Norco City Council
August 16, 2023

AGENDA
City Council
Wednesday, August 16, 2023
City Council Chamber – Norco City Hall
2820 Clark Avenue, Norco, CA 92860
CALL TO ORDER 6:00 PM
ROLL CALL Robin Grundmeyer, Mayor
Kevin Bash, Mayor Pro Tem
Katherine Aleman, Council Member
Berwin Hanna, Council Member
Greg Newton, Council Member

CLOSED SESSION

CONFERENCE WITH REAL PROPERTY NEGOTIATORS
Property: APN: 152-060-011
Agency negotiator: City Manager
Negotiating parties: City of Norco and AT&T/Verizon
Under negotiation: Price and terms of payment

CONFERENCE WITH REAL PROPERTY NEGOTIATORS
Property: APN: 130-240-008
Agency negotiator: City Manager
Negotiating parties: City of Norco
Under negotiation: Price and terms of payment

CONFERENCE WITH REAL PROPERTY NEGOTIATORS
Property: APN: 133-080-010
City Negotiator: City Manager Lori Sassoon
Negotiating parties: City of Norco
Under Negotiation: Price and Terms

PUBLIC EMPLOYEE PERFORMANCE EVALUATION
Pursuant to Government Code §54957
Title: City Manager
Conference with Labor Negotiator
Agency designated representatives: City Manager Sassoon Employee organization: Utility Workers Union of America, AFL-CIO Local 606

CONFERENCE WITH LEGAL COUNSEL-EXISTING LITIGATION
Paragraph (1) of subdivision (d) of Section 54956.9
Name of case: In re Leland Price (WCAB No.: ADJ14308224A & ADJ10277866) RECONVENE PUBLIC SESSION 7:00 PM
City Council Agenda - August 16, 2023

REPORT OF ACTION(S) TAKEN IN CLOSED SESSION
PLEDGE OF ALLEGIANCE Mayor Pro Tem Kevin Bash
INVOCATION Pastor Fred Griffin
Corona Church of the Open Door
PRESENTATIONS Introduction
Bryson Keener
CAL FIRE Battalion Chief
Recognition
NPC Members Service to Community

GENERAL PLAN UPDATE
Community Development Director Robles

1. CITY COUNCIL REPORTS ON REGIONAL BOARDS

2. CONSENT CALENDAR
All items listed under the Consent Calendar are considered to be routine and may be enacted by one motion. Prior to the motion to consider any action by the presiding governmental body, any public comments on any of the Consent Items will be heard. There will be no separate action unless members of the governmental body or the audience request specific items be removed from the Consent Calendar. Items removed from the Consent Calendar will be separately considered under Item 3 of the Agenda.

2.A. Waive Reading of all Ordinance Adoptions on this Agenda and Read by Title Only.

RECOMMENDATION:

Waive reading, by title only, of all Ordinances and Resolutions. Said Ordinances and Resolutions which appear on the agenda shall be determined to have been read by title and further reading waived.

Staff Report - Pdf

2.B. Recap of Actions Taken by the Planning Commission at its Meeting Held on June 14, 2023
RECOMMENDATION:

Receive and file the recap of actions taken by the Planning Commission at its meeting held on August 9, 2023.

Staff Report - Pdf

City Council Agenda - August 16, 2023

2.C. Designation of Voting Delegate and Alternate for the 2023 League of California Cities Annual Conference and Expo
RECOMMENDATION:

Adopt Resolution No. 2023-52, appointing Mayor Pro Tem Kevin Bash as the voting delegate and Council Members Katherine Aleman and Berwin Hanna as alternates to represent the City of Norco at the 2023 League of California Cities Annual Conference.

Staff Report - Pdf

2.D. Acceptance of Proposal for Rate Study Professional Consulting Services RECOMMENDATION:

Accept the proposal submitted by Stantec Consulting Services Inc. to provide Professional Consulting Services for the preparation of a Water, Sewer, and Reclaimed Water Rate Study in the amount not to exceed $85,255 and appropriate $30,000 from the Recycled Water Fund for contractual services.

Staff Report - Pdf

2.E. Proposal from Krieger and Stewart Engineering Consultants to provide engineering support services as part of the construction of the the Shawnee Lift Station Replacement Project
RECOMMENDATION:

Accept the proposal from Krieger and Stewart Engineering Consultants to provide engineering support services as part of the construction of the Shawnee Lift Station Replacement Project in the amount of $66,930; and authorize the City Manager to approve contract change orders up to 10 percent of the total bid amount.

Staff Report - Pdf

2.F. Approve Professional Services Agreement and Procurement of Licenses for Arctic Wolf Managed Detection Response Security Services RECOMMENDATION:

Approve a Professional Services Agreement with Arctic Wolf and CDW-G for Managed Detection and Response (MDR) Security Services in an amount not to exceed $123,557 over a three (3) year term; authorize the City Manager to approve contract change orders up to $3,800 per each Fiscal Year to accommodate for additional licenses for potential growth in staff, servers, and workstations, for a total of $134,957.

Staff Report - Pdf

City Council Agenda - August 16, 2023

2.G. Waive Reading of all Ordinance Adoptions on this Agenda and Read by Title Only.

RECOMMENDATION:

Waive reading, by title only, of all Ordinances and Resolutions. Said Ordinances and Resolutions which appear on the agenda shall be determined to have been read by title and further reading waived.

Staff Report - Pdf

3. ITEM(S) PULLED FROM CONSENT CALENDAR

4. PUBLIC COMMENTS
This is the time when persons wishing to address the presiding governmental body regarding the Consent Calendar, Legislative Matters or items within the subject matter jurisdiction of the legislative body. Please submit a speaker card to the Meeting Clerk. Please limit comments to three minutes or less. The Ralph M. Brown Act limits the governmental body’s ability to respond to comments on non-agendized matters at the time such comments are made. The governmental body shall not discuss or act relative to any general public comment.

5. DISCUSSION / ACTION ITEM(S)
Order of Presentation for Discussion Items:

1. Staff Report Presentation

2. Council Questions of Staff

3. Public Comment

4. Council Discussion and Action

5.A. Consideration of Measure R Citizens' Oversight Committee Additional Budget Appropriation Procedures
RECOMMENDATION:

Review and consider options regarding procedures for additional Measure R budget appropriations.

Staff Report - Pdf

5.B. Consider and adopt an amended City Council procedures Resolution to provide for the selection of Mayor and Mayor Pro Tempore RECOMMENDATION:

Adopt Resolution No. 2023-53 amending the City Council Rules of Procedures to provide for the selection of Mayor and Mayor Pro Tempore Staff Report - Pdf

6. PUBLIC HEARING(S)

City Council Agenda - August 16, 2023
Order of Presentation for Public Hearing Items:

1. Staff Report Presentation

2. Council Questions of Staff

3. Open Public Hearing
a. Public Comment

4. Close Public Hearing

5. Council Discussion and Action

6.A. Public Hearing for First Reading:

Ordinance 1099: Code Amendment 2023-05(City of Norco), a City initiated amendment to the Norco Municipal Code, Title 1 – "General Provisions", Chapter 1.05 – ”Administrative Citations”, to align with Government Code 36900 with respect to fine schedules, with fines imposed for Building Code violations and Short Term Rentals to be assessed at higher levels than General violations;
Ordinance 1100: Code Amendment 2023-06 (City of Norco), a City initiated amendment to the Norco Municipal Code, Title 6 – “Health and Sanitation”., Chapter 6.22 – “Public Nuisance Abatement”, to adopt a process for immediate issuance of a Notice to Abate; to change the process for a hearing to occur; and to permit summary abatement by the City of hazardous nuisances on private property; and
Ordinance 1101: Code Amendment 2023-07 (City of Norco), a City initiated amendment to the Norco Municipal Code Title 15 – “Building and Construction”, Chapter 15.01 - Administrative Provisions for Title 15" and to Chapter 15.06 – “Housing Code”, to replace the Housing Code with the 2021 International Property Maintenance Code, which will now include the Housing Code and Dangerous Buildings Code.

RECOMMENDATION:

Adopt Ordinance No.1099, First Reading, approving Code Amendment 2023-05;
Adopt Ordinance No.1100, First Reading, approving Code Amendment 2023-06; and
Adopt Ordinance No. 1101, First Reading, approving Code Amendment 2023-07.

Staff Report - Pdf

7. CITY COUNCIL / STAFF COMMUNICATIONS

8. ADJOURNMENT

City Council Agenda - August 16, 2023
In compliance with the Americans with Disabilities Act, any person who requires a modification or accommodation in order to participate in this meeting is encouraged to contact the City Clerk’s Office at (951) 270-5623 or [email protected] at least 48 hours prior to the meeting so that reasonable arrangements can be made to ensure accessibility. Staff reports are on file in the City Clerk’s Office. Any writings or documents provided to a majority of the presiding governmental body regarding any item on this agenda will be available for public inspection at the City Clerk’s Office during normal business hours at Norco City Hall, located at 2870 Clark Avenue in Norco. The meeting is recorded.

City Council

STAFF REPORT
Date: August 16, 2023 Agenda Item:

2.A.

To: Honorable Mayor and City Council Members
Prepared By: Dana Roa, City Clerk
Department: City Clerk
SUBJECT:

Waive Reading of all Ordinance Adoptions on this Agenda and Read by Title Only.

RECOMMENDATION:

Waive reading, by title only, of all Ordinances and Resolutions. Said Ordinances and Resolutions which appear on the agenda shall be determined to have been read by title and further reading waived.

REVIEWED AND APPROVED BY:

City Council

STAFF REPORT
Date: August 16, 2023 Agenda Item:

2.B.

To: Honorable Mayor and City Council Members
Prepared By: Alma Robles, Planning Director
Department: Planning
SUBJECT:

Recap of Actions Taken by the Planning Commission at its Meeting Held on June 14, 2023
RECOMMENDATION:

Receive and file the recap of actions taken by the Planning Commission at its meeting held on August 9, 2023.

REVIEWED AND APPROVED BY:

ATTACHMENT(S):

Draft Planning Commission - Aug 09 2023 - Minutes

DRAFT - MINUTES
Planning Commission
Wednesday, August 9, 2023
City Council Chamber – Norco City Hall
2820 Clark Avenue, Norco, CA 92860
CALLED TO ORDER 7:00 PM

OATH OF OFFICE
City Clerk gave the Oath of Office to newly Re-Appointed Member Danny Azevedo and Youth Commissioner Henry Langlois.

ROLL CALL Patricia Hedges, Chair
Jeff Shyu, Vice Chair
Danny Azevedo, Member
Fia Sullivan, Member
Tara Young, Member
Henry Langlois, Youth Commissioner

PLEDGE OF ALLEGIANCE

ELECTION OF CHAIR AND VICE CHAIR

1. Election of Chair
Nomination of Jeff Shyu for Chair was made by Pat Hedges and seconded by Fia Sullivan. No Further nominations were made.

M/S HEDGES/SULLIVAN Jeff Shyu was appointed Chair of the Planning Commission for term ending June 30, 2024. The Motion was carried by the following roll call vote:

AYES: HEDGES, SHYU, AZEVEDO, SULLIVAN, AND YOUNG
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE
Youth Commissioner Langlois voted yes.

2. Election of Vice Chair
Fia Sullivan was nominated for Chair by Danny Azevedo and seconded by Jeff Shyu. No further nominations were made.

Planning Commission Minutes - August 9, 2023
M/S AZEVEDO/SHYU Fia Sullivan was appointed Vice Chair of the Planning Commission for term ending June 30, 2024. The Motion was carried by the following roll call vote:

AYES: HEDGES, SHYU, AZEVEDO, SULLIVAN, AND YOUNG
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE
Youth Commissioner Langlois voted yes.

Community Development Director Robles read the APPEAL NOTICE: In the event that you disagree with the action taken by the Planning Commission in regards to your application, or with any condition for approval of the application which is not a specific requirement of the Norco Municipal Code, you are entitled to appeal such determination or conditions to the Norco City Council, provided that such appeal is filed with the Norco City Clerk within ten calendar days after the requirements for appeals, inclusive of payment of an appeal fee.

Presented by Alma

1. CONSENT CALENDAR
a. Approval of Consent Calendar as presented.

M/S HEDGES/AZEVEDO Approve Consent Calendar as Presented. The Motion was carried by the following roll call vote:

AYES: HEDGES, SHYU, AZEVEDO, SULLIVAN, AND YOUNG
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE
Youth Commissioner Langlois voted yes.

1.A. Approval of Planning Commission Regular Meeting Minutes Action: Approved the Planning Commission Meeting Minutes of May 10, and June 14, 2023.

2. ITEM(S) PULLED FROM CONSENT CALENDAR
There were no items pulled from the Consent Calendar.

3. PUBLIC COMMENTS

Planning Commission Minutes - August 9, 2023
Bonnie Slager reminded the community that Fair Buttons were on sale now for $15.

4. DISCUSSION / ACTION ITEM(S)

4.A. Site Plan 2023-07 (Vandenraadt): A request to approve of an Accessory Building Use Permit for a 1,400 square-foot RV garage/workshop and a 3,140 squarefoot barn at 4204 Hillside Avenue within the A-1-20 (Agricultural Low Density) Zone. (APN 133-062-011)
Community Development Director Robles requested that this item be continued to the next regularly scheduled Planning Commission meeting.

M/S HEDGES/SULLIVAN Continue item to the next regularly scheduled Planning Commission meeting: The Motion was carried by the following roll call vote:

AYES: HEDGES, SHYU, AZEVEDO, SULLIVAN, AND YOUNG
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE
Youth Commissioner Langlois voted yes.

4.B. Review of the Draft ADU Legalization Program

Community Services Director Robles presented report on the review of the Draft Legalization Program.

The Commission Members asked questions and provided feedback to staff.

Chair Shyu opened Public Comment.

There was no Public Comment at this time.

Following further discussion and without formal motion the Planning Commission provided input to staff that will be forwarded to the City Council for further review.

5. PUBLIC HEARING(S)

5.A. Conditional Use Permit 2023-07 (Cook): A request to allow 15 additional animal units and 3 additional dogs for a total of 40 animal units and 7 dogs

Planning Commission Minutes - August 9, 2023
at 4680 Pedley Avenue within the A-1 (Agricultural, Low Density) Zone. (APN: 153-150-020)

Senior Planner Vince Acuna presented the report regarding CUP 2023-07 to allow 15 additional animal units and 3 additional dogs for a total of 40 animal units and 7 dogs at 4680 Pedley Avenue.

Commission Members asked questions of staff and discussed concerns for this conditional use permit.

Staff answered questions and addressed concerns.

Chair Shyu opened the Public Hearing.

Applicant Jennifer Cook spoke regarding their reasons for needing the conditional use permit on their property and addressed concerns that were brought up by the community.

Tracy Oswalt, Charis Matthews and Erica Cohn spoke in favor of Tesoro Farms conditional use permit and gave testimony of the positive business practices of Tesoro Farms and owners.

Chair Shyu called for a 10-minute break at this time.

Morgan Kimbrell and Ted Schwarzback spoke in favor of Tesoro Farms conditional use permit and gave testimony of the positive business practices of Tesoro Farms and owners.

Chair Shyu closed the Public Hearing.

Following further discussion to include a Sunset Clause to the 7 Dogs on the property, motion was made.

M/S YOUNG/AZEVEDO Approval of Conditional Use Permit (CUP) 2023-07 subject to the attached Conditions of Approval on Resolution 2023-15, which allows for a total of 38 animal units and 7 dogs, with a Sunset Clause by attrition for dogs, on the property. The Motion was carried by the following roll call vote:

AYES: HEDGES, SHYU, AZEVEDO, SULLIVAN, AND YOUNG
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE

Youth Commissioner Langlois voted yes.

Planning Commission Minutes - August 9, 2023

5.B. Conditional Use Permit 2023-03 (Gonzales): A request to allow a concrete breaker equipment retail and rental business with an outdoor storage/display area located at 791 Sixth Street, within the C-4 (Commercial) Zone. (APN: 133- 142-015)

Vince Acuna presented report regarding Conditional Use Permit 2023-03, a request to allow a concrete breaker equipment retail and rental business with an outdoor storage/display area located at 791 Sixth Street

Applicant Dave Gonzalez answered question of the Commission.

Chair Shyu opened the Public Hearing.

There was no public comment at this time.

Chair Shyu closed the Public Hearing.

Following discussion of hours of operation and demonstration of equipment a motion was made.

M/S HEDGES/SULLIVAN Planning staff recommends approval of Conditional Use Permit (CUP) 2023-03 subject to the attached Conditions of Approval on Resolution 2023-14, with amendment to Hours of Operation to be Monday through Friday 7am to 5 p.m., with no equipment demonstration before 8 am. The Motion was carried by the following roll call vote:

AYES: HEDGES, SHYU, AZEVEDO, SULLIVAN, AND YOUNG
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE

Youth Commissioner Langlois voted yes.

5.C. Zone Code Amendment 2023-04 (City of Norco): A City-Initiated proposal to amend Norco Municipal Code Title 18 – “Zoning”, Chapter 18.68 – “Accessory Building Use Permits”, to amend the provisions/regulations for Large Vehicle Parking Buildings, and for buildings 240 square feet and under.

Zone Code Amendment 2023-05 (City of Norco): A City-Initiated proposal to amend Norco Municipal Code Title 18 – “Zoning”, Chapter 18.31 – “General Provisions – Yards, Setbacks, and Height Exceptions”, to amend the provisions/regulations for roof overhangs/eaves in the required setback areas.

Planning Commission Minutes - August 9, 2023
Code Amendment 2023-04 (City of Norco): A City-Initiated proposal to amend Norco Municipal Code Title 15 – “Building and Construction”, Chapter 15.02 – “Building Code”, Section 15.02.150 – Conversion of Cargo Carriers, to allow cargo carriers/metal storage containers 240 square feet and under without approval of a conditional use permit, on properties zoned for residential, subject to the requirements of Chapter 18.68 Chapter 18.68 – “Accessory Building Use Permits” of the Norco Municipal Code

Community Development Director Robles presented the report on zoning code amendments for Accessory Buildings.

Commission members had questions for staff and discussed their concerns.

Staff addressed the questions and concerns of the Commission.

Chair Shyu opened the Public Hearing.

Bill Naylor discussed that previous commissions had vetted the issue of the RV Parking Hanger Height and found the current restrictions to be appropriate.

Chair Shyu closed the Public Hearing.

Following discussion motion was made.

M/S HEDGES/AZEVEDO Adopt Resolution 2023-18, recommending approval of Zone Code Amendment 2023-04 to the City Council;
Adopt Resolution 2023-19, recommending approval of Zone Code Amendment 2023-05 to the City Council; and
Adopt Resolution 2023-20, Recommending approval of Code Amendment 2023- 04 to the City Council
The Motion was carried by the following roll call vote:

AYES: HEDGES, SHYU, AZEVEDO, SULLIVAN, AND YOUNG
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE
Youth Commissioner Langlois voted yes.

Planning Commission Minutes - August 9, 2023

5.D. Zone Code Amendment 2023-03 (City of Norco): A City-Initiated proposal to amend Norco Municipal Code Title 18 – “Zoning”, amending Chapter 18.65 – “Residential Density Bonus Provisions” for compliance with State law.

Community Development Director Robles introduced Attorney Erica Vega to present information on the Residential Density Bonus Provisions.

Attorney Erica Vega presented report.

Chair Jeff Shyu opened the Public Hearing.

There were no public comments at this time.

Chair Shyu closed the Public Hearing.

Following discussion motion was made.

M/S HEDGES/YOUNG Adopt Resolution 2023-16, recommending approval of Zone Code Amendment 2023-03 to the City Council. The Motion was carried by the following roll call vote:

AYES: HEDGES, SHYU, AZEVEDO, SULLIVAN, AND YOUNG
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE
Youth Commissioner Langlois voted yes.

6. COMMISSION / STAFF COMMUNICATIONS
There were no further communications at this time.

7. ADJOURNMENT
Chair Shyu adjourned the meeting at 10:04 p.m.

City Council

STAFF REPORT
Date: August 16, 2023 Agenda Item:

2.C.

To: Honorable Mayor and City Council Members
Prepared By: Dana Roa, City Clerk
Department: City Clerk
SUBJECT:

Designation of Voting Delegate and Alternate for the 2023 League of California Cities Annual Conference and Expo
RECOMMENDATION:

Adopt Resolution No. 2023-52, appointing Mayor Pro Tem Kevin Bash as the voting delegate and Council Members Katherine Aleman and Berwin Hanna as alternates to represent the City of Norco at the 2023 League of California Cities Annual Conference.

SUMMARY:

The League of California Cities will be hosting its Annual Conference in September 2023.

An important part of the Annual Conference is the Annual Business Meeting. In order to vote at that meeting, the City Council must designate a voting delegate, along with up to two alternate voting delegates, one of whom may vote in the event that the designated voting delegate is unable to serve in that capacity.

BACKGROUND:

The League of California Cities will be hosting its Annual Conference from September 20- 22, 2023. One important aspect of the Annual Conference is the Annual Business Meeting when the membership takes action on resolutions. Annual resolutions guide cities and the League in combined efforts to improve the quality, responsiveness and vitality of local government in California.

Consistent with League bylaws, a city’s voting delegate and up to two alternates must be designated by the City Council. This designation must be done by Council action and cannot be accomplished by individual action or the Mayor or City Manager alone.

Mayor Pro Tem Kevin Bash and Council Members Katherine Aleman and Berwin Hanna are scheduled to attend the League Conference. Therefore, the Council is recommended to appoint Mayor Pro Tem Bash as the City’s voting delegate and Council Members Aleman and Hanna as alternates.

FISCAL IMPACT:

No financial impact as a result of this action.

RELATIONSHIP TO STRATEGIC PLAN:

This item is consistent with Strategic Direction No. 4 - Communication and Stakeholder Experience: Enhance the stakeholder experience, engage the community, and build brand awareness through proactive, effective and consistent communication.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Lisette Free, Finance Director Approved by: Lori Sassoon, City Manager
Approved as to Form: Harper and Burns, LLC, City Attorney ATTACHMENT(S):

Resolution No 2023- 52 LCC Voting Delegate

RESOLUTION NO. 2023-52

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NORCO,

CALIFORNIA, APPOINTING ONE VOTING DELEGATE AND TWO
VOTING ALTERNATEs FOR THE 2023 LEAGUE OF CALIFORNIA

CITIES ANNUAL CONFERENCE
WHEREAS, the League of California Cities will be hosting its Annual Conference, September 20-22, 2023, and an important part of the Annual Conference is the Annual Business Meeting; and
WHEREAS, in order to vote at the Annual Business Meeting, the City Council must designate a voting delegate, along with up to two alternate voting delegates, one of whom may vote in the event that the designated voting delegate is unable to serve in that capacity; and
WHEREAS, consistent with League bylaws, the designation must be done by Council action and cannot be accomplished by individual action or the Mayor or City Manager alone; and
WHEREAS, Mayor Pro Tem Kevin Bash and Council Members Katherine Aleman and Berwin Hanna will be attending the League of California Cities Annual Conference in September 2023.

NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Norco, California, that the following are hereby designated as the voting delegate and alternate to represent the City of Norco at the League of California Cities 2022 Annual Conference, in September 2023:

1. Mayor Pro Tem Kevin Bash shall be designated as the voting delegate

2. Council Members Katherine Aleman and Berwin Hanna shall be designated as the voting alternate.

PASSED AND ADOPTED by the City Council of the City of Norco, California, at a regular meeting held August 16, 2023.
______________________
Robin Grundmeyer, Mayor
City of Norco, California
ATTEST:
_________________________
Dana Roa, CMC, City Clerk

Resolution 2023-52 – Delegate and Alternate for 2022 LCC Annual Conference

August 16, 2023
City of Norco, California
I, Dana Roa, CMC, City Clerk of the City of Norco, California, do hereby certify that the foregoing Resolution was regularly introduced and adopted by the City Council of the City of Norco, California, at a regular meeting thereof held on August 16, 2023, by the following vote of the City Council:

AYES:

NOES:

ABSENT:

ABSTAIN:

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the City of Norco, California on August 16, 2023.
_________________________
Dana Roa, CMC, City Clerk
City of Norco, California

City Council

STAFF REPORT
Date: August 16, 2023 Agenda Item:

2.D.

To: Honorable Mayor and City Council Members
Prepared By: Chad Blais, Public Works Director
Department: Public Works
SUBJECT:

Acceptance of Proposal for Rate Study Professional Consulting Services RECOMMENDATION:

Accept the proposal submitted by Stantec Consulting Services Inc. to provide Professional Consulting Services for the preparation of a Water, Sewer, and Reclaimed Water Rate Study in the amount not to exceed $85,255 and appropriate $30,000 from the Recycled Water Fund for contractual services.

SUMMARY:

Staff is seeking professional consulting services to conduct a Water, Sewer and Reclaimed Water Rate Study and requested a proposal from Stantec to provide these rate analysis services. Staff is recommending the City Council accept the proposal and approve a contract with Stantec Consulting Services Inc. in the amount not to exceed $85,255 and appropriate $30,000 from Recycled Water Fund.

BACKGROUND:

The City has been developing and installing the backbone infrastructure for a reclaimed (aka recycled) water system to provide reclaimed water to the City parks, facilities, and potentially private companies that can utilize recycled water. However, prior to delivering any reclaimed water to potential customers, the City must establish a reclaimed water rate through a detailed rate analysis.

In 2016, the City utilized Stantec Consulting Services Inc (Stantec) to complete a 5-year rate analysis study for water and sewer. The performance of Stantec and its Project Director, David Hyder, was a very professional and positive experience.

