Economic Development Committee
May 1, 2023

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CITY OF MODESTO SCADA SYSTEM UPGRADE PROJECT

PRECONSTRUCTION ESTIMATING
September 3, 2021; Revised December 6, 2021; Revised February 4, 2022; Revised June 29, 2022; Revised September 2, 2022; Revised December 22, 2022 Project
Manager
Deputy
Project
Manager
Senior/Field
Engineer
Senior
Programmer
Principal
Engineer
Senior/Field
Engineer
Associate
Engineer
Senior
Programmer Designer Drafting Clerical
$226 $185 $185 $197 $226 $185 $143 $197 $125 $108 $88
Task 1 - Project Management and Planning
Layout, Coordinate, Manage the Work (12 months+/-) 24 60 $ - 60 30 12 20 $ - $ - Initial Schedule Development 4 8 $ - 8 8 2 $ - $ -
Update Schedule, Monthly 4 $ - 6 12 12 $ - $ -
Develop Project Management Plan / Execution Plan 4 32 16 $ - 12 2 14 5 $ - $ - Develop Submittal Procedures 8 8 $ - 1 2 2 1 $ - $ -
Develop Quality Management Procedures 8 16 $ - 1 2 1 $ - $ - Develop Project Documentation Plan 16 $ - 1 $ - $ -
Develop Procurement Buyout Plan 16 $ - 1 $ - $ -
Develop Construction Management Plan 8 24 $ - 1 2 2 1 $ - $ - Develop Project Safety Plan 12 $ - 1 $ - $ -
Constructability Reviews 12 12 12 $ - 12 12 $ - $ -
Monthly Status Reports 8 $ - 6 6 4 12 $ - $ -
Weekly Check-in Meetings 24 24 $ - 52 52 26 $ - $ -
E-mail and Telephone Correspondence 24 24 $ - 52 26 52 26 52 $ - $ - Partnering Sessions (Kickoff and 3 Follow-up Sessions) 32 32 $ 2,000 32 $ 1,000 $ 21,600 Task 1 -Hours 124 272 76 0 246 46 178 42 0 0 132
Task 1 - Subtotals $ 28,024 $ 50,320 $ 14,060 $ - $ 2,000 $ 55,596 $ 8,510 $ 25,454 $ 8,274 $ - $ - $ 11,616 $ 1,000 $ 21,600 $ 300 $ 13,205 $ 239,959 Task 2 - Design Field Investigations (all sites)
Assemble/Organize Documents We Have $ - 2 8 8 $ - $ -
Information Request $ - 3 4 2 3 $ - $ -
Receive Drawings, Organize $ - 2 8 8 4 2 $ - $ -
Coordination (over the course of the work) $ - 8 12 12 4 $ - $ - Preparation/Categorize $ - 8 8 8 8 4 $ - $ -
Field Investigations: Remote Sites 16 8 80 $ 3,250 180 300 300 $ 24,000 $ - Field Investigations: Treatment Plants 8 8 40 $ 1,750 40 40 40 $ 4,000 $ - Debrief, Summarize Field Notes, Filing $ - 8 16 16 8 2 $ - $ - Task 2 -Hours 24 16 120 0 251 392 396 2 0 20 15
Task 2 - Subtotals $ 5,424 $ 2,960 $ 22,200 $ - $ 5,000 $ 56,726 $ 72,520 $ 56,628 $ 394 $ - $ 2,160 $ 1,320 $ 28,000 $ - $ 750 $ 21,775 $ 275,857 Task 3 - Workshops
Typical Workshop (Assume 3-4 hours each): $ - $ - $ -
Assemble Materials, Agenda $ - 1 4 6 $ - $ -
Coordinate Details $ - 2 2 $ - $ -
Workshop (including getting there) 6 6 2 2 $ 250 6 6 $ 250 $ 9,600 Develop Minutes, Distribute $ - 2 2 1 $ - $ -
Receive Comments, Incorporate $ - 2 2 1 $ - $ -
Totals per Workshop 6 6 2 2 $ 250 13 0 10 4 6 0 4 $ 250 $ 9,600 Number of Workshops: 25
Task 3 -Hours 150 150 50 50 325 0 250 100 150 0 100
Task 3 - Subtotals $ 33,900 $ 27,750 $ 9,250 $ 9,850 $ 6,250 $ 73,450 $ - $ 35,750 $ 19,700 $ 18,750 $ - $ 8,800 $ 6,250 $ 9,600 $ 938 $ 17,230 $ 277,468 Task 4 - Standards
SCADA/HMI Configuration Standards $ - $ - $ -
Outline, Review Existing $ - 8 24 6 $ - $ -
Develop Initial Content, Including Example Screens 8 $ - 8 40 4 $ - $ - Assemble Other Examples $ - 8 16 2 $ - $ -
Preparation for Workshops $ - 18 6 18 9 12 $ - $ -
Conduct Workshops, Three (covered under task 3) $ - $ - $ - Edit Standards 4 8 $ - 8 8 24 8 $ - $ -
Various Submissions $ - 8 8 12 8 $ - $ -
Receive Comments; Address $ - 8 8 12 4 $ - $ -
Unlisted $ - 8 8 8 8 $ - $ -
Tagging and Identification Standards $ - $ - $ -
Investigations and Assessments $ - 8 8 16 $ - $ -
Lay Out TM $ - 8 8 6 $ - $ -
Conduct Workshop (covered under task 3) $ - $ - $ -
Expand TM $ - 4 16 4 4 $ - $ -
Review, Revise, Submit 4 8 $ - 4 4 4 3 $ - $ -
Conduct Workshop (covered under task 3) $ - $ - $ -
Develop Preliminary Standards 4 $ - 4 6 2 3 $ - $ -
Review, Submit 2 4 $ - 2 4 2 $ - $ -
Receive Comments, Make Punchlist $ - 2 2 2 1 $ - $ -
PLC Programming Standards $ - $ - $ -
Outline 16 $ - 4 6 2 $ - $ -
Review Existing Programs and Perform Field Investigations 24 72 $ - $ - $ - Develop Initial Content 16 $ - $ - $ -
Assemble Other Examples 24 $ - $ - $ -
Preparation for workshops 16 $ - $ - $ -
Conduct Workshop (covered under task 3) $ - $ - $ -
Edit Standards 4 80 $ - 8 8 8 $ - $ -
Telstar Instruments Subconsultant: ArcSine Engineering
Extended $
15% Markup
on Telstar
Expenses $
Other SubConsultants
10% Markup
on SubExpenses Expenses Consultants

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CITY OF MODESTO SCADA SYSTEM UPGRADE PROJECT

PRECONSTRUCTION ESTIMATING
September 3, 2021; Revised December 6, 2021; Revised February 4, 2022; Revised June 29, 2022; Revised September 2, 2022; December 22, 2022; Revised March 28, 2023 Project
Manager
Deputy
Project
Manager
Senior/Field
Engineer
Senior
Programmer
Principal
Engineer
Senior/Field
Engineer
Associate
Engineer
Senior
Programmer Designer Drafting Clerical
$226 $185 $185 $197 $226 $185 $143 $197 $125 $108 $88 Extended $ 15% Markup
on Telstar
Expenses $
Other SubConsultants
10% Markup
on SubExpenses Expenses Consultants
Various Submissions 40 $ - $ - $ -
Receive Comments; Address 2 16 $ - 8 8 8 $ - $ -
Unlisted 8 $ - $ - $ -
PLC Hardware Evaluation $ - $ - $ -
Consult with Hardware Vendors and Perform Evaluation 4 8 8 $ - 4 4 $ - $ - Conduct Workshop (covered under task 3) $ - $ - $ -
Prepare TM Documenting Recommendations 4 8 8 $ - 2 2 $ - $ - Control Panel Standards $ - $ - $ -
Develop Initial Content 16 $ - $ - $ -
Assemble Other Examples 16 $ - $ - $ -
Preparation for Workshops 16 $ - $ - $ -
Conduct Workshop (covered under task 3) $ - $ - $ -
Edit Standards 8 4 24 $ - 8 8 4 $ - $ -
Receive Comments; Address 8 16 $ - 6 6 2 2 $ - $ -
Loop Drawing Standards $ - $ - $ -
Develop Initial Content 16 $ - $ - $ -
Assemble Other Examples 16 $ - $ - $ -
Preparation for Workshops 16 $ - $ - $ -
Conduct Workshops, Three (covered under task 3) $ - $ - $ - Edit Standards 8 4 24 $ - 8 8 4 $ - $ -
Receive Comments; Address 8 16 $ - 6 6 2 2 $ - $ -
Test Plan Outline $ - $ - $ -
Develop Test Plan Outline 12 8 $ - 6 6 2 $ - $ -
Develop Example Test Forms 12 8 $ - 2 2 $ - $ -
Design Standards $ - $ - $ -
Outline Standards $ - 4 8 2 4 $ - $ -
Assemble Reference Documents $ - 2 4 4 6 2 $ - $ -
Develop Draft Standards, Review 4 8 $ - 4 12 6 4 8 4 $ - $ - Submit $ - 1 1 1 $ - $ -
Cover as an Adjunct in the Workshops (covered under task 3) $ - $ - $ - Revise $ - 6 6 4 2 4 4 $ - $ -
Resubmit $ - 1 2 1 2 $ - $ -
Receive Comments, Incorporate $ - 1 2 2 2 $ - $ -
Task 4 -Hours 84 8 224 352 186 35 106 248 0 35 122
Task 4 - Subtotals $ 18,984 $ 1,480 $ 41,440 $ 69,344 $ - $ 42,036 $ 6,475 $ 15,158 $ 48,856 $ - $ 3,780 $ 10,736 $ - $ - $ - $ 12,704 $ 270,993 Task 5 - Radio System Evaluation
Review Existing Documentation for Radio Network 40 $ - $ - $ - Perform Needs Assessment with Operations Staff 8 8 40 8 $ - $ - $ - Model Existing Communications System 80 $ 3,600 $ - $ - Perform Field Radio Path Surveys for Radio System 320 $ 14,700 $ - $ - Evaluate Alternate Technologies 8 8 80 16 $ - 4 16 4 8 4 $ - $ - Revise Communication Modeling 40 $ - $ - $ -
Conduct Workshop (covered under task 3) $ - $ - $ -
Perform Secondary Field Radio Patch Surveys 32 $ 2,800 $ - $ - Prepare Report Documenting Study and Recommendations 8 8 80 16 $ - 4 16 4 8 4 $ - $ - Receive Comments; Address 32 $ - $ - $ -
Incorporate the Results on to the Design Drawings $ - 4 24 12 40 $ - $ - Task 5 -Hours 24 24 744 40 12 56 20 16 0 40 8
Task 5 - Subtotals $ 5,424 $ 4,440 $ 137,640 $ 7,880 $ 21,100 $ 2,712 $ 10,360 $ 2,860 $ 3,152 $ - $ 4,320 $ 704 $ - $ - $ 3,165 $ 2,411 $ 206,168 Task 6 - Cyber Security
Preliminary Coordination and Identification of Key Stakeholders 2 $ - 4 8 4 $ 3,200 Data Review & and Development of Preliminary Requirements 2 2 4 $ 6,400 Workshop - Requirement Review and Collaboration with Key Stakeholders Draft High-Level Existing Architecture (ICS/Purdue Model Format) 2 2 4 4 4 $ 4,200 Select Applicable Security Control Requirements 2 2 6 $ 6,200 Generate Preliminary Recommendations 2 8 2 8 4 $ 21,600 Draft Preliminary High-Level Proposed Architecture (ICS/Purdue Model) 2 2 2 $ 5,200 Workshop - Review Plan with Key Stakeholders
Develop and Submit TM Draft 4 8 8 16 4 $ 10,400
Receive and Incorporate Comments 2 4 $ 5,200
Workshop - Review Final TM with Stakeholders
Submit TM Final 2 8 8 8 4 $ 4,800
Advise Telstar Team During Preliminary Design $ 9,400
Task 6 -Hours 0 14 0 30 34 0 0 56 0 0 24
Task 6 - Subtotals $ - $ 2,590 $ - $ 5,910 $ - $ 7,684 $ - $ - $ 11,032 $ - $ - $ 2,112 $ - $ 76,600 $ - $ 9,743 $ 115,671 Task 7 - 30% Design
Lay Out the Deliverable $ - 4 8 4 4 $ - $ -
Cover Sheet $ - 1 1 2 $ - $ -
Legends $ - 1 1 2 $ - $ -
Site Location Maps (4 sheets) $ - 4 16 16 $ - $ -

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CITY OF MODESTO SCADA SYSTEM UPGRADE PROJECT

PRECONSTRUCTION ESTIMATING
September 3, 2021; Revised December 6, 2021; Revised February 4, 2022; Revised June 29, 2022; Revised September 2, 2022; December 22, 2022; Revised March 28, 2023 Project
Manager
Deputy
Project
Manager
Senior/Field
Engineer
Senior
Programmer
Principal
Engineer
Senior/Field
Engineer
Associate
Engineer
Senior
Programmer Designer Drafting Clerical
$226 $185 $185 $197 $226 $185 $143 $197 $125 $108 $88 Extended $ 15% Markup
on Telstar
Expenses $
Other SubConsultants
10% Markup
on SubExpenses Expenses Consultants
Block Diagrams (6 sheets) $ - 8 16 $ - $ 600
P&ID's Remote Sites (21 sheets) 16 8 $ - 16 40 20 80 $ - $ - P&ID's Treatment Plants (17 sheets, refer to 60%) $ - $ - $ - Control Diagrams Remote Sites (21 sheets) 8 4 $ - 6 30 30 80 $ - $ - Control Diagrams Treatment Plants (11 sheets, refer to 60%) $ - $ - $ - Panel Elevations Remote Sites (21 sheets, refer to 60%) $ - $ - $ - Panel Elevations Treatment Plants (11 sheets, refer to 60%) $ - $ - $ - Specifications (see list) 4 4 $ - 8 16 8 8 16 $ - $ -
Control Strategies, As-Is 8 4 $ - 16 16 16 16 $ - $ -
Control Strategies, As-Desired (refer to 60%) $ - $ - $ - Assemble Package for Internal Review $ - 4 4 $ - $ -
Review and Revisions 8 4 $ - 6 8 8 8 8 $ - $ -
Submit $ - 1 4 4 2 $ - $ -
Review Long Lead Item List 2 4 $ - 1 1 1 1 $ - $ -
Prepare Maintenance of Operations Plans 16 8 32 40 $ - 21 50 42 18 20 $ - $ - SCADA Network And Telemetry Upgrade Plan 16 40 $ - 8 16 16 $ - $ - Implementation Alternatives, Review Prior Work $ - 8 8 8 2 $ - $ - Brainstorm In-house 8 $ - 8 8 8 8 2 $ - $ -
Conduct Workshop (covered under task 3) $ - $ - $ -
Assemble Results in a Brief Technical Memorandum $ - 4 8 4 2 $ - $ - Coordinate, Review, Revise $ - 2 4 2 4 $ - $ -
Task 7 -Hours 84 34 76 40 123 212 97 115 8 232 65
Task 7 - Subtotals $ 18,984 $ 6,290 $ 14,060 $ 7,880 $ - $ 27,798 $ 39,220 $ 13,871 $ 22,655 $ 1,000 $ 25,056 $ 5,720 $ - $ 600 $ - $ 13,592 $ 196,726 Task 8 - 60% Design
60% Design Documents 24 8 $ - 93 146 96 56 8 214 65 $ - $ 600 P&ID's Treatment Plants (17 sheets) $ - 15 60 75 $ - $ - Control Diagrams Treatment Plants (11 sheets) $ - 6 24 30 $ - $ - Panel Elevations Remote Sites (21 sheets) 8 4 $ - 40 60 $ - $ - Panel Elevations Treatment Plants (11 sheets) 8 4 $ - 6 24 30 $ - $ - Sequencing Drawings (6 sheets) 8 4 $ - 12 18 $ - $ -
Unique Remote Site Drawings (40 sheets) $ - 20 80 100 $ - $ - SCADA Migration Approach and Cutover Plan 16 24 $ - 8 16 24 $ - $ - Data Migration Plan 16 24 $ - 8 16 24 $ - $ -
Task 8 -Hours 80 20 0 48 156 418 96 104 8 527 65
Task 8 - Subtotals $ 18,080 $ 3,700 $ - $ 9,456 $ - $ 35,256 $ 77,330 $ 13,728 $ 20,488 $ 1,000 $ 56,916 $ 5,720 $ - $ 600 $ - $ 21,104 $ 263,378 Task 9 - 85% Design
85% Design Documents 40 24 $ - 140 386 96 56 8 527 44 $ - $ 600 Report Definition $ - $ - $ -
Obtain Existing Reports and Permits $ - 2 4 2 2 $ - $ 600 Interview Staff $ - 2 4 4 $ - $ -
Review Reports $ - 1 4 6 $ - $ -
Review Permits $ - 1 4 6 $ - $ -
Assess Tags in Use $ - 1 6 2 $ - $ -
Develop Preliminary Requirements $ - 2 4 4 $ - $ -
Prepare for Workshops $ - 2 4 $ - $ -
Conduct Workshops, Two (covered under Task 3) $ - $ - $ - Write Preliminary Control Strategies $ - 4 6 4 $ - $ -
Review, Revise $ - 4 4 4 $ - $ -
Submit Draft $ - 4 4 4 $ - $ 600
Receive Comments $ - 2 4 2 $ - $ -
Revise $ - 2 2 2 $ - $ 600
Develop Draft Compliance Matrix (at 85% only). Submit. $ - 6 8 8 6 $ 600 $ - Task 9 -Hours 40 24 0 0 0 173 386 120 116 8 527 74
Task 9 - Subtotals $ 9,040 $ 4,440 $ - $ - $ - $ 39,098 $ 71,410 $ 17,160 $ 22,852 $ 1,000 $ 56,916 $ 6,512 $ - $ 600 $ - $ 21,555 $ 250,583 Task 10 - Kickoff And Design Review Meetings
Typical Meeting $ - $ - $ -
Prepare $ - 2 2 2 $ - $ -
Conduct Meeting 8 8 $ 200 8 8 $ 200 $ -
Develop Minutes $ - 1 2 2 $ - $ -
Coordination $ - 1 1 1 $ - $ -
Totals per Meeting 8 8 0 0 $ 200 12 0 13 0 0 0 5 $ 200 $ - Kickoff Meeting 8 8 0 0 $ 200 12 0 13 0 0 0 5 $ 200 $ - Design Review Meetings: 3 24 24 0 0 $ 600 36 0 39 0 0 0 15 $ 600 $ - Task 10 -Hours 32 32 0 0 48 0 52 0 0 0 20
Task 10 - Subtotals $ 7,232 $ 5,920 $ - $ - $ 800 $ 10,848 $ - $ 7,436 $ - $ - $ - $ 1,760 $ 800 $ - $ 120 $ 2,084 $ 37,000 Task 11 - Interim Design Specifications
Allowance to be applied As-needed 8 8 16 $ - 40 40 24 8 16 8 $ - $ - Task 11 -Hours 8 8 16 0 40 40 24 8 0 16 8
Task 11 - Subtotals $ 1,808 $ 1,480 $ 2,960 $ - $ - $ 9,040 $ 7,400 $ 3,432 $ 1,576 $ - $ 1,728 $ 704 $ - $ - $ - $ 2,388 $ 32,516 Task 12 - Cost Estimating And Optimizations

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CITY OF MODESTO SCADA SYSTEM UPGRADE PROJECT

PRECONSTRUCTION ESTIMATING
September 3, 2021; Revised December 6, 2021; Revised February 4, 2022; Revised June 29, 2022; Revised September 2, 2022; December 22, 2022; Revised March 28, 2023 Project
Manager
Deputy
Project
Manager
Senior/Field
Engineer
Senior
Programmer
Principal
Engineer
Senior/Field
Engineer
Associate
Engineer
Senior
Programmer Designer Drafting Clerical
$226 $185 $185 $197 $226 $185 $143 $197 $125 $108 $88 Extended $ 15% Markup
on Telstar
Expenses $
Other SubConsultants
10% Markup
on SubExpenses Expenses Consultants
Initial Cash-Flow Forecast 4 4 $ - 2 4 1 $ - $ -
Formulate Written Cost Estimating Position (project cost model) 8 8 8 $ - 8 8 4 4 $ - $ - Review, Revise 2 2 $ - 2 2 2 $ - $ -
Submit 1 1 $ - 1 2 2 $ - $ -
Meeting (virtual) 2 2 $ - 2 2 $ - $ -
Revise 2 2 $ - 2 2 2 $ - $ -
Resubmit 1 1 $ - 1 2 1 $ - $ -
Value-Engineering (VE) Meetings (qty. 6) 24 12 12 12 $ - 24 24 12 6 $ - $ - 30% Cost Estimate, Including Cash-Flow Forecast 4 4 $ - 4 4 4 2 3 $ - $ - 60% Cost Estimate, Including Cash-Flow Forecast 4 4 $ - 4 4 4 2 3 $ - $ - 85% Cost Estimate, Including Cash-Flow Forecast 8 8 $ - 4 4 4 2 3 $ - $ - 30% VE Development 8 8 4 4 $ - 8 4 4 2 $ - $ -
60% VE Development 8 8 4 4 $ - 8 4 4 2 $ - $ -
85% VE Development 8 8 4 4 $ - 8 4 4 2 $ - $ -
Task 12 -Hours 84 72 32 24 78 46 20 46 6 0 31
Task 12 - Subtotals $ 18,984 $ 13,320 $ 5,920 $ 4,728 $ - $ 17,628 $ 8,510 $ 2,860 $ 9,062 $ 750 $ - $ 2,728 $ - $ - $ - $ 4,154 $ 88,644 Task 13 - GMP And Scope Development
Develop Detailed Scope 8 8 8 8 $ - 4 8 8 4 $ - $ -
Develop Detailed Estimate 40 40 $ - 4 6 3 $ - $ -
Seek Out Pricing 40 40 40 40 $ - 2 4 2 $ - $ -
Define Supervisory Infrastructure, Licensing, Allowances (coordinate among team members) 8 8 8 8 $ - 4 16 2 $ - $ - Address Performance Criteria 4 4 $ - 2 4 2 1 $ - $ -
Coordinate with Team Members, Gaps/Overlaps 4 4 $ - 4 4 2 $ - $ - Undertake a Risk/Variance Analysis (internal) 4 4 $ - 4 4 2 $ - $ - Revise 4 4 $ - 2 4 2 1 $ - $ -
Develop Major Milestones 8 8 $ - 2 2 2 1 $ - $ -
Package and Submit Draft 4 8 $ - 1 2 2 $ - $ -
Review Meeting (assume virtual) 8 8 4 4 $ - 4 4 4 $ - $ - Adjustments, Coordination, Finalize 8 8 4 4 $ - 2 4 2 $ - $ - Task 13 -Hours 140 136 72 64 35 16 34 28 5 0 19
Task 13 - Subtotals $ 31,640 $ 25,160 $ 13,320 $ 12,608 $ - $ 7,910 $ 2,960 $ 4,862 $ 5,516 $ 625 $ - $ 1,672 $ - $ - $ - $ 2,355 $ 108,628 Task 14 - Add Flow Meters
Field Investigations (four sites) $ - 8 $ 250 $ -
Drawings Development $ - 8 8 $ - $ -
Scoping 12 $ - 10 $ - $ -
Cost Estimation 16 $ - 8 $ - $ -
Unlisted 8 $ - 8 $ - $ -
Task 14 -Hours 0 0 36 0 0 42 8 0 0 0 0
Task 14 - Subtotals $ - $ - $ 6,660 $ - $ - $ - $ 7,770 $ 1,144 $ - $ - $ - $ - $ 250 $ - $ - $ 916 $ 16,740 Task 15 - Evaluate Cameras
Receive wish list, evaluations as scope 8 8 44 $ - 8 52 $ - $ - Preparation and workshop 8 16 $ 750 8 16 $ 750 $ -
Conceptual design, as scoped 8 72 $ - 8 72 $ - $ -
Preparation and workshop 8 8 $ 500 8 8 $ 500 $ -
Scoping and pricing 8 42 $ - 8 16 $ - $ -
Preparation and workshop 8 8 $ 500 8 8 $ 500 $ -
Rescope, re-estimate 8 16 $ - 8 $ - $ -
Unlisted 8 16 $ - 8 8 $ - $ -
Task 15 -Hours 8 64 222 0 56 188 0 0 0 0 0
Task 15 - Subtotals $ 1,808 $ 11,840 $ 41,070 $ - $ 1,750 $ 12,656 $ 34,780 $ - $ - $ - $ - $ - $ 1,750 $ - $ 263 $ 4,919 $ 110,835 Task 16 - As-built Documentation for Network - Jennings/Sutter Review existing documentation 8 16 $ - 8 16 $ - $ -
Field Investigation 40 200 $ 7,500 16 64 $ 2,500 $ -
Drafting as-built documents 24 $ - 160 $ - $ -
Task 16 -Hours 0 48 240 0 24 80 0 0 0 160 0
Task 16 - Subtotals $ - $ 8,880 $ 44,400 $ - $ 7,500 $ 5,424 $ 14,800 $ - $ - $ - $ 17,280 $ - $ 2,500 $ - $ 1,125 $ 4,000 $ 105,909 Totals - Hours 882 922 1908 648 1787 1957 1401 881 185 1557 683 Totals - Fee $ 199,332 $ 170,570 $ 352,980 $ 127,656 $ 44,400 $ 403,862 $ 362,045 $ 200,343 $ 173,557 $ 23,125 $ 168,156 $ 60,104 $ 40,550 $ 109,600 $ 6,660 $ 154,134 $ 2,597,074 Cost Proposal Notes:

1. The task-by-task figures do not comprise individual not-to-exceed costs. Budgets may be moved amongst tasks, by the consultant, to accommodate overs/unders which are expected.

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TABLE 2 - SITE/UNIT PROCESS COUNTS

MODESTO SCADA
SEPTEMBER 3, 2021
Revised December 3, 2021
Revised February 4, 2022
Revised June 29, 2022
Site Type Quantity of Sites
Well Sites 103
Storage Tanks 13
Turnout Valves 14
Pressure Points 21
Sewer and Storm Water Lift Stations 63
Sutter WWTP Processes 6
Jennings WWTP Processes 5
Total Remote Sites 214
Total WWTP Processes 11
Total Sites + Processes 225
Notes:

1. The Jennings process count includes only the HSQ areas. Other areas where this project does not replace RTU's will not be the subject of investigations or design work.

Table 2 - Site/Unit Process Counts
1 of 4
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CITY OF MODESTO SCADA SYSTEM UPGRADE PROJECT

PRECONSTRUCTION ESTIMATING
September 3, 2021; Revised December 6, 2021; Revised February 4, 2022; Revised June 29, 2022; Revised September 2, 2022 Project
Manager
Deputy
Project
Manager
Senior/Field
Engineer
Senior
Programmer
Principal
Engineer
Senior/Field
Engineer
Associate
Engineer
Senior
Programmer Designer Drafting Clerical
$226 $185 $185 $197 $226 $185 $143 $197 $125 $108 $88 Extended $ 15% Markup
on Telstar
Expenses $
Other SubConsultants
10% Markup
on SubExpenses Expenses Consultants
Workshop - Review Plan with Key Stakeholders
Develop and Submit TM Draft 4 8 8 16 4 $ 10,400
Receive and Incorporate Comments 2 4 $ 5,200
Workshop - Review Final TM with Stakeholders
Submit TM Final 2 8 8 8 4 $ 4,800
Advise Telstar Team During Preliminary Design $ 9,400
Task 6 -Hours 0 14 0 30 34 0 0 56 0 0 24
Task 6 - Subtotals $ - $ 2,590 $ - $ 5,910 $ - $ 7,684 $ - $ - $ 11,032 $ - $ - $ 2,112 $ - $ 76,600 $ - $ 9,743 $ 115,671 Task 7 - 30% Design
Lay Out the Deliverable $ - 4 8 4 4 $ - $ -
Cover Sheet $ - 1 1 2 $ - $ -
Legends $ - 1 1 2 $ - $ -
Site Location Maps (4 sheets) $ - 4 16 16 $ - $ -
Block Diagrams (6 sheets) $ - 8 16 $ - $ 600
P&ID's Remote Sites (21 sheets) 16 8 $ - 16 40 20 80 $ - $ - P&ID's Treatment Plants (17 sheets, refer to 60%) $ - $ - $ - Control Diagrams Remote Sites (21 sheets) 8 4 $ - 6 30 30 80 $ - $ - Control Diagrams Treatment Plants (11 sheets, refer to 60%) $ - $ - $ - Panel Elevations Remote Sites (21 sheets, refer to 60%) $ - $ - $ - Panel Elevations Treatment Plants (11 sheets, refer to 60%) $ - $ - $ - Specifications (see list) 4 4 $ - 8 16 8 8 16 $ - $ -
Control Strategies, As-Is 8 4 $ - 16 16 16 16 $ - $ -
Control Strategies, As-Desired (refer to 60%) $ - $ - $ - Assemble Package for Internal Review $ - 4 4 $ - $ -
Review and Revisions 8 4 $ - 6 8 8 8 8 $ - $ -
Submit $ - 1 4 4 2 $ - $ -
Review Long Lead Item List 2 4 $ - 1 1 1 1 $ - $ -
Prepare Maintenance of Operations Plans 16 8 32 40 $ - 21 50 42 18 20 $ - $ - SCADA Network And Telemetry Upgrade Plan 16 40 $ - 8 16 16 $ - $ - Implementation Alternatives, Review Prior Work $ - 8 8 8 2 $ - $ - Brainstorm In-house 8 $ - 8 8 8 8 2 $ - $ -
Conduct Workshop (covered under task 3) $ - $ - $ -
Assemble Results in a Brief Technical Memorandum $ - 4 8 4 2 $ - $ - Coordinate, Review, Revise $ - 2 4 2 4 $ - $ -
Task 7 -Hours 84 34 76 40 123 212 97 115 8 232 65
Task 7 - Subtotals $ 18,984 $ 6,290 $ 14,060 $ 7,880 $ - $ 27,798 $ 39,220 $ 13,871 $ 22,655 $ 1,000 $ 25,056 $ 5,720 $ - $ 600 $ - $ 13,592 $ 196,726 Task 8 - 60% Design
60% Design Documents 24 8 $ - 93 146 96 56 8 214 65 $ - $ 600 P&ID's Treatment Plants (17 sheets) $ - 15 60 75 $ - $ - Control Diagrams Treatment Plants (11 sheets) $ - 6 24 30 $ - $ - Panel Elevations Remote Sites (21 sheets) 8 4 $ - 40 60 $ - $ - Panel Elevations Treatment Plants (11 sheets) 8 4 $ - 6 24 30 $ - $ - Sequencing Drawings (6 sheets) 8 4 $ - 12 18 $ - $ -
Unique Remote Site Drawings (40 sheets) $ - 20 80 100 $ - $ - SCADA Migration Approach and Cutover Plan 16 24 $ - 8 16 24 $ - $ - Data Migration Plan 16 24 $ - 8 16 24 $ - $ -
Task 8 -Hours 80 20 0 48 156 418 96 104 8 527 65
Task 8 - Subtotals $ 18,080 $ 3,700 $ - $ 9,456 $ - $ 35,256 $ 77,330 $ 13,728 $ 20,488 $ 1,000 $ 56,916 $ 5,720 $ - $ 600 $ - $ 21,104 $ 263,378 Task 9 - 85% Design
85% Design Documents 40 24 $ - 140 386 96 56 8 527 44 $ - $ 600 Report Definition $ - $ - $ -
Obtain Existing Reports and Permits $ - 2 4 2 2 $ - $ 600 Interview Staff $ - 2 4 4 $ - $ -
Review Reports $ - 1 4 6 $ - $ -
Review Permits $ - 1 4 6 $ - $ -
Assess Tags in Use $ - 1 6 2 $ - $ -
Develop Preliminary Requirements $ - 2 4 4 $ - $ -
Prepare for Workshops $ - 2 4 $ - $ -
Conduct Workshops, Two (covered under Task 3) $ - $ - $ - Write Preliminary Control Strategies $ - 4 6 4 $ - $ -
Review, Revise $ - 4 4 4 $ - $ -
Submit Draft $ - 4 4 4 $ - $ 600
Receive Comments $ - 2 4 2 $ - $ -
Revise $ - 2 2 2 $ - $ 600

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SCADA Upgrade Progressive Design Build Contract, Page 15 of 83 EXHIBIT 3

GENERAL CONDITIONS OF THE CONTRACT

BETWEEN OWNER AND DB ENTITY

TABLE OF CONTENTS
ARTICLE 1 – DEFINITIONS AND TERMINOLOGY
ARTICLE 2 – PRELIMINARY
ARTICLE 3 – CONTRACT DOCUMENTS: INTENT, AMENDING, REUSE ARTICLE 4 – AVAILABILITY OF LANDS; DIFFERING SITE CONDITIONS; REFERENCE POINTS; HAZARDOUS ENVIRONMENTAL CONDITIONS
ARTICLE 5 – BONDS AND INSURANCE
ARTICLE 6 – DB ENTITY'S RESPONSIBILITIES
ARTICLE 7 – OTHER CONSTRUCTION
ARTICLE 8 – OWNER'S RESPONSIBILITIES
ARTICLE 9 – CHANGES IN THE WORK; CLAIMS
ARTICLE 10 – COST OF THE WORK; CASH ALLOWANCES; UNIT PRICE WORK ARTICLE 11 – CHANGE OF CONTRACT PRICE; CHANGE OF CONTRACT TIME(S) ARTICLE 12 – TESTS AND INSPECTIONS; CORRECTION, REMOVAL OR

ACCEPTANCE OF DEFECTIVE WORK
ARTICLE 13 – PAYMENTS TO DB ENTITY AND COMPLETION
ARTICLE 14 – SUSPENSION OF WORK AND TERMINATION
ARTICLE 15 – CLAIMS AND DISPUTE RESOLUTION
ARTICLE 16 – MISCELLANEOUS
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GENERAL CONDITIONS OF THE

CONTRACT BETWEEN

OWNER AND DB ENTITY
ARTICLE 1 – DEFINITIONS AND TERMINOLOGY

1.01 Defined Terms
A. Wherever used in the Contract Documents and printed with initial capital letters, the following terms have the meanings indicated which are applicable to both the singular and plural thereof. In addition to terms specifically defined, terms with initial capital letters in the Contract Documents include references to identified articles and paragraphs, and the titles of other documents or forms.

1. Addenda: Written or graphic instruments issued prior to the opening of Proposals which clarify, correct or change the Request for Proposals or the Contract Documents.

2. Agreement: The written instrument which is evidence of the agreement between Owner and DB Entity covering the Work.

3. Application for Payment: The form which is to be used by DB Entity in requesting progress or final payments and which is to be accompanied by such supporting documentation as is required by the Contract Documents.

4. Asbestos: Any material that contains more than one percent asbestos and is friable or is releasing asbestos fibers into the air above current action levels established by the United States Occupational Safety and Health Administration.

5. Bonds: Performance and payment bonds and other instruments of security.

6. Change Order: A written order which, when signed by Owner, authorizes an addition, deletion or revision in the Work, or an adjustment in the Contract Price or the Contract Time(s), issued on or after the Effective Date of the Agreement.

7. City: Another name for "Owner" that may be used in Technical Requirements. See definition for "Owner." City or Owner may be used interchangeably throughout the Contract Documents.

8. Construction: The part of the Work that is the result of performing or furnishing of labor, the furnishing and incorporating of materials and equipment into the Work and the furnishing of services (other than Design Professional Services) and documents, all as required by the Contract Documents.

9. Construction Subagreement: A written agreement between DB Entity and a construction Subcontractor for provision of Construction.
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10. Contract: The entire and integrated written agreement between Owner and DB Entity concerning the Work. The Contract supersedes prior negotiations, representations, or agreements, whether written or oral.

11. Contract Documents: Those items so designated in the Agreement. Only printed or hard copies of the items listed in the Agreement are Contract Documents.

12. Contract Price: The moneys payable by Owner to DB Entity for completion of the Work in accordance with Article 4 of the Agreement.

13. Contract Price Proposal: The document submitted by DB Entity setting forth, among other things, the design concepts, proposed prices, and other conditions for the Work to be performed thereunder.

14. Contract Time(s): The Scheduled Substantial Completion Date and Scheduled Final Acceptance Date.

15. Contractor: Another name for "DB Entity" that may be used in Technical Requirements.

See definition for "DB Entity." Contractor and DB Entity may be used interchangeably throughout Contract Documents.

16. DB-Related Entity: DB Entity, Design Sub-consultants, Subcontractors, Suppliers, and anyone for whose acts any of them may be legally or contractually responsible.

17. Delay Liquidated Damages: Those liquidated damages set forth in Section 3.4 of the Agreement.

18. DB Entity: The individual or entity with whom Owner has entered into the Agreement.

There may be instances in Technical Requirements where the DB Entity is referred to as "Contractor."

19. Design Professional Services: That part of the Pre-Construction Phase Services and tthat part of the Work comprised of services relating to the preparation of Drawings, Specifications, and other design submittals specified by the Contract Documents and required to be performed by licensed design professionals, as well as other services provided by or for licensed design professionals as part of the Work.

20. Design Sub-agreement: A written agreement between DB Entity and a Design Subconsultant for provision of Design Professional Services.

21. Design Sub-consultant: A qualified, licensed design professional, eligible to provide professional engineering, architectural and/or land surveying services in California, who is not an employee of DB Entity, but is retained by DB Entity to furnish design services on the Project through a Design Sub-agreement.
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22. Drawings: Consists of drawings, diagrams, illustrations, schedules and other data which show the scope, extent, and character of the Work.

23. Effective Date of the Agreement: The date that the Contract is executed by both Owner and DB Entity.

24. Effective Date of the Contract Price Proposal: The date that the Contract Price Proposal is executed by both Owner and DB Entity.

25. Field Order: A written order issued by Owner which orders minor changes in the Work but which does not involve a change in the Contract Price or the Contract Time(s).

26. Final Acceptance: The written notice from Owner to DB Entity pursuant to Paragraph

13.08 of the General Conditions that Owner is satisfied that the Work has been completed and DB Entity's other obligations under the Contract Documents have been fulfilled.

27. Final Drawings and Specifications: Those Drawings and Specifications that will be approved by Owner and will become Contract Documents for the Design-Build Phase of the Project.

28. General Conditions: The General Conditions of the Contract between Owner and DB Entity included as part of the Contract Documents.

29. Hazardous Environmental Condition: The presence at the Site of Hazardous Materials in such quantities or circumstances that may present an imminent or substantial danger to persons or property exposed thereto on connection with the Work.

30. Hazardous Materials: Collectively, Asbestos, Hazardous Waste, PCB's, Petroleum Products, Radioactive Materials and other materials, waste, substances and chemicals deemed to be hazardous under applicable Laws or Regulations.

31. Hazardous Waste: The term Hazardous Waste shall have the meaning provided in Section 25117 of the California Health and Safety Code as amended from time to time.

32. Indemnified Parties: Owner and all of its representatives, appointed and elected officials, officers, employees, authorized agents, consultants (including Owner’s Advisor), and other duly authorized representatives.

33. Laws and/or Regulations: Any and all applicable laws, rules, regulations, ordinances, codes, and orders of any and all governmental bodies, agencies, authorities and courts having jurisdiction.

34. Liens: Charges, security interests or encumbrances upon real property or personal property.

35. Milestone: Completion date(s), if any, specified as “Milestones” in Article 6 of the Agreement and relating to an intermediate completion date or time prior to Substantial Completion of all the Work.
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36. Notice to Proceed (“NTP”): A written notice given by Owner to DB Entity, which notice is the date on which the Contract Time(s) will commence to run and is the date on which DB Entity shall start to perform the Work.

37. Owner: City of Modesto. There may be instances in Technical Requirements where the Owner is referred to as "City."

38. Owner's Advisor: Carollo Engineers, Inc.

39. Partial Utilization: Use by Owner of a substantially completed part of the Work for the purpose for which it is intended (or a related purpose) prior to Substantial Completion of all the Work.

40. PCBs: Polychlorinated biphenyls.

41. Progress Payment Schedule: A schedule prepared by DB Entity and acceptable to Owner indicating that portion of the Contract Price to be paid for each major component of the Work.

42. Project: Supervisory Control and Data Acquisition (“SCADA”) Upgrade Project.

43. Scheduled Final Acceptance Date: The date set forth in Article 13 of the Agreement by which Final Acceptance shall be achieved.

44. Scheduled Substantial Completion Date: The date set forth in the Contract Documents by which the Work shall be substantially complete.

45. Site: Lands or other areas designated in the Contract Documents as being furnished by Owner upon which Construction is to be performed, including rights-of-way and easements for access thereto, and such other lands furnished by Owner which are designated for use of DB Entity. The lands or other areas may not be contiguous, but are collectively referred to as the Site.

46. Specifications: Those Submittals prepared by or for DB Entity and approved by Owner consisting of written technical descriptions of materials, equipment, construction systems, standards and workmanship as applied to the Work and certain administrative details applicable thereto.

47. Subcontractor or Sub-consultant: An individual or entity other than a Design Subconsultant or Supplier having a direct contract with DB Entity or with any other Subcontractor for the performance of a part of the Work.

50. Submittal: A written or graphic document prepared by or for DB Entity which is required by the Contract Documents to be submitted to Owner by DB Entity. Submittals may include Drawings, Specifications, progress schedules, shop drawings, samples, cash flow #7..
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SCADA Upgrade Progressive Design Build Contract, Page 20 of 83 projections, and Schedules of Values. Except for the Contract Price Proposal Documents and the Final Drawings and Specifications, Submittals are not Contract Documents.

51. Substantial Completion: The time at which the Work (or a specified part) has progressed to the point where it is sufficiently complete, in accordance with the Contract Documents, so that the Work (or a specified part) can be utilized for the purposes for which it is intended. The terms "substantially complete" and "substantially completed" as applied to all or part of the Work refer to Substantial Completion thereof.

52. Supplier: A manufacturer, fabricator, supplier, distributor, materialman or vendor having a direct contract with DB Entity or with any Subcontractor to furnish materials or equipment to be incorporated in the Work by DB Entity or any Subcontractor.

53. Technical Requirements: The Technical Requirements shall govern the Design-Build Phase, and shall be developed as part of the Contract Price Proposal. The Owner and DB Entity shall agree upon the Technical Requirements prior to the Owner’s acceptance of the Contract Price Proposal.

54. Unit Price Work: Work to be paid for on the basis of unit prices.

55. Work: All Design Professional Services, Construction, and other obligations to be performed by DB Entity under the Contract Documents, including without limitation project management, supervision, training, testing, commissioning, and all other services and deliverables required by Contractor to achieve Final Acceptance of the Project in accordance with the Contract Documents. The Work shall consist of both the Design-Build Phase Services and the Pre-Construction Phase Services.

56. Work Change Directive: A written directive to DB Entity, issued on or after the Effective Date of the Agreement and signed by Owner ordering an addition, deletion or revision in the Work, or responding to differing site conditions under which the Work is to be performed or to emergencies. A Work Change Directive will not change the Contract Price or the Contract Time(s), but is evidence that the parties expect that the change directed or documented by a Work Change Directive will be incorporated in a subsequently issued Change Order following negotiations by the parties as to its effect, if any, on the Contract Price or Contract Time(s).

57. Work Product: All Drawings, Specifications, Submittals, and other documents and data identified in the Contract Documents as being prepared or furnished by DB Entity and submitted to Owner.

1.02 Terminology
A. The words and terms discussed in Paragraph 1.02.B are not defined terms, but when used in the Contract Documents have the indicated meanings.

B. Intent of Certain Terms or Adjectives:
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1. The word "day" shall constitute a calendar day of 24 hours measured from midnight to the next midnight.

2. The word "defective," when modifying the word "Construction" refers to Construction that is unsatisfactory, faulty, or deficient in that it does not conform to the Contract Documents, or does not meet the requirements of any inspection, reference standard, test or approval referred to in the Contract Documents, or has been damaged prior to Final Acceptance (unless responsibility for the protection thereof has been assumed by Owner at Substantial Completion) provided that the defect was not caused by Owner.

3. The word "furnish," when used in connection with services, materials, or equipment, shall mean to supply and deliver said services, materials or equipment to the Site (or some other specified location) ready for use or installation and in usable or operable condition.

4. The word "install," when used in connection with services, materials, or equipment, shall mean to put into use or place in final position said services, materials or equipment or equipment complete and ready for intended use.

5. The words "perform" or "provide" when used in connection with services, materials, or equipment, shall mean to furnish and install said services, materials, or equipment complete and ready for intended use.

6. When "furnish," "install," "perform," or "provide" is not used in connection with services, materials, or equipment in a context clearly requiring an obligation of DB Entity, "provide" is implied.

7. Unless stated otherwise in the Contract Documents, words or phrases that have a well-known technical or construction industry or trade meaning are used in the Contract Documents in accordance with that meaning.

ARTICLE 2 – PRELIMINARY MATTERS

2.01 Delivery of Bonds, Insurance Certificates and Insurance Declaration Page(s) A. When DB Entity delivers the executed Agreement to Owner, DB Entity shall also deliver to Owner:
(a) an updated letter from DB Entity’s surety or sureties verifying that DB Entity has bonding capacity of TWENTY MILLION DOLLARS ($20,000,000) available for this Project; (b) certificates of insurance and the insurance declaration page(s) for the insurance requirements and policies set forth herein which DB Entity is required to purchase and maintain in accordance with Article 5.

2.02 Commencement of Work; Notice to Proceed
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2.03 Intent of the Contract Documents
A. The Contract Documents are complementary; what is required by one shall be as binding as if required by all.

B. All Work that may reasonably be inferred from the Contract Documents or from prevailing custom or trade usage as necessary to properly execute and complete the Work to conform to the requirements of the Contract Documents shall be provided by DB Entity with no change in the Contract Price or Contract Time. Additionally:

1. Arrangement and titles of drawings and organization of the specifications into divisions, sections and articles in the Contract Documents shall not be construed as segregating the various units of material and labor, dividing the Work among Subcontractors, or establishing the extent of Work to be performed by any trade.

DB Entity may arrange and delegate the Work in conformance with trade practices, but DB Entity shall be responsible for completion of all Work in accordance with the Contract Documents.

2. Before undertaking the Work, DB Entity shall carefully study and compare the Contract Documents and check and verify pertinent figures therein and all applicable field measurements. DB Entity shall promptly report in writing to Owner any conflict, error, ambiguity, or discrepancy which DB Entity may discover and shall obtain a written interpretation or clarification from Owner before proceeding with any Work affected thereby.

2.04 Submission of Schedules
A. The schedules set forth below shall be included in the Contract Price Proposal:

1. A progress schedule indicating the times (numbers of days or dates) for starting and completing the various stages of the Work, including the Scheduled Substantial Completion Date upon which the proposal and progress schedule is based;

2. A schedule of Submittals which will list each required Submittal and the times for submitting, reviewing and processing each Submittal;

3. A Progress Payment Schedule for all of the Work which will include quantities and prices of items which when added together equal the Contract Price and subdivides the Work into component parts in sufficient detail to serve as the basis for progress payments during performance of the Work; and

4. A cash flow projection estimating that portion of the Contract Price to be due during each month of performance.
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2.05 Applicable Owner Policies
A. DB Entity hereby agrees to be bound by all applicable Owner policies and standards of conduct.

It is DB Entity’s responsibility to advise its employees, Design Subconsultants, Subcontractors, Suppliers, or hired workers of the nature of the Project, as described in the Contract Documents. Upon request, DB Entity shall, at its sole expense, conduct background checks for any DB Entity employee or hired worker providing services on the Project.

ARTICLE 3 – CONTRACT DOCUMENTS: INTENT, AMENDING, REUSE

3.01 Intent of the Contract Documents
A. The Contract Documents are complementary; what is called for by one is as binding as if called for by all.

B. It is the intent of the Contract Documents, including but not limited to the Final Drawings and Specifications (prepared during the Pre-Construction Phase), to describe a functionally complete Project (or part thereof) to be designed and constructed in accordance with the Contract Documents.

DB Entity will furnish or perform all labor, documentation, services, materials, and equipment that may reasonably be inferred from the Contract Documents or from prevailing custom or trade usage as being required to produce the intended result whether or not specifically called for, at no additional cost to Owner.

3.02 Reference Standards
A. Standards, Specifications, Codes, Laws or Regulations.

1. Reference to standards, specifications, manuals or codes of any technical society, organization or association, or to Laws or Regulations, whether such reference be specific or by implication, shall mean (except as may be otherwise specifically stated in the Contract Documents) the standard, specification, manual, code, or Laws or Regulations in effect on the Effective Date of the Agreement.

2. No provision of any such standard, specification, manual, or code, or instruction of a Supplier, shall be effective to change the duties and responsibilities of Owner, DB Entity, or any of their subcontractors, consultants, agents, or employees from those set forth in the Contract Documents, nor shall it be effective to assign to Owner any duty or authority to supervise or direct the furnishing or performance of the Work or any duty or authority to undertake responsibility inconsistent with the provisions of the Contract Documents.

3.03 Resolving Discrepancies
A. Except as otherwise specifically stated in the Contract Documents, the provisions of the Contract Documents shall take precedence in resolving any conflict, error, ambiguity, or discrepancy between the provisions of the Contract Documents and:
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1. The provisions of any such standard, specification, manual, code, or instruction (whether or not specifically incorporated by reference in the Contract Documents); or

2. The provisions of any such Laws or Regulations applicable to the performance of the Work (unless such an interpretation of the provisions of the Contract Documents would result in violation of such Law or Regulation).

