Attachment A
Professional Services Agreement with Water Resources Economics, LLC
PROFESSIONAL SERVICES AGREEMENT WITH WATER RESOURCES ECONOMICS LLC FOR WATER, WASTEWATER, AND RECYCLED WATER RATE STUDY THIS PROFESSIONAL SERVICES AGREEMENT (Agreement) is made and entered into as of this 22nd day of September, 2026 , by and between the CITY OF NEWPORT BEACH, a California municipal corporation and charter city City), and WATER RESOURCES ECONOMICS LLC, a California limited liability company whose address is 10830 Pickford Way, Culver City, CA 90230, and is made with reference to the following: RECITALS A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. City desires to engage Consultant to provide water, wastewater, and recycled water rate studies C. Consultant possesses the skill, experience, ability, background, certification and knowledge to provide the professional services described in this Agreement. D. Pursuant to a competitive bidding process, Consultant was awarded an agreement by the City of San Clemente on May 6, 2025 for the same or similar water, wastewater, and recycled water rate studies services, to which the City now desires to piggyback for purposes of the Project. E. City has solicited and received a proposal from Consultant, has reviewed the previous experience and evaluated the expertise of Consultant, and desires to retain Consultant to render professional services under the terms and conditions set forth in this Agreement. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. TERM The term of this Agreement shall commence on the Effective Date, and shall terminate on September 30, 2028, unless terminated earlier as set forth herein. 2. SERVICES TO BE PERFORMED Consultant shall diligently perform all the services described in the Scope of sole discretion.
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3. TIME OF PERFORMANCE 3.1 Time is of the essence in the performance of Services under this Agreement and Consultant shall perform the Services in accordance with the schedule included in Exhibit A. In the absence of a specific schedule, the Services shall be performed to completion in a diligent and timely manner. The failure by Consultant to strictly adhere to the schedule set forth in Exhibit A, if any, or perform the Services in a diligent and timely manner may result in termination of this Agreement by City. 3.2 Notwithstanding the foregoing, Consultant shall not be responsible for delays due to causes beyond Coany such delay in the Services to be provided for the Project, each party hereby agrees to provide notice within two (2) calendar days of the occurrence causing the delay to the other party so that all delays can be addressed. 3.3 Consultant shall submit all requests for extensions of time for performance in writing to the Project Administrator as defined herein not later than ten (10) calendar days after the start of the condition that purportedly causes a delay. The Project Administrator shall review all such requests and may grant reasonable time extensions for unforeseeable delays that a 3.4 For all time periods not specifically set forth herein, Consultant shall respond in the most expedient and appropriate manner under the circumstances, by hand-delivery or mail. 4. COMPENSATION TO CONSULTANT 4.1 City shall pay Consultant for the Services on a time and expense not-to-exceed basis in accordance with the provisions of this Section and the Schedule of Billing Rates attached hereto as Exhibit B and incorporated herein by reference. compensation for all Work performed in accordance with this Agreement, including all reimbursable items and subconsultant fees, shall not exceed One Hundred Eighty-Five Thousand Dollars and 00/100 ($185,000.00), without prior written authorization from City. No billing rate changes shall be made during the term of this Agreement without the prior written approval of City. 4.2 Consultant shall submit monthly invoices to City describing the Work who performed the Work, a brief description of the Services performed and/or the specific task in the Scope of Services to which it relates, the date the Services were performed, the number of hours spent on all Work billed on an hourly basis, and a description of any reimbursable expenditures. City shall pay Consultant no later than thirty (30) calendar days after approval of the monthly invoice by City staff. 4.3 City shall reimburse Consultant only for those costs or expenses specifically identified in Exhibit B to this Agreement or specifically approved in writing in advance by City.