The last water related rate increase was implemented in July 2021; no sewer increases were implemented at that time. It is fiscally prudent the City continue to evaluate its revenue versus expenditures and adjust rates on a regular basis to make sure there is

appropriate funding being generated to cover increasing costs for operations/maintenance and for critical capital improvement projects.

In early 2023, Professional Consulting Services were sought to conduct a water, sewer and reclaimed water rate study, and a proposal was requested from Stantec Inc. to provide these rate analysis services based on the City's previous experience with that firm.

Stantec submitted a proposal for Rate Analysis of Water, Wastewater and Reclaimed Water Enterprises with a cost of $85,255 (see Stantec proposal). Staff has reviewed the proposal to ensure completeness of proposal and format; quality of work previously performed; understanding of scope of work; experience of project team; references; availability of resources to perform work; proposed work schedule; and cost of services.

In addition, David Hyder, Senior Principal & Project Director, will once again be leading the Stantec team and personally presenting rate study results and recommendations at all the outreach meetings that will be conducted as part of the rate analysis process.

While the current schedule proposed by Stantec is completion by January 2024, staff is going to work with Stantec to deliver the report to Council in December 2023 (if possible) with a possible Prop 218 hearing in January 2023.

The completion of a rate analysis study was originally planned to be completed by June 2023; however, at the direction of Council, a third-party consultant was first retained to conduct an analysis of the Public Works Department by evaluating the department resources, structure, staff perceptions, and industry best practices to develop recommendations on staffing, operations, communication, and process. This study was completed by the consultant and presented to Council at a workshop on August 2, 2023.

Staff is recommending the City Council accept the proposal and approve a contract with Stantec Consulting Services Inc. to provide Professional Consulting Services to complete a rate analysis for water, sewer, and reclaimed water; and authorize the City Manager to approve a purchase order in an amount not-to-exceed $85,255.

FISCAL IMPACT:

The preparation of the water, sewer, and reclaimed water rate analysis was included in the operations budget for FY 2023-24 ($30,000 to Water Operating Fund - 124-804- 34100; $30,000 to Sewer Operating Fund - 126-809-34100). Staff is requesting $30,000 appropriation to Recycled Water Fund 159-965-34100 because funding was not included in the budget for that enterprise's share of the rate study.

RELATIONSHIP TO STRATEGIC PLAN:

Completion of rate analysis for water, sewer, and reclaimed water is consistent with Strategic Direction #5 – Infrastructure and Asset Management: Ensure timely preservation, replacement, improvement and acquisition of infrastructure and capital assets.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Lisette Free, Finance Director

Approved by: Lori Sassoon, City Manager
Approved as to Form: Harper and Burns, LLC, City Attorney ATTACHMENT(S):
norco_stantec_rate_study_proposal_2023

City of Norco
Proposal for
Rate Analysis of Water,
Wastewater and Reclaimed Water
Enterprises
Prepared by Stantec
July 25, 2023

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

i

TABLE OF CONTENTS
Table of Contents ........................................................................................................................................... i Cover Letter .................................................................................................................................................. ii

1. Understanding of Scope of Services ......................................................................................................... 1

2. Methodology .............................................................................................................................................. 2 Work Element I: Water & Wastewater Enterprise Funds .......................................................................... 2 Task 1: Revenue Sufficiency Analysis and Financial Planning Analysis .............................................. 2 Task 2: Cost of Service Allocation Analysis .......................................................................................... 3 Task 3: Rate Design .............................................................................................................................. 3 Work Element II: Reclaimed Water Enterprise Fund ................................................................................ 3 Task 4: Reclaimed Water Cost Determination ...................................................................................... 4 Task 5: Estimate of Potential Demand and Usage ............................................................................... 4 Task 6: Cost of Service Allocation Analysis .......................................................................................... 4 Task 7: Level of Cost Recovery and Rate Design ................................................................................ 4 Work Element III: Deliverables .................................................................................................................. 4 Task 8: Rate and Bill Comparisons ....................................................................................................... 4 Task 9: Reports and Presentations ....................................................................................................... 5

3. Qualifications ............................................................................................................................................. 6

4. Personnel .................................................................................................................................................. 8

5. Experience .............................................................................................................................................. 10

6. References .............................................................................................................................................. 12

7. Schedule ................................................................................................................................................. 16

8. Signature ................................................................................................................................................. 17

9. Estimate of Consulting Fee ..................................................................................................................... 18 Appendix A: Resumes ................................................................................................................................. 22 Appendix B: Data Request List ................................................................................................................... 32

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

ii

COVER LETTER

July 25, 2025
City of Norco
Chad Blais, Public Works Director
2870 Clark Avenue
Norco, CA 92860
Re: Request for Proposal – Rate Analysis of Water, Wastewater & Reclaimed Water Enterprises Dear Mr. Blais:

We are pleased to present this proposal to provide Water, Wastewater and Reclaimed Water Rate Analysis services to the City of Norco, California (City). Stantec Consulting Services Inc. provides expertise in utility rate setting and a full suite of consulting services for over 500 water clients in the United States. Stantec has over 30 staff members that specialize in providing financial forecasting, rate making, and cost of service allocations for retail and wholesale utility customers, as well as providing affordability, stakeholder engagement, and benchmarking services.

Industry Leader & Authority. The senior members of our firm have been recognized as industry experts in various state and federal utility ratemaking proceedings. They have testified on multiple occasions before utility regulatory agencies in states such as Florida, Michigan, and Arizona, and at a national level before the Federal Energy Regulatory Committee (FERC). In addition, they have experience serving as expert witnesses in litigation when the rates of our municipal clients have been challenged by various types of customers such as other municipalities, retail customer groups, and privately owned utility systems. Our proposed project team has over 70 years of combined experience, and has supported the issuance of approximately $2 billion of debt for our clients’ utility capital funding needs over just the past five years.

The senior members of our project team, including Mr. David Hyder who will serve as Project Director, and Mr. Andrew Burnham who will serve as the Technical Advisor are currently serving on the AWWA Rates and Charges Committee, and are actively involved in an update to AWWA Manual M1 – Principles of Water Rates, Fees and Charges. In addition, they are actively involved in the Water Environment Federation (WEF) and the WEF Management Committee. This experience allows us to bring industry best practices to our approach to financial forecasting, management, cost of service, and rate making.

Local Knowledge & Relevant Experience. Our project team has extensive experience in providing financial planning, cost of service, and rate design services to water and wastewater utilities, culminating in the completion of over 1,500 similar studies throughout the country. Our Project Director, David Hyder, has conducted several utility rate studies in California including studies for the Cities of Norco, Santa Ana, Whittier, the East Bay Municipal Utility District and the Jurupa Community Services District. Our project

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

iii
team consists of a team of national experts including resources from California offices, who can bring you the depth of Stantec’s rate-setting expertise. You can expect a fully compliant rate study from us.

Interactive Approach & Modeling Process. To conduct the study, we will use our interactive financial model, which will be available to the City at the conclusion of the study at no additional cost. It is robust, easy to use and understand, and was built and developed in MS Excel to be easily customizable to properly reflect the unique dynamics of our clients’ utility systems. Our financial model is specifically designed to ensure the flexibility to be able to perform extensive sensitivity/scenario analysis with realtime feedback of the results. The control panel of our financial model display results on an easy-tounderstand dashboard that is customized for each client to highlight key assumptions or alternative scenarios.

Contact. Mr. David Hyder will serve as the project director and main point of contact. He is located at 1101 14th Street NW Suite 1200 Washington DC 20005 and is available by phone at (443) 538-1175, or email at [email protected].

If you have any questions, please do not hesitate to contact me.

Very truly yours,

Senior Principal & Project Director

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

1 1. UNDERSTANDING OF SCOPE OF SERVICES
Effective utility management in areas where water resources are limited requires the careful integration of cost allocation and pricing strategies into overall conservation and water supply plans. A careful and thorough analysis of the various types of costs of service must be combined with the proper rate design and communication strategies to ensure a fair and equitable rate structure that sends the correct pricing signals and can be understood by customers. Utility managers in this circumstance face large and complex risks that are unknown to areas where water supply is plentiful. In major water-challenged cities from California, to Colorado, Arizona, and Texas, our consultants have dealt with similar issues that currently confront the City of Norco.

It is our understanding that the City is seeking a qualified professional consulting firm such as Stantec, to assist the City in analyzing its current rate structure for water and sewer services and to evaluate other potential rate structures that would provide increased revenue stability and that are equitable and defendable. In addition, Stantec will help the City establish a rate structure for its new reclaimed water system. For each fund, we will evaluate the revenue requirements, including capital, operations and maintenance expenditures, bond debt coverage and reserves for both capital and operations. We will perform a cost allocation analysis to ensure that the rate plans are equitable to all customer classes including residential, commercial and non-connect customers in addition to ensuring that the rates recommended during the study are in compliance with Proposition 218.

Our approach to completing a utility rate study is focused on an interactive decision support process.

While our team will facilitate all aspects of the study, provide industry expertise and specific recommendations, we believe that input from the City is essential to the process. It is vital for the study to reflect the unique nature and specific needs of the City. Our interactive process effectively facilitates this input in an efficient manner while providing transparency and ultimately a comprehensive look at our clients’ utility systems. To facilitate the process we will use our industry-leading financial model.

To properly calibrate the modules of our financial model to precisely simulate the City’s utility systems, we will gather and review a significant amount of information, including historical and projected operating and capital budgets, audited financial statements, facility plans, bond/loan agreements, service agreements, historical, current, and expected usage data.

We will then conduct multiple interactive decision support work sessions with City Staff with the financial model and running with the “control panel.” The interactive process allows us to work closely with our clients to conduct a transparent analysis and to clearly and quickly identify and understand the drivers and impacts of any decision alternative. We can evaluate alternative assumptions and scenarios “on-the-fly” as the discussion progresses. This allows us to work towards solutions with an understanding of the short and long-term consequences of each scenario to the utility and its customers.

Based upon the City’s desired scope of services, we use the following sections to describe how we will use the financial model to accomplish the City’s desired tasks, and how we provide a complete evaluation of all aspects of your utility systems.

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

2 2. METHODOLOGY
To initialize the study, we will meet with City staff to discuss key issues, data requirements, and the overall project schedule, which will identify key milestones for deliverables, including draft and final reports. The kickoff meeting is the first of several project management meetings during the course of the project. Subsequent project management meetings will address project issues including execution of the scope, review and acceptance of deliverables, budget and time performance, and internal coordination issues necessary for the timely completion of the project. Once data has been received, we will review all data in detail, including regulatory requirements, historical and future operating expenses, debt service, reserve policies, billing procedures, existing rate structures, customer characteristics, system and capital improvement information, and other data provided by City staff.

We have divided our work plan into three work elements: Water & Wastewater Enterprise Fund Analysis, Reclaimed Water Enterprise Fund Analysis, and Deliverables. Please note that tasks within each element may be conducted concurrently, contingent on the receipt of data as well as the final project schedule.

Work Element I: Water & Wastewater Enterprise Funds
Task 1: Revenue Sufficiency Analysis and Financial Planning Analysis We will use the financial model to develop multi-year financial management plan for the water, wastewater and reclaimed water enterprise funds, including projected annual revenue requirements and rate adjustments. This model allows examination of historical operating expenses, growth and consumption trends, alternative capital improvement spending levels, debt service coverage ratios, levels of operating and capital reserves, and other financial policies/goals that affect the revenue requirements of the funds.

In addition to evaluating financial goals and objectives, we will also evaluate alternative demand projections, cost escalation factors, changes in usage patterns, elasticity of customer demand in response to rate increases, and other variables that could affect the financial performance of the City.

One item of particular importance is the projection of volumetric sales. Water use patterns are influenced by price signals, and change in customer behavior can also be affected by other non-price factors, such as rainfall, conservation programs, and economic conditions. We will analyze probable ranges of demand changes in response to different degrees of rate increases, weather patterns, rate structure changes, etc.

Prudent planning requires that utilities prepare for reductions and changes in demand patterns, and such planning will be incorporated to achieve financial targets and fund balances as described below.

The financial model provides a valuable capital planning tool which we will use to review the City’s capital improvement program, and to evaluate the impacts of alternative projects, costs, timing, and funding sources. Our capital planning tool allows us to evaluate the current and recommended investments for improvements as well renewal and replacement of utility systems and the financial impacts to the rate payers. For all scenarios reviewed, the financial model will develop a funding plan, including the identification of the amount, timing, and type of borrowing required as may be necessary. We will examine each enterprise fund’s use of debt financing for capital improvements and assess the impact of current levels of debt financing, as well as building a financing scenario to support the City in maintaining a proper balance for debt coverage and rate stabilization over the study period.

Closely related to this analysis is an examination of adequacy of reserves for operating and capital projects. Adequate reserves are fundamental to achieving financial stability, and can help some systems to avoid sudden or disruptive rate adjustments in the face of unanticipated operating or capital

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

3 needs. We will examine the City’s fund balances and incorporate these balances and alternative reserve policies into the interactive planning process and the conversations we will have regarding financial sustainability.

Task 2: Cost of Service Allocation Analysis
The cost allocation analysis will allow for the total cost of service and revenue requirements for the water and wastewater systems to be functionalized and distributed to customer classes. Each utility system’s cost of service and revenue requirements are functionalized to defined segments, which are then allocated to each class of customer based upon the characteristics or units of service of each respective class of customer. An example of typical functions and customer classes for a water system is presented in the following charts. Please note that system functions and customer classes are unique to each community and would be determined for the City based upon a review of its system/user data.

We identify the most appropriate Prop 218-compliant cost-of-service allocation methodologies and rate structures based upon available data, legal requirements, system configuration, service agreements, resources, customer base, demand and usage characteristics, local practice, and public policy objectives. We then customize the cost allocation module to employ the identified methodologies and concepts best suited for each utility system. At this time, we can also evaluate the various customer classes and recommend any changes, which may include adding a customer class or combining existing customer classes, based upon the results of the cost allocation analysis.

At the conclusion of the cost allocation portion of the analysis, we compare the resulting allocation of revenue requirements to the revenue generated by the current rates for each customer class. To the extent current revenue recovery levels are not in line with the results of the cost-of-service allocation analysis, we evaluate alternative levels of revenue recovery by class of customer within the rate structure analysis that would better comport with the identified cost of service allocations.

Task 3: Rate Design
At this point, we will also perform an independent review of the current rate structures for each customer class and examine alternative rate structures using our rate design model. The rate structure will be evaluated to determine if they may better serve the City’s fiscal stability and/or public policy objectives relating to fixed cost recovery, economic development, conservation, and affordability, while ensuring a fair and equitable distribution of costs, and conformance to accepted industry practice, legal precedent, and terms of any service agreements. Similarly, we can also evaluate the distribution of costs between the fixed and variable components of the rate structure, and will make recommendations that are consistent with your cost recovery objectives and consider your reserve policies as well as revenue stability and affordability objectives.

The revenue requirements determined in the revenue sufficiency and financial planning module for the first projected fiscal year are linked to the cost allocation and rate design model, which calculates specific rates necessary for each customer class to generate the required revenues based upon proper allocation of costs and the specified rate structure, or rate structure alternatives.

Work Element II: Reclaimed Water Enterprise Fund
The City of Norco does not currently sell reclaimed water to customers located within the City. While a recycled water system has been constructed, recycled water from the Western Riverside County Regional Water Cost of Service → Source of Supply → Treatment → Transmission → Pumping → Metering → Billing & Collection → Residential → General Service → Residential Irrigation → General Irrigation → University → Wholesale Customer Classes Cost Functions

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

4 Wastewater Treatment Plant (WRCRWTP) has not been approved by the state for reclaimed water. The City currently supplies non-potable water through the reclaimed water system to City parks and parkways.

Our project team has assisted several communities with the establishment of reclaimed water rates during the startup phase of the utility. The specific tasks identified below recognize the startup nature of the reclaimed water system.

Task 4: Reclaimed Water Cost Determination
Our project team will work with the City to identify the current and future costs associated with providing reclaimed water service. The cost determination will include estimates of costs associated with treatment, pumping, storage, and transmission of reclaimed water. The costs will be loaded into our revenue sufficiency and financial planning module to develop multi-year financial management plan for the reclaimed water enterprise fund, including projected annual revenue requirements.

Task 5: Estimate of Potential Demand and Usage
In order to evaluate reclaimed water rates for the City it will be necessary to develop an estimate of the potential demand for reclaimed water service within the City. Our project team will work with the City to identify the potential demands by various classes of customers within the City (typically retail and bulk/wholesale). Based on our experience, it is fairly common for a new reclaimed system to initially serve bulk customers for a period of time prior to transitioning to serving retail customers given the additional infrastructure that is often required to provide retail service.

Task 6: Cost of Service Allocation Analysis
The annual revenue requirements identified in Task 4 will be functionalized and distributed to the potential customer classes identified in Task 5. The cost allocation process will be based on the costs associated with serving the potential customer classes. For example, bulk customers would be allocated treatment and transmission costs, but storage and pumping costs may be excluded if bulk customer have onsite storage facilities. Additionally, the task will identify the fixed and variable cost components related to providing reclaimed water service.

Task 7: Level of Cost Recovery and Rate Design
When the revenue requirements have been identified, and the cost allocation has been complete, we will develop reclaimed water rates. The key considerations for the development of the reclaimed water rates will include:
 The level of reclaimed water service cost recovery (it is fairly common for a reclaimed water system to not fully recover the cost of providing reclaimed service)  The potential structure of fixed fee for reclaimed service  The development of the variable rate structure
Our project team will work with the City Staff to evaluate the level of cost recovery and to evaluate the various rate structure options. Based on the evaluation of the various options, recommended reclaimed water rates will be developed.

Work Element III: Deliverables
Task 8: Rate and Bill Comparisons
We will provide a comparison of water, sewer and reclaimed water rates and sample customer bills for comparable and surrounding utilities.

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

5 Task 9: Reports and Presentations
At the conclusion of the study we will prepare written reports of the analysis that will detail the analysis, conclusions and recommendations of the study. We will first prepare a draft report, provide to City staff for comment, and then incorporate any edits into a final report. Additionally, we will present the results at three meetings including one public workshop with Streets, Trails and Utilities Committee, one public workshop with City Council, and a final public hearing to adopt the new rates. The presentations are critical not just to comply with Prop 218 noticing requirements, but also to generate acceptance of the study recommendations. Additional presentations can be provided, as requested.

It is important to note that we do require the City to sign a usage and non-disclosure agreement in order to protect the propriety nature of our financial model and to allow for our review of the model to ensure its accuracy for the City’s protection. Within the agreement, we also typically identify the parameters for any future module maintenance assistance, updates, and support services the City may desire to ensure its future beneficial use of the modules. Upon request, we can provide a sample agreement used with another of our clients.

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

6 3. QUALIFICATIONS
The Stantec community unites more than 22,000 employees working in over 400 locations across the globe. Our local strength, knowledge, and relationships, coupled with our world-class expertise, have allowed us to go anywhere to meet our clients’ needs in more creative and personalized ways. With longterm commitment to the people and places we serve, Stantec has the unique ability to connect to projects on a personal level and advance the quality of life in communities across the globe.

Stantec Inc. is a publicly traded entity listed on the New York Stock Exchange (Symbol: STN) and the Toronto Stock Exchange (Symbol: STN). We are required to be financially stable in order to maintain these listings and we are required to adhere to the Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission “(2013 framework)” (the COSO criteria). We are subject to ongoing independent audits that prove our financial stability and credit worthiness.

Our Financial Services Practice offers
35+ consultants with over 400 years
of combined experience and value to
your project. As a group, we work
together and learn from each other’s
experiences. This combination of
diverse backgrounds and experiences
has made us who we are today – a
trusted source to our clients in
providing independent and
objective financial management
services to local governments and
utilities throughout the country.

This knowledge sharing and expertise
will be brought to you as well. You can
be assured that our team will develop
comprehensive and balanced
solutions tailored for your situation.

As a multi-disciplinary firm, Stantec
has the unique depth of resources
and diversity of subject matter
expertise to ensure that any
unanticipated needs can be met
during the study.

FINANCIAL SERVICES OFFERINGS
Rate Studies
 Water/Sewer/Reclaimed
 Solid Waste & Recycling
 Stormwater
 Electric / Gas
Cost-of-Service Analysis
 Wholesale/Outside-City rates
 Interlocal Agreements
 Regionalization Studies
 Customer Class Allocations
Financial Planning & Capital Funding
 Policies, Targets & KPI’s
 Bond Feasibility Studies
 Demand Forecasting
 Project Funding Strategies
System Development Fees/Capacity Fees
 Utilities & Other Services
 Expert Witness Services
 Fee/Charge Structure
 Development Policies
Benchmarking
 Database of 500+ Entities
 Audited Financials & Rates
 Audited financial statements
 Custom Group Comparisons
Affordability
 Actual Bills & Incomes
 Multiple Metrics & Thresholds
 Regulatory Support
 Assistance Programs
Strategy & Management
 IT Planning & Implementation
 Strategic Plans
 Business Process Mapping
 Assessment Management
 O&M and CIP Optimization
 Performance Measures
 Level of Service Development
 Real Estate Advisory Services

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

7 Stantec is uniquely qualified to perform the requested services because of the long history of experience in financial services focused on utilities and local government. Our team has helped nearly 350 communities – including over 30 in California. It may be useful to note that while we are a dedicated financial services practice, we are part of a larger water group in Stantec that supports the operations and design of water, wastewater, and stormwater utilities. We have a global engineering firm as a resource for any technical support needed during the study.

We currently have hundreds of contracts with California local government clients.

We are proposing an integrated and well-rounded project team of financial consultants. Our financial consulting team includes experts in the field of water and sewer rate design, cost of service, and the requirements for implementing rates in accordance with California law, namely Propositions 218 and 26. Our experienced staff have depth and breadth of knowledge, backgrounds working with utilities to develop financial plans, and design rates and fees as requested by the District. Stantec’s team of financial and management consultants are recognized industry experts having contributed to all major publications and reference materials. We have also conducted rate training classes for AWWA, WEF, Michigan State University, the Carl Vinson Institute of Government, and private professional training organizations.

Our senior team members are contributing authors to the leading industry publications on water and wastewater rates, and routinely give presentations and teach classes on water resources utility ratemaking across the country. The leaders in Stantec’s Financial Services team are widely recognized as experts in the municipal rate consulting industry, and have:
 Contributed to AWWA’s primary water rate manual M-1
 Contributed to WEF’s wastewater rate Manual of Practice No. 27  Contributed to AWWA’s alternative rate manual M-54
 Contributed to AWWA’s capital financing manual M-29
 Contributed to AWWA’s cash reserve policy report
 Conducted training for Michigan State University’s Ratemaking Class
 Served as chair to AWWA’s Rates and Charges Committee  Provided testimony and expert witness services
We have structured our project team with members who are particularly strong in the following areas:
 Multi-Year Financial Management Plans. Our financial planning platform was designed for systems of similar size operated by local government agencies, and include capital planning, operations, and maintenance expense budgeting, grant and debt financing, and financial management targets and reserve policies.

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

8  Cost-Based Rates. We develop rates that reflect clear allocations of cost to customers based on valid criteria and usage characteristics. Our approach yields fair and equitable rates by customer class that meet the proportionality requirements of Proposition 218.  Robust and Defensible Rate Design. Stantec leads the industry in rate structure concepts that address specific local policy objectives including conservation, affordability, and revenue stability, while conforming to accepted industry practice and legal precedent.  Reserve Policy. Our team members work closely with utilities across the country to craft reserve policies that provide resilience from financial shock due to unexpected infrastructure failure, natural disaster, drought, and changes in the local economy.
 Communication. We pride ourselves on clear, concise communication with and on behalf of our clients. Public support for rate changes depends on if the public perceives the rates as fair. This perception depends on, among other things, the clarity of our presentations and discussions at public meetings.

We have selected a team of committed and highly experienced firm personnel for this project. We have team members who will dedicate a significant portion of their time to independent quality assurance and quality control (QA/QC) reviews, in order to provide internal auditing of the work products we prepare for the City.

4. PERSONNEL
We have carefully selected our proposed project team with members that are experienced in each service requested by the City. Summary biographies of our project team are provided below, with full resumes provided in Appendix A.

David Hyder
Project Director
David has over 20 years of professional experience,
and he specializes in assisting public sector clients
with the financial and managerial aspects of
environmental infrastructure. David brings
experience applying engineering, environmental and
financial expertise to a broad range of projects for
clients. He is currently serving on the AWWA Rates
and Charges Committee, and is actively involved in
an update to AWWA Manual M1 – Principles of
Water Rates, Fees and Charges.

Specialist Skills
 Innovative Rate/Fee Design
 Design of Financial
Management and Rate
Programs
 Development of Assessment
Program Methodologies
 Rate Regulation Assistance
Tracey Moher
Project Manager
Tracey is a Managing Consultant with eleven years
of experience. She has developed several types of
financial models has also gained strong financial,
business and analytical skills that she applies to
support the services provided by Stantec. She has
worked in multiple states for clients ranging in size
from 200 to 500,000 accounts. Prior to her
management consulting career, she worked for a
financial consulting firm in the Baltimore area.

Specialist Skills
 Long-Term Financial Plan
Development
 Cost of Service Rate Studies
 Customer, Demand, and
Revenue Forecasts
 Stakeholder
Outreach/Education

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

9 Andrew Burnham
Technical Advisor
Andy is a leader in our industry and has provided
exemplary professional consulting services to our
clients for many years. Andy has extensive
experience in utility financial planning, cost
allocation, and rate development, during which he
has been recognized as an industry expert as part
of utility rate-related regulatory proceedings in
multiple states and territories. He has personally
conducted/managed over 500 similar studies for
local governments.