B. For the avoidance of doubt, in the event of a discrepancy between the Contract Price Proposal Documents on the one hand and the Drawings and Specifications on the other hand, the Contract Price Proposal Documents will control, except when Owner has accepted a Submittal pursuant to the Contract Documents.

3.04 Amending and Supplementing Contract Documents
A. The Contract Documents may be amended to provide for additions, deletions, and revisions in the Work or to modify the terms and conditions thereof in one or more of the following ways:

1. A Work Change Directive;

2. A Change Order;

3. A Field Order.

4. A written amendment executed by the Parties.

5. Owner’s acceptance of required Submittals pursuant to the Contract Documents.

3.05 Ownership and Use of Work Product
A. DB Entity hereby assigns to Owner all right, title and interest, including but not limited to any intellectual property rights, copyrights and/or patents, in all Work Product. All Work Product shall become the property of Owner upon the earlier of: (a) Owner’s payment to DB Entity of monies due in accordance with this Agreement; (b) the date any Work Product is delivered to Owner; or (c) upon termination of the Agreement pursuant to Article 14 below.

B. The Work Product is not intended or represented to be suitable for reuse by Owner or others on extensions of the Project or on any other project. Any reuse without written verification or adaptation by DB Entity for the specific purpose intended will be at Owner’s sole risk and without liability or legal exposure to DB Entity. DB Entity will be entitled to further compensation at rates to be agreed upon by Owner and DB Entity if it is asked by Owner to verify or adapt the Work Product for extensions of the Project or any other project.

C. DB Entity may make and retain copies of the Work Product for information, reference, and use on this Project by DB Entity and all other DB-Related Entities. #7..
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SCADA Upgrade Progressive Design Build Contract, Page 25 of 83 D. Owner acknowledges and agrees that in the performance of the services under this Agreement, DB Entity will use its proprietary algorithms, software, hardware, databases and other background technology that DB Entity or any other DB-Related Entity developed or licensed from third parties prior to the Effective Date of the Agreement (“Pre-Existing Technology”). Pre-Existing Technology used by a DB-Related Entity in connection with the Project shall remain the property of such DBRelated Entity, but DB Entity shall cause such DB-Related Entity to grant a non-exclusive, irrevocable, royalty-free license to Owner to use, copy or modify such Pre-Existing Technology solely with respect to this Project.

E. With respect to any intellectual property rights in software vested in any third party that are supplied to Owner by DB Entity as part of the Work, but not prepared, developed or modified under or in connection with this Project, DB Entity shall use all reasonable efforts to obtain from such third party such permission, waiver, or license as may be necessary to enable the software to be used, copied, or modified by Owner solely in connection with this Project.

3.06 Electronic Data
A. Copies of data furnished by Owner to DB Entity or by DB Entity to Owner that may be relied upon are limited to the printed copies (also known as hard copies). Files in electronic media format of text, data, graphics, or other types are furnished only for the convenience of the receiving party.

Any conclusion or information obtained or derived from such electronic files will be at the user's sole risk. If there is a discrepancy between the electronic files and the hard copies, the hard copies govern.

B. Because data stored on electronic media format can deteriorate or be modified inadvertently or otherwise without authorization of the data's creator, the party receiving data in electronic format agrees that it will perform acceptance tests or procedures within 60 days, after which the receiving party shall be deemed to have accepted the data thus transferred. Any errors detected within the 60- day acceptance period will be corrected by the transferring party.

C. When transferring documents in electronic media format, the transferring party makes no representations as to long term compatibility, usability, or readability of documents resulting from the use of software application packages, operating systems, or computer hardware differing from those used by the data’s creator.

ARTICLE 4 – CONSTRUCTION FACILITES; DIFFERING SITE CONDITIONS; REFERENCE POINTS; HAZARDOUS ENVIRONMENTAL CONDITIONS

4.01 Construction FaciltiesA. DB Entity shall provide for all additional lands and access thereto that may be required for temporary construction facilities or storage of materials and equipment.

4.02 Differing Site Conditions
A. DB Entity shall promptly, but in no event later than ten (10) days, after discovery, and before the conditions are further disturbed, give a written notice to Owner of: (i) subsurface or latent physical conditions at the Site which differ materially from those indicated in the Contract Documents; or (ii) unknown physical conditions at the Site, of an unusual nature, which differ materially from those #7..
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B. Owner will investigate the Site conditions promptly after receiving the notice. If the conditions do materially so differ and cause an increase or decrease in DB Entity's cost of, or the time required for, performing any part of the Work, whether or not changed as a result of the conditions, an equitable adjustment shall be made under this clause and the Contract Price or Times modified in writing by Change Order in accordance with Article 9.

C. No request by DB Entity for an equitable adjustment under Paragraph 4.02 shall be allowed unless DB Entity has given the written notice required; provided that the time prescribed in Paragraph 15.02 for giving written notice may be extended by Owner.

D. The provisions of this Paragraph 4.02 are not intended to apply to a Hazardous Environmental Condition uncovered or revealed at the Site.

E. DB Entity shall not be entitled to any adjustment in the Contract Price or Contract Time(s) if: (a) DB Entity knew of the existence of such conditions as of the Effective Date of the Contract Price Proposal; or (b) the existence of such condition could reasonably have been discovered or revealed as a result of the examinations, investigations, explorations, tests or studies of the Site during DB Entity’s performance the Project.

F. In the event that a dispute arises between Owner and the DB Entity, whether the conditions materially differ, involve hazardous waste, or cause a decrease or increase in the DB Entity’s cost of or time required for performance of any part of the work, the DB Entity shall not be excused from any scheduled completion date provided for by the Construction Provisions but shall proceed with all work to be performed under the Construction Provisions. The DB Entity shall retain any and all rights provided either by contract or by law which pertain to the resolution of disputes and protests between the contracting parties.

4.03 Reserved

4.04 Hazardous Environmental Conditions at Site
A. Owner represents to the best of its knowledge that a Hazardous Environmental Condition does not exist and it has disclosed to DB Entity the existence of all known Hazardous Materials located at the Site, including type, quantity, and location.

B. If DB Entity encounters any unknown Hazardous Environmental Conditions at the Site, it shall stop Work immediately in the affected part of the Work to the extent required to avoid any such safety or health hazard until it has taken such action as is necessary, in accordance with applicable Laws and Regulations, to protect the interests of any affected party. DB Entity shall, immediately upon encountering any Hazardous Environmental Conditions at the Site, notify Owner and, if required by Laws and Regulations, assist Owner in providing notifications to all governmental authorities having jurisdiction over the Project or Site.
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SCADA Upgrade Progressive Design Build Contract, Page 27 of 83 C. DB Entity, working with Owner, shall take all necessary measures required to ensure that Hazardous Environmental Conditions are remediated or rendered harmless in accordance with applicable Laws and Regulations. DB Entity shall, as may be directed by Owner and prior to proceeding with any such work: (a) obtain all environmental site assessments of the affected property and submit copies of such assessments to Owner for its approval; (b) develop remediation plans for the Hazardous Environmental Conditions, subject to Owner’s approval; and (c) obtain on Owner’s behalf all applicable approvals of governmental authorities having jurisdiction over the Project or Site to implement such plans. During the period of any investigation and remediation efforts, DB Entity shall take all necessary measures to isolate and contain such Hazardous Environmental Conditions from the unaffected parts of the Work, and shall continue the Work to the maximum extent possible on unaffected parts of the Work.

D. Except for those Hazardous Environmental Conditions and Hazardous Materials set forth in Paragraph 4.04.E below, DB Entity will be entitled to submit a request for an adjustment to the Contract Price and/or Contract Time, in accordance with the requirements of these General Conditions, to the extent DB Entity’s cost and/or time of performance have been adversely impacted by the presence, removal or remediation of unknown Hazardous Environmental Conditions.

E. Notwithstanding anything to the contrary in this Paragraph 4.04, DB Entity shall bear full responsibility for the handling, treatment, storage, removal, remediation, avoidance, or other appropriate action (if any), with respect to: (a) any Hazardous Materials present at, on, in or under, or migrating and/or emanating to or from the Site, that were brought or caused to be brought on the Site by any act or omission of any DB-Related Entity; and (b) the creation or exacerbation of any Hazardous Environmental Condition due to the negligence, recklessness or willful misconduct of any DB-Related Entity. To the fullest extent permitted by Laws and Regulations, DB Entity shall indemnify, defend and hold harmless the Indemnified Parties from and against all claims, losses, damages, liabilities and expenses, including attorneys’ fees and expenses, arising out of or resulting from Items (a) and/or (b) above.

F. Nothing contained in this Paragraph 4.04 is intended to identify DB Entity as the generator of any pre-existing Hazardous Materials, except as set forth in applicable Legal Requirements.

ARTICLE 5 – BONDS AND INSURANCE

5.01 Performance, Payment and Other Bonds
A. On or before the Effective Date of the Contract Price Proposal, DB Entity shall furnish performance and payment Bonds, each in an amount at least equal to one hundred percent (100%) of the Contract Price, as security for the faithful performance and payment of all DB Entity's obligations to furnish, provide and pay for the Work, including but not limited to all Design Professional Services.

The Performance Bond shall remain in effect at least until one (1) year after Final Acceptance.

Alternatively, DB entity may file with the City a Warranty Bond or equivalent security in the amount of ten percent (10%) of the cost of the contracted work to guaranty and warranty the contracted work for a period of one (1) year following Owner acceptance thereof against any defective work or labor done, or defective materials furnished. Such Warranty Bond must be filed with the City prior to Final Acceptance by the Owner. DB Entity shall also furnish such other Bonds as are required by the Contract Documents. The applicable section of California Civil Code Section 9550 et seq. shall apply. #7..
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SCADA Upgrade Progressive Design Build Contract, Page 28 of 83 B. All Bonds shall be executed by sureties that meet the following requirements:

1. hold a certificate of authority authorizing it to write surety bonds in California;

2. have twice the minimum surplus and capital required by the California insurance code at the time of the Effective Date of the Contract Price Proposal;

3. be in compliance with the provisions of the California insurance code;

4. hold a currently valid certificate of authority issued by the United States Department of the Treasury under 31 U.S.C. Sections 9304 to 9308; and

5. provide an affidavit executed by an officer of the surety bond insurer as evidence that the surety company is in compliance with the foregoing requirements.

All Bonds signed by an agent or attorney-in-fact must be accompanied by a certified copy of that individual's authority to bind the surety. The evidence of authority shall show that it is effective on the date the agent or attorney-in-fact signed each bond.

C. If the surety on any Bond furnished by DB Entity is declared a bankrupt or becomes insolvent or its right to do business is terminated in California or it ceases to meet the requirements of Paragraphs

5.01.B and 5.02, DB Entity shall within twenty (20) days thereafter substitute another Bond and surety, both of which shall comply with the requirements of Paragraphs 5.01.B and 5.02.

5.02 Licensed Sureties and Insurers
A. All Bonds and insurance required by the Contract Documents to be purchased and maintained by DB Entity shall be obtained from surety or insurance companies that are duly licensed or authorized to conduct business in the state of California. In addition, such sureties and insurance companies shall have an A.M. Best company rating of no less than A-:VII.

5.03 Certificates of Insurance
A. DB Entity shall deliver to Owner, with copies to each additional insured and loss payee identified in the Contract Documents, certificates of insurance (and other evidence of insurance requested by Owner or any other additional insured or loss payee) which DB Entity is required to purchase and maintain. The endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. All endorsements are to be received and approved by Owner before Work commence.

B. Failure of Owner to demand such certificates or other evidence of DB Entity's full compliance with these insurance requirements or failure of Owner to identify a deficiency in compliance from the evidence provided shall not be construed as a waiver of DB Entity's obligation to maintain such insurance.
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SCADA Upgrade Progressive Design Build Contract, Page 29 of 83 C. The insurance and insurance limits required herein shall not be deemed as a limitation on DB Entity's liability under the indemnities granted to Owner and others in the Contract Documents.

5.04 DB Entity's Insurance
A. See Insurance Requirements in Exhibit 9.

5.05 Property Insurance
A. DB Entity will purchase and maintain property insurance upon Construction at the Site. Such insurance is in the amount of the full replacement cost. Such insurance shall:

1. include the interests of Owner, DB Entity, and any other persons or entities identified as a loss payee in the Contract Documents, each of whom is deemed to have an insurable interest to the extent of their actual loss.

2. be written on a Builder’s Risk “all risk” policy that shall at least include insurance for physical loss or damage to the Work, including any real or personal property delivered to the site and shall insure against at least the perils of fire, lightning, extended coverage, theft, vandalism and malicious mischief, flood, earthquake, collapse, debris removal, demolition occasioned by enforcement of Laws or Regulations, water damage and such other perils or causes of loss as may be specifically required by the Contract Documents;

3. include expenses incurred in the repair or replacement of any Owner’s property (including but not limited to fees and charges of Owner’s Advisor);

4. cover materials and equipment stored at the Site or at another location that was agreed to in writing by Owner prior to being incorporated in the Work, provided that such materials and equipment have been included in an Application for Payment recommended by Owner;

5. includes the hazards usually contained in a boiler and machinery policy, and any additional property insurance as may be required by the Contract Documents or Laws or Regulations;

6. remain in effect and not be excluded by a “force majeure clause,” whether in these General Conditions or otherwise; and

7. be maintained in effect until Final Acceptance unless otherwise agreed to in writing by Owner and DB Entity with thirty days written notice to each other person or entity that is identified as a loss payee in the Contract Documents.

B. All the policies of insurance (and the certificates or other evidence thereof) required to be purchased and maintained by DB Entity in accordance with this Paragraph will contain a provision or endorsement that the coverage afforded will not be canceled, renewal refused, or reduced in coverage or limits, until at least 30 days' prior written notice has been given to Owner and to each other loss #7..
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SCADA Upgrade Progressive Design Build Contract, Page 30 of 83 payee identified in the Contract Documents, and will contain waiver provisions in accordance with Paragraph 5.06.

C. Owner shall not be responsible for purchasing and maintaining any property insurance to protect the interests of any DB-Related Entity.

5.06 Waiver of Rights
A. Owner and DB Entity intend that all policies purchased in accordance with Paragraph 5.06 will protect Owner, Owner’s Advisor, DB Entity, and all DB-Related Entities, and will provide primary coverage for all losses and damages caused by the perils or causes of loss covered thereby. All such policies shall contain provisions to the effect that in the event of payment of any loss or damage the insurers will have no rights of recovery against any of the insureds or loss payees thereunder.

5.07 Acceptance of Bonds and Insurance; Option to Replace A. If Owner has any objection to the coverage afforded by or other provisions of the Bonds or insurance required to be purchased and maintained by DB Entity in accordance with Article 5 on the basis of their not complying with the Contract Documents, Owner shall notify DB Entity in writing within ten days after receipt of the certificates and insurance declaration page(s) required by Paragraph

2.01. DB Entity shall provide to Owner such additional information in respect of insurance provided as Owner may reasonably request. If DB Entity does not maintain all of the Bonds and insurance required by the Contract Documents, and without prejudice to any other right or remedy, Owner shall have the right to terminate DB Entity for cause under Paragraph 14.02.

ARTICLE 6 – DB ENTITY'S RESPONSIBILITIES

6.01 Design Professional Services
A. General:

1. The standard of care for all Design Professional Services and performed or furnished by DB Entity under this Agreement will be the care and skill ordinarily used by members of the subject profession practicing under similar conditions at the same time and in the same locality. Notwithstanding the preceding sentence, if the Contract Price Proposal Documents contain specific performance standards, the services shall be performed to achieve such standards.

2. DB Entity shall comply with all California laws with respect to the practice of land surveying and professional engineering.

3. DB Entity assumes full responsibility for any portion or element of the Contract Documents that is incorporated into the Drawings and Specifications. For the avoidance of doubt, DB Entity shall be responsible hereunder for any errors in the Work Product developed through Design-Build Agreement.
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4. Owner shall have the right to review and comment upon all DB Entity design documents, whether in draft or final form, including all field-directed amendments to the design, in order to confirm the compliance and consistency of the design documents with the Contract Documents. DB Entity shall give due consideration and provide written responses to any comments delivered by Owner as to DB Entity’s design Submittals. Neither compliance by DB Entity with the Contract Documents, nor review of and comment by Owner on DB Entity’s design documents, nor any failure or delay by Owner in commenting on any design Submittals, shall in any way relieve DB Entity of full responsibility for the design, construction, and performance of the Project in accordance with the Contract Documents.

5. Owner has made no representation or warranty to DB Entity that the information provided to DB Entity in the Contract Documents is correct, sufficient, complete or accurate. DB Entity shall, as part of the Design Professional Services, evaluate and validate any design criteria, requirements or other data and information provided in the Contract Documents, and, if it believes that there are errors, omissions, contradictions or any other problems in the Contract Documents, it shall notify Owner accordingly.

DB Entity assumes responsibility for the sufficiency, completeness, and accuracy of all Contract Documents, notwithstanding the fact that Owner provided such information. DB Entity shall have no right to claim or seek an adjustment to the Contract Price or Contract Time as the result of: (i) any incomplete, inaccurate, ambiguous, or inadequate information or requirements contained in or among any of the Contract Documents; or (ii) Owner’s review or approval of any Contract Documents.

B. Design-Build Services: DB Entity shall:

1. On the basis of the Contract Price Proposal Documents, prepare Final Drawings showing the scope, extent, and character of the Construction to be performed and furnished by DB Entity and Final Specifications (which will be prepared, where appropriate, in general conformance with the format recommended by the Construction Specifications Institute);

2. Provide technical criteria, written descriptions, and design data required for obtaining approvals of such governmental authorities as have jurisdiction to review or approve the final design of the Project, and assist Owner in consultations with appropriate authorities;

3. Furnish the above documents, Drawings, and Specifications to and review them with Owner within the times indicated in the schedules described in Paragraph 2.04; and

4. Identify any deviations from other Contract Documents.

6.02 Supervision and Superintendence of Construction
A. DB Entity shall supervise, inspect, and direct the Construction competently and efficiently, devoting such attention thereto and applying such skills and expertise as may be necessary to provide #7..
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SCADA Upgrade Progressive Design Build Contract, Page 32 of 83 the Construction in accordance with the Contract Documents. DB Entity shall be solely responsible for the means, methods, techniques, sequences, and procedures of the Work. DB Entity shall be responsible to see that the completed Construction complies fully with the Contract Documents and shall keep Owner advised as to the quality and progress of the Construction.

B. At all times during the progress of Construction, DB Entity shall assign a competent resident superintendent who shall not be replaced without written notice to Owner except under extraordinary circumstances. The superintendent will be DB Entity's representative at the Site and shall have authority to act on behalf of DB Entity. All communications given to or received from the superintendent shall be binding on DB Entity. The superintendent shall be able to read, write, speak, and understand the English language.

6.03 Labor, Working Hours
A. DB Entity shall provide competent, suitably qualified personnel to perform the Work as required by the Contract Documents. DB Entity shall at all times maintain good discipline and order at the Site.

To the extent there is a conflict between the requirements of this Paragraph 6.03 and the applicable Laws and Regulations, the applicable Laws and Regulations shall control.

1. DB Entity shall remove from the Site any person in the employ of DB Entity or any Subcontractor or Consultant whom Owner may deem incompetent or unfit and such worker shall not again participate in the work and shall not again be employed on it except with written consent of Owner.

2. DB Entity shall take all reasonable steps necessary to ensure that any employees of DB Entity or any of its Subcontractors or Consultants report for work in a manner fit to do their job. Such employees: (i) shall not utilize tobacco on the Site, and (ii) shall not be under the influence of or in possession of any alcoholic beverage or any controlled substance (except a controlled substance as prescribed by a physician so long as the performance or safety at the Site is not affected thereby). DB Entity shall advise its employees, Subcontractors, suppliers, and invitees of these requirements before they enter on the Site and shall immediately remove from the Site any person in violation of these requirements as determined by DB Entity or by Owner. DB Entity shall impose these requirements on its Subcontractors, suppliers, and other invitees. DB Entity shall execute, under penalty of perjury, the certification of a drug-free workplace and certification of a tobacco-free workplace on the forms provided herewith provided herewith.

3. DB Entity shall comply with the requirements in Section 9 of Technical Requirements relating to Funding Requirements.

B. Working Hours: As provided in Article 3 (commencing at Section 1810), Chapter 1, Part 7, Division 2 of the Labor Code, DB Entity stipulates that eight (8) hours of labor shall constitute a legal day’s work. The time of service of any worker employed at any time by DB Entity or by the work or upon any part of the work contemplated by this contract is limited and restricted to eight (8) hours during any one calendar day and forty (40) hours during any one calendar week, except as hereinafter provided. Notwithstanding the provisions hereinabove set forth, work performed by employees of DB Entities in excess of eight (8) hours per day and forty (40) hours during any one week upon this public #7..
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SCADA Upgrade Progressive Design Build Contract, Page 33 of 83 work shall be permitted compensation of all hours worked in excess of eight (8) hours per day at not less than one and one-half times the basic rate of pay.

C. DB Entity shall pay to Owner a penalty of TWENTY-FIVE DOLLARS ($25.00) for each worker employed in the execution of these Contract Documents by DB Entity or by any Subcontractor for each calendar day during which such workman is required or permitted to work more than eight (8) hours in any calendar day and forty (40) hours in any one calendar week in violation of the provisions of Article 3 (commencing at Section 1810), Chapter 1, Part 7, Division 2 of the Labor Code, unless compensation to the worker so employed by DB Entity is not less than one and one-half (1-1/2) times the basic rate of pay for all hours worked in excess of eight (8) hours per day.

D. Any work necessary to be performed after regular working hours, or on Sundays or other holidays shall be performed without additional expense to Owner, unless otherwise agreed to by the parties.

E. Construction work under the Construction Provisions shall be accomplished on a schedule consistent with the normal and reasonable practices of DB Entity and in compliance with applicable ordinances.

F. Prevailing Wage: This Project is subject to the California Prevailing Wage Law. For convenience and for the purposes of reference, several provisions of the California Prevailing Wage Laws are set forth in this section. DB Entity shall be responsible for complying with the California Prevailing Wage Laws in their entirety, even if applicable provisions of the laws are not specifically listed in this Agreement.

1. Pursuant to Section 1770, et seq., of the Labor Code of the State of California, the DB Entity shall pay its employees the general prevailing rate of wages as determined by the Director of the Department of Industrial Relations. In addition, the Respondent shall be responsible for compliance with the requirements of Section 1777.5 of the California Labor Code relating to apprentice public works contracts. In accordance with Section 1771.1 of the California Labor Code, a contractor or subcontractor shall not be qualified to bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the Public Contract Code, or engage in the performance of any contract for public work, as defined in this chapter, unless currently registered and qualified to perform public work pursuant to Section 1725.5. It is not a violation of this section for an unregistered contractor to submit a bid that is authorized by Section 7029.1 of the Business and Professions Code or by Section 10164 or 20103.5 of the Public Contract Code, provided the contractor is registered to perform public work pursuant to Section 1725.5 at the time the contract is awarded.

2. Per Diem wages shall be deemed to include employer payments for health and welfare, pension, vacation, travel time and subsistence pay as provided in Labor Code § 1773.1 apprenticeship or other training programs authorized by Labor Code § 3093, and similar purposes when the term “per diem wages” is used herein.

3. Each worker needed to execute the Work must be paid travel and subsistence payments as defined in the applicable collective bargaining agreements in accordance with Labor Code § 1773.1.
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4. Holiday and overtime work when permitted by law shall be paid for at a rate of at least one and one-half times the above specified rate of per diem wages, unless otherwise specified.

5. Each worker of DB Entity and any of its subcontractors engaged in work on the System shall be paid not less than the prevailing wage rate, regardless of any contractual relationship which may be alleged to exist between DB Entity or any subcontractors and such workers.

6. DB Entity shall, as a penalty to Owner, forfeit an amount as determined by the Labor Commissioner pursuant to Labor Code § 1775 for each calendar day, or portion thereof, for each worker paid less than the prevailing rate as determined by the director for such work or craft in which such worker is employed for any public work done under the contract by him or by any subcontractor under him. The difference between such prevailing wage rate and the amount paid to each worker for each calendar day or portion thereof, for which each worker was paid less than the prevailing wage rate, shall be paid to each worker by DB Entity.

7. Copies of the determined prevailing wage rates are on file and available upon request at Owner’s office, or online at the California Department of Industrial Relations website, which may be located at www.dir.ca.gov. Owner shall provide DB Entity with current prevailing wage rates, in writing, upon request. DB Entity shall post, at an appropriate conspicuous point on the Site, a schedule showing all determined general prevailing wage rates. Alternatively, DB Entity may obtain copies of the current prevailing wage rates from the Department of Industrial Relations.

8. Any worker employed to perform onsite work on the Project which is not covered by any classification available in Owner’s office, shall be paid not less than the minimum rate of wages specified for the classification which most nearly corresponds with work to be performed by him.

G. Apprentices.

1. All apprentices employed by DB Entity to perform services under these Contract Documents shall be paid the standard wage paid to apprentices under the regulation of the craft or trade at which that apprentice is employed, and shall be employed only at the work of the craft or trade in which that apprentice is registered. Only apprentices, as defined in Labor Code § 3077, who are in training under apprenticeship standards and written apprenticeship agreements under Chapter 4 (commencing at Section 3070), Division 3 of the Labor Code, are eligible to be employed under these Construction Provisions. The employment and training of each apprentice shall be in accordance with the provisions of the apprenticeship standards and apprenticeship agreements under which that apprentice is training.

2. When DB Entity to whom the work under these Construction Provisions is awarded by Owner or any Subcontractor under DB Entity, in performing any of the work under the Contract Documents, employs workers in any apprenticeable craft or trade, DB Entity and #7..
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SCADA Upgrade Progressive Design Build Contract, Page 35 of 83 Subcontractor shall apply to the joint apprenticeship committee administering the apprenticeship standards of the craft or trade in the area of the Site of the public work, for a certificate approving DB Entity or Subcontractor under the apprenticeship standards for the employment and training of apprentices in the area or industry affected. However, approval as established by the joint apprenticeship committee or committees shall be subject to the approval of the Administrator of Apprenticeship. DB Entity or Subcontractors shall not be required to submit individual applications for approval to local joint apprenticeship committees provided they are already covered by the local apprenticeship standards. The ratio of work performed by apprentices to journeymen, who shall be employed in the craft or trade on the public work, may be the ratio stipulated in the apprenticeship standards under which the joint apprenticeship committee operates, but in no case shall the ratio be less than one hour of apprentice work for each five (5) hours of labor performed by a journeyman, except as otherwise provided in Section 1777.5 of the Labor Code. However, the minimum ratio for the land surveyor classification shall not be less than one apprentice for each five journeymen.

3. “Apprenticeable craft or trade” as used in Labor Code § 1777.5 and this Article, means a craft or trade determined as an apprenticeable occupation in accordance with rules and regulations prescribed by the Apprenticeship Council.

4. DB Entity, or any Subcontractor which, in performing any of the work under this contract, employs journeymen or apprentices in any apprenticeable craft or trade and which is not contributing to a fund or funds to administer and conduct the apprenticeship programming of any craft or trade in the area of the Site of the public work, to which fund or funds other DB Entities in the area of the Site of the public work are contributing, shall contribute to the fund or funds in each craft or trade in which that DB Entity employs journeymen or apprentices on the public work in the same amount or upon the same basis and in the same manner as other DB Entities do, but where the trust fund administrators are unable to accept the funds, DB Entities not signatory to the trust agreement shall pay like amount to the California Apprenticeship Council. DB Entity or Subcontractor may add the amount of such contributions in computing their bid for the contract. The Division of Labor Standards Enforcement is authorized to enforce the payment of the contributions to the fund or funds as set forth in Labor Code § 227.

5. The responsibility of compliance with Labor Code § 1777.5 and this Article for all apprenticeable occupations is with DB Entity.

6. The interpretation and enforcement of Sections 1777.5 and 1777.7 of the Labor Code shall be in accordance with the rules and procedures of the California Apprenticeship Council.

H. Compliance: Failure to fully comply with Paragraphs A, B, C D, E, F and G above shall be a material breach of the Contract and cause for termination of the Contract for cause. Without limiting the application of Section 6.19, DB Entity agrees to and does hereby defend (with counsel acceptable to Owner), indemnify and hold harmless the Indemnified Parties, as defined herein, from every claim or demand made, and every liability, loss, damage, expense or attorney’s fees of any nature #7..
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SCADA Upgrade Progressive Design Build Contract, Page 36 of 83 whatsoever, which may be alleged or incurred by reason of DB Entity’s failure to comply with the requirements of Article 6.03.

6.04 Services, Materials, and Equipment
A. Unless otherwise specified in the Contract Documents, DB Entity shall furnish or cause to be furnished and assume full responsibility for the Work, including but not limited to all services, materials, equipment, labor, transportation, construction equipment and machinery, tools, appliances, fuel, power, light, heat, telephone, water, sanitary facilities, temporary facilities, and all other facilities and incidentals necessary for the performance, testing, start-up, and completion of the Work.

B. All materials and equipment incorporated into the Work shall be as specified by Owner, or in the Drawings or Specifications, or if not specified shall be of good quality and new, except as otherwise provided in the Contract Documents. All warranties and guarantees specifically called for by the Contract Documents shall expressly run to the benefit of Owner. If required by Owner, DB Entity shall furnish satisfactory evidence (including reports of required tests) as to the source, kind, and quality of materials and equipment.

C. All materials and equipment shall be stored, applied, installed, connected, erected, protected, used, cleaned, and conditioned in accordance with instructions of the applicable Supplier, except as otherwise provided in the Contract Documents.

6.05 Progress Schedule
A. DB Entity shall adhere to the progress schedule established in accordance with Paragraph 2.04.A as it may be adjusted from time to time as provided below:

1. DB Entity shall submit to Owner for acceptance proposed adjustments in the progress schedule that will not change the Contract Time(s) (or Milestones). Such adjustments will conform generally to the progress schedule then in effect.

2. Proposed adjustments in the progress schedule that will change the Contract Time(s) (or Milestones) shall be submitted in accordance with the requirements of Paragraph 11.02. Such adjustments may only be made by a Change Order.

3. If, in the opinion of Owner, DB Entity falls behind the progress schedule due to an event that does not enable DB Entity to extend the Contract Time(s),including but not limited to actions or neglect of any DB-Related Entity’s failure to perform part or all of the Work or to supply any equipment or materials, Owner may direct DB Entity, at DB Entity's sole cost and expense, to take remedial steps, including, but not limited to, increasing the number of personnel, shifts, and/or overtime operations, days of Work, and/or amount of construction equipment until such time as the Work is back on schedule. In such event, DB Entity shall also submit for review not later than the time of submittal of the next request for partial payment, a supplementary schedule demonstrating the manner in which the acceptable rate and achievement of progress will be regained, all without additional cost to Owner.
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6.06 Concerning DB-Related Entities
A. DB Entity shall not employ any DB-Related Entity or any individual against whom Owner may have reasonable objection. DB Entity shall not be required to employ any Design Sub-consultant or Subcontractor against whom DB Entity has reasonable objection.

B. DB Entity shall be fully responsible to Owner for all acts and omissions of the DB-Related Entities just as DB Entity is responsible for DB Entity's own acts and omissions. Nothing in the Contract Documents:

1. shall create for the benefit of any such DB-Related Entity any contractual relationship between Owner and any such DB-Related Entity;

2. shall create any obligation on the part of Owner to pay or to see to the payment of any moneys due any DB-Related Entity except as may otherwise be required by Laws or Regulations.

C. DB Entity shall be solely responsible for scheduling and coordinating all DB-Related Entities.

D. DB Entity shall require all DB-Related Entities to communicate with Owner through DB Entity.

E. All Work performed for DB Entity by a DB-Related Entity will be pursuant to an appropriate Design Sub-agreement or Construction Sub-agreement between DB Entity and the DB-Related Entities which specifically binds the DB-Related Entities to the applicable terms and conditions of the Contract Documents for the benefit of Owner. Whenever any such agreement is with a DB-Related Entity who is listed as a loss payee on the property insurance provided in Paragraph 5.06, the agreement between DB Entity and such DB-Related Entity will contain provisions whereby the DBRelated Entity waives all rights against Owner, Owner’s Advisor, DB Entity, and all other loss payees (and their officers, directors, members, partners, employees, agents, and other consultants and subcontractors of each and any of them) for all losses and damages caused by any of the perils or causes of loss covered by such policies and any other property insurance applicable to the Work. If the insurers on any such policies require separate waiver forms to be signed by any DB-Related Entity, DB Entity will obtain the same.

6.07 Patent Fees and Royalties
A. DB Entity shall obtain all necessary licenses for any invention, design, process, product or device which is the subject of patent rights or copyrights held by others that is used in the performance of the Work. The cost of such licenses may be included in the Contract Price Proposal to be paid by the Owner. The Owner shall not be responsible for any license fees or royalties not included in the Contract Price Proposal, unless approved by the Owner in writing. DB Entity shall transfer any license paid for by the Owner to the Owner upon final completion.

B. To the fullest extent permitted by Laws or Regulations, DB Entity shall indemnify and hold harmless the Indemnified Parties from and against all claims, costs, losses and damages (including but not limited to all fees and charges of engineers, architects, attorneys and other professionals and #7..
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SCADA Upgrade Progressive Design Build Contract, Page 38 of 83 all court or arbitration or other dispute resolution costs) arising out of or resulting from any infringement of patent rights or copyrights incident to the use in the performance of the Work or resulting from the specification or incorporation in the Work of any invention, design, process, product or device. Notwithstanding the foregoing, DB Entity shall not be liable to Owner for infringement claims: (i) relating solely to a particular process or product of a particular manufacturer specified by Owner and not objected to in writing by DB Entity to Owner; (ii) arising from modifications to the Work by Owner after acceptance of the Work; or (iii) Owner’s use or operation of the Work for purposes other than intended.

6.08 Permits
A. Unless otherwise provided in the Contract Documents, DB Entity shall obtain and pay for all necessary permits, licenses, and approvals of governmental authorities having jurisdiction over the Work. The Owner shall only be responsible for the cost of such permits, licenses and approvals if identified in the Contract Price Proposal. If any such permit, license or approval of governmental authorities is required to be formally issued in the name of Owner, DB Entity shall undertake all efforts to obtain such permit, license or approval subject to Owner's reasonable cooperation with DB Entity, including execution and delivery of appropriate applications and other documentation in forms approved by Owner.

B. DB Entity shall pay all governmental charges and inspection fees necessary for the performance of the Work. DB Entity shall pay all charges of utility owners for connections to the Work, and Owner shall pay all charges of such utility owners for capital costs related thereto. The Owner shall only be responsible for the cost of such governmental charges and inspection fees if identified in the Contract Price Proposal.

C. A contractor or subcontractor shall not be qualified to bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the Public Contract Code, or engage in the performance of any contract for public work unless currently registered and qualified to perform public work pursuant to Section 1725.5. It is not a violation of this section for an unregistered contractor to submit a bid that is authorized by Section 7029.1 of the Business and Professions Code or by Section 10164 or 20103.5 of the Public Contract Code, provided the contractor is registered to perform public work pursuant to Section 1725.5 at the time the contract is awarded.

6.09 Laws or Regulations
A. DB Entity shall give all notices required by and comply with all Laws or Regulations applicable to the performance of the Work. Except where otherwise expressly required by applicable Laws and Regulations, Owner shall not be responsible for monitoring DB Entity's compliance with any Laws or Regulations.

B. If DB Entity performs any Work that it is contrary to Laws or Regulations, DB Entity shall bear all claims, costs, losses, and damages (including but not limited to all fees and charges of engineers, architects, attorneys, and other professionals and all court or arbitration or other dispute resolution costs) arising out of or relating to such Work.
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SCADA Upgrade Progressive Design Build Contract, Page 39 of 83 C. Changes in Laws or Regulations not known on the Effective Date of the Contract Price Proposal having an effect on the cost or time of performance may be the subject of a change in Contract Price or Contract Time(s). Notwithstanding the above, DB Entity shall not be entitled to an adjustment in the Contract Price or Contract Time for, and assumes the risk of, any changes in Laws or Regulations related to DB Entity’s corporate existence or the maintenance of its business, including, but not limited to, gross receipt taxes, social security, Medicare, and other payroll-related taxes.

6.10 Taxes
A. DB Entity shall pay all sales, consumer, use, employment-related and other taxes required to be paid by DB Entity in accordance with the Laws or Regulations of the place of the Project which are applicable during the performance of the Work.

6.11 Use of Site and Other Areas
A. Limitation on Use of Site and Other Areas.

1. DB Entity shall confine construction equipment, the storage of materials and equipment, and the operations of construction workers to the Site and other areas permitted by Laws or Regulations, and shall not unreasonably encumber the Site and other areas with construction equipment or other materials or equipment. DB Entity shall assume full responsibility for any damage to any such land or area, or to the owner or occupant thereof or of any adjacent land or areas, resulting from the performance of the Work.

2. Should any claim be made by any such owner or occupant because of the performance of Work, DB Entity shall promptly settle with such other party by negotiation or otherwise resolve the claim by arbitration or other dispute resolution proceeding or at law.

3. To the fullest extent permitted by Laws or Regulations, DB Entity shall indemnify and hold harmless the Indemnified Parties from and against all claims, costs, losses and damages (including, but not limited to, fees of engineers, architects, attorneys and other professionals and court and arbitration or other dispute resolution costs) arising out of or resulting from any claim brought by any such owner or occupant against Owner, or any other party indemnified hereunder to the extent caused by or based upon the failure of any DB-Related Entity to perform the Construction in accordance with the Contract Documents.

4. DB Entity shall ensure that all employees performing or furnishing any of the Work will be prohibited from using firearms, engaging in hunting, fishing, trapping, using illegal drugs or using alcohol either on the work site, on Owner property, or on any land adjoining the work site.

B. Removal of Debris: During the performance of the Construction, DB Entity shall keep the premises free from accumulations of waste materials, rubbish, and other debris resulting from the #7..
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SCADA Upgrade Progressive Design Build Contract, Page 40 of 83 Construction. Removal and disposal of such waste materials, rubbish, and other debris shall conform to applicable Laws or Regulations.

C. Cleaning: Prior to Substantial Completion, DB Entity shall clean the Site and make it ready for utilization by Owner. At completion of Construction, DB Entity shall remove all tools, appliances, construction equipment, temporary construction and machinery, and surplus materials and shall restore to original condition all property not designated for alteration by the Contract Documents.

D. Loading Structures: DB Entity shall not load nor permit any part of any structure to be loaded in any manner that will endanger the structure, nor shall DB Entity subject any part of the Construction or adjacent property to stresses or pressures that will endanger it.

6.12 Record Documents
A. DB Entity shall maintain in a safe place at the Site one record copy of all Drawings, Specifications, Addenda, Change Orders, Field Orders, Work Change Directives, approved Submittals, QA/QC records, and all other written interpretations and clarifications in good order and annotated to show all changes made during performance of the Work. Such copies shall constitute the “Record Documents” and will be available to Owner for reference.

B. The Record Documents shall, as appropriate, be marked-up as the Work progresses to reflect current conditions and shall become the "as-built" plans. The revisions are to be indicated in a neat, well-organized manner and are to include the elevation and plan location of any utilities, structures, etc., encountered or installed.

C. Upon Substantial Completion of the Work, the Record Documents will be delivered to Owner.

DB Entity shall deliver to Owner a reproducible set of updated contract plans. DB Entity will transfer all its "as-built" information to these reproducibles and deliver the resultant "as-built" set of plans to Owner. Each completed set of "as-built" drawings must include on its face, a certified statement by DB Entity that the set of "as-built" drawings accurately depicts the actual Work as constructed.

6.13 Safety and Protection
A. DB Entity shall be solely responsible for initiating, maintaining and supervising all safety precautions and programs in connection with the Work. Such responsibility does not relieve Subcontractors of their responsibility for the safety of persons or property in the performance of their work, nor for compliance with applicable safety Laws and Regulations. DB Entity shall take all necessary precautions for the safety of, and shall provide the necessary protection to prevent damage, injury, or loss to:

1. All persons on the Site or who may be affected by the Work;

2. All the Work and materials and equipment to be incorporated therein, whether in storage on or off the Site; and
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3. Other property at the Site or adjacent thereto, including trees, shrubs, lawns, walks, pavements, roadways, structures, utilities and underground facilities not designated for removal, relocation, or replacement in the course of construction.

B. DB Entity shall comply with applicable Laws and Regulations relating to the safety of persons or property, or to the protection of persons or property from damage, injury, or loss; and shall erect and maintain all necessary safeguards for such safety and protection. DB Entity shall notify owners of adjacent property and of underground facilities and utility owners when prosecution of the Work may affect them, and shall cooperate with them in the protection, removal, relocation, and replacement of their property.

C. DB Entity's duties and responsibilities for safety and for protection of the construction shall continue until such time as all the Work is completed and Owner has issued a notice to DB Entity in accordance with Paragraph 13.08 that the Work is acceptable (except as otherwise expressly provided in connection with Substantial Completion).

6.14 Safety Representative
A. DB Entity shall designate a competent safety representative at the Site who has the experience, duty and responsibility to take prompt actions to eliminate hazards, correct unsafe conditions, and enforce the implementation of DB Entity’s safety requirements.

6.15 Hazard Communication Programs
A. DB Entity shall be responsible for coordinating any exchange of material safety data sheets or other hazard communication information required to be made available to or exchanged between or among employers at the Site in accordance with Laws or Regulations.

6.16 Emergencies
A. DB Entity shall be required to secure or remove from the site, prior to a storm event, any materials or equipment which could cause bodily injury, damage to the Work, Owner's installations and/or public or private property. Site excavations shall be required to be secured and/or backfilled. No DB Entity equipment may be parked within 100 feet of any Owner facilities. In the event of the issuance of a storm warning, Owner will attempt to notify DB Entity, however, DB Entity is responsible for preparing for a storm event. DB Entity shall take the necessary precautions to protect the walking and motoring public from harm due to construction activity.

B. Owner may, but is not required to, order the work be stopped if a condition of eminent danger exists. Nothing shall be construed to shift responsibility or risk of loss for injuries and /or damages, cost of stoppage or delay of work, from DB Entity to Owner. DB Entity shall remain solely and exclusively responsible for compliance with all safety requirements and the safety of all persons and property at the Site.

6.17 Continuing the Work
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SCADA Upgrade Progressive Design Build Contract, Page 42 of 83 A. DB Entity shall continue the Work and adhere to the progress schedule during all disputes or disagreements with Owner. No Work shall be delayed or postponed pending resolution of any disputes or disagreements, except as set forth in Paragraph 14.04 or as DB Entity and Owner may otherwise agree in writing.

6.18 DB Entity's General Warranty and Guarantee
A. DB Entity warrants and guarantees to Owner that all Construction will be in accordance with the Contract Documents and will not be defective.

B. DB Entity's warranty and guarantee hereunder excludes defects or damage caused by:

1. abuse, modification or improper maintenance or operation by persons other than a DB-Related Entity; or

2. normal wear and tear under normal usage.

C. DB Entity is obligated to perform and complete the Work in accordance with the Contract Documents. None of the following will constitute an acceptance of Work that is not in accordance with the Contract Documents or a release of DB Entity's obligation to perform the Work in accordance with the Contract Documents:

1. Observations by Owner;

2. The making of any progress or final payment;

3. The issuance of a certificate of Substantial Completion;

4. Use or occupancy of the Work or any part thereof by Owner;

5. Any review and approval of a Submittal;

6. Any inspection, test, or approval by others; or

7. Any correction of defective Work by Owner.

6.19 Indemnification
A. DB Entity agrees to and does hereby defend, indemnify and hold harmless Owner, and all of its representatives, appointed and elected officials, officers, employees, authorized agents, consultants (including Owner’s Advisor), and other duly authorized representatives (the “Indemnified Parties”) from every claim or demand made, and every liability, loss, damage, expense or attorney’s fees of any nature whatsoever, which may be incurred by reason of:

1. Liability for: (1) death or bodily injury to persons; (2) damage or injury to, loss (including theft), or loss of use of, any property; (3) any failure or alleged failure to comply with any provision of law or the Contract Documents; or (4) any other loss, damage or #7..
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SCADA Upgrade Progressive Design Build Contract, Page 43 of 83 expense, sustained by any person, firm or corporation arising from any act, omission or breach of DB Entity or any person, firm or corporation employed by, under contract with, or acting on behalf of DB Entity, arising out of or in any way connected with the Work performed by DB Entity, its employees, contractors and/or agents pursuant to this Agreement or the Contract Documents, whether said injury or damage occurs either on or off Owner Property, except for liability resulting from the sole negligence or the willful misconduct of any of the Indemnified Parties; and

2. Any dispute between DB Entity and DB Entity’s subcontractors, suppliers and/or sureties, including, but not limited to, any failure or alleged failure of the DB Entity (or any person hired or employed directly or indirectly by the DB Entity) to pay any subcontractor or materialman of any tier or any other person employed in connection with the Work and/or filing of any stop notice or mechanic’s lien claims.

B. DB Entity, at its own expense, cost, and risk, shall defend any and all third party claims, actions, suits, or other proceedings, including any and all appeals thereof, that may be brought or instituted against Owner, its officers, agents or employees, on account of or founded upon any cause, damage, or injury identified in this Section except for liability resulting from the sole or active negligence or the willful misconduct of any of the Indemnified Parties and shall pay or satisfy any final and nonappealable judgment that may be rendered against Owner, its officers, agents or employees in any action, suit or other proceedings as a result thereof, except for liability resulting from the sole negligence or the willful misconduct of any of the Indemnified Parties. DB Entity may select counsel to provide such defense, subject to acceptance by Owner, which acceptance shall not unreasonably be withheld.

C. In any and all claims against an Indemnified Party by any employee (or the survivor or personal representative of such employee) of a DB-Related Entity, the indemnification obligations under Paragraphs 6.19.A and 6.19.B shall not be limited in any way by any limitation on the amount or type of damages, compensation or benefits payable by or for a DB-Related Entity under workers' compensation acts, disability benefit acts or other employee benefit acts.

ARTICLE 7 – RESERVED

ARTICLE 8 – OWNER'S RESPONSIBILITIES

8.01 General
A. Owner shall do the following in a timely manner so as not to delay the services of DB Entity:

1. Designate in writing a person to act as Owner's Representative with respect to the services to be rendered under this Agreement. Such person shall have complete authority to transmit instructions, receive information, interpret and define Owner’s policies, make decisions with respect to performance of the Work, and shall provide such other services as may be agreed upon; #7..
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2. Make payments to DB Entity promptly when they are due as provided in Paragraphs 13.03 and 13.09;

3. Furnish the Site as set forth in Paragraph 4.01.A;

4. Furnish to DB Entity, as required for performance of DB Entity's Services, the following:
a. Environmental assessment and impact statements;
b. Property, boundary, easement, right-of-way, topographic, and utility surveys; c. Property descriptions;
d. Zoning, deed, and other land use restrictions;
e. Engineering surveys to establish reference points for design and construction which in Owner's judgment are necessary to enable DB Entity to proceed with the Work;
f. Assistance to DB Entity in filing documents required to obtain necessary permits, licenses, and approvals of governmental authorities having jurisdiction over the Project;
g. Permits, licenses, and approvals of government authorities Owner is specifically required to obtain by the Contract Documents; and h. Identify all reports known to Owner of explorations and tests of subsurface conditions at or contiguous to the Site, all drawings known to owner of physical conditions relating to existing surface or subsurface structures at the Site, and any information or data known to Owner concerning underground facilities at the Site.

6. Review Submittals subject to Owner review pursuant to the Contract Documents, and provide timely comments. Where multiple comments apply to a given topic, coordinate and resolve the comments to remove conflict/ambiguity. Two (2) rounds of submittal revisions are budgeted; and

7. Provide information known to Owner relating to the presence of materials and substances at the Site which could create a Hazardous Environmental Condition.

8. Respond to requests for information related to the Work.

9. Provide access to the Site, accompanied by a representative of the Owner where so required by the Owner.
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11. Cooperate in decision making such that each phase of the project can proceed with minimal uncertainty.

12. Provide access to the existing SCADA system.

13. Other support, decisions, access normally part of SCADA planning, designs, construction, and commissioning.

8.02 Insurance
A. Owner's responsibilities in respect of purchasing and maintaining liability and property insurance are set forth in Article 5.

8.03 Limitations on Owner's Responsibilities
A. Owner shall not supervise, direct, or have control or authority over, nor be responsible for, DB Entity's means, methods, techniques, or procedures of construction or the safety precautions and programs incident thereto, or for any failure of DB Entity to comply with Laws or Regulations applicable to the furnishing or performance of the Work. Owner will not be responsible for DB Entity's failure to perform the Work in accordance with the Contract Documents.

8.04 Undisclosed Hazardous Materials and Hazardous Environmental Conditions A. Owner's responsibility in respect of undisclosed Hazardous Materials and Hazardous Environmental Conditions uncovered or revealed at the Site is set forth in Paragraph 4.04.

8.05 Owner’s Advisor
A. Owner’s Advisor, if any, has no duties, responsibilities, or authorities with respect to DB Entity, unless so provided in the Contract Documents.