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4.4 Consultant shall not receive any compensation for Extra Work performed without the prior written authorization of City. As used herein, Extra Work means any Work that is determined by City to be necessary for the proper completion of the Project, but which is not included within the Scope of Services and which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Compensation for any authorized Extra Work shall be paid in accordance with the Schedule of Billing Rates as set forth in Exhibit B. 5. PROJECT MANAGER 5.1 Consultant shall designate a Project Manager, who shall coordinate all phases of the Project. This Project Manager shall be available to City at all reasonable times during the Agreement term. Consultant has designated Sanjay Gaur to be its Project Manager. Consultant shall not remove or reassign the Project Manager or any personnel listed in Exhibit A or assign any new or replacement personnel to the Project without the prior written consent of City. C approval shall not be unreasonably withheld with respect to the removal or assignment of non-key personnel. 5.2 Consultant, at the sole discretion of City, shall remove from the Project any of its personnel assigned to the performance of Services upon written request of City. Consultant warrants that it will continuously furnish the necessary personnel to complete the Project on a timely basis as contemplated by this Agreement. 5.3 If Consultant is performing inspection services for City, the Project Manager and any other assigned staff shall be equipped with a cellular phone to communicate with City staff. cellular phone number shall be provided to City. 6. ADMINISTRATION This Agreement will be administered by the Utilities Department. City Utilities Director or designee shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator shall represent City in all matters pertaining to the Services to be rendered pursuant to this Agreement. 7. CITY'S RESPONSIBILITIES To assist Consultant in the execution of its responsibilities under this Agreement, City agrees to provide access to and upon request of Consultant, one copy of all existing relevant information on file at City. City will provide all such materials in a timely manner Work schedule. 8. STANDARD OF CARE 8.1 All of the Services supervision. Consultant represents that it possesses the professional and technical personnel required to perform the Services required by this Agreement, and that it will perform all Services in a manner commensurate with community professional standards and with the ordinary degree of skill and care that would be used by other reasonably
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competent practitioners of the same discipline under similar circumstances. All Services shall be performed by qualified and experienced personnel who are not employed by City. By delivery of completed Work, Consultant certifies that the Work conforms to the requirements of this Agreement, all applicable federal, state and local laws, and legally recognized professional standards. 8.2 Consultant represents and warrants to City that it has, shall obtain, and shall keep in full force and effect during the term hereof, at its sole cost and expense, all licenses, permits, qualifications, insurance and approvals of whatsoever nature that is legally required of Consultant to practice its profession. Consultant shall maintain a City of Newport Beach business license during the term of this Agreement. 8.3 Consultant shall not be responsible for delay, nor shall Consultant be responsible for damages or be in default or deemed to be in default by reason of strikes, lockouts, accidents, acts of God, or the failure of City to furnish timely information or to Work promptly, or delay or faulty performance by City, contractors, or governmental agencies. 9. HOLD HARMLESS 9.1 To the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, (directly or indirectly) to any breach of the terms and conditions of this Agreement, any Work performed or Services provided under this Agreement including, without limitation, the Project (including the negligent, reckless, and/or willful acts, errors and/or omissions of Consultant, its principals, officers, agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable, or any or all of them). 9.2 Notwithstanding the foregoing, nothing herein shall be construed to require Consultant to indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by Consultant.
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10. INDEPENDENT CONTRACTOR It is understood that City retains Consultant on an independent contractor basis and Consultant is not an agent or employee of City. The manner and means of conducting the Work are under the control of Consultant, except to the extent they are limited by statute, rule or regulation and the expressed terms of this Agreement. No civil service status or other right of employment shall accrue to Consultant or its employees. Nothing in this Agreement shall be deemed to constitute approval for Consultant or any shall have the responsibility for and control over the means of performing the Work, provided that Consultant is in compliance with the terms of this Agreement. Anything in this Agreement that may appear to give City the right to direct Consultant as to the details of the performance of the Work or to exercise a measure of control over Consultant shall mean only that Consultant shall follow the desires of City with respect to the results of the Services. 11. COOPERATION Consultant agrees to work closely and cooperate fully with C designated Project Administrator and any other agencies that may have jurisdiction or interest in the Work to be performed. City agrees to cooperate with the Consultant on the Project. 12. CITY POLICY Consultant shall discuss and review all matters relating to policy and Project direction with C Project Administrator in advance of all critical decision points in order to ensure the Project proceeds in a manner consistent with City goals and policies. 