Specialist Skills
 Long-Term Financial Plan
Development
 Cost of Service Analysis
 Stakeholder Communication
 Bond Feasibility Reports &
State Loans
 Assistance with the
Preparation of Ordinances
Ben Stewart
QA/QC Advisor
Ben is a California-based management consultant
who bridges the disciplines of financial analysis, rate setting and strategic planning. He has performed
dozens of water, wastewater, and recycled water
rate studies in California and is a published author
and expert in Proposition 218 and all of California’s
legal requirements regarding utility rates.

Specialist Skills
 Expert in Prop 218
 Cost-of-Service Studies
 Rate Design
Loriza Khan
Project Consultant
Loriza is a California-based Financial Analyst with
five years of experience in populating and
customizing financial planning, cost allocation, rate
design, impact fee, and miscellaneous service fee
modules of our modeling system. She has superior
financial, business and analytical skills and has
provided our clients with exemplary financial
analysis based on application of sound financial and
economic concepts.

Specialist Skills
 Long-Term Financial Plan
Development
 Development of Impact Fees
 Development of Capital
Finance Plans

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

10 5. EXPERIENCE
Our expertise helped communities across the globe–including over 350 diverse locations in the United States alone. The map below presents our extensive experience in providing similar studies throughout the country.

We have conducted rate studies throughout the country and have helped over 350 utilities to refine or restructure their rates to improve equity, efficiency, and transparency. We have included detailed descriptions of a few select projects on the following pages to demonstrate our experience and expertise, while the table below summarizes the wealth of our team’s California specific project experience. Note that all projects listed were completed within the past 10 years.

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

11 This table presents a selection of our
experience in providing a full suite of
financial consulting services to clients
throughout California. Revenue Requirements Cost of Service Analysis Rate Structure Development Capacity Charges/Impact Fees Miscellaneous Fees & Charges Affordability Analysis/WARI TM Debt Issuance Support Capital Project Funding Grant & Loan Funding Services Custom Model & Tool Development Financial Policies & Benchmarking Public/Stakeholder Engagement Demand Forecasting Ordinance /Agreement Assistance Asset Management Services CA Casitas Municipal Water District ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ CA Christian Valley Park Community
Services District
▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA City of Auburn ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA City of Anaheim, Water ▪
CA City of Bakersfield ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA City of Berkeley ▪ ▪ ▪ ▪
CA City of Ceres ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA City of Coachella ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA City of Fresno ▪ ▪
CA City of Greenfield ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA City of Jackson ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA City of Lodi ▪
CA City of Manteca ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA City of Merced ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA City of Norco ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA City of Palm Springs ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA City of Richmond ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA City of Ridgecrest ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA City of Sacramento ▪ ▪ ▪ ▪ ▪ ▪
CA City of San Diego ▪ ▪ ▪ ▪ ▪ ▪
CA City of Santa Ana ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA City of Whittier ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA Coachella Valley Water District ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ CA East Bay Municipal Utility District ▪ ▪
CA Fullerton ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA Indian Wells Valley Water District ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ CA Moulton Niguel Water District ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA Needles Public Utility Authority ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA Ross Valley Sanitation District ▪ ▪ ▪ ▪ ▪
CA San Andreas Sanitary District ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA Santa Clara Valley Water District ▪ ▪
CA Soquel Creek Water District ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
CA Western Municipal Water District ▪ ▪ ▪ ▪ ▪ ▪
CA Whittier Water Authority ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

12 6. REFERENCES
This section presents current or recently completed projects. Within each description, we have included details of the project team members assigned to the project as well as reference contact information.

Dates of Services: 2018 – 2019
Project Team: David Hyder, Ben Stewart
Client Contact: Kyle Cason, Director of
Public Works
Whittier Utility Authority / City of Whittier
13230 Penn Street, Whittier, CA 90602
(562) 567-9500
[email protected]
Contract Amount: $105,000

WATER AND SEWER RATE STUDY & ANALYSIS
Whittier Utility Authority, California
Located approximately 12 miles southeast of Los Angeles, the City of Whittier is a predominantly residential community with a population of approximately 87,400 people. The City engaged Stantec to update its water and sewer user rates, and to update the water connection fee and develop a new connection fee for the sewer utility.

This project focused on helping the City become well positioned financially over the next five to ten years to provide ongoing operations while largely cash funding their utility capital improvement programs. Much of the City’s water and sewer infrastructure was built in the 1950s during a post WWII construction boom. Now the City’s utility infrastructure is ageing and in need of repair and replacement. In addition, the City wishes to continue to provide the same level of utility service to new development within the City, and therefore must fund and construct infrastructure projects to serve incoming residents and businesses without burdening existing rate payers.

Stantec’s work with the City included development of a 10-year financial forecast using Stantec’s FAMS modeling framework. Of key interest to the City was the ability to evaluate capital planning scenarios, flexing key variables including annual pipe replacement, operating and capital reserve development, and a combination of capital financing alternatives. This process of scenario analysis allowed the City to start with a project wish list, and then adjust and revise capital improvement programs to prioritize certain projects and maintain their stated planning goals and targets.

Stantec worked with the City to complete an updated cost of service analysis to account for new cost-drivers and help customer classes adequately reflect the needs of the City. Following completion of this COS study, Stantec developed a revised rate structure, focused on providing revenue stability while maintaining the ability to promote conservation and affordability. Stantec also prepared the utility connection fee analyses and recommended updated fees.

Stantec assisted the City in communicating the need for updated rates and fees to the City Council and community of rate payers. New rates and charges were adopted in June of 2019.

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

13 Dates of Services: 2018 – ongoing
Project Team: David Hyder, Sally Van
Etten, Ben Stewart
Client Contact: Rudy Rosas
Senior Civil Engineer, City of Santa Ana
220 S. Daisy Ave., M-85,
Santa Ana, CA 92703,
(714) 647-3379,
[email protected]
Contract Amount: $160,025

COMPREHENSIVE WATER, RECYCLED WATER, AND

SANITARY SEWER RATE STUDY
City of Santa Ana, California
The City of Santa Ana, located in Orange County CA provides water, recycled water, and sewer services to a population of approximately 334,000. The City wished to review the cost basis for existing rates and establish a long-term financial plan that would allow them to proactively repair and replace capital infrastructure. Similar to other utilities in California, the water demand in Santa Ana has declined for a myriad of reasons. Our team worked with the City to develop updated water, recycled water, and wastewater rates for the City to recover projected operating cost increases; continue to repair and replace aging infrastructure; enhance financial stability of the utility; avoid the depletion of reserves; and comply with state and federal regulatory and legal requirements.

Stantec has worked with the City to establish a long-term/ten-year financial plan for each enterprise fund. As part of this effort, the project team assisted the City to evaluate multiple capital improvement scenarios and funding strategies. Our team has also worked with the City to review and update cost-of-service analysis to support equitable rates and fees. The recommended rate structure was designed for compliance with Proposition 218, enhancement of revenue stability, and both maintenance and enhancement of affordability for customers.

To augment the City’s messaging of the proposed rates, our team developed Proposition 218 mailers in multiple languages, developed a proposed rate increase website, and developed a rate survey for the water and wastewater enterprises. These deliverables allowed for the rate payers to understand the proposed rates, what services they are paying for, why they are needed, and how the resulting rates compare to other communities in the area.

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

14 Dates of Services: 2019 – 2020
Project Team: David Hyder, Ben Stewart,
William Zieburtz
Client Contact: Richard Lou, Principal
Management Analyst
(510) 287-0399
[email protected]
Contract Amount: $74,700

WATER SYSTEM CAPACITY CHARGE STUDY
East Bay Municipal Utility District, Oakland, California The East Bay Municipal Utility District (EBMUD) is a public utility district which provides high quality water to approximately 1.4 million customers in the east bay communities of the San Francisco bay area. Among the chief challenges facing EBMUD are the needs to serve a rapidly growing community that is redeveloping old neighborhoods with new housing stock (especially multifamily housing redevelopment), and the need for additional investment to enhance EBMUD’s resilience to drought.

EBMUD utilizes Water System Capacity Charges (SCC) to recover appropriate shares of the costs of water distribution and water supply investments from new customers. The SCC program works in the same way as comparable programs in that it provides a mechanism to minimize the impacts of growth on the existing customer base. But EBMUD’s SCC program differs from many other fee programs in that it recognizes differences in typical demand profiles and capacity costs across geographic sub-areas. EBMUD has been collecting SCCs since 1983. SCC fee schedules have been increased annually based on a construction cost escalation factor for over a decade. EBMUD engaged Stantec in 2019 to conduct a comprehensive review of the existing SCC fee methodology, followed by an analysis to re-establish the cost basis of the fees to ensure they adequately fund the cost to provide water infrastructure to serve future development.

The ongoing SCC Study includes a comprehensive review of the methodology employed to calculate SCCs, as well as all procedures used to assess SCCs to individual applicants, with a particular focus on the justification and feasibility of adjusting the fee schedule to reflect lower the demand profiles of smaller multi-family residential units or other low water use situations. The water industry appropriately relies on “equivalent unit” approaches to manage multiple types of capacity related charges; EBMUD’s interest in the potential to reflect the reduced demand characteristics of small residential units created an opportunity for Stantec to support the District in a fresh and comprehensive analysis on this issue of increasing importance to many utilities.

The ongoing study also includes analysis of enhanced water demand records and updated projections to better understand peak and seasonal water demand patterns, and to reflect that knowledge in EBMUD’s SCC schedule. Seasonal demands and drought year water supply considerations are tremendously important in determining costs of water supply and infrastructure establishment, yet most capacity charge programs lean heavily on comparatively generic average daily demands. Recognition of individual peaks or seasonal or drought condition demand factors could have the potential to contribute to the development of a “next level” of beneficial differentiation and specificity in the allocation of costs to different types of new customers, as well as a meaningful enhancement in the equitable recovery of these costs through refined SCC approaches.

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

15 INDEPENDENT WATER AND WASTEWATER RATE REVIEW
City of San Diego, California
Ongoing upward pressures on rates, combined with changes in the City’s utility cost structures and complex state requirements, led the City of San Diego to create an independent review function to aid the City in meeting its goal of providing safe and reliable services at the lowest possible costs while improving transparency of the City’s rate development and review processes. Stantec was engaged to provide this independent review function.

The cost-of-service studies conducted by the Public Utilities Department (PUD) and the existing rate consultant were seen by some stakeholders as needing a fresh look from an outside perspective to minimize risk of carrying forward outdated policies, assumptions, and methodologies. The San Diego City Council charged the City’s Independent Budget Analyst (IBA) with the responsibility of managing an explicitly independent review process to address future cost-of-service studies and rate proposals developed by the City’s PUD. The IBA fulfills this role in conjunction with the City’s Independent Rates Oversight Committee (IROC) as the key stakeholder, which serves as an official advisory body to the Mayor and City Council on policy issues relating to City PUD’s operations, financial management, and rate setting practices.

The complexity and difficulty of creating a meaningful independent review process led the IBA to engage Stantec to provide clear, objective, and unbiased analysis and advice regarding proposed rate changes. As is the case for many agencies around the country, the financial requirements for operation, maintenance, and rehabilitation of major systems of urban infrastructure create significant challenges to that specific goal of providing low-cost reliable service. Added to those challenges, the City’s Pure Water Program, a potable water recycling program that will provide one-third of San Diego’s water supply by 2035, as well as a shift in the wholesale water provider’s rate structure toward higher fixed charges will yield changes in the City’s cost structure, increased operational and planning complexity, and burdens that can seem enormously difficult from many perspectives as increases in rates and charges will be necessary.

Dates of Services: 2020 – ongoing
Project Team: Andrew Burnham, Ben
Stewart, William Zieburtz
Client Contact: Angela Colton, Fiscal &
Policy Analyst
202 C St., San Diego, CA 92101
(619) 236-6555
[email protected]
Contract Amount: $200,000

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises 16

7. SCHEDULE
The schedule below is intended to allow for completion of the study in January of 2024. However, in order to accomplish the scope within the desired timeframe, we will need to receive water and sewer system data in a very short timeframe following the award of the contract. As such, we have included an initial data request list for the Water & Wastewater Enterprise Funds in Appendix B of this proposal to begin the data transfer process such that the data could be available shortly after contract approval. If the data requirements cannot be provided in a timely manner, potential delays to the schedule may occur. Our project schedule assumes 3 on-site presentations, in addition to periodic online interactive meetings.

Task 1 Revenue Sufficiency Analysis and Financial
Planning
Task 2 Cost-of-Service Analysis
Task 3 Rate Design
Task 4 Reclaimed Water Cost Determination
Task 5 Review of Potential Demand and Usage
Task 6 Cost of Service Allocation Analysis
Task 7 Level of Cost Recovery and Rate Design
Task 8 Rate and Bill Comparisons
Task 9 Reports and Presentation
Work Element I: Water & Wastewater Enterprise
Work Element II: Reclaimed Water Enterprise Fund
Work Element III: Deliverables
January
City of Norco
Rate Analysis of Water, Wastewater & Reclaimed Water Enterprises Proposed Project Schedule
Tasks August
Month
September October December November

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

17 8. SIGNATURE
Mr. David Hyder has the authority to contract with the City. He can be reached at 1101 14th Street NW Suite 1200 Washington DC 20005, by phone at (443) 538-1175, or via email at [email protected]. Stantec Consulting Services Inc. is in good financial standing and can provide financial statements if requested by the City.

This proposal is a firm offer for a period of 90-days from the date this proposal was submitted. _____________________________________
David Hyder
Senior Principal

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

18 9. ESTIMATE OF CONSULTING FEE
Based upon our understanding of the scope of services requested by Norco, we propose to complete the requested scope of services for a total not-to-exceed fee of $85,255, inclusive of all expenses.

Any additional services requested by the City will be completed at the hourly rates noted in Section 3 below.

1. Labor Allocation
The summary table below demonstrates the labor allocation by task required to complete the requested scope of services, inclusive of all tasks we recommend completing.

2. Expenses
Our cost proposal is inclusive of all out of pocket expenses including, airfare, hotels and administrative costs such as printed materials and overhead costs.

3. Hourly Rate Schedule
The table below represent the hourly rates for each member of our proposed project team.

Hourly Rates
Technical Advisor $375
Project Director $325
Project Manager $250
QA/QC Advisor $250
Project Consultant $160

4. Cost Proposal
The following pages represents the detailed work plan and cost proposal to complete the Water, Wastewater & Reclaimed Water Rate Analysis. Please note that all expenses are included herein.

Task 1 Revenue Sufficiency Analysis and Financial Planning 86 Task 2 Cost-of-Service Analysis 40
Task 3 Rate Design 73
Task 4 Reclaimed Water Cost Determination 17
Task 5 Review of Potential Demand and Usage 16
Task 6 Cost of Service Allocation Analysis 14
Task 7 Level of Cost Recovery and Rate Design 60
Task 8 Rate and Bill Comparisons 6
Task 9 Reports and Presentation 49
Total Estimated Hours 361
Task Hours
Work Element I: Water & Wastewater Enterprise Funds
Work Element II: Reclaimed Water Enterprise Fund
Work Element III: Deliverables

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises 19 $375 $325 $250 $250 $160 Task 1

1.1 0 1 1 1 4 7

1.2 0 1 1 1 2 5

1.3 0 1 1 1 2 5

1.4 0 0 0 0 6 6

1.5 0 0 1 0 4 5

1.6 0 1 1 0 16 18
→ Capital Improvements Program
- Project listing by year
- → Financial Policy Review, including reserve levels (operating, capital, and rate stabilization), capital reinvestment, etc. → Borrowing Program
-
- Timing of bond issue(s)/loan(s) to provide required borrowed funds → Revenue Sufficiency Analysis
- Annual revenue and operations & maintenance expense projections -
-
- 1.7 0 1 1 1 2 5

1.8 Review results with consulting team, make adjustments, and create alternatives scenarios of rate adjustments and CIP spending. 0 1 1 1 4 7

1.9 Meet with City staff in an interactive work session to review preliminary results [Virtual Meeting #1]. 0 2 2 0 4 8

1.10 1 1 1 0 4 7

1.11 Meet with City staff in a second interactive work session to review revised results [Virutal Meeting #2]. 0 2 2 0 4 8

1.12 0 0 0 1 4 5
Task 2 Cost-of-Service Analysis

2.1 0 1 2 0 6 9

2.2 0 1 2 0 8 11

2.3 1 1 2 1 6 11

2.4 0 1 1 0 2 4

2.5 2.6 0 1 1 1 2 5
Revenue Sufficiency Analysis and Financial Planning
-- included in Task 1.11 --
Identify any borrowing required and/or appropriate to fund certain CIP projects, to include but not necessarily be limited to, revenue bonds and state programs.

Perform a detailed review and analysis of historical billed volume and customer data to observe trends in demands, usage patterns and customer growth in order to develop projections of customers and usage for all customer classes.

Evaluate budget versus actual performance (O&M and capital) to determine proper funding levels to include in rate revenue requirements as well as trends in annual expenses to inform future cost escalation factors/assumptions.

Identify potential changes to rate classes, including adding or combining existing rate classes.

Meet with City staff in an interactive work session to review preliminary results [Virtual Meeting #2].

Allocate costs/revenue requirements to functional cost components and then to customer classes based upon appropriate allocation criteria and usage characteristics. Identify any potential customer rate subsidization that may exist as well as impact Projections of other revenue requirements such as R&R, minor capital, transfers, debt service/loan payments, Evaluation of adequacy of revenue provided by existing rates to meet current and projected system requirements Alternative plans of annual percentage rate adjustments to provide sufficient revenues over a multi-year projection Make adjustments as required based upon input from City staff and prepare revised workbook of assumptions and preliminary City of Norco
Rate Analysis of Water, Wastewater & Reclaimed Water Enterprises Project Work Plan and Estimated Hours Schedule
Total
Project Rates →
Project
Manager
QA/QC
Advisor
Project Tasks
Estimated Labor-Hours
Technical
Advisor
Financial
Analyst
Project
Director
Work Element I: Water & Wastewater Enterprise Funds
Perform adjustments, finalize module/resulting allocations based upon input from City staff.

Input current financial and billing data into our financial planning module, run the model, and produce preliminary output, including a five and ten year financial management program that will include the following:

Prepare initial data request list and detailed critical path schedule.

Conduct kickoff conference call with City Staff for data collection and to finalize understanding of study objectives, approach, Compile and review historical, current, and projected financial, and other system data as provided by staff.

Identify all test year costs/revenue requirements associated with the provision of water and sewer service.

Review billing data and existing customer classes to determine recommended customer classes for cost allocation and rate Evaluation of existing and alternative capital improvement programs and funding requirements Make adjustments to the module as required to calibrate to the utility's specific financial dynamics.

Make adjustments as required based upon input from City staff, and prepare workbook of assumptions and preliminary results.

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises 20 $375 $325 $250 $250 $160 Task 3 Rate Design

3.1 1 1 4 0 4 10

3.2 1 1 4 0 4 10
a. b. c. d. e. 3.3 Develop User Fees:
a. Load billing history data into our rate module and create a bill frequency analysis. 0 1 1 1 6 9 b. Conduct a revenue test to ensure accuracy of billing data. 0 0 0 0 2 2 c. 0 0 0 1 3 4
d. Run the model and prepare rate structures that reflect the following considerations: 1 1 1 1 4 8 - Recovery of current and future costs of service in accordance with established and anticipated legal standards and regulations - Project demands of the customer base of the City
- Age and condition of the City's systems
- Funding requirements for all current long-term liabilities and debt requirements - Consistency with industry practice for utility rate making in the region e. 0 1 2 1 6 10 f. Review results with consulting team and adjust as required. 1 2 2 1 6 12 g. Meet with City staff in an interactive work session to review preliminary results [Virtual Meeting #2]. h. 0 0 2 2 4 8
Work Element II: Reclaimed Water Enterprise Fund
Task 4

4.1 1 2 2 1 6 12 →
→
→
→

4.2 0 1 1 1 2 5
Task 5 Review of Potential Demand and Usage

5.1 1 1 1 1 4 8

5.2 1 1 1 1 4 8
Task 6 Cost of Service Allocation Analysis

6.1 0 2 2 1 4 9

6.2 0 1 2 0 2 5
-- included in Task 1.11 --
Conduct a diagnostic analysis of the current utility rate structures (for all classes, including residential, commercial and irrigation) to identify strengths and weaknesses in terms of but not limited to the following criteria:

City of Norco
Rate Analysis of Water, Wastewater & Reclaimed Water Enterprises Project Work Plan and Estimated Hours Schedule
Total
Project Rates →
Project
Manager
QA/QC
Advisor
Project Tasks
Estimated Labor-Hours
Technical
Advisor
Financial
Analyst
Project
Director
Set up the rate model in conformance with the rate design evaluation in Task 3.1 and the cost allocation results of Task Ease of administration and understanding to City staff and customers.

Prepare a customer impact analysis to compare the recommended water and sewer rates for each class of customer and compare those rates to the existing rates.

Perform adjustments, finalize module/resulting rate design adjustments based upon input from City staff.

Reclaimed Water Cost Determination
Estimate potential bulk customer usage based on current non-potable usage and system demands.

Identify all costs associated with producing and delivering reclaimed water to include, but not necessarily be limited to the Allocate all identified costs to those costs associated with providing reclaimed service to potential reclaimed customers.

Estimate retail customer based on system demands and discussions with City Staff.

Review existing rates and rate structure methodologies including the cost distribution to various rate categories, including all Compliance with legal precedent and generally accepted industry practice (national and local).

Fair and equitable distribution of costs to customers in proportion to the benefit received and/or demand placed on the Consistency with community policies and management objectives regarding such things as affordability, conservation, Fiscal stability/risk of the utility.

Treatment costs
Transmission
Allocate costs requirements to functional cost components for reclaimed water and then to customer classes based upon appropriate allocation criteria and usage characteristics.

Other costs as identified during the Study
Pumping and storage costs.

Review the cost allocation spreadsheet with City staff and adjust as appropriate

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises 21 $375 $325 $250 $250 $160 Task 7 Level of Cost Recovery and Rate Design

7.1 0 2 4 4 6 16
a. b. c. d.

7.2 a. 0 1 1 0 4 6
b. 0 1 1 0 4 6
c. 0 1 3 3 6 13
d. 0 1 3 0 4 8
e. 0 1 3 3 4 11
Work Element III: Deliverables
Task 8 Rate and Bill Comparisons

8.1 0 0 0 0 6 6

8.2 Task 9 Reports and Presentation

9.1 1 4 4 2 12 23

9.2 0 1 4 0 0 5

9.3 1 2 2 0 0 5

9.4 0 1 1 1 1 4

9.5 0 4 0 0 0 4

9.6 0 4 0 0 0 4

9.7 0 4 0 0 0 4 TOTAL ESTIMATED LABOR-HOURS 11 58 71 33 188 361 TOTAL ESTIMATED FEE $4,125 $18,850 $17,750 $8,250 $30,080 $79,055 ESTIMATED EXPENSES $6,200 TOTAL NOT-TO-EXCEED FEE $85,255 City of Norco
Rate Analysis of Water, Wastewater & Reclaimed Water Enterprises Project Work Plan and Estimated Hours Schedule
Total
Project Rates →
Project
Manager
QA/QC
Advisor
Project Tasks
Estimated Labor-Hours
Technical
Advisor
Financial
Analyst
Project
Director
Attend final public hearing to adopt rates [On-Site Meeting #3] Develop reclaimed water rates under the selected rate structure:

Prepare a benchmarking of water, sewer and reclaimed water rates for surrounding and comparable utilities.

Make adjustments based upon input from City staff during the interactive work session.

Load all cost, demand and projected usage data into the reclaimed rate model.

Other as identified during the Study.

Usage rate per 1,000 gallons.

Reserved capacity fee.

Meet with City staff to review and discuss the results [Virual Meeting #3]. -- included in Task 7.2d -- Identify alternative rate structures for the provision of reclaimed water service to include, but not necessarily be limited to the Prepare draft report of the results of the study, and provide to City staff for review and comment.

Prepare presentation of the results of the study.

Adjust our interactive rate model to calculate the reclaimed water rates for potential classes of customers as defined in Review results with consulting team and adjust analysis as required.

Conduct an interactive work session with City staff to review the preliminary results. [Virtual Meeting #3] Attend public workshop with City Council [On-Site Meeting #2] Review presentation with City staff and make adjustments as needed.

Attend public workshop with Streets, Trails and Utilities Committee [On-Site Meeting #1] Adjust analysis and prepare final recommendations.

Fixed monthly service charge or minimum usage charge.

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

22 APPENDIX A: RESUMES
Resumes for the proposed project team members, as identified in Section 4 - Personnel, are presented on the following pages:
 David Hyder
 Andrew Burnham
 Ben Stewart
 Tracey Moher
 Loriza Khan

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

23 David is a Senior Principal with Stantec, applying engineering, environmental and financial expertise to a broad range of projects for clients. Mr. Hyder has 25 years of professional experience, and he specializes in assisting public sector clients with the financial and managerial aspects of environmental infrastructure. He has served as a project manager for hundreds of cost of service and rate studies for water, wastewater, storm water, reclaimed water and solid waste utilities, including development of financial plans, cost of service analysis, rate structure design and evaluation, and project reporting. He has also assisted several communities around the country with the establishment of storm water utilities. Mr. Hyder is currently serving on the AWWA Rates and Charges Committee and served as a contributing author for the recent editions of the AWWA Manual M1 – Principles of Water Rates, Fees and Charges, including contributions to the System Development Fee chapter.