ARTICLE 9 – CHANGES IN THE WORK; CLAIMS

9.01 Authorized Changes in the Work
A. Any change in the scope of the Work, method of performance, nature of materials or price thereof, or any other matter materially affecting the performance or nature of the Work shall not be paid for or accepted unless such change, addition, or deletion is approved in advance and in writing by a valid change order executed by Owner and approved by the Owner in accordance with this Agreement and the Contract Documents. The foregoing notwithstanding, the DB Entity shall continue to perform its Work under the Agreement with respect to all undisputed portions of the Work and shall not cause a delay of the Work by virtue of the inability of Owner and DB Entity to agree upon the extent of any adjustment to the Contract Time and/or the Project Price on account of such change. DB Entity specifically understands, acknowledges, and agrees that Owner shall have the right to request any alterations, deviations, reductions, or additions to the Project or Work, and the cost thereof shall be added to or deducted from the amount of the Project pursuant to the Change Order process in Contract Documents.
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SCADA Upgrade Progressive Design Build Contract, Page 46 of 83 B. Required Documentation. DB Entity agrees to provide Owner with all information requested to substantiate the cost of the change order and to inform Owner whether the Work will be done by the DB Entity or a subcontractor. DB Entity shall maintain detailed records on a daily basis. Such records shall include without limitation hourly records for labor and Construction Equipment and itemized records of materials and equipment used that day in connection with the performance of any Change to the Work. In the event that more than one Change to the Work is performed by the DB Entity in a calendar day, DB Entity shall maintain separate records of labor, Construction Equipment, materials and equipment for each such Change. In the event that any Subcontractor, of any tier, shall provide or perform any portion of any Change to the Work, DB Entity shall require that each such Subcontractor maintain records in accordance with this provision. Each daily record maintained hereunder shall be signed by DB Entity's Superintendent or DB Entity's authorized representative; such signature shall be deemed DB Entity's representation and warranty that all information contained therein is true, accurate, complete, and relate only to the Change referenced therein. All records maintained by a subcontractor, of any tier, relating to the costs of a Change to the Work shall be signed by such subcontractor's authorized representative or superintendent. All records maintained hereunder shall be subject to inspection, review and/or reproduction by Owner upon request. In the event that DB Entity shall fail or refuse, for any reason, to maintain or make available for inspection, review and/or reproduction such records and the adjustment to the Project Price on account of any Change to the Work is determined pursuant to this section, Owner's reasonable good faith determination of the extent of adjustment to the Project Price on account of such Change shall be final, conclusive, dispositive and binding upon DB Entity.

C. Adjustment to Contract Time. Except as otherwise stated this Agreement, including the General Conditions and the Contract Documents, the Contract Time may be extended or reduced by change order if the performance of such Change necessitates such extension or reduction. DB Entity shall submit, prior to approval of the change order, its request for a time extension (if any), as well as all information necessary to substantiate its belief that such change will delay the completion of the Work.

If DB Entity fails to submit its request for a time extension or the necessary supporting information, it shall be deemed to have waived its right to request such extension.

9.02 Unauthorized Changes in the Work
A. DB Entity shall not be entitled to an increase in the Contract Price or an extension of the Contract Time(s) with respect to any Work performed that is not required by the Contract Documents as amended, modified and supplemented as provided in Paragraph 3.04, except in the case of an emergency as provided in Paragraph 6.16 or in the case of uncovering Construction as provided in Paragraph 12.04.

9.03 Claims
A. If DB Entity shall claim compensation for any reason, including, without limitation, changes to the in the Work or Services, extensions of time, and/or damages sustained by DB Entity for which it may seek recovery from Owner (“Claim”), DB Entity shall, within ten (10) business days after the first occurrence giving rise to the Claim, make and deliver to Owner a written statement of the amount of the Claim, the first occurrence giving rise to the Claim, and a description of the occurrences, events and bases for the Claim (“Notice of Claim”). DB Entity shall file with Owner an itemized statement #7..
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SCADA Upgrade Progressive Design Build Contract, Page 47 of 83 of all details and the amount of the Claim within fifteen (15) business days of delivery to Owner of the Notice of Claim. Thereafter all claims shall be handled in accordance with Article 15 below.

9.04 Execution of Change Orders
A. Owner and DB Entity shall execute appropriate change orders (or written amendments) covering:

1. Changes in the Work which are:
a. ordered by Owner pursuant to Paragraph 9.01;
b. Required because of acceptance of defective work under Article 13 or Owner's correction of defective work under Article 12; or c. Base claims agreed to by the parties.

2. Changes in the Contract Price or Contract Time(s) which are agreed to by the parties, including any undisputed sum or amount of time for Work actually performed in accordance with a change order or amendment; and

3. Unilateral changes in the Contract Price or Contract Time(s) which are issued by Owner, including any undisputed and/or disputed sum or amount of time for Work actually performed in accordance with a change order or amendment; and

4. Changes in the Contract Price or Contract Time(s) which embody the substance of any written decision rendered by Owner pursuant to Paragraph 15.02; provided that, in lieu of executing any such change order, an appeal may be taken from any such decision in accordance with the provisions of the Contract Documents and applicable Laws and Regulations, but during any such appeal, DB Entity shall carry on the work and adhere to the progress schedule pursuant to, among other provisions of the Contract Documents, Paragraph 6.18.

5. DB Entity acknowledges that agreement on any change order shall constitute a final settlement and full accord and satisfaction of all matters relating to the change directly or indirectly changed or unchanged in the Work which is the subject of the change order, including, but not limited to, all direct, indirect costs, and impact costs associated with such change, including inefficiencies or acceleration based claims, and any and all adjustments to the Contract Price and Contract Time(s), and schedule.

B. There shall be no DB Entity delay claim based upon DB Entity's inability to perform change order work due to delay caused by Owner's approval process.

9.05 Notice to Sureties
A. If notice of any change affecting the general scope of the Work or the provisions of the Contract Documents (including, but not limited to, Contract Price or Contract Time(s)) is required by the #7..
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SCADA Upgrade Progressive Design Build Contract, Page 48 of 83 provisions of any Bond to be given to a surety, the giving of any such notice will be DB Entity's responsibility. The amount of each applicable Bond will be adjusted to reflect the effect of any such change.

ARTICLE 10 – COST OF THE WORK; CASH ALLOWANCES; UNIT PRICE WORK

10.01 Cost of the Work
A. Costs Included: The term Cost of the Work means the sum of all costs necessarily incurred and paid by DB Entity in the proper performance of the Work. When the value of Work covered by a Change Order or when a claim for an adjustment in Contract Price is determined on the basis of Cost of the Work, the costs to be reimbursed to DB Entity will be only those additional or incremental costs required because of the change of the Work or because of the event giving rise to the claim. Except as otherwise may be agreed to in writing by Owner, such costs shall be in amounts no higher than those rates and terms defined in Exhibit 11, and shall include only the following items:

1. Payroll costs for employees in the direct employ of DB Entity in the performance of the Work under schedules of job classifications agreed upon by Owner and DB Entity.
a. Such employees shall include without limitation superintendents, foremen, and other personnel employed on this Project. Payroll costs shall include, but not be limited to, salaries and wages plus the cost of fringe benefits which shall include social security contributions, unemployment, excise and payroll taxes, workers' compensation, health and retirement benefits, bonuses, sick leave, vacation and holiday pay applicable thereto. The expenses of performing Work after regular working hours, on Saturday, Sunday or legal holidays, shall be included in the above to the extent authorized by Owner. b. Such employees shall also include engineers, engineering technicians, architects, and others providing Design Professional Services. For purposes of this Paragraph 10.01.A.1, DB Entity shall be entitled to payment for such employees based on rates and terms defined in Exhibit 11, both as designated in the Agreement, for all services performed or furnished by such employees engaged on the Project.

2. Cost of all materials and equipment furnished and incorporated in the Work, including costs of transportation and storage thereof, and Suppliers' field services required in connection therewith.

3. Payments made by DB Entity to Subcontractors (excluding payments for Design Professional Services pursuant to Paragraph 10.01.A.4) for Work performed or furnished by Subcontractors.

4. Payments made by DB Entity for Design Professional Services provided or furnished under a Design Sub-agreement.
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5. Costs of special consultants (including but not limited to engineers, architects, testing laboratories, surveyors, attorneys, and accountants) employed for services specifically related to the Work.

6. Supplemental costs including the following items:
a. The proportion of necessary transportation, travel and subsistence expenses of DB Entity's employees incurred in discharge of duties connected with the Work.
b. Cost, including transportation and maintenance, of all materials, supplies, equipment, machinery, appliances, office and temporary facilities at the Site and hand tools not owned by the workers, which are consumed in the performance of the Work, and cost, less market value, of such items used but not consumed which remain the property of DB Entity.
c. Rentals of all construction or engineering equipment and machinery and the parts thereof whether rented from DB Entity or others in accordance with rental agreements approved by Owner, and the costs of transportation, loading, unloading, installation, dismantling and removal thereof. All such costs shall be in accordance with the terms of said rental agreements. The rental of any such equipment, machinery or parts shall cease when the use thereof is no longer necessary for the Work.
d. Sales, consumer, use, and other similar taxes related to the Work, and for which DB Entity is liable, imposed by Laws or Regulations.
e. Deposits lost for causes other than negligence of a DB-Related Entity, and royalty payments and fees for permits and licenses.
f. Losses, damages, and related expenses caused by damage to the Work not compensated by insurance or otherwise, sustained by DB Entity in connection with the furnishing and performance of the Work provided they have resulted from causes other than the negligence of a DB-Related Entity. Such losses shall include settlements made with the written consent and approval of Owner.

No such losses, damages, and expenses shall be included in the Cost of the Work for the purpose of determining DB Entity's fee.
g. The cost of utilities, fuel, and sanitary facilities at the Site. h. Minor expenses such as telegrams, long distance telephone calls, telephone service at the Site, express and courier services,, and similar petty cash items in connection with the Work.
i. Cost of premiums for all Bonds and insurance DB Entity is required by the Contract Documents to purchase and maintain.
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SCADA Upgrade Progressive Design Build Contract, Page 50 of 83 B. Costs Excluded: The term Cost of the Work shall not include any of the following items:

1. Payroll costs and other compensation of DB Entity's officers, executives, principals (of partnerships and sole proprietorships), general managers, estimators, attorneys, auditors, accountants, timekeepers, and other personnel employed by DB Entity whether at the Site or in DB Entity's principal or a branch office for general administration of the Work and not specifically included in the agreed upon schedule of job classifications referred to in Paragraph 10.01.A.1, all of which are to be considered administrative costs covered by DB Entity's fee.

2. Expenses of DB Entity's principal and branch offices other than DB Entity's office at the Site.

3. Any part of DB Entity's capital expenses, including interest on DB Entity's capital employed for the Work and charges against DB Entity for delinquent payments.

4. Costs due to the negligence of a DB-Related Entity, including but not limited to the correction of defective Work, disposal of materials or equipment wrongly supplied, and making good any damage to property.

5. Other overhead or general expense costs of any kind and the costs of any item not specifically and expressly included in Paragraph 10.01.A.

C. DB Entity's Fee: When the value of the Work covered by a Change Order is determined on the basis of Cost of the Work, DB Entity's fee shall be determined as set forth in Paragraph 11.01.

D. Documentation: Whenever the cost of any Work is to be determined pursuant to Paragraph

10.01.A and 10.01.B, DB Entity will establish and maintain records thereof in accordance with generally accepted accounting practices and submit in a form acceptable to Owner an itemized cost breakdown together with supporting data.

ARTICLE 11 – CHANGE OF CONTRACT PRICE; CHANGE OF CONTRACT TIME(S)

11.01 Change of Contract Price
A. The Contract Price may only be changed by a Change Order. Any claim for an adjustment in the Contract Price shall be based on written notice delivered by DB Entity to Owner promptly in accordance with Paragraph 15.02.

B. The value of any Work covered by a Change Order or of any claim for an adjustment in the Contract Price will be determined as follows:

1. By a mutually agreed lump sum (which may include an allowance for overhead and profit not necessarily in accordance with Paragraph 11.01.C); or #7..
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3. Where agreement to a lump sum is not reached under Paragraph 11.01.B.2, on the basis of the Cost of the Work (determined as provided in Paragraph 10.01) plus a DB Entity's Fee for overhead and profit (determined as provided in Paragraph

11.01.C).

C. DB Entity's Fee on any Work covered by a Change Order or of any claim for an adjustment in the Contract Price shall be calculated using the same percentage as used in the Contract Price Proposal to establish DB Entity's Fee for overhead and profit.

D. The amount of credit to be allowed by DB Entity to Owner for any change which results in a net decrease in cost will be the amount of the actual net decrease in cost, (including the overhead and profit percentage established by the contract price proposal) plus a deduction in DB Entity's fee calculated as specified in Paragraph 11.01.C; and
F. When both additions and credits are involved in any one change, DB Entity’s fee shall be computed on the basis of amount of the net increase or decrease in cost. If there is a net increase in cost, then the fee shall be as set forth in Paragraph 11.01.C, and if there is a net decrease, the fee deduction shall be as set forth in Paragraph 11.01.D.

11.02 Change of Contract Time(s)
A. The Contract Time(s) (or Milestones) may only be changed by a Change Order. Any claim for an adjustment of the Contract Time(s) (or Milestones) shall be based on written notice pursuant to Paragraph 15.02. All adjustments for additional time must include a detailed critical path analysis of the Contract schedule.

B. Any adjustment of the Contract Time(s) (or Milestones) covered by a change order or of any claim for an adjustment in the Contract Time(s) (or Milestones) will be determined in accordance with the provisions of this Paragraph 11.02.

C. DB Entity expressly agrees that in undertaking to complete the work within the time specified, it has made allowances for certain foreseeable hindrances and delays ordinarily encountered on projects of this type. The parties specifically anticipate and contemplate such hindrances and delays, including but not limited to, labor disputes; those reasonable delays caused by or arising from minor design conflicts and issues; schedule adjustments; the actions of DB-Related Entities; late or out-of-sequence Owner-furnished equipment, materials and facilities not affecting the critical path; reasonable turnaround or approval of DB Entity's Submittals; normal unfavorable weather, wet grounds, or other similar unsuitable construction conditions likely to occur in the City of Modesto; reasonable turnaround to DB Entity's requests for information or direction; change order processing; and access and coordination by Owner that does not create any new critical paths in the schedule. DB Entity agrees that such delays are included in the Contract Price and Contract Time(s) and that they shall not constitute the basis for a time extension or a claim for additional compensation of any type.

D. Delays Beyond DB Entity's Control: Where DB Entity is prevented from completing any part of the Work within the Contract Time(s) (or Milestones) due to delay beyond the control of DB Entity, the Contract Time(s) (or Milestones) will be extended in an amount equal to the time lost due to such delay plus a reasonable time to resume production, and the price will be adjusted to compensate DB #7..
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SCADA Upgrade Progressive Design Build Contract, Page 52 of 83 Entity for such delay. if a claim is made therefor as provided in Paragraph 11.02.A. Delays beyond the control of DB Entity shall include, but not be limited to, acts or neglect by Owner, acts or omissions of any governmental authority or of Owner, compliance with newly enacted government regulations, embargo, material delays/shortages, or manufacturing facilities from usual sources or from defects or delays in the performance of its suppliers or subcontractors due to any of the foregoing enumerated causes, acts of war, fire, strike. governmental agencies, changes of law pursuant to Paragraph 6.09.C, acts or neglect of utility owners or other contractors performing other construction work as contemplated by Article 7, fires, floods, epidemics, abnormal weather conditions, or other acts of God.

E. If DB Entity intends to seek an adjustment in the Contract Time for abnormal weather conditions, it shall, in addition to fulfilling all other requirements for a time extension, demonstrate that the actual weather encountered was unusually severe and abnormal compared with the five-year average weather statistics compiled by the United States National Oceanic and Atmospheric Administration (“NOAA”) for the time of year and locality of the Site.

F. If Owner or other contractor or utility owners performing other work for Owner as contemplated by Article 7, or anyone for whom Owner is responsible, delays, disrupts, or interferes with the performance or progress of the Work, then DB Entity shall be entitled to an equitable adjustment in the Contract Price or the Contract Time(s), or both. DB Entity’s entitlement to an adjustment of the Contract Time(s) is conditioned on such adjustment being essential to DB Entity’s ability to complete the Work within the Contract Time(s).

G. If DB Entity is delayed in the performance or progress of the Work by fire, flood, epidemic, abnormal weather conditions, acts of God, acts or failures to act of utility owners not under the control of Owner, or other causes not the fault of and beyond control of Owner and DB Entity, then DB Entity shall be entitled to an equitable adjustment in Contract Time(s), if such adjustment is essential to DB Entity’s ability to complete the Work within the Contract Time(s). Such an adjustment shall be DB Entity’s sole and exclusive remedy for the delays described in this Paragraph 11.02.G.

Notwithstanding the preceding sentence:

1. If such delays result in Owner suspending the Work in accordance with Paragraph

14.01, DB Entity’s remedy shall be as specified in that provision.

2. If the total aggregate of such delays exceeds thirty (30) days, commencing on the Notice to Proceed, then DB Entity shall be entitled to treat the days of delay that exceed such 30-day period in the same manner as set forth in Paragraph 11.02.F above.

H. Owner, Owner’s Advisor shall not be liable to DB Entity for any claims, costs, losses, or damages (including but not limited to all fees and charges of engineers, architects, attorneys, and other professionals and all court or arbitration or other dispute resolution costs) sustained by DB Entity on or in connection with any other project or anticipated project.

I. DB Entity shall not be entitled to an adjustment in Contract Price or Contract Time(s) for delays within the control of DB Entity. Delays attributable to and within the control of a DB-Related Entity shall be deemed to be delays within the control of DB Entity. #7..
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SCADA Upgrade Progressive Design Build Contract, Page 53 of 83 J. Notwithstanding anything to the contrary in this Article 11 or in any other Contract Document, Owner shall not be liable, and DB Entity shall not be entitled to recover, for any time-related or delay damages for: (1) loss of anticipated profit; (2) consequential damages (including but not limited to loss of bonding capacity, loss of bidding opportunities, and insolvency); and (3) legal fees, claims preparation expenses, or the cost of dispute resolution.

ARTICLE 12 – TESTS AND INSPECTIONS; CORRECTION, REMOVAL OR

ACCEPTANCE OF DEFECTIVE WORK

12.01 Notice of Defects
A. Owner shall give DB Entity prompt written notice of all defective Construction of which Owner has actual knowledge. All defective Construction may be rejected, corrected or accepted as provided in this Article 12.

12.02 Access to Construction
A. Owner, Owner’s Advisor, other representatives and personnel of Owner, independent testing laboratories and governmental agencies with jurisdictional interests will have access to the Site and the Construction at reasonable times for their observation, inspecting, and testing. DB Entity shall provide them proper and safe conditions for such access and advise them of DB Entity's Site safety procedures and programs so that they may comply therewith as applicable.

12.03 Tests and Inspections
A. If the Contract Documents or Laws or Regulations of any public body having jurisdiction require any part of the Construction specifically to be inspected, tested or approved, DB Entity shall assume full responsibility for arranging and obtaining such inspections, tests or approvals, pay all costs in connection therewith, and furnish Owner the required certificates of inspection or approval. The Owner shall not be responsible for the costs associated with any such inspections or tests unless included in the Contract Price Proposal. DB Entity shall also be responsible for arranging and obtaining and shall pay all costs in connection with any inspections, tests, or approvals required for Owner's acceptance of materials or equipment to be incorporated in the Work or of materials, mix designs, or equipment submitted for approval prior to DB Entity's purchase thereof for incorporation in the Work.

B. DB Entity shall give Owner reasonable notice of the planned schedule for all required inspections, tests, or approvals.

C. If any Construction (or the construction work of others) that is required to be inspected, tested, or approved is covered by DB Entity without written concurrence of Owner, then DB Entity shall, if requested by Owner, uncover such Construction for observation.

D. Uncovering Construction as provided in Paragraph 12.04 shall be at DB Entity's expense unless DB Entity has given Owner timely notice of DB Entity's intention to cover the same and Owner has not acted with reasonable promptness in response to such notice. #7..
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12.04 Uncovering Construction
A. If any Construction is covered contrary to the written request of Owner, it must, if requested by Owner, be uncovered for Owner's observation and recovered at DB Entity's expense.

B. If Owner considers it necessary or advisable that covered Construction be observed by Owner or inspected or tested by others, DB Entity, at Owner's request, shall uncover, expose or otherwise make available for observation, inspection or testing as Owner may require, that portion of the Construction in question, furnishing all necessary labor, material and equipment. If it is found that such Construction is defective, DB Entity shall pay all costs and damages caused by or resulting from such uncovering, exposure, observation, inspection and testing and of satisfactory replacement or reconstruction, (including but not limited to all fees and charges of engineers, architects, attorneys and other professionals, all court or arbitration or other dispute resolution costs, and all costs of repair or replacement of work of others); and Owner shall be entitled to an appropriate decrease in the Contract Price. If, however, such Construction is not found to be defective, DB Entity shall be allowed an increase in the Contract Price or an extension of the Contract Time(s) (or Milestones), or both, directly attributable to such uncovering, exposure, observation, inspection, testing, replacement and reconstruction. If the parties are unable to agree as to the amount or extent thereof, DB Entity may make a claim therefor as provided in Article 9.

12.05 Owner May Stop Construction
A. If Construction is defective, or DB Entity fails to supply sufficient skilled workers or suitable materials or equipment, or fails to furnish or perform Construction in such a way that the completed Construction will conform to the Contract Documents, Owner may order DB Entity to stop Construction or any portion thereof, until the cause for such order has been eliminated; however, this right of Owner to stop Construction will not give rise to any duty on the part of Owner to exercise this right for the benefit of DB Entity or any other party.

12.06 Correction or Removal of Defective Work
A. Owner will have authority to disapprove or reject defective Work and will have authority to require special inspection or testing of the Work whether or not the Work is fabricated, installed or completed.

If required by Owner, DB Entity shall promptly, as directed, either correct all defective Work, whether or not fabricated, installed or completed, or, if the Work has been rejected by Owner, remove it from the Site and replace it with non-defective Work. DB Entity shall bear all direct, indirect, and consequential costs of such correction or removal (including but not limited to fees and charges of engineers, architects, attorneys and other professionals and all court, arbitration, or other dispute resolution costs) arising out of or relating to such correction or removal.

12.07 Correction Period
A. If within one year after the date of Final Acceptance or such longer period of time as may be prescribed by Laws or Regulations or by the terms of any applicable special guarantee required by the Contract Documents or by any specific provision of the Contract Documents, any Work is found to be defective, DB Entity shall promptly, without cost to Owner and in accordance with Owner's written #7..
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SCADA Upgrade Progressive Design Build Contract, Page 55 of 83 instructions, (i) correct such defective Work, or, if it has been rejected by Owner, remove it from the Site and replace it with Work that is not defective, and (ii) satisfactorily correct or remove and replace any damage to other Work or the work of others resulting therefrom. If DB Entity does not promptly comply with the terms of such instructions, or in an emergency where delay would cause serious risk of loss or damage, Owner may have the defective Work corrected or the rejected Work removed and replaced, and all costs, losses, and damages caused by or resulting from such removal and replacement (including but not limited to all fees and charges of engineers, architects, attorneys and other professionals, all court or arbitration or other dispute resolution costs, and all costs of repair or replacement of work of others) will be paid by DB Entity.

B. Where defective Work (and damage to other Work resulting therefrom) has been corrected, removed or replaced under this Paragraph 12.07, the correction period hereunder with respect to such Work will be extended for an additional period of one year after such correction or removal and replacement has been satisfactorily completed.

12.08 Acceptance of Defective Work
A. If, instead of requiring correction or removal and replacement of defective Work, Owner prefers to accept it, Owner may do so. DB Entity shall pay all costs, losses, and damages (including but not limited to all fees and charges of engineers, architects, attorneys and other professionals and all court or arbitration or other dispute resolution costs) attributable to Owner's evaluation of and determination to accept such defective Work. If any such acceptance occurs prior to Final Acceptance, a Change Order will be issued incorporating the necessary revisions in the Contract Documents, and Owner shall be entitled to an appropriate decrease in the Contract Price reflecting the diminished value of the Work so accepted. If the acceptance occurs after Final Acceptance, an appropriate amount will be paid by DB Entity to Owner.

12.09 Owner May Correct Defective Work
A. If DB Entity fails within a reasonable time after written notice from Owner to correct defective Work or to remove and replace rejected Work as required by Owner in accordance with Paragraphs

12.06.A or 12.07.A, or if DB Entity fails to perform the Work in accordance with the Contract Documents, or if DB Entity fails to comply with any other provision of the Contract Documents, Owner may, after ten (10) days' written notice to DB Entity, correct and remedy any such deficiency.

B. In exercising the rights and remedies under this Paragraph 12.09 Owner shall proceed expeditiously. In connection with such corrective and remedial action, Owner may exclude DB Entity from all or part of the Site, take possession of all or part of the Work, and suspend DB Entity's services related thereto, take possession of any tools, appliances, equipment and machinery for which the Owner paid the DB Entity, and incorporate in the Work all materials and equipment stored at the Site or for which Owner has paid DB Entity but which are stored elsewhere. DB Entity shall allow Owner, Owner’s Advisor, Owner's representatives, agents, employees, and other contractors access to the Site to enable Owner to exercise the rights and remedies under this paragraph.

C. All costs, losses, and damages (included but not limited to fees and charges of engineers, architects, attorneys and other professionals, all court or arbitration or other dispute resolution costs and all costs #7..
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SCADA Upgrade Progressive Design Build Contract, Page 56 of 83 of repair or replacement of work of others) incurred or sustained by Owner in exercising such rights and remedies under this Paragraph 12.09 will be charged against DB Entity and a Change Order will be issued incorporating the necessary revisions in the Contract Documents, and Owner shall be entitled to an appropriate decrease in the Contract Price.

D. DB Entity shall not be allowed an extension of the Contract Time(s) (or Milestones) because of any delay in the performance of the Work attributable to the exercise by Owner of Owner's rights and remedies under this Paragraph 12.09 .

ARTICLE 13 – PAYMENTS TO DB ENTITY AND COMPLETION

13.01 Progress Payment Schedule
A. A schedule prepared by DB Entity and acceptable to Owner indicating that portion of the Contract Price to be paid for each major component of the Work.

13.02 Application for Progress Payment
A. DB Entity shall submit to Owner, on or about the last day of each month, an Application for Payment filled out and signed by DB Entity covering the Work completed as of the date indicated on the Application and accompanied by supporting documentation as required by the Contract Documents.

B. If payment is requested on the basis of materials and equipment not incorporated in the Work but delivered and suitably stored at the Site or at another location agreed to in writing, the Application for Payment shall also be accompanied by a bill of sale, invoice or other documentation warranting that Owner has received the materials and equipment free and clear of all Liens and evidence that the materials and equipment are covered by appropriate property insurance and other arrangements to protect Owner's interest therein, all of which will be satisfactory to Owner.

C. Beginning with the second Application for Payment, each Application shall include an affidavit of DB Entity stating that all previous progress payments received on account of the Work have been applied on account to discharge DB Entity's legitimate obligations associated with prior Applications for Payment.

D. The amount of retention with respect to progress payments will be as stipulated in the Agreement.

13.03 Progress Payments
A. Owner will, after receipt of each application for payment, either make payment or return the application to DB Entity, indicating in writing Owner's reasons for refusing to make payment. In the latter case, DB Entity may make the necessary corrections and resubmit the application.

B. Owner may refuse to make the whole or any part of any payment if, in Owner's opinion, it would be incorrect to make such payment because of subsequently discovered evidence or the results of subsequent inspections or tests, revise or revoke any such payment previously made, to such extent as may be necessary in Owner's opinion to protect Owner from loss because:
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1. The Work is defective, or completed Work has been damaged, requiring correction or replacement;

2. The Contract Price has been reduced by written amendment or change orders;

3. Owner has been required to correct defective Work or complete Work in accordance with Article 12; or

4. Owner has actual knowledge of the occurrence of any of the events enumerated in Article 15.

5. DB Entity fails to comply with the SBE requirements as stated in the Contract;

7. DB Entity fails to submit the required insurance policy declaration page as stated in the Contract;

8. DB Entity fails to comply with progress schedule updates in keeping with general requirements.

C. Reduction in Payment: Owner may refuse to make the whole or any part of any such payment, or because of subsequently discovered evidence or the results of subsequent inspections or tests, nullify any previous payment, to the extent that is reasonably necessary to protect Owner from loss because:

1. Claims have been made against Owner on account of DB Entity's performance or furnishing of the Work; or

2. Liens have been filed in connection with the Work, except where DB Entity has delivered a specific Bond satisfactory to Owner to secure the satisfaction and discharge of such Liens;

3. There are other items entitling Owner to a set off against the amount for which application is made; or

4. Owner has actual knowledge of the occurrence of any of the events enumerated in Paragraph 14.02.A or if DB Entity is otherwise in breach.

D. If Owner refuses to make payment of the full amount requested by DB Entity, Owner must give DB Entity immediate written notice stating the reasons for such action and promptly pay DB Entity any amount remaining after deduction of the amount withheld. Owner shall promptly pay DB Entity the amount withheld or any adjustment thereto agreed to when DB Entity remedies the reason for such action.

13.04 DB Entity's Warranty of Title
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SCADA Upgrade Progressive Design Build Contract, Page 58 of 83 A. DB Entity warrants and guarantees that title to all Construction, materials, and equipment covered by any Application for Payment, whether incorporated in the Project or not, will pass to Owner no later than the time of payment free and clear of all Liens.

13.05 Substantial Completion
A. When DB Entity considers the Work ready for its intended use, DB Entity shall notify Owner in writing that the milestone Work is substantially complete (except for items specifically listed by DB Entity as incomplete) and request that Owner issue a certificate of Substantial Completion. Promptly thereafter, Owner and DB Entity shall make an inspection of the Work to determine the status of completion. If Owner does not consider the Work substantially complete, Owner will notify DB Entity in writing giving the reasons therefor. If Owner considers the Work substantially complete, Owner will prepare and deliver to DB Entity a certificate of Substantial Completion which shall fix the date of Substantial Completion . There shall be attached to the certificate a list of items to be completed or corrected before Final Acceptance (“Punch List”). Within five (5) working days after receipt of a proposed Punch List, Owner shall either (a) approve the Punch List or (b) request that certain amendments or modifications be made to the Punch List. The Parties shall meet and negotiate in good faith and shall promptly agree on and execute an amended Punch List to be completed by the DB Entity before Final Completion is achieved. At the time of delivery of the certificate of Substantial Completion , Owner will deliver to DB Entity a written determination as to division of responsibilities pending Final Acceptance between Owner and DB Entity with respect to security, operation, safety, protection of Construction, maintenance, heat, utilities, insurance and warranties and guarantees.

B. Owner will have the right to exclude DB Entity from the Site after the date of Substantial Completion, but Owner will allow DB Entity reasonable access to complete or correct items on the list of items to be completed.

13.06 Partial Utilization
A. Prior to Substantial Completion of all the Work, Owner may use or occupy any substantially completed part of the Construction which (i) has specifically been identified in the Contract Documents, or (ii) Owner and DB Entity agree constitute a separately functioning and usable part of the Construction that can be used by Owner for its intended purpose without significant interference with DB Entity's performance of the remainder of the Construction, subject to the following:

1. Owner at any time may request DB Entity in writing to permit Owner to use or occupy any such part of the Construction which Owner believes to be ready for its intended use and substantially complete. If DB Entity agrees that such part of the Work is substantially complete, DB Entity and Owner will follow the procedures of Paragraph 13.05 for that part of the Construction.

2. DB Entity at any time may notify Owner in writing that DB Entity considers any such part of the Work ready for its intended use and substantially complete and request Owner to issue a certificate of Substantial Completion for that part of the Work.
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3. Within a reasonable time after either such request, Owner and DB Entity shall make an inspection of that part of the Work to determine its status of completion.

If Owner does not consider that part of the Work to be substantially complete, Owner will notify DB Entity in writing giving the reasons therefor. If Owner considers that part of the Work to be substantially complete, the provisions of Paragraph 13.05 will apply with respect to certification of Substantial Completion of that part of the Work and the division of responsibility in respect thereof and access thereto.

4. No use or occupancy of part of the Construction will be accomplished prior to compliance with the requirements of Paragraph 5.10 regarding property insurance.

13.07 Final Inspection
A. Upon written notice from DB Entity that the entire Work is complete, Owner will make a final inspection with DB Entity and will notify DB Entity in writing of all particulars in which this inspection reveals that the Work is incomplete or defective. DB Entity shall immediately take such measures as are necessary to complete such Work or remedy such deficiencies.

13.08 Final Acceptance
A. The following conditions shall constitute the conditions for Final Acceptance:

1. All permits required under applicable Laws and/or Regulations and the Contract Documents to be obtained by DB Entity which are necessary for the continued routine operation of the Project shall be in full force and effect and certified copies of all such permits shall have been delivered to Owner.

B. When DB Entity determines that it has met the conditions for Final Acceptance, it shall furnish Owner with a certified statement (in a form acceptable to Owner) evidencing that Final Acceptance has been met. If Owner is satisfied that the conditions for Final Acceptance set forth in Paragraph

13.08.A above have been achieved, it will, within thirty (30) days after receipt of DB Entity’s certification, give written notice to DB Entity that it agrees that Final Acceptance has been achieved.

Otherwise, Owner will indicate to DB Entity in writing the reasons that it disagrees that Final Acceptance has been achieved, in which case DB Entity shall make the necessary corrections and resubmit the certification.

13.09 Final Payment
A. Application for Payment.

1. After DB Entity has achieved Final Acceptance to the satisfaction of Owner and delivered in accordance with the Contract Documents all maintenance and operating instructions, schedules, guarantees, Bonds, certificates or other evidence of insurance, certificates of inspection, record documents (as provided in Paragraph 6.12) and other documents, DB Entity may make application for final payment following the procedure for progress payments.
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2. The final Application for Payment shall be accompanied (unless previously delivered) by: (i) all documentation called for in the Contract Documents, including but not limited to the evidence of insurance required by Paragraph

5.04.B.7; (ii) consent of the surety, if any, to final payment; and (iii) complete and legally effective releases or waivers (satisfactory to Owner) of all Liens arising out of or filed in connection with the Work.

3. In lieu of such releases or waivers of Liens specified in Paragraph 13.09.A.2 and as approved by Owner, DB Entity may furnish receipts or releases in full and an affidavit of DB Entity that: (i) the releases and receipts include all labor, services, material and equipment for which a Lien could be filed, and (ii) all payrolls, material and equipment bills and other indebtedness connected with the Work for which Owner might in any way be responsible, or which in any way might result in liens or other burdens on Owner's property, have been paid, or otherwise satisfied. If any Design Subconsultant, Subcontractor or Supplier fails to furnish such a release or receipt in full, DB Entity may furnish a Bond or other collateral satisfactory to Owner to indemnify Owner against any Lien.

B. Final Payment: If Owner is satisfied that the Work has been completed and DB Entity's other obligations under the Contract Documents have been fulfilled, Owner will, within ten days after receipt of the final Application for Payment, give written notice to DB Entity that it is ready to process final payment. Otherwise, Owner will return the Application to DB Entity, indicating in writing the reasons for refusing to process final payment, in which case DB Entity shall make the necessary corrections and resubmit the Application.

C. Payment Becomes Due: Thirty days after the presentation to Owner of the acceptable Application for Payment and accompanying documentation, in appropriate form and substance and with Owner's notice of acceptability, the amount will become due and will be paid by Owner to DB Entity in compliance with the statutory requirements set forth in California Public Contract Code section 7107, and pursuant to Article 5 of the Agreement.

13.10 Waiver of Claims
A. The making and acceptance of final payment will constitute:

1. A waiver of all claims by Owner against DB Entity, except claims arising from unsettled Liens, from defective Work appearing after final inspection pursuant to Paragraph 13.07, from failure to comply with the Contract Documents or the terms of any special guarantees specified therein, or from DB Entity's continuing obligations under the Contract Documents; and

2. A waiver of all claims by DB Entity against Owner other than those previously made in writing and still unsettled.
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SCADA Upgrade Progressive Design Build Contract, Page 61 of 83 ARTICLE 14 – SUSPENSION OF WORK AND TERMINATION

14.01 Owner May Suspend Work
A. At any time and without cause, Owner may suspend the Work or any portion thereof for a period of not more than 90 consecutive days by notice in writing to DB Entity which will fix the date on which Work will be resumed. DB Entity shall resume the Work on the date so fixed. DB Entity shall be allowed an adjustment in the Contract Price or an extension of the Contract Time(s), or both, directly attributable to any such suspension if DB Entity makes a Claim therefor as provided in Article

9. 14.02 Owner May Terminate for Cause
A. The occurrence of any one or more of the following events justifies termination for cause:

1. DB Entity's persistent failure to perform the Work in accordance with the Contract Documents (including, but not limited to, failure to supply sufficient skilled workers or suitable materials or equipment or failure to adhere to the progress schedule established under Paragraph 2.04.A as adjusted from time to time pursuant to Paragraph 6.05).

2. DB Entity's disregard of Laws or Regulations of any public body having jurisdiction.

3. DB Entity's violation in any substantial way of provisions of the Contract Documents.

4. Any act by DB Entity exposing Owner to liability to others for personal injury or property damage; or

5. DB Entity becomes insolvent; files for federal bankruptcy protection; is adjudged a bankrupt; makes a general assignment for the benefit of creditors; or a receiver is appointed on account of DB Entity's insolvency.

B. If one or more of the events identified in Paragraph 14.02.A occur, Owner may, after giving DB Entity (and the surety, if any) seven days' written notice, terminate the services of DB Entity, take possession of any completed Drawings and Specifications prepared by or for DB Entity (subject to the indemnification provisions of Paragraph 3.05.A), exclude DB Entity from the Site, and take possession of the Work and of any tools, appliances, equipment and machinery for which the Owner paid the DB Entity, incorporate in the Work all materials and equipment stored at the Site or for which Owner has paid DB Entity but which are stored elsewhere, and finish the Work as Owner may deem expedient. In such case DB Entity shall not be entitled to receive any further payment until the Work is finished. If the unpaid balance of the Contract Price exceeds all costs, losses and damages sustained by Owner arising out of or resulting from completing the Work (including but not limited to all fees and charges of engineers, architects, attorneys and other professionals and all court or arbitration or other dispute resolution costs) such excess will be paid to DB Entity. If such costs, losses and damages exceed such unpaid balance, DB Entity shall pay the difference to Owner. Such costs, losses and #7..
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SCADA Upgrade Progressive Design Build Contract, Page 62 of 83 damages incurred by Owner will be incorporated in a Change Order. When exercising any rights or remedies under this paragraph Owner shall not be required to obtain the lowest price for the Work performed.

C. Notwithstanding Paragraph 14.02.B, DB Entity's services will not be terminated if DB Entity begins, within seven (7) days of receipt of notice of intent to terminate, to correct its failure to perform and proceeds diligently to cure such failure within no more than 30 days of receipt of said notice.

D. Where DB Entity’s services have been so terminated by Owner, the termination will not affect any rights or remedies of Owner against DB Entity then existing or which may thereafter accrue. Any retention or payment of moneys due DB Entity by Owner will not release DB Entity from liability.

E. Notwithstanding the notice periods provided in this Paragraph 14.02, in the event of an emergency, Owner shall have the right to immediately, and without notice to DB Entity, take over and protect the Site by whatever means it deems appropriate. Owner will endeavor to provide DB Entity notice of such action within 24 hours after its occurrence.

F. In no event shall any delay in Completion arising prior to issuance of a notice of termination for cause through the time such condition or violation shall have ceased or been cured be excused, nor shall DB Entity be relieved of liability for Liquidated Damages relating thereto.

G. Upon termination, DB Entity shall provide Owner with all Work Product, whether or not such documents are final or draft documents.

14.03 Owner May Terminate for Convenience
A. Owner may, at any time, with or without reason, terminate this Agreement and compensate DB Entity only for the Work and Services rendered to the date of termination and all reasonable costs incurred by DB Entity as a result of such termination (including in the termination of subcontracts, vendor agreements and in demobilization), which cannot be mitigated or eliminated through commercially reasonable efforts by DB Entity. Written notice by Owner shall be sufficient to stop further performance of services by DB Entity. Notice shall be deemed given when received by the DB Entity or no later than three (3) Business Days after the day of mailing, whichever is sooner. In the event that Owner terminates this Agreement pursuant to this section, Owner shall compensate DB Entity for work completed to date.

B. In any such termination for the convenience of Owner, DB Entity shall be paid for work completed in accordance with the Contract Documents prior to receipt of the notice of termination, and for termination settlement costs that in Owner’s sole discretion relate to commitments which had become firm prior to the termination. DB Entity shall not be paid on account of loss of anticipated profits or revenue or other economic loss arising out of or resulting from such termination. DB Entity shall justify its claims as requested by Owner with thorough, accurate records and data.

C. Notwithstanding the provisions of Paragraphs 14.03.A and 14.04.B above, in the event that Owner elects to terminate this Contract under Section 8.5 of the Agreement as a result of the failure of the Parties to reach an agreement on the Contract Price Proposal, then the following shall apply:
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1. Owner’s termination will be effective upon DB Entity’s receipt of notice from Owner, provided, however, that Owner may set the effective date of termination at a time up to thirty (30) days later than otherwise provided to allow DB Entity to complete tasks whose value would otherwise be lost, to prepare notes as to the status of completed and uncompleted tasks, and to assemble Project documents in orderly files.

2. DB Entity’s sole and exclusive relief for such termination shall be limited to the monies due under the Design-Build Agreement, and DB Entity shall not be paid on account of loss of anticipated profits or revenue or other economic loss arising out of or resulting from such termination.

3. For the avoidance of doubt, upon terminating DB Entity, Owner shall have the right to use the Work Product to complete the Project, on a design-build, design-bidbuild or any other basis, with any entity of its choosing.

14.04 DB Entity May Suspend or Terminate for Cause
A. If Owner fails to pay undisputed amounts owed to DB Entity within forty-five (45) days of the date such payment is due under the Agreement, DB Entity’s remedies shall be as follows:

1. DB Entity is entitled to suspend the Work within five (5) days of delivering a written notice to Owner that DB Entity will suspend the Work as a result of Owner’s failure to pay undisputed amounts due. If DB Entity does suspend the Work and claims that the suspension has affected the cost or time of performance, it shall be entitled to proceed in accordance with the remedies set forth in Article

15. 2. DB Entity is entitled to terminate this Agreement if a suspension for Owner’s nonpayment continues for more than ninety (90) consecutive days. The termination shall become effective if, after such ninety (90) day period, Owner fails to cure the nonpayment within twenty (20) days of its receipt of a notice from DB Entity that it intends to terminate the Agreement as a result of Owner’s failure to pay undisputed amounts due. If DB Entity does terminate the Agreement, such termination shall be treated as if Owner had terminated the whole of the Work in accordance with Paragraph 14.03.A above.

B. If DB Entity elects to suspend the Work as a result of Owner’s failure to act under the circumstances described in Section 8.6 of the Agreement, DB Entity shall provide Owner with ten (10) working days advance written notice of its intent to suspend the Work. If Owner has not taken action under Section 8.5 of the Agreement within such ten (10) working days, and DB Entity does suspend the Work and claims that the suspension has affected the cost or time of performance, it shall be entitled to proceed in accordance with the remedies set forth in Article 15.

C. Other than as specifically set forth in Paragraphs 14.04.A and 14.04.B above, DB Entity shall have no rights to suspend or terminate this Agreement for any reason, and shall be obligated to continue performing in a diligent manner and without delay. #7..
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SCADA Upgrade Progressive Design Build Contract, Page 64 of 83 ARTICLE 15 – CLAIMS AND DISPUTE RESOLUTION

15.01 General
A. Claims and disputes under the Contract include disagreements, claims, counterclaims, matters in question, and differences of opinion between Owner and DB Entity, regarding the Work and modifications or changes to the Work. Disputes may involve interpretation of Contract Documents, acceptability of the Work, costs and/or time for performance.

B. The procedures specified herein shall be the sole and exclusive procedures for the resolution of disputes between Owner and DB Entity arising out of or relating to this Contract, unless Owner and DB Entity agree otherwise in writing. The Parties will participate in good faith in the procedures specified in this Article 15.

C. All applicable statutes of limitation and defenses based upon the passage of time shall be tolled while the procedures specified in this Article 15 are pending. The Parties will take such action, if any, required to effectuate such tolling.

D. In the event any dispute occurs under this Contract which cannot be readily resolved, it shall be referred to the appropriate executives of Owner and DB Entity for negotiation and resolution as described below.

E. In the event of a dispute between the parties described in this Article, pending resolution of the dispute(s), DB Entity agrees to and shall continue the Work diligently to completion conditioned only on Owner’s payment of undisputed amounts. If the dispute is not resolved, DB Entity agrees it will not stop, delay, or hinder progress of the Work, but shall continue the Work diligently to completion conditioned only on Owner’s payment of undisputed amounts.

15.02 Notice
A. Notice: Written notice stating the general nature of each claim, dispute, or other matter shall be delivered by DB Entity to Owner immediately, but in no event later than ten (10) days after the start of the event giving rise thereto. Notice of the amount or extent of the claim, dispute, or other matter with supporting data shall be delivered to Owner within thirty (30) days after the start of such event (unless Owner allows additional time for DB Entity to submit additional or more accurate data in support of such claim, dispute, or other matter.) A claim for an adjustment in Contract Price shall be prepared in accordance with the provisions of Paragraph 11.01. A claim for an adjustment in Contract Time(s) shall be prepared in accordance with the provisions of Paragraph 11.02. Each claim shall be accompanied by DB Entity's written statement that the adjustment claimed is the entire adjustment to which DB Entity believes it is entitled as a result of said event. In its claim DB Entity must provide justification for each line item of DB Entity’s claim including but not limited to specifying the section of the terms and conditions which provides an entitlement to the claim.

B. Owner's decision: Owner will render a formal decision in writing within sixty (60) days after receipt of the last submittal of DB Entity, if any. Owner's written decision on such claim, dispute, #7..
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SCADA Upgrade Progressive Design Build Contract, Page 65 of 83 or other matter will be final and binding upon Owner and DB Entity unless an appeal from Owner's decision is taken within the time limits and in accordance with the dispute resolution procedures set forth in this Article 15. Owner may issue unilateral change orders as referenced in Paragraph

9.04.A.3.

15.03 Meet and Confer
A. If the claimant disputes the Owner’s written response, or the Owner fails to respond within the time prescribed, the claimant may so notify the Owner, in writing, either within 15 days of receipt of the Owner’s response or within 15 days of the Owner’s failure to respond within the time prescribed, respectively, and demand an informal conference to meet and confer for settlement of the issues in dispute. Upon a demand, the Owner shall schedule a meet and confer conference within 30 days for settlement of the dispute.

B. Following the meet and confer conference, if the claim or any portion remains in dispute, the claimant may file a claim as provided in Chapter 1 (commencing with Section 900) and Chapter 2 (commencing with Section 910) of Part 3 of Division 3.6 of Title 1 of the Government Code. For purposes of those provisions, the running of the period of time within which a claim must be filed shall be tolled from the time the claimant submits his or her written claim pursuant to subdivision (a) until the time that claim is denied as a result of the meet and confer process, including any period of time utilized by the meet and confer process.

15.04 Litigation
A. The parties hereto agree that all actions or proceedings arising in connection with this agreement shall be tried and litigated exclusively in the state and federal courts of competent jurisdiction located in the County of Modesto, State of California or in the Federal District Court in the Eastern District of California. The aforementioned choice of venue is intended by the parties to be mandatory and not permissive in nature, thereby precluding the possibility of litigation between the parties with respect to or arising out of this agreement in any jurisdiction other than that specified in this paragraph. DB Entity agrees to waive any objections to venue or jurisdiction in the County of Modesto, State of California or in the Federal District Court in the Eastern District of California, for the purpose of litigating any dispute, controversy, or proceeding arising out of or related to this agreement.

15.05 Auditing of Claims
A. All claims filed by DB Entity shall be subject to audit at any time following the filing of the claim whether or not such claim is the subject of litigation. The audit and review of records may be performed by Owner or its consultants. Such right of audit shall include the records of DB Entity and its Design Sub-consultants, Subcontractors and Suppliers. The audit may begin on 10 days’ notice to DB Entity, Design Sub-consultants, Subcontractors, or Suppliers. DB Entity, Design Sub-consultants, Subcontractors and Suppliers shall be required to cooperate with the auditors and provide such information and records as are necessary for analysis of the claim.

15.06 Costs for Dispute Resolution
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SCADA Upgrade Progressive Design Build Contract, Page 66 of 83 A. Each party will bear its own costs, including but not limited to attorney’s fees, incurred as a result of any claim process and dispute resolution process contained in this Article 15. Notwithstanding the above, Owner shall have the right to recover its costs, including attorney’s fees, to the extent that these General Conditions provides Owner with such right.

ARTICLE 16 – MISCELLANEOUS

16.01 Giving Notice
A. All notices, demands, or other communications to DB Entity under this Contract shall be in writing and shall be deemed received if sent by certified mail, return receipt requested .

B. All notices to either Owner or DB Entity under this Contract shall be in writing. Any notice required or permitted to be given under this Agreement shall be deemed to have been given, served, and received if (i) given in writing and either personally delivered; (ii) sent by overnight delivery service; or (iii) certified mail, return receipt requested:

City
City of Modesto
1010 10th Street, Suite 4600
Modesto, California 95353
Attn: William Wong, P.E.