13. PROGRESS Consultant is responsible for keeping the Project Administrator informed on a regular basis regarding the status and progress of the Project, activities performed and planned, and any meetings that have been scheduled or are desired. 14. INSURANCE of Work, Consultant shall obtain, provide and maintain at its own expense during the term of this Agreement or for other periods as specified in this Agreement, policies of insurance of the type, amounts, terms and conditions described in the Insurance Requirements attached hereto as Exhibit C, and incorporated herein by reference. 15. PROHIBITION AGAINST ASSIGNMENTS AND TRANSFERS Except as specifically authorized under this Agreement, the Services to be provided under this Agreement shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City. Any of the following shall be construed as an assignment: The sale, assignment, transfer or other disposition of any
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of the issued and outstanding capital stock of Consultant, or of the interest of any general partner or joint venturer or syndicate member or cotenant if Consultant is a partnership or joint-venture or syndicate or co-tenancy, which shall result in changing the control of Consultant. Control means fifty percent (50%) or more of the voting power or twenty-five percent (25%) or more of the assets of the corporation, partnership or joint-venture. 16. SUBCONTRACTING The subcontractors authorized by City, if any, to perform Work on this Project are identified in Exhibit A. Consultant shall be fully responsible to City for all acts and omissions of any subcontractor. Nothing in this Agreement shall create any contractual relationship between City and any subcontractor nor shall it create any obligation on the part of City to pay or to see to the payment of any monies due to any such subcontractor other than as otherwise required by law. City is an intended beneficiary of any Work performed by the subcontractor for purposes of establishing a duty of care between the subcontractor and City. Except as specifically authorized herein, the Services to be provided under this Agreement shall not be otherwise assigned, transferred, contracted or subcontracted out without the prior written approval of City. 17. OWNERSHIP OF DOCUMENTS 17.1 Each and every report, draft, map, record, plan, document and other writing produced, including but not limited to, websites, blogs, social media accounts and its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Consultant or any other party. Additionally, all material posted in cyberspace by Consultant, its officers, employees, agents and subcontractors, in the course of implementing this Agreement, shall become the exclusive property of City, and City shall have the sole right to use such materials in its discretion without further compensation to Consultant or any other party. and password information to City upon prior written request. 17.2 Documents, including drawings and specifications, prepared by Consultant pursuant to this Agreement are not intended or represented to be suitable for reuse by City or others on any other project. Any use of completed Documents for other projects and any use of incomplete Documents without specific written authorization from t by City or persons other than Consultant is waived against Consultant, and City assumes full responsibility for such changes unless City has given Consultant prior notice and has received from Consultant written consent for such changes. 17.3 All written documents shall be transmitted to City in formats compatible with Microsoft Office and/or viewable with Adobe Acrobat.
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18. CONFIDENTIALITY All Documents, including drafts, preliminary drawings or plans, notes and communications that result from the Services in this Agreement, shall be kept confidential unless City expressly authorizes in writing the release of information. 19. INTELLECTUAL PROPERTY INDEMNITY Consultant shall defend and indemnify City, its agents, officers, representatives and employees against any and all liability, including costs, for infringement or alleged infringement Documents provided under this Agreement. 20. RECORDS Consultant shall keep records and invoices in connection with the Services to be performed under this Agreement. Consultant shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any Services, expenditures and disbursements charged to City, for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Consultant shall allow inspection of all Work, data, Documents, proceedings and activities related to the Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. 21. WITHHOLDINGS City may withhold payment to Consultant of any disputed sums until satisfaction of the dispute with respect to such payment. Such withholding shall not be deemed to constitute a failure to pay according to the terms of this Agreement. Consultant shall not discontinue Work as a result of such withholding. Consultant shall have an immediate right to appeal to the City Manager or designee with respect to such disputed sums. Consultant shall be entitled to receive interest on any withheld sums at the rate of return that City earned on its investments during the time period, from the date of withholding of any amounts found to have been improperly withheld. 22. ERRORS AND OMISSIONS In the event of errors or omissions that are due to the negligence or professional inexperience of Consultant which result in expense to City greater than what would have resulted if there were not errors or omissions in the Work accomplished by Consultant, the additional design, construction and/or restoration expense shall be borne by Consultant. Nothing in this Section is intended to limit Citythe law or any other sections of this Agreement.