Education
Master of Business Administration in Finance, Johns
Hopkins University, Baltimore, Maryland, 2002
Bachelor of Science, Civil / Environmental
Engineering, Michigan State University, East
Lansing, Michigan, 1998
Memberships
Rates and Charges Committee, American Water
Works Association
Publications & Presentations
WEF National Conference: Basics of Water and
Sewer Rates Workshop, September 2012
AWWA National: Declining Revenues and Your Rate
Structure, June 2012
Virginia GFOA: Achieving Utility Rate Sustainability,
August 2010
Chesapeake Section AWWA Annual Meeting:

Setting Rates for Utility Consolidation, August 2009
WE&T Magazine: Rate Setting for Community
Systems, June 2009
Principals of Water Rates, Fees and Charges,
AWWA Manual M1: Contributing Author, Sixth
Addition
Project Experience
City of Norco, California
David served as Project Manager for a
comprehensive water, sewer and recycled water rate
study for the City, including the development of a
financial forecasting model, cost of service analysis
and water rate structure evaluation. A key
component of the study was the identification of an
approach to help stabilize the City’s water system
revenues in light of significant reductions in water
sales due to drought restrictions. Based on our
recommendations, the City has taken several steps
to enhance the revenue stability of the Water Fund
including the adoption of a rate stabilization
reserves, increasing the portion of the revenues
from fixed charges and adoption of drought rates.

East Bay Municipal Utility District, California
David served as the project manager for a
comprehensive water system capacity charge
analysis for EBMUD. The study included the
development and analysis of detailed customer
class usage characteristics and examination of
changes in development patterns to determine an
appropriate structure for charging new customers
joining the water system. The study considered
capacity charges for affordable housing and for “tinyhouse” developments.

David Hyder
Project Director

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

24 Loudoun Water, Virginia
David has provided Loudoun Water with financial
consulting expertise for several years. He has
managed several comprehensive rate and cost of
service studies for the utility as well as conducted
numerous special purpose studies. The most recent
comprehensive plan development included the
development of a plan to finance the construction of
a new water supply Authority including an intake,
reservoir, and the Authority’s own water treatment
plant. Mr. Hyder has assisted Loudoun Water with
the development of financial policies including
establishment of appropriate reserves as well as
comprehensive rate and fee development for water,
wastewater, and reclaimed water.

City of Cleveland, Ohio
David served as the Project Manager responsible for
completion and oversight of five-year financial plan
for Division of Water and Water Pollution Control.

The Study included development of fully
functionalized cost of service, rate structure
evaluation, demand model development and project
reporting.

City of Portsmouth, New Hampshire
David has been engaged with the City of Portsmouth
for several years providing water, wastewater, and
storm water financial consulting expertise. He has
served as Project Manager for the development of
financial plans for the water and sewer systems
including the development of a rate plan to facilitate
the funding of an $80 million upgrade and expansion
of the City’s wastewater treatment plant. Dave also
served as project manager for the completion of a
storm water utility feasibility study for the City in an effort to develop a dedicated funding source for the
City’s storm water system.

City of Olathe, Kansas
David served as the Project Manager for a
comprehensive water, sewer, storm water and solid
waste rate study for the City. The study included the
development of revenue requirements, cost of
service allocations by customer class, and rate
structure design for the City’s four enterprise funds.

Dave managed the development of financial models
for each fund, on a consistent modeling platform that
will allow the City to track and manage the finances
of the funds in the future. As part of the storm water
utility analysis an alternative approach to billing for storm water was developed that transitioned the City
from using gross parcel size to impervious area
resulting in greater equity.

Prince William County Service Authority, Virginia
David is currently serving as Project Director for the
development of a comprehensive reserve policy
review for the Authority. PWCSA currently maintains
four reserve funds including an operating fund,
replacement fund, expansion fund and commitment
fund. Our project team is currently developing a
financial model to assist in the establishment of a
target range for balance for each of the Authority’s
funds. Our project team will also be commencing a
full cost of service and rate study for the Authority
within the next few months.

Toho Water Authority, Florida
David has served as the Project Director for several
engagements with the Toho Water Authority. Most
recently, he assisted with the development of a
water budget-based rate structure for the Authority’s
commercial reclaimed water irrigation customers.

The structure includes irrigation tiers based on
landscaped area for each individual customer. The
structure was recently adopted by the Authority and
is the first of its kind in the State of Florida. David has also assisted with the calculation of the
Authority’s bulk reclaim water rates and a
comprehensive analysis of the utility’s system
development charges.

Orange Water and Sewer Authority, North
Carolina
David has served as Project Manager for several
comprehensive water and sewer rate studies for
OWASA. The studies have included development
of financial plans, detailed cost of service analysis,
rate design and analysis of system development
charges. He is currently engaged with the Authority
to re-examine the Authority’s system development
charges in light of new legislation in the State of
North Carolina pertaining to these fees.

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

25 Andy is the Vice President and Global Practice Leader of Financial Services at Stantec. Andy has extensive experience in conducting as well as overseeing cost-of-service allocations, long-term financial planning analyses, and development of alternative rate structures for a variety of utility systems, including water, wastewater, reclaimed water, stormwater, solid waste, recycling, electric, and natural gas. He has been recognized as an industry expert as part of providing testimony in utility rate-related regulatory proceedings in multiple states and territories (including Florida, Michigan, Arizona, and the United States Virgin Islands), as well as before the Federal Energy Regulatory Commission. He has led well over 500 studies for 150+ local governments and has supported our clients in the issuance of $1 billion of bonds for projects in the past 5 years.

Andy is currently serving on multiple AWWA and WEF Committees and was actively involved in the recent update to AWWA Manual M1 – Principles of Water Rates, Fees and Charges, notably in regard to outside-city retail rates, wholesale rates, and reuse rates. In addition, Andy led the development of the Cash Reserve Policy Guidelines Report recently published by the AWWA and was recently an instructor at the Michigan State University Institute of Public Utilities Advanced Ratemaking Program focused on complex water resources issues.

Education
Bachelor of Business Administration, Lake Superior
State University, Sault Ste. Marie, Michigan, 2000
Memberships
Rates and Charges Committee, American Water
Works Association
Financial Accounting & Management Controls
Committee, American Water Works Association
Management Committee, Water Environment
Federation
Government Finance Officers Association, Florida
Section
Utility Resource Management Committee, National
Association of Clean Water Agencies
Publications & Presentations
Money Matters - Utility Cash Reserves, Journal
AWWA, 2018 (co-author)
Paying for Stormwater - Engaging the Community,
American Public Works Association Annual
Conference (PWX), Orlando, FL, 2017.

Can Conservation Rates be Tied to the Cost to
Serve? American Water Works Association Annual
Conference & Exposition, Philadelphia, PA, 2017.

Reclaimed Water Expansion: An Approach that
Makes Sense, AWWA Annual Conference &
Exposition, Philadelphia, PA, 2017.

Project Experience
Independent Water and Wastewater Rate Review
| City of San Diego, California
Andy is serving as the Project Director in an
engagement with the City of San Diego to assist the
Independent Budget Analyst’s office and provide an
independent review function to aid the City in
meeting its goal of providing safe and reliable
services at the lowest possible costs while improving
transparency of the City’s rate development and
review processes. Stantec is providing technical
assistance to the IBA and the IROC to help the City
make the right decisions, including independent
review of cost of service and rate proposals for
accuracy and compliance with industry practices and
substantive requirements of Proposition 218,
perspective from rate and user charge strategies
used in other communities, analysis in response to
IBA, IROC, or Council questions or comments, input
and innovative solutions as might be beneficial from
other rate proceeding processes, and assistance in
communicating the implications of any proposed
changes in rates. By independently assessing the
accuracy, clarity, and fiscal responsibility and
Andrew Burnham
Technical Advisor

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

26 appropriateness of rate proposals, Andy is helping
the IBA and IROC to build the context needed by
City Council as it contemplates further rate
increases.

Western Area Water Authority | North Dakota
Andy is serving as the Project Manager on a
financial feasibility study for the Authority as required by the 2017 legislature. As part of the study, our
team quantified the amount of excess capacity
available on a locational basis to evaluate the
potential of firm and interruptible service offerings
that would effectively change the Authority’s primary
role to more of a pure wholesaler of water to local
private water companies. The study incorporated
potential revenue from a new concession-based
business model, with the intent of stabilizing cash
flows and achieving financial sustainability to
support continued domestic rural water supply in the
region.

Pinellas County | Florida
Andy has served as the Project Manager for the
County for nearly ten years, including a
comprehensive Water, Wastewater and Solid Waste
Rate Study and several annual updates. During
these studies, Andy has used our FAMS-XL model
to develop ten-year financial plans for the water,
sewer, and solid waste enterprise funds. He has
also conducted a benchmarking analysis, assisted
County staff in evaluating the underlying cost of
operations, and conducted detailed cost allocation
and overhead studies for the Utilities Department.

Brunswick-Glynn County Joint Water & Sewer
Commission | Georgia
Andy has 1) developed annual ten-year financial
management plans for the water and sewer systems
within the JWSC’s two districts, 2) prepared loan and
bond feasibility reports, 3) calculated updated water
and sewer capital tap fees (impact fees) for each
district, 4) calculated public and private fire
protection charges, 5) developed a uniform
conservation rate structure for its two service
districts, and 6) prepared a detailed rate manual that
explains the purpose, intent, and structure of all its
rates and charges.

Town of Gilbert | Arizona
Andy served as the Project Manager for a
comprehensive Water, Sewer, Reclaimed Water,
Environmental Services (Sanitation), and
Stormwater Rate Study (Study) for the Town. As part
of the study, for each utility system, we performed a
revenue sufficiency analysis, detailed cost-of-service
allocation, and rate structure analysis. We
developed several modifications to the Town’s
existing rate structures, notably including a new
inclining block water rate structure. He also
completed a cost allocation study for the wastewater
system and a stormwater rate program feasibility
study.

City of Olathe | Kansas
Andy served as the Project Director for a
Comprehensive Utility Rate Study for the City. For
each service – including Solid Waste, Water, Sewer,
and Stormwater – we developed customized
financial models including ten-year financial plans
and identification of alternative plans of rate
adjustments, reviews of alternative capital spending
and operational scenarios, and other sensitivity
analyses. Andy provided guidance to support the
detailed cost allocation analyses for each fund and
developed alternative rate structures to ensure fair
and equitable rates for each service.

City of Greenfield | California
Andy served as Project Manager during the conduct
of a long-overdue comprehensive water and
wastewater rate study for Greenfield. Rates were
designed to fund the utility’s projected costs of
providing service while proportionally allocating
costs among customers, providing a reasonable and
prudent balance of revenue stability, and complying
with the substantive requirements of California
Constitution Article XIII D, Section 6 (Prop 218).

City of Denton | Texas
Andy led a comprehensive cost-of-service and rate
design study for the City’s water and sewer utilities.

The study included the development of a ten-year
financial management plan, including identification
of annual rate increases, amount, and timing of
required borrowing to fund the capital improvement
program, establishment of proper reserve levels,
and maintenance of adequate debt service coverage
levels. An important component in the study was a
rate stabilization reserve to address the issue of
revenue volatility due to weather conditions and
demand reductions.

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

27 Tracey works as a Managing Consultant in the Financial Services group of Stantec. She has over eleven years of experience managing projects and client relationships related to water, wastewater, stormwater, and solid waste finance and business operations. Additionally, Tracey has worked with clients developing system development fees, and conducting cost allocation plans and miscellaneous fees studies. Tracey’s background in finance and accounting provides a well-rounded understanding of utility operations and capital planning combined with economic evaluations and financial planning. She has managed multiple engagements across the country that involve the development of dynamic financial models related to utility and local government operations, rates, and fees.

Education
Bachelor of Science in Business Administration,
Accounting
University of Pittsburgh, Pittsburgh, Pennsylvania,
2006
Project Experience
City of Greenfield, California
Tracey has served as the project manager for a
water and sewer cost of service and rate study for
the City of Greenfield. The study included the
development of a long-term financial plan for the
City’s water and sewer systems, cost of service
allocations and rate design. Tracey assisted with
the management and completion of all aspects of
the study.

City of Hollywood, Florida
Tracey is currently working with the City on a
revenue sufficiency analysis of their water and
sewer fund. She is also working through a rate
calculation for the large users of the City’s sewer
system and a true-up analysis for previous fees
charged to the large users of the system. The
comprehensive work for the city also includes an
analysis of a bulk water fee to be charged for future
bulk water users of the system.

Village of Downers Grove, Illinois
Tracey assisted the Village in the completion of a
cost-of-service and rate study for the Village’s water
system. The primary goals for the study included
determination of the cost of providing water service,
including funding repair and replacement of the
aging water system, developing appropriate
reserves and development of alternative rate
structures. The Village faced continued increases
for water purchases from the Dupage Water
Commission which supplies all of the Village’s water.

Springfield Water and Sewer Commission,
Massachusetts
Tracey has previously served as the Project
Manager for water and sewer financial planning and
rate design studies for the Commission. The studies
have included the development of both retail and
wholesale water and sewer rates for customers
served within the Commissions serve area.

City of Annapolis, Maryland
Tracey assisted in the completion of a cost of
service and rate study for the City. The study
focused on reinvestment needs and funding for a
new water treatment plant. The study included the
use of a rate study advisory committee consisting of
members of the public, elected officials, business
owners and representatives from the Naval
Academy. The City successfully increased rates
over 100% to meet funding requirements
Tracey Moher
Project Manager

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

28 City of Moline, Illinois
Tracey worked for the City of Moline for several
years completing several water and sewer rate
studies and updates. Rate studies included rate
increases necessary to allow for increased
replacement of buried infrastructure. Ms. Moher
presented findings, conclusions and
recommendations to City Council at the conclusion
of the rate study.

Town of Fuquay-Varina, North Carolina
Tracey is currently serving as the project manager
for a water and sewer financial planning and rate
analysis for Fuquay-Varina. The Town is one of the
fastest growing in North Carolina and the study is
being completed to assist with financial analysis to
support the necessary expansions of the Town’s
water and sewer systems. Tracey is leading the
project including oversight of financial analysts,
project coordination and inactive meetings with the
Town staff.

City of Olathe, Kansas
Tracey worked with the City to update the
comprehensive water and wastewater cost of
service analysis and rate study for this large and
growing community located southwest of Kansas
City, Missouri. Olathe provides water service to
approximately 34,000 water customers and sanitary
sewer service to 28,000 customers. The sanitary
sewer system, which consists of approximately three
hundred-fifty miles of collection system piping,
thirteen sewage lift stations and two wastewater
treatment plants, provides treatment for
approximately two thirds of the City’s population.

The water system includes two treatment plants, the
associated distribution system and raw water
collection wells. The study encompasses a
complete cost of service analysis with an emphasis
on appropriate planning and funding of rehabilitation
and replacement of the City’s water and sewer
infrastructure.

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

29 Benjamin has used his diverse background to successfully lead clients through the process to develop long term financial plans, design cost-of-service based rates, assess affordability impacts to ratepayers, and improve customer assistance programs. Benjamin has also helped clients structure plans for the future through development of fund reviews and benchmarking studies, comprehensive funding strategies, and business case evaluations and feasibility studies of capital investment alternatives. He is currently Stantec’s lead consultant when addressing complex affordability issues with our enhanced WARi™ methodology. His background in engineering and economics provides a well-rounded understanding of utility operations and capital planning that is often integrated into economic evaluations, affordability assessments, and financial planning studies.

Education
MS – Mineral & Energy Economics, Colorado School
of Mines, 2015
MS – Environmental Engineering, University of
Nebraska – Lincoln, 2011
BS – Civil Engineering, University of Nebraska –
Lincoln, 2009
Memberships
Graduate Research/Teaching Assistant, Colorado
School of Mines, 2013-2015
Graduate Research Assistant, University of
Nebraska-Lincoln, 2009-2011
Member – American Water Works Association
(AWWA), 2015
Project Experience
Independent Water and Wastewater Rate Review
| City of San Diego, California
Benjamin is serving as the Project Manager in an
engagement with the City of San Diego to assist the
Independent Budget Analyst’s office and provide an
independent review function to aid the City in
meeting its goal of providing safe and reliable
services at the lowest possible costs while improving
transparency of the City’s rate development and
review processes. Stantec is providing technical
assistance to the IBA and the IROC to help the City
make the right decisions, including independent
review of cost of service and rate proposals for
accuracy and compliance with industry practices and
substantive requirements of Proposition 218,
perspective from rate and user charge strategies
used in other communities, analysis in response to
IBA, IROC, or Council questions or comments, input
and innovative solutions as might be beneficial from
other rate proceeding processes, and assistance in
communicating the implications of any proposed
changes in rates. By independently assessing the
accuracy, clarity, and fiscal responsibility and
appropriateness of rate proposals, Benjamin is
helping the IBA and IROC to build the context
needed by City Council as it contemplates further
rate increases.

City of Sacramento | California
Benjamin is responsible for project management of a
Department of Utilities Storm Drainage Fund
Review, managed by Sacramento’s City Auditor’s
office. The project is intended to provide an
independent review of the Storm Drainage Fund’s
financials in addition to an assessment of their
operations, asset valuation, and capital plan.

Through benchmarking and a detailed review of the
fund’s historical and near-term projected financial
performance, the project will produce a financial gap
analysis to better understand the drivers of historical shortfalls. Using this information, we will develop a
fiscal forecast, incorporating a range of potential
funding options, to provide the City with a detailed
understanding of the options available to meet their
funding needs into the future.

Benjamin Stewart
Project Manager

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

30 Stormwater Funding Analysis | San Diego,
California
Benjamin was responsible for project management,
research, and analysis as Stantec’s team, with Tetra
Tech stormwater engineers, developed a
Stormwater Infrastructure Needs Assessment and
Funding Strategy for the City of San Diego. This
work consisted of developing a historical funding
gap analysis, funding options evaluation, and
stormwater funding roadmap to help the City meet
its stormwater infrastructure investment needs.

Funding options were primarily composed of
enhancing internal revenue sources (fees, transfers,
parking citations), developing new internal revenue
sources (new fees, assessments, special taxes),
grants and loans. Benjamin is currently responsible
for project management and model development in
a subsequent engagement, again partnered with
Tetra Benjamin is currently responsible for project
management and model development in a
subsequent engagement, again partnered with Tetra
Tech, to forecast potential funding options (e.g.
grants, loans, alternative revenues, transfers, etc.),
in addition to creating a long-term planning and
tracking tool that the City can incorporate into its
financial and operations planning process. The
model will integrate with the City’s asset
management and financial/account data systems for
streamlined updating, tracking of plan vs. actuals,
and a central point of contact for operations, capital, and financial reporting.

City of Fullerton | California
Benjamin developed a comprehensive financial plan,
cost-of-service (COS), and rate design study. In
addition to the expiration of the City’s existing rate
ordinance, this project was focused on addressing
the City’s extensive needs for reinvestment in their
buried infrastructure. Development of the 10-year
financial forecast focused on providing the ability to
evaluate capital planning scenarios, flexing key
variables including annual buried pipe replacement,
operating and capital reserve development, and a
combination of capital financing alternatives. The
COS and rate design process enabled the City to
eliminate unnecessary or redundant customer
classes while ensuring an equitable allocation of
costs among customers with differing consumption
characteristics
City of Merced | California
Benjamin oversaw research and analysis of viable in
the establishment of a Special Assessment District
for the City. Specific work consisted of determining
methods of allocating special benefits to parcels
within the district in a defensible manner. As the City planned for continued development, a special
assessment district was desired to fund capital
projects required to provide sewer service to the
new parcels. Our guidance helped define the
parameters of the District. Benefit apportionment
methods compliant with CA Proposition 218 were
identified and proposed to assist in the formation of
the new district.

City of Whittier | California
Benjamin was responsible for overseeing modeling
and spearheading sewer portion of the rate study as
the team worked with the City to develop a politically
viable schedule of rate adjustments, in addition to
structural changes to the way the City charges
customers, ensuring the City can meet ongoing
capital investment needs and introducing a fixed
charge component to the City's sewer rate revenue
stream. Additional analyses were required to
develop a defensible justification for the City's
maximum bill level for residential customers, in
addition to determining the appropriate level of credit to be applied to customers living in private
developments with privately maintained sewer
infrastructure.

City of Omaha | Nebraska
Benjamin served as the lead consultant responsible
for developing, updating, and customizing financial
planning models. Financial plans were developed to
evaluate multiple capital, operating, and financing
scenarios within the City’s CSO program to assess
the impact of debt financing and necessary rate
increases. The financial planning model was
licensed to the City following a training workshop
conducted with City Public Works and Finance
Department staff. Benjamin also led in the
development of a financial capability assessment
(FCA) including a complete WARi™ affordability
analysis to analyze affordability impacts to rate
payers at the census tract level accounting for lowincome assistance programs.

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

31 Loriza works as a Financial Analyst in the Management and Technology Consulting group of Stantec. She has five years of experience in engineering and consultatory services. Loriza has successfully assisted clients in financial forecasting, cost-of-service rate design, and economic evaluations. Her background also includes civil infrastructure design and budgeting, feasibility research and study, business case assessments, and project management.

Education
MBA – Finance Specialization, UCLA Anderson
School of Management, 2023
BS – Civil Engineering, University of California,
Davis, 2016
Memberships
Member – Society of Women Engineers, Student
Chapter (SWE), 2014-2016
Board Chair – American Society of Civil Engineers,
Student Chapter (ASCE), 2015
Project Experience
Strength Based Billing | San Diego, California
Loriza is serving as the financial analyst in an
engagement with the City of San Diego to assist in
the review of cost allocation factors and the
development of an updated rate design. The project
is a multifaceted and cross-functional effort amongst
Stantec’s engineers and internal consulting team.

The development of the revised rate design includes
an in-depth analysis of wastewater treatment
processes, existing billing structures, and impacts of
flow volumes and strengths. Additional research and
investigation are geared towards forecasting
capacity needs. This data-driven approach is
intended to assist the city in efficiently and
effectively identifying and managing cost patterns
and expense allocations.

City of Tallahassee | Florida
Loriza is responsible for the review and analysis of
the City of Tallahassee’s historic and current
financial data, as well as the development of the
associated financial planning models for the city’s
water and wastewater departments. Financial plans
curated by the models are intended to evaluate
various scenarios surrounding capital planning,
anticipated revenues and expenditures, and debt
obligations. These plans will assist in the forecasting of necessary rate increases, the evaluation of debt
financing options, and provide comprehensive
financial reports for long-term tracking. Loriza is
assisting in the both the development and
customization of these models, as well as
subsequent engagement and support to the client.

Las Virgenes Municipal Water District | California
Loriza was responsible for setting up the financial
planning platforms and associated user interfaces
for Las Virgenes Municipal Water District’s water,
sanitation, and reclaimed water enterprises. After a
detailed review of the district’s historical and nearterm performance, the platforms were structured to project the financial dynamics of each enterprise,
inclusive of a range of funding options. Additional
metrics were added to allow the district to
incorporate variable sourcing supply rates and
trends into the model. The project was intended to
provide the client fiscal forecasting capabilities and
to assist in the assessment of their operations and
capital planning.

Loriza Khan
Financial Analyst

Stantec // City of Norco // Rate Analysis of Water, Wastewater, and Reclaimed Water Enterprises

32 APPENDIX B: DATA REQUEST LIST
Water and Sewer Enterprise Funds
Section A: Financial Data (FYE = Fiscal Year Ending)

1. Preliminary/draft Statement of Net Position and ACFR for FYE 2022 (i.e. as of 9/30/22)

2. Un-audited trial balance for FYE 2022 showing detailed distribution of various accounts

3. Actual vs. Budget (in line item detail by division/department) for revenue and expenses. We would like to obtain budget information at the most detailed level available a. FY 18 – FY 22
b. FY 23 (budget and YTD)
c. FY 24 (proposed budget only, if available)

4. Current 5 and/or 10-year CIP Budget, including project descriptions, funding sources, O&M impacts, % expansion, and identification of any prior year appropriations

5. Copy of all wholesale and/or inter-local service agreements, including any billing summaries with monthly historical volumes and charges

6. Current rate resolutions/ordinances that includes all water and sewer fees/charges

7. Debt Information:
a. Current schedules of annual debt service for each outstanding debt, including any revenue bonds, USDA loans, capital leases, bank loans, etc.
b. Copy of official statements for any revenue bonds and agreements (including amendments) for all other loans/leases

8. Current forecast of new developments by type and size from planning or other dept.

Section B: Billing Data

1. # of active customers by meter size for water and sewer as of September 30 for 2018 - 2022

2. 5-year history (FY 18 – 22) of gallons billed and treated for water and sewer by month, plus year-todate data for FY 23

3. Detailed consumption data for FY 2022 in electronic format. Data should include:

Fields for Account information:
a) Unique account number or I.D.
b) Geographic/service area code (inside v. outside City) c) User/Class code (i.e. Single-Family, Multi-Family, Commercial, Wholesale, etc.) d) Meter Information: Number of meters, Size of each meter, Services to each meter (i.e. Water, Sewer, Irrigation, Fire Protection, etc.)
e) Number of dwelling units (if available in billing system) Fields for Monthly Bills:
a) Unique account number or I.D.
b) Year & Month of issue
c) Volume/Consumption billed for each meter
d) Monthly charges for services provided on each meter separated by charge type

4. Documentation identifying all geographic/service area, user/class, rate, and meter size codes to understand values in these fields contained in item #3.

City Council

STAFF REPORT
Date: August 16, 2023 Agenda Item:

2.E.