Email: [email protected]
DB Entity
Telstar Instruments
1717 Solano Way, Unit 34
Concord, CA 94520
Attn: Tammy Marston
Email: [email protected]
Any notice personally given shall be effective upon receipt. Any notice sent by overnight delivery service shall be effective the business day next following delivery thereof to the overnight delivery service. Any notice sent by certified mail shall be effective upon delivery or delivery attempt C. All correspondence to Owner under this Contract shall reference Owner’s Contract Number.

16.02 Computation of Times
A. When any period of time is referred to in the Contract Documents by days, it will be computed to exclude the first and include the last day of such period. If the last day of any such period falls on a Saturday or Sunday or on a day made a legal holiday by the law of the applicable jurisdiction, such day will be omitted from the computation.

16.03 Cumulative Remedies
A. The duties and obligations imposed by these General Conditions and the rights and remedies available hereunder to the parties hereto are in addition to, and are not to be construed in any way as a limitation of, any rights and remedies available to any or all of them which are otherwise imposed or available by:

1. Laws or Regulations; or

2. any special warranty or guarantee; or
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3. other provisions of the Contract Documents.

B. The provisions of Paragraph 16.03.A will be as effective as if repeated specifically in the Contract Documents in connection with each particular duty, obligation, right and remedy to which they apply.

16.04 Survival of Obligations
A. All representations, indemnifications, warranties and guarantees made in, required by or given in accordance with the Contract Documents, as well as all continuing obligations indicated in the Contract Documents, will survive Final Acceptance, final payment, and termination or completion of the Contract.

16.05 Controlling Law
A. The laws of the state of California shall govern all aspects of this Contract.

16.06 Truth-In-Negotiation
A. DB Entity warrants that all bid line items are true, complete and accurate and include all costs, overhead, profit and all other amounts associated with such items and may be relied upon by Owner when making additions or deductions to the Contract Price. DB Entity further warrants that all cost and pricing data provided to Owner during the term of the contract shall be complete, accurate and current when provided. Should there be any changes in the cost and pricing data previously submitted, DB Entity shall notify and provide the new information to Owner immediately. Owner shall be entitled to issue an appropriate change order to adjust the Contract Price and Contract Time(s) based on correcting inaccurate or incomplete information provided by DB Entity.

B. Despite any provisions in the Contract Documents to the contrary, any amounts paid by Owner to DB Entity in excess of that to which it is entitled under the Contract Documents shall be reimbursed by DB Entity to Owner. The making of final payment to DB Entity shall not be a waiver of Owner's right to reimbursement from DB Entity nor shall it discharge DB Entity's obligation to refund the overpayment. The terms of this Paragraph B shall survive Owner's making final payment.

C. DB Entity shall insert a provision containing all the requirements of this Paragraph 16.06 in all contracts between DB Entity and all DB-Related Entities, altering the section only as necessary to identify properly the contracting parties.

16.07 Notice to Other Agencies
A. DB Entity shall notify all public and private entities or agencies in accordance with any and all ordinances, laws, agreements, licenses, and any other directions of construction activity, disruption of access or services. Owner shall not be responsible for any such notification.

16.08 No Conflict with Laws Or Regulations
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SCADA Upgrade Progressive Design Build Contract, Page 68 of 83 A. The duties, obligations, criteria or procedure imposed by these General Conditions and the rights and remedies made available are in addition to, and are not to be construed in any way as a limitation of any rights and remedies available to any or all of them which are otherwise imposed or available by Laws or Regulations, except that in the event that a specific part or detailed requirement of a provision, criterion or procedure in these General Conditions and a specific part or detailed requirement of a provision, criterion or procedure imposed or available by Laws or Regulations are in conflict the specific part or detailed requirement of Laws and Regulations shall govern. All other specific parts or detailed requirements in the provisions, criteria or procedures of the applicable Laws or Regulations and these General Conditions not in conflict shall remain in full force and effect and be read with the controlling specific part or detailed requirement.

16.09 Advertising
A. No advertising shall be permitted upon any part of the Site or structures located on the Site. News or press releases pertaining to the services, work product(s), or performance of DB Entity under this Contract or the Project to which it relates shall be at the sole discretion of Owner.

16.10 Non-Solicitation
A. DB Entity shall not directly or indirectly, or through any other person, agency, company or organization solicit employees of Owner to undertake employment with it, its parent company, or any subsidiary company or any affiliated company during the performance of this Contract and for a period of one (1) year thereafter (the “non-solicitation period”). DB Entity acknowledges that actual or threatened violations of this Paragraph may give rise to irreparable injury to Owner, inadequately compensable in damages and, therefore, Owner may seek and obtain injunctive relief against the breach or threatened breach of DB Entity's obligations and undertakings thereunder, in addition to any other legal remedies which may be available. This Paragraph 16.10 will survive the termination of this Agreement. Violation of this Paragraph 16.10 during the non-solicitation period will be deemed a material breach of contract.

16.11 Records
A. DB Entity shall maintain records and Owner shall have inspection and audit rights as follows:

1. Maintenance of Records: DB Entity shall maintain all financial and non-financial records and reports directly or indirectly related to the negotiation or performance of this Contract including supporting documentation for any service rates, expenses, research or reports. Such records shall be maintained and made available for inspection for a period of five years from completing performance and receiving final payment under this Contract.

2. Examination of Records: Owner or its designated agent shall have the right to examine in accordance with generally accepted governmental auditing standards all records directly or indirectly related to this Contract. Such examination may be made only within five (5) years from the date of final payment under this Contract and upon reasonable notice, time and place. Records which relate to any litigation, appeals or settlements of claims arising from performance under this #7..
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SCADA Upgrade Progressive Design Build Contract, Page 69 of 83 Contract shall be made available until a final disposition has been made of such litigation, appeals or claims.

3. Cost and Pricing Data: DB Entity, by executing this Contract, certifies to truth in negotiation, specifically, that wage rates and other factual unit costs supporting the consideration are accurate, complete, and current at the time of contracting.

DB Entity agrees that Owner may adjust the consideration for this Contract to exclude any significant sums by which the consideration was increased due to inaccurate, incomplete, or non-current wage rates and other actual unit costs.

Owner shall make any such adjustment before the termination of this Contract.

4. Applicability to Authorized Agents: In the event that any of the Work is delegated by DB Entity, DB Entity hereby agrees to include in any such Contract a provision requiring such counterparty to agree to the same requirement for records retention, inspection and audit rights as set forth in this Paragraph 16.11.

5. Pursuant to California Statutes any part of the Work which include building plans, blueprints, schematic drawings, and diagrams, including draft, preliminary, and final formats, which depict the internal layout and structural elements of a building, water treatment facility, or other structure, must be maintained in a confidential manner and secured by DB Entity and parties associated with projects assigned under the Contract. Review by any unauthorized provider or outside/third party not performing work necessary for the assigned work order is prohibited. This Paragraph shall survive the expiration or termination of this Contract.

6. DB Entity and parties associated with projects assigned under the Contract shall complete, comply with and furnish to Owner a signed copy of a plan and specification request form, prior to obtaining such documents for bidding purposes.

16.12 Public Access
A. Owner shall allow public access to all Project documents and materials in accordance with the provisions of California Government Code Section 6250 et seq. Should DB Entity assert any exemptions to the requirements of California Government Code Section 6250 et seq. and related statutes, the burden of establishing such exemption, by way of injunctive or other relief as provided by law, shall be upon DB Entity.

16.13 Standards of Compliance
A. DB Entity hereby assures that no person shall be excluded on the grounds of race, color, creed, national origin, handicap, age, gender, sex, sexual orientation, or any other basis prohibited by applicable Laws and Regulations from participation in, denied the benefits of, or be otherwise subjected to discrimination in any activity under this Contract. DB Entity shall take all measures necessary to effectuate these assurances.
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SCADA Upgrade Progressive Design Build Contract, Page 70 of 83 B. DB Entity warrants that it has not employed or retained any person, other than a bona fide employee working solely for DB Entity, to solicit or secure this Contract. Further, DB Entity warrants that it has not paid or agreed to pay any person, other than a bona fide employee working solely for DB Entity, any fee, commission, percentage, gift, or other consideration contingent upon or resulting from the awarding or making of this Contract. For breach of this provision, Owner may terminate this Contract without liability and, at its discretion, deduct or otherwise recover the full amount of such fee, commission, percentage, gift, or other consideration.

16.14 DB Entity is an Independent Contractor
A. DB Entity shall be considered an independent contractor and neither party shall be considered an employee or agent of the other party. Nothing in this Contract shall be interpreted to establish any relationship other than that of independent contractor between the parties and their respective employees, agents, subcontractors, or assigns during or after the performance on this Contract. Both parties are free to enter into contracts with other parties for similar services. Owner shall not pay DB Entity staff any direct remuneration, expense reimbursement or compensation of any kind and DB Entity’s staff shall not be eligible for any benefit programs Owner offers to its employees. All benefits available to DB Entity’s staff shall be exclusively provided by DB Entity. DB Entity shall provide all billing, collection, payroll services and tax withholding, among other things, for all DB Entity staff performing services under this Contract.

16.15 No Right to Assign
A. DB Entity shall not assign, delegate, or otherwise transfer its rights and obligations as set forth in this Contract without the prior written consent of Owner. Any attempted assignment in violation of this Paragraph shall be null and void.

16.16 No Right to Pledge
A. DB Entity shall not pledge Owner’s credit or make Owner a guarantor of payment or surety for any contract, debt, obligation, judgment, lien, or any form of indebtedness.

16.17 No Right to Employment Benefits
A. DB Entity expressly understands and agrees that DB Entity, its officers, agents, and employees, are not entitled to any employment benefits from Owner. DB Entity expressly and voluntarily waives and agrees not to make any claim to participate in any of Owner’s employee benefits or benefit plans should DB Entity or any of its officers, agents, or employees be adjudicated for any reason to be an employee of Owner.

16.18 Void or Unenforceable Provisions Entire Agreement A. Any provision or part of the Contract Documents held to be void or unenforceable under any Law or Regulation shall be deemed stricken, and all remaining provisions shall continue to be valid and binding upon Owner and DB Entity, who agree that the Contract Documents shall be reformed #7..
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SCADA Upgrade Progressive Design Build Contract, Page 71 of 83 to replace such stricken provision or part thereof with a valid and enforceable provision that comes as close as possible to expressing the intention of the stricken provision.

16.19 Counterparts
A. This Agreement and all amendments to it may be executed in counterparts, each of which shall be deemed an original. A facsimile or electronic signature shall be deemed to be the equivalent of the actual original signature. All counterparts so executed shall constitute one document binding all the Parties hereto.

16.20 Nondiscrimination
DB Entity and its contractors and subcontractors shall not unlawfully discriminate, harass, or allow harassment against any employee or applicant for employee because of gender, sexual orientation, race, color, ancestry, religion, creed, national origin (including language use restriction), pregnancy, physical disability, mental disability, medical condition, age, marital status, or any other basis prohibited by applicable Laws and Regulations. DB Entity and its contractors and subcontractors shall comply with the provisions of the Fair Employment and Housing Act and associated regulations.

16.21 Entire Agreement
A. The Contract Documents states the entire understanding between the parties and supersedes any written or oral representations, statements, negotiations, or agreements to the contrary. DB Entity recognizes that any representations, statements or negotiations made by Owner staff or Owner consultants do not suffice to legally bind Owner in a contractual relationship unless they have been reduced to writing, approved, and signed by an authorized Owner representative. This Contract shall, as of the Effective Date of the Agreement, bind the parties, their assigns, and successors in interest.

END OF DOCUMENT
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SCADA Upgrade Progressive Design Build Contract, Page 72 of 83 EXHIBIT 4

LOCAL HIRE AND SKILLED AND TRAINED WORKFORCE

CERTIFICATIONS
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SCADA Upgrade Progressive Design Build Contract, Page 73 of 83

LOCAL HIRE CERTIFICATION

TO BE EXECUTED BY DB ENTITY AND SUBMITTED WITH CONTRACT PRICE PROPOSAL The undersigned declares:

I agree and certify that I will make a good faith effort to hire Qualified Individuals who are local residents in sufficient numbers so that no less than twenty-five percent (25%) of the total Construction Work Hours are performed by Local Residents. I certify that if this Contract Price Proposal is accepted I will take the following or similar actions to recruit and maintain Local Residents as part of the construction workforce pursuant to Section 8-

3.704(b) Modesto Municipal Code:

1. Contact local recruitment sources to identify Qualified Individuals who are Local Residents;

2. Advertise for Qualified Individuals who are Local Residents in trade papers and newspapers of general circulation within the City of Modesto and County of Stanislaus, or by electronic means (unless time does not permit such advertising);

3. If applicable, identify subcontractors whose workforce includes Qualified Individuals who are Local Residents.

I further certify that if this Contract Price Proposal is accepted I will include in each and every subcontract related to this bid a provision requiring the subcontractor to certify that it made a good faith effort to hire Qualified Individuals who are Local Residents. Capitalized terms not defined herein shall have the same meaning as in Section 8-3.703 Modesto Municipal Code
Any person executing this declaration on behalf of a DB Entity that is a corporation, partnership, joint venture, limited liability company, limited liability partnership, or any other entity, hereby represents that he or she has full power to execute, and does execute, this declaration on behalf of the DB Entity.

I certify under penalty of perjury under the laws of the State of California that the foregoing is true and correct. _______________________________________________
(Signature)
___________________________________________________
(Print Name & Title)
___________________________________________________
(Print Name of Bidder)
___________________________________________________
(Date)
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SCADA Upgrade Progressive Design Build Contract, Page 74 of 83

SKILLED AND TRAINED WORKFORCE CERTIFICATION

TO BE EXECUTED BY DB ENTITY AND SUBMITTED WITH CONTRACT PRICE PROPOSAL The undersigned DB Entity declares:

I agree and certify that I will make a good faith effort to employ a skilled and trained workforce, as defined by California Public Contract Code § 2601, to perform all work on the project that falls within an Apprenticable Occupation. I certify that if this Contract Price Proposal is accepted I will take the following or similar actions to recruit and maintain a skilled and trained workforce pursuant to Section 8-3.804(c) of the Modesto Municipal Code:

1. Contact recruitment sources to identify Qualified Individuals;

2. Advertise for Qualified Individuals in trade papers and newspapers of general circulation within the City of Modesto and County of Stanislaus, or by electronic means (unless time does not permit such advertising); and

3. If applicable, identify subcontractors whose workforce includes Qualified Individuals.

I further certify that if this Contract Price Proposal is accepted I will include in each and every subcontract related to this bid a provision requiring the subcontractor to certify that it made a good faith effort to use a skilled and trained workforce in that contract. Capitalized terms not defined herein shall have the same meaning as in Section 8-3.803 Modesto Municipal Code
Any person executing this declaration on behalf of a DB Entity that is a corporation, partnership, joint venture, limited liability company, limited liability partnership, or any other entity, hereby represents that he or she has full power to execute, and does execute, this declaration on behalf of the DB Entity.

I certify under penalty of perjury under the laws of the State of California that the foregoing is true and correct. ___________________________________________________
(Signature)
___________________________________________________
(Print Name & Title)
___________________________________________________
(Print Name of Bidder)
___________________________________________________
(Date)
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SCADA Upgrade Progressive Design Build Contract, Page 75 of 83 EXHIBIT 5

PREVAILING WAGE CERTIFICATION
I hereby certify that I will conform to the State of California Public Works Contract requirements regarding prevailing wages, benefits, on-site audits with 48-hours’ notice, payroll records, and apprentice and trainee employment requirements, as further set forth in Labor Code section 1720 et seq., for all Work on the above Project.

Date:

Name of DB Entity:

Signature:

Print Name:

Title:
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SCADA Upgrade Progressive Design Build Contract, Page 76 of 83 EXHIBIT 6
WORKERS’ COMPENSATION CERTIFICATION
Labor Code section 3700 in relevant part provides:

Every employer except the State shall secure the payment of compensation in one or more of the following ways:
a. By being insured against liability to pay compensation by one or more insurers duly authorized to write compensation insurance in this state.
b. By securing from the Director of Industrial Relations a certificate of consent to self-insure, which may be given upon furnishing proof satisfactory to the Director of Industrial Relations of ability to self-insure and to pay any compensation that may become due to his employees.

I am aware of the provisions of section 3700 of the Labor Code which require every employer to be insured against liability for workers' compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the Work of this Agreement.

Date:

Name of DB Entity:

Signature:

Print Name:

Title:
(In accordance with Article 5 - commencing at section 1860, chapter 1, part 7, division 2 of the Labor Code, the above certificate must be signed and filed with the awarding body prior to performing any Work under this Agreement.)
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SCADA Upgrade Progressive Design Build Contract, Page 77 of 83 EXHIBIT 7

ASBESTOS & OTHER HAZARDOUS MATERIALS CERTIFICATION

DB Entity hereby certifies that no Asbestos, or Asbestos-Containing Materials, polychlorinated biphenyl (PCB), or any material listed by the federal or state Environmental Protection Agency or federal or state health agencies as a hazardous material, or any other material defined as being hazardous under federal or state laws, rules, or regulations “New Material Hazardous”, shall be furnished, installed, or incorporated in any way into the Project or in any tools, devices, clothing, or equipment used to affect any portion of DB Entity's work on the Project for Owner.

DB Entity further certifies that it has instructed its employees with respect to the above-mentioned standards, hazards, risks, and liabilities.

Asbestos and/or asbestos-containing material shall be defined as all items containing but not limited to chrysotile, crocidolite, amosite, anthophyllite, tremolite, and actinolite. Any or all material containing greater than one-tenth of one percent (.1%) asbestos shall be defined as asbestos-containing material.

Any disputes involving the question of whether or not material is New Hazardous Material shall be settled by electron microscopy or other appropriate and recognized testing procedure, at Owner’s determination. The costs of any such tests shall be paid by DB Entity if the material is found to be New Hazardous Material.

All Work or materials found to be New Hazardous Material or Work or material installed with “New Hazardous Material” containing equipment will be immediately rejected and this Work will be removed at DB Entity's expense at no additional cost to Owner.

DB Entity has read and understood the document Hazardous Materials Procedures & Requirements, and shall comply with all the provisions outlined therein.

Date:

Name of DB Entity:

Signature:

Print Name:

Title:
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SCADA Upgrade Progressive Design Build Contract, Page 78 of 83 EXHIBIT 8

PERFORMANCE & PAYMENT BONDS
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SCADA Upgrade Progressive Design Build Contract, Page 79 of 83 EXHIBIT 9

INSURANCE REQUIREMENTS

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STANDARD AGREEMENT

FOR CONSULTANT SERVICES
THIS AGREEMENT, made and entered into in the City of Modesto, State of California, this day of , 2023, (“Effective Date”) by and between the CITY OF MODESTO, a municipal corporation of the State of California, hereinafter referred to as "City", and EMA, INC. DBA EMA OF MINNESOTA, INC., hereinafter referred to as "Consultant".

This Agreement is made with regard to the following recitals:

A. The City has determined that technical advisor services are necessary for the (SCADA) Supervisory Control and Data Acquisition System Replacement Project based on the City’s existing and future needs.

B. Consultant represents that it is qualified, willing and able to provide the services to prepare said document(s).

NOW, THEREFORE, in consideration of this agreement, and the mutual promises, covenants, and stipulations hereinafter contained, the parties agree as follows:

1. SCOPE OF SERVICES.

Consultant shall undertake and complete the preparation of the scope of work as set forth and described in the documents attached hereto and referred to as Exhibit "A" or "project". The Consultant shall perform the services as described in Exhibit "A" in a manner compatible with the standards of its profession, and shall produce a fully complete project that is acceptable to City.

2. TERM OF AGREEMENT.
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This Agreement is effective as of the date first written above and will continue in effect until City's acceptance of and payment for all services authorized by City and performed by Consultant, unless terminated earlier in accordance with the provisions of the termination clause in this Agreement.

Consultant shall undertake and complete the preparation of the scope of work as set forth and described in the documents commonly referred to as “project” attached hereto as Exhibit "A" and made a part hereof. City hereby gives Consultant notice to proceed with the preparation of the project in the manner described in Exhibit "A", as of the Effective Date of this agreement. Consultant shall diligently proceed with the preparation of the project and agrees to complete said preparation within the time period set forth in Exhibit "A".

3. COMPENSATION.

Consultant agrees to accept a sum not to exceed THREE HUNDRED SIXTY NINE THOUSAND SIX HUNDRED NINETY FOUR AND 00/100 DOLLARS ($369,694) (maximum compensation) as full remuneration for performing all services and furnishing all staffing and materials for Modesto in accordance with Exhibit "A" attached hereto and for performance by Consultant of all of its duties and obligations under this Agreement, except that additional services may be compensated as described below.

The Compensation shall be paid pursuant in the manner and at the times set forth below:

City shall pay Consultant on a time and materials basis for Consultant’s actual costs for all work called for in Exhibit “A” to this Agreement. All work to be performed under this Agreement shall be billed at the hourly rates set forth in Exhibit “B” attached hereto, Consultant shall submit monthly invoices to City which include detailed tasks, hours worked, #7..
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and billable rates for all work completed, and detailed receipts for any out-of-pocket costs paid by Consultant in connection with work performed on this project.

Additional services may be authorized by the City Manager in an amount up to, but not to exceed 10% of the agreed maximum compensation, or THIRTY SIX THOUSAND NINE HUNDRED SIXTY NINE AND 00/100 DOLLARS ($36,969). In the event that additional services are deemed necessary, the Consultant shall provide a written request to the City Manager indicating the reason for additional work, scope and cost of such work. The City Manager shall provide a written response to the request, either approving or denying the additional expenditure. If additional services are requested and approved, they will be billed at the hourly rates set forth in Exhibit “B” and may not exceed the amount requested and approved in writing by the City Manager. In that event, the new total compensation shall not exceed FOUR HUNDRED SIX THOUSAND SIX HUNDRED SIXTY THREE AND 00/100 DOLLARS ($406,663). If additional services in excess of this amount are deemed necessary by City Staff, an amendment to this Agreement will be required and must be approved by the City Council prior to commencing the work, as provided in Paragraph 9 of this agreement.

4. OBLIGATIONS OF CONSULTANT.

Throughout the term of this Agreement, Consultant shall possess, or secure all licenses, permits, qualifications and approvals legally required to conduct business.

Consultant warrants that it has all of the necessary professional capabilities and experience, as well as all tools, instrumentalities, facilities and other resources necessary to provide the City with the services contemplated by this Agreement. Consultant further warrants that it will follow the best current, generally accepted and professional practices to make findings, render opinions, #7..
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prepare factual presentations, and provide professional advice and recommendations regarding this project.

5. PERFORMANCE BY KEY EMPLOYEE.

Consultant has represented to City that David Selby, will be the person primarily responsible for the performance of the services referred to in this Agreement. City has entered into this Agreement in reliance on that representation by Consultant. Consultant therefore agrees that forty percent (40%) or more of the time to be devoted to the project that is the subject of this Agreement will be that of the above-named person.

6. OWNERSHIP OF DOCUMENTS/TITLE TO DATA.

Ownership of Documents
All reports, drawings, designs, graphics, working papers and other incidental work or materials furnished hereunder shall become and remain the property of the City, and may be used by City as it may require without any additional cost to City. No reports shall be used by the Consultant for purposes other than this contract without the express prior written consent of City.

Title to Data
If, as a part of the agreement, Consultant is required to produce data such as, but not limited to, drawings, plans, specifications, calculations, models, flow diagrams, visual aids and other related materials, the originals of all such data generated under this agreement will be delivered to City upon the completion or termination of services under the contract.

All materials, documents, data or information obtained from the City data files or any City medium furnished to Consultant in the performance of this Agreement will at all times remain the property of the City. Such data or information may not be used or copied for #7..
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direct or indirect use by Consultant after termination of this Agreement without written consent of the City.

7. NEWS AND INFORMATION RELEASE.

Consultant agrees that it will not issue any news releases in connection with either the award of this Agreement, or any subsequent amendment of or efforts under this Agreement, without first obtaining review and approval of said news releases from City through the City Manager.

8. INTEREST OF CONTRACTOR.

Consultant warrants that it presently has no interest and shall not acquire any interest, direct or indirect, which would conflict in any manner or degree with the performance of services required to be performed under this Agreement. Consultant warrants that, in performance of this Agreement, Consultant shall not employ any person having any such interest. Consultant agrees to file a Statement of Economic Interests with the City Clerk at the start and end of this contract if so required at the option of City.

9. AMENDMENTS.

Both parties to this Agreement understand that it may become desirable or necessary during the execution of this Agreement, for City or Consultant to modify the scope of services provided for under this Agreement. Any material extension or change in the scope of work shall be discussed with City and the change and cost shall be memorialized in a written amendment to the original contract prior to the performance of the additional work.

Until a change order is so executed, City will not be responsible to pay any charges Consultant may incur in performing such additional services, and Consultant shall not be required to perform any such additional services. #7..
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10. INDEPENDENT CONTRACTOR.

All acts of Consultant, its agents, officers, and employees and all others acting on behalf of Consultant relating to the performance of this Agreement, shall be performed as independent contractors and not as agents, officers, or employees of City. Consultant, by virtue of this Agreement, has no authority to bind or incur any obligation on behalf of City.

Consultant has no authority or responsibility to exercise any rights or power vested in the City.

No agent, officer, or employee of the City is to be considered an employee of Consultant. It is understood by both Consultant and City that this Agreement shall not under any circumstances be construed or considered to create an employer-employee relationship or a joint venture.

Consultant, its agents, officers and employees are and, at all times during the terms of this Agreement, shall represent and conduct themselves as independent contractors and not as employees of City.

Consultant shall determine the method, details and means of performing the work and services to be provided by Consultant under this Agreement. Consultant shall be responsible to City only for the requirements and results specified in this Agreement, and, except as expressly provided in this Agreement, shall not be subjected to City's control with respect to the physical action or activities of the Consultant in fulfillment of this Agreement. Consultant has control over the manner and means of performing the services under this Agreement.

Consultant is permitted to provide services to others during the same period service is provided to City under this Agreement. If necessary, Consultant has the responsibility for employing other persons or firms to assist Consultant in fulfilling the terms and obligations under this Agreement.
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If in the performance of this Agreement any third persons are employed by Consultant, such persons shall be entirely and exclusively under the direction, supervision, and control of Consultant. All terms of employment including hours, wages, working conditions, discipline, hiring, and discharging or any other term of employment or requirement of law shall be determined by the Consultant.

It is understood and agreed that as an independent contractor and not an employee of City neither the Consultant or Consultant's assigned personnel shall have any entitlement as a City employee, right to act on behalf of the City in any capacity whatsoever as an agent, or to bind the City to any obligation whatsoever.

It is further understood and agreed that Consultant must issue W-2 forms or other forms as required by law for income and employment tax purposes for all of Consultant's personnel.

As an independent contractor, Consultant hereby indemnifies and holds City harmless from any and all claims that may be made against City based upon any contention by any third party that an employer-employee relationship exists by reason of this Agreement.

11. ASSIGNMENT.

Neither this Agreement nor any portion thereof shall be subcontracted or assigned without the express prior written consent of the City in each and every instance.

12. PATENT/COPYRIGHT MATERIALS.

Unless otherwise expressly provided in the contract, Consultant shall be solely responsible for obtaining the right to use any patented or copyrighted materials in the performance of this Agreement. Consultant shall furnish a warranty of such right to use to City at the request of City.
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13. NOTICES.

Notice required by this Agreement shall be given in writing and shall be deemed given and effective upon receipt provided that such are delivered in accordance with the provisions of this Section. Notices shall be delivered either by: (a) personal delivery (including delivery by an overnight courier service which obtains confirmation of receipt); or (b) by facsimile, provided that such transmission is followed by delivery by an overnight courier service which obtains confirmation of receipt; or (c) postage prepaid, return receipt requested, certified mail; or (d) by electronic transmission subject to reasonable proof that the notice was both transmitted and received. Each such notice shall be sent to the parties at the address respectively set forth below or to such other address as a party may designate by written notice given in accordance with the provisions of this Section:

FOR CONSULTANT: Name: EMA, Inc.

Address: 2355 Highway 36 West, Suite 200
St. Paul, MN 55113-3819
Attention: Timothy S. Payne
Phone: (253) 606-6523
Email: [email protected]
FOR CITY: Name: City of Modesto
Address: P.O. Box 642
Modesto, CA 95353
Attention: Cristian Ciotau, Senior Civil Engineer
Phone: (209) 571-5424
Facsimile: (209) 522-1780

14. INSURANCE REQUIREMENTS.

The Consultant shall provide at its own expense and maintain at all times the following insurance with insurance companies licensed in the State of California and shall #7..
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provide evidence of such insurance to the City as may be required by the Risk Manager of the City. The policies or certificates thereof shall provide that, thirty (30) days prior to cancellation or material change in the policy, notices of same shall be given to the Risk Manager of the City by certified mail, return receipt requested, for all of the following stated insurance policies.

In the event the certificates of insurance required hereunder do not provide for notice of cancellation to the certificate holder and/or additional insureds, the Consultant shall provide, and shall require its subcontractors to provide, as an express condition precedent to payment hereunder, an endorsement from their insurers providing that the additional insureds identified herein shall be provided 30 days notice of the cancellation on the policies of insurance required hereunder (10 days notice if the policies are cancelled for non-payment of premium). In addition, the named insured on all such policies shall provide to the additional insureds identified herein any notices of cancellation of said insurance policies within 5 business days of receipt of such notice. The Consultant shall, as a further express condition precedent to payment for work performed, affirm under penalty of perjury that the required insurance on the project remains in place and said insurance has not been cancelled.
(a) Worker's Compensation - in compliance with the statutes of the State of California, plus employer's liability with a minimum limit of liability of $1,000,000. (b) General Liability insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. This insurance shall indicate on the certificate of insurance the following coverages and indicate the policy aggregate limit applying to: premises #7..
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and operations; broad form contractual; independent consultants and subcontractors; products and completed operations as applicable.
(c) Automobile Liability insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and property damage. This insurance shall cover any automobile for bodily injury and property damage.
(d) Professional Liability insurance with a minimum limit of $1,000,000 per claim and policy aggregate. If coverage is on a claims made basis it shall be maintained for at least three (3) years following completion of the work as long as such coverage is commercially available.

If at any time any of said policies shall be unsatisfactory to the City, as to form or substance, or if a company issuing such policy shall be unsatisfactory to the City, the Consultant shall promptly obtain a new policy, submit the same to the Risk Manager for approval and submit a certificate thereof as hereinabove provided. Upon failure of the Consultant to furnish, deliver or maintain such insurance and certificates as above provided, this Agreement, at the election of the City, may be forthwith declared suspended or terminated.

Failure of the Consultant to obtain and/or maintain any required insurance shall not relieve the Consultant from any liability under this Agreement, nor shall the insurance requirements be construed to conflict with or otherwise limit the obligations of the Consultant concerning indemnification. The City, its agents, officers, employees, and volunteers shall be named as an additional insured on all insurance policies required herein, except Workers' Compensation and Professional Liability. The Workers' Compensation insurer shall agree to waive all rights of subrogation against the City, its agents, officers, employees, and volunteers for losses arising from work performed by Consultant for the City. The Consultant's General Liability and Auto #7..
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Liability insurance policy(ies) shall include a provision that the coverage is primary as respects the City; shall include no special limitations to coverage provided to additional insured; and, shall be placed with insurer(s) with acceptable Best's rating of A:VII or with approval of the Risk Manager. The Consultant must deliver certificates evidencing existence of the insurance listed above to the City prior to the time the contract is signed.

CONSULTANT shall provide CITY with separate endorsements evidencing proof of the CITY’s additional insured status as to both the general liability and automobile liability insurance policies. In addition, CONSULTANT shall provide CITY with a Workers Compensation subrogation waiver by way of a separate endorsement. All endorsements referenced above must include the applicable policy number.

For any claims related to this project, the CONSULTANT’S insurance coverage shall be primary insurance as respects the Entity, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by the Entity, its officers, officials, employees, or volunteers shall be excess of the CONSULTANT’S insurance and shall not contribute with it.

15. TERMINATION OF AGREEMENT.

Termination by City for Default of Consultant
Should Consultant default in the performance of this Agreement or materially breach any of its provisions, at its option, City may terminate this Agreement by giving written notification to Consultant. The termination date shall be the effective date of the notice. For the purposes of this section, material breach of this Agreement shall include, but not be limited to, any of the following: failure to perform required services or duties, willful destruction of City's property by Consultant, dishonesty or theft. #7..
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Termination by City for Convenience
The City may also terminate the Consultant's performance under the Agreement, either in whole or in part, at its own discretion, or when conditions encountered during the Work make it impossible or impracticable to proceed, or when the City is prevented from proceeding with the Agreement by act of God, by law, or by official action of a public authority, or upon a determination by the City that such termination is in the best interest and convenience of the City, or whenever the City is prohibited from completing the Work for any reason. The City shall provide no less than ten (10) calendar days written notice of its intent to terminate the Agreement for convenience, and shall endeavor to provide the Consultant with consultation with the City prior to termination.

Post-Termination Procedure
Upon receipt of a written notice of termination pursuant to either of the foregoing paragraphs, the Consultant shall:
a. Cease its work as directed in the notice of termination as of the termination date and see to it that its employees, subconsultants and agents are notified of such termination and act as specified in the notice of termination;
b. Terminate all orders and Subcontractors except as necessary to complete any portion of the Work that is not terminated; c. If directed in writing by the City to do so, assign all right, title and interest in subcontracts and materials in progress to City, in which case the City will have the right at its discretion to settle, or pay any or all claims arising out of the termination of such #7..
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subconsultants, but in no event shall recovery by any Consultant or subconsultant include lost profits for portions of the Work not completed or undertaken, including materials not delivered; d. Deliver or otherwise make available to the City all data, drawings, specifications, reports, estimates, summaries and such other information and material as may have been accumulated by the Consultant in performing the Work whether completed or in process; e. Settle outstanding liabilities and claims, subject to the approval of City;
f. Complete performance of such part of the Work as has not been terminated;
g. Take such other actions as may be necessary, or as may be directed by the City for the protection and preservation of the Work and/or property related to the Work;
h. If City so requests, and at City's cost, Consultant shall provide sufficient oral or written status reports to make City reasonably aware of the status of Consultant's work on the project. i. The Consultant understands and agrees that City may, in City's sole discretion, refuse to pay Consultant for that portion of Consultant's services which were performed by Consultant on the project prior to the termination date and which remain
unacceptable and/or not useful to City as of the termination date. #7..
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City will pay Consultant an amount based on the percentage of satisfactory work completed in accordance with the notice of termination. The final payment to the Consultant after termination for convenience shall be limited to amounts due and owing under the Agreement at time of termination, including the following:
a. The cost of settling and paying valid claims arising out of the termination of the Work such as subconsultant agreements or contracts for materials;
b. The Agreement price allocable to the portion of the Work properly performed or goods supplied to the work site by the Consultant as of the date of termination, as determined in accordance with the notice of termination, reduced by any sums previously paid to the Consultant.

Authorization to Terminate Agreement
Termination of the Agreement may be invoked by the City Manager, or his/her designee, subject to the right of the Consultant to appeal the City Manager, or his/her designee’s, decision to the City Council. The Consultant shall appeal by notifying the City Clerk in writing within ten (10) calendar days of receipt of written notification from City of termination of the Agreement. In the event that termination of this Agreement is upheld by the City Council, any cessation of payment of delay claims, extended claims, Eichleay claims, or any other claims for delay shall be retroactive to the date of termination selected by the City Manager, or his/her designee.
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16. CERTIFIED PAYROLL REQUIREMENT.

For consultants performing field work on public works contracts on which prevailing wages are required: The Consultant shall comply with the provisions of Section 1776 of the California Labor Code, regarding payroll records, and shall require its subconsultants and subcontractors to comply with that section as may be required by law.

17. INDEMNITY.

The Consultant shall hold the City, its agents, officers, employees, and volunteers, harmless from and save, defend and indemnify them against any and all claims, losses, liabilities, judgments or damages from every cause, including but not limited to injury to person or property or wrongful death, including reasonable costs and expenses of defense of any judicial or administrative action, arising directly or indirectly out of any negligent or intentional act or omission of Consultant, or its agents, officers, employees, or volunteers relating to or during the performance of its obligations under this Agreement.

Consultant's obligation to defend, indemnify, and hold the City, its agents, officers, and employees harmless under the provisions of this paragraph is not limited to or restricted by any requirement in this Agreement for Consultant to procure and maintain a policy of insurance.

18. DISPUTE RESOLUTION.

All claims, controversies, or disputes arising out of, or relating to the formation of this Agreement, or the breach, termination execution, enforcement, interpretation, or validity of this Agreement, including the determination of the scope or applicability of this contract provision shall be determined by binding arbitration in Modesto, California by one arbitrator, except as otherwise specified in this Agreement. The American Arbitration #7..
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Association shall administer the arbitration under its Arbitration Rules then in effect, subject to the modifications of those rules contained in this paragraph. This agreement to arbitrate shall be specifically enforceable under the prevailing law of any court having jurisdiction, and the award rendered by the arbitrator may be entered in any court having jurisdiction. The appropriate venue for any arbitration or court proceeding relating to or arising out of this provision shall be in Stanislaus County, California.

This paragraph is not intended to and does not waive the claim filing requirements found in California Government Code section 900 et seq. In the event that a timely and legally sufficient, arbitrable claim is filed by Consultant with City, and the claim is rejected in whole or in part by City, this paragraph shall result in the conclusive, final, and binding resolution of all the issues presented in the claim by Consultant so long as any issues presented by the claim are arbitrable. Claims rejected by City or by operation of law, shall be submitted by Consultant to arbitration pursuant to the Arbitration Rules of the American Arbitration Association within ninety (90) days after mailing of the written rejection by City to Consultant.

Otherwise, the claim or claims shall be deemed waived in their entirety.

The “fast track’ rules of the American Arbitration Association shall apply to any claim or counterclaim less than ONE HUNDRED FIFTY THOUSAND AND 00/100 ($150,000.00) DOLLARS. In arbitration not proceeding under the “fast track” rules, the arbitrator shall have the power to order that depositions be taken and other discovery be made.

Both City and Consultant shall have the right, upon written notice, to take no more than three (3) depositions of the other as a matter of right in an arbitration proceeding under the “fast track” rules.
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Whether or not City and Consultant may be engaged in interstate commerce, any controversy or dispute mentioned above shall be determined by, and the parties shall be bound by, the substantive law of the State of California, and not the Federal Arbitration Act at 9 USC Section 1 et seq.

The arbitrator may grant any remedy or relief deemed by the arbitrator just and equitable under the circumstances, whether or not such relief could be awarded in a court of law. The arbitrator shall be empowered to award monetary sanctions against a party for failure of cooperation in the arbitration. The arbitrator shall, in written award, allocate all the costs of the arbitration, including the fees of the arbitrator and the reasonable attorney fees of the prevailing party, against the party who did not prevail. The prevailing party shall be the party in whose favor the majority of the central issues in the case are resolved.

Notwithstanding anything in this provision to the contrary, the arbitrator shall have no power to award punitive damages or other damages not measured by the party’s actual damages (excluding litigation costs and fees) against any party. This limitation of the arbitrator’s powers under this Agreement shall not operate as an exclusion of the issue of punitive damages from this Agreement to Arbitrate sufficient to vest jurisdiction in a court with respect to that issue.

Consultant shall include in all subcontracts a specification whereby the subcontractor consents to being joined in an arbitration between City and Consultant involving the work of the subcontractor to be joined. Consultant’s failure to do so shall be a breach of this Agreement.
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The parties hereby waive any rights provided by Title 9.2 of the California Code of Civil Procedure, Section 1296. The arbitrator’s award shall be deemed final, conclusive and binding to the fullest extent allowed by California law.

19. ENTIRE AGREEMENT.

This Agreement and its exhibits contain the entire understanding between Consultant and City. Additional or new terms contained in this Agreement which vary from Consultant's proposal are controlling and are deemed accepted by Consultant by shipment of any article or other commencement of performance hereunder. All previous proposals, offers and communications relative to this Agreement, whether oral or written, are hereby superseded except to the extent that they have been incorporated into this Agreement. No future waiver of or exception to any of the terms, conditions, and provisions of this Agreement shall be considered valid unless specifically agreed to in writing by all the parties.

20. PARTIAL INVALIDITY.

If any provision in this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way.

21. WAIVER.

The waiver by any party to this Agreement of a breach of any provision hereof shall be in writing and shall not operate or be construed as a waiver of any other or subsequent breach hereof unless specifically stated in writing. #7..
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22. AUDIT.

The City's duly authorized representative shall have access at all reasonable times to all reports, contract records, contract documents, contract files, and personnel necessary to audit and verify Consultant's charges to City under this Agreement.

Consultant agrees to retain reports, records, documents, and files related to charges under this Agreement for a period of four (4) years following the date of final payment for Consultant services. City's representative shall have the right to reproduce any of the aforesaid documents.

23. GOVERNING LAW.

This Agreement shall be governed according to the laws of the State of California.

24. HEADINGS NOT CONTROLLING.

Headings used in the Agreement are for reference purposes only and shall not be considered in construing this Agreement.

25. COMPLIANCE WITH LAWS.

Consultant shall insure compliance with all safety and hourly requirements for employees, in accordance with federal, state, and county safety and health regulations and laws. Consultant shall fully comply with all applicable federal, state, and local laws, ordinances, regulations and permits.

26. CITY BUSINESS LICENSE.

Consultant will have a City of Modesto business license. #7..
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IN WITNESS WHEREOF, the City of Modesto, a municipal corporation, has authorized the execution of this Agreement in duplicate by its City Manager and attestation by its City Clerk under authority of Resolution No. 2023- , adopted by the Council of the City of Modesto on the day of , 2023, and EMA, Inc., has caused this agreement to be duly executed in duplicate as of the Effective Date.

CITY OF MODESTO, EMA, Inc,
a municipal corporation a Minnesota corporation*
By ___________________________ By ________________________________ JOSEPH P. LOPEZ, City Manager Timothy S. Payne, Vice President By ________________________________
Terry Draper, Vice President
ATTEST: (Seal)
By ___________________________
DIANE NAYARES-PEREZ, City Clerk
Consultant’s Federal ID #______________
APPROVED AS TO FORM:

By ________________________________
JOSE M. SANCHEZ, City Attorney
APPROVED AS TO FORM:

By ________________________________
JOE F. RODRIGUEZ, Risk Manager
* Corporations - signature of two (2) officers
required or one (1) officer plus corporate seal
* LLC - signature of two (2) officers required
Partnership - signature of a partner required
Sole Proprietorship - signature of proprietor
required
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EXHIBIT A & B
City of Modesto SCADA DB Technical Advisory Services
Scope of Services – Rev 2
December 2022 1

SCOPE OF SERVICES

OVERVIEW
The City of Modesto (the City) currently utilizes an HSQ SCADA system to monitor and control facilities within the City’s water, wastewater, and storm water systems. The City faces various challenges related to the maintenance, operation, expansion, and reporting components of the SCADA system. In order to address the operational limitations and support challenges presented by the current system, the City is replacing the HSQ system with a commercial-off-the-shelf (COTS) system.

EMA has thus far provided Professional Engineering Services to assist the City in the planning and implementing of the replacement SCADA system. The process began with the evaluation of HMI systems, and then EMA worked with the City to determine the procurement and delivery methodology to be used for the upgrade project. EMA then assisted with the development of the scope of work needed to engage a qualified design-build team.

The City has elected to use the progressive design-build contracting method to deliver the SCADA Upgrade Project and has selected Telstar Instruments as the Design-Builder (DB Team). Additionally, Carollo Engineers will be providing Owner’s Advisor (OA) Services.

EMA has been engaged to provide Technical Advisory Services for the project. This will include providing support to the City to evaluate the technical aspects of the Pre-Construction phase services and development of the guaranteed maximum price (GMP). When the project moves into the construction phase, EMA will continue to support the City by reviewing submittals and overseeing SCADA system implementation and testing.

The following describes our proposed scope of work for these services. 1 #7..
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EXHIBIT A & B
City of Modesto SCADA DB Technical Advisory Services
Scope of Services – Rev 2
December 2022 2

SCOPE OF WORK
Phase 100 Project Management
The total duration of this project is anticipated to be approximately 15 months. EMA will provide the following project management services.

Task 110 Provide General Project Management
EMA’s project manager will supervise and assign project staff as appropriate to complete the project requirements in a timely manner. The PM will also track task budgets and prepare invoices on a monthly basis.

Task 120 Attend Periodic Project Meetings
EMA will participate in weekly check-in meetings via video conferencing. Attendance will include the City, Telstar, Carollo, and EMA. Additionally, EMA will attend quarterly partnering sessions anticipated to be 4 hours in length.

Task 130 Submit Progress Reports
EMA will develop monthly progress reports. The progress reports will summarize work completed in the previous month, work planned for the following month, any issues that need resolution, and budget. A copy of the progress report will be included with each invoice. EMA will ensure that the expenditures of each task are within budget; if the expenditures are in excess of the budgeted amount, EMA will submit with the monthly invoice, along with an adjusted budget allocation by task. The impact to the overall budget should also be indicated.

Phase 200 Design Field Investigations
Field site investigations will be conducted by the DB Team to gather the information needed to develop the design. Field site visits are anticipated for a duration of 15 weeks. EMA will participate in the initial investigations to facilitate this effort, including five days allotted for Remote Sites and two days for Treatment Plants.

Phase 300 Attend Workshops
Under this phase EMA will attend project workshops as follows:
 System Architecture
 Radio Telemetry / Network Alternatives (3)
 Tagging and Identification
 Project Implementation Alternatives (3)
 Historic Data, Conversion, Criteria
 PLC Hardware Evaluation
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EXHIBIT A & B
City of Modesto SCADA DB Technical Advisory Services
Scope of Services – Rev 2
December 2022 3
 Control Panel and PLC Technical Details
 Shop Drawing Format, Structure
 PLC Programming Standards (3)
 HMI/SCADA Standards (3)
 Standards for Related Projects
 Cybersecurity (3)
 Enterprise Integration / Interfaces
 Reporting (2)
For budgetary purposes, we are assuming the above 25 workshops are four hours in duration.

The DB Team will be responsible for conducting the workshops as well as meeting agendas, presentations, and meeting notes. For budgetary purposes, we are assuming that the workshops will be conducted in person and conducted by grouping the workshops into eight trips.

Phase 400 Submittal Review
EMA will review DB Team submittals, including Standards, Reports, Technical Memorandums, and multiple iterations of Design Drawings and Specifications. EMA will coordinate with the City and OA to determine which submittals will be reviewed by EMA. EMA’s comments will direct the DB Team to the necessary corrective actions when required, include recommended improvements, and identify the acceptability and recommended disposition of the submittal.

In general, submittals will be reviewed and returned with comments with 10 working days of their receipt. Extended review time may be required in certain cases, and EMA will notify the City and OA in advance if it is believed that the 10-day review turn-around period is not possible. EMA will provide one additional review for submittals that are returned to the DB Team for revision and resubmittal. Review of multiple re-submittals due to the DB Team’s inability to provide the proper information or comply with contract requirements is not included in our current project budget.

Task 410 General Submittals
General Submittals will include all Standards, Reports, and Technical Memorandums completed under the Pre-Construction phase. Anticipated submittals for review include the following:
 SCADA/HMI Configuration Standards
 Tagging and Identification
 PLC Programming Standards
 PLC Alternatives Analysis
 Control Panel Standards
 Loop Drawing Standards
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EXHIBIT A & B
City of Modesto SCADA DB Technical Advisory Services
Scope of Services – Rev 2
December 2022 4
 Design Standards
 Test Plan Outline
 Radio Path Computer Model Results
 Communication Study Report
 Cybersecurity Technical Memorandum
Task 420 Design Submittals
Design Submittals developed by the DB Team are to be submitted at 30%, 60%, and 85% design milestones. Anticipated submittals for review include the following:
 Design Drawings and Specifications
 Cost Estimates and GMP
 SCADA Network and Telemetry Upgrade Plan
 Basis of Design Hardware and Software BOMs
 Process Control Narratives (PCNs), existing and as-proposed  Maintenance of Operations Plans
 SCADA Migration Approach and Cutover Plan
 Data Migration Plan
EMA will attend the design review for each milestone. For budgetary purposes, we are assuming the workshops are four hours in duration. The DB Team will be responsible for conducting the workshops as well as meeting agendas, presentations, and meeting notes.

Phase 500 Construction Phase Scope and GMP Proposal Review The DB Team will prepare a detailed construction phase scope and Guaranteed Maximum Price proposal based on the 85% design milestone plan and specifications. This will outline the work that the DB Team proposes to self-perform, along with a detailed schedule for the construction phase. The following are anticipated for review:
 Construction Phase Scope Documents
 Construction Phase Estimating (GMP)
EMA will attend the review meetings for the above deliverables. For budgetary purposes, we are assuming two workshops that are four hours in duration. The DB Team will be responsible for conducting the workshops as well as the meeting agenda, presentation, and meeting notes. #7..
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EXHIBIT A & B
City of Modesto SCADA DB Technical Advisory Services
Scope of Services – Rev 2
December 2022 5
Phase 600 Construction Phase Services
EMA will provide technical advisory services through the construction phase, including submittal review and the overseeing of Factory Acceptance and Site Acceptance Testing. Based on the preliminary schedule provided by Telstar, it is anticipated that the Construction Phase will last for a duration of 26 months.