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23. CITY'S RIGHT TO EMPLOY OTHER CONSULTANTS City reserves the right to employ other Consultants in connection with the Project. 24. CONFLICTS OF INTEREST 24.1 Consultant or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the Act) and/or Government Code §§ 1090 et seq., which (1) require such persons to disclose any financial interest that may foreseeably be materially affected by the Work performed under this Agreement, and (2) prohibit such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. 24.2 If subject to the Act and/or Government Code §§ 1090 et seq., Consultant shall conform to all requirements therein. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Consultant shall indemnify and hold harmless City for any and all claims for damages resulting from 25. NOTICES 25.1 All notices, demands, requests or approvals, including any change in mailing address, to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first-class mail, addressed as hereinafter provided. 25.2 All notices, demands, requests or approvals from Consultant to City shall be addressed to City at: Attn: Utilities Director Utilities Department City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 25.3 All notices, demands, requests or approvals from City to Consultant shall be addressed to Consultant at: Attn: Sanjay Gaur Water Resources Economics LLC 10830 Pickford Way Culver City, CA 90230 26. CLAIMS 26.1 Unless a shorter time is specified elsewhere in this Agreement, before making its final request for payment under this Agreement, Consultant shall submit to
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City, in writing, all claims for compensation under or arising out of this Agreement. compensation under or arising out of this Agreement except those previously made in writing and identified by Consultant in writing as unsettled at the time of its final request for payment. Consultant and City expressly agree that in addition to any claims filing requirements set forth in the Agreement, Consultant shall be required to file any claim Consultant may have against City in strict conformance with the Government Claims Act (Government Code sections 900 et seq.). 26.2 Contract Code section 9204 or any successor statute thereto, the Parties agree to follow dispute after completion of the dispute resolution process provided for in Public Contract Code section 9204 or any successor statute thereto shall be subject to the Government Claims Act requirements requiring Consultant to file a claim in strict conformance with the as defined in Public Contract Code section 9204 or any successor statute thereto, Consultant shall be required to file such claim with the City in strict conformance with the Government Claims Act (Government Code sections 900 et seq.). 27. TERMINATION 27.1 In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of two (2) calendar days, or if more than two (2) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within two (2) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non-defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. 27.2 Notwithstanding the above provisions, City shall have the right, at its sole and absolute discretion and without cause, of terminating this Agreement at any time by giving no less than seven (7) calendar days prior written notice to Consultant. In the event of termination under this Section, City shall pay Consultant for Services satisfactorily performed and costs incurred up to the effective date of termination for which Consultant has not been previously paid. On the effective date of termination, Consultant shall deliver to City all reports, Documents and other information developed or accumulated in the performance of this Agreement, whether in draft or final form. 28. PREVAILING WAGES 28.1 Pursuant to the applicable provisions of the Labor Code of the State of California, not less than the general prevailing rate of per diem wages including legal holidays and overtime Work for each craft or type of workman needed to execute the Work contemplated under the Agreement shall be paid to all workmen employed on the
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Work to be done according to the Agreement by the Consultant and any subcontractor. In accordance with the California Labor Code (Sections 1770 et seq.), the Director of Industrial Relations has ascertained the general prevailing rate of per diem wages in the locality in which the Work is to be performed for each craft, classification, or type of workman or mechanic needed to execute the Agreement. A copy of said determination is available by calling the prevailing wage hotline number (415) 703-4774, and requesting one from the Department of Industrial Relations. The Consultant is required to obtain the wage determinations from the Department of Industrial Relations and post at the job site the prevailing rate or per diem wages. It shall be the obligation of the Consultant or any subcontractor under him/her to comply with all State of California labor laws, rules and regulations and the parties agree that the City shall not be liable for any violation thereof. 28.2 Unless otherwise exempt by law, Consultant warrants that no contractor or subcontractor was listed on the bid proposal for the Services that it is not currently registered and qualified to perform public work. Consultant further warrants that it is currenCode section 1725.5 or any successor statute thereto and that no contractor or subcontractor will engage in the performance of the Services unless currently registered and qualified to perform public work. 29. STANDARD PROVISIONS 29.1 Recitals. City and Consultant acknowledge that the above Recitals are true and correct and are hereby incorporated by reference into this Agreement. 29.2 Compliance with all Laws. Consultant shall, at its own cost and expense, comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all Work prepared by Consultant shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator and City. 29.3 Waiver. A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 29.4 Integrated Contract. This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 29.5 Conflicts or Inconsistencies. In the event there are any conflicts or inconsistencies between this Agreement and the Scope of Services or any other attachments attached hereto, the terms of this Agreement shall govern. 29.6 Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or