To: Honorable Mayor and City Council Members
Prepared By: Chad Blais, Public Works Director
Department: Public Works
SUBJECT:

Proposal from Krieger and Stewart Engineering Consultants to provide engineering support services as part of the construction of the the Shawnee Lift Station Replacement Project
RECOMMENDATION:

Accept the proposal from Krieger and Stewart Engineering Consultants to provide engineering support services as part of the construction of the Shawnee Lift Station Replacement Project in the amount of $66,930; and authorize the City Manager to approve contract change orders up to 10 percent of the total bid amount.

SUMMARY:

Krieger and Stewart Engineering Consultants prepared the design plans for the Shawnee Lift Station Replacement Project. The City is now seeking assistance from Krieger and Stewart to provide professional engineering support services for the construction project to review submittals and respond to request for information from the construction contractor. Staff is recommending the City Council accept the proposal from Krieger and Stewart and award a contract in an amount of $66,930.

BACKGROUND:

The Shawnee Lift Station Replacement Project was designed by Krieger and Stewart Engineering Consultants and awarded for construction to Kirtley Construction, Inc. As the engineer of record for the design work, the City is seeking Krieger and Stewarts assistance to provide construction engineering support for the review/approval of submittals for construction and to address any engineering related conflicts that might arise during the project.

Krieger and Stewart provided the City with a proposal to provide engineering support services as part of the Shawnee Lift Station Replacement Project. Staff has reviewed the proposal and determined the overall scope of work and project cost is reflective of the overall needs of the project. Staff is recommending the City Council accept the proposal

from Krieger and Stewart to provide engineering support services as part of the construction of the Shawnee Lift Station Replacement Project and award a contract in the amount of $66,930; and authorize the City Manager to approve contract change orders up to 10 percent of the total bid amount.

FISCAL IMPACT:

The Shawnee Lift Station Replacement Project has sufficient project balance to fund the construction support services in the amount of $66,930 (Project Number 4811.2; 147.960.43250).

RELATIONSHIP TO STRATEGIC PLAN:

Engineering support services for the Shawnee Lift Station Replacement Project is consistent with Strategic Direction #5 – Infrastructure and Asset Management: Ensure timely preservation, replacement, improvement and acquisition of infrastructure and capital assets.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Lisette Free, Finance Director Approved by: Lori Sassoon, City Manager
Approved as to Form: Harper and Burns, LLC, City Attorney ATTACHMENT(S):

Proposal
Contract

KRIEGER & STEWART, INCORPORATED
Mailing Address: 3890 Orange Street #1509, Riverside, CA 92502 Office Address: 3602 University Avenue, Riverside, CA 92501 Tel: (951) 684-6900 • Fax: (951) 684-6986 • www.kriegerandstewart.com December 16, 2022 893-7.8.1A
Chad Blais
City of Norco
2870 Clark Avenue
Norco, CA 92860
Subject: Construction Phase Engineering Services Proposal for Shawnee Lift Station Replacement
Dear Mr. Blais:

We appreciate the opportunity to submit our proposal to provide engineering support services during construction for subject project. We have organized our services into the following components:

Task 1 - Preconstruction Meeting
Task 2 - Respond to Contractor RFI's
Task 3 - Respond to Contractor, City, and Inspector Questions.

Task 4 - Materials and Shop Drawing Submittal Review
Task 5 - Startup and Testing
Task 6 - Prepare Record Drawings
Each construction engineering component is described in detail in the following paragraphs:

1. Preconstruction Meeting
If requested by the City, we will attend the preconstruction meeting. The preconstruction meeting will provide the opportunity for complete review of the essential provisions of Contract Documents by all parties prior to starting work. We will be prepared to respond to questions regarding Contract Document requirements, including special project requirements, sequence of work, scheduling restrictions, welded steel reservoir installation requirements, and completion dates.

2. Respond to Contractor RFI's
We will respond to requests for information (RFIs) and Requests for Clarification (RFCs) from the Contractors regarding the Contract Documents in order to ensure that the improvements and related facilities are constructed in compliance with Contract Documents. We will also prepare clarifications as needed. We will also prepare and maintain RFI/Clarification logs for an ongoing record.

For purposes of this proposal, we have assumed that the contractor will submit up to 20 RFI's, and each RFI response will require 3.0 hours engineer's review time per RFI (including 1.0 hours for Project Engineer and 2.0 hours for Staff Engineer). Clerical hours are based on 0.5 hour per submittal.3 hours of an engineer's time and 0.5 hours of support staff time.

Chad Blais
December 16, 2022

3. Respond to Contractor, City, and Inspector Questions Throughout the course of construction, our Design Engineer will respond to inquiries regarding the Contract Documents in order to ensure that the project is constructed in compliance with Contract Documents.

We will respond to requests for information (RFIs - see Task 2 above) and Requests for Clarification (RFCs) from the Contractor, City staff, and Inspector regarding the Contract Documents in order to ensure that the improvements and related facilities are constructed in compliance with Contract Documents.

For the purposes of this proposal, we have assumed the Project Engineer will dedicate 1 hour per week for the 26 week construction period.

4. Materials and Shop Drawing Submittal Review
We will review Contractor materials and shop drawing submittals (submittals) to ensure compliance with the Contract Documents. We expect submittal documents to be received for all construction materials and equipment.

Once received, submittal documents will be reviewed for completeness and compliance with the contract documents. Our review will include preparation of a Submittal Review Comments Sheet, which will inform the contractor whether the submittal is acceptable or not. For submittals that are not acceptable, the Submittal Review Comments Sheet will include detailed instruction to the contractor on what information or revisions are required on the re-submittal to obtain acceptance.

We will provide a digital pdf copy of each submittal and associated Submittal Review Comments Sheet to the City and the Contractor, and retain two copies of same (one for our inspector and one for our files).

We will prepare and maintain a detailed submittal log for an ongoing record of: submittal numbers, dates received and returned, quantities received and returned, descriptions, manufacturers, actions taken, and other comments as necessary. Said submittal log will be available for transmittal to City at any time.

For purposes of this proposal, we have assumed submittal review will require reviewing and approving 50 submittals and re-submittals at an average of 2.5 hours engineer's review time per submittal (including 0.5 hours for Project Engineer and 2 hours for Staff Engineer). Clerical hours are based on 0.5 hour per submittal.

5. Startup and Testing
The Contract Documents require the Contractor to provide startup, performance testing, and system validation of all equipment and components. Contract Documents also require the field services of manufacturer's representatives to perform equipment pre-startup checkouts, certify proper equipment installation, and assist City and Contractor during performance of startup and testing.

Chad Blais
December 16, 2022

During startup, we will provide a construction engineer with electrical, controls, and instrumentation experience to observe and record the Contractor's startup activities. During startup, we will verify that all equipment alarm and status signals are properly transmitted from field instrumentation and equipment control panels to the City's SCADA System (via the existing Pump Station RTU). In addition, we will verify that all Chemical Feed Control Panel, OSG PLC, chemical feed pump, and VFD control functions operate in accordance with Specification requirements. Upon completion of startup activities, we will provide the City with a remedial work list (punch list) of items requiring correction.

For the purposes of this proposal, 8 hours of time for the project engineer, and 40 hours of electrical inspectors time to create pre-startup and start-up check lists, and attend pre-startup, startup, and remedial electrical and startup related inspections.

6. Prepare Record Drawings
Once project construction has been completed, we will provide the City with a complete set of record drawings which will reflect the facilities as constructed. The record drawings will be prepared in AutoCAD format based on information supplied by the City Inspector and the Contractor. Once the record drawings are prepared, copies will be submitted to City for approval.

Once approved, we will provide the Final Record Drawings to the City in electronic PDF format via email, removable flash drive, and/or CD, as requested by the City.

FEE ESTIMATE
Our estimated fee for providing the above-described engineering services is $66,930. A detailed breakdown is included in attached Table 1 and a copy of our 2023 Fee Schedule is also attached.

Our estimated fee is based on the following understandings and assumptions:

1. Construction administration and inspection will be provided by City staff or others.

2. Meetings beyond those listed in our proposal will be considered additional services, and will be billed on a time and materials basis.

3. We will bill monthly in accordance with the attached fee schedule.

4. Reimbursables include plots, copies, postage, delivery, and mileage, and are estimated at 2% of the total estimated fee.

5. Record drawings will be based on City supplied "as-built" redlined drawings with revisions due to field change orders and RFIs.

Chad Blais
December 16, 2022

Our estimated fee for construction phase engineering services is based on our experience with similar projects; however, our actual fee will depend on the efficiency, competence, and diligence of the Contractor.

If you have any questions or require additional information, please call.

Sincerely,

KRIEGER & STEWART, INCORPORATED
William G. Huffman
WGH/blt
893-7p8p1-Const Pro
Attachments: Table 1 - Estimated Fees for Construction Phase Engineering Services 2023 Fee Schedule

CADD ELECTRICAL
ENGINEER (2) SERVICES (3) INSPECTOR (5) TOTAL
HOURS $ HOURS $ HOURS $ HOURS $ HOURS $ $

1. PRECONSTRUCTION MEETING 4 964 964

2. RESPOND TO CONTRACTOR RFI'S 20 4,820 40 6,920 10 1,220 12,960

3. RESPOND TO CONTRACTOR, CITY, AND INSPECTOR QUESTIONS 26 6,266 6,266

4. MATERIALS AND SHOP DRAWING SUBMITTAL REVIEW 25 6,025 70 19,285 25 3,050 28,360

5. STARTUP AND TESTING 8 1,928 40 7,680 9,608

6. PREPARE RECORD DRAWINGS 4 964 16 2,768 24 3,936 7,668 SUBTOTAL: 87 20,967 126 28,973 24 3,936 35 4,270 40 7,680 65,826 REIMBURSABLES (2%): 1,104
ENGINEERING SERVICES TOTAL: 66,930
KRIEGER & STEWART 2023 FEE SCHEDULE:
(1) SENIOR ENGINEER II @ $241 /Hr
(2) STAFF ENGINEER II @ $173 /Hr
(3) CADD OPERATOR II @ $164 /Hr
(4) STAFF TECHNICIAN II @ $122 /Hr
(5) ELECTRICAL INSPECTOR @ $192 /Hr
ENGINEER (1)

COMPONENT

CITY OF NORCO

SUPPORT
SERVICES (4)
TABLE 1

SHAWNEE LIFT STATION REPLACEMENT

ESTIMATED FEES FOR ENGINEERING SERVICES DURING CONSTRUCTION

PROJECT STAFF
893-7-SLS-Const Pro-Fee.xls (12/16/2023) Page 65 of 231

KRIEGER & STEWART, INCORPORATED

FEE SCHEDULE
2023

CLASSIFICATION
RATES
$/Hr.

Consulting, Design, Construction, Engineering, Environmental, Commissioning, and Surveying Services (Office)
Principal 270.00
Senior III 255.00
Senior II 241.00
Senior I 225.00
Associate III 217.00
Associate II 211.00
Associate I 204.00
Staff III 196.00
Staff II 173.00
Staff I 151.00
Computer Aided Design Services
Operator III 173.00
Operator II 164.00
Operator I 154.00
Surveying Services (Field)
2 Man Crew with Standard Equipment and Survey Truck 313.00 1 Man Crew with Standard Equipment and Survey Truck 242.00 3rd Man on Crew 145.00
Construction Services (Field)
Construction Engineer 217.00
Electrical Inspector 192.00
Construction Inspector:

Regular Time 152.00
Overtime:

Weekdays (8 hours to 12 hours) 181.00
Weekdays (More than 12 hours) 218.00
Saturday (12 hours or less) 181.00
Saturday (More than 12 hours) 218.00
Sunday and Holiday (Holidays: New Year's Day, Memorial Day, Independence Day, Labor Day, Veterans Day, Thanksgiving Day and the Day After, Christmas Day) 218.00
Support Services
Staff Technician III 128.00
Staff Technician II 122.00
Staff Technician I 117.00
Utility Clerk III 92.00
Utility Clerk II 85.00
Utility Clerk I 84.00

KRIEGER & STEWART, INCORPORATED

FEE SCHEDULE
2023
(continued)

CLASSIFICATION
RATES
$/Hr.

Outside Services
Special Consultants and Purchased Services Cost + 15%
Reimbursable Expenses
Vehicle Mileage 0.72 /Mile
Travel and Subsistence, including Air Fare, Ground Fare, and Vehicle Parking Cost Specialized Rental Equipment Cost
Copies, Delivery, Postage, Prints, Telephone, and Sundry Charges Cost The above rates are subject to change on or about January 1 each year due to salary and cost increases, except for Construction Inspector and Survey Crew rates which are also subject to change if California Department of Industrial Relations issues new prevailing wage determinations during the course of the year. A gasoline surcharge may be included in response to increased prices; no such surcharge will be included on project invoices without prior notification.

TERMS OF PAYMENT:

Unless charge accommodations have been established beforehand, all accounts shall be prepaid. For accounts having charge accommodations, payment in full shall be made within 30 days of date of invoice. Any amount unpaid within said 30 days will be assessed a service charge of 1-1/2% per month (18% annual percentage rate), with a minimum charge of 1.00. Accounts with a past due balance of 30 days or more are subject, without notice, to credit discontinuance and mechanic's lien or stop notice. If it becomes necessary for Krieger & Stewart to initiate legal proceedings for the collection of any balance due, the action shall be brought and tried in the Judicial Districts wherein Krieger & Stewart offices are located. Client agrees that the court may award reasonable attorney's fees and costs of suit to the prevailing party. 2023-FEES (10/25/2022)

CITY OF NORCO

ENGINEERING SUPPORT SERVICES CONTRACT

FOR SHAWNEE SEWER LIFT STATION REPLACEMENT PROJECT

1. Parties and Date.

This Agreement is made and entered into this 16th day of August, 2023 by and between the City of Norco, a municipal corporation of the State of California, located at 2870 Clark Avenue, Norco, California 92860, County of Riverside, State of California, (hereinafter referred to as “City”) and Krieger & Stewart Engineering Consultants, a corporation with its principal place of business at 3602 University Avenue, Riverside, CA 92501-3331 (hereinafter referred to as “Consultant”).

City and Consultant are sometimes individually referred to as “Party” and collectively as “Parties” in this Agreement.

2. Recitals.

2.1 Consultant.

Consultant desires to perform and assume responsibility for the design services on the terms and conditions set forth in this Agreement. Consultant represents that it is experienced in providing sewer lift station engineering support services to public clients, that it and its employees or subconsultants have all necessary licenses and permits to perform the Services in the State of California, and that is familiar with the plans of the City.

2.2 Project.

Consultant desires to engage the City to render such design services “Services” for the Shawnee Sewer Lift Station Replacement Project (“Project”) as set forth in this Agreement.

3. Terms.

3.1 Scope of Services and Term.

3.1.1 General Scope of Services. Consultant promises and agrees to furnish to the City all labor, materials, tools, equipment, services, and incidental and customary work necessary to provide the Services outlined by the Shawnee Sewer Lift Station Replacement Project. The Project is more particularly described in Exhibit A attached hereto and incorporated herein by reference. All design services shall be subject to, and performed in accordance with this Agreement, the exhibits attached hereto and incorporated herein by reference, and all applicable local, state and federal laws, rules and regulations. The Consultant shall not conduct any work unless provided written direction by the City and cannot be exceeded without written approval of the City.

3.1.2 Term. The terms of this Agreement shall begin at the Notice to Proceed and shall be completed once the Notice of Completion for the construction project has been filed.

Consultant shall complete the Project within the term of this Agreement and shall meet any other established schedules and deadlines.

3.2 Responsibilities of Consultant.

3.2.1 Control and Payment of Subordinates; Independent Consultant. The Services shall be performed by Consultant or under its supervision. Consultant will determine the means, methods and details of performing the Services subject to the requirements of this Agreement. City retains Consultant on an independent Consultant basis and not as an employee.

Consultant retains the right to perform similar or different services for others during the term of this Agreement. Any additional personnel performing the Services under this Agreement on behalf of Consultant shall also not be employees of City and shall at all times be under Consultant’s exclusive direction and control. Consultant shall pay all wages, salaries, and other amounts due such personnel in connection with their performance of Services under this Agreement and as required by law. Consultant shall be responsible for all reports and obligations respecting such additional personnel, including, but not limited to: social security taxes, income tax withholding, unemployment insurance, disability insurance, and workers’ compensation insurance.

3.2.2 Schedule of Services. Consultant shall perform the Services expeditiously, within the term of this Agreement, and in accordance with the Project Timeframe set forth herein.

Consultant represents that it has the professional and technical personnel required to perform the Services in conformance with such conditions. In order to facilitate Consultant’s conformance with the Schedule, City shall respond to Consultant’s Requests in a timely manner. Upon request of City, Consultant shall provide a more detailed schedule of anticipated performance to meet the Project timeframe.

3.2.3 Conformance to Applicable Requirements. All work prepared by Consultant shall be subject to the approval of City.

3.2.4 City’s Representative. The City hereby designates the Director of Public Works, or his designee, to act as its representative for the performance of this Agreement (“City’s Representative”). City’s Representative shall have the power to act on behalf of the City for all purposes under this Agreement. Consultant shall not accept direction or orders from any person other than the City’s Representative or his or her designee.

3.2.5 Consultant’s Representative. Consultant hereby designates Charles Krieger - President, or his designee, to act as its representative for the performance of this Agreement (“Consultant’s Representative”). Consultant’s Representative shall have full authority to represent and act on behalf of the Consultant for all purposes under this Agreement. The Consultant’s Representative shall supervise and direct the Services, using his best skill and attention, and shall be responsible for all means, methods, techniques, sequences and procedures and for the satisfactory coordination of all portions of the Services under this Agreement.

3.2.6 Coordination of Services. Consultant agrees to work closely with City staff in the performance of Services and shall be available to City’s staff, consultants and other staff at all reasonable times.

3.2.7 Standard of Care; Performance of Employees. Consultant shall perform all Services under this Agreement in a skillful and competent manner, consistent with the standards generally recognized as being employed by professionals in the same discipline in the State of California. Consultant represents and maintains that it is skilled in the professional calling necessary to perform the Services. Consultant represents that all employees and subconsultants shall have sufficient skill and experience to perform the Services assigned to them. Finally, Consultant represents that it, its employees and subconsultants have all licenses, permits,

qualifications and approvals of whatever nature that are legally required to perform the Services, including a City Business License, and that such licenses and approvals shall be maintained throughout the term of this Agreement. As provided for in the indemnification provisions of this Agreement, Consultant shall perform, at its own cost and expense and without reimbursement from the City, any services necessary to correct errors or omissions which are caused by the Consultant’s failure to comply with the standard of care provided for herein. Any employee of the Consultant or its sub-Consultants who is determined by the City to be uncooperative, incompetent, a threat to the adequate or timely completion of the Project, a threat to the safety of persons or property, or any employee who fails or refuses to perform the Services in a manner acceptable to the City, shall be promptly removed from the Project by the Consultant and shall not be reemployed to perform any of the Services or to work on the Project.

3.2.8 Laws and Regulations. Consultant shall keep itself fully informed of and in compliance with all local, state and federal laws, rules and regulations in any manner affecting the performance of the Project or the Services, including all Cal/OSHA requirements, and shall give all notices required by law. Consultant shall be liable for all violations of such laws and regulations in connection with Services. If the Consultant performs any work knowing it to be contrary to such laws, rules and regulations and without giving written notice to the City, Consultant shall be solely responsible for all costs arising therefrom. Consultant shall defend, indemnify and hold City, its officials, directors, officers, employees and agents free and harmless, pursuant to the indemnification provisions of this Agreement, from any claim or liability arising out of any failure or alleged failure to comply with such laws, rules or regulations.

3.2.9 Insurance.

3.2.9.1 Time for Compliance. Contractor shall not commence work under this Agreement until it has provided evidence satisfactory to the City that it has secured all insurance required under this section. In addition, Contractor shall not allow any subcontractor to commence work on any subcontract until it has provided evidence satisfactory to the City that the subcontractor has secured all insurance required under this section.

3.2.9.2 Minimum Requirements. Throughout the life of this Contract, Contractor shall pay for and maintain in full force and effect all policies of insurance required hereunder with an insurance company(ies) either (i) admitted by the California Insurance Commissioner to do business in the State of California and rated not less than "A- VII" in Best's Insurance Rating Guide, or (ii) as may be authorized in writing by City Manager or his/her designee at any time and in his/her sole discretion. The following policies of insurance are required:
(i) COMMERCIAL GENERAL LIABILITY insurance which shall be at least as broad as the most current version of Insurance Services Office (ISO) Commercial General Liability Coverage Form CG 00 01 and include insurance for “bodily injury,” “property damage” and “personal and advertising injury” with coverage for premises and operations (including the use of owned and non-owned equipment), products and completed operations, and contractual liability (including, without limitation, indemnity obligations under the Contract) with limits of liability of not less than the following:
$2,000,000 per occurrence for bodily injury and property damage $1,000,000 per occurrence for personal and advertising injury $2,000,000 aggregate for products and completed operations $4,000,000 general aggregate

(ii) COMMERCIAL AUTOMOBILE LIABILITY insurance which shall be at least as broad as the most current version of Insurance Service Office (ISO) Business Auto Coverage Form CA 00 01, and include coverage for all owned, hired, and non owned automobiles or other licensed vehicles (Code 1 Any Auto) with limits of liability of not less than $1,000,000 per accident for bodily injury and property damage.
(iii) WORKERS' COMPENSATION insurance as required under the California Labor Code.

(iv) EMPLOYERS’ LIABILITY insurance with limits of liability of not less than $1,000,000 each accident, $1,000,000 disease policy limit and $1,000,000 disease each employee.
(v) BUILDERS RISK (Course of Construction) insurance in an amount equal to the completed value of the project with no coinsurance penalty provisions. (Only required if the project includes new construction of a building; or renovation of, or addition to, an existing building.)
(vi) CONTRACTORS POLLUTION LIABILITY (Unless waived in
writing by the City Manager or his/her designee in his/her sole discretion, Contractors Pollution Liability is required for all environmental and water remediation work and for all work transporting fuel. Unless waived in writing by the City Manager or his/her designee in his/her sole discretion, Contractors Pollution Liability is also required for demolition, renovation, HVAC, plumbing or electrical (including, without limitation, lighting) work on any structure built prior to the year 1990.) insurance with limits of liability of not less than the following:
$1,000,000 per occurrence or claim
$2,000,000 general aggregate per annual policy period
In the event Contractor purchases an Umbrella or Excess insurance policy(ies) to meet the minimum limits of insurance set forth above, this insurance policy(ies) shall “follow form” and afford no less coverage than the primary insurance policy(ies).

Should this Contract involves any lead based, mold or asbestos environmental hazard, either the Automobile Liability insurance policy or the Contractors Pollution Liability insurance policy shall be endorsed to include Transportation Pollution Liability insurance covering materials to be transported by Contractor pursuant to the Contract.

In the event this Contract involves any lead-based environmental hazard (e.g., lead based paint), the Contractors Pollution Liability insurance policy shall be endorsed to include coverage for lead based environmental hazards. In the event this Contract involves any asbestos environmental hazard (e.g., asbestos remediation), the Contractors Pollution Liability insurance policy shall be endorsed to include coverage for asbestos environmental hazards. In the event this Contract involves any mold environmental hazard (e.g., mold remediation), the Contractors Pollution Liability insurance policy shall be endorsed to include coverage for mold environmental hazards and “microbial matter including mold” within the definition of “Pollution” under the policy.

Contractor shall be responsible for payment of any deductibles contained in any insurance policies required hereunder and Contractor shall also be responsible for payment of any self-insured retentions. Any deductibles or self-insured retentions must be declared to, and approved by, the City Manager or his/her designee in his/her sole discretion. At the option of the

City Manager or his/her designee, either (i) the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects City, its officers, officials, employees and agents; or (ii) Contractor shall provide a financial guarantee, satisfactory to the City Manager or his/her designee in his/her sole discretion, guaranteeing payment of losses and related investigations, claim administration and defense expenses. At no time shall City be responsible for the payment of any deductibles or self-insured retentions.

All policies of insurance required hereunder shall be endorsed to provide that the coverage shall not be cancelled, non-renewed, reduced in coverage or in limits except after 30 calendar day written notice has been given to City. Upon issuance by the insurer, broker, or agent of a notice of cancellation, non-renewal, or reduction in coverage or in limits, Contractor shall furnish City with a new certificate and applicable endorsements for such policy(ies). In the event any policy is due to expire during the work to be performed for City, Contractor shall provide a new certificate, and applicable endorsements, evidencing renewal of such policy not less than 15 calendar days prior to the expiration date of the expiring policy.

The General Liability and Automobile Liability insurance policies shall be written on an occurrence form. The Contractors Pollution Liability insurance policy shall be written on either an occurrence form, or a claims-made form. The General Liability (including ongoing operations and completed operations), Automobile Liability and Contractors Pollution Liability insurance policies shall name City, its officers, officials, employees and agents as an additional insured. All such policies of insurance shall be endorsed so Contractor’s insurance shall be primary and no contribution shall be required of City, its officers, officials, employees and agents.

The Builders Risk (Course of Construction) insurance policy shall be endorsed to name the City as a loss payee. Any Workers’ Compensation insurance policy shall contain a waiver of subrogation as to City, its officers, officials, employees and agents. The coverage(s) shall contain no special limitations on the scope of protection afforded to City, its officers, officials, employees and agents. If Contractor maintains higher limits of liability than the minimums shown above, City requires and shall be entitled to coverage for the higher limits of liability maintained by Contractor.