Task 610 100% Design Submittal Review
A final design submittal will be developed by the DB Team and submitted at the 100% design milestone. Anticipated submittals for review include the following:
 Design Drawings and Specifications
 SCADA Network and Telemetry Upgrade Plan
 Basis of Design Hard and Software BOMs
 Process Control Narratives (PCNs)
 Maintenance of Operations Plans
 SCADA Migration Approach and Cutover Plan
 Data Migration Plan
EMA will attend the 100% Design Review workshop. For budgetary purposes, we are assuming the workshop is four hours in duration. The DB Team will be responsible for conducting the workshop as well as the meeting agenda, presentation, and meeting notes.

Task 620 Factory Acceptance Testing
EMA will witness the required testing and record performance and compliance with the contract requirements for control system hardware and software that undergoes FAT in accordance with the DB contract and approved shop drawings.

EMA will review the DB Team’s factory acceptance test plans as part of the submittal review task, attend and observe, and review the DB Team’s test reports. EMA, along with Carollo and the City, will determine whether rework and/or additional testing is required. EMA will participate in any required additional testing to verify deficiencies are corrected.

For budgetary purposes, we assume the contractor will schedule multiple factory tests for portions of the system. We have assumed a total of four FATs conducted over 20 business days.

Task 630 Site Acceptance Testing
EMA will witness the required testing and record performance and compliance with the contract requirements for control system software that undergoes SAT in accordance with the construction contract and approved shop drawings.
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EXHIBIT A & B
City of Modesto SCADA DB Technical Advisory Services
Scope of Services – Rev 2
December 2022 6
EMA will review the DB Team’s site acceptance test plans as part of the submittal review process, attend and observe, and review the DB Team’s test reports. EMA, along with Carollo and the City, will determine whether rework and/or additional testing is required. EMA will participate in any required additional testing to verify deficiencies are corrected.

EMA will provide one technical resource for the SAT, assisting the City and participating in the testing process. It is anticipated that the resource will be participating in the SAT from the Control Room. This includes, but is not limited to the following:
 Verifying that all Standards are being adhered to.
 End-to-end loop testing of all hardwired and virtual I/O from the field device, through the PLC to the SCADA HMI.
 Step by step testing of established control strategies to ensure that operational requirements are maintained.

For budgetary purposes, we assume Site Acceptance Testing will be conducted over 60 business days.

Phase 700 Additional Technical Advisory Services
EMA will provide additional technical advisory services on a time and materiel basis, as requested by the City Project Manager. Potential additional services may include items such as:
 GMP Scope and Fee Negotiations
 Additional meetings or workshops
 Additional site visits
 Other services as requested by the City Project Manager For budgetary purposes, we have allotted 120 hours for additional technical advisory services. #7..
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EXHIBIT A & B
City of Modesto SCADA DB Technical Advisory Services
Scope of Services – Rev 2
December 2022 7
Project Duration and Fee Estimate
For budgetary purposes, we assume a total project duration of 41 months. This is comprised of 15 months for the preconstruction phase and 26 months for the construction phase.

The estimated overall level of effort is summarized in the table below.

Project Phase EMA Labor
Hours
Labor Cost Expenses Total Fee
Phase 100: Project Management 308 $60,340 $4,520 $64,860 Phase 200: Design Field Investigations 56 $10,360 $2,450 $12,810 Phase 300: Attend Workshops 160 $34,304 $21,480 $55,784 Phase 400: Submittal Reviews 188 $35,964 $4,380 $40,344 Phase 500: Construction Phase Scope
and GMP Proposal Review 48 $12,240 $4,820 $17,060
Phase 600: Construction Phase
Services 728 $106,376 $43,900 $150,276
Phase 700: Additional Technical
Advisory Services 120 $22,200 $6,360 $28,560
Total 1,584 $281,784 $87,910 $369,694
The hourly rates used in the development of the fee are in the table below, and based on the Design-Build Team’s 41-month project duration:

EMA Project Resource Hourly Rate
Principal in Charge $325
Project Manager $185
Staff Engineer $137
PLC SME $252
Telemetry SME $183
Cybersecurity SME $232
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CITY OF MODESTO

ECONOMIC DEVELOPMENT

COMMITTEE AGENDA REPORT
DATE OF MEETING:

May 1, 2023
Date: April 12, 2023
TO: Economic Development Committee
Sue Zwahlen, Chair
Chris Ricci, Vice Chair
Eric Alvarez, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: William Wong, Director of Utilities
SUBJECT: Proposed Water Rate Increases
CONTACT: William Wong, Director of Utilities, [email protected], 209-571-5801 DESCRIPTION:

Consider approving the Water System Engineer’s Report prepared by West Yost as complete; the Water Rate Study prepared by Bartle Wells Associates as complete; authorizing Staff to initiate the Proposition 218 process to adjust the City’s Water Rates beginning in Fiscal Year 2023-24 through Fiscal Year 2027-28 and forwarding to Council for approval. (Funding Source: Water Fund)
STRATEGIC PLAN ELEMENT:

The recommended action supports the 2020-2025 City’s Strategic Plan Initiatives, Goal D:

Provide safe, efficient, and reliable infrastructure through proactive community investment, maintenance and sustainability efforts.

BACKGROUND:

The City of Modesto provides water service to over 74,000 accounts consisting of residential, multi-family, commercial, and industrial customers located within the City of Modesto, as well as the communities of Salida, Empire, Grayson, Del Rio, and portions of Turlock and unincorporated Stanislaus County. The City’s water utility is a self-supporting utility enterprise funded by customer revenues from the sale of groundwater and treated surface water purchased from the Modesto Irrigation District.

In 1996, California voters adopted Proposition 218, which amended the California Constitution to establish a process that public agencies must follow when imposing new or increasing property related fees. In 2007, the California Supreme Court ruled that water service fees are property related fees, thus subject to Proposition 218 requirements. Proposition 218 mandates that any property-related fee imposed by a public agency cannot exceed the cost of providing that service #8..
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Economic Development Committee, May 1, 2023
Proposed Water Rate Increases

by imposing certain restrictions on the rate and fee amounts to be charged, and limits what costs can be funded by the revenue generated by the proposed rates and fees.

Proposition 218 also requires that a public agency mail a notice of the proposed rate increases to all affected property owners or ratepayers and conduct a public hearing to consider the proposed increases. The notice must include the proposed rate and fee amounts, state how the rates and fees were calculated, the reason for the fees, and the date, time, and location of the public hearing. The notice must also inform affected property owners or ratepayers that the rate increase is subject to a majority protest, meaning that if more than fifty percent (50%) of affected property owners or ratepayers submit written protests against the proposed rate increase, the increase will not be adopted. The notice must be sent to the affected property owners or ratepayers at least forty-five (45) days before the date of the public hearing.

The City last conducted an in-depth cost of service rate study in 2016, which was approved and implemented by the City Council by Resolution No. 2016-241. This Resolution established rates from fiscal year (FY) 2016-17 through 2020-21. The last rate change occurred October 1, 2021.

Table 1 - Previous Adopted Water Rate Increases (FY 2017-2021) As shown in Table 1, there was a significant first year increase needed to adjust the amount of revenue collected in the Water utility to meet requirements of the City’s financial polices (debt coverage ratio of 1.5 or greater) in FY2017. This large increase in FY 2017 was due to not raising water rates in FY 2015 and 2016. However, while the City did adopt higher water rate increases of 9% in FY 2019-2020 and 9% in FY 2020-21, City staff readjusted its capital program, and revised its projected revenues and expenses. As a result, City Staff was able to recommend, and Council approved, lower than adopted rates increase of 6% and 2%, respectively.

However, in the current economic environment, changes in the City’s water utility, including escalating operation and maintenance costs due to inflation, new regulatory requirements, and major water system capital improvements requires the City to update its water rate structure, and adopt a new five-year schedule of adjustments.

On December 8, 2020, Council, by Resolution No. 2020-526 approved an agreement with West Yost to update the Water System Engineer’s Report, which identifies all required water system improvement projects to meet current and future growth demands and new regulatory requirements. The Water System Engineer’s Report serves as the basis for the Water Rate Study (Study), providing the justification and allocation of costs for the proposed water Capital Improvement Program between existing and future customer classes.

On December 8, 2020, Council, by Resolution No. 2020-525, approved an agreement with Bartle Wells Associates (BWA) to conduct a comprehensive cost of service review of the water rates FY 2017-2021
Water Rates
FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
% increase 25.04% 11.08% 9% 9%
(revised to 6%)
9%
(revised to 2%)
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Economic Development Committee, May 1, 2023
Proposed Water Rate Increases

and fees, and prepare a new water rate and fee structure that is compliant with all legal requirements of Proposition 218.

DISCUSSION:

The analysis of the completed Engineer’s Report and water system Capital Improvement Program (CIP) cash flow, has identified a range of approximately $138 million to $185 million in CIPs between FY 2023-2027. Key CIPs to address water system reliability, water quality improvements and regulatory mandates (such as AB 1668 and SB 606) include:
 Strengthen & Replace Water System Pipeline Projects
 New and Replacement Wells and Wellhead Treatment
 Supervisory Control and Data Acquisition (SCADA) upgrades  Backup Power/Emergency Generators
 Advanced Metering Infrastructure (AMI)
 Water Storage Tank Improvements
 Sustainable Groundwater Studies and Projects
 Flow Transmission Main Capacity Improvements
 Additional/Upsized Transmission Mains and Pump Stations for South Modesto and Growth Areas
The CIP costs are incorporated into the comprehensive Water Rate Study update. Key rate and fee impacts were analyzed, including:
 Updating the cost of service, including steep inflationary increases  Rate design
 Amount of capital improvement spending
o Reduced capital improvement plan
o Full capital improvement plan
 Developing drought and non-drought rates
 Setting rates to recover operating costs and capital improvements  Evaluating revenue recovery from fixed meter charges vs. volume rate  Funding of capital improvements
o Analysis of different CIP scenarios
o Use of Reserves
o Rate revenues and connection fees
o Debt financing
Below is BWA’s comprehensive water cost of service methodology used for the rate Study:
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Economic Development Committee, May 1, 2023
Proposed Water Rate Increases

Project
Initiation
and Data
Collection
Demand
Analysis
LongRange
Financial
Plan
Cost
Allocatio
n
Rate
Design
Prop. 218
Process
BWA’s rate recommendations include modifications to the cost of service allocations and water rates. The recommended rates are designed to recover the Water utility’s cost of service and proportionately recover costs from customers. The financial challenges over the next five years will be to maintain debt service coverage and to stabilize revenues with reduced water volume sales, resulting from ongoing water conservation, regulatory mandates and looming drought conditions. Based on BWA’s analysis, the following proposed increases are needed to meet the revenue requirements for either a Reduced (low) or a Fully-funded capital improvement plan:

Table 2 – Proposed Water Rate Scenarios (FY 2024-2028)
FY 2023-24
% increase
FY 2024-25
% increase
FY 2025-26
% increase
FY 2026-27
% increase
FY 2027-28
% increase
Scenario 1
Reduced (Low)
CIP – No Debt
($138M)

4.5% 4.5% 4.5% 4.5% 4.5%
Scenario 2
Full CIP – with
Debt ($185M)*

4.5% 4.5% 4.5% 4.5%* 4.5%*
Scenario 3
Full CIP – No Debt
($185M)

6.5% 6.5% 6.5% 6.5% 6.5%
*Scenario 2 would require $40M in debt financing in FY 2027 and 2028 ($20M each year) The Study prepared by BWA found that prior water rate and fee increases had strengthened the financial condition of the Water Fund. However, current rates are not adequate to fund the needed water system reliability, water quality improvements, and meet regulatory mandates.

The Study developed three capital funding rate scenarios and their associated rate and fee requirements for consideration:
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Economic Development Committee, May 1, 2023
Proposed Water Rate Increases

• Scenario 1 – Reduced (Low) Capital, No Debt. This scenario projects inflation adjusted capital spending to total $138 million over the next five years. This scenario projects that all capital spending will be cash funded which is an average cash expense of $27.6 million per year. Scenario 1 also keeps the Water Fund’s debt coverage ratio above

1.50, maintains the Water Fund’s strong credit rating, covers the cost of service of the water system, funds the capital improvement program budget and supports the financial health of the Water Fund
• Scenario 2 - Full Capital with Debt. This scenario projects inflation adjusted capital spending to total $185 million over the next five years. This scenario projects that $145 million over the next five years will be cash funded which is an average cash expense of $29 million per year, with the remaining $40 million is projected to be debt financed.

Scenario 2 also keeps the Water Fund’s debt coverage ratio above 1.50, maintains the Water Fund’s strong credit rating, covers the cost of service of the water system, funds the capital improvement program budget, covers additional debt service, and supports the financial health of the Water Fund.
• Scenario 3 - Full Capital, No Debt. This scenario projects inflation adjusted capital spending to total $185 million over the next five years. This scenario projects that all capital spending will be cash funded which is an average cash expense of $37 million per year. Scenario 3 keeps the Water Fund’s debt coverage ratio above 1.50, maintains the Water Fund’s strong credit rating, covers the cost of service of the water system, funds the capital improvement program budget, and supports the financial health of the Water Fund.

Staff is recommending Scenario 2 - Full Capital Plan with Debt. Scenario 2 will provide the City with the same 4.5% rate increase as Scenario 1,and includes proposed debt financing to fund the full CIP program, including implementing the AMI project, which will help the City comply with the state water use mandates from Assembly Bill (AB) 1668 and Senate Bill (SB) 606. In addition, the proposed 4.5% annual rate increase is still below the City’s projected inflationary budget increases of 5.0%, and provides a debt coverage ratio of over 2.0, which is recommended by the City’s financial consultants for the water utility. While $40M in debt financing is anticipated, City Staff will continue to pursue alternate State and Federal funding opportunities to offset City Water Fund costs, and could potentially reduce the amount of debt required.

The Water Rate Study allocated cost between fixed costs for customer service and meter size, and variable cost of water used (volume) by meter. The table below reflects the recommended proposed rate schedule that includes the fully-funded CIPs (Scenario 2). #8..
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Economic Development Committee, May 1, 2023
Proposed Water Rate Increases

Table 2 – Proposed Scenario 2 Water Rates
A separate drought surcharge rate to be used only under drought conditions was developed to promote conservation, while minimizing impacts to the Water Fund Revenue. Currently, drought rates will be implemented when the Governor of California declares a state-wide drought, or through City Council action, when local water supplies are unsustainable and reach Stage 3 of the City’s Water Shortage Contingency Plan.

Under drought conditions, customers will pay a higher rate and consume less water, thereby maintaining a similar water bill as a non-drought condition. This surcharge will be implemented to recover the City’s water costs, many of which are fixed and do not decrease when conservation increases, from projected drought-level water use.

In order to maintain the debt coverage ratio above 1.50, maintain the Water Fund’s strong credit rating, and support the financial health of the Water Fund, staff recommends City Council approve Scenario 2 as shown above for the new water rates, effective October 1, 2023. Therefore, a Proposition (Prop) 218 protest vote process for water rates must be initiated and a water rate hearing conducted during August 2023.

FISCAL IMPACT:

The proposed increases will help the City generate sufficient revenues from FY 2023-24 through FY 2027-28 to cover costs associated with system operational and infrastructure needs required #8..
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Economic Development Committee, May 1, 2023
Proposed Water Rate Increases

to maintain reliable and high-quality water services. The increases will also allow the City to maintain a debt service coverage ratio above 1.50, which is essential to maintain a strong credit rating and the financial health of the Water Fund.

Modesto’s proposed rate increases in Scenarios 1 and 2 are in the median in comparison with nearby regional agencies (see below).

CEQA/NEPA REQUIREMENTS:

The adoption of the proposed rate increases does not constitute a project for the purposes of the California Environmental Quality Act (CEQA).

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion approving the Water System Engineer’s Report prepared by West Yost as complete; the Water Rate Study prepared by Bartle Wells Associates as complete; authorizing Staff to initiate a Proposition 218 process to adjust the City’s Water Rates beginning in Fiscal Year 2023-24 through Fiscal Year 2027-28 and forwarding to Council for approval. #8..
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Economic Development Committee, May 1, 2023
Proposed Water Rate Increases

Approved by:

William Wong, Director of Utilities
Joseph P. Lopez, City Manager
Attachments:

1. Draft Water System Engineer’s Report

2. Draft Water Rate Study

3. Water Proforma
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PREPARED BY
2022 Water System Engineer’s Report

PREPARED FOR
City of Modesto
Updated April 2023
FINAL REPORT | SEPTEMBER 2022
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FINAL REPORT | SEPTEMBER 2022
EARYEAR2020
2022 Water System Engineer’s Report
Prepared for
City of Modesto
Project No. 418-60-20-65
4/14/23
Project Manager: Roberto Vera, PE Date
4/14/23
QA/QC Review: Elizabeth Drayer, PE Date
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i City of Modesto
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September 2022 (Updated April 2023)
Table of Contents

1.0 Introduction ................................................................................................................................. 1

2.0 Summary of Capital Improvement Project Costs ............................................................................ 2

3.0 Water System Background ............................................................................................................ 4

3.1 Water Service Area ........................................................................................................................... 4

3.2 Current and Projected Water Demands ........................................................................................... 4

3.3 Existing Water Supplies .................................................................................................................... 6

3.3.1 Groundwater Supply ............................................................................................................... 6

3.3.2 Surface Water Supply.............................................................................................................. 7

4.0 Justification and Cost Allocation for Proposed Improvements ........................................................ 8

4.1 MRWTP Phase Two Expansion (Category 1) .................................................................................... 9

4.2 City-Side Downstream Improvements related to MRWTP Expansion (Category 2) ...................... 10

4.3 Improvements for South Modesto (Category 3) ............................................................................ 11

4.4 Water Quality Related Studies (Category 4) .................................................................................. 12

4.5 SCADA System Upgrades (Category 5) ........................................................................................... 13

4.6 New Corporation Yard (Category 6) ............................................................................................... 14

4.7 Existing Tank Improvements (Category 7) ...................................................................................... 15

4.8 Extend Water Mains Program (Category 8) ................................................................................... 16

4.9 Strengthen and Replace Water System Program (Category 9) ...................................................... 17

4.10 Install New Wells Program (Category 10)..................................................................................... 18

4.11 Wellhead Treatment Program (Category 11) ............................................................................... 19

4.12 Purchase and Install New Generators Program (Category 12) .................................................... 20

4.13 Water System Security Enhancements (Category 13) .................................................................. 21

4.14 Groundwater Management Program (Category 14) .................................................................... 22

4.15 Urban Water Management Plan (Category 15) ........................................................................... 23

4.16 Water Master Plan (Category 16) ................................................................................................. 24

4.17 Water System Evaluations (Category 17) ..................................................................................... 25

4.18 New Water Tanks (Category 18) .................................................................................................. 26

4.19 Water Meters Program (Category 19) .......................................................................................... 27

4.20 New or Replacement Pumps (Category 21) ................................................................................. 28

4.21 Utility Cuts Program (Category 22)............................................................................................... 29

5.0 Project Schedule and Cost Projections ......................................................................................... 30 #8..
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Table of Contents

LIST OF TABLES
Table 1. Summary of Five-Year and Ten-Year Water System Capital Improvement Program Costs and Allocations for Existing and Future Customers ......................................... 3 Table 2. Proposed Ten-Year Water System Capital Improvement Program Expenditures by Year .............................................................................................................. 31

LIST OF FIGURES
Figure 1. Water Service Areas ................................................................................................................ 5

LIST OF ACRONYMS AND ABBREVIATIONS
Af/yr Acre-Feet per Year 3
AMI Advanced Metering Infrastructure 17
AWIA America’s Water Infrastructure Act 13
CIP Capital Improvement Project 1
City City of Modesto 1
ENR Engineering News Record 1
GWMP Groundwater Management Plan 14
IRGMP Integrated Regional Groundwater Management Plan 14 mgd Million Gallons per Day 3
MID Modesto Irrigation District 1
MRWTP Modesto Regional Water Treatment Plant 1
Report 2022 Water System Engineer’s Report 1
RRMS Risk and Resilience Management Strategies 13
SCADA Supervisory Control and Data Acquisition 9
SJV Basin San Joaquin Valley Groundwater Basin 5
SOI Sphere of Influence 3
UWMP Urban Water Management Plan 15
VA Water System Vulnerability Assessment 13
WMP Water Master Plan 1
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1 City of Modesto
Engineer’s Report
September 2022 (Updated April 2023)
2022 Water System Engineer’s Report

1.0 INTRODUCTION
This 2022 Water System Engineer’s Report (Report) is an essential supporting document to conduct new water rate and capacity charge studies for the City of Modesto (City). It describes and justifies the various capital improvement projects and programs that are needed to provide and maintain reliable water service, including required water supplies, storage volumes, pumping capacities, distribution facilities, and system pressures under different demand conditions. It also identifies associated budgetary-level cost estimates and determines the appropriate cost allocation between existing and future water customers.

The City is proposing to fund the needed water system improvements using a combination of water utility rates, capacity charges (connection fees), and possibly some level of bond financing, as appropriate.

This Report is based on capital improvement projects (CIPs) developed as part of the City’s 2017 Water Master Plan (2017 WMP), on-going CIPs identified in the City’s 2021/22 fiscal year preliminary CIP budget, improvements previously identified in the City’s 2016 Engineer’s Report that have not yet been implemented or constructed, improvements by Modesto Irrigation District (MID) associated with the Modesto Regional Water Treatment Plant (MRWTP), as well as other needed improvements identified by City staff. CIPs identified in this Report are based on the best information available at the time of preparation.

It should be noted that estimated program costs and their associated cost allocations, may change as future conditions change (e.g., change in demands, additional and/or new regulations requiring City to implement groundwater well treatment, increase in pipeline failures leading to more strengthen and replace projects).

It is recommended that the City update program costs and associated cost allocations on a regular basis (e.g., every five years). As summarized in the following sections, program costs and allocations are provided for a five-year period and a ten-year period, with costs allocated to existing and future customers based on projected needs within the ten-year capital improvement plan.

This Report is organized into the following sections:
 Introduction
 Summary of Capital Improvement Project Costs
 Water System Background
 Justification and Cost Allocation for Proposed Improvements  Project Schedule and Cost Projections
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2.0 SUMMARY OF CAPITAL IMPROVEMENT PROJECT COSTS
The estimated CIP costs by project category and the recommended allocations between existing and future customers are summarized in Table 1. The new water rate and capacity charge studies will be based on funding only those improvements needed within the next ten years. Thus, the estimated five-year and ten-year program costs are approximately $220 million and $490 million, respectively. Additional information on program costs, and associated timing, is provided in Section 5 of this Report. All costs in this Report have been estimated based on the September 2022 Engineering News Record (ENR) Construction Cost Index of 15083.26 for San Francisco and have been escalated by 4 percent annually 1 to
the year of planned implementation and/or construction.

The CIP costs include allowances for project implementation (i.e., engineering, construction management and program implementation) and a construction contingency. The allowances and construction contingency total 50 percent of the estimated construction cost and are summarized as follows:
 Construction Contingency: 20 percent
 Engineering: 10 percent
 Construction Management: 10 percent
 Program Implementation: 10 percent
As described in Section 4, the cost allocation split between the existing rate payers and future users is specific to each project and is based on a methodology developed for each specific type of CIP. The tenyear CIP cost allocated to existing customers is approximately $407 million (approximately 83 percent of the ten-year cost) and to future users is approximately $83 million (approximately 17 percent of the ten-year cost).
1 The ENR CCI (SF) index was reviewed for the last ten years to determine the appropriate escalation. The yearover-year escalation average is 3.9 percent. For the purposes of this evaluation, a 4.0 percent escalation was used to estimate capital improvement costs for future years. #8..
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Total Cost,
dollars
Costs Allocated
to Existing
Customers,
dollars
Costs Allocated
to Future
Customers,
dollars
Total Cost,
dollars
10-Year Costs
Allocated to
Existing
Customers,
dollars
10-year Costs
Allocated to
Future
Customers,
dollars
1 MRWTP Phase Two Expansion 62 / 38 $10,732,400 $6,654,100 $4,078,300 $27,523,000 $17,064,300 $10,458,700 2 City-Side Downstream Improvements related to MRWTP Expansion 62 / 38 $7,971,000 $4,942,000 $3,029,000 $7,971,000 $4,942,000 $3,029,000 3 Improvements for South Modesto 62 / 38 $10,074,200 $6,246,000 $3,828,200 $30,933,700 $19,178,900 $11,754,800 4 Water Quality Related Studies 100 / 0 $130,900 $130,900 $0 $325,100 $325,100 $0 5 SCADA System Upgrades 100 / 0 $8,448,000 $8,448,000 $0 $9,358,000 $9,358,000 $0 6 New Corporation Yard 100 / 0 $9,035,500 $9,035,500 $0 $10,044,600 $10,044,600 $0 7 Existing Tank Improvements 100 / 0 $7,776,000 $7,776,000 $0 $16,009,100 $16,009,100 $0 8 Extend Water Mains 0 / 100 $2,494,300 $0 $2,494,300 $6,285,200 $0 $6,285,200 9 Strengthen and Replace Water System 100 / 0 $69,059,200 $69,059,200 $0 $197,285,600 $197,285,600 $0 10 Install New Wells 30 / 70 $28,985,700 $8,695,700 $20,290,000 $67,190,900 $20,157,300 $47,033,600 11 Wellhead Treatment 100 / 0 $13,537,700 $13,537,700 $0 $27,045,100 $27,045,100 $0 12 Purchase & Install New Generators 100 / 0 $2,543,100 $2,543,100 $0 $6,902,700 $6,902,700 $0 13 Water System Security Enhancements 100 / 0 $558,600 $558,600 $0 $1,133,100 $1,133,100 $0 14 Groundwater Management Program 62 / 38 $2,154,700 $1,335,900 $818,800 $2,773,900 $1,719,800 $1,054,100 15 Urban Water Management Plan 62 / 38 $383,700 $237,900 $145,800 $745,300 $462,100 $283,200 16 Water Master Plan 62 / 38 $479,504 $297,300 $182,204 $1,213,404 $752,300 $461,104 17 Water System Evaluation 62 / 38 $1,648,100 $1,021,800 $626,300 $2,665,300 $1,652,500 $1,012,800 18 New Water Tanks 62 / 38 $4,168,700 $2,584,600 $1,584,100 $4,168,700 $2,584,600 $1,584,100 19 Water Meters 100 / 0 $38,752,300 $38,752,300 $0 $67,693,000 $67,693,000 $0 21 New or Replacement Pumps 100 / 0 $575,100 $575,100 $0 $1,001,100 $1,001,100 $0 22 Utility Cuts 100 / 0 $934,900 $934,900 $0 $2,072,300 $2,072,300 $0 83 / 17 $220,444,000 $183,366,600 $37,077,004 $490,340,000 $407,383,974 $82,956,604 -- 83% 17% -- 83% 17%
Table 1. Summary of Five-Year and Ten-Year Water System Capital Improvement Program Costs and Allocations for Existing and Future Customers(a) Total
(a) Costs based on September 2022 San Francisco Engineering News Record (ENR) Construction Cost Index (CCI) (15083.26). There is no category 20. Category numbers were kept the same to remain consistent with previous reports and City Program numbers. 5-Year Costs 10-Year Costs
Category Number and Name
Existing / Future
Customer
Allocation,
percent
Total Percent Allocation:

N-C-418-60-20-65-E-CIP_DATABASE
City of Modesto
2022 Engineer's Report
Last Revised: 04-14-23
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4 City of Modesto
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September 2022 (Updated April 2023)

3.0 WATER SYSTEM BACKGROUND
The City’s existing water system is a conjunctive use system, which utilizes both surface water and groundwater to meet water demands within its water service area. In 2020, the City produced approximately 27,121 acre-feet per year (af/yr) (24.2 million gallons per day, mgd) of groundwater and purchased an estimated 25,983 af/yr (23.2 mgd)2 of treated surface water from MID. The treated surface water and groundwater supplies are used to serve North Modesto (the portion of the City’s contiguous service area north of the Tuolumne River). Groundwater supplies are used to serve South Modesto (the portion of the City’s contiguous service area south of the Tuolumne River) and the outlying areas where the City also provides water service. In the future, additional needed supply will be provided by additional groundwater supplies, pumped from either new wells or existing out-of-service wells that are planned to be rehabilitated.

The characteristics of the City’s water system are described in the following sections:
 Water Service Area
 Current and Projected Water Demands
 Existing Water Supplies

3.1 Water Service Area
The City’s water service area consists of one large contiguous service area and several outlying non-contiguous service areas. The City’s contiguous service area is primarily defined by the current Sphere of Influence (SOI), Salida, North Ceres and some unincorporated Stanislaus County “islands” within or adjacent to the SOI (Empire is within the SOI). The outlying service areas include Grayson, Del Rio, Ceres (Walnut Manor), and portions of Turlock. Figure 1 illustrates the location of the City’s contiguous and outlying service areas.

3.2 Current and Projected Water Demands
The City’s 2017 WMP defined existing demands within the contiguous area to be approximately 71,600 af/yr (63.9 mgd). Based on planned development of vacant areas within the General Plan area, projected water demand at buildout is estimated to be approximately 100,000 af/yr (89.3 mgd).

The City’s 2017 WMP, however, includes existing water demand based on City water use patterns from 2000 through 2013, which is prior to the 2012 to 2016 drought experienced in the State of California.

Since then, the City has been actively implementing water use efficiency and conservation measures that have resulted in a decrease in baseline existing water demand. Actual demand from 2015 to 2020 has ranged from 47,159 af/yr (2016) to 53,104 af/yr (2020), averaging 49,630 af/yr. Since recent actual demands have been lower than the City’s 2017 WMP projections, the City’s 2020 Urban Water Management Plan (UWMP) has reduced the City’s 2017 WMP buildout projections by 15 percent to 86,778 af/yr to reflect more recent and projected water use trends. This Report uses these reduced buildout demand projections (estimated to occur by 2050). 2 These estimates are based on Table 6-13 of the City’s 2020 Urban Water Management Plan. #8..
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0 1 2
Scale in Miles
Notes:

1. Sphere of influence boundary obtained from the City on 11/6/2014.

2. The City's contiguous service area is co-terminus with the City's SOI boundary except for the Salida and North Ceres areas.

3. City limit boundary based on County GIS data downloaded on October 6, 2014.

Turlock
Grayson
Modesto
Salida
Empire
Del Rio
North Ceres
(Portion Served by Modesto)
Ceres (Walnut Manor)
Bret Harte
West Modesto
Shackelford
Stanislaus County
Merced County
CYRD
REEK

ST A NISLAUS RI VE R

SAN JOAQUIN RIVER

DRY CREEK

TUOLUMNE RIVE R

STANISLAUS RIVER
§¨¦5
¬«108
¬«165
¬«99
¬«219
¬«132
¬«33
¬«132
Figure 1
Water Service Areas
City of Modesto
2021 Engineer's Report
Legend
Sphere of Influence (SOI)
Contiguous Service Area
Contiguous Area Outside of SOI
Outlying Service Area
City Limits
WEST YOST - N:\Clients\418 City of Modesto\60-20-65 2020 Engr Rpt\GIS\MXD\Fig1_WtrSrvArea.mxd - bvera - 4/20/2021 #8..
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3.3 Existing Water Supplies
The City has two existing water supply sources: local groundwater and treated surface water purchased from MID. The combination of these water supply sources allows the City to implement a conjunctive use operational strategy that is described further under the following topics:
 Groundwater Supply
 Surface Water Supply
The following sections are intended to be a brief overview of the City’s water supplies. Additional detailed information can be found in the City’s WMP and the City’s Urban Water Management Plan (UWMP).

3.3.1 Groundwater Supply
The City’s groundwater supply wells are located throughout the contiguous and outlying service areas, and located within the San Joaquin Valley Groundwater Basin (SJV Basin). The City currently has 89 active groundwater wells (including six wells for non-potable uses and two wells on standby). Groundwater supply is pumped from the following three subbasins within the SJV Basin:
 Modesto Subbasin
 Turlock Subbasin
 Delta-Mendota Subbasin
The City’s contiguous service area and some outlying service areas span both the Modesto and Turlock Subbasins. North Modesto, Salida, Empire, and Del Rio, are located in the Modesto Subbasin. South Modesto, Turlock, North Ceres, and Ceres (Walnut Manor) are located in the Turlock Subbasin. Grayson is located in the Delta-Mendota Subbasin. The City has developed a preliminary operational yield of 51,500 af/yr for the three groundwater subbasins (underlying the City’s service area).

The preliminary operational yield is a long-term average used to assess groundwater reliability for planning level type analyses, such as this Report, during all hydrologic conditions (dry, normal, and wet years). This preliminary operational yield is based on historical groundwater pumping by the City and the general conclusion is that if the total, long-term average groundwater pumping quantity is held at or below 51,500 af/yr, then stable groundwater levels will result, at approximately 40 feet above mean sea level within and near the City’s contiguous service area. If groundwater pumping is significantly less than 51,500 af/yr, groundwater levels will likely rise, thereby increasing the quantity of available groundwater stored within the basin for later use via “in-lieu” groundwater banking. Alternatively, if more than 51,500 af/yr is extracted (e.g., during dry years), groundwater levels will likely decline. However, actual groundwater extractions may be lower in wet years and higher in dry years; consequently, the preliminary groundwater operational yield available to the City for the planning period is assumed to be equal to the long-term average, or 51,500 af/yr.

It is worth noting that while the operational yield is currently defined as 51,500 af/yr, it does not imply that the City has the available infrastructure to extract this amount. As described in the various programs in subsequent sections, there are several groundwater well improvements planned. These improvements are intended to bolster the City’s infrastructure to have the ability to extract up to the operational yield.

The City’s various groundwater wells are aging and/or possibly threatened due to declining water quality or because of contaminants of emerging concern. The planned improvements are intended to improve #8..
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the City’s capacity and reliability of these facilities, which are an important facet of the City’s overall conjunctive use strategy.

3.3.2 Surface Water Supply
The City purchases treated surface water from the MID’s Modesto Regional Water Treatment Plant (MRWTP) during all hydrologic conditions (i.e., dry, normal, and wet years). MID has surface water rights on the Tuolumne River, which MID uses to supply some of its raw water to the MRWTP. The first phase of the MRWTP became operational in 1995 and provides the City with an annual average supply of 30 mgd (33,600 af/yr), with a functional peaking capacity of 42.5 mgd that helps meet the Maximum Day and Peak Hour demands of North Modesto. The MRWTP Phase Two Expansion Project was completed in 2016 and doubled the annual average capacity of the MRWTP to 60 mgd (67,200 af/yr). The MRWTP terminal reservoir facilities (booster pump station and tanks) and a portion of the transmission pipelines traversing the City are owned and operated by MID and the delivery of surface water is governed through an existing “Amended and Restated Water Treatment and Delivery Agreement”. #8..
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4.0 JUSTIFICATION AND COST ALLOCATION FOR PROPOSED

IMPROVEMENTS
The following recommended CIPs are necessary to meet projected demands described in the previous section and maintain safe and reliable water service to existing and future customers. These CIP recommendations only identify improvements at a master plan level and do not constitute a design of such improvements. Subsequent detailed design is required to determine the exact sizes, locations, and costs of the proposed improvements. Each recommendation is grouped into one of twenty-one CIP categories based on project type. CIP categories and cost allocations are shown in Table 1.

Costs allocated to existing customers are for those improvements necessary to safely and reliably serve existing customers. Costs allocated to future customers are for those improvements that are necessary to serve future customers after fiscal year 2021/22 and within the buildout planning horizon. The cost split between existing and future customers is clearly defined in the CIP categories based on the type of improvement or the proportionate share of demand for existing versus future customers.

The justification and cost allocation methodology for each individual project or program are described on the following pages.
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4.1 MRWTP Phase Two Expansion (Category 1)
Description
This category was used in the City’s 2016 Engineer’s Report to expand the capacity of the MRWTP from an annual average of 30 mgd to 60 mgd. Most of the costs associated with the MRWTP expansion have been expended. Costs within this category are intended to fund on-going operations and maintenance of the MRWTP, and are based on MID’s long-term maintenance projections.

Justification
Maintenance tasks include replacing filters, membranes, tanks, and pumps once they have reached the end of their useful life, as well as general system upgrades and improvements to the operations building.

These periodic updates ensure the MRWTP is kept up-to-date and able to maintain reliable water service to customers.

Cost Allocation
The cost allocation for existing and future customers for MRWTP maintenance is based on the proportionate share of demands for existing and future customers. The program is expected to require additional funds beyond the 10-year time horizon, as part of routine maintenance, but those are not yet known. The five-year and ten-year cost allocation for improvements is summarized in Table 1. #8..
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4.2 City-Side Downstream Improvements related to MRWTP
Expansion (Category 2)
Description
This program is to provide funding for the design, construction, and rights-of-way acquisition for the Cityside downstream improvements necessary to accommodate the increased production capacity of the MRWTP Phase Two Expansion. This project first received funding under the City’s 2016 Engineer’s Report and is mostly complete. The only remaining Project is Phase II of the previously planned Yosemite Transmission Mains.

Justification
Previous studies evaluated and recommended that conveyance be constructed for the City’s contiguous service area as part of the MRWTP Phase Two Expansion. One project has not been constructed, and is still required to further integrate the MID transmission mains with the City’s distribution system. The proposed improvement will help correct low pressures currently observed during Peak Hour conditions, which will benefit existing customers. It will also help distribute the additional treated surface water and therefore benefit future customers.

Cost Allocation
The cost allocation for existing and future customers for the City-Side Downstream Improvements related to the MRWTP Phase Two Expansion project is based on the proportionate share of demands for existing and future customers. The five-year and ten-year cost allocation for improvements is summarized in Table 1.
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4.3 Improvements for South Modesto (Category 3)
Description
Since the City has opted out of the regional surface water treatment project using Turlock Irrigation District supplied water, alternative improvements are needed to increase delivery reliability to customers in South Modesto. These improvements specific to South Modesto include new and replacement distribution/transmission pipelines (related to high and low priority fire flow improvements, the strengthen and replace program, and general grid improvements), as well as water meters and a new storage tank with associated booster pump station. Most of these improvements come from recommendations made in the 2017 WMP to support existing and future customers.

Justification
These improvements are needed for the City to better meet peak demands, maintain sufficient service pressures, and better meet future storage deficiencies. Since the South Modesto service area is not completely built out, these improvements would benefit both existing and future customers.

Cost Allocation
The cost allocation is based on the proportionate share of demands for existing and future customers. The five-year and ten-year cost allocation for improvements is summarized in Table 1. #8..
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4.4 Water Quality Related Studies (Category 4)
Description
This program provides funding for water quality related studies and activities, such as to investigate the presence of uranium and arsenic in groundwater. These studies are needed to identify cost-effective methods to manage groundwater resources for meeting the City's water supply needs.

Justification
Some of the City’s wells are out of service due to water quality concerns. Additionally, it is expected that more stringent regulations on groundwater quality in the future would require the City to shut down, replace, or provide wellhead treatment for more of its existing groundwater wells. These studies are a step in developing a plan to stabilize and manage the City’s groundwater resources.

Cost Allocation
Since these studies address existing wells needed to serve current customers, all of the cost is allocated to existing customers. The five-year and ten-year cost allocation for improvements is summarized in Table 1. #8..
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4.5 SCADA System Upgrades (Category 5)
Description
This project implements Supervisory Control and Data Acquisition (SCADA) system upgrades to improve the City’s operation and management of the water system.

Justification
The City uses its current SCADA system to monitor and control water system facilities to maintain reliable water service to customers. Improvements to the SCADA system are needed to continue to be able to reliably monitor and control the City’s water system. In 2017, the City undertook a SCADA Upgrade Study to develop a detailed set of requirements for a future SCADA system. The City’s current SCADA system is based on HSQ MISER software and associated proprietary hardware, which has been in place for over 20 years.

Several issues have recently been identified that have prompted the City to undertake a complete overhaul of its SCADA system. These issues generally include: 1) concerns over hardware/software obsolescence; 2) increased demands for access to the SCADA system and collected data for planning and analysis; 3) desire for system functionality enhancements; 4) dependence on a single vendor for SCADA system supply/support; and 5) concerns over SCADA system support.

Cost Allocation
The total cost of the project was estimated to be approximately $18 million. This cost, however, was intended to be split with other City departments and it is estimated that the water system would fund approximately half of this project. There is likely to be on-going annual operations and maintenance costs associated with this program after it is implemented, but these costs are not included since they are not known at this time.

Since the SCADA system is used for monitoring and control of the existing system, and its need for upgrade represents an existing system deficiency, existing customers are allocated 100 percent of the cost of this project. The five-year and ten-year cost allocation for improvements is summarized in Table 1. #8..
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4.6 New Corporation Yard (Category 6)
Description
This project will cover Phase 2 of the new Water Division Corporation Yard located along Litt Road. Phase 1 of construction is complete, however, several site improvements have not yet been completed, which are intended to be captured in Phase 2. Phase 2 improvement include: 1) construction/expansion of the employee parking lot; 2) construction of a new warehouse; 3) construction of material bins; 4) construction of solar canopies over the employee parking lot; 5) vehicle fuel station; and 6) vehicle car wash.

Justification
The City previously identified the need to construct a new corporation yard to replace the existing facility.

The scoping, design and construction of a new building was completed under Phase 1. The site development (as listed above) still needs to be completed under Phase 2.

Cost Allocation
Because the corporation yard supports current system operations, costs for this project are allocated to existing customers. The five-year and ten-year cost allocation for improvements is summarized in Table 1. #8..
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4.7 Existing Tank Improvements (Category 7)
Description
This program provides funding for interior and exterior enhancements to existing water storage tanks to improve water quality, system efficiency, and prolong their useful life. The improvements are generally routine maintenance items (e.g., tank inspections, re-coating, sealing, replacement of existing appurtenances, generator platforms, etc.) as well as fall protection safety enhancements.

Justification
The goal of this program is to maintain system integrity and prolong the useful life of existing tanks via tank rehabilitation improvements.

Cost Allocation
This program is funded annually and is expected to require additional funds beyond the ten-year time horizon, as part of routine maintenance, but those are not included as part of this Report. Although future customers might receive some benefit from the maintenance of these tanks, the tanks are existing facilities and these improvements are required to help maintain existing system performance. Therefore, 100 percent of the total cost for this category is allocated to existing customers. The five-year and ten-year cost allocation for improvements is summarized in Table 1. #8..
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4.8 Extend Water Mains Program (Category 8)
Description
This program extends water mains, on an as-needed basis, into developing areas to meet the demands of new growth, based on the recommendations identified in the 2017 WMP. Typically, this includes the installation of 12-inch diameter and larger pipelines, fire hydrants and valves, on a one-half mile grid.

Projects to complete distribution pipeline “looping” are included to improve service reliability to new water service areas.

Justification
As needed, this program includes the installation of new and/or upsized water mains that contribute to creating a distribution grid by extending or looping existing water mains to help maintain adequate system performance. These pipes will also enable the City to more efficiently integrate and distribute additional treated surface water from the MRWTP Phase Two Expansion.

Cost Allocation
This program is required to support demands from future customers. Therefore, costs are allocated entirely to future users. The five-year and ten-year cost allocation for improvements is summarized in Table 1. #8..
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4.9 Strengthen and Replace Water System Program (Category 9) Description
This category includes distribution and transmission pipeline replacements for high and low priority fire flow improvements, as well as grid improvements that were recommended in the 2017 WMP. In addition, this program replaces and upgrades deficient water mains throughout the water system that have reached the end of their useful life, on an as-needed basis.

Justification
Pipelines have a finite life expectancy, and eventually corrode, leak, or otherwise fail. This program aims to replace pipelines before they reach the point of failure. This program also includes pipelines that have been identified as inadequate to meet pressures under normal operating conditions or fire flows, as identified in the 2017 WMP.

Cost Allocation
This program is intended to maintain the system’s performance by strengthening and replacing existing pipelines; therefore, all costs are allocated to existing customers. This program is anticipated to extend past the ten-year planning horizon. The five-year and ten-year cost allocation for improvements is summarized in Table 1.
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4.10 Install New Wells Program (Category 10)
Description
This program includes the following improvements: 1) replaces wells previously taken out of service due to water quality concerns and that are deemed unsuitable for rehabilitation; 2) replaces older, low producing wells that are reaching the end of their service life; 3) adds new wells to help alleviate low flow problems and/or maintain adequate system pressures for existing customers; and 4) provides additional capacity (13 new wells, resulting in an additional 16.8 mgd of firm supply capacity) to meet increasing demands for new growth, as recommended in the 2017 WMP. The cost of a well field improvement plan is also included.

Justification
Since one of the primary sources of supply for the City is groundwater, these new wells will help maintain or increase the groundwater supply. The program is expected to produce approximately one to two new wells every year, mainly as new supply sources for the water system. It should be noted that historically, the City has replaced fewer wells than scheduled. In addition, the City has actively been destroying wells that that have reached their useful life, and thus the City no longer has access to that capacity. With recent reductions in demands, this lost capacity has been to date inconsequential, but if demands increase (either by increased/rebounded water use patterns or growth, or both) additional wells will be required.

Cost Allocation
Costs for this program are anticipated to extend beyond this ten-year program. Costs are allocated to existing and future customers based on the currently identified number of wells for the existing system and the projected required number of wells for the buildout system. The current estimate for new wells that replace older existing wells is approximately 30 percent of the overall ten-year cost. The remaining portion, 70 percent of the total ten-year cost, is associated with new wells to support future demands.

The five-year and ten-year cost allocation for improvements is summarized in Table 1. #8..
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4.11 Wellhead Treatment Program (Category 11)
Description
This program provides funding for the design and construction of wellhead treatment or blending facilities for wells throughout the water service area that are currently off-line due to high contaminant levels or are at risk of exceeding mandated maximum contaminant levels.

Justification
The program rehabilitates existing groundwater wells that the City has shut down because of water quality concerns, but are not candidates for replacement, as defined in the Install New Wells Program (Category 10). This category thereby extends the useful life of wells and therefore reduces the need to construct more than one well per year in Category 10. This program includes evaluating various wellhead treatments and available treatment alternatives that will bring key wells back into production. Bringing as many of these wells back on-line will maintain the City’s groundwater production capacity. This program also includes funding for the purchase and installation of new chlorine analyzers and flush lines.

Cost Allocation
Funding for this program addresses existing system deficiencies and is wholly allocated to existing customers. Costs for this program are anticipated to extend beyond this ten-year program. The five-year and ten-year cost allocation for improvements is summarized in Table 1. #8..
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4.12 Purchase and Install New Generators Program (Category 12) Description
This program provides funding to purchase and install generators for back-up power at various booster pump stations for tanks and well sites throughout the water system. Providing emergency power to these facilities during power interruptions or outages of the main grid is critical to maintaining reliable water service.

Justification
The back-up generators for these facilities improve supply reliability to meet existing demands. In addition, back-up generators for wells are recommended to provide for groundwater storage credit inlieu of construction of more costly storage tanks.

Cost Allocation
Generators are for existing facilities that are needed to support existing customers, and so all costs are allocated to existing customers. The five-year and ten-year cost allocation for improvements is summarized in Table 1.
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4.13 Water System Security Enhancements (Category 13)
Description
This program implements water system security improvements identified in the March 2003 Water System Vulnerability Assessment (VA), to comply with the Public Health Security and Bioterrorism Response Act of 2001. This program is ongoing, with several fencing installations already completed, and more fencing, security signage, and other security measures to be implemented at well and tank sites throughout the water distribution system. This program also includes implementing various Risk and Resilience Management Strategies (RRMSs) developed as part of the City’s Risk and Resilience Assessment (in compliance with the 2018 America’s Water Infrastructure Act [AWIA]) and includes periodic updates to the City’s Emergency Response Plan.

Justification
This program helps the City meet State and Federal requirements and implement the recommendations presented in the 2003 VA and identified as part of the City’s 2018 AWIA compliance.

Cost Allocation
Although future customers may benefit from these security enhancements, existing customers are allocated 100 percent of the category costs, since the improvements identified in the CIP are associated with existing system facilities. Costs for this program are anticipated to extend beyond this ten-year program. The five-year and ten-year cost allocation for improvements is summarized in Table 1. #8..
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4.14 Groundwater Management Program (Category 14)
Description
This program provides funding to develop projects that are identified through the Integrated Regional Groundwater Management Plan (IRGMP) in the Modesto Groundwater Basin and the Groundwater Management Plan (GWMP) in the Turlock Groundwater Basin. The two GWMPs were developed with respective jurisdictions that share a common groundwater basin. These programs are needed to effectively manage the groundwater basin as a safe and sustainable water supply. This program is intended to fund groundwater monitoring wells that need to be constructed to support the groundwater planning efforts discussed above. In addition, planning and studies aimed at securing State grants are also included under this category.

Justification
The IRGMP and GWMP identify goals and objectives needed to effectively manage the groundwater basin(s) as a safe and sustainable water supply. Work through this program will be coordinated with other jurisdictions to implement the IRGMP and GWMP, along with periodic amendments and updates as necessary. Participation in this program will also allow the City to become eligible for grants that can be used on various groundwater related projects (e.g., recharge programs and aquifer storage and recovery wells).

Cost Allocation
The groundwater management program enhances the City’s groundwater supply, which benefits both existing and future customers. The cost allocation is based on the proportionate share of demands for existing and future customers. Costs for this program are anticipated to extend beyond this ten-year program. The five-year and ten-year cost allocation for improvements is summarized in Table 1. #8..
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4.15 Urban Water Management Plan (Category 15)
Description
This program provides funding to develop UWMPs every five years. The program also provides funding for future water loss audits, conservation program implementation and potential future water supply assessments. This program will help ensure the reliability of the water supply and includes conservation programs, residential plumbing retrofits, recycled water implementations, and water system audits.