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against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 29.7 Amendments. This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney. 29.8 Severability. If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 29.9 Controlling Law and Venue. The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange, State of California. 29.10 Equal Opportunity Employment. Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because race, religious creed, color, national origin, ancestry, physical handicap, medical condition, marital status, sex, sexual orientation, age or any other impermissible basis under law. 29.11 No Fees. In the event of any dispute or legal action arising under this Agreement, the prevailing party shall not be entitled to fees. 29.12 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute one (1) and the same instrument. [SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the dates written below. APPROVED AS TO FORM: CITY ATTORNEY CITY OF NEWPORT BEACH, a California municipal corporation Date:__________________ By:_____________________________ Date:____________________ By:_____________________________ Aaron C. Harp City Attorney Lauren Kleiman Mayor ATTEST: Date:_________________ CONSULTANT: WATER RESOURCES ECONOMICS LLC, a California limited liability company By:_____________________________ Date:_____________________ By:_____________________________ Lena Shumway City Clerk Sanjay Gaur Managing Member [END OF SIGNATURES] Attachments: Exhibit A Scope of Services Exhibit B Schedule of Billing Rates Exhibit C Insurance Requirements
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August 25, 2026 Mark Vukojevic Utilities Director City of Newport Beach 949 West 16th Street Newport Beach, CA 92663 Subject: Proposal for Water, Wastewater, and Recycled Water Rate Study Dear Mr. Vukojevic, Water Resources Economics, LLC (WRE) is pleased to submit this letter proposal to the City of Newport Beach (City) for a Water, Wastewater, and Recycled Water Rate Study. The study will evaluate the financial sufficiency of each utility, update the cost-of-service analyses, evaluate alternative rate structures, evaluate reserve policies, develop water emergency rates, update water and wastewater capacity fees, and support the Proposition 218 process. Proposed Scope of Services TASK 1: PROJECT INITIATION & MANAGEMENT Project Kickoff WRE will conduct a virtual kickoff meeting with City of Newport Beach (City) staff at the initiation of the study. In advance of the kickoff meeting, WRE will provide a detailed data request list describing the information needed to conduct the study. Topics to be discussed during the kickoff meeting will include the scope of services, project schedule, project roles and responsibilities, data request, key policy considerations, and other study objectives. WRE will provide draft meeting minutes to City staff for review following the kickoff meeting. Project Management Task 1 also includes ongoing project management throughout the study. WRE will coordinate with City staff regarding project progress, outstanding data needs and action items, upcoming meetings, and deliverables to maintain the project schedule. Meetings: One virtual kickoff meeting with City staffDeliverables: Data request list in Microsoft Word; kickoff meeting presentation in Microsoft PowerPoint; kickoff meeting minutes in Microsoft Word TASK 2: WATER, WASTEWATER, AND RECYCLED WATER FINANCIAL PLAN Financial Plan Projections WRE will develop financial plan models for the City's water, wastewater, and recycled water utilities to evaluate financial condition and determine the revenues necessary to support each utility over the planning horizon. WRE will work with City staff to project revenues, operating expenses, capital expenditures, debt obligations, and other financial requirements.
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The financial plans will evaluate the timing and magnitude of revenue adjustments required to maintain the long-term financial health of each utility. WRE will evaluate alternative financial scenarios, as appropriate, including the use of reserves, timing of capital expenditures, and other strategies that may help mitigate rate impacts while meeting the City's financial and operational objectives. The ultimate goal of the financial plan task is to determine the annual rate revenue requirements for each utility over the multi-year rate-setting period. Reserve Policy Evaluation As part of the financial plan development, WRE will review the City's existing reserve policies and reserve balances for the water, wastewater, and recycled water utilities. WRE will evaluate appropriate reserve targets based on each utility's operating requirements, capital needs, financial risks, and other relevant considerations. Based on this evaluation, WRE will recommend reserve targets to be incorporated into the financial plans. Meetings: Up to four virtual meetings with City staffDeliverables: Water, wastewater, and recycled water financial plan models in Microsoft Excel TASK 3: WATER, WASTEWATER, AND RECYCLED WATER COST-OF-SERVICE ANALYSES Cost-of-Service Analysis WRE will conduct cost-of-service analyses for the City's water, wastewater, and recycled water utilities. The cost-of-service analyses will provide the technical basis for developing rates consistent with Proposition 218 requirements and generally accepted industry methodologies. The analyses will allocate the rate revenue requirements developed in Task 2 to appropriate cost components and customer classes based on the costs associated with providing each type of service. WRE will evaluate available customer, usage, system, financial, and operational data to develop the cost allocations. The water cost-of-service analysis will be based on industry standards and methodologies consistent with the American Water Works Association's Principles of Water Rates, Fees, and Charges (M1). The wastewater cost-of-service analysis will consider methodologies consistent with the Water Environment Federation's Financing and Charges for Wastewater Systems. The recycled water analysis will similarly evaluate the costs associated with providing recycled water service and provide the basis for the City's recycled water rates. WRE will review preliminary cost-of-service results with City staff and refine the analyses based on staff input. Meetings: Up to three virtual meetings with City staff Deliverables: Water, wastewater, and recycled water cost-of-service analyses in Microsoft Excel TASK 4: WATER, WASTEWATER, AND RECYCLED WATER RATE DEVELOPMENT Rate Structure and Customer Impacts WRE will develop proposed water, wastewater, and recycled water rates based on the revenue requirements identified in Task 2 and the cost-of-service analyses developed in Task 3. Proposed rates will be developed for a multi-year rate-setting period. WRE will develop Excel-based rate models to calculate the proposed rates and evaluate customer bill impacts. The models will compare current and proposed City of Newport Beach Water, Wastewater, and Recycled Water Rate Study Water Resources Economics Page 3