Claims-Made Policies - If any coverage required is written on a claimsmade coverage form:
(i) The retroactive date must be shown, and must be before the effective date of the Contract or the commencement of work by Contractor. (ii) Insurance must be maintained and evidence of insurance must be provided for at least 5 years after completion of the work or termination of the Contract, whichever first occurs.
(iii) If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a retroactive date prior to the effective date of the Contract, or work commencement date, Contractor must purchase extended reporting period coverage for a minimum of 5 years after completion of the work or termination of the Contract, whichever first occurs.
(iv) A copy of the claims reporting requirements must be submitted to City for review.
(v) These requirements shall survive expiration or termination of the Contract.

Contractor shall furnish City with all certificate(s) and applicable endorsements effecting coverage required hereunder. All certificates and applicable endorsements are to be received and approved by the City’s Risk Manager or his/her designee in his/her sole discretion prior to City’s execution of the Contract and before work commences. Upon request of City, Contractor shall immediately furnish City with a complete copy of any insurance policy required under this Contract, including all endorsements, with said copy certified by the underwriter to be a true and correct copy of the original policy. This requirement shall survive expiration or termination of this Contract.

If at any time during the life of the Contract or any extension, Contractor or any of its subcontractors fail to maintain any required insurance in full force and effect, all work under this Contract shall be discontinued immediately, and all payments due or that become due to Contractor shall be withheld until notice is received by City that the required insurance has been restored to full force and effect and that the premiums therefore have been paid for a period satisfactory to City. Any failure to maintain the required insurance shall be sufficient cause for City to terminate this Contract. No action taken by City hereunder shall in any way relieve Contractor of its responsibilities under this Contract.

The fact that insurance is obtained by Contractor shall not be deemed to release or diminish the liability of Contractor, including, without limitation, liability under the indemnity provisions of this Contract. The duty to indemnify City 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 Contractor. Approval or purchase of any insurance contracts or policies shall in no way relieve from liability nor limit the liability of Contractor, its principals, officers, agents, employees, persons under the supervision of Contractor, vendors, suppliers, invitees, consultants, sub-consultants, subcontractors, or anyone employed directly or indirectly by any of them.

In the event of a partial or total destruction by the perils insured against of any or all of the work and/or materials herein provided for at any time prior to the final completion of the Contract and the final acceptance by the City of the work or materials to be performed or supplied thereunder, the Contractor shall promptly reconstruct, repair, replace, or restore all work or materials so destroyed or injured at his/her sole cost and expense. Nothing herein provided for shall in any way excuse the Contractor or his/her insurance company from the obligation of furnishing all the required materials and completing the work in full compliance with the terms of the Contract.

If Contractor should subcontract all or any portion of the services to be performed under this Contract, Contractor shall require each subcontractor to provide insurance protection in favor of City, its officers, officials, employees and agents in accordance with the terms of each of the preceding paragraphs, except that the subcontractors' certificates and endorsements shall be on file with Contractor and City prior to the commencement of any work by the subcontractor.

3.2.10 Safety. When conducting field work as part of the design project the Consultant shall execute and maintain its work so as to avoid injury or damage to any person or property. In carrying out its Services, the Consultant shall at all times be in compliance with all applicable local, state and federal laws, rules and regulations, and shall exercise all necessary precautions for the safety of employees appropriate to the nature of the work and the conditions under which the work is to be performed. Safety precautions as applicable shall include, but shall not be limited to: (A) adequate life protection and lifesaving equipment and procedures; (B) instructions in accident prevention for all employees and subconsultants, such as safe walkways, scaffolds, fall protection ladders, bridges, gang planks, confined space procedures, trenching and

shoring, equipment and other safety devices, equipment and wearing apparel as are necessary or lawfully required to prevent accidents or injuries; and (C) adequate facilities for the proper inspection and maintenance of all safety measures.

3.3 Fees and Payments.

3.3.1 Compensation. Consultant shall receive compensation, including authorized reimbursements, for all Services rendered under this Agreement at the rates set forth in Exhibit B attached hereto and incorporated herein by reference. Extra work may be authorized, as described below, and if authorized, will be compensated at the rates and manner set forth in this Agreement.

3.3.2 Payment of Compensation. Consultant shall submit to City a monthly itemized statement which indicates work completed by Consultant. The statement shall describe the amount of Services and supplies provided since the initial commencement date, or since the start of the subsequent billing periods, as appropriate, through the date of the statement. City shall, within 45 days of receiving such statement, review the statement and pay all approved charges thereon.

3.3.3 Reimbursement for Expenses. Consultant shall not be reimbursed for any expenses or work completed unless said work was requested and authorized in writing by City.

3.3.4 Extra Work. At any time during the term of this Agreement, City may request that Consultant perform Extra Work. As used herein, “Extra Work” means any work which is determined by City to be necessary for the proper completion of the Project, but which the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Consultant shall not perform, nor be compensated for, Extra Work without written authorization from City’s Representative.

3.3.5 Prevailing Wages. Consultant is aware of the requirements of California Labor Code Section 1720, et seq., and 1770, et seq., as well as California Code of Regulations, Title 8, Section 1600, et seq., ("Prevailing Wage Laws"), which require the payment of prevailing wage rates and the performance of other requirements on "public works" and "maintenance" projects.

If the Services are being performed as part of an applicable "public works" or "maintenance" project, as defined by the Prevailing Wage Laws, and if the total compensation is $1,000 or more, Consultant agrees to fully comply with such Prevailing Wage Laws. City shall provide Consultant with a copy of the prevailing rates of per diem wages in effect at the commencement of this Agreement. Consultant shall make copies of the prevailing rates of per diem wages for each craft, classification or type of worker needed to execute the Services available to interested parties upon request, and shall post copies at the Consultant's principal place of business and at the project site. Consultant shall defend, indemnify and hold the City, its elected officials, officers, employees and agents free and harmless from any claim or liability arising out of any failure or alleged failure to comply with the Prevailing Wage Laws.

3.4 Accounting Records.

3.4.1 Maintenance and Inspection. Consultant shall maintain complete and accurate records with respect to all costs and expenses incurred under this Agreement. All such records shall be clearly identifiable. Consultant shall allow a representative of City during normal business hours to examine, audit, and make transcripts or copies of such records and any other documents

created pursuant to this Agreement. 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 under this Agreement.

3.5 General Provisions.

3.5.1 Termination of Agreement.

3.5.1.1 Grounds for Termination. City may, by written notice to Consultant, terminate the whole or any part of this Agreement at any time and without cause by giving written notice to Consultant of such termination, and specifying the effective date thereof, at least seven (7) days before the effective date of such termination. Upon termination, Consultant shall be compensated only for those services which have been adequately rendered to City, and Consultant shall be entitled to no further compensation. Consultant may not terminate this Agreement except for cause.

3.5.1.2 Effect of Termination. If this Agreement is terminated as provided herein, City may require Consultant to provide all finished or unfinished Documents and Data and other information of any kind prepared by Consultant in connection with the performance of Services under this Agreement. Consultant shall be required to provide such document and other information within fifteen (15) days of the request.

3.5.1.3 Additional Services. In the event this Agreement is terminated in whole or in part as provided herein, City may procure, upon such terms and in such manner as it may determine appropriate, services similar to those terminated.

3.5.2 Delivery of Notices. All notices permitted or required under this Agreement shall be given to the respective parties at the follow address, or at such other address as the respective parties may provide in writing for this purpose:

Consultant:

Krieger & Stewart Engineering Consultants
3890 Orange Street, Suite 1509
Riverside, CA 92502
Attention: Charles Krieger - President
City:

City of Norco
2870 Clark Avenue
Norco, CA 92860
Attention: Director of Public Works
Such notice shall be deemed made when personally delivered or when mailed, forty-eight (48) hours after deposit in the US Mail, first class postage prepaid and addressed to the party at its applicable address. Actual notice shall be deemed adequate notice on the date actual notice occurred, regardless of the method of service.

3.5.3 Cooperation; Further Acts. The Parties shall fully cooperate with one another, and shall take any additional acts or sign any additional documents as may be necessary, appropriate or convenient to attain the purposes of this Agreement.

3.5.4 Attorney’s Fees. If either party commences an action against the other party, either legal, administrative or otherwise, arising out of or in connection with this Agreement, the prevailing party in such litigation shall be entitled to have and recover from the losing party reasonable attorney’s fees and all other costs of such action.

3.5.5 Indemnification.
(a) Indemnification for Professional Liability. When the law establishes a professional standard of care for Consultant's services, to the fullest extent permitted by law, Consultant shall indemnify, protect, defend, and hold harmless CITY and any and all of its officials, employees, and agents from and against any and all losses, liabilities, damages, costs, and expenses, including attorney's fees and costs to the extent the same arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of Consultant, its officers, agents, employees, or subconsultants (or any entity or individual that Consultant shall bear the legal liability thereof) in the performance of professional services under this AGREEMENT. (b) Indemnification for Other than Professional Liability. Other than in the performance of professional services and to the fullest extent permitted by law, Consultant shall indemnify, defend, and hold harmless CITY and any and all of its employees, officials, and agents from and against any liability (including liability for claims, suits, actions, arbitration proceedings, administrative proceedings, regulatory proceedings, losses, expenses, or costs of any kind, whether actual, alleged, or threatened, including attorney's fees and costs, court costs, interest, defense costs, and expert witness fees), where the same arise out of," pertain to, relate to, are a consequence of, or are in any way attributable to, in whole or in part, the performance of this AGREEMENT by Consultant or by any individual or entity for which Consultant is legally liable, including, but not limited to, officers, agent, employees, or subconsultants of Consultant.

3.5.6 Entire Agreement. This Agreement contains the entire Agreement of the parties with respect to the subject matter hereof, and supersedes all prior negotiations, understandings or agreements. This Agreement may only be modified by a writing signed by both parties.

3.5.7 Governing Law. This Agreement shall be governed by the laws of the State of California. Venue shall be in Riverside County.

3.5.8 Time of Essence. Time is of the essence for each and every provision of this Agreement.

3.5.9 City’s Right to Employ Other Consultants. City reserves right to employ other Consultants in connection with this Project.

3.5.10 Successors and Assigns. This Agreement shall be binding on the successors and assigns of the parties.

3.5.11 Assignment or Transfer. Consultant shall not assign, hypothecate or transfer, either directly or by operation of law, this Agreement or any interest herein without the prior written consent of the City. Any attempt to do so shall be null and void, and any assignees, hypothecates or transferees shall acquire no right or interest by reason of such attempted assignment, hypothecation or transfer.

3.5.12 Construction; References; Captions. Since the Parties or their agents have participated fully in the preparation of this Agreement, the language of this Agreement shall be

construed simply, according to its fair meaning, and not strictly for or against any Party. Any term referencing time, days or period for performance shall be deemed calendar days and not work days. All references to Consultant include all personnel, employees, agents, and subconsultants of Consultant, except as otherwise specified in this Agreement. All references to City include its elected officials, officers, employees, agents, and volunteers except as otherwise specified in this Agreement. The captions of the various articles and paragraphs are for convenience and ease of reference only, and do not define, limit, augment, or describe the scope, content or intent of this Agreement.

3.5.13 Amendment; Modification. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing and signed by both Parties.

3.5.14 Waiver. No waiver of any default shall constitute a waiver of any other default or breach, whether of the same or other covenant or condition. No waiver, benefit, privilege, or service voluntarily given or performed by a Party shall give the other Party any contractual rights by custom, estoppel or otherwise.

3.5.15 No Third-Party Beneficiaries. There are no intended third-party beneficiaries of any right or obligation assumed by the Parties.

3.5.16 Invalidity; Severability. If any portion of this Agreement is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect.

3.5.17 Prohibited Interests. Consultant maintains and warrants that it has not employed nor retained any company or person, other than a bona fide employee working solely for Consultant, to solicit or secure this Agreement. Further, Consultant warrants that it has not paid nor has it agreed to pay any company or person, other than a bona fide employee working solely for Consultant, any fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or making of this Agreement. Consultant further agrees to file, or shall cause its employees or subconsultants to file, a Statement of Economic Interest with the City’s Filing Officer as required under state law in the performance of the Services.

For breach or violation of this warranty, City shall have the right to rescind this Agreement without liability. For the term of this Agreement, no member, officer or employee of City, during the term of his or her service with City, shall have any direct interest in this Agreement, or obtain any present or anticipated material benefit arising therefrom.

3.5.18 Equal Opportunity Employment. Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subconsultant, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. Such non-discrimination shall include, but not be limited to, all activities related to initial employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination. Consultant shall also comply with all relevant provisions of City’s Minority Business Enterprise program, Affirmative Action Plan or other related programs or guidelines currently in effect or hereinafter enacted.

3.5.19 Labor Certification. By its signature hereunder, Consultant certifies that it is aware of the provisions of Section 3700 of the California 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 agrees to comply with such provisions before commencing the performance of the Services.

3.5.20 Authority to Enter Agreement. Consultant has all requisite power and authority to conduct its business and to execute, deliver, and perform the Agreement. Each Party warrants that the individuals who have signed this Agreement have the legal power, right, and authority to make this Agreement and bind each respective Party.

3.5.21 Counterparts. This Agreement may be signed in counterparts, each of which shall constitute an original.

3.6 Subcontracting.

3.6.1 Prior Approval Required. Consultant shall not subcontract any portion of the work required by this Agreement, except as expressly stated herein, without prior written approval of City. Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement.

Name of Consultant: Krieger and Stewart Engineering Consultants *By:
__________________________________________
Signature
_________________________________________
Charles Krieger - President
NOTE: SIGNATURES OF CORPORATE OFFICIALS MUST
NOTARIZED.

Attach Certificate of Notary Acknowledgement
OWNER: CITY OF NORCO, a municipal corporation
*By:
_________________________________________
Robin Grundmayer, Mayor
ATTEST:
__________________________________________
Dana Roa, CMC, City Clerk

APPROVED AS TO FORM:
__________________________________________
Colin Burns, City Attorney

Exhibit A
Scope of Work
Shawnee Lift Station Replacement Project
(See Attachments)

KRIEGER & STEWART, INCORPORATED
Mailing Address: 3890 Orange Street #1509, Riverside, CA 92502 Office Address: 3602 University Avenue, Riverside, CA 92501 Tel: (951) 684-6900 • Fax: (951) 684-6986 • www.kriegerandstewart.com December 16, 2022 893-7.8.1A
Chad Blais
City of Norco
2870 Clark Avenue
Norco, CA 92860
Subject: Construction Phase Engineering Services Proposal for Shawnee Lift Station Replacement
Dear Mr. Blais:

We appreciate the opportunity to submit our proposal to provide engineering support services during construction for subject project. We have organized our services into the following components:

Task 1 - Preconstruction Meeting
Task 2 - Respond to Contractor RFI's
Task 3 - Respond to Contractor, City, and Inspector Questions.

Task 4 - Materials and Shop Drawing Submittal Review
Task 5 - Startup and Testing
Task 6 - Prepare Record Drawings
Each construction engineering component is described in detail in the following paragraphs:

1. Preconstruction Meeting
If requested by the City, we will attend the preconstruction meeting. The preconstruction meeting will provide the opportunity for complete review of the essential provisions of Contract Documents by all parties prior to starting work. We will be prepared to respond to questions regarding Contract Document requirements, including special project requirements, sequence of work, scheduling restrictions, welded steel reservoir installation requirements, and completion dates.

2. Respond to Contractor RFI's
We will respond to requests for information (RFIs) and Requests for Clarification (RFCs) from the Contractors regarding the Contract Documents in order to ensure that the improvements and related facilities are constructed in compliance with Contract Documents. We will also prepare clarifications as needed. We will also prepare and maintain RFI/Clarification logs for an ongoing record.

For purposes of this proposal, we have assumed that the contractor will submit up to 20 RFI's, and each RFI response will require 3.0 hours engineer's review time per RFI (including 1.0 hours for Project Engineer and 2.0 hours for Staff Engineer). Clerical hours are based on 0.5 hour per submittal.3 hours of an engineer's time and 0.5 hours of support staff time.

Chad Blais
December 16, 2022

3. Respond to Contractor, City, and Inspector Questions Throughout the course of construction, our Design Engineer will respond to inquiries regarding the Contract Documents in order to ensure that the project is constructed in compliance with Contract Documents.

We will respond to requests for information (RFIs - see Task 2 above) and Requests for Clarification (RFCs) from the Contractor, City staff, and Inspector regarding the Contract Documents in order to ensure that the improvements and related facilities are constructed in compliance with Contract Documents.

For the purposes of this proposal, we have assumed the Project Engineer will dedicate 1 hour per week for the 26 week construction period.

4. Materials and Shop Drawing Submittal Review
We will review Contractor materials and shop drawing submittals (submittals) to ensure compliance with the Contract Documents. We expect submittal documents to be received for all construction materials and equipment.

Once received, submittal documents will be reviewed for completeness and compliance with the contract documents. Our review will include preparation of a Submittal Review Comments Sheet, which will inform the contractor whether the submittal is acceptable or not. For submittals that are not acceptable, the Submittal Review Comments Sheet will include detailed instruction to the contractor on what information or revisions are required on the re-submittal to obtain acceptance.

We will provide a digital pdf copy of each submittal and associated Submittal Review Comments Sheet to the City and the Contractor, and retain two copies of same (one for our inspector and one for our files).

We will prepare and maintain a detailed submittal log for an ongoing record of: submittal numbers, dates received and returned, quantities received and returned, descriptions, manufacturers, actions taken, and other comments as necessary. Said submittal log will be available for transmittal to City at any time.

For purposes of this proposal, we have assumed submittal review will require reviewing and approving 50 submittals and re-submittals at an average of 2.5 hours engineer's review time per submittal (including 0.5 hours for Project Engineer and 2 hours for Staff Engineer). Clerical hours are based on 0.5 hour per submittal.

5. Startup and Testing
The Contract Documents require the Contractor to provide startup, performance testing, and system validation of all equipment and components. Contract Documents also require the field services of manufacturer's representatives to perform equipment pre-startup checkouts, certify proper equipment installation, and assist City and Contractor during performance of startup and testing.

Chad Blais
December 16, 2022

During startup, we will provide a construction engineer with electrical, controls, and instrumentation experience to observe and record the Contractor's startup activities. During startup, we will verify that all equipment alarm and status signals are properly transmitted from field instrumentation and equipment control panels to the City's SCADA System (via the existing Pump Station RTU). In addition, we will verify that all Chemical Feed Control Panel, OSG PLC, chemical feed pump, and VFD control functions operate in accordance with Specification requirements. Upon completion of startup activities, we will provide the City with a remedial work list (punch list) of items requiring correction.

For the purposes of this proposal, 8 hours of time for the project engineer, and 40 hours of electrical inspectors time to create pre-startup and start-up check lists, and attend pre-startup, startup, and remedial electrical and startup related inspections.

6. Prepare Record Drawings
Once project construction has been completed, we will provide the City with a complete set of record drawings which will reflect the facilities as constructed. The record drawings will be prepared in AutoCAD format based on information supplied by the City Inspector and the Contractor. Once the record drawings are prepared, copies will be submitted to City for approval.

Once approved, we will provide the Final Record Drawings to the City in electronic PDF format via email, removable flash drive, and/or CD, as requested by the City.

FEE ESTIMATE
Our estimated fee for providing the above-described engineering services is $66,930. A detailed breakdown is included in attached Table 1 and a copy of our 2023 Fee Schedule is also attached.

Our estimated fee is based on the following understandings and assumptions:

1. Construction administration and inspection will be provided by City staff or others.

2. Meetings beyond those listed in our proposal will be considered additional services, and will be billed on a time and materials basis.

3. We will bill monthly in accordance with the attached fee schedule.

4. Reimbursables include plots, copies, postage, delivery, and mileage, and are estimated at 2% of the total estimated fee.

5. Record drawings will be based on City supplied "as-built" redlined drawings with revisions due to field change orders and RFIs.

Chad Blais
December 16, 2022

Our estimated fee for construction phase engineering services is based on our experience with similar projects; however, our actual fee will depend on the efficiency, competence, and diligence of the Contractor.

If you have any questions or require additional information, please call.

Sincerely,

KRIEGER & STEWART, INCORPORATED
William G. Huffman
WGH/blt
893-7p8p1-Const Pro
Attachments: Table 1 - Estimated Fees for Construction Phase Engineering Services 2023 Fee Schedule

Exhibit B
Compensation for Proposed Scope of Work
(See Attachments)

CADD ELECTRICAL
ENGINEER (2) SERVICES (3) INSPECTOR (5) TOTAL
HOURS $ HOURS $ HOURS $ HOURS $ HOURS $ $

1. PRECONSTRUCTION MEETING 4 964 964

2. RESPOND TO CONTRACTOR RFI'S 20 4,820 40 6,920 10 1,220 12,960

3. RESPOND TO CONTRACTOR, CITY, AND INSPECTOR QUESTIONS 26 6,266 6,266

4. MATERIALS AND SHOP DRAWING SUBMITTAL REVIEW 25 6,025 70 19,285 25 3,050 28,360

5. STARTUP AND TESTING 8 1,928 40 7,680 9,608

6. PREPARE RECORD DRAWINGS 4 964 16 2,768 24 3,936 7,668 SUBTOTAL: 87 20,967 126 28,973 24 3,936 35 4,270 40 7,680 65,826 REIMBURSABLES (2%): 1,104
ENGINEERING SERVICES TOTAL: 66,930
KRIEGER & STEWART 2023 FEE SCHEDULE:
(1) SENIOR ENGINEER II @ $241 /Hr
(2) STAFF ENGINEER II @ $173 /Hr
(3) CADD OPERATOR II @ $164 /Hr
(4) STAFF TECHNICIAN II @ $122 /Hr
(5) ELECTRICAL INSPECTOR @ $192 /Hr
ENGINEER (1)

COMPONENT

CITY OF NORCO

SUPPORT
SERVICES (4)
TABLE 1

SHAWNEE LIFT STATION REPLACEMENT

ESTIMATED FEES FOR ENGINEERING SERVICES DURING CONSTRUCTION

PROJECT STAFF
893-7-SLS-Const Pro-Fee.xls (12/16/2023) Page 86 of 231

KRIEGER & STEWART, INCORPORATED

FEE SCHEDULE
2023

CLASSIFICATION
RATES
$/Hr.

Consulting, Design, Construction, Engineering, Environmental, Commissioning, and Surveying Services (Office)
Principal 270.00
Senior III 255.00
Senior II 241.00
Senior I 225.00
Associate III 217.00
Associate II 211.00
Associate I 204.00
Staff III 196.00
Staff II 173.00
Staff I 151.00
Computer Aided Design Services
Operator III 173.00
Operator II 164.00
Operator I 154.00
Surveying Services (Field)
2 Man Crew with Standard Equipment and Survey Truck 313.00 1 Man Crew with Standard Equipment and Survey Truck 242.00 3rd Man on Crew 145.00
Construction Services (Field)
Construction Engineer 217.00
Electrical Inspector 192.00
Construction Inspector:

Regular Time 152.00
Overtime:

Weekdays (8 hours to 12 hours) 181.00
Weekdays (More than 12 hours) 218.00
Saturday (12 hours or less) 181.00
Saturday (More than 12 hours) 218.00
Sunday and Holiday (Holidays: New Year's Day, Memorial Day, Independence Day, Labor Day, Veterans Day, Thanksgiving Day and the Day After, Christmas Day) 218.00
Support Services
Staff Technician III 128.00
Staff Technician II 122.00
Staff Technician I 117.00
Utility Clerk III 92.00
Utility Clerk II 85.00
Utility Clerk I 84.00

KRIEGER & STEWART, INCORPORATED

FEE SCHEDULE
2023
(continued)

CLASSIFICATION
RATES
$/Hr.

Outside Services
Special Consultants and Purchased Services Cost + 15%
Reimbursable Expenses
Vehicle Mileage 0.72 /Mile
Travel and Subsistence, including Air Fare, Ground Fare, and Vehicle Parking Cost Specialized Rental Equipment Cost
Copies, Delivery, Postage, Prints, Telephone, and Sundry Charges Cost The above rates are subject to change on or about January 1 each year due to salary and cost increases, except for Construction Inspector and Survey Crew rates which are also subject to change if California Department of Industrial Relations issues new prevailing wage determinations during the course of the year. A gasoline surcharge may be included in response to increased prices; no such surcharge will be included on project invoices without prior notification.

TERMS OF PAYMENT:

Unless charge accommodations have been established beforehand, all accounts shall be prepaid. For accounts having charge accommodations, payment in full shall be made within 30 days of date of invoice. Any amount unpaid within said 30 days will be assessed a service charge of 1-1/2% per month (18% annual percentage rate), with a minimum charge of 1.00. Accounts with a past due balance of 30 days or more are subject, without notice, to credit discontinuance and mechanic's lien or stop notice. If it becomes necessary for Krieger & Stewart to initiate legal proceedings for the collection of any balance due, the action shall be brought and tried in the Judicial Districts wherein Krieger & Stewart offices are located. Client agrees that the court may award reasonable attorney's fees and costs of suit to the prevailing party. 2023-FEES (10/25/2022)

GENERAL LIABILITY ENDORSEMENT

CITY OF NORCO
2870 Clark Avenue
Norco, CA 92860
(951) 270-5632
A. POLICY INFORMATION Endorsement # ________________________

1. Insurance Company ____________________________________________ Policy Number _____________________

2. Policy Term (From) _______________ (To)________________ Endorsement Effective Date ______________________________________

3. Named Insured _______________________________________________

4. Address of Named Insured
_____________________________________________________________ _____________________________________________________________

5. Limit of Liability Any One Occurrence/Aggregate
$______________________________ /_____________________________

6. Deductible or Self-Insured Retention (Nil unless otherwise specified):
______________________________________________

7. Coverage is equivalent to:

Comprehensive General Liability Form GL0002 (Ed. 1/73)
______________________________________________
Commercial General Liability “Occurrence” Form CG0001
______________________________________________

8. Bodily Injury and Property Damage Coverage is:
____________________________________”occurrence”
Note: The City of Norco standard insurance requirements specify “occurrence” coverage. “Claims-made” coverage is not acceptable. If commercial general liability form or equivalent is used, the general aggregate must apply separately to this location/project or the general aggregate must be twice the occurrence limit.