Justification
The City is required to comply with the Urban Water Management Planning Act and prepare an updated UWMP every five years. In addition, compliance with developing regulatory requirements centered around conservation will require additional conservation/consumption reporting.

Cost Allocation
This program benefits both existing and future customers because the UWMP is developed to assist decisions that affect existing system performance and future assured water supplies. The cost allocation is based on the proportionate share of demands for existing and future customers. Costs for this program are anticipated to extend beyond this ten-year program. The five-year and ten-year cost allocation for improvements is summarized in Table 1.
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4.16 Water Master Plan (Category 16)
Description
This program provides funding for the preparation of a system wide WMP and the completion of the associated environmental review (California Environmental Quality Act) work on a recurring basis. The WMP evaluates the hydraulic and operational performance of the City’s water system and addresses, among other items, future sources of supply, water quality issues, water demands, conjunctive use strategies, water system modeling updates, and capital improvements (for both existing and future customers).

Justification
The WMP allows the City to assess the impacts of future planned water system expansions, compare existing and planned supplies to existing and projected demands, and develop a revised capital improvement plan for both existing and future customers based on trends observed at the time.

Cost Allocation
This program benefits both existing and future customers since it addresses water system performance for both existing and future conditions. The cost allocation is based on the proportionate share of demands for existing and future customers. Costs for this program are anticipated to extend beyond this ten-year program. The five-year and ten-year cost allocation for improvements is summarized in Table 1. #8..
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4.17 Water System Evaluations (Category 17)
Description
This program provides funding for the preparation of "as-needed" engineering studies and water system evaluations throughout the water service area. These studies and evaluations normally involve assessing and evaluating demands for proposed developments, supply capabilities, the potential loss of key groundwater production wells, capital deficiencies, regulatory impacts, environmental reviews, water supply assessments, hydraulic modeling support, and other water system related activities. These studies are smaller than a WMP and are budgeted annually. This program also includes funding for maintenance of the hydraulic modeling software and hydraulic model updates.

Justification
The City needs to conduct time-critical engineering studies and evaluations of the water system, on an ongoing basis. The City typically conducts these engineering evaluations and water system studies in response to proposed development projects, determining impacts of changes to proposed capital improvement projects, regulatory agency requirements, and to increase the City staff’s level of understanding of the entire water system between updates of the WMP and UWMP.

Cost Allocation
The purpose of this program is to conduct various time critical engineering studies and water system evaluations required for existing and future expansions. The cost allocation is based on the proportionate share of demands for existing and future customers. Costs for this program are anticipated to extend beyond this ten-year program. The five-year and ten-year cost allocation for improvements is summarized in Table 1.
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4.18 New Water Tanks (Category 18)
Description
This program provides funding for new water tanks including booster pump stations, generators for backup power, and other associated facilities. Only one project is included within the ten-year timeframe:
completion of the Grayson Tank 15 and associated booster pump station. Other storage tanks were recommended in the 2017 WMP to mitigate the future storage deficiency, associated with future demands. These projects, however, are not expected to be required within the next ten years, and therefore are not included in the ten-year cost.

Justification
Using the performance and design criteria from the 2017 WMP, storage tanks should provide sufficient storage to address the following three supply components:
 Operational Storage: 25 percent of the Maximum Day demand.  Fire Flow Storage: Meets the required fire flow for two simultaneous fire flow events (a multi-family residential fire event that is non-sprinklered, and an industrial fire event).  Emergency Storage: Average Day demand for one day.

Cost Allocation
The Grayson Tank will serve both existing and future customers. The cost allocation is based on the proportionate share of demands for existing and future customers. The five-year and ten-year cost allocation for improvements is summarized in Table 1.
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4.19 Water Meters Program (Category 19)
Description
This program is established to fund the purchase and installation of advanced metering infrastructure (AMI) for customers throughout the City’s service areas, as well as to provide funding to upgrade obsolete meters. Costs associated with the data handling and storage of the associated AMI data is also included in this program.

Justification
While the City has already implemented a metering program to convert from a flat water rate structure to a metered one, there is now a need to upgrade the overall program to an AMI program. An AMI program will improve metering technology to allow for enhanced demand tracking, management, and to identify areas more easily where there is apparent water loss. This upgrade will ultimately support the City in current and future water conservation and/or water use efficiency efforts and provide the City’s water customers with the ability to track and monitor their own water use.

Cost Allocation
Since future customers are required to have meters installed as new areas are developed, this program directly affects and benefits existing customers only. Therefore, 100 percent of these costs are allocated to existing customers. The five-year and ten-year cost allocation for improvements is summarized in Table 1. #8..
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4.20 New or Replacement Pumps (Category 21)
Description
This Program replaces deficient water pumps, on an as-needed basis, at wells and booster pump stations that are beyond their useful life and/or too costly to repair.

Justification
Similar to the need to replace aging pipeline infrastructure in the water system over time, it is also necessary to replace existing deficient water pumps at wells and booster pump stations. In particular, pumps may need replacement over time if pump efficiency decreases or if the pump experiences mechanical problems that cannot be remedied with routine maintenance.

Cost Allocation
The costs for this program are budgeted annually and since these improvements are primarily focused on maintaining existing system performance, costs are only allocated to existing customers. Costs for this program are anticipated to extend beyond this ten-year program. The five-year and ten-year cost allocation for improvements is summarized in Table 1.
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4.21 Utility Cuts Program (Category 22)
Description
This program funds pavement repairs related to utility construction activities, such as the installation of water lines, valve replacement, water connections, and leak repairs.

Justification
The City maintains this program to cover costs beyond funds included as part of the Strengthen and Replace Water System Program (Category 9).

Cost Allocation
Utility cuts are required for existing pavement repairs which will benefit existing customers; therefore, 100 percent of the costs are allocated to existing customers. Costs for this program are anticipated to extend beyond this ten-year program. The five-year and ten-year cost allocation for improvements is summarized in Table 1.
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5.0 PROJECT SCHEDULE AND COST PROJECTIONS
The proposed CIP expenditures by year are summarized in Table 2. Table 2 shows the anticipated cost per fiscal year for each of the CIP projects, and the total cost for each fiscal year. Costs shown in Table 2 are escalated 4 percent annually to the year of planned construction. #8..
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Table 2. Proposed Ten-Year Water System Capital Improvement Program Expenditures by Year(a) Category
No. Category FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 FY 2031/32 5 Year Total 10 Year Total 1 MRWTP Phase Two
Expansion $1,280,600 $1,981,500 $1,733,500 $1,268,300 $4,468,500 $4,574,500 $5,459,100 $1,718,400 $4,015,100 $1,023,500 $10,732,400 $27,523,000 2 City-Side Downstream
Improvements related
to MRWTP Expansion
$862,900 $3,111,000 $3,608,800 $388,300 $0 $0 $0 $0 $0 $0 $7,971,000 $7,971,000 3 Improvements for
South Modesto $3,221,500 $4,546,800 $2,208,800 $97,100 $0 $1,606,900 $6,490,200 $4,709,300 $4,180,400 $3,872,700 $10,074,200 $30,933,700 4 Water Quality Related
Studies $23,100 $24,000 $25,600 $27,900 $30,300 $32,900 $35,700 $38,700 $41,800 $45,100 $130,900 $325,100 5 SCADA System
Upgrades $650,000 $1,300,000 $1,300,000 $2,599,000 $2,599,000 $650,000 $65,000 $65,000 $65,000 $65,000 $8,448,000 $9,358,000 6 New Corporation Yard $0 $12,000 $311,100 $4,270,800 $4,441,600 $699,900 $72,800 $75,700 $78,800 $81,900 $9,035,500 $10,044,600 7 Existing Tank
Improvements $3,969,300 $514,600 $547,600 $1,210,100 $1,534,400 $14,000 $1,565,000 $1,612,400 $3,322,300 $1,719,400 $7,776,000 $16,009,100 8 Extend Water Mains $201,400 $658,100 $246,400 $621,200 $767,200 $699,900 $727,900 $757,000 $787,300 $818,800 $2,494,300 $6,285,200 9 Strengthen and Replace
Water System $12,613,000 $12,833,900 $15,426,600 $15,998,300 $12,187,400 $26,745,000 $23,653,600 $29,577,000 $22,513,600 $25,737,200 $69,059,200 $197,285,600 10 Install New Wells $6,770,800 $5,545,900 $4,598,000 $5,603,800 $6,467,200 $5,599,100 $6,550,900 $7,570,000 $8,660,000 $9,825,200 $28,985,700 $67,190,900 11 Wellhead Treatment $3,238,700 $2,117,900 $2,849,700 $2,976,300 $2,355,100 $2,463,300 $2,576,700 $2,695,700 $2,820,400 $2,951,300 $13,537,700 $27,045,100 12 Purchase & Install New
Generators $28,800 $329,100 $311,100 $1,100,100 $774,000 $804,900 $837,100 $870,600 $905,400 $941,600 $2,543,100 $6,902,700 13 Water System Security
Enhancements $143,900 $59,900 $62,300 $90,600 $201,900 $70,000 $72,800 $75,700 $110,300 $245,700 $558,600 $1,133,100 14 Groundwater
Management Program $69,100 $1,017,100 $597,400 $0 $471,100 $42,000 $0 $529,900 $47,300 $0 $2,154,700 $2,773,900 15 Urban Water
Management Plan $115,100 $30,000 $31,200 $32,400 $175,000 $35,000 $36,400 $37,900 $39,400 $212,900 $383,700 $745,300 16 Water Master Plan $10,904 $0 $0 $64,800 $403,800 $0 $0 $0 $78,800 $655,100 $479,504 $1,213,404 17 Water System
Evaluation $589,700 $618,100 $135,100 $146,300 $158,900 $172,200 $186,400 $202,200 $218,900 $237,500 $1,648,100 $2,665,300 18 New Water Tanks $0 $89,800 $1,306,700 $1,358,900 $1,413,300 $0 $0 $0 $0 $0 $4,168,700 $4,168,700 19 Water Meters(c) $0 $0 $13,293,000 $12,356,600 $13,102,700 $13,894,200 $14,733,900 $95,200 $107,900 $109,500 $38,752,300 $67,693,000 21 New or Replacement
Pumps $0 $0 $248,900 $258,900 $67,300 $72,800 $78,700 $84,800 $91,400 $98,300 $575,100 $1,001,100 22 Utility Cuts $172,600 $179,500 $186,700 $194,200 $201,900 $210,000 $218,400 $227,100 $236,200 $245,700 $934,900 $2,072,300 Total $33,961,404 $34,969,200 $49,028,500 $50,663,900 $51,820,600 $58,386,600 $63,360,600 $50,942,600 $48,320,300 $48,886,400 $220,443,604 $490,340,104 (a) Costs based on September 2022 San Francisco Engineering News Record (ENR) Construction Cost Index (CCI) (15083.26) and Costs are escalated by 4% annually to the year of planned construction. (b) While some Categories show zero remaining costs, there will be costs beyond the ten-year plan horizon (e.g., Categories 7, 9, 14, 15, 16, 19, etc.). (c) Updated capital costs for Water Meters provided by City staff on April 13, 2023.

N-C-418-60-20-65-E-CIP_DATABASE
City of Modesto
2022 Engineer's Report
Last Revised: 04-14-23
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CITY OF MODESTO

WATER RATE STUDY

DRAFT REPORT
April 12, 2023
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2625 Alcatraz Ave, #602
Berkeley, CA 94705
Tel 510 653 3399
www.bartlewells.com
April 12, 2023

Utilities Department, City of Modesto
1010 Tenth Street, 4th Floor, Suite 4600
Modesto, CA 95354
Attention: William Wong, Director of Utilities
Re: Water Rate Study
Bartle Wells Associates is pleased to submit to the City of Modesto the attached Draft Water Rate Study. The study presents BWA’s analysis of the operating and non-operating expenses of the City’s water system and provides a five-year cash flow projection. The primary purpose of this study was to analyze the City’s water enterprise and make recommendations that would achieve financial sustainability. Another important purpose of this study was to review rates to ensure that they adhere to the State’s legal requirements.

BWA finds that the rates and charges proposed in our report reflect the cost-of-service for each customer, follow generally accepted rate design criteria, and adhere to the substantive requirements of Proposition 218. BWA believes the proposed rates are fair and reasonable to the City’s customers.

Please contact us with any future questions about this study and the recommended water rates.

Sincerely,

Douglas Dove, PE, CIPMA Erik Helgeson, MBA
Principal/ President Vice President
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Contents
1 Executive summary........................................................................................ 1

1.1 Introduction ............................................................................................................................... 1

1.2 Rate Study Objectives .................................................................................................................. 1

1.3 Cash Flow Projection Scenarios ................................................................................................... 2

1.4 Water Rate Recommendations per Scenario............................................................................... 2 2 Background, Objectives, and Legal Requirements.......................................... 4

2.1 Rate Study Objectives .................................................................................................................. 4

2.2 Rate-Study Process....................................................................................................................... 5

2.3 Constitutional Requirements for Rates........................................................................................ 5

2.3.1 Article 13D, Section 6................................................................................................................... 5

2.3.2 Article 10, Section 2 ..................................................................................................................... 6

2.4 Statute of Limitations................................................................................................................... 6 3 Projected Water Demand and Customer Characteristics................................ 7

3.1 Projected Water Demand ............................................................................................................ 7

3.2 Water Services and Equivalent Capacity...................................................................................... 7 4 Water Financial Plan ...................................................................................... 9

4.1 Water Financial Overview ............................................................................................................ 9

4.2 Key Drivers of Rate Increases....................................................................................................... 9

4.3 Financial Plan Assumptions........................................................................................................ 10

4.4 Cash Flow Projections ................................................................................................................ 10

4.5 Cash Flow Projection Scenarios ................................................................................................. 11

4.6 Cash Flow Projection for Scenario 1 - Low Capital, No Debt ..................................................... 11

4.7 Cash Flow Projection for Scenario 2 - Full Capital with New Debt ............................................ 14

4.8 Cash Flow Projection for Scenario 3 - Full Capital, No Debt ...................................................... 17

4.9 Scenario Projected Cashflow Comparison ................................................................................. 20 5 Cost-of-Service Rate Derivation ................................................................... 21

5.1 Functional Allocation.................................................................................................................. 22

5.2 Rate Derivation .......................................................................................................................... 24

5.3 Proposed Water Rates ............................................................................................................... 27 6 Regional Residential Bill Comparison ........................................................... 30 #8..
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7 Drought Rates.............................................................................................. 31 8 Conclusion and Recommendations .............................................................. 33

8.1 Conclusion ............................................................................................................................. 33

8.2 Recommendations..................................................................................................................... 33 Appendix A - Scenario 1 Water Rate Study Tables
Appendix B - Scenario 2 Water Rate Study Tables
Appendix C - Scenario 3 Water Rate Study Tables
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LIST OF TABLES
Table 1 – Proposed Scenario 1 Water Rates............................................................................................................ 2 Table 2 – Proposed Scenario 2 Water Rates............................................................................................................ 3 Table 3 – Proposed Scenario 3 Water Rates............................................................................................................ 3 Table 4 – Historic and Projected Potable Supply and Metered Demand ............................................................... 7 Table 5 – Water Services and Meter Equivalent Units............................................................................................ 8 Table 6 – Scenario 1 Cash Flow Projection Summary............................................................................................ 11 Table 7 – Scenario 1 Detailed Cash Flow Projections............................................................................................ 13 Table 8 – Scenario 2 Cash Flow Projection Summary............................................................................................ 14 Table 9 – Scenario 2 Detailed Cash Flow Projections............................................................................................ 16 Table 10 – Scenario 3 Cash Flow Projection Summary.......................................................................................... 17 Table 11 – Scenario 3 Detailed Cash Flow Projections.......................................................................................... 19 Table 12 – Scenario Projected Cashflow Comparison ........................................................................................... 20 Table 13 – Scenario 1 Functional Allocation .......................................................................................................... 23 Table 14 – Scenario 2 Functional Allocation .......................................................................................................... 23 Table 15 – Scenario 3 Functional Allocation .......................................................................................................... 23 Table 16 – Scenario 1 Rate Derivation ................................................................................................................... 24 Table 17 – Scenario 2 Rate Derivation ................................................................................................................... 25 Table 18 – Scenario 3 Rate Derivation ................................................................................................................... 26 Table 19 – Proposed Scenario 1 Water Rates........................................................................................................ 27 Table 20 – Proposed Scenario 2 Water Rates........................................................................................................ 28 Table 21 – Proposed Scenario 3 Water Rates........................................................................................................ 29 Table 22 – Proposed Scenario 1 Drought Rates..................................................................................................... 31 Table 23 – Proposed Scenario 2 Drought Rates..................................................................................................... 32 Table 24 – Proposed Scenario 3 Drought Rates..................................................................................................... 32

LIST OF FIGURES
Figure 1 – Cost-of-Service Rate Study Process......................................................................................................... 5 Figure 2 – Scenario 1 Projected Cashflow Graph................................................................................................... 12 Figure 3 – Scenario 2 Projected Cashflow Graph................................................................................................... 15 Figure 4 – Scenario 3 Projected Cashflow Graph................................................................................................... 18 Figure 5 – Residential Bill Comparison................................................................................................................... 30 #8..
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City of Modesto – Water Rate Study 2023
1 EXECUTIVE SUMMARY

1.1 Introduction
The City of Modesto provides water service to over 74,000 accounts throughout the City of Modesto, Salida, Empire, Grayson, Del Rio, and portions of Ceres (Walnut Manor) and Turlock. The City of Modesto’s water sources are groundwater and treated surface water purchased from the Modesto Irrigation District.

The revenues from the City’s water utility are primarily derived from charges for services. The City must establish rates and charges adequate to fund the cost of providing water services, which includes costs for operations and maintenance, as well as capital improvements needed to keep the City’s utility infrastructure in a safe and reliable operating condition.

The City has provided proactive financial stewardship by raising rates to keep revenues in line with the costs of providing water service. Those rate increases have enabled the City to maintain its financial health.

The City’s water utility is a financially self-supporting enterprise, where revenues are derived primarily from water service charges. As such, the City’s water rates must be set at adequate levels to fund the costs of providing service and:
• Fund ongoing operating and maintenance expenses
• Address regulatory requirements
• Fund the capital improvement projects, related debt service, and associated increased operating costs • Provide funding for water system maintenance and upgrades The prior water rate increases strengthened the financial condition of the water enterprise. However, current rates are not adequate to fund the needed improvements and meet regulatory water quality and supply requirements.

1.2 Rate Study Objectives
The City has historically adopted rate increases in order to keep revenues in line with the escalating costs of providing service. Therefore, in 2020, the City retained BWA to develop a cost-of-service based water rate study.

Key goals and objectives of this study include developing water rates that:
• Recover the costs of providing service, including operating, capital, and debt funding needs; • Are proportionate, fair, and equitable to all customers; • Are easy to understand and implement;
• Comply with the substantive requirements of the California Constitution, Article 13D, Section 6 (which was adopted by the voters as Proposition 218 in 1996) and the general mandate of Article 10, Section 2 that prohibits the wasteful use of water;
• Support the long-term operational and financial stability of the City. #8..
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City of Modesto – Water Rate Study 2023
BWA worked closely with City staff to incorporate information and input, evaluate alternatives, and develop recommendations. This report summarizes key findings and recommendations for water rates over the next five years.

1.3 Cash Flow Projection Scenarios
This report explores the financial plan and rates for three different capital scenarios which are as follows:
• Scenario 1 - Low Capital, No Debt. This scenario projects inflation adjusted capital spending to total $138 million over the next five years, of which all will be cash funded; resulting in an average cash expense of $27.6 million per year.
• Scenario 2 - Full Capital with Debt. This scenario projects inflation adjusted capital spending to total $185 million over the next five years, of which $145 million will be cash funded; resulting in an average cash expense of $29 million per year. The remaining $40 million is projected to be debt financed. • Scenario 3 - Full Capital, No Debt. This scenario projects inflation adjusted capital spending to total $185 million over the next five years, of which all will be cash funded; resulting in an average cash expense of $37 million per year.

1.4 Water Rate Recommendations per Scenario
The following tables show the recommended water rates for each scenario.

Table 1 – Proposed Scenario 1 Water Rates
Monthly Volumetric
Rates FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Existing Proposed Proposed Proposed Proposed Proposed
Non-Drought ($/CCF) $2.02 $2.11 $2.20 $2.30 $2.40 $2.51 Drought ($/CCF) $2.45 $2.56 $2.68 $2.80 $2.93
Monthly Fixed Charge FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Existing Proposed Proposed Proposed Proposed Proposed
Meter Size
5/8" $25.44 $26.48 $27.67 $28.92 $30.22 $31.58
3/4" $25.44 $26.48 $27.67 $28.92 $30.22 $31.58
1" $36.83 $38.56 $40.30 $42.11 $44.00 $45.98

1.5" $65.32 $68.74 $71.83 $75.06 $78.44 $81.97
2" $99.50 $104.96 $109.68 $114.62 $119.78 $125.17
3" $207.73 $219.66 $229.54 $239.87 $250.66 $261.94
4" $367.24 $388.68 $406.17 $424.45 $443.55 $463.51
6" $748.90 $793.14 $828.83 $866.13 $905.11 $945.84
8" $1,375.53 $1,457.17 $1,522.74 $1,591.26 $1,662.87 $1,737.70 10" $2,173.05 $2,302.31 $2,405.91 $2,514.18 $2,627.32 $2,745.55 12" $2,856.63 $3,026.71 $3,162.91 $3,305.24 $3,453.98 $3,609.41 #8..
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BARTLE WELLS ASSOCIATES 3
City of Modesto – Water Rate Study 2023
Table 2 – Proposed Scenario 2 Water Rates
Table 3 – Proposed Scenario 3 Water Rates
Monthly Volumetric
Rates FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Existing Proposed Proposed Proposed Proposed Proposed
Non-Drought ($/CCF) $2.02 $2.11 $2.20 $2.30 $2.40 $2.51 Drought ($/CCF) $2.45 $2.56 $2.68 $2.80 $2.93
Monthly Fixed Charge FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Existing Proposed Proposed Proposed Proposed Proposed
Meter Size
5/8" $25.44 $26.43 $27.62 $28.86 $30.16 $31.52
3/4" $25.44 $26.43 $27.62 $28.86 $30.16 $31.52
1" $36.83 $38.55 $40.28 $42.09 $43.98 $45.96

1.5" $65.32 $68.85 $71.95 $75.19 $78.57 $82.11
2" $99.50 $105.21 $109.94 $114.89 $120.06 $125.46
3" $207.73 $220.35 $230.27 $240.63 $251.46 $262.78
4" $367.24 $390.03 $407.58 $425.92 $445.09 $465.12
6" $748.90 $796.05 $831.87 $869.30 $908.42 $949.30
8" $1,375.53 $1,462.65 $1,528.47 $1,597.25 $1,669.13 $1,744.24 10" $2,173.05 $2,311.05 $2,415.05 $2,523.73 $2,637.30 $2,755.98 12" $2,856.63 $3,038.25 $3,174.97 $3,317.84 $3,467.14 $3,623.16 Monthly Volumetric
Rates FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Existing Proposed Proposed Proposed Proposed Proposed
Volumetric Rate ($/CCF) $2.02 $2.14 $2.28 $2.43 $2.59 $2.76 Drought ($/CCF) $2.49 $2.65 $2.82 $3.00 $3.20
Monthly Fixed Charge FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Existing Proposed Proposed Proposed Proposed Proposed
Meter Size
5/8" $25.44 $26.76 $28.50 $30.35 $32.32 $34.42
3/4" $25.44 $26.76 $28.50 $30.35 $32.32 $34.42
1" $36.83 $39.40 $41.96 $44.69 $47.59 $50.68

1.5" $65.32 $70.98 $75.59 $80.50 $85.73 $91.30
2" $99.50 $108.88 $115.96 $123.50 $131.53 $140.08
3" $207.73 $228.90 $243.78 $259.63 $276.51 $294.48
4" $367.24 $405.76 $432.13 $460.22 $490.13 $521.99
6" $748.90 $828.98 $882.86 $940.25 $1,001.37 $1,066.46
8" $1,375.53 $1,523.81 $1,622.86 $1,728.35 $1,840.69 $1,960.33 10" $2,173.05 $2,408.15 $2,564.68 $2,731.38 $2,908.92 $3,098.00 12" $2,856.63 $3,166.15 $3,371.95 $3,591.13 $3,824.55 $4,073.15 #8..
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BARTLE WELLS ASSOCIATES 4
City of Modesto – Water Rate Study 2023
2 BACKGROUND, OBJECTIVES, AND LEGAL REQUIREMENTS
The City of Modesto provides water service to over 74,000 accounts throughout the City of Modesto, Salida, Empire, Grayson, Del Rio, and portions of Ceres (Walnut Manor) and Turlock. The City sold the water system serving Hickman and Waterford to the City of Waterford in 2015. The City of Modesto’s water sources are groundwater and treated surface water purchased from the Modesto Irrigation District.

The revenues from the City’s water utility are primarily derived from charges for services. The City must establish rates and charges adequate to fund the cost of providing water services, including costs for operations and capital improvements needed to keep the City’s utility infrastructure in a safe and reliable operating condition.

The City has provided proactive financial stewardship by raising rates to keep revenues in line with the costs of providing water service. Those rate increases have enabled the City to maintain its financial health.

The City’s water utility is a financially self-supporting enterprise. Revenues are derived primarily from water service charges. As such, the City’s water rates must be set at adequate levels to fund the costs of providing service and:
• Fund ongoing operating and maintenance expenses
• Address regulatory requirements
• Fund the capital improvement projects, related debt service and associated increased operating costs • Provide funding for water system maintenance and upgrades The prior water rate increases strengthened the financial condition of the water enterprise. However, current rates are not adequate to fund the needed improvements and meet regulatory water quality and supply requirements.

2.1 Rate Study Objectives
In 2020, the City retained BWA to develop a cost-of-service based water rate study. The City has historically adopted rate increases in order to keep revenues in line with the escalating costs of providing service. Key goals and objectives of this study include developing water rates that:
• Recover the costs of providing service, including operating, capital, and debt funding needs; • Are proportionate, fair and equitable to all customers; • Are easy to understand and implement;
• Comply with the substantive requirements of the California Constitution, Article 13D, Section 6 (which was adopted by the voters as Proposition 218 in 1996) and the general mandate of Article 10, Section 2 that prohibits the wasteful use of water;
• Support the long-term operational and financial stability of the City both in normal and drought conditions.
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City of Modesto – Water Rate Study 2023

2.2 Rate-Study Process
The general process used for this cost-of-service rate study is summarized in the following diagram.

Figure 1 – Cost-of-Service Rate Study Process
Key elements of the study include:
1) Project Initiation and Data Collection – Review financial policies; collect financial and other relevant data; and review rate structures;
2) Demand Analysis – Analyze past water demands and customer characteristics to forecast future demands; 3) Long Range Financial Plans – Develop financial projections to evaluate annual revenue requirements from rates and the overall level of rate increases needed to fund the costs of providing service and support longterm financial stability; 4) Cost Allocation – Group the City’s costs in terms of the function they serve as a basis to proportionally allocate the revenue requirement from rates;
5) Cost-of-Service Rate Design – Develop rates that proportionately recover costs; and 6) Prop 218 Process – Ensure compliance with the substantive and procedural requirements of Proposition 218.

2.3 Constitutional Requirements for Rates
The water rates proposed in this report are designed to comply with two key articles of the California Constitution:

Article 13D and Article 10, as explained below.

2.3.1 Article 13D, Section 6
Proposition 218 was adopted by California voters in 1996 and added Articles 13C and 13D to the California Constitution. Article 13D, Section 6 governs property-related charges, which the California Supreme Court has ruled, includes rates imposed for water delivered through pipes connected to property. Article 13D, Section 6 establishes both a) procedural requirements for imposing or increasing property-related charges, and b) Project
Initiation
and Data
Collection
Demand
Analysis
LongRange
Financial
Plan
Cost
Allocation
Rate
Design
Prop. 218
Process
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City of Modesto – Water Rate Study 2023
substantive requirements for those charges. Article 13D requires voter approval for new or increased propertyrelated charges but exempts rates for water, wastewater, and garbage service from this voting requirement if rates are adopted by the appropriate procedure and meet the substantive requirements. This report recommends water rates designed to comply with the substantive requirements of Proposition 218.

The substantive requirements of Article 13D, section 6 require property-related charges, such as the City’s water rates, to meet the following conditions:
1) Revenues derived from the fee or charge shall not exceed the costs required to provide the propertyrelated service. 2) Revenues derived from the fee or charge shall not be used for any purpose other than that for which the fee or charge was imposed.
3) The amount of a fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel. 4) No fee or charge may be imposed for a service unless that service is used by, or immediately available to the property in question.
5) No fee or charge may be imposed for general governmental services, such as police or fire services, where the service is available to the public at large in substantially the same manner as it is to property owners.

2.3.2 Article 10, Section 2
Article 10, Section 2 of the California Constitution states that:

It is hereby declared that because of the conditions prevailing in this State the general welfare requires that the water resources of the State be put to beneficial use to the fullest extent of which they are capable, and that the waste or unreasonable use or unreasonable method of use of water be prevented, and that the conservation of such waters is to be exercised with a view to the reasonable and beneficial use thereof in the interest of the people and for the public welfare.

2.4 Statute of Limitations
Pursuant to California Government Code 53759, there is a 120-day statute of limitations for challenging any new, increased, or extended fees. This statute of limitations applies to the water rates proposed in this rate study and is included in the Proposition 218 Notice.
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BARTLE WELLS ASSOCIATES 7
City of Modesto – Water Rate Study 2023
3 PROJECTED WATER DEMAND AND CUSTOMER CHARACTERISTICS

3.1 Projected Water Demand
Projected FY 23/24 water demand is based on the average metered demand for the last five fully recorded years.

Table 4 – Historic and Projected Potable Supply and Metered Demand Source: Actual water supply, water loss, and metered water sales provided by the City.

3.2 Water Services and Equivalent Capacity
Each connection to the City’s water system is considered one service. Some of the City's fixed costs are reasonably recovered on a per-customer basis, while others should be recovered based on the capacity required to serve each customer. The size of a customer’s meter reflects the demand they require of the water system’s capacity.

A significant percentage of the costs of any water system is related to its requirement to deliver water to any customer instantaneously at any time, up to the maximum safe flow capacity of a customer’s meter. Simply put, as the size of a customer’s water meter increases, the instantaneous demand it can place on the City’s water system increases.

Fixed charges for each meter size are based on the capacity of a meter, relative to the capacity of smallest meter size (e.g., a 3/4-inch meter), in the City’s system. In this study, the relative capacity of a meter size, referred to as a meter equivalent ratio (MEU), is calculated by dividing the capacity of a given meter size by the capacity of a 3/4” meter. The meter equivalent ratios used are proportional to the maximum safe flow of a 3/4" meter. The sum of all MEU’s reflects the total capacity of the City.

Customer Data FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 FY 23-24 Actual Actual Actual Actual Actual Projected Projected
Total Accounts (#) 73,469 73,629 73,833 74,137 74,413 74,560 74,707 Growth (%) 0.22% 0.28% 0.41% 0.37% 0.20% 0.20%
Annual metered use (CCF) per meter 278 265 277 288 279 277.0 277.0 Annual production (CCF) per account 304 295 304 315 310 305 306 Billed, Metered Consumption (CCF) 18,639,728 18,222,157 19,509,688 20,697,851 20,568,355 20,562,541 20,693,839 Total Estimated Consumption (CCF) 20,710,040 19,789,661 20,643,245 21,464,258 20,796,593 20,676,660 20,693,839 Total Water Production (CCF) 22,302,089 21,737,810 22,437,586 23,362,606 23,034,358 22,775,690 22,849,883 #8..
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City of Modesto – Water Rate Study 2023
The following table contains the counts of water services and calculations of meter equivalent units. Total meter equivalent units for each meter size are derived by multiplying the meter equivalent ratio by the number of services at each meter size.

Table 5 – Water Services and Meter Equivalent Units
Meter Size Services
Meter
Equivalent
Ratio**
Meter Equivalent
Units
Annual Meter
Equivalent Units
Unmetered 0.0 1.7 0.0 0.0
5/8" 87 1.0 87.0 1,044.0
3/4" 13,459 1.0 13,459.0 161,508.0
1" 57,153 1.7 95,255.0 1,143,060.0

1.5" 1,168 3.3 3,893.3 46,720.0
2" 2,176 5.3 11,605.3 139,264.0
3" 158 11.7 1,843.3 22,120.0
4" 289 21.0 6,069.0 72,828.0
6" 141 43.3 6,110.0 73,320.0
8" 64 80.0 5,120.0 61,440.0
10" 11 126.7 1,393.3 16,720.0
12" 1 166.7 166.7 2,000.0
Total 74,707.0 145,002.0 1,740,024.0
* Customer data as of June 2022 provided by staff
** Capacity factors based on AWWA operating capacity standards by meter size #8..
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City of Modesto – Water Rate Study 2023
4 WATER FINANCIAL PLAN

4.1 Water Financial Overview
BWA conducted an independent evaluation of water enterprise finances and concluded the previous rate increases have put the water enterprise in a sound financial position. Continual, gradual increases are projected to maintain its strong financial position where operating reserves exceed six months of operating costs and the debt service coverage ratio exceeds the target of 2.0.

The City relies almost solely on revenues from water rates to fund the costs of providing service. As such, water rates must be set at levels adequate to fund the costs of operating and maintaining the water system, fund necessary capital improvements to keep the water system in good operating condition, and meet the City’s financial policies.

4.2 Key Drivers of Rate Increases
The City is facing several manageable financial challenges that will drive the need for rate increases in upcoming years. Key drivers of future rate increases are summarized below.

Capital Improvement Funding Needs
The City takes a proactive approach to maintaining its water system, which requires ongoing repair and improvement projects. This report explores the financial plan and rates for three different capital scenarios which are described in Section 4.5.

Ongoing Operating Cost Inflation
The City faces annual cost inflation due to annual increases in a range of expenses including staffing, utilities, insurance, supplies, etc. On top of rate increases needed for capital improvements, annual rate increases are needed to keep revenues aligned with cost inflation and prevent rates from falling behind the cost of providing service. Water cost inflation has historically been higher than the Consumer Price Index (CPI) for consumer goods and services. Historically inflation has typically remained consistently around 3%, but recently inflation has reached forty-year highs with the CPI and ENR CCI exceeding 7% in 2022. It is not expected that inflation will remain at such high levels in the future and for the purposes of this rate study average annual inflation is projected to be 5%; in-line with the City’s budget inflationary projections.

Water Reserve Funds
Maintaining a prudent minimal level of fund reserves provides a financial cushion for dealing with unanticipated expenses, revenue shortfalls, and non-catastrophic emergency capital repairs. The City’s financial reserve policies include a minimum reserve target equal to 25% of its operating costs. BWA developed a financial plan designed to maintain prudent reserve levels that are in-line with water utility industry standards.

Debt Service Coverage
Most municipal debt requires that the issuer generate net operating revenues of 1.25 times the total annual debt service payment or greater. This is referred to as “debt service coverage”. To support a strong credit rating and #8..
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City of Modesto – Water Rate Study 2023
good financial health, the current City policy requires a debt coverage ratio of 1.5 times the annual payment or greater, and the City’s financial advisors recommend a debt coverage ratio of 2.0.

4.3 Financial Plan Assumptions
The financial projections incorporate the latest information available and a number of reasonable and slightly conservative assumptions for planning purposes. Key assumptions include:

Revenue Assumptions
• Water rate revenues are based on estimated revenues for the current fiscal year. • Rates proposed to be adopted in August 2023 will be effective on October 1, 2023, with rate adjustments planned to become effective on October 1 of each of the subsequent four years. • Water sales revenues are based on the projected volume of water sales and projected water rates. • The City is anticipating minimal growth. To be conservative and ensure revenues will be sufficient, BWA assumed 0.2% annual growth based on the lowest annual growth over the past five years. • Interest earnings are projected based on the annual beginning fund balance multiplied by the projected interest rate. The interest rate projections are based on recent and anticipated interest rates. • Discretionary “non-rate” revenues which support rate assistance programs, such as the low-income and medical disability waiver programs, were not included in projected revenues.

Expense Assumptions
• Operating and maintenance costs are primarily based on the 2022/23 budget. • Operating costs are projected to escalate at 5% per year to account for cost inflation. • Debt service projections are based on outstanding debt schedules and projected issuances of new debt. • Capital improvement costs are based on the most recent engineering cost estimates. Capital costs include a 5% annual construction cost inflation factor for the next five years.

4.4 Cash Flow Projections
Long-term cash-flow projections were developed based on assumptions and key drivers of future rate increases described above. The projections were used to determine the water utility’s annual revenue requirements and project required water rate revenue increases. The long-term cash-flow projections incorporate the latest information available from the City’s budget, annual reports, capital spending projections, and metered water demand data, as well as a number of reasonable assumptions developed with input from the City. The overall rate revenue increases shown for each of the following scenarios are designed to fund the City’s cost of providing service, maintain roughly balanced budgets, maintain healthy debt service coverage, and maintain prudent reserves. The projections indicate the need for increases for water rate revenues for each of the next five fiscal years. Actual impacts to customers’ water bills will vary based on meter size and water use, due to the outcome of the updated cost-of-service analysis.
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City of Modesto – Water Rate Study 2023

4.5 Cash Flow Projection Scenarios
This report explores the financial plan and rates for three different capital scenarios which are as follows:
• Scenario 1 - Low Capital, No Debt. This scenario projects inflation adjusted capital spending to total $138 million over the next five years, of which all will be cash funded; resulting in an average cash expense of $27.6 million per year.
• Scenario 2 - Full Capital with Debt. This scenario projects inflation adjusted capital spending to total $185 million over the next five years, of which $145 million will be cash funded; resulting in an average cash expense of $29 million per year. The remaining $40 million is projected to be debt financed. • Scenario 3 - Full Capital, No Debt. This scenario projects inflation adjusted capital spending to total $185 million over the next five years, of which all will be cash funded; resulting in an average cash expense of $37 million per year.

4.6 Cash Flow Projection for Scenario 1 - Low Capital, No Debt In future years, the City can re-evaluate its finances and revenue requirements and adjust rates as needed based on updated projections. However, while the City always has the flexibility to implement rate adjustments that are lower than adopted pursuant to Proposition 218, future rates cannot exceed adopted increases without going through the Proposition 218 process again. Rates adopted pursuant to Proposition 218 are essentially future rate caps.

A summary of the key elements of the long-term cash-flow projections for this scenario is displayed in the following table.

Table 6 – Scenario 1 Cash Flow Projection Summary
Scenario 1 - Low
Capital, No Debt FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Debt Funded Capital $0 $0 $0 $0 $0
Cash Funded Capital $25,625,000 $23,489,550 $26,719,088 $29,617,836 $32,593,800 Total Capital $25,625,000 $23,489,550 $26,719,088 $29,617,836 $32,593,800 Ending Reserves $102,018,732 $97,794,035 $91,442,474 $83,322,765 $73,390,177 Rate Revenue
Increase 4.5% 4.5% 4.5% 4.5% 4.5%
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City of Modesto – Water Rate Study 2023
The following figure visually depicts the cash-flow projections with the proposed rate increases for the next five years. Projected expenses are summarized into key categories. The figure also shows the projected fund reserves at the end of each fiscal year.

Figure 2 – Scenario 1 Projected Cashflow Graph
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City of Modesto – Water Rate Study 2023
Detailed, long-term, cash-flow projections for this scenario are shown in the following table.

Table 7 – Scenario 1 Detailed Cash Flow Projections
Projected Cashflow FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Rate Revenue Increase emand Increase 4.5%0% 4.5%0% 4.5%0% 4.5%0% 4.5%0% Beginning Reserves $110,862,007 $102,018,732 $97,794,035 $91,442,474 $83,322,765 Revenues
Rate Revenue $79,021,999 $82,743,145 $86,639,520 $90,719,375 $94,991,350 Rate Increase Revenue 3,555,990 3,723,442 3,898,778 4,082,372 4,274,611 Timing Adjustment* -592,665
Other Revenue 4,650,665 4,559,418 4,543,198 4,518,473 4,486,676 Interest on Reserves ________ ________ ________ ________ ________$443,448 $408,075 $391,176 $365,770 $333,291 Total Revenue $87,079,437 $91,434,079 $95,472,672 $99,685,989 $104,085,928 Expenses
Operating Expenses $58,312,292 $59,483,407 $62,419,327 $65,502,043 $68,738,895 Existing Debt Service 11,985,419 12,685,819 12,685,819 12,685,820 12,685,821 New Debt Service 0 0 0 0 0
Rate Funded Capital $25,625,000 $23,489,550 $26,719,088 $29,617,836 $32,593,800 ________ ________ ________ ________ ________ Total Expenses $95,922,711 $95,658,776 $101,824,234 $107,805,699 $114,018,516 Net Revenues -$8,843,274 -$4,224,697 -$6,351,561 -$8,119,709 -$9,932,588 Ending Reserves $102,018,732 $97,794,035 $91,442,474 $83,322,765 $73,390,177 Debt Coverage (Target 2.0) 2.40 2.52 2.61 2.69 2.79
*Reflects October rate implementation
Capital Funding FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Capital Revenues
Use of Debt Proceeds
Rate Funded Capital $25,625,000 $23,489,550 $26,719,088 $29,617,836 $32,593,800 ________ ________ ________ ________ ________ Total Capital Revenue $25,625,000 $23,489,550 $26,719,088 $29,617,836 $32,593,800 Total Capital Expenditures $25,625,000 $23,489,550 $26,719,088 $29,617,836 $32,593,800 #8..
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4.7 Cash Flow Projection for Scenario 2 - Full Capital with New Debt In future years, the City can re-evaluate its finances and revenue requirements and adjust rates as needed based on updated projections. However, while the City always has the flexibility to implement rate adjustments that are lower than adopted pursuant to Proposition 218, future rates cannot exceed adopted increases without going through the Proposition 218 process again. Rates adopted pursuant to Proposition 218 are essentially future rate caps.

A summary of the key elements of the long-term cash-flow projections for this scenario is displayed in the following table. This scenario utilizes debt in FY 26-27 and FY 27-28 to stabilize reserves, which allows more capital to be funded in this scenario than Scenario 1 with the same rate increases. This scenario demonstrates that 4.5% increases are sufficient under low and full capital scenarios. The impact of utilizing debt is potentially needing average annual rate increasesin years FY 28-29 through FY 32-33 of 6.4% rather than the projected average annual rate increases in Scenario 1 of 5.5%. It is important to keep in mind projections more than five years out are conservative and do not include grants and capital construction slowdowns.

Table 8 – Scenario 2 Cash Flow Projection Summary
Scenario 2 - Full Capital
with New Debt FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Debt Funded Capital $0 $0 $0 $20,000,000 $20,000,000
Cash Funded Capital $25,625,000 $37,591,025 $37,937,002 $19,547,379 $24,194,205 Total Capital $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 Ending Reserves $102,018,732 $83,692,561 $66,010,273 $67,757,563 $63,478,048 Rate Revenue Increase 4.5% 4.5% 4.5% 4.5% 4.5%
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The following figure visually depicts the cash-flow projections with the proposed rate increases for the next five years. Projected expenses are summarized into key categories. The figure also shows the projected fund reserves at the end of each fiscal year.

Figure 3 – Scenario 2 Projected Cashflow Graph
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28
Rate Funded Capital
Debt Service
O&M
Revenue
Reserves
City of Modesto
Projected Water Revenues & Expenses ($ Millions)
Scenario 2 - Full Capital with New Debt
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Detailed, long-term, cash-flow projections for this scenario are shown in the following table.

Table 9 – Scenario 2 Detailed Cash Flow Projections
Projected Cashflow FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Rate Revenue Increase emand Increase 4.5%0% 4.5%0% 4.5%0% 4.5%0% 4.5%0% Beginning Reserves $110,862,007 $102,018,732 $83,692,561 $66,010,273 $67,757,563 Revenues
Rate Revenue $79,021,999 $82,743,145 $86,639,520 $90,719,375 $94,991,350 Rate Increase Revenue 3,555,990 3,723,442 3,898,778 4,082,372 4,274,611 Timing Adjustment* -592,665
Other Revenue 4,650,665 4,559,418 4,486,792 4,416,744 4,424,415 Interest on Reserves ________ ________ ________ ________ ________ $443,448 $408,075 $334,770 $264,041 $271,030 Total Revenue $87,079,437 $91,434,079 $95,359,861 $99,482,532 $103,961,406 Expenses
Operating Expenses $58,312,292 $59,483,407 $62,419,327 $65,502,043 $68,738,895 Existing Debt Service 11,985,419 12,685,819 12,685,819 12,685,820 12,685,821 New Debt Service 0 0 0 0 2,622,000
Rate Funded Capital $25,625,000 $37,591,025 $37,937,002 $19,547,379 $24,194,205 ________ ________ ________ ________ ________ Total Expenses $95,922,711 $109,760,251 $113,042,148 $97,735,242 $108,240,921 Net Revenues -$8,843,274 -$18,326,172 -$17,682,287 $1,747,289 -$4,279,515 Ending Reserves $102,018,732 $83,692,561 $66,010,273 $67,757,563 $63,478,048 Debt Coverage (Target 2.0) 2.40 2.52 2.60 2.68 2.30
*Reflects October rate implementation
Capital Funding FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Capital Revenues
Use of Debt Proceeds $20,000,000 $20,000,000
Rate Funded Capital $25,625,000 $37,591,025 $37,937,002 $19,547,379 $24,194,205 ________ ________ ________ ________ ________ Total Capital Revenue $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 Total Capital Expenditures $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 #8..
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4.8 Cash Flow Projection for Scenario 3 - Full Capital, No Debt In future years, the City can re-evaluate its finances and revenue requirements and adjust rates as needed based on updated projections. However, while the City always has the flexibility to implement rate adjustments that are lower than adopted pursuant to Proposition 218, future rates cannot exceed adopted increases without going through the Proposition 218 process again. Rates adopted pursuant to Proposition 218 are essentially future rate caps.

A summary of the key elements of the long-term cash-flow projections for this scenario is displayed in the following table.

Table 10 – Scenario 3 Cash Flow Projection Summary
Scenario 3 - Full
Capital, No Debt FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Debt Funded Capital $0 $0 $0 $0 $0
Cash Funded Capital $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 Total Capital $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 Ending Reserves $103,335,766 $88,361,528 $76,015,089 $65,310,989 $53,503,665 Rate Revenue
Increase 6.5% 6.5% 6.5% 6.5% 6.5%
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The following figure visually depicts the cash-flow projections with the proposed rate increases for the next five years. Projected expenses are summarized into key categories. The figure also shows the projected fund reserves at the end of each fiscal year.

Figure 4 – Scenario 3 Projected Cashflow Graph
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28
Rate Funded Capital
Debt Service
O&M
Revenue
Reserves
City of Modesto
Projected Water Revenues & Expenses ($ Millions)
Scenario 3 - Full Capital, No Debt
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Detailed, long-term, cash-flow projections for this scenario are shown in the following table.

Table 11 – Scenario 3 Detailed Cash Flow Projections
Projected Cashflow FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Rate Revenue Increase 6.5% 6.5% 6.5% 6.5% 6.5% emand Increase 0% 0% 0% 0% 0% Beginning Reserves $110,862,007 $103,335,766 $88,361,528 $76,015,089 $65,310,989 Revenues
Rate Revenue $79,021,999 $84,326,746 $89,987,600 $96,028,468 $102,474,859 Rate Increase Revenue 5,136,430 5,481,238 5,849,194 6,241,850 6,660,866 Timing Adjustment* -856,072
Other Revenue 4,650,665 4,564,686 4,505,468 4,456,763 4,414,629 Interest on Reserves $443,448 $413,343 $353,446 $304,060 $261,244 ________ ________ ________ ________ ________ Total Revenue $88,396,470 $94,786,013 $100,695,709 $107,031,142 $113,811,598 Expenses
Operating Expenses $58,312,292 $59,483,407 $62,419,327 $65,502,043 $68,738,895 Existing Debt Service 11,985,419 12,685,819 12,685,819 12,685,820 12,685,821 New Debt Service 0 0 0 0 0
Rate Funded Capital $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 ________ ________ ________ ________ ________ Total Expenses $95,922,711 $109,760,251 $113,042,148 $117,735,242 $125,618,921 Net Revenues -$7,526,241 -$14,974,238 -$12,346,439 -$10,704,100 -$11,807,324 Ending Reserves $103,335,766 $88,361,528 $76,015,089 $65,310,989 $53,503,665 Debt Coverage (Target 2.0) 2.51 2.78 3.02 3.27 3.55
*Reflects October rate implementation
Capital Funding FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Capital Revenues
Use of Debt Proceeds
Rate Funded Capital $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 ________ ________ ________ ________ ________ Total Capital Revenue $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 Total Capital Expenditures $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 #8..
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4.9 Scenario Projected Cashflow Comparison
With lower capital spending, Scenario 1 preserves $73 million of reserves while cash funding all expenses with

4.5% annual rate revenue increases. Scenario 1 leaves the City in a position where average annual rate revenue increases of 5.5% are conservatively projected for the following rate study (FY 28-29 through FY 32-33).