bills for representative customers and allow WRE and City staff to evaluate alternative rate scenarios during the study. Water Rates WRE will maintain the City's existing water rate structure and calculate proposed rates based on the results of the financial plan and cost-of-service analyses. WRE will also evaluate the City's fixed water charges, including the potential recovery of capital-related fixed charges through the property tax roll. WRE will evaluate the financial and rate impacts of this approach and work with City staff to determine an appropriate methodology for the proposed fixed charges. Wastewater Rates WRE will review the City's existing wastewater rate structure and evaluate up to three alternative wastewater rate structures for the City's wastewater collection system. WRE will evaluate the cost-of-service basis, revenue recovery, customer impacts, and implementation considerations associated with the alternatives. WRE will review the alternatives with City staff and develop a recommended wastewater rate structure based on staff and policy direction. Recycled Water Rates WRE will maintain the City's existing recycled water rate structure and calculate proposed recycled water rates based on the results of the financial plan and cost-of-service analyses. Meetings: Up to three virtual meetings with City staff Deliverables: Water, wastewater, and recycled water rate models in Microsoft Excel; customer bill impact analyses TASK 5: WATER EMERGENCY RATE DEVELOPMENT Water Emergency Rates WRE will develop emergency water rates to provide the City with a mechanism to maintain adequate revenues during droughts or other water shortage conditions. WRE will review the City's Water Shortage Contingency Plan and develop emergency rates corresponding to the applicable water shortage stages and anticipated demand reductions. The analysis will evaluate the financial impacts of reduced water sales and other changes in revenues or costs associated with water shortage conditions. Based on this analysis, WRE will calculate emergency rate adjustments designed to recover the revenue requirements associated with each applicable shortage stage. WRE will coordinate the emergency rate structure with the City's proposed regular water rates developed in Task 4. Meetings: Up to two virtual meetings with City staff Deliverables: Emergency water rate analysis and rate calculations in Microsoft Excel TASK 6: WATER AND WASTEWATER CAPACITY FEES Capacity Fees WRE will evaluate and update the City's water and wastewater capacity fees. WRE will review the City's existing capacity fee methodologies and determine whether modifications are appropriate based on City of Newport Beach Water, Wastewater, and Recycled Water Rate Study Water Resources Economics Page 4
current system characteristics, available capacity, capital improvement needs, asset values, and other relevant information. WRE will work with City staff to identify an appropriate methodology for each utility and calculate updated water and wastewater capacity fees. The analysis will document the relationship between the proposed fees and the facilities and costs associated with providing capacity to new development. Meetings: Up to two virtual meetings with City staff Deliverables: Water and wastewater capacity fee calculations in Microsoft Excel TASK 7: REPORT DEVELOPMENT Final and Draft Reports WRE will prepare a detailed Water, Wastewater, and Recycled Water Rate Study Report documenting the analyses and recommendations developed through Tasks 2 through 6. The report will provide an overview of the rate-setting process and document the financial plans, reserve policy evaluation, cost-of-service analyses, rate calculations, emergency water rates, and water and wastewater capacity fee analyses. The report will document the technical basis for the proposed water, wastewater, and recycled water rates and serve as part of the City's administrative record supporting the Proposition 218 rate adoption process. In addition, the Report will include a 10-agency rate survey to compare the proposed bills to neighboring communities. WRE will provide a draft report for review by City staff and legal counsel. WRE will incorporate one consolidated set of comments from the City and legal counsel into the final report. If necessary, WRE will hold one virtual meeting to discuss comments on the draft report. Meetings: Up to one virtual meeting with City staff and legal counsel to review draft report comments Deliverables: Draft and final Water, Wastewater, and Recycled Water Rate Study Report in Microsoft Word and/or PDF format TASK 8: PROPOSITION 218 NOTICE SUPPORT Proposition 218 Notices WRE will assist the City with development of the Proposition 218 notice for the proposed water, wastewater, and recycled water rates. WRE will provide the proposed rate schedules and other technical information necessary for the notice and coordinate with City staff and legal counsel regarding the presentation of the proposed rates. WRE will assist with the layout and design of the Proposition 218 notice to provide a clear and accessible presentation of the proposed rates and supporting information. WRE will provide an electronic version of the completed notice to the City. The City will be responsible for legal review, printing, mailing, and distribution of the notice. Meetings: Up to one virtual meeting with City staff, legal counsel, and other members of the City's project team, as needed Deliverables: Draft and final Proposition 218 notice in electronic format City of Newport Beach Water, Wastewater, and Recycled Water Rate Study Water Resources Economics Page 5