B. POLICY AMENDMENTS
This endorsement is issued in consideration of the policy premium. Notwithstanding any inconsistent statement in the policy to which this endorsement is attached or any other endorsement attached thereto, it is agreed as follows:

1. INSURED. As respects any work performed on the above described Project, the City of Norco, its elected or appointed officers, officials, employees, consulting engineers, and volunteers are included as insured with regard to damages and defense of claims arising from: (a) activities performed by or on behalf of the Named Insured, (b) products and completed operations of the Named Insured, or (c) premises owned, leased, or used by the Named Insured.

2. CONTRIBUTION NOT REQUIRED. As respects: (a) work performed by the Named Insured on the above described Project for or on behalf of the City of Norco; or (b) products sold by the Named Insured to the City of Norco for use on the Project; or (c) premises leased by the Named Insured from the City of Norco, the insurance afforded by this policy shall be primary insurance as respects the City of Norco, its elected or appointed officers, officials, employees, consulting engineers, or volunteers; or stand in an unbroken chain of coverage excess of the Named Insured’s schedule underlying primary coverage. In either event, any other insurance maintained by the City of Norco, its elected or appointed officers, officials, employees, consulting engineers, or volunteers shall be in excess of this insurance and shall not contribute with it.

3. SCOPE OF COVERAGE. This policy, if primary, affords coverage at least as broad as:
(1) Insurance Services Office Form Number GL 0002 (Ed. 1/73), Comprehensive General Liability Insurance and Insurance Services Office form number GL 0404 Broad Form Comprehensive General Liability endorsement; or
(2) Insurance Services Office Commercial General Liability Coverage, “Occurrence” Form CG 0001; or
(3) If excess, affords coverage which is at least as broad as the primary insurance forms referenced in the preceding Sections (1) and (2).

4. SEVERABILITY OF INTEREST. The insurance afforded by this policy applies separately to each insured who is seeking coverage or against whom a claim is made or a suit is brought, except with respects to the Company’s limit of liability.

5. PROVISIONS REGARDING THE INSURED’S DUTIES AFTER ACCIDENT OR LOSS. Any failure to comply with reporting provisions of the policy shall not affect coverage provided to the City of Norco, its elected or appointed officer, officials, employees, consulting engineers or volunteers.

6. CANCELLATION NOTICE. The insurance afforded by this policy shall not be suspended, voided, canceled, reduced in coverage or in limits except after 30 days prior written notice by certified mail return receipt requested has been given to the City of Norco. Such notice shall be addressed as shown in the heading of this endorsement.

C. INCIDENT AND CLAIM REPORTING PROCEDURE
Incidents and claims are to be reported to the insurer at:

ATTN:
_____________________________________________________________________ (Title) (Department)
_____________________________________________________________________ (Company)
_____________________________________________________________________ (Street Address)
_____________________________________________________________________ (City) (State) (Zip Code)
______________________________
(Telephone Number)

D. SIGNATURE OF INSURER OR AUTHORIZED REPRESENTATIVE OF THE

INSURER
I, __________________________, warrant that I have authority to bind the below-listed (Print/Type Name)
insurance company and by my signature hereon do so bind this company. ____________________________________________

SIGNATURE OF AUTHORIZED REPRESENTATIVE
(Original Signature required on endorsement furnished to the City of Norco) ORGANIZATION: _____________________________________________________ TITLE: _____________________________________________________ ADDRESS: _____________________________________________________ _____________________________________________________
TELEPHONE: _____________________________________________________

AUTOMOBILE LIABILITY ENDORSEMENT

CITY OF NORCO
2870 Clark Avenue
Norco, CA 92860
(951) 270-5632
A. POLICY INFORMATION Endorsement #_____________________

1. Insurance Company _____________________________________________ Policy Number _____________________

2. Policy Term (From)________________(To) _______________ Endorsement Effective Date ___________

3. Named Insured________________________________________________

4. Address of Named Insured________________________________________

5. Limit of Liability Any One Occurrence/Aggregate
$______________________ /_____________________________________

6. Deductible or Self-Insured Retention
(Nil unless otherwise specified):
$____________________________________________________________ B. POLICY AMENDMENTS
This endorsement is issued in consideration of the policy premium. Notwithstanding any inconsistent statement in the policy to which this endorsement is attached or any other endorsement attached thereto, it is agreed as follows:

1. INSURED. The City of Norco, its elected or appointed officers, officials, consulting engineers, employees and volunteers are included as insured with regard to damages and defense of claims arising from: the ownership, operation, maintenance, use, loading or unloading of any auto owned, leased, hired or borrowed by the Named Insured, regardless of whether liability is attributable to the Named Insured or a combination of the Named Insured and the City of Norco, its elected or appointed officers, officials, employees, consulting engineers or volunteers.

2. CONTRIBUTION NOT REQUIRED. As respects work performed by the Named Insured for or on behalf of the City of Norco, the insurance afforded by this policy shall: (a) be primary insurance as respects the City of Norco, its elected or appointed officers, officials, employees, consulting engineers or volunteers;

or (b) stand in an unbroken chain of coverage excess of the Named Insured’s primary coverage. In either event, any other insurance maintained by the City of Norco, its elected or appointed officers, officials, employees or volunteers shall be in excess of this insurance and shall not contribute with it.

3. SCOPE OF COVERAGE. This policy, if primary, affords coverage to the Named Insured at least as broad as:
(1) Insurance Services Office form number CA 00001 (Ed. 1/78), Code 1 (“any auto”) and endorsement CA 0025.
(2) If excess, affords coverage which is at least as broad as the primary insurance forms referenced in the preceding Section (1).

4. SEVERABILITY OF INTEREST. The insurance afforded by this policy applies separately to each insured who is seeking coverage, or against whom a claim is made or a suit is brought, except with respect to the Company’s limit of liability.

5. PROVISIONS REGARDING THE INSURED’S DUTIES AFTER ACCIDENT OR LOSS. Any failure to comply with reporting provisions of the policy shall not affect coverage provided to the City of Norco, its elected or appointed officer, officials, employees, consulting engineers or volunteers.

6. CANCELLATION NOTICE. The insurance afforded by this policy shall not be suspended, voided, canceled, reduced in coverage or in limits except after 30 days prior written notice by certified mail return receipt requested has been given to the City of Norco. Such notice shall be addressed as shown in the heading of this endorsement.

C. INCIDENT AND CLAIM REPORTING PROCEDURE
Incidents and claims are to be reported to the insurer at:

ATTN:
_____________________________________________________________________ (Title) (Department)
_____________________________________________________________________ (Company)
_____________________________________________________________________ (Street Address)
_____________________________________________________________________ (City) (State) (Zip Code)
____________________________________________________
(Telephone Number)
D. SIGNATURE OF INSURER OR AUTHORIZED REPRESENTATIVE OF THE

INSURER
I, __________________________, warrant that I have authority to bind the below-listed (Print/Type Name)
insurance company and by my signature hereon do so bind this company. ____________________________________________

SIGNATURE OF AUTHORIZED REPRESENTATIVE
(Original Signature required on endorsement furnished to the City of Norco) ORGANIZATION: _____________________________________________________ TITLE: _____________________________________________________ ADDRESS: _____________________________________________________ _____________________________________________________
TELEPHONE: _____________________________________

WORKER’S COMPENSATION/EMPLOYER’S LIABILITY ENDORSEMENT

CITY OF NORCO
2870 Clark Avenue
Norco, CA 92860
(951) 270-5632
A. POLICY INFORMATION Endorsement # ________________________

1. Insurance Company ____________________________________________ (“the Company”)
Policy Number _________________________________________________

2. Effective Date of this Endorsement ________________________________

3. Named Insured_________________________________________________

4. Employer’s Liability Limit (Coverage B)______________________________ _____________________________________________________________ B. POLICY AMENDMENTS
In consideration of the policy premium and notwithstanding any inconsistent statement in the policy to which this endorsement is attached or any other endorsement attached thereto, it is agreed as follows:
(1) Cancellation Notice. The insurance afforded by this policy shall not be suspended, voided, canceled, reduced in coverage or in limits except after 30 days prior written notice by certified mail return receipt requested has been given to the City of Norco. Such notice shall be addressed as shown in the heading of this endorsement.
(2) Waiver of Subrogation. The Insurance Company agrees to waive all rights of subrogation against the City of Norco, its elected or appointed officers, officials, agents and employees for losses paid under the terms of this policy which arise from work performed by the Named Insured for the City of Norco.

C. SIGNATURE OF INSURER OR AUTHORIZED REPRESENTATIVE OF THE

INSURER
I, _______________________, warrant that I have authority to bind the below-listed (Print/Type Name)
insurance company and by my signature hereon do so bind this company.

SIGNATURE OF AUTHORIZED REPRESENTATIVE
(Original signature required on endorsement furnished to the City of Norco) ORGANIZATION: ____________________________________________________ TITLE: ____________________________________________________ ADDRESS: ____________________________________________________ TELEPHONE: ____________________________________________________

City Council

STAFF REPORT
Date: August 16, 2023 Agenda Item:

2.F.

To: Honorable Mayor and City Council Members
Prepared By: Matt Boudreaux, IT Manager
Department: IT
SUBJECT:

Approve Professional Services Agreement and Procurement of Licenses for Arctic Wolf Managed Detection Response Security Services
RECOMMENDATION:

Approve a Professional Services Agreement with Arctic Wolf and CDW-G for Managed Detection and Response (MDR) Security Services in an amount not to exceed $123,557 over a three (3) year term; authorize the City Manager to approve contract change orders up to $3,800 per each Fiscal Year to accommodate for additional licenses for potential growth in staff, servers, and workstations, for a total of $134,957.

SUMMARY:

The IT Master Plan adopted by City Council in July 2022 included a recommendation that the City contract with a Managed Detection and Response (MDR) product to provide constant monitoring of the City’s technology network and hardware. A MDR service would provide the following services on a 24/7/365 basis:
• Alerts and hands on security team for all hardware and networking traffic • Hardware segregation from the network that has been compromised • Consistent review of logs identifying malicious software on the City’s network • Weekly and monthly reviews with City staff to review all alerts and issues • Forensic investigation and breakdown of all intrusions or compromised systems Staff's evaluation determined the Arctic Wolf MDR service offered the best value for the City providing higher cyber risk mitigation at a competitive price.

BACKGROUND:

The IT Department currently manages the City’s cybersecurity posture by reducing and preventing risks to the network, technology devices, and the City’s data. The City maintains a sophisticated approach to cybersecurity including firewalls, identity management, email filtering, anti-virus software, patch management, and staff training.

As cyberattacks are increasingly widespread, the City’s technology infrastructure must be

continuously monitored and analyzed. Entities typically accomplish this through the use of specialized software and highly trained experts in a Security Operations Center (SOC).

A critical element of the SOC is Security Information and Event Management (SIEM), in which specialized software is utilized to continuously monitor system logs and network data, and then correlate and analyze the information to proactively respond to suspected incidents or anomalous events. The SIEM system collects data from all IT infrastructure including firewalls, penetration testing tools, intrusion detection/prevention systems, and anti-virus software.

The challenge of managing effective detection and response includes monitoring and analyzing an enormous amount of data, on a continuous basis, by security engineers.

These security engineers primary focus involves investigating, prioritizing, and responding to incidents in real time. A traditional, on-premises approach involving equipment, software, staffing, and expertise would be cost prohibitive for the City. SOC Services, (SOC-as-a-Service) can be sourced contractually using a Managed Security Services Provider (MSSP).

After conducting research, City Staff found organizations similar in size and scope typically struggle with staffing these needs internally and outsource SOC services to a third party. Arctic Wolf’s MDR solution collects, analyzes, and correlates data from servers, devices, and network traffic and is staffed with security engineers on a 24/7/365 basis. The Arctic Wolf MDR solution also meets PERMA Cybersecurity requirements for continuous IT security monitoring and SOC services.

In order to provide the City with the best service at the lowest price, staff through cooperative purchasing worked with CDW-G to obtain pricing based on the prenegotiated OMNIA Partners Group Contract (IT Solutions & Services #2018011-01). A quote (Attachment B) with a copy of the OMNIA Partners Group Contract (Attachment D) has been provided for Council’s review.

FISCAL IMPACT:

The initial cost of $44,986 is included in the Fiscal Year 2023-24 Information Technology Division Operating Budget. Future Arctic Wolf licensing costs will be budgeted in subsequent fiscal years.

RELATIONSHIP TO STRATEGIC PLAN:

Strategic Direction #5 - Ensure timely preservation, replacement, improvement and acquisition of infrastructure and capital assets, and Action Plan 3 - Implement the actions identified in the I Assessment and Strategic Plan.

IT Master Plan Initiative #13 - User Access Controls
IT Master Plan Initiative #66 - IT Security Assessment & 24/7 Systems Security Monitoring Solution
REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Lisette Free, Finance Director Approved by: Lori Sassoon, City Manager

Approved as to Form: Harper and Burns, LLC, City Attorney ATTACHMENT(S):

Attachment A - Arctic Wolf Presentation
Attachment B - Arctic Wolf Quote
Attachment C - Solutions Agreement
Attachment D - OMNIA/CDW-G Contract 2018011-01

THE LEADER IN SECURITY OPERATIONS

THE LEADER IN SECURITY OPERATIONS
Executive Proposal
Presented to:

Matthew Boudreaux IT Manager
Prepared By:

Alex Larsen Account Executive – Arctic Wolf
Chris Kuriger Pre Sales Systems Engineer – Arctic Wolf
Jordan Hamu Sr. Account Manager – CDW-G
City of Norco

THE LEADER IN SECURITY OPERATIONS
Why Now? Why Arctic Wolf? Positive Organization Outcomes Challenges today: Lean security team, highly focused on Security Posture for 2023 ©2021 Arctic Wolf Networks, Inc. All rights reserved. | Classification: Confidential 2 Security Outcome
• Managed Detection and Response
• Detect and respond to security events
in 30 minutes or less, plus Containment
capabilities for Endpoint & Server
• 2 Named & Dedicated Resources
(Concierge Security Team) supporting
City of Norco.
• 24x7 monitoring, alert triage, and
threat hunting delivered by CST & 650+
Triage Engineers
• Concierge Team
• Included in both services
• Access to team on unlimited basis
• Reporting, Meetings, Questions,
escalations, etc.
• Decrease Risk
• Greatly reduce risk of Security
Incident happening
• Respond Quicker by leveraging
Arctic Wolf Security experts
30min or les SLA
• Arctic Wolf monitors All Attack
Surfaces
• Maintain reputation
• Keep City of Norco out of news
vs being front page news if
experiences Security incident
• Cost Savings
• Arctic Wolf vs Hiring FTE’s
• Arctic Wolf vs DIY SOC
• Arctic Wolf vs cost of Ransom
• Save money for cyber insurance
premiums
• Full-service city that is managing –
water, sewage, trash and utilities.
• Security is a top priority for 2022 and
security SCADA environment
• Lean team – Matt and two others. Not
enough time in the day to focus
primarily on security
• Looking for holistic solution that can
fulfill 24/7 threat monitoring
• Solution that integrates with existing
tools
• Wants to make it easier for team to
manage logs and get alerted of
anything out of the ordinary

THE LEADER IN SECURITY OPERATIONS
©2021 Arctic Wolf Networks, Inc. All rights reserved. | Classification: Confidential 3 Very Familiar with Cities and Municipalities

THE LEADER IN SECURITY OPERATIONS
©2021 Arctic Wolf Networks, Inc. All rights reserved. | Classification: Confidential 4 Cybersecurity Talent Gap in California – pulled April 1st, 2022.

Retaining talent with experience in building/sustaining a SOC (security operations center) is very expensive IDG and Symantec:

Global demand for the
cybersecurity workforce is
expected to rise to 6M this
year with a projected shortfall
of 1.5M jobs. This means that
25% of available jobs are not
being filled.

Recruiting Firm Robert Half:

Employees across security
organizations are seeing
larger than average gains in
pay with increases between
7-10% annually. How much does a cyber security engineer make in San Diego, California? As of April 1st, 2022, the average annual pay for a Cyber Security Engineer in Southern California is $123,367 a year. Just in case you need a simple salary calculator, that works out to be approximately $56.02 an hour. This is equivalent of $2,241/ week or $9,710 / month.

THE LEADER IN SECURITY OPERATIONS Personal | Predictable | Protection Concierge Security Team
(CST)
*$246K+ in Value Per Year*
©2022 Arctic Wolf Networks, Inc. All rights reserved. | Classification: Confidential 5

EXPERTISE
Deliver execution and operational
excellence with skills required to detect
advanced threats and manage risks in a
way that’s customized to your
environment.

Security Operations Experts
Hundreds of years of combined
experience with cybersecurity
accreditations like CISSP, HCISPP, CCSP,

CISM, CRISC, GCIH
Threat Hunting
Hunting for suspicious activity across your
environment
Informed Incident Insights
Filter out the noise to reveal what
happened, and what to do about it

STRATEGY
Strategic security guidance drives
continuous improvement that’s tailored to the
specific needs of your organization.

Security Posture Reviews
Evaluate the root cause of threats and get
prioritized recommendations to improve
posture
Named Advisors
Trusted security operations experts paired
with you to deliver tailored triage and
strategic guidance
Security Journey Guidance
Quarterly reviews to help you design,
implement, and achieve your security vision
Your named Concierge Security Team will work with you to build and execute a Security Journey that meets your organization's goals and objectives while identifying opportunities to strengthen your security posture over time.

THE LEADER IN SECURITY OPERATIONS Personal | Predictable | Protection Arctic Wolf
Triage Team
©2022 Arctic Wolf Networks, Inc. All rights reserved. | Classification: Confidential 6

COVERAGE
Work around the clock to triage critical
events and deliver actionable insights when
you need them the most.
24x7 Continuous Monitoring
Your environment is monitored around the
clock for threats and risks
Rapid Response
Investigate and escalate critical events
within thirty minutes
Real-Time Remediation
Rapidly contain incidents and get detailed
guidance on remediation
On- Demand Access
To security analysts via telephone or email
24/7

INVESTIGATION
Deliver execution and operational excellence with
skills required to detect advanced threats and
manage risks in a way that’s customized to your
environment.

Security Operations Experts
Top-talent with hundreds of years of combined
experience working for Military, Government and
Public and Private sector organizations.

Informed Incident Insights
• Filter out the noise to reveal what happened, and
what to do about it
• Detect threats across network, endpoint, & cloud.
• Expert analysis of IOCs across entire attack
surface using a purpose-built cloud platform
• Discover vulnerabilities and misconfigurations
The 300+ Security Engineer and Security Analyst Triage Team works 24x7x365 to investigate alerts generated by the Arctic Wolf Platform. This team provides tactical support and guidance to customers and the Concierge Security Team during security events.

THE LEADER IN SECURITY OPERATIONS 2022 Cybersecurity Trends • High Profile Cybersecurity Incidents
• Russia / Ukraine conflict
• Log4J Vulnerability - Ongoing
• Kaseya VSA - $70M ransom demand, 1,000+ companies impacted • CNA Financial - $40M paid
• JBS Foods - $11M paid
• Colonial Pipeline - $4.4M paid
• Brenntag - $4.4M paid
• Cyber insurance policies are drastically changing...
• Increased Evaluation of Customer Risk Profile
• Reduced Coverage
• Increased Rates
• Ransomware Carveouts
7 Classification: Confidential

THE LEADER IN SECURITY OPERATIONS
©2021 Arctic Wolf Networks, Inc. All rights reserved. Restricted 8 Other Incidents we are responding to..
• Remote connection by Unknown / unauthorized user
• Domain privilege escalation
• Unusual Admin account activity
• Files/date in/out to unusual IP/location
• Malware downloaded/executed/not quarantined by EDR

THE LEADER IN SECURITY OPERATIONS
Why does it matter?
• Many vulnerabilities and vectors that contribute to
cybersecurity breach
• To manage all of these vectors / incident’s / and alerts you need a team
• That team needs to be monitoring and managing the traffic 24X7 / 365 for confidence that organization is safeguarded • For an effective team you need at least 7-8 people to manage it effectively
©2021 Arctic Wolf Networks, Inc. All rights reserved. Restricted 9

THE LEADER IN SECURITY OPERATIONS
©2021 Arctic Wolf Networks, Inc. All rights reserved. Classification: Confidential 10 Arctic Wolf sees the whole picture
10 Geo Alert
IaaS/Saas
Identity
Egress Traffic
Managed IDS
Network
Scanning
Endpoint
10%
5%
24%
10%
25% 1%
Active Directory
10%
• DNS/IP
• Memory
• Logins
• Process
• Files
• Registry
• Active Directory
• Azure AD
• M365
• Google
• Box
• AWS
• Azure
• GCP
• Egress Traffic
• Managed IDS
• Palo Alto
• Fortinet
• Cisco ASA
• Cisco FP
• Host vuln Scanning
• Account Takeover
• External vuln scan
• Darkweb monitoring
Arctic Wolf
CrowdStrike
SentinelOne
Carbon Black
Sophos
MS Defender
ATP
Cisco AMP
Cylance
• Active
Directory
• Azure AD
• Okta
• Duo
• Restricted Country Login
• Impossible Travel
*Incident required response action.

Email
15% • Office 365
• Gsuite
• Mimecast
• Proofpoint

THE LEADER IN SECURITY OPERATIONS
ADD - ONS:
• 1 year log retention (up to 10 years)
• Data Exploration (includes log search)
• Cloud Detection and Response
• Amazon Web Services (AWS)
• Microsoft Azure
• Google Cloud Platform (GCP)
• Microsoft 365 & Azure Active Directory (AD)
• Google Workspace
• Salesforce Sales Cloud
• Box cloud
• & more
Arctic Wolf® Managed Risk
Arctic Wolf® Managed Detection and Response
Pricing includes:

Arctic Wolf Managed Security Awareness®
Arctic Wolf® IR JumpStart Retainer includes:

Arctic Wolf® Platform includes: • Unlimited log volume and events per second • Unlimited Data Ingestion
• Access to AW Portal (Resale only)
• 90-day standard log retention (MDR)
• Unlimited Data Retention (MR)
• Inclusion of one $0 virtual series 100 Sensor The Arctic Wolf Platform is only required for Managed Detection and Response and Managed Risk solutions.
• Use of AW Agent
INCLUDES:
• 24x7 monitoring
• Unlimited log ingestion
• Named Concierge Security Team
• External vulnerability scanning
• Monthly, quarterly and ad hoc reporting
• Managed IDS
• Required Server license for each user
• Required Sensors (100, 200, 300, 1000 or virtual)
• Onboarding & sensor shipping
INCLUDES:
• Fully managed awareness program
• Awareness coaching
• Multiple integration options
• Frictionless user experience
• Gamification
• Ongoing microlearning
• Integrated phishing simulations
• 24x7 account takeover monitoring
ADD - ONS/UPGRADES:
• Compliance Content Pack includes:
• PCI, HIPAA, OSHA, Title IX, FERPA
• Anti-discrimination, Sexual Harassment, Affirmative
Action and Equal Employment, FLMA
• Managed Awareness Plus upgrades include:
• Content library
• Group-based content assignment
• Industry content tracks
• Role-based content
INCLUDES:
• Comprehensive risk profiling
• Proactive notifications, alerts & actionable reporting • Internal & External Vulnerability Scanning
• Dynamic asset discovery and credential scanning
• Asset inventory, categorization, notes, and tags
• Asset discovery based on root domains/IP
• Automatic IP, domain, sub-domain detection
• Required Server license for each user
• Required Scanners (100 or 200 series)
• Onboarding & scanner shipping
ADD - ONS:
• Cloud Security Posture Management for
• Amazon Web Services (AWS)
• Microsoft Azure
• Google Cloud Platform (GCP)
INCLUDES:
• 1 hour response time to request for IR services
• Secure development and storage of IR plan
• Concierge-led IR plan review
• Complimentary incident scoping call
• Preferred pricing and case minimums
• No pre-paid hours
• Elastic Response Framework
• Remote-first incident response

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FOR MORE

INFORMATION

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INFORMATION
©2023 Arctic Wolf Networks, Inc. All rights reserved. | Classification: Confidential 11

THE LEADER IN SECURITY OPERATIONS
12 ©2021 Arctic Wolf Networks, Inc. All rights reserved. | Classification: Confidential MDR – ANNUAL CONTRACT with 8% annual renewal rate
Year 1 Cost: $42,455.44
Year 2 Cost: $42,530
Year 3 Cost: $45932
Year 3 total: $130,917.44 Page 116 of 231

THE LEADER IN SECURITY OPERATIONS
©2021 Arctic Wolf Networks, Inc. All rights reserved. | Classification: Confidential 13 MDR 3 YEAR PAID ANNUAL
With 5% renewal rate
Year 1 Recurring Cost: $$42,455.44
Year 2 Cost: $41,348
Year 3 Cost: $43,415
Year 3 total: $127,218.44
Savings over 3 years: $3,700 Page 117 of 231

THE LEADER IN SECURITY OPERATIONS
©2021 Arctic Wolf Networks, Inc. All rights reserved. | Classification: Confidential 14 3 year paid upfront
Savings if City of Norco went with this
option: $7,360.54 Page 118 of 231

THE LEADER IN SECURITY OPERATIONS
Start Finish
• Review Contracts
• Define Project Plan and
SLAs
• Gather network sensor
info
• Ship network sensors
Technical Kickoff
• Install sensors,
scanners, and agents at
primary location(s)
• Configure essential log
sources
• Setup portal users and
basic escalation
Essentials
• Complete sensors,
scanners, and agent
deployment at remote
location(s)
• Configure internal,
external, host-based
vulnerability scans
• Validate log source
ingestion
Readiness
• Introduce Concierge
Security Team
• Review vulnerability
scans
• Customize log source
alerts
• Identify customized
reporting needs
• Train customer portal
users
• Get value from first call
with CST
Acceptance &
Customization
©2021 Arctic Wolf Networks, Inc. All rights reserved. | Classification: Confidential 15 Arctic Wolf Concierge Onboarding
Dedicated:
• Project Manager
• Onboarding Engineer
Most deployments completed within 30 days with about 10 hours invested from customer

THE LEADER IN SECURITY OPERATIONS
16 Arctic Wolf
Overview
The cybersecurity industry
has an effectiveness
problem.
3,000
Vendors
$120B
Total Spend
3,950
Reported
Breaches
About Arctic Wolf
2,000+
Employees
4,000+
Customers
2012
Founded
Industry Cybersecurity Challenges
Audit/Compliance Drivers

PCI DSS FFIEC-NCUA HIPAA
Arctic Wolf
Helps Detect and
Respond to the Top 5
Attack Vectors:

Industry average
time to identify an
intrusion is
206 days. Arctic
Wolf does it in
30 minutes
or less.