In Scenario 2, the full capital spending is augmented with a debt issuance of $40 million. This allows the City to preserve $63 million of reserves with 4.5% annual rate revenue increases. Scenario 2 leaves the City in a position where average annual rate revenue increases of 6.4% are conservatively projected for the following rate study (FY 28-29 through FY 32-33).

In Scenario 3, the full capital spending is cash funded. This allows the City to preserve $54 million of reserves with

6.5% annual rate revenue increases. Scenario 3 leaves the City in a position where average annual rate revenue increases of 4.1% are conservatively projected for the following rate study (FY 28-29 through FY 32-33).

It is important to keep in mind projections more than five years out are conservative and do not include grants and capital construction slowdowns. The following table shows key financial information for all scenarios.

Table 12 – Scenario Projected Cashflow Comparison
Scenario 1 - Low Capital,
No Debt FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28
Debt Funded Capital $0 $0 $0 $0 $0
Cash Funded Capital $25,625,000 $23,489,550 $26,719,088 $29,617,836 $32,593,800 Total Capital $25,625,000 $23,489,550 $26,719,088 $29,617,836 $32,593,800 Ending Reserves $102,018,732 $97,794,035 $91,442,474 $83,322,765 $73,390,177 Rate Revenue Increase 4.5% 4.5% 4.5% 4.5% 4.5%
Scenario 2 – Full Capital
with New Debt FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Debt Funded Capital $0 $0 $0 $20,000,000 $20,000,000
Cash Funded Capital $25,625,000 $37,591,025 $37,937,002 $19,547,379 $24,194,205 Total Capital $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 Ending Reserves $102,018,732 $83,692,561 $66,010,273 $67,757,563 $63,478,048 Rate Revenue Increase 4.5% 4.5% 4.5% 4.5% 4.5%
Scenario 3 - Full Capital,
No Debt FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28
Debt Funded Capital $0 $0 $0 $0 $0
Cash Funded Capital $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 Total Capital $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 Ending Reserves $103,335,766 $88,361,528 $76,015,089 $65,310,989 $53,503,665 Rate Revenue Increase 6.5% 6.5% 6.5% 6.5% 6.5%
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5 COST-OF-SERVICE RATE DERIVATION
Article XIII D, Section 6 of the California Constitution (which was adopted by the voters in 1996 as a part of Proposition 218) requires that the City adopt only rates that meet a number of substantive requirements.

Specifically:
(1) Revenues derived from the water rates cannot exceed the funds required to provide water service. (2) Revenues derived from the water rates cannot be used for any purpose other than providing water service.
(3) The amount of the water rates imposed upon any parcel or person as an incident of property ownership cannot exceed the proportional cost of the service attributable to the parcel. (4) Water rates may not be imposed unless the water service is used by, or immediately available to, the owner of the property in question.

In Modesto, each water customer is charged both a monthly fixed rate and a volumetric rate based on the quantity of water delivered by the City to the customer. This reflects that (i) some system costs are based entirely on the actual quantity of water consumed, (ii) other system costs are fixed from the point of view of the City, but are a result of design decisions that were made to accommodate all users, including high-demand users, and (iii) some costs, particularly the cost of administering the water system, would be largely the same regardless of the volume of water use.

Water utilities have employed a wide range of approaches or perspectives for allocating and recovering their costs for providing service, often through a combination of fixed and variable charges. The percentage of revenues derived from the fixed and variable charges should be proportional to each system’s expenditures and must not exceed the cost of providing service.

Many of the City’s costs are fixed costs that do not vary by the level of service provided, such as operational and staff costs, as well as costs for building and maintaining infrastructure. Some of these costs are related to the number of customers, but most of the fixed costs are related to the total capacity of the water system. Fixed costs related to system capacity can reasonably be apportioned by meter size or variable, usage-based rate recovery in recognition that both units of measure reasonably reflect customer usage driving the City to incur capacity-related costs. For example, a share of the fixed cost of salaries related to water production can reasonably be recovered from usage-based charges as these costs are incurred to provide water supply to meet customer demand or from a fixed charge based on a customer’s meter size which reflects the magnitude of water a customer can pull from the water system. Likewise, debt service payments may be fixed annual costs, but it is reasonable to recover some of these costs from usage-based rates as the costs are incurred to fund infrastructure that will improve the water delivery system.

While there is no single correct approach, BWA believes that costs should be allocated within a reasonable range that reflects both a) underlying cost causation, to the extent such causation can reasonably be determined or estimated, and b) the policy preferences of the agency in cases where a range of reasonable approaches can be justified.
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5.1 Functional Allocation
There must be a cost-based nexus between the revenue requirement from the cash flow and the proposed rates.

The nexus is created by allocating the expenses and offsetting non-rate revenues to functional components and then dividing each functional component’srevenue requirements by the allocations units most reasonably related to each function. A functional component reflects a grouping of the utility’s expenses whose magnitude is driven by the quantity of a specific unit-of-measure. For example, costs allocated to the customer functional component are driven by the number of customers served by the water enterprise.

The functional components used in this study are as follows:
• Customer- Fixed costs are recovered per customer. Fixed costs or costs related to system capacity were allocated to this category.
• Capacity- Fixed costs are recovered per customer. Fixed costs or costs related to system capacity were allocated to this category.
• All Volume- Costs reasonably recovered volumetrically were allocated to this category. Volumetric costs are recovered per unit of volume (100 cubic feet (CCF)) based on all projected demand.

Related expenses and non-rate revenues were grouped into the following allocation categories before being allocated to each functional category:
• Administration- Expenses were allocated 30% to the customer and 70% to capacity functional components because some costs are driven by the number of customers, and some are driven by the overall capacity of the system. For example, a smaller system would require less staff, leading to reduced office supply costs. • Source of Supply- expenses were allocated 10% to Capacity and 90% to All Volume to reflect that these costs are incurred to meet the volumetric needs of the City. These costs include the costs associated with wells and groundwater supply.
• Water Demand expenses consist of conservation, water quality and surface water costs. They are allocated 100% to All Volume to reflect that these costs are incurred to meet the volumetric needs of the City. • Customer Accounts costs are allocated 100% to the Customer functional component because they are fixed expenditures that relate to operational support activities, including billing, customer service, and meter reading support. These expenditures are common to all customers, regardless of the meter size serving a property or actual water use.
• Water System expenses are related to maintaining and operating the water system. These costs are allocated 50% to Capacity and 50% to All Volume because these costs are related to the overall capacity of the system which is driven by the projected volume of water sold.
• Debt Service is allocated 100% to Capacity because they are related to system capacity and are fixed annual expenses.
• Capital expenses and non-rate revenues are allocated 50% to Capacity and 50% to All Volume because these costs are related to the overall capacity of the system which is driven by the projected volume of water sold.

The following tables show a breakdown of the water utility’s expenses and offsetting revenues and how they are allocated by function. The proportional allocation is then applied to the rate revenue requirement so that the #8..
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rates are proportional to the cost of service provided. To recover the allocated revenue requirements proportionally to the service provided, a unit cost must be derived. Critical to this step is using the unit which relates to the function.

The allocation amounts are based on the last year of the proposed rates, FY 27-28, because it reflects the completed regionalization project in operation. The revenue requirements leading up to that year are increasing to fund the project.

Table 13 – Scenario 1 Functional Allocation
Table 14 – Scenario 2 Functional Allocation
Table 15 – Scenario 3 Functional Allocation
Functional Allocation Amount
Offsetting
Revenue
Allocation
Amount Customer Capacity All Volume Total
Administration $7,550,855 $0 $7,550,855 30% 70% 100%
Source of Supply $9,839,635 $0 $9,839,635 10% 90% 100%
Water Demand $24,584,204 $0 $24,584,204 100% 100%
Customer Accounts $6,831,266 $0 $6,831,266 100% 100%
Water System $11,638,388 $0 $11,638,388 50% 50% 100%
Debt Service $12,545,740 $0 $12,545,740 100% 100%
Capital $27,609,055 $330,328 $27,278,726 50% 50% 100%
Functional Allocation $ $100,599,144 $330,328 $100,268,815 $9,096,523 $38,273,859 $52,898,433 $100,268,815 Functional Allocation % 9.07% 38.17% 52.76% 100%
Revenue Requirement $7,489,824 $31,520,018 $43,568,147 $82,577,989 Functional Allocation Amount
Offsetting
Revenue
Allocation
Amount Customer Capacity All Volume Total
Administration $7,550,855 $52,060 $7,498,795 30% 70% 100% Source of Supply $9,839,635 $0 $9,839,635 10% 90% 100%
Water Demand $24,584,204 $0 $24,584,204 100% 100%
Customer Accounts $6,831,266 $0 $6,831,266 100% 100%
Water System $11,638,388 $0 $11,638,388 50% 50% 100%
Debt Service $12,545,740 $0 $12,545,740 100% 100%
Capital $28,978,922 $330,328 $28,648,594 50% 50% 100%
Functional Allocation $ $101,969,011 $382,388 $101,586,623 $9,080,905 $38,922,351 $53,583,367 $101,586,623 Functional Allocation % 8.94% 38.31% 52.75% 100%
Revenue Requirement $7,382,472 $31,635,628 $43,559,889 $82,577,989 Functional Allocation Amount
Offsetting
Revenue
Allocation
Amount Customer Capacity All Volume Total
Administration $7,550,855 $0 $7,550,855 30% 70% 100%
Source of Supply $9,839,635 $0 $9,839,635 10% 90% 100%
Water Demand $24,584,204 $0 $24,584,204 100% 100%
Customer Accounts $6,831,266 $0 $6,831,266 100% 100%
Water System $11,638,388 $0 $11,638,388 50% 50% 100%
Debt Service $12,545,740 $0 $12,545,740 100% 100%
Capital $36,978,922 $330,328 $36,648,594 50% 50% 100%
Functional Allocation $ $109,969,011 $330,328 $109,638,683 $9,096,523 $42,958,793 $57,583,367 $109,638,683 Functional Allocation % 8.30% 39.18% 52.52% 100%
Revenue Requirement $6,985,150 $32,973,272 $44,200,007 $84,158,429 #8..
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5.2 Rate Derivation
Monthly Fixed Service Charge
This charge applies to all active services. It recovers the Customer functional component revenue requirement on a per service basis and the Capacity functional component revenue requirement on a per MEU basis. The Customer unit cost is the same for all meter sizes and the unit costs per MEU varies by meter size. MEU ratios are based on the AWWA meter equivalent ratio for each meter size as described in Section 3.2.

Monthly Volumetric Service Charge
This charge applies to every unit of water sold. It recovers the All Volume functional component revenue requirement on a unit (CCF) basis.

The following tables show the rate derivation of the fixed and volumetric charges for each scenario.

Table 16 – Scenario 1 Rate Derivation
Allocation Units Customer Capacity All Volume
Unit of Measure # EDU CCF
Allocation Units 894,714 1,740,024 20,693,839
Revenue Requirement $7,489,824 $31,520,018 $43,568,147
Unit Cost ($/Unit) $8.37 $18.11 $2.11
Monthly Fixed
Charge
Calculation
Capacity
Factor**
Monthly
Customer
Component
Monthly
Capacity
Component
Monthly Fixed
Charge
5/8" 1.00 $8.37 $18.11 $26.48
3/4" 1.00 $8.37 $18.11 $26.48
1" 1.67 $8.37 $30.18 $38.56

1.5" 3.33 $8.37 $60.37 $68.74
2" 5.33 $8.37 $96.59 $104.96
3" 11.67 $8.37 $211.28 $219.66
4" 21.00 $8.37 $380.31 $388.68
6" 43.33 $8.37 $784.77 $793.14
8" 80.00 $8.37 $1,448.80 $1,457.17
10" 126.67 $8.37 $2,293.93 $2,302.31
12" 166.67 $8.37 $3,018.33 $3,026.71
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Table 17 – Scenario 2 Rate Derivation
Allocation Units Customer Capacity All Volume
Unit of Measure # EDU CCF
Allocation Units 894,714 1,740,024 20,693,839
Revenue Requirement $7,382,472 $31,635,628 $43,559,889
Unit Cost ($/Unit) $8.25 $18.18 $2.11
Monthly Fixed
Charge
Calculation
Capacity
Factor**
Monthly
Customer
Component
Monthly
Capacity
Component
Monthly Fixed
Charge
5/8" 1.00 $8.25 $18.18 $26.43
3/4" 1.00 $8.25 $18.18 $26.43
1" 1.67 $8.25 $30.30 $38.55

1.5" 3.33 $8.25 $60.60 $68.85
2" 5.33 $8.25 $96.96 $105.21
3" 11.67 $8.25 $212.10 $220.35
4" 21.00 $8.25 $381.78 $390.03
6" 43.33 $8.25 $787.80 $796.05
8" 80.00 $8.25 $1,454.40 $1,462.65
10" 126.67 $8.25 $2,302.80 $2,311.05
12" 166.67 $8.25 $3,030.00 $3,038.25
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Table 18 – Scenario 3 Rate Derivation
Allocation Units Customer Capacity All Volume
Unit of Measure # EDU CCF
Allocation Units 894,714 1,740,024 20,693,839
Revenue Requirement $6,985,150 $32,973,272 $44,200,007
Unit Cost ($/Unit) $7.81 $18.95 $2.14
Monthly Fixed
Charge
Calculation
Capacity
Factor**
Monthly
Customer
Component
Monthly
Capacity
Component
Monthly Fixed
Charge
5/8" 1.00 $7.81 $18.95 $26.76
3/4" 1.00 $7.81 $18.95 $26.76
1" 1.67 $7.81 $31.58 $39.40

1.5" 3.33 $7.81 $63.17 $70.98
2" 5.33 $7.81 $101.07 $108.88
3" 11.67 $7.81 $221.08 $228.90
4" 21.00 $7.81 $397.95 $405.76
6" 43.33 $7.81 $821.17 $828.98
8" 80.00 $7.81 $1,516.00 $1,523.81
10" 126.67 $7.81 $2,400.33 $2,408.15
12" 166.67 $7.81 $3,158.33 $3,166.15
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5.3 Proposed Water Rates
The following tables show a 5-year schedule of proposed water rates for each scenario.

Table 19 – Proposed Scenario 1 Water Rates
Monthly Volumetric
Rates FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Existing Proposed Proposed Proposed Proposed Proposed
Non-Drought ($/CCF) $2.02 $2.11 $2.20 $2.30 $2.40 $2.51 Drought ($/CCF) $2.45 $2.56 $2.68 $2.80 $2.93
Monthly Fixed Charge FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Existing Proposed Proposed Proposed Proposed Proposed
Meter Size
5/8" $25.44 $26.48 $27.67 $28.92 $30.22 $31.58
3/4" $25.44 $26.48 $27.67 $28.92 $30.22 $31.58
1" $36.83 $38.56 $40.30 $42.11 $44.00 $45.98

1.5" $65.32 $68.74 $71.83 $75.06 $78.44 $81.97
2" $99.50 $104.96 $109.68 $114.62 $119.78 $125.17
3" $207.73 $219.66 $229.54 $239.87 $250.66 $261.94
4" $367.24 $388.68 $406.17 $424.45 $443.55 $463.51
6" $748.90 $793.14 $828.83 $866.13 $905.11 $945.84
8" $1,375.53 $1,457.17 $1,522.74 $1,591.26 $1,662.87 $1,737.70 10" $2,173.05 $2,302.31 $2,405.91 $2,514.18 $2,627.32 $2,745.55 12" $2,856.63 $3,026.71 $3,162.91 $3,305.24 $3,453.98 $3,609.41 #8..
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Table 20 – Proposed Scenario 2 Water Rates
Monthly Volumetric
Rates FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Existing Proposed Proposed Proposed Proposed Proposed
Non-Drought ($/CCF) $2.02 $2.11 $2.20 $2.30 $2.40 $2.51 Drought ($/CCF) $2.45 $2.56 $2.68 $2.80 $2.93
Monthly Fixed Charge FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Existing Proposed Proposed Proposed Proposed Proposed
Meter Size
5/8" $25.44 $26.48 $27.67 $28.92 $30.22 $31.58
3/4" $25.44 $26.48 $27.67 $28.92 $30.22 $31.58
1" $36.83 $38.56 $40.30 $42.11 $44.00 $45.98

1.5" $65.32 $68.74 $71.83 $75.06 $78.44 $81.97
2" $99.50 $104.96 $109.68 $114.62 $119.78 $125.17
3" $207.73 $219.66 $229.54 $239.87 $250.66 $261.94
4" $367.24 $388.68 $406.17 $424.45 $443.55 $463.51
6" $748.90 $793.14 $828.83 $866.13 $905.11 $945.84
8" $1,375.53 $1,457.17 $1,522.74 $1,591.26 $1,662.87 $1,737.70 10" $2,173.05 $2,302.31 $2,405.91 $2,514.18 $2,627.32 $2,745.55 12" $2,856.63 $3,026.71 $3,162.91 $3,305.24 $3,453.98 $3,609.41 #8..
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BARTLE WELLS ASSOCIATES 29
City of Modesto – Water Rate Study 2023
Table 21 – Proposed Scenario 3 Water Rates
Monthly Volumetric
Rates FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Existing Proposed Proposed Proposed Proposed Proposed
Volumetric Rate ($/CCF) $2.02 $2.14 $2.28 $2.43 $2.59 $2.76 Drought ($/CCF) $2.49 $2.65 $2.82 $3.00 $3.20
Monthly Fixed Charge FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Existing Proposed Proposed Proposed Proposed Proposed
Meter Size
5/8" $25.44 $26.76 $28.50 $30.35 $32.32 $34.42
3/4" $25.44 $26.76 $28.50 $30.35 $32.32 $34.42
1" $36.83 $39.40 $41.96 $44.69 $47.59 $50.68

1.5" $65.32 $70.98 $75.59 $80.50 $85.73 $91.30
2" $99.50 $108.88 $115.96 $123.50 $131.53 $140.08
3" $207.73 $228.90 $243.78 $259.63 $276.51 $294.48
4" $367.24 $405.76 $432.13 $460.22 $490.13 $521.99
6" $748.90 $828.98 $882.86 $940.25 $1,001.37 $1,066.46
8" $1,375.53 $1,523.81 $1,622.86 $1,728.35 $1,840.69 $1,960.33 10" $2,173.05 $2,408.15 $2,564.68 $2,731.38 $2,908.92 $3,098.00 12" $2,856.63 $3,166.15 $3,371.95 $3,591.13 $3,824.55 $4,073.15 #8..
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BARTLE WELLS ASSOCIATES 30
City of Modesto – Water Rate Study 2023
6 REGIONAL RESIDENTIAL BILL COMPARISON
Figure 5 provides a residential bill survey comparing the City of Modesto’s current and proposed water bills with the bills of other local agencies. The City of Modesto bills shown in Figure 5 are the non-drought water bills. Since each agency has an individualized conservation target, it is unknown how the City of Modesto typical water use would compare. Even with the proposed rate increases under each scenario, the City of Modesto’s typical bill would remain competitive.

Figure 5 – Residential Bill Comparison
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BARTLE WELLS ASSOCIATES 31
City of Modesto – Water Rate Study 2023
7 DROUGHT RATES
The City is proposing to authorize a drought rate that could be implemented to support financial stability and help ensure adequate funding for water utility operations during periods of water shortages and reduced water sales.

As proposed, these rates would be temporary, billed based on metered water use, that would replace the City’s regular water rates during water shortage emergencies.

The drought rates are designed to enable the City to recover its costs of service and remain financially stable during periods of water shortages and reduced water sales.

Financial impacts during water shortages and periods of reduced water sales can include:
• A loss of volumetric water rate revenues due to a reduction in the volume of water sales. • Reduced variable expenses due to reduced volumes of water production and supply, such as reduced costs for water treatment and pumping.
• Additional costs for achieving water demand cutback targets, such as costs for an enhanced conservation program and water demand mitigation efforts.
• Additional costs for supplemental sources of water supply when normal-year supply is curtailed during a drought.
• Potential costs of compliance for drought-related regulations and potential cost of fines or penalties for non-compliance with State water reduction mandates during periods of severe drought.

The surcharges account for a) lost revenues due to reduced water sales, less b) estimated reduced variable expenses due to reduced water supply, divided by c) the volume of projected water sales with reduced demand.

Table 22 – Proposed Scenario 1 Drought Rates
Drought Rate Calculation Units Amount
Projected volume CCF 20,693,839
Drought reduction % 15%
Drought volume CCF 17,589,763
Volume reduction CCF 3,104,076

Variable Cost $/CCF $0.14
Variable cost reduction $ $434,571
Projected revenue requirement $ $43,568,147
Drought revenue requirement $ $43,133,576
Drought Rate $/CCF $2.45
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BARTLE WELLS ASSOCIATES 32
City of Modesto – Water Rate Study 2023
Table 23 – Proposed Scenario 2 Drought Rates
Drought Rate Calculation Units Amount
Projected volume CCF 20,693,839
Drought reduction % 15%
Drought volume CCF 17,589,763
Volume reduction CCF 3,104,076

Variable Cost $/CCF $0.14
Variable cost reduction $ $434,571
Projected revenue requirement $ $43,559,889
Drought revenue requirement $ $43,125,319
Drought Rate $/CCF $2.45
Table 24 – Proposed Scenario 3 Drought Rates
Drought Rate Calculation Units Amount
Projected volume CCF 20,693,839
Drought reduction % 15%
Drought volume CCF 17,589,763
Volume reduction CCF 3,104,076

Variable Cost $/CCF $0.14
Variable cost reduction $ $434,571
Projected revenue requirement $ $44,200,007
Drought revenue requirement $ $43,765,436
Drought Rate $/CCF $2.49
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BARTLE WELLS ASSOCIATES 33
City of Modesto – Water Rate Study 2023
8 CONCLUSION AND RECOMMENDATIONS
This water rate study report presents a comprehensive review of the City of Modesto’s water revenue requirements and rate structures. The City will need regular annual rate increases to keep up with cost inflation and be able to complete necessary capital projects while maintaining prudent reserves.

8.1 Conclusion
The City practices sound financial planning which has provided for the financial health of the water enterprise.

Historically, the City has increased rate revenue to keep up with inflationary cost increases and fund system upgrades and maintenance. The adoption of these rates reflect the City’s commitment to stewarding financially sound utilities and providing reliable, high quality water service that will benefit the community many years into the future.

8.2 Recommendations
BWA recommends that the City adopt the rates shown in this report. Rates were developed as part of a collaborative process. At minimum, BWA recommends that the City review and update its water rate study every five years and/or concurrent with Master Plan Updates. Proposition 218 allows public agencies to adopt rates over a five-year planning period. Any further rate increases must be proposed as part of a new Proposition 218 process. #8..
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APPENDIX A
Scenario 1 Water Rate Study Tables
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City of Modesto
Draft Water Rate Study Tables
April 10, 2023
Scenario 1 - Low Capital, No Debt
Draft

BARTLE WELLS ASSOCIATES
Independent Public Finance Advisors
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Table A Draft
City of Modesto
Water Rate Study
Rate Sheet
Scenario 1 - Low Capital, No Debt
Monthly Volumetric
Rates FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Existing Proposed Proposed Proposed Proposed Proposed
Non-Drought ($/CCF) $2.02 $2.11 $2.20 $2.30 $2.40 $2.51 Drought ($/CCF) $2.45 $2.56 $2.68 $2.80 $2.93
Monthly Fixed Charge FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Existing Proposed Proposed Proposed Proposed Proposed
Meter Size
5/8" $25.44 $26.48 $27.67 $28.92 $30.22 $31.58
3/4" $25.44 $26.48 $27.67 $28.92 $30.22 $31.58
1" $36.83 $38.56 $40.30 $42.11 $44.00 $45.98

1.5" $65.32 $68.74 $71.83 $75.06 $78.44 $81.97
2" $99.50 $104.96 $109.68 $114.62 $119.78 $125.17
3" $207.73 $219.66 $229.54 $239.87 $250.66 $261.94
4" $367.24 $388.68 $406.17 $424.45 $443.55 $463.51
6" $748.90 $793.14 $828.83 $866.13 $905.11 $945.84
8" $1,375.53 $1,457.17 $1,522.74 $1,591.26 $1,662.87 $1,737.70 10" $2,173.05 $2,302.31 $2,405.91 $2,514.18 $2,627.32 $2,745.55 12" $2,856.63 $3,026.71 $3,162.91 $3,305.24 $3,453.98 $3,609.41 #8..
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Table 1 Draft
City of Modesto
Water Rate Study
Projected Operating Expenses
Scenario 1 - Low Capital, No Debt
Expenses1 Inflation FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Budgeted Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected General Inflation Factor General 5.0% 5.0% 5.0% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 4.5% 12460 FIN Cashiering Customer Accounts General $845,352 $835,287 $877,051 $920,904 $966,949 $1,015,297 $1,060,985 $1,108,729 $1,158,622 $1,210,760 $1,265,244 12470 FIN Utilities & Collections Customer Accounts General 2,499,546 $2,411,368 $2,531,936 $2,658,533 $2,791,460 $2,931,033 $3,062,929 $3,200,761 $3,344,795 $3,495,311 $3,652,600 12475 FIN Utility Assistance Programs Administration General 1,119,827 $2,286,900 $2,401,245 $2,521,307 $2,647,373 $2,779,741 $2,904,830 $3,035,547 $3,172,147 $3,314,893 $3,464,063 41010 UPP Administration Administration General 1,167,848 $1,154,259 $1,211,972 $1,272,571 $1,336,199 $1,403,009 $1,466,144 $1,532,121 $1,601,066 $1,673,114 $1,748,405 41410 UPP Water General Administration General 410,902 $425,795 $447,085 $469,439 $492,911 $517,556 $540,847 $565,185 $590,618 $617,196 $644,970 41420 UPP Water Billing & Collections Customer Accounts General 176,311 $223,954 $235,152 $246,909 $259,255 $272,217 $284,467 $297,268 $310,645 $324,624 $339,233 42024 UTL Water Engineering Design Capital General 1,122,154 $1,119,841 $1,175,833 $1,234,625 $1,296,356 $1,361,174 $1,422,427 $1,486,436 $1,553,325 $1,623,225 $1,696,270 43010 UPP Ground Water Management Plan Source of Supply General $115,141 $61,438 $64,510 $67,735 $71,122 $74,678 $78,039 $81,551 $85,220 $89,055 $93,063 43020 UPP Water System Analysis Water System General 220,977 $191,680 $201,264 $211,327 $221,894 $232,988 $243,473 $254,429 $265,878 $277,843 $290,346 43030 UPP Urban Water Management Plan Water Demand General 46,705 $32,502 $34,127 $35,833 $37,625 $39,506 $41,284 $43,142 $45,083 $47,112 $49,232 43040 UPP Water Quality Study Water Demand General 86,457 $81,917 $86,013 $90,313 $94,829 $99,571 $104,051 $108,734 $113,627 $118,740 $124,083 43060 UPP Capital Planning Capital General 801,938 $800,160 $840,168 $882,176 $926,285 $972,599 $1,016,366 $1,062,103 $1,109,898 $1,159,843 $1,212,036 43070 UPP Water Rate Analysis Administration General 122,251 $4,905 $5,150 $5,408 $5,678 $5,962 $6,230 $6,511 $6,804 $7,110 $7,430 43080 UPP Sphere of Influence Administration General 35,962 $34,933 $36,680 $38,514 $40,439 $42,461 $44,372 $46,369 $48,455 $50,636 $52,914 45010 UPP Water Services Administration Administration General 2,192,418 $2,233,552 $2,345,230 $2,462,491 $2,585,616 $2,714,896 $2,837,067 $2,964,735 $3,098,148 $3,237,564 $3,383,255 45020 UPP Systems Maintenance Water System General 3,120,442 $3,445,734 $3,618,021 $3,798,922 $3,988,868 $4,188,311 $4,376,785 $4,573,741 $4,779,559 $4,994,639 $5,219,398 45040 UPP Construction Water System General 6,233,954 $6,893,861 $7,238,554 $7,600,482 $7,980,506 $8,379,531 $8,756,610 $9,150,657 $9,562,437 $9,992,747 $10,442,420 45050 UPP Wells & Tanks Source of Supply General 8,654,114 $8,842,192 $9,284,302 $9,748,517 $10,235,943 $10,747,740 $11,231,388 $11,736,800 $12,264,956 $12,816,879 $13,393,639 45055 UPP Water Quality Water Demand General 2,908,597 $3,081,081 $3,235,135 $3,396,892 $3,566,736 $3,745,073 $3,913,602 $4,089,714 $4,273,751 $4,466,069 $4,667,043 45060 UPP Service & Meters Customer Accounts General 2,489,378 $2,710,826 $2,846,367 $2,988,686 $3,138,120 $3,295,026 $3,443,302 $3,598,251 $3,760,172 $3,929,380 $4,106,202 45065 UPP Water Conservation Water Demand General 1,580,898 $1,914,878 $2,010,622 $2,111,153 $2,216,711 $2,327,546 $2,432,286 $2,541,739 $2,656,117 $2,775,642 $2,900,546 45070 UPP MID Surface Water T & DA Water Demand General 17,120,214 $17,135,229 $17,991,990 $18,891,590 $19,836,169 $20,827,978 $21,765,237 $22,744,673 $23,768,183 $24,837,751 $25,955,450 55110 PW - Water Services Meters Water System General -129,160 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Non-capital projects (FY23/24 is Billing Software) Administration General 684,000 $1,625,000 UTL - Water - Grant Research & Writing - 101452 Administration 150,000 UTL - Groundwater Well Strategy Plan - 101456 Source of Supply 126,125 Transfer Into Fund 4140 - Match Funding Administration General 46,723 $0 $0 $0 $0 Storm Drain Annual Transfer-out (rockwell rej) Administration General 700,000 $700,000 $700,000 $700,000 $700,000 $700,000 $700,000 $731,500 $764,418 $798,816 $834,763 JPA Building svs Annual Transfer-out Administration General 65,000 $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 $67,925 $70,982 $74,176 $77,514 __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ Total Operating Expenses $54,714,074 $58,312,292 $59,483,407 $62,419,327 $65,502,043 $68,738,895 $71,797,721 $75,028,618 $78,404,906 $81,933,127 $85,620,117 1 Based on City's FY 22-23 budget
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Table 3 Draft
City of Modesto
Water Rate Study
Capital Improvement Costs
Scenario 1 - Low Capital, No Debt
Project Description FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected CIP (Current Dollars)
CIP 29,321,500 25,625,000 22,371,000 24,235,000 25,585,000 26,815,000 26,515,000 27,175,000 23,715,000 23,525,000 23,480,000 Total CIP (Current Dollars) $29,321,500 $25,625,000 $22,371,000 $24,235,000 $25,585,000 $26,815,000 $26,515,000 $27,175,000 $23,715,000 $23,525,000 $23,480,000 Total CIP (Inflated Dollars) $29,321,500 $25,625,000 $23,489,550 $26,719,088 $29,617,836 $32,593,800 $33,679,460 $36,071,095 $32,894,947 $34,099,812 $35,566,141 Annual Inflation Rate 5.0% 5.0% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 4.5% #8..
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Table 2 Draft
City of Modesto
Water Rate Study
Projected Revenues
Scenario 1 - Low Capital, No Debt
Revenue Category Escalation FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Budgeted Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Growth 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% None 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Interest 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% Rate Revenue Growth $79,318,075 $79,021,999 $82,743,145 $86,639,520 $90,719,375 $94,991,350 $99,464,493 $105,144,910 $111,149,736 $117,497,497 $124,207,779 Revenue from Rate Increase1,2 $2,963,325 $3,723,442 $3,898,778 $4,082,372 $4,274,611 $5,470,547 $5,782,970 $6,113,235 $6,462,362 $6,831,428 Other Revenue
Refunds, Damages, and Cost Recovery/Other As All Other Growth $10,000 $10,020 $10,040 $10,060 $10,080 $10,100 $10,121 $10,141 $10,161 $10,181 $10,202 Water Fund Development Fees Capital Growth $1,220,500 $329,010 $329,668 $330,327 $330,988 $331,650 $332,313 $332,978 $333,643 $334,311 $334,979 Legal Settlement As All Other None
Rental Income As All Other None $42,000 $42,000 $42,000 $42,000 $42,000 $42,000 $42,000 $42,000 $42,000 $42,000 $42,000 Service Credits As All Other None $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 Utility Assistance Fee As All Other None $200,902
Repayment of Carpenter Road Landfill mitigation
loan - Advance 16A/B/C As All Other None $707,421 $707,421 $707,421 $707,421 $707,421 $707,421 $707,421 $707,421 $707,421 $707,421 $707,421 INTEREST As All Other None $500,000 $500,000 $408,075 $391,176 $365,770 $333,291 $293,561 $259,614 $226,879 $218,425 $217,761 __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ Total Other Revenue $5,743,037 $4,650,665 $4,559,418 $4,543,198 $4,518,473 $4,486,676 $4,447,629 $4,414,367 $4,382,319 $4,374,552 $4,374,577 __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ Total Revenue $85,061,112 $86,635,989 $91,026,004 $95,081,496 $99,320,219 $103,752,637 $109,382,669 $115,342,247 $121,645,290 $128,334,412 $135,413,784 1 Additional revenue based on recommended increase
2 Adjusted if rates adopted in the middle of fiscal year #8..
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$25.6
$23.5
$26.7
$29.6
$32.6
$33.7
$36.1
$32.9
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 City of Modesto
Water Capital Improvements ($ millions)
Scenario 1 - Low Capital, No Debt
Source: City of Modesto 2023 CIP plus annual construction cost inflation.

Future $; includes annual
construction cost inflation.
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Table 4 Draft
City of Modesto
Water Rate Study
Debt
Scenario 1 - Low Capital, No Debt
Debt FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Budgeted Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Existing Debt
55140-54104 MID T & DA - 1998D (2013G) $5,155,541 $4,367,900 $0 $0 $0 $0 $0 $0 $0 $0 $0 55140-54103 MID T & DA - 2007F $4,257,700 $4,032,800 $8,409,205 $8,409,205 $8,409,206 $8,409,207 $8,409,208 $8,409,209 $8,409,210 $8,409,211 $8,409,212 4130 2008 Water Rev Lease Bond $2,164,623 $3,546,482 $4,240,014 $4,240,014 $4,240,014 $4,240,014 $4,240,014 $4,240,014 $4,240,014 $4,240,014 $4,240,014 55060 CA DWR (Del Este) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 4140-12183 ARRA funding CDPH $46,723 $38,237 $36,600 $36,600 $36,600 $36,600 $36,600 $36,600 $36,600 $36,600 $36,600 Total Current Debt Service $11,624,587 $11,985,419 $12,685,819 $12,685,819 $12,685,820 $12,685,821 $12,685,822 $12,685,823 $12,685,824 $12,685,825 $12,685,826 #8..
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Table 5
City of Modesto
Water Rate Study
Cash Flow Projections
Scenario 1 - Low Capital, No Debt
Projected Cashflow FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Rate Revenue Increase 4.5% 4.5% 4.5% 4.5% 4.5% 5.5% 5.5% 5.5% 5.5% 5.5% Beginning Reserves $110,862,007 $102,018,732 $97,794,035 $91,442,474 $83,322,765 $73,390,177 $64,903,403 $56,719,728 $54,606,219 $54,440,290 Revenues
Rate Revenue $79,021,999 $82,743,145 $86,639,520 $90,719,375 $94,991,350 $99,464,493 $105,144,910 $111,149,736 $117,497,497 $124,207,779 Rate Increase Revenue 3,555,990 3,723,442 3,898,778 4,082,372 4,274,611 $5,470,547 5,782,970 6,113,235 6462362.34 6,831,428 Timing Adjustment* -592,665
Other Revenue 4,650,665 4,559,418 4,543,198 4,518,473 4,486,676 $4,447,629 4,414,367 4,382,319 4,374,552 4,374,577 Interest on Reserves $443,448 $408,075 $391,176 $365,770 $333,291 $293,561 $259,614 $226,879 $218,425 $217,761 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ Total Revenue $87,079,437 $91,434,079 $95,472,672 $99,685,989 $104,085,928 $109,676,230 $115,601,861 $121,872,169 $128,552,836 $135,631,546 Expenses
Operating Expenses $58,312,292 $59,483,407 $62,419,327 $65,502,043 $68,738,895 $71,797,721 $75,028,618 $78,404,906 $81,933,127 $85,620,117 Existing Debt Service 11,985,419 12,685,819 12,685,819 12,685,820 12,685,821 $12,685,822 12,685,823 12,685,824 12,685,825 12,685,826 New Debt Service 0 0 0 0 0 0 0 0 0 0
Rate Funded Capital $25,625,000 $23,489,550 $26,719,088 $29,617,836 $32,593,800 $33,679,460 $36,071,095 $32,894,947 $34,099,812 $35,566,141 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ Total Expenses $95,922,711 $95,658,776 $101,824,234 $107,805,699 $114,018,516 $118,163,003 $123,785,536 $123,985,678 $128,718,765 $133,872,084 Net Revenues -$8,843,274 -$4,224,697 -$6,351,561 -$8,119,709 -$9,932,588 -$8,486,773 -$8,183,676 -$2,113,509 -$165,928 $1,759,462 Ending Reserves $102,018,732 $97,794,035 $91,442,474 $83,322,765 $73,390,177 $64,903,403 $56,719,728 $54,606,219 $54,440,290 $56,199,752 Debt Coverage (Target 2.0) 2.40 2.52 2.61 2.69 2.79 2.99 3.20 3.43 3.67 3.94 *Reflects October rate implementation
Capital Funding FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Capital Revenues
Use of Debt Proceeds
Rate Funded Capital $25,625,000 $23,489,550 $26,719,088 $29,617,836 $32,593,800 $33,679,460 $36,071,095 $32,894,947 $34,099,812 $35,566,141 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ Total Capital Revenue $25,625,000 $23,489,550 $26,719,088 $29,617,836 $32,593,800 $33,679,460 $36,071,095 $32,894,947 $34,099,812 $35,566,141 Total Capital Expenditures $25,625,000 $23,489,550 $26,719,088 $29,617,836 $32,593,800 $33,679,460 $36,071,095 $32,894,947 $34,099,812 $35,566,141 #8..
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$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
$180.0
$200.0
FY 22-
23 FY 23-
24 FY 24-
25 FY 25-
26 FY 26-
27 FY 27-
28 FY 28-
29 FY 29-
30 FY 30-
31 FY 31-
32 FY 32-
33 Rate Funded Capital
Debt Service
O&M
Revenue
Reserves
City of Modesto
Projected Water Revenues & Expenses ($ Millions)
Scenario 1 - Low Capital, No Debt
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Table 6 Draft
City of Modesto
Water Rate Study
Customer Data
Scenario 1 - Low Capital, No Debt
Customer Data FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 FY 23-24 Actual Actual Actual Actual Actual Projected Projected
Metered Customers
Meter Size # # # # # # #
5/8" 98 96 95 96 87 87 87
3/4" 10,319 10,570 11,244 11,740 12,754 13,106 13,459
1" 52,781 54,271 55,158 56,106 56,925 57,039 57,153

1.5" 1,178 1,161 1,158 1,166 1,164 1,166 1,168
2" 2,123 2,124 2,131 2,149 2,168 2,172 2,176
3" 126 132 144 150 158 158 158
4" 283 280 281 286 287 288 289
6" 138 138 142 142 141 141 141
8" 66 66 64 64 64 64 64
10" 12 12 10 11 11 11 11
12" 1 1 1 1 1 1 1
Total Metered Customers 67,125 68,851 70,428 71,911 73,760 74,233 74,707 Unmetered Customers
# # # # # # #
PR01 857 752 418 196 28 14 -
PR02 2,899 1,986 1,444 812 337 169 -
PR03 1,909 1,454 1,075 870 124 62 -
PR04 323 273 224 149 47 24 -
PR05 356 313 244 199 117 59 -
Total Unmetered Customers 6,344 4,778 3,405 2,226 653 327 0 Projected Unmetered Use
Monthly CCF per Account CCF CCF CCF CCF CCF CCF CCF
PR01 20 207,370 181,963 101,144 47,426 6,775 3,388 -
PR02 24 848,082 580,990 422,432 237,545 98,587 49,293 - PR03 31 708,675 539,766 399,071 322,969 46,032 23,016 - PR04 34 129,874 109,769 90,067 59,911 18,898 9,449 -
PR05 41 176,312 155,015 120,843 98,556 57,945 28,973 -
Total Unmetered 2,070,312 1,567,504 1,133,557 766,407 228,238 114,119 0 System Totals
Total Accounts (#) 73,469 73,629 73,833 74,137 74,413 74,560 74,707 Growth (%) 0.22% 0.28% 0.41% 0.37% 0.20% 0.20%
Annual metered use (CCF) per meter 278 265 277 288 279 277.0 277.0 Annual production (CCF) per account 304 295 304 315 310 305 306 Billed, Metered Consumption (CCF) 18,639,728 18,222,157 19,509,688 20,697,851 20,568,355 20,562,541 20,693,839 Total Estimated Consumption (CCF) 20,710,040 19,789,661 20,643,245 21,464,258 20,796,593 20,676,660 20,693,839 Total Water Production (CCF) 22,302,089 21,737,810 22,437,586 23,362,606 23,034,358 22,775,690 22,849,883 #8..
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Table 7 Draft
City of Modesto
Water Rate Study
Meter Equivalent Units
Scenario 1 - Low Capital, No Debt
Meter Size Services
Meter
Equivalent
Ratio**
Meter Equivalent
Units
Annual Meter
Equivalent Units
5/8" 87 1.0 87.0 1,044.0
3/4" 13,459 1.0 13,459.0 161,508.0
1" 57,153 1.7 95,255.0 1,143,060.0

1.5" 1,168 3.3 3,893.3 46,720.0
2" 2,176 5.3 11,605.3 139,264.0
3" 158 11.7 1,843.3 22,120.0
4" 289 21.0 6,069.0 72,828.0
6" 141 43.3 6,110.0 73,320.0
8" 64 80.0 5,120.0 61,440.0
10" 11 126.7 1,393.3 16,720.0
12" 1 166.7 166.7 2,000.0
Total 74,707.0 145,002.0 1,740,024.0
* Customer data as of June 2022 provided by staff
** Capacity factors based on AWWA operating capacity standards by meter size #8..
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Table 8 Draft
City of Modesto
Water Rate Study
Functional Allocation
Scenario 1 - Low Capital, No Debt
Functional Allocation Amount
Offsetting
Revenue
Allocation
Amount Customer Capacity All Volume Total
Administration $7,550,855 $0 $7,550,855 30% 70% 100%
Source of Supply $9,839,635 $0 $9,839,635 10% 90% 100%
Water Demand $24,584,204 $0 $24,584,204 100% 100%
Customer Accounts $6,831,266 $0 $6,831,266 100% 100%
Water System $11,638,388 $0 $11,638,388 50% 50% 100%
Debt Service $12,545,740 $0 $12,545,740 100% 100%
Capital $27,609,055 $330,328 $27,278,726 50% 50% 100%
Functional Allocation $ $100,599,144 $330,328 $100,268,815 $9,096,523 $38,273,859 $52,898,433 $100,268,815 Functional Allocation % 9.07% 38.17% 52.76% 100%
Revenue Requirement $7,489,824 $31,520,018 $43,568,147 $82,577,989 #8..
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Table 9 Draft
City of Modesto
Water Rate Study
Rate Derivation
Scenario 1 - Low Capital, No Debt
Allocation Units Customer Capacity All Volume
Unit of Measure # EDU CCF
Allocation Units 894,714 1,740,024 20,693,839
Revenue Requirement $7,489,824 $31,520,018 $43,568,147
Unit Cost ($/Unit) $8.37 $18.11 $2.11
Monthly Fixed
Charge
Calculation Capacity Factor**
Monthly
Customer
Component
Monthly Capacity
Component
Monthly Fixed
Charge
5/8" 1.00 $8.37 $18.11 $26.48
3/4" 1.00 $8.37 $18.11 $26.48
1" 1.67 $8.37 $30.18 $38.56

1.5" 3.33 $8.37 $60.37 $68.74
2" 5.33 $8.37 $96.59 $104.96
3" 11.67 $8.37 $211.28 $219.66
4" 21.00 $8.37 $380.31 $388.68
6" 43.33 $8.37 $784.77 $793.14
8" 80.00 $8.37 $1,448.80 $1,457.17
10" 126.67 $8.37 $2,293.93 $2,302.31
12" 166.67 $8.37 $3,018.33 $3,026.71
#8..
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Table 10
City of Modesto
Water Rate Study
Drought Rate Derivation
Scenario 1 - Low Capital, No Debt
Drought Rate Calculation Units Amount
Projected volume CCF 20,693,839
Drought reduction % 15%
Drought volume CCF 17,589,763
Volume reduction CCF 3,104,076
Variable Cost $/CCF $0.14
Variable cost reduction $ $434,571
Projected revenue requirement $43,568,147
Drought revenue requirement $43,133,576
Drought rate $2.45
#8..
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APPENDIX B
Scenario 2 Water Rate Study Tables

#8..
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City of Modesto
Draft Water Rate Study Tables
April 10, 2023
Scenario 2 - Full Capital with New Debt
Draft

BARTLE WELLS ASSOCIATES
Independent Public Finance Advisors
#8..
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Table A Draft
City of Modesto
Water Rate Study
Rate Sheet
Scenario 2 - Full Capital with New Debt
Monthly Volumetric
Rates FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Existing Proposed Proposed Proposed Proposed Proposed
Non-Drought ($/CCF) $2.02 $2.11 $2.20 $2.30 $2.40 $2.51 Drought ($/CCF) $2.45 $2.56 $2.68 $2.80 $2.93
Monthly Fixed Charge FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Existing Proposed Proposed Proposed Proposed Proposed
Meter Size
5/8" $25.44 $26.43 $27.62 $28.86 $30.16 $31.52
3/4" $25.44 $26.43 $27.62 $28.86 $30.16 $31.52
1" $36.83 $38.55 $40.28 $42.09 $43.98 $45.96

1.5" $65.32 $68.85 $71.95 $75.19 $78.57 $82.11
2" $99.50 $105.21 $109.94 $114.89 $120.06 $125.46
3" $207.73 $220.35 $230.27 $240.63 $251.46 $262.78
4" $367.24 $390.03 $407.58 $425.92 $445.09 $465.12
6" $748.90 $796.05 $831.87 $869.30 $908.42 $949.30
8" $1,375.53 $1,462.65 $1,528.47 $1,597.25 $1,669.13 $1,744.24 10" $2,173.05 $2,311.05 $2,415.05 $2,523.73 $2,637.30 $2,755.98 12" $2,856.63 $3,038.25 $3,174.97 $3,317.84 $3,467.14 $3,623.16 #8..
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Table 1 Draft
City of Modesto
Water Rate Study
Projected Operating Expenses
Scenario 2 - Full Capital with New Debt
Expenses1 Inflation FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Budgeted Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected General Inflation Factor General 5.0% 5.0% 5.0% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 4.5% 12460 FIN Cashiering Customer Accounts General $845,352 $835,287 $877,051 $920,904 $966,949 $1,015,297 $1,060,985 $1,108,729 $1,158,622 $1,210,760 $1,265,244 12470 FIN Utilities & Collections Customer Accounts General 2,499,546 $2,411,368 $2,531,936 $2,658,533 $2,791,460 $2,931,033 $3,062,929 $3,200,761 $3,344,795 $3,495,311 $3,652,600 12475 FIN Utility Assistance Programs Administration General 1,119,827 $2,286,900 $2,401,245 $2,521,307 $2,647,373 $2,779,741 $2,904,830 $3,035,547 $3,172,147 $3,314,893 $3,464,063 41010 UPP Administration Administration General 1,167,848 $1,154,259 $1,211,972 $1,272,571 $1,336,199 $1,403,009 $1,466,144 $1,532,121 $1,601,066 $1,673,114 $1,748,405 41410 UPP Water General Administration General 410,902 $425,795 $447,085 $469,439 $492,911 $517,556 $540,847 $565,185 $590,618 $617,196 $644,970 41420 UPP Water Billing & Collections Customer Accounts General 176,311 $223,954 $235,152 $246,909 $259,255 $272,217 $284,467 $297,268 $310,645 $324,624 $339,233 42024 UTL Water Engineering Design Capital General 1,122,154 $1,119,841 $1,175,833 $1,234,625 $1,296,356 $1,361,174 $1,422,427 $1,486,436 $1,553,325 $1,623,225 $1,696,270 43010 UPP Ground Water Management Plan Source of Supply General $115,141 $61,438 $64,510 $67,735 $71,122 $74,678 $78,039 $81,551 $85,220 $89,055 $93,063 43020 UPP Water System Analysis Water System General 220,977 $191,680 $201,264 $211,327 $221,894 $232,988 $243,473 $254,429 $265,878 $277,843 $290,346 43030 UPP Urban Water Management Plan Water Demand General 46,705 $32,502 $34,127 $35,833 $37,625 $39,506 $41,284 $43,142 $45,083 $47,112 $49,232 43040 UPP Water Quality Study Water Demand General 86,457 $81,917 $86,013 $90,313 $94,829 $99,571 $104,051 $108,734 $113,627 $118,740 $124,083 43060 UPP Capital Planning Capital General 801,938 $800,160 $840,168 $882,176 $926,285 $972,599 $1,016,366 $1,062,103 $1,109,898 $1,159,843 $1,212,036 43070 UPP Water Rate Analysis Administration General 122,251 $4,905 $5,150 $5,408 $5,678 $5,962 $6,230 $6,511 $6,804 $7,110 $7,430 43080 UPP Sphere of Influence Administration General 35,962 $34,933 $36,680 $38,514 $40,439 $42,461 $44,372 $46,369 $48,455 $50,636 $52,914 45010 UPP Water Services Administration Administration General 2,192,418 $2,233,552 $2,345,230 $2,462,491 $2,585,616 $2,714,896 $2,837,067 $2,964,735 $3,098,148 $3,237,564 $3,383,255 45020 UPP Systems Maintenance Water System General 3,120,442 $3,445,734 $3,618,021 $3,798,922 $3,988,868 $4,188,311 $4,376,785 $4,573,741 $4,779,559 $4,994,639 $5,219,398 45040 UPP Construction Water System General 6,233,954 $6,893,861 $7,238,554 $7,600,482 $7,980,506 $8,379,531 $8,756,610 $9,150,657 $9,562,437 $9,992,747 $10,442,420 45050 UPP Wells & Tanks Source of Supply General 8,654,114 $8,842,192 $9,284,302 $9,748,517 $10,235,943 $10,747,740 $11,231,388 $11,736,800 $12,264,956 $12,816,879 $13,393,639 45055 UPP Water Quality Water Demand General 2,908,597 $3,081,081 $3,235,135 $3,396,892 $3,566,736 $3,745,073 $3,913,602 $4,089,714 $4,273,751 $4,466,069 $4,667,043 45060 UPP Service & Meters Customer Accounts General 2,489,378 $2,710,826 $2,846,367 $2,988,686 $3,138,120 $3,295,026 $3,443,302 $3,598,251 $3,760,172 $3,929,380 $4,106,202 45065 UPP Water Conservation Water Demand General 1,580,898 $1,914,878 $2,010,622 $2,111,153 $2,216,711 $2,327,546 $2,432,286 $2,541,739 $2,656,117 $2,775,642 $2,900,546 45070 UPP MID Surface Water T & DA Water Demand General 17,120,214 $17,135,229 $17,991,990 $18,891,590 $19,836,169 $20,827,978 $21,765,237 $22,744,673 $23,768,183 $24,837,751 $25,955,450 55110 PW - Water Services Meters General -129,160 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Non-capital projects (FY23/24 is Billing Software) Administration General 684,000 $1,625,000 UTL - Water - Grant Research & Writing - 101452 150,000 UTL - Groundwater Well Strategy Plan - 101456 126,125
Transfer Into Fund 4140 - Match Funding General 46,723 $0 $0 $0 $0 Storm Drain Annual Transfer-out (rockwell rej) Administration General 700,000 $700,000 $700,000 $700,000 $700,000 $700,000 $700,000 $731,500 $764,418 $798,816 $834,763 JPA Building svs Annual Transfer-out Administration General 65,000 $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 $67,925 $70,982 $74,176 $77,514 __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ Total Operating Expenses $54,714,074 $58,312,292 $59,483,407 $62,419,327 $65,502,043 $68,738,895 $71,797,721 $75,028,618 $78,404,906 $81,933,127 $85,620,117 1 Based on City's FY 22-23 budget
#8..
- 406 -
Table 2 Draft
City of Modesto
Water Rate Study
Projected Revenues
Scenario 2 - Full Capital with New Debt
Revenue Category Escalation FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Budgeted Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Growth 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% None 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Interest 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% Rate Revenue Growth $79,318,075 $79,021,999 $82,743,145 $86,639,520 $90,719,375 $94,991,350 $99,464,493 $106,639,861 $114,332,861 $122,580,833 $130,195,555 Revenue from Rate Increase1,2 $2,963,325 $3,723,442 $3,898,778 $4,082,372 $4,274,611 $6,962,514 $7,464,790 $8,003,300 $7,354,850 $6,509,778 Other Revenue
Refunds, Damages, and Cost Recovery/Other Administration Growth $10,000 $10,020 $10,040 $10,060 $10,080 $10,100 $10,121 $10,141 $10,161 $10,181 $10,202 Water Fund Development Fees Capital Growth $1,220,500 $329,010 $329,668 $330,327 $330,988 $331,650 $332,313 $332,978 $333,643 $334,311 $334,979 Legal Settlement Administration None
Rental Income Administration None $42,000 $42,000 $42,000 $42,000 $42,000 $42,000 $42,000 $42,000 $42,000 $42,000 $42,000 Service Credits As All Other None $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 Utility Assistance Fee As All Other None $200,902
Repayment of Carpenter Road Landfill mitigation
loan - Advance 16A/B/C As All Other None $707,421 $707,421 $707,421 $707,421 $707,421 $707,421 $707,421 $707,421 $707,421 $707,421 $707,421 INTEREST As All Other None $500,000 $500,000 $408,075 $334,770 $264,041 $271,030 $253,912 $241,383 $243,338 $243,974 $241,324 __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ Total Other Revenue $5,743,037 $4,650,665 $4,559,418 $4,486,792 $4,416,744 $4,424,415 $4,407,981 $4,396,137 $4,398,778 $4,400,101 $4,398,140 __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ Total Revenue $85,061,112 $86,635,989 $91,026,004 $95,025,090 $99,218,491 $103,690,376 $110,834,988 $118,500,788 $126,734,939 $134,335,784 $141,103,473 1 Additional revenue based on recommended increase
2 Adjusted if rates adopted in the middle of fiscal year #8..
- 407 -
Table 3 Draft
City of Modesto
Water Rate Study
Capital Improvement Costs
Scenario 2 - Full Capital with New Debt
Project Description FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected CIP (Current Dollars)
CIP 29,321,500 25,625,000 35,800,976 34,409,979 34,162,513 36,358,682 37,092,938 23,558,714 22,681,004 25,081,003 25,138,184 Total CIP (Current Dollars) $29,321,500 $25,625,000 $35,800,976 $34,409,979 $34,162,513 $36,358,682 $37,092,938 $23,558,714 $22,681,004 $25,081,003 $25,138,184 Total CIP (Inflated Dollars) $29,321,500 $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 $47,115,599 $31,270,970 $31,460,697 $36,355,260 $38,077,861 Annual Inflation Rate 5.0% 5.0% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 4.5% #8..
- 408 -
$25.6
$37.6 $37.9
$39.5
$44.2
$47.1
$31.3 $31.5
$36.4
$38.1
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
$50.0
FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 City of Modesto
Water Capital Improvements ($ millions)
Scenario 2 - Full Capital with New Debt
Source: City of Modesto 2023 CIP plus annual construction cost inflation.