TASK 9: COMMITTEE AND CITY COUNCIL MEETINGS Public Meetings WRE will support the City throughout the study and public rate adoption process through presentations to the appropriate City committee(s) and City Council. WRE will prepare presentation materials for each meeting and coordinate with City staff regarding the objectives and content of each presentation. WRE will attend up to three committee meetings to present study information, preliminary analyses, and recommendations and to receive policy direction as the study progresses. WRE will also attend up to four City Council meetings, including the Proposition 218 public hearing. The City Council meetings are anticipated to occur at key milestones during the study and may include presentation of preliminary study findings, proposed rates, the final rate study, authorization to proceed with the Proposition 218 process, and the public hearing to consider adoption of the proposed rates. WRE will incorporate direction received from the committee and City Council into the technical analyses and recommendations, as appropriate. At the Proposition 218 public hearing, WRE will present a summary of the rate study process and proposed rates and will be available to respond to technical questions from the City Council and the public. Meetings: Up to three committee meetings and four City Council meetings, including the Proposition 218 public hearing Deliverables: Meeting presentations in Microsoft PowerPoint Water Resources Economics LLC Page B-1
City of Newport Beach Water, Wastewater, and Recycled Water Rate Study Water Resources Economics Page 6
Proposed Fees WRE proposes to complete the proposed scope of services based on the fee table shown below, with a not-to-exceed value of $174,815. WRE will invoice the City based on time and materials. WRE estimates that 62% of the cost is associated with the Water / Recycled Enterprise Fund and 38% of the below cost is associated with Wastewater Enterprise Fund.
EXHIBIT CINSURANCE REQUIREMENTS PROFESSIONAL SERVICES 1. Provision of Insuranceprior to commencement of Work, Consultant shall obtain, provide and maintain at its own expense during the term of this Agreement, policies of insurance of the type and amounts described below and in a form satisfactory to City. Consultant agrees to provide insurance in accordance with requirements set forth here. If Consultant uses existing coverage to comply and that coverage does not meet these requirements, Consultant agrees to amend, supplement or endorse the existing coverage. 2. Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact Rating of A- (or higher) and Financial Size Category Class VII (or larger) in 3. Coverage Requirements. A. . Consultant Insurance with limits of at least one million dollars ($1,000,000) each accident for bodily injury by accident and each employee for bodily injury by disease in accordance with the laws of the State of California. Consultant shall submit to City, along with the certificate of insurance, a Waiver of Subrogation endorsement in favor of City of Newport Beach, its City Council, boards and commissions, officers, agents, volunteers, employees. B. General Liability Insurance. Consultant shall maintain commercial general liability insurance, and if necessary excess/umbrella liability insurance, with coverage at least as broad as provided by Insurance Services Office form CG 00 01, in an amount not less than two million dollars ($2,000,000) per occurrence, four million dollars ($4,000,000) general aggregate. The policy shall cover liability arising from bodily injury, property damage, completed operations, personal and advertising injury, and liability assumed under an insured contract (including the tort liability of another assumed in a business contract). Consultant shall submit to City, along with a certificate of insurance, additional coverage as stated in Section 4. Other Insurance Requirements. C. Automobile Liability Insurance. Consultant shall maintain automobile insurance at least as broad as Insurance Services Office form CA 00 01 covering bodily injury and property damage for all activities of Consultant arising out of or in connection with Work to be performed under this Agreement, including coverage for any owned, hired, non-owned or rented
vehicles, in an amount not less than one million dollars ($1,000,000) combined single limit each accident. Consultant shall submit to City, along with a certificate of insurance, additional coverage as stated in Section 4. Other Insurance Requirements. D. Professional Liability (Errors & Omissions) Insurance. Consultant shall maintain professional liability insurance that covers the Services to be performed in connection with this Agreement, in the minimum amount of one million dollars ($1,000,000) per claim and two million dollars ($2,000,000) in the aggregate. Any policy inception date, continuity date, or retroactive date must be before the Effective Date of this Agreement and Consultant agrees to maintain continuous coverage through a period no less than three years after completion of the Services required by this Agreement. E. Excess/Umbrella Liability Insurance. If any Excess or Umbrella Liability policies are used to meet the limits of liability required by this contract, then terms, conditions, and provisions and shall meet all of the insurance requirements stated in this contract, including, but not limited to, the additional insured and primary & non-contributory insurance requirements stated herein. No insurance policies maintained by the City, whether primary or excess, and which also apply to a loss covered hereunder, shall be called upon to contribute to a loss until the Consultantexcess/umbrella liability policies are exhausted. Consultant shall submit to City, along with a certificate of insurance, additional coverage as stated in Section 4. Other Insurance Requirements. 4. Other Insurance Requirements. The policies are to contain, or be endorsed to contain, the following provisions: A. Waiver of Subrogation. All insurance coverage maintained or procured pursuant to this Agreement shall be endorsed to waive subrogation against City of Newport Beach, its City Council, boards and commissions, officers, agents, volunteers and employees or shall specifically allow Consultant or others providing insurance evidence in compliance with these requirements to waive their right of recovery prior to a loss. Consultant hereby waives its own right of recovery against City, and shall require similar written express waivers from each of its subconsultants. B. Additional Insured Status. All liability policies including general liability, excess/umbrella liability, pollution liability, and automobile liability, if required, but not including professional liability, shall provide or be endorsed to provide that City of Newport Beach, its City Council, boards and commissions, officers, agents, volunteers and employees shall be included as insureds under such policies.