Future $; includes annual
construction cost inflation.
#8..
- 409 -
Table 4 Draft
City of Modesto
Water Rate Study
Debt
Scenario 2 - Full Capital with New Debt
Debt FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Budgeted Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Existing Debt
55140-54104 MID T & DA - 1998D (2013G) $5,155,541 $4,367,900 $0 $0 $0 $0 $0 $0 $0 $0 $0 55140-54103 MID T & DA - 2007F $4,257,700 $4,032,800 $8,409,205 $8,409,205 $8,409,206 $8,409,207 $8,409,208 $8,409,209 $8,409,210 $8,409,211 $8,409,212 4130 2008 Water Rev Lease Bond $2,164,623 $3,546,482 $4,240,014 $4,240,014 $4,240,014 $4,240,014 $4,240,014 $4,240,014 $4,240,014 $4,240,014 $4,240,014 55060 CA DWR (Del Este) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 4140-12183 ARRA funding CDPH $46,723 $38,237 $36,600 $36,600 $36,600 $36,600 $36,600 $36,600 $36,600 $36,600 $36,600 Total Current Debt Service $11,624,587 $11,985,419 $12,685,819 $12,685,819 $12,685,820 $12,685,821 $12,685,822 $12,685,823 $12,685,824 $12,685,825 $12,685,826 Proposed Borrowing
Net Proceeds Needed $40,000,000 $25,000,000
Repayment Term (yrs) 30 30
Interest Rate 5.0% 5.0%
Month of Issue 1 1
Issuance Cost $300,000 $300,000
Total Debt Issue Size $40,300,000 $25,300,000
Prorated Debt Service Payment - Current Yr. Only $2,622,000 $1,646,000 Annual Debt Service Payment (rounded) $2,622,000 $1,646,000 Total Proposed Annual Water Debt Service $0 $0 $0 $0 $0 $2,622,000 $2,622,000 $4,268,000 $4,268,000 $4,268,000 $4,268,000 #8..
- 410 -
Table 5
City of Modesto
Water Rate Study
Cash Flow Projections
Scenario 2 - Full Capital with New Debt
Projected Cashflow FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Rate Revenue Increase 4.5% 4.5% 4.5% 4.5% 4.5% 7.0% 7.0% 7.0% 6.0% 5.0% Beginning Reserves $110,862,007 $102,018,732 $83,692,561 $66,010,273 $67,757,563 $63,478,048 $60,345,805 $60,834,565 $60,993,415 $60,330,961 Revenues
Rate Revenue $79,021,999 $82,743,145 $86,639,520 $90,719,375 $94,991,350 $99,464,493 $106,639,861 $114,332,861 $122,580,833 $130,195,555 Rate Increase Revenue 3,555,990 3,723,442 3,898,778 4,082,372 4,274,611 6,962,514 7,464,790 8,003,300 7,354,850 6,509,778 Timing Adjustment* -592,665
Other Revenue 4,650,665 4,559,418 4,486,792 4,416,744 4,424,415 4,407,981 4,396,137 4,398,778 4,400,101 4,398,140 Interest on Reserves $443,448 $408,075 $334,770 $264,041 $271,030 $253,912 $241,383 $243,338 $243,974 $241,324 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ Total Revenue $87,079,437 $91,434,079 $95,359,861 $99,482,532 $103,961,406 $111,088,900 $118,742,171 $126,978,277 $134,579,758 $141,344,796 Expenses
Operating Expenses $58,312,292 $59,483,407 $62,419,327 $65,502,043 $68,738,895 $71,797,721 $75,028,618 $78,404,906 $81,933,127 $85,620,117 Existing Debt Service 11,985,419 12,685,819 12,685,819 12,685,820 12,685,821 12,685,822 12,685,823 12,685,824 12,685,825 12,685,826 New Debt Service 0 0 0 0 2,622,000 2,622,000 4,268,000 4,268,000 4,268,000 4,268,000 Rate Funded Capital $25,625,000 $37,591,025 $37,937,002 $19,547,379 $24,194,205 $27,115,599 $26,270,970 $31,460,697 $36,355,260 $38,077,861 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ Total Expenses $95,922,711 $109,760,251 $113,042,148 $97,735,242 $108,240,921 $114,221,142 $118,253,411 $126,819,427 $135,242,212 $140,651,805 Net Revenues -$8,843,274 -$18,326,172 -$17,682,287 $1,747,289 -$4,279,515 -$3,132,242 $488,760 $158,850 -$662,454 $692,992 Ending Reserves $102,018,732 $83,692,561 $66,010,273 $67,757,563 $63,478,048 $60,345,805 $60,834,565 $60,993,415 $60,330,961 $61,023,953 Debt Coverage (Target 2.0) 2.40 2.52 2.60 2.68 2.30 2.57 2.58 2.87 3.11 3.29 *Reflects October rate implementation
Capital Funding FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Capital Revenues
Use of Debt Proceeds $20,000,000 $20,000,000 $20,000,000 $5,000,000 Rate Funded Capital $25,625,000 $37,591,025 $37,937,002 $19,547,379 $24,194,205 $27,115,599 $26,270,970 $31,460,697 $36,355,260 $38,077,861 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ Total Capital Revenue $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 $47,115,599 $31,270,970 $31,460,697 $36,355,260 $38,077,861 Total Capital Expenditures $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 $47,115,599 $31,270,970 $31,460,697 $36,355,260 $38,077,861 #8..
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$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
$180.0
$200.0
FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Rate Funded Capital
Debt Service
O&M
Revenue
Reserves
City of Modesto
Projected Water Revenues & Expenses ($ Millions)
Scenario 2 - Full Capital with New Debt
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Table 6 Draft
City of Modesto
Water Rate Study
Customer Data
Scenario 2 - Full Capital with New Debt
Customer Data FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 FY 23-24 Actual Actual Actual Actual Actual Projected Projected
Total Accounts (#) 73,469 73,629 73,833 74,137 74,413 74,560 74,707 Growth (%) 0.22% 0.28% 0.41% 0.37% 0.20% 0.20%
Annual metered use (CCF) per meter 278 265 277 288 279 277 277 Annual production (CCF) per account 298 285 303 309 298 299 299 Billed, Metered Consumption (CCF) 18,639,728 18,222,157 19,509,688 20,697,851 20,568,355 20,562,541 20,693,839 Total Estimated Consumption (CCF) 20,710,040 19,789,661 20,643,245 21,464,258 20,796,593 20,676,660 20,693,839 Total Water Production (CCF) 21,919,447 20,965,305 22,397,473 22,916,498 22,203,522 22,277,633 22,328,428 #8..
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Table 7 Draft
City of Modesto
Water Rate Study
Meter Equivalent Units
Scenario 2 - Full Capital with New Debt
Meter Size Services
Meter
Equivalent
Ratio**
Meter Equivalent
Units
Annual Meter
Equivalent Units
5/8" 87 1.0 87.0 1,044.0
3/4" 13,459 1.0 13,459.0 161,508.0
1" 57,153 1.7 95,255.0 1,143,060.0

1.5" 1,168 3.3 3,893.3 46,720.0
2" 2,176 5.3 11,605.3 139,264.0
3" 158 11.7 1,843.3 22,120.0
4" 289 21.0 6,069.0 72,828.0
6" 141 43.3 6,110.0 73,320.0
8" 64 80.0 5,120.0 61,440.0
10" 11 126.7 1,393.3 16,720.0
12" 1 166.7 166.7 2,000.0
Total 74,707.0 145,002.0 1,740,024.0
* Customer data as of June 2022 provided by staff
** Capacity factors based on AWWA operating capacity standards by meter size #8..
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Table 8 Draft
City of Modesto
Water Rate Study
Functional Allocation
Scenario 2 - Full Capital with New Debt
Functional Allocation Amount
Offsetting
Revenue
Allocation
Amount Customer Capacity All Volume Total
Administration $7,550,855 $52,060 $7,498,795 30% 70% 100% Source of Supply $9,839,635 $0 $9,839,635 10% 90% 100%
Water Demand $24,584,204 $0 $24,584,204 100% 100%
Customer Accounts $6,831,266 $0 $6,831,266 100% 100%
Water System $11,638,388 $0 $11,638,388 50% 50% 100%
Debt Service $12,545,740 $0 $12,545,740 100% 100%
Capital $28,978,922 $330,328 $28,648,594 50% 50% 100%
Functional Allocation $ $101,969,011 $382,388 $101,586,623 $9,080,905 $38,922,351 $53,583,367 $101,586,623 Functional Allocation % 8.94% 38.31% 52.75% 100%
Revenue Requirement $7,382,472 $31,635,628 $43,559,889 $82,577,989 #8..
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Table 9 Draft
City of Modesto
Water Rate Study
Rate Derivation
Scenario 2 - Full Capital with New Debt
Allocation Units Customer Capacity All Volume
Unit of Measure # EDU CCF
Allocation Units 894,714 1,740,024 20,693,839
Revenue Requirement $7,382,472 $31,635,628 $43,559,889
Unit Cost ($/Unit) $8.25 $18.18 $2.11
Monthly Fixed
Charge
Calculation Capacity Factor**
Monthly
Customer
Component
Monthly Capacity
Component
Monthly Fixed
Charge
5/8" 1.00 $8.25 $18.18 $26.43
3/4" 1.00 $8.25 $18.18 $26.43
1" 1.67 $8.25 $30.30 $38.55

1.5" 3.33 $8.25 $60.60 $68.85
2" 5.33 $8.25 $96.96 $105.21
3" 11.67 $8.25 $212.10 $220.35
4" 21.00 $8.25 $381.78 $390.03
6" 43.33 $8.25 $787.80 $796.05
8" 80.00 $8.25 $1,454.40 $1,462.65
10" 126.67 $8.25 $2,302.80 $2,311.05
12" 166.67 $8.25 $3,030.00 $3,038.25
#8..
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Table 10
City of Modesto
Water Rate Study
Drought Rate Derivation
Scenario 2 - Full Capital with New Debt
Drought Rate Calculation Units Amount
Projected volume CCF 20,693,839
Drought reduction % 15%
Drought volume CCF 17,589,763
Volume reduction CCF 3,104,076
Variable Cost $/CCF $0.14
Variable cost reduction $ $434,571
Projected revenue requirement $43,559,889
Drought revenue requirement $43,125,319
Drought rate $2.45
#8..
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APPENDIX C
Scenario 3 Water Rate Study Tables
#8..
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City of Modesto
Draft Water Rate Study Tables
April 10, 2023
Scenario 3 - Full Capital, No Debt
Draft

BARTLE WELLS ASSOCIATES
Independent Public Finance Advisors
#8..
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Table A Draft
City of Modesto
Water Rate Study
Rate Sheet
Scenario 3 - Full Capital, No Debt
Monthly Volumetric Rates FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Existing Proposed Proposed Proposed Proposed Proposed
Volumetric Rate ($/CCF) $2.02 $2.14 $2.28 $2.43 $2.59 $2.76 Drought ($/CCF) $2.49 $2.65 $2.82 $3.00 $3.20
Monthly Fixed Charge FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 Existing Proposed Proposed Proposed Proposed Proposed
Meter Size
5/8" $25.44 $26.76 $28.50 $30.35 $32.32 $34.42
3/4" $25.44 $26.76 $28.50 $30.35 $32.32 $34.42
1" $36.83 $39.40 $41.96 $44.69 $47.59 $50.68

1.5" $65.32 $70.98 $75.59 $80.50 $85.73 $91.30
2" $99.50 $108.88 $115.96 $123.50 $131.53 $140.08
3" $207.73 $228.90 $243.78 $259.63 $276.51 $294.48
4" $367.24 $405.76 $432.13 $460.22 $490.13 $521.99
6" $748.90 $828.98 $882.86 $940.25 $1,001.37 $1,066.46
8" $1,375.53 $1,523.81 $1,622.86 $1,728.35 $1,840.69 $1,960.33 10" $2,173.05 $2,408.15 $2,564.68 $2,731.38 $2,908.92 $3,098.00 12" $2,856.63 $3,166.15 $3,371.95 $3,591.13 $3,824.55 $4,073.15 #8..
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Table 1 Draft
City of Modesto
Water Rate Study
Projected Operating Expenses
Scenario 3 - Full Capital, No Debt
Expenses1 Inflation FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Budgeted Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected General Inflation Factor General 5.0% 5.0% 5.0% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 4.5% 12460 FIN Cashiering Customer Accounts General $845,352 $835,287 $877,051 $920,904 $966,949 $1,015,297 $1,060,985 $1,108,729 $1,158,622 $1,210,760 $1,265,244 12470 FIN Utilities & Collections Customer Accounts General 2,499,546 $2,411,368 $2,531,936 $2,658,533 $2,791,460 $2,931,033 $3,062,929 $3,200,761 $3,344,795 $3,495,311 $3,652,600 12475 FIN Utility Assistance Programs Administration General 1,119,827 $2,286,900 $2,401,245 $2,521,307 $2,647,373 $2,779,741 $2,904,830 $3,035,547 $3,172,147 $3,314,893 $3,464,063 41010 UPP Administration Administration General 1,167,848 $1,154,259 $1,211,972 $1,272,571 $1,336,199 $1,403,009 $1,466,144 $1,532,121 $1,601,066 $1,673,114 $1,748,405 41410 UPP Water General Administration General 410,902 $425,795 $447,085 $469,439 $492,911 $517,556 $540,847 $565,185 $590,618 $617,196 $644,970 41420 UPP Water Billing & Collections Customer Accounts General 176,311 $223,954 $235,152 $246,909 $259,255 $272,217 $284,467 $297,268 $310,645 $324,624 $339,233 42024 UTL Water Engineering Design Capital General 1,122,154 $1,119,841 $1,175,833 $1,234,625 $1,296,356 $1,361,174 $1,422,427 $1,486,436 $1,553,325 $1,623,225 $1,696,270 43010 UPP Ground Water Management Plan Source of Supply General $115,141 $61,438 $64,510 $67,735 $71,122 $74,678 $78,039 $81,551 $85,220 $89,055 $93,063 43020 UPP Water System Analysis Water System General 220,977 $191,680 $201,264 $211,327 $221,894 $232,988 $243,473 $254,429 $265,878 $277,843 $290,346 43030 UPP Urban Water Management Plan Water Demand General 46,705 $32,502 $34,127 $35,833 $37,625 $39,506 $41,284 $43,142 $45,083 $47,112 $49,232 43040 UPP Water Quality Study Water Demand General 86,457 $81,917 $86,013 $90,313 $94,829 $99,571 $104,051 $108,734 $113,627 $118,740 $124,083 43060 UPP Capital Planning Capital General 801,938 $800,160 $840,168 $882,176 $926,285 $972,599 $1,016,366 $1,062,103 $1,109,898 $1,159,843 $1,212,036 43070 UPP Water Rate Analysis Administration General 122,251 $4,905 $5,150 $5,408 $5,678 $5,962 $6,230 $6,511 $6,804 $7,110 $7,430 43080 UPP Sphere of Influence Administration General 35,962 $34,933 $36,680 $38,514 $40,439 $42,461 $44,372 $46,369 $48,455 $50,636 $52,914 45010 UPP Water Services Administration Administration General 2,192,418 $2,233,552 $2,345,230 $2,462,491 $2,585,616 $2,714,896 $2,837,067 $2,964,735 $3,098,148 $3,237,564 $3,383,255 45020 UPP Systems Maintenance Water System General 3,120,442 $3,445,734 $3,618,021 $3,798,922 $3,988,868 $4,188,311 $4,376,785 $4,573,741 $4,779,559 $4,994,639 $5,219,398 45040 UPP Construction Water System General 6,233,954 $6,893,861 $7,238,554 $7,600,482 $7,980,506 $8,379,531 $8,756,610 $9,150,657 $9,562,437 $9,992,747 $10,442,420 45050 UPP Wells & Tanks Source of Supply General 8,654,114 $8,842,192 $9,284,302 $9,748,517 $10,235,943 $10,747,740 $11,231,388 $11,736,800 $12,264,956 $12,816,879 $13,393,639 45055 UPP Water Quality Water Demand General 2,908,597 $3,081,081 $3,235,135 $3,396,892 $3,566,736 $3,745,073 $3,913,602 $4,089,714 $4,273,751 $4,466,069 $4,667,043 45060 UPP Service & Meters Customer Accounts General 2,489,378 $2,710,826 $2,846,367 $2,988,686 $3,138,120 $3,295,026 $3,443,302 $3,598,251 $3,760,172 $3,929,380 $4,106,202 45065 UPP Water Conservation Water Demand General 1,580,898 $1,914,878 $2,010,622 $2,111,153 $2,216,711 $2,327,546 $2,432,286 $2,541,739 $2,656,117 $2,775,642 $2,900,546 45070 UPP MID Surface Water T & DA Water Demand General 17,120,214 $17,135,229 $17,991,990 $18,891,590 $19,836,169 $20,827,978 $21,765,237 $22,744,673 $23,768,183 $24,837,751 $25,955,450 55110 PW - Water Services Meters General -129,160 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Non-capital projects (FY23/24 is Billing Software) Administration General 684,000 $1,625,000 UTL - Water - Grant Research & Writing - 101452 150,000 UTL - Groundwater Well Strategy Plan - 101456 126,125
Transfer Into Fund 4140 - Match Funding General 46,723 $0 $0 $0 $0 Storm Drain Annual Transfer-out (rockwell rej) Administration General 700,000 $700,000 $700,000 $700,000 $700,000 $700,000 $700,000 $731,500 $764,418 $798,816 $834,763 JPA Building svs Annual Transfer-out Administration General 65,000 $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 $67,925 $70,982 $74,176 $77,514 __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ Total Operating Expenses $54,714,074 $58,312,292 $59,483,407 $62,419,327 $65,502,043 $68,738,895 $71,797,721 $75,028,618 $78,404,906 $81,933,127 $85,620,117 1 Based on City's FY 22-23 budget
#8..
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Table 2 Draft
City of Modesto
Water Rate Study
Projected Revenues
Scenario 3 - Full Capital, No Debt
Revenue Category Escalation FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Budgeted Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Growth 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% None 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Interest 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% Rate Revenue Growth $79,318,075 $79,021,999 $84,326,746 $89,987,600 $96,028,468 $102,474,859 $109,353,996 $116,694,930 $121,605,453 $126,722,610 $130,785,337 Revenue from Rate Increase1,2 $4,280,358 $5,481,238 $5,849,194 $6,241,850 $6,660,866 $7,108,010 $4,667,797 $4,864,218 $3,801,678 $3,923,560 Other Revenue
Refunds, Damages, and Cost Recovery/Other As All Other Growth $10,000 $10,020 $10,040 $10,060 $10,080 $10,100 $10,121 $10,141 $10,161 $10,181 $10,202 Water Fund Development Fees Capital Growth $1,220,500 $329,010 $329,668 $330,327 $330,988 $331,650 $332,313 $332,978 $333,643 $334,311 $334,979 Legal Settlement As All Other None
Rental Income As All Other None $42,000 $42,000 $42,000 $42,000 $42,000 $42,000 $42,000 $42,000 $42,000 $42,000 $42,000 Service Credits As All Other None $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 $3,062,214 Utility Assistance Fee As All Other None $200,902
Repayment of Carpenter Road Landfill mitigation
loan - Advance 16A/B/C As All Other None $707,421 $707,421 $707,421 $707,421 $707,421 $707,421 $707,421 $707,421 $707,421 $707,421 $707,421 INTEREST As All Other None $500,000 $500,000 $413,343 $353,446 $304,060 $261,244 $214,015 $171,795 $199,297 $233,186 $249,877 __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ Total Other Revenue $5,743,037 $4,650,665 $4,564,686 $4,505,468 $4,456,763 $4,414,629 $4,368,083 $4,326,548 $4,354,737 $4,389,313 $4,406,693 __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ Total Revenue $85,061,112 $87,953,022 $94,372,670 $100,342,263 $106,727,082 $113,550,354 $120,830,089 $125,689,275 $130,824,408 $134,913,602 $139,115,590 1 Additional revenue based on recommended increase
2 Adjusted if rates adopted in the middle of fiscal year #8..
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Table 3 Draft
City of Modesto
Water Rate Study
Capital Improvement Costs
Scenario 3 - Full Capital, No Debt
Project Description FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected CIP (Current Dollars)
Total CIP (Current Dollars) $29,321,500 $25,625,000 $35,800,976 $34,409,979 $34,162,513 $36,358,682 $37,092,938 $23,558,714 $22,681,004 $25,081,003 $25,138,184 Total CIP (Inflated Dollars) $29,321,500 $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 $47,115,599 $31,270,970 $31,460,697 $36,355,260 $38,077,861 Annual Inflation Rate 5.0% 5.0% 5.0% 5.0% 4.5% 4.5% 4.5% 4.5% 4.5% #8..
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$25.6
$37.6 $37.9
$39.5
$44.2
$47.1
$31.3 $31.5
$36.4
$38.1
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
$50.0
FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 City of Modesto
Water Capital Improvements ($ millions)
Scenario 3 - Full Capital, No Debt
Source: City of Modesto 2023 CIP plus annual construction cost inflation.

Future $; includes annual
construction cost inflation.
#8..
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Table 4 Draft
City of Modesto
Water Rate Study
Debt
Scenario 3 - Full Capital, No Debt
Debt FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Budgeted Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Existing Debt
55140-54104 MID T & DA - 1998D (2013G) $5,155,541 $4,367,900 $0 $0 $0 $0 $0 $0 $0 $0 $0 55140-54103 MID T & DA - 2007F $4,257,700 $4,032,800 $8,409,205 $8,409,205 $8,409,206 $8,409,207 $8,409,208 $8,409,209 $8,409,210 $8,409,211 $8,409,212 4130 2008 Water Rev Lease Bond $2,164,623 $3,546,482 $4,240,014 $4,240,014 $4,240,014 $4,240,014 $4,240,014 $4,240,014 $4,240,014 $4,240,014 $4,240,014 55060 CA DWR (Del Este) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 4140-12183 ARRA funding CDPH $46,723 $38,237 $36,600 $36,600 $36,600 $36,600 $36,600 $36,600 $36,600 $36,600 $36,600 Total Current Debt Service $11,624,587 $11,985,419 $12,685,819 $12,685,819 $12,685,820 $12,685,821 $12,685,822 $12,685,823 $12,685,824 $12,685,825 $12,685,826 #8..
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Table 5
City of Modesto
Water Rate Study
Cash Flow Projections
Scenario 3 - Full Capital, No Debt
Projected Cashflow FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Rate Revenue Increase 6.5% 6.5% 6.5% 6.5% 6.5% 6.5% 4.0% 4.0% 3.0% 3.0% Beginning Reserves $110,862,007 $103,335,766 $88,361,528 $76,015,089 $65,310,989 $53,503,665 $42,948,626 $49,824,285 $58,296,562 $62,469,138 Revenues
Rate Revenue $79,021,999 $84,326,746 $89,987,600 $96,028,468 $102,474,859 $109,353,996 $116,694,930 $121,605,453 $126,722,610 $130,785,337 Rate Increase Revenue 5,136,430 5,481,238 5,849,194 6,241,850 6,660,866 7,108,010 4,667,797 4,864,218 3,801,678 3,923,560 Timing Adjustment* -856,072
Other Revenue 4,650,665 4,564,686 4,505,468 4,456,763 4,414,629 4,368,083 4,326,548 4,354,737 4,389,313 4,406,693 Interest on Reserves $443,448 $413,343 $353,446 $304,060 $261,244 $214,015 $171,795 $199,297 $233,186 $249,877 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ Total Revenue $88,396,470 $94,786,013 $100,695,709 $107,031,142 $113,811,598 $121,044,104 $125,861,070 $131,023,705 $135,146,788 $139,365,466 Expenses
Operating Expenses $58,312,292 $59,483,407 $62,419,327 $65,502,043 $68,738,895 $71,797,721 $75,028,618 $78,404,906 $81,933,127 $85,620,117 Existing Debt Service 11,985,419 12,685,819 12,685,819 12,685,820 12,685,821 12,685,822 12,685,823 12,685,824 12,685,825 12,685,826 New Debt Service 0 0 0 0 0 0 0 0 0 0
Rate Funded Capital $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 $47,115,599 $31,270,970 $31,460,697 $36,355,260 $38,077,861 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ Total Expenses $95,922,711 $109,760,251 $113,042,148 $117,735,242 $125,618,921 $131,599,142 $118,985,411 $122,551,427 $130,974,212 $136,383,805 Net Revenues -$7,526,241 -$14,974,238 -$12,346,439 -$10,704,100 -$11,807,324 -$10,555,039 $6,875,658 $8,472,277 $4,172,576 $2,981,662 Ending Reserves $103,335,766 $88,361,528 $76,015,089 $65,310,989 $53,503,665 $42,948,626 $49,824,285 $58,296,562 $62,469,138 $65,450,800 Debt Coverage (Target 2.0) 2.51 2.78 3.02 3.27 3.55 3.88 4.01 4.15 4.19 4.24 *Reflects October rate implementation
Capital Funding FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 Capital Revenues
Use of Debt Proceeds
Rate Funded Capital $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 $47,115,599 $31,270,970 $31,460,697 $36,355,260 $38,077,861 ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ Total Capital Revenue $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 $47,115,599 $31,270,970 $31,460,697 $36,355,260 $38,077,861 Total Capital Expenditures $25,625,000 $37,591,025 $37,937,002 $39,547,379 $44,194,205 $47,115,599 $31,270,970 $31,460,697 $36,355,260 $38,077,861 #8..
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$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
$180.0
$200.0
FY 22-
23 FY 23-
24 FY 24-
25 FY 25-
26 FY 26-
27 FY 27-
28 FY 28-
29 FY 29-
30 FY 30-
31 FY 31-
32 FY 32-
33 Rate Funded Capital
Debt Service
O&M
Revenue
Reserves
City of Modesto
Projected Water Revenues & Expenses ($ Millions)
Scenario 3 - Full Capital, No Debt
#8..
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Table 6
City of Modesto
Water Rate Study
Customer Data
Scenario 3 - Full Capital, No Debt
Customer Data FY 20-21 FY 21-22 FY 22-23 FY 23-24
Actual Actual Projected Projected
Metered Customers
Meter Size # # # #
5/8" 96 87 87 87
3/4" 11,740 12,754 13,106 13,459
1" 56,106 56,925 57,039 57,153

1.5" 1,166 1,164 1,166 1,168
2" 2,149 2,168 2,172 2,176
3" 150 158 158 158
4" 286 287 288 289
6" 142 141 141 141
8" 64 64 64 64
10" 11 11 11 11
12" 1 1 1 1
Total Metered Customers 71,911 73,760 74,233 74,707
Unmetered Customers
# # # #
PR01 196 28 14 -
PR02 812 337 169 -
PR03 870 124 62 -
PR04 149 47 24 -
PR05 199 117 59 -
Total Unmetered Customers 2,226 653 327 0
Projected Unmetered Use
Monthly CCF per Account CCF CCF CCF CCF
PR01 20 47,426 6,775 3,388 -
PR02 24 237,545 98,587 49,293 -
PR03 31 322,969 46,032 23,016 -
PR04 34 59,911 18,898 9,449 -
PR05 41 98,556 57,945 28,973 -
Total Unmetered 766,407 228,238 114,119 0
System Totals
Total Accounts (#) 74,137 74,413 74,560 74,707
Growth (%) 0.41% 0.37% 0.20% 0.20%
Annual metered use (CCF) per meter 288 279 277.0 277.0
Annual production (CCF) per account 309 298 299 299
Billed, Metered Consumption (CCF) 20,697,851 20,568,355 20,562,541 20,693,839 Total Estimated Consumption (CCF) 21,464,258 20,796,593 20,676,660 20,693,839 Total Water Production (CCF) 22,916,498 22,203,522 22,277,633 22,328,428 #8..
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Table 7 Draft
City of Modesto
Water Rate Study
Meter Equivalent Units
Scenario 3 - Full Capital, No Debt
Meter Size Services
Meter
Equivalent
Ratio**
Meter Equivalent
Units
Annual Meter
Equivalent Units
5/8" 87 1.0 87.0 1,044.0
3/4" 13,459 1.0 13,459.0 161,508.0
1" 57,153 1.7 95,255.0 1,143,060.0

1.5" 1,168 3.3 3,893.3 46,720.0
2" 2,176 5.3 11,605.3 139,264.0
3" 158 11.7 1,843.3 22,120.0
4" 289 21.0 6,069.0 72,828.0
6" 141 43.3 6,110.0 73,320.0
8" 64 80.0 5,120.0 61,440.0
10" 11 126.7 1,393.3 16,720.0
12" 1 166.7 166.7 2,000.0
Total 74,707.0 145,002.0 1,740,024.0
* Customer data as of June 2022 provided by staff
** Capacity factors based on AWWA operating capacity standards by meter size #8..
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Table 8 Draft
City of Modesto
Water Rate Study
Functional Allocation
Scenario 3 - Full Capital, No Debt
Functional Allocation Amount
Offsetting
Revenue
Allocation
Amount Customer Capacity All Volume Total
Administration $7,550,855 $0 $7,550,855 30% 70% 100%
Source of Supply $9,839,635 $0 $9,839,635 10% 90% 100%
Water Demand $24,584,204 $0 $24,584,204 100% 100%
Customer Accounts $6,831,266 $0 $6,831,266 100% 100%
Water System $11,638,388 $0 $11,638,388 50% 50% 100%
Debt Service $12,545,740 $0 $12,545,740 100% 100%
Capital $36,978,922 $330,328 $36,648,594 50% 50% 100%
Functional Allocation $ $109,969,011 $330,328 $109,638,683 $9,096,523 $42,958,793 $57,583,367 $109,638,683 Functional Allocation % 8.30% 39.18% 52.52% 100%
Revenue Requirement $6,985,150 $32,973,272 $44,200,007 $84,158,429 #8..
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Table 9 Draft
City of Modesto
Water Rate Study
Rate Derivation
Scenario 3 - Full Capital, No Debt
Allocation Units Customer Capacity All Volume
Unit of Measure # EDU CCF
Allocation Units 894,714 1,740,024 20,693,839
Revenue Requirement $6,985,150 $32,973,272 $44,200,007
Unit Cost ($/Unit) $7.81 $18.95 $2.14
Monthly Fixed
Charge
Calculation Capacity Factor**
Monthly
Customer
Component
Monthly Capacity
Component
Monthly Fixed
Charge
5/8" 1.00 $7.81 $18.95 $26.76
3/4" 1.00 $7.81 $18.95 $26.76
1" 1.67 $7.81 $31.58 $39.40

1.5" 3.33 $7.81 $63.17 $70.98
2" 5.33 $7.81 $101.07 $108.88
3" 11.67 $7.81 $221.08 $228.90
4" 21.00 $7.81 $397.95 $405.76
6" 43.33 $7.81 $821.17 $828.98
8" 80.00 $7.81 $1,516.00 $1,523.81
10" 126.67 $7.81 $2,400.33 $2,408.15
12" 166.67 $7.81 $3,158.33 $3,166.15
#8..
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Table 10
City of Modesto
Water Rate Study
Drought Rate Derivation
Scenario 3 - Full Capital, No Debt
Drought Rate Calculation Units Amount
Projected volume CCF 20,693,839
Drought reduction % 15%
Drought volume CCF 17,589,763
Volume reduction CCF 3,104,076
Variable Cost $/CCF $0.14
Variable cost reduction $ $434,571
Projected revenue requirement $ $44,200,007
Drought revenue requirement $ $43,765,436
Drought Rate $/CCF $2.49
#8..
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Rate Increase Date
Effective date of
10/1/2021, approved on
4/6/2021; deferred to
FY22 due to COVID-19
economic impacts) No PROP 218
November 1st,
2023 January 1st, 2025
January 1st,
2026
January 1st,
2027
January 1st,
2028
Rate Increase 2.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Actual (12/13/22) Budget Projected Projected Projected Projected Projected 2022 2023 2024 2025 2026 2027 2028
No PROP 218 (deferred
from FY21) No PROP 218

REVENUES
Charges for Services 79,318,075 82,110,000 81,232,793 81,232,793 81,232,793 81,232,793 81,232,793 Misc Revenue 135,665 - - - - - -
Refunds, Damages, and Cost Recovery/ Other (4,141,774) 10,000 11,500 11,730 11,965 12,204 12,448 Water Fund Development Fees 1,194,261 1,220,500 1,244,910 1,269,808 1,295,204 1,321,108 1,347,531 Interest Income 971,868 500,000 500,000 464,655 434,746 429,978 367,618 Legal Settlement 1,005,890
Rental Income 42,787 42,000 42,000 42,840 43,697 44,571 45,462 Service credits 3,405,150 3,062,214 3,105,221 3,167,325 3,230,672 3,295,285 3,361,191 Sale of Fixed Asset 14,068 - - - - - -
Project Revenue - - - - - - -
Utility Assistance Fee 138,725 200,902 254,100 - - - -
GF Transfer Parks P&I (paid off in FY19) - - - - - - -
Misc Transfers In - - - - - - -
Repayment of Carpenter Road Landfill mitigation
loan - Advance 16A/B/C 658,001 707,421 707,421 707,421 707,421 707,421 707,421 GROSS OPERATING REVENUES 82,742,716 87,853,037 87,097,945 86,896,573 86,956,498 87,043,360 87,074,464

OPERATING EXPENSES
12460 FIN Cashiering 680,347 845,352 835,287 877,051 920,904 966,949 1,015,297 12461 FIN City Services for StanRTA 29,128 - - - - - -
12470 FIN Utilities & Collections 2,098,214 2,499,546 2,411,368 2,531,936 2,658,533 2,791,460 2,931,033 12475 FIN Utility Assistance Programs 920,434 1,119,827 2,286,900 2,401,245 2,521,307 2,647,373 2,779,741 12480 FIN Customer Service Administration - - - - - - - 41010 UPP Administration 775,145 1,167,848 1,154,259 1,211,972 1,272,571 1,336,199 1,403,009 41320 UPP Utility Billing and Collections - - - - - - - 41410 UPP Water General 314,169 410,902 425,795 447,085 469,439 492,911 517,556 41420 UPP Water Billing & Collections 184,034 176,311 223,954 235,152 246,909 259,255 272,217 42024 UTL Water Engineering Design 887,433 1,122,154 1,119,841 1,175,833 1,234,625 1,296,356 1,361,174 42026 UTL Wastewater Engineering Design - - - - - - -
42100 UPP Water PCE Litigation - - - - - - -
42200 UPP Water Zone1 Revenue - - - - - - -
43010 UPP Ground Water Management Plan 60,473 115,141 61,438 64,510 67,735 71,122 74,678 43020 UPP Water System Analysis 74,466 220,977 191,680 201,264 211,327 221,894 232,988 43030 UPP Urban Water Management Plan 21,334 46,705 32,502 34,127 35,833 37,625 39,506 43040 UPP Water Quality Study 222 86,457 81,917 86,013 90,313 94,829 99,571 43060 UPP Capital Planning 505,413 801,938 800,160 840,168 882,176 926,285 972,599 43070 UPP Water Rate Analysis 8,514 122,251 4,905 5,150 5,408 5,678 5,962 43080 UPP Sphere of Influence 52 35,962 34,933 36,680 38,514 40,439 42,461 45010 UPP Water Services Administration 1,775,059 2,192,418 2,233,552 2,345,230 2,462,491 2,585,616 2,714,896 45020 UPP Systems Maintenance 2,663,103 3,120,442 3,445,734 3,618,021 3,798,922 3,988,868 4,188,311 45040 UPP Construction 5,824,728 6,233,954 6,893,861 7,238,554 7,600,482 7,980,506 8,379,531 45050 UPP Wells & Tanks 7,959,001 8,654,114 8,842,192 9,284,302 9,748,517 10,235,943 10,747,740 45055 UPP Water Quality 2,473,750 2,908,597 3,081,081 3,235,135 3,396,892 3,566,736 3,745,073 45060 UPP Service & Meters 3,727,834 2,489,378 2,710,826 2,846,367 2,988,686 3,138,120 3,295,026 45065 UPP Water Conservation 1,427,206 1,580,898 1,914,878 2,010,622 2,111,153 2,216,711 2,327,546 45070 UPP MID Surface Water T & DA 11,597,093 17,120,214 17,135,229 17,991,990 18,891,590 19,836,169 20,827,978 Storm Drain for MID - - - - - - 0
55090 PW Water Wells and T - - - - - - -
55110 PW - Water Services Meters (129,160) - - - - - -
UPP - Well Field Phase II B Multyr- 100610 - - - - - - - UPP - Well Field Management Project - 100817 - - - - - - - UPP - Groundwater Sub-Basin Study - 100818 - - - - - - - Non-capital projects (FY23/24 is Billing Software) 2,013,764 684,000 1,625,000 UPP - Prop 1 Groundwater Uranium Study - 101011 - - - - - - UTL - TCP Litigation - 101303
UTL - Water - Grant Research & Writing - 101452 150,000 UTL - Groundwater Well Strategy Plan - 101456 126,125
SUB-TOTAL OPERATING EXPENSES 46,020,915 53,902,351 57,547,292 58,718,407 61,654,327 64,737,043 67,973,895

TRANSFERS OUT
Transfer Out $2.3M Loan to Carpenter Road Landfill - - - - - - - City of Modesto - Water Fund Proforma
#8..
- 433 -
Rate Increase Date
Effective date of
10/1/2021, approved on
4/6/2021; deferred to
FY22 due to COVID-19
economic impacts) No PROP 218
November 1st,
2023 January 1st, 2025
January 1st,
2026
January 1st,
2027
January 1st,
2028
Rate Increase 2.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Actual (12/13/22) Budget Projected Projected Projected Projected Projected 2022 2023 2024 2025 2026 2027 2028
No PROP 218 (deferred
from FY21) No PROP 218
City of Modesto - Water Fund Proforma
Transfer Out to Fund 5230 for Budget Software and
Oracle Update 5,546 - - - - - -
Transfer Out additional $900K Loan to Carpenter
Road Landfill - - - - - - -
Transfer Out additional 1.54M Loan to Carpenter
Road Landfill - - - - - - -
Transfer Out to Project 101223 for TrackIt Software
(fund 1800) 0 - - - -
Transfer Out to Project 101209 South MLK S&R
Water Mains (fund 3170) 37 - - - - - -
Transfer Out to IT (5230) for DocuSign/Hyland
software - - - - - - -
Transfer Out to Fund 5350-5390 for FMLA Reimbursement - - - - - - - Transfer Out to Water Grants - Prop 1 - GSP (101131) - - - - - - - Transfer Into Fund 4140 - Match Funding 104,034 46,723 - - - - - Transfer Into 4210 - WasterWater for Join Project
(Water and Sewer Mains 101302,101032) (342,491) - - - - - - UAL 115 Trust and OPEB Trust transfers to 5510-
EBF 191,783 - - - - - -
Storm Drain Annual Transfer-out (rockwell rej) 700,000 700,000 700,000 700,000 700,000 700,000 700,000 JPA Building svs Annual Transfer-out 65,000 65,000 65,000 65,000 65,000 65,000 65,000 TOTAL OPERATING EXPENSES 46,744,824 54,714,074 58,312,292 59,483,407 62,419,327 65,502,043 68,738,895 NET OPERATING REVENUES 35,997,892 33,138,963 28,785,653 27,413,166 24,537,172 21,541,317 18,335,569

TOTAL DEBT SERVICE
55140-54104 MID T & DA - 1998D (2013G) 5,460,520 5,155,541 4,367,900 - - - - 55140-54103 MID T & DA - 2007F 4,461,194 4,257,700 4,032,800 8,409,205 8,409,205 8,409,206 8,409,207 4130 2008 Water Rev Lease Bond 2,138,850 2,164,623 3,546,482 4,240,014 4,240,014 4,240,014 4,240,014 55060 CA DWR (Del Este) - - - - - - -
4140-12183 ARRA funding CDPH 37,343 46,723 38,237 36,600 36,600 36,600 36,600 Total Debt Service 12,097,907 11,624,587 11,985,419 12,685,819 12,685,819 12,685,820 12,685,821

DEBT SERVICE COVERAGE
(Net operating Revenues / Total Debt Service ) 2.98 2.85 2.40 2.16 1.93 1.70 1.45 Debt to Operating Revenues
Days Cash on Hand (covers only operating expense)

RETAINED EARNINGS CALCULATION
Beginning Unrestricted Retained Earnings 105,539,951 121,327,344 113,520,220 105,495,454 98,705,001 90,721,354 78,091,851 2007 Bond Collateral Refund - - - - - - -
Return of Cash Collateral - - - - - - -
Realase of Restricted Cash with Fiscal Agent - - - - - - - 1997 Bond Retired FY11 - - - - - - -
Net Change in Retained Earnings 23,899,985 21,514,376 16,800,234 14,727,347 11,851,352 8,855,497 5,649,748 PCE Litigation expenses - - - - - - -
CAFR Adjustments - - - - - - -
Pay as you go CIP (8,112,592) (29,321,500) (24,825,000) (21,517,800) (19,835,000) (21,485,000) (22,715,000) Ending Retained Earnings 121,327,344 113,520,220 105,495,454 98,705,001 90,721,354 78,091,851 61,026,599 Target Cash at 25% of Operating Costs 11,686,206 13,678,519 14,578,073 14,870,852 15,604,832 16,375,511 17,184,724 #8..
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CITY OF MODESTO

ECONOMIC DEVELOPMENT

COMMITTEE AGENDA REPORT
DATE OF MEETING:

May 1, 2023
Date: March 23, 2023
TO: Economic Development Committee
Sue Zwahlen, Chair
Chris Ricci, Vice-Chair
Eric Alvarez, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: DeAnna Christensen, Director of Finance
SUBJECT: Utility Billing Assistance Program Funding Update CONTACT: Jeni Martin, Revenue Collection and Compliance Manager, [email protected], 209-571-5892
DESCRIPTION:

Consider accepting an update on available funding for the Utility Billing Assistance Program (UBAP) with an increase to the monthly discount amount and forwarding to Council for approval. (Funding Source: Water and Wastewater Funds)
STRATEGIC PLAN ELEMENT:

This item supports the City of Modesto 2020-2025 Strategic Plan focus of Governance and Service Delivery under Goal H: Achieve Financial Sustainability.

BACKGROUND:

The Utility Billing Division of the Finance Department offers an assistance program for lowincome utility customers. If a customer is enrolled in another public assistance program including CARES, CalWorks, CalFresh, General Assistance, MediCal, WIC, SSP, or SSI, and are a responsible party of the City of Modesto utility bill, they will be eligible to receive the Utility Billing Assistance discount of $35 on their monthly utility bill. Customers are able to apply online, in our office, or with Central Valley Opportunity Center by completing the application and providing proof of enrollment in one of the above programs.

Our utility customers are still recovering from the effects of the COVID-19 pandemic. Those hardest hit have been our low-income customers, many of which fall within the poverty levels of Stanislaus County with annual incomes averaging around $44,400 for a household of four.

The average City of Modesto utility bill for water, sewer, and garbage was $143 per month in fiscal year 2020. The average City of Modesto utility bill now is around $163 per month, an increase of $20 per month within 2-3 years.
#9..
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Economic Development Committee, May 1, 2023
Utility Billing Assistance Program Funding Update