C. Primary and Non Contributory. All liability coverage shall apply on a primary basis and shall not require contribution from any insurance or self-insurance maintained by City. D. Notice of Cancellation. All policies shall provide City with thirty (30) calendar required coverage. E. Subcontractors. Consultant shall be responsible for causing subcontractors to purchase the same types and limits of insurance in compliance with the terms of this Agreement, including adding the City as an additional insured, providing primary and non-contributory coverage and waiver of subrogation Limits of liability for General Liability in an amount not less than one million dollars ($1,000,000) per occurrence, two million dollars ($2,000,000) aggregate and Professional Liability (Errors & Omissions) in an amount not less than one million dollars ($1,000,000) per claim, two million dollars ($2,000,000) aggregate. 5. Additional Agreements Between the Parties. The parties hereby agree to the following: A. Evidence of Insurance. Consultant shall provide certificates of insurance to City as evidence of the insurance coverage required herein, along with a endorsements as specified herein for each coverage. Insurance certificates commencement of performance. Current certification of insurance shall be kept on file with City at all times during the term of this Agreement. The certificates and endorsements for each insurance policy shall be signed by a person authorized by that insurer to bind coverage on its behalf. At least fifteen (15) days prior to the expiration of any such policy, evidence of insurance showing that such insurance coverage has been renewed or extended shall be filed with the City. If such coverage is cancelled or reduced, Consultant shall, within ten (10) days after receipt of written notice of such cancellation or reduction of coverage, file with the City evidence of insurance showing that the required insurance has been reinstated or has been provided through another insurance company or companies. City reserves the right to require complete, certified copies of all required insurance policies, at any time. B. . City reserves the right at any time during the term of the Agreement to change the amounts and types of written notice of such change. If such change results in substantial additional cost to Consultant, City and Consultant may renegotiate
C. Right to Review Subcontracts. Consultant agrees that upon request, all agreements with subcontractors or others with whom Consultant enters into contracts with on behalf of City will be submitted to City for review. Failure of City to request copies of such agreements will not impose any liability on City, or its employees. D. Enforcement of Agreement Provisions. Consultant acknowledges and agrees that any actual or alleged failure on the part of City to inform Consultant of non-compliance with any requirement imposes no additional obligations on City nor does it waive any rights hereunder. E. Requirements not Limiting. Requirements of specific coverage features or limits contained in this Section are not intended as a limitation on coverage, limits or other requirements, or a waiver of any coverage normally provided by any insurance. Specific reference to a given coverage feature is for purposes of clarification only as it pertains to a given issue and is not intended by any party or insured to be all inclusive, or to the exclusion of other coverage, or a waiver of any type. If the Consultant maintains higher limits than the minimums shown above, the City requires and shall be entitled to coverage for higher limits maintained by the Consultant. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City. F. Self-insured Retentions. Any self-insured retentions must be declared to and approved by City. City reserves the right to require that self-insured retentions be eliminated, lowered, or replaced by a deductible. Self-insurance will not be considered to comply with these requirements unless approved by City. G. City Remedies for Non-Compliance. If Consultant or any subconsultant fails to provide and maintain insurance as required herein, then City shall have the right but not the obligation, to purchase such insurance, to terminate this til proper sole option, be deducted from amounts payable to Consultant or reimbursed by Consultant upon demand. H. Timely Notice of Claims. Consultant shall give City prompt and timely notice performance under this Agreement, and that involve or may involve coverage under any of the required liability policies. City assumes no obligation or liability by such notice, but has the right (but not the duty) to monitor the handling of any such claim or claims if they are likely to involve City. I. . Consultant shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the Work.