Better Protection Against All Attack Types
Of customers
have phishing
activity that is
missed by email
security
but caught by
Arctic Wolf
Of customers
have advanced
threat activity
being missed by
security tools but
caught by Arctic
Wolf
Of customers
have some PII
exposure and

5.5% have
plaintext
passwords
exposed online
Reduction in time
to patch critical
vulnerabilities
after activating
Arctic Wolf
Dwell
Time
0:30
Phishing
18%
Advanced
Threats
43%
Account
Takeover
70%
Unpatched
Vulnerabilities
35%
• Malware/Ransomware
• Phishing
• PUP Adware
• Account Hijacking
• Unpatched Outdated Software
Arctic Wolf® is the market leader
in security operations. Using the
cloud-native Arctic Wolf®
Platform, we provide security
operations as a concierge
service. Highly trained Concierge
Security® experts work as an
extension of your team to provide
24x7 monitoring, detection,
and response, as well as ongoing
risk management to proactively
protect systems and data while
continually strengthening your
security posture.
©2021 Arctic Wolf Networks, Inc. All rights reserved. | Classification: Confidential NIST 800-171 23 NYCRR 500
Source: 2019 Ponemon Cost of Data Breach Incident Report 84 Days
Mean Time to Contain (MTTC)
230 Days
Mean Time to Identify (MTTI)
314 DAYS
of organizations are unable to
process +60% of their security data
Source: Gartner
70% 1.5M The security skills
gap through 2020
Source: Gartner
2019 2020

Hardware Software Services IT Solutions Brands Research Hub

QUOTE CONFIRMATION
Thank you for choosing CDW. We have received your quote.

MATTHEW BOUDREAUX,
Thank you for considering CDW•G for your technology needs. The details of your quote are below. If you are an eProcurement or single sign on customer, please log into your system to access the CDW site. You can search for your quote to retrieve and transfer back into your system for processing.

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Convert Quote to Order
QUOTE # QUOTE DATE QUOTE REFERENCE CUSTOMER # GRAND TOTAL NLVL938 7/19/2023 ARTIC WOLF 3YR UPFRONT 6451096 $123,556.90

QUOTE DETAILS
ITEM QTY CDW# UNIT PRICE EXT. PRICE
ARCTIC WOLF MDR USER LIC CLD 150 5839578 $424.80 $63,720.00 Mfg. Part#: AW-MDR-USER
Electronic distribution - NO MEDIA
Contract: National IPA Technology Solutions (2018011-01) Arctic Wolf Managed Detection and Response - license - 1 server 30 5744220 $424.80 $12,744.00 Mfg. Part#: AW-MDR-SE
Electronic distribution - NO MEDIA
Contract: National IPA Technology Solutions (2018011-01) ARCTIC WOLF MDR LOG RETENTION LIC 1Y 180 6124471 $30.07 $5,412.60 Mfg. Part#: AW-MDR-1YR
Electronic distribution - NO MEDIA
Contract: National IPA Technology Solutions (2018011-01) Arctic Wolf 200 Series Sensor 1 6063521 $9,396.00 $9,396.00 Mfg. Part#: AW-MDR-2XX-S-10G
Electronic distribution - NO MEDIA
Contract: National IPA Technology Solutions (2018011-01) Arctic Wolf Managed Detection and Response for Office 365 - subscription li
150 5744235 $46.98 $7,047.00
Mfg. Part#: AW-MDR-O365
Electronic distribution - NO MEDIA
Contract: National IPA Technology Solutions (2018011-01) ARCTIC WOLF MDR DATA EXPL LIC 180 7047165 $62.64 $11,275.20 Mfg. Part#: AW-MDR-EXPLR
Electronic distribution - NO MEDIA
Contract: National IPA Technology Solutions (2018011-01)

QUOTE DETAILS (CONT.)
Arctic Wolf Platform - license - 1 access 180 6773750 $31.33 $5,639.40 Mfg. Part#: AW-PLATFORM
Electronic distribution - NO MEDIA
Contract: National IPA Technology Solutions (2018011-01) Arctic Wolf Platform - Base License - 1 license 1 7040196 $5,220.00 $5,220.00 Mfg. Part#: AW-PLATFORM-BASE
Electronic distribution - NO MEDIA
Contract: National IPA Technology Solutions (2018011-01) ARCTIC WOLF MDR ONBOARDING CLDS 1 5749862 $3,102.70 $3,102.70 Mfg. Part#: AW-MDR-OB
Electronic distribution - NO MEDIA
Contract: National IPA Technology Solutions (2018011-01) These services are considered Third Party Services, and this purchase is subject to CDW’s Third Party Cloud Services Terms and Conditions, unless you have a written agreement with CDW covering your purchase of products and services, in which case this purchase is subject to such other written agreement.

The third-party Service Provider will provide these services directly to you pursuant to the Service Provider’s standard terms and conditions or such other terms as agreed upon directly between you and the Service Provider. The Service Provider, not CDW, will be responsible to you for delivery and performance of these services. Except as otherwise set forth in the Service Provider’s agreement, these services are non-cancellable, and all fees are non-refundable.

SUBTOTAL $123,556.90
SHIPPING $0.00
SALES TAX $0.00
GRAND TOTAL $123,556.90

PURCHASER BILLING INFO DELIVER TO
Billing Address:

CITY OF NORCO
2870 CLARK AVE
NORCO, CA 92860-1903
Phone: (951) 735-3900
Payment Terms: Net 30 Days-Govt State/Local
Shipping Address:

CITY OF NORCO
2870 CLARK AVE
NORCO, CA 92860-1903
Phone: (951) 735-3900
Shipping Method: ELECTRONIC DISTRIBUTION
Please remit payments to:

CDW Government
75 Remittance Drive
Suite 1515
Chicago, IL 60675-1515
Sales Contact Info
Jordan Hamu | (877) 881-6914 | [email protected]
Need Help?
My Account Support Call 800.800.4239
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This order is subject to CDW's Terms and Conditions of Sales and Service Projects at http://www.cdwg.com/content/terms-conditions/product-sales.aspx For more information, contact a CDW account manager
© 2023 CDW•G LLC, 200 N. Milwaukee Avenue, Vernon Hills, IL 60061 | 800.808.4239

THE LEADER IN SECURITY OPERATIONS
©2020 Arctic Wolf Networks, Inc. All rights reserved. | Public Arctic Wolf Solutions Agreement – Frequently Asked Questions Thank you for reviewing the Arctic Wolf Solutions Agreement. We appreciate your interest in becoming a customer of Arctic Wolf.

We hope the below information will help you better understand how Arctic Wolf’s security solutions (the “Solution” or “Solutions”) contracting model works.

Please note that this information is not considered part of the contract at any time. This is provided for information purposes only.

Who is Arctic Wolf?
• Arctic Wolf is a cybersecurity company that provides security operations Solutions, including managed detection and response, managed risk, and managed security awareness to mitigate our customers’ exposure to cyber threats. • We offer standard, highly configurable, Solutions to our customers which allows us to leverage the power of scale across our customer base to deliver cost effective and operationally efficient Solutions. • Arctic Wolf’s customers may subscribe to and license for the purchased Subscription Term the right to receive and use, in whole or in part, the various Solutions offered by Arctic Wolf. All customers subscribing to a particular Solution are on the same release using the same operational infrastructure and the same security and support operations for such Solution.

Who is the Authorized Partner?
Arctic Wolf leverages its channel partner relationships (its “Authorized Partners”) to resell our Solutions to our customers. The Authorized Partner may be selected by you or introduced to you by Arctic Wolf.

The Authorized Partners act as the financial arm in our transactions with you. You contract directly with the Authorized Partner related to purchase and payment of your subscription to our Solutions. The Authorized Partners are not involved in the delivery of our Solutions and, therefore, are not contemplated in the obligations and liabilities within the Solutions Agreement related to the delivery of our Solutions to you. You and the Authorized Partner will have separate contractual terms in place to address the financial aspects of the subscription transaction.

What data do you provide to Arctic Wolf?
Arctic Wolf monitors systems telemetry data received from our customers via the sensors, scanners and agents our customers install within their environment. The systems telemetry data allows us to identify potential security threats that may impact your environment. Systems telemetry data may include names, email addresses, phone numbers, usernames, passwords IP Address, geolocation data, deviceID, and other system log metadata. Arctic Wolf should not receive other more sensitive information, including the content of your business files, your customer’s business information, social security numbers, financial information, etc.

We trust that our customers have appropriate system and operational controls in place to prevent disclosure of such information to us.

Why does Arctic Wolf reserve the right to change certain terms within the Solutions Agreement? Like other subscription-based solutions providers, customer-generic terms that apply across our customer base are set forth as url links within the overarching Solutions Agreement. This allows Arctic Wolf to maintain consistency in the Solutions across its customers.

To address any customer concerns related to this model, Arctic Wolf: (i) provides that the url terms are last in line from an order of precedence; (ii) agrees that we will not materially decrease the features and functionalities during any customer then-current Subscription Term; (iii) provides notice of the change; and (iv) allows customers to object to any specific modification for the remaining period of their then-current Subscription Term.

Does Arctic Wolf offer service levels?
Arctic Wolf provides for response time service levels. These service levels can be found in the Managed Detection and Response Solutions Terms located at https://arcticwolf.com/terms/. These terms are password protected. Please contact your sales representative for the password.

Arctic Wolf Networks –Solutions Agreement
Last Updated: 2023.05 Page 2 of 13
Does Arctic Wolf offer termination for convenience?
As a subscription Solution, Arctic Wolf does not allow for termination for convenience. Arctic Wolf relies on committed subscription terms, in part, to manage our dedicated CST resource model.

We have special data security requirements. Can we include our security and privacy requirements in the Solutions Agreement?
We are unable to include customer specific data security requirements in our Solutions Agreement. We offer a consistent Solution across our customer base. Arctic Wolf maintains the same IT security controls and processes for all customers. These controls and processes are reflected in our SOC2 Type II Report and its ISO 27001 certification.

Where is the Statement of Work for the services described in the Solutions Agreement? Arctic Wolf’s provides a subscription Solution that, depending on the Solution, is comprised of hardware, software and services. All designated components of the Solution are required to use and receive the Solutions. While services are an important part of the Solution, we do not define the services component of the Solutions as separate “professional services”. Unlike a traditional professional service offering, the services do not include deliverables and are not subject to acceptance.

Can we make changes to the Beta Terms?
Because participation in the beta programs is completely voluntary and there is no cost for participation, we do not agree to modifications to the beta terms.

We are a Covered Entity under HIPAA. Can we use our Business Associate Agreement? Arctic Wolf should not receive PHI during the delivery of the Solutions to you, nor does Arctic Wolf process PHI on your behalf.

Accordingly, Arctic Wolf is not a business associate under HIPAA. Arctic Wolf appreciates that certain customers may take a conservative approach and require a business associate agreement (BAA) to cover the exchange of any inadvertently disclosed PHI provided during our relationship. Given this, Arctic Wolf is amenable to execution of its template BAA in which each party’s liabilities and requirements are strictly construed to HIPAA requirements and incorporates such terms by url reference in the Solutions Agreement.
(For information purposes only, this FAQ does not form part of any contract)

Arctic Wolf Networks –Solutions Agreement
Last Updated: 2023.05 Page 3 of 13

SOLUTIONS AGREEMENT
(via Authorized Partner)
This Solutions Agreement (the “Agreement”) is a legal agreement entered into by and between the Customer identified in the signature block below (“Customer”) and Arctic Wolf Networks, Inc. (“Arctic Wolf”) and governs any order forms, quotes, or other similarly intended ordering document (however named) executed or accepted by Customer (“Order Form”) that reference this Agreement or pertains to purchases of an Arctic Wolf subscription. The Order Form will be issued to Customer by an Arctic Wolf authorized partner (“Authorized Partner”). This Agreement is effective on the date last executed in the signature block below (the “Effective Date”). This Agreement permits Customer to purchase subscriptions to the Solutions, as defined below, identified in the Order Form from its Authorized Partner and sets forth the terms and conditions under which those Solutions will be delivered. The Agreement consists of the terms and conditions set forth below, any attachments or exhibits identified herein and any Order Forms that reference this Agreement. If there is a conflict between the terms below, the Order Form, or the terms set forth in an URL referenced herein (such URL terms, the “Terms”), the documents will control in the following order: the Order Form, this Agreement, and the Terms.

In consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Scope.

1.1 Solutions. Customer will purchase and Arctic Wolf, together with its Affiliates, will provide the specific products and services (each a “Solution” or collectively, “Solutions”) as specified in the applicable Order Form. For purposes of this Agreement, “Affiliate” means any company or other entity, which directly or indirectly controls, is controlled by or is under joint control with a party.

A Solution will be comprised of the following components:

Managed Detection & Response
Solution
Managed Risk Solution Managed Security Awareness
/ Managed Security
Awareness+ Solution
Software The object form of any software,
including any operating system
software included in the Equipment,
and add-ons offering enhanced
features and functionality made
generally available to Arctic Wolf
customers from time-to-time
The object form of any software,
including any related to virtual
Equipment, if applicable, any
operating system software included
in the Equipment, and add-ons
offering enhanced features and
functionality made generally
available to Arctic Wolf customers
from time-to-time
Phishtel Reporting Engine and
Arctic Wolf Report Email Button,
as set forth in the Solutions
Terms
Equipment Virtual appliances or physical sensors Virtual appliances or physical scanners
N/A
Content N/A N/A Online access and download
rights, if licensed by Customer
and as more fully described in
the Solutions Terms, to
Customer learning content and
Content Compliance Pack within
the Administrator Dashboard
and/or Content Library
Content Management
Hosting Environment
N/A N/A Access to and use of a cloudbased learning management tool (the “Administrator Dashboard”)
and metrics related to the use of
the Content by Customer’s users
Services Support, onboarding services, and
services provided by Security
Services, all as described in the
Solutions Terms (defined below)
Support, onboarding services, and
services provided by Security
Services, all as described in the
Solutions Terms (defined below)
Support, onboarding services,
and Content modification
services, all as described in the
Solutions Terms (defined below)
Professional Services As agreed by the parties in
accordance with Section 3
As agreed by the parties in
accordance with Section 3
As agreed by the parties in
accordance with Section 3
Platform One (1) vSensor 100 series
Unlimited data ingestion
Access to the Customer Portal
Use of the Arctic Wolf Agent
90-day Log Retention (unless another
retention period is purchased by
Unlimited data ingestion
Access to the Customer Portal
Use of the Arctic Wolf Agent
N/A

Arctic Wolf Networks –Solutions Agreement
Last Updated: 2023.05 Page 4 of 13
Customer and set forth on an Order
Form)

1.2 License Grant. The Solutions are provided on a subscription basis for a set term designated on the Order Form (each, a “Subscription Term”) for the one-time costs and subscription fees set forth therein (the “Fees”). Provided Customer is in compliance with the terms of this Agreement, including payment of Fees, Arctic Wolf grants to Customer a limited, non-transferable, non-sublicensable, non-exclusive right and/or license during the Subscription Term, to the extent a component of the Solutions being licensed by Customer as set forth in Section 1.1 above, to:
(i) Install, use, and access the Software,
(ii) Use the Equipment for purposes of the use of the Solutions, (iii) Obtain and use the Services in conjunction with Customer’s use of the Solutions, (iv) Load Customer’s users and associated information for delivery of Content and use of the Administrator Dashboard, (v) Access the Customer Portal and/or Administrator Dashboard, as applicable, subject to the Privacy Notice located at https://arcticwolf.com/privacy-policy-for-customer-portal-users/, as may be updated from time-to-time in accordance with Section 13 below (the “Privacy Notice”),
(vi) Access and use the Platform features and functionality, (vii) Use Arctic Wolf Trademarks included in the Content in accordance with the Solutions Terms, and (viii) Distribute, display, transmit, and, if licensed by Customer, download certain Content in electronic format.

Customer may access and use the Solutions, and any Documentation associated therewith, solely for its own and its Affiliates’ internal business purposes and in accordance with the terms and conditions of this Agreement, such associated Documentation, any scope of use restrictions and license counts, including by server, user, or such other licensing metric designated in the applicable Order Form, and the Solutions Terms found at https://arcticwolf.com/terms/solutionsterms/, as may be updated from time to time by Arctic Wolf in accordance with Section 13 herein (the “Solutions Terms”). “Documentation” means user manuals, training materials, product descriptions and specifications, and other printed information relating to the Solution, as in effect and generally available from Arctic Wolf, but expressly excluding marketing and sales collateral and materials.

1.3 Future Functionality. Subject to the warranties set forth in Section 10, Customer agrees that it has not relied on the promise of availability of any future functionality of the Solutions or any other future product or service in executing this Agreement or any Order Form.

Customer acknowledges that information provided by Arctic Wolf regarding future functionality should not be relied upon to make a purchase decision. Should Arctic Wolf offer additional optional functionality in the future that complement the Solutions, Customer may elect to subscribe to and obtain a license to the optional functionality for an additional fee.

1.4 Except as otherwise provided herein, Customer understands and agrees that the Authorized Partner may not modify this Agreement or make any commitments related to the delivery or performance of the Solutions on Arctic Wolf’s behalf.

1.5 Beta Solutions.

1.5.1 From time-to-time Arctic Wolf may invite Customer to try, at no charge, Arctic Wolf products, features, or functionality that are not generally available to Arctic Wolf’s customers (“Beta Solutions”). Customer may accept or decline any such trial in its sole discretion. Any Beta Solutions will be clearly designated as beta, pilot, limited release, developer preview, non-production or by a description of similar import.

1.5.2 Restrictions and Disclaimers. Beta Solutions are provided for evaluation purposes and not for production use, are not supported, may contain bugs or errors, and may be subject to additional terms. To the full extent permitted by applicable U.S. and foreign consumer protection laws, Beta Solutions are not considered Solutions hereunder and are provided solely and exclusively “AS IS” with no express or implied warranty of any kind. TO THE FULL EXTENT PERMITTED BY APPLICABLE U.S. AND FOREIGN CONSUMER PROTECTION LAWS, (THE “CONSUMER PROTECTION LAWS”), CUSTOMER ASSUMES AND UNCONDITIONALLY RELEASES ARCTIC WOLF FROM ALL RISKS ASSOCIATED WITH THE USE OF ANY BETA SOLUTIONS. Arctic Wolf may discontinue the Beta Solutions at any time in its sole discretion and Arctic Wolf will make reasonable efforts to provide Customer with advanced notice of any such discontinuance. Arctic Wolf does not promise or represent that Beta Solutions will be made generally available.

1.5.3 NO DATA RETENTION. ANY DATA ENTERED INTO THE BETA SOLUTIONS MAY BE PERMANENTLY LOST UNLESS CUSTOMER:
(i) PURCHASES A SUBSCRIPTION TO THE COMMERCIALLY AVAILABLE VERSION OF THE BETA SOLUTIONS AS MAY BE MADE AVAILABLE BY ARCTIC WOLF; OR (ii) TO THE EXTENT POSSIBLE, EXPORTS SUCH DATA PRIOR TO TERMINATION OF THE BETA SOLUTIONS.

1.5.4 LIMITED LIABILITY. TO THE FULL EXTENT PERMITTED BY LAW, INCLUDING THE CONSUMER PROTECTION LAWS, ARCTIC WOLF’S ENTIRE LIABILITY IN CONNECTION WITH ANY USE OF THE BETA SOLUTIONS WHETHER IN CONTRACT, TORT OR UNDER ANY OTHER THEORY OF LIABILITY, WILL NOT, AS TO ANY INDIVIDUAL CLAIM OR IN THE AGGREGATE, EXCEED $50. IF CUSTOMER

DOES NOT AGREE TO THE ALLOCATION OF RISK IN THIS SECTION, ITS SOLE RECOURSE IS TO IMMEDIATELY DISCONTINUE THE USE OF THE BETA SOLUTIONS.

1.5.5. Despite anything to the contrary in this Agreement, Customer acknowledges that (a) Beta Solutions may not be supported and may be changed at any time, including in a manner that reduces functionality, (b) Beta Solutions may not be available or reliable, and (c) Beta Solutions may not be subject to the same security or audits as the Solutions.

1.6 IR JumpStart Retainer. In the event Customer’s Order Form includes the license of IR JumpStart Retainer, Customer agrees that the IR JumpStart Retainer Agreement located at https://arcticwolf.com/terms/ shall apply. If Customer is a managed service provider plus Authorized Partner (“MSPP”), MSPP, as Customer, understands that the IR JumpStart Retainer Agreement is an agreement between Arctic Wolf and MSPP’s end user and MSPP is reselling IR JumpStart Retainer to its end user. If Customer is a managed service provider (“MSP”) Authorized Partner and has licensed IR Jumpstart Retainer for use with an end user, MSP is Arctic Wolf’s Customer in accordance with the terms of the IR JumpStart Retainer Agreement for Managed Service Providers located at https://arcticwolf.com/terms/.

Arctic Wolf Networks –Solutions Agreement
Last Updated: 2023.05 Page 5 of 13

2. Equipment. If the Order Form specifies that Customer will receive Equipment, then Customer is responsible for installing the Equipment at the location(s) specified by Arctic Wolf and for the implementation of appropriate data protection practices related to the protection of any information included on such Equipment while the Equipment is located within Customer’s environment. The Equipment is a part of the Solutions and included with the subscription to the Solutions for use by Customer during the Subscription Term. If Customer attempts to install or use the Equipment at a location other than the location determined by Customer and communicated to Arctic Wolf during onboarding or at any time thereafter, the Solutions may fail to function or may function improperly. In the event Customer installs, uses, or relocates the Equipment, Customer will promptly notify Arctic Wolf so that Equipment deployment information can be updated within Customer’s account. Other than normal wear and tear, Customer is directly responsible for the replacement cost of the Equipment associated with any loss, repair, or replacement, including any other costs, damages, fees, and charges to repair the Equipment. If applicable, Arctic Wolf will ship Equipment to Customer and will pay the freight costs associated with shipping the Equipment to Customer’s designated locations. Customer is responsible for all additional costs and expenses associated with shipping the Equipment to its designated locations and for the return of the Equipment to Arctic Wolf. Such additional costs and expenses may be reflected on an Order Form, from time-to-time following shipment of the Equipment and will be invoiced by Arctic Wolf or the Authorized Partner. Customer understands and agrees if the Equipment is shipped outside of the United States or Canada (or such other locations identified by Arctic Wolf), Customer is responsible for acting as the importer of record.

3. Professional Services. In the event Arctic Wolf and Customer agree on the delivery of Professional Services, any such Professional Services shall be specified on an Order Form and described in a statement of work which shall reference this Agreement.

4. Reservation of Rights and Ownership. Arctic Wolf owns or has the right to license the Solutions and any associated Documentation (“Arctic Wolf Technology”). Customer acknowledges and agrees that: (a) the Arctic Wolf Technology is protected by United States and international copyright, trademark, patent, trade secret and other intellectual property or proprietary rights laws; (b) Arctic Wolf retains all right, title and interest (including, without limitation, all patent, copyright, trade secret and other intellectual property rights) in and to the Arctic Wolf Technology, excluding any rights, title, and interest in any Third Party Products (as defined in Section 10.3 below) which shall be retained by its third party licensor(s), Threat Intelligence Data (as defined in Section 7.3), and any other deliverables, know-how, databases, developed programs, and registered or unregistered intangible property rights related to the foregoing; (c) there are no implied licenses and any rights not expressly granted to Customer hereunder are reserved by Arctic Wolf; (d) the Solutions, excluding Professional Services, is licensed on a subscription basis, not sold, and Customer acquires no ownership or other interest (other than the license rights expressly stated herein); and (e) the Solution is offered as an on-line, hosted solution, and Customer has no right to obtain a copy of the Software.

5. Restrictions, Responsibilities, and Prohibited Use.

5.1 Restrictions. Customer agrees not to, directly or indirectly: (i) modify, translate, copy or create derivative works of the Arctic Wolf Technology except as otherwise expressly permitted under applicable U.S. and foreign copyright laws (“Copyright Laws”) which may not be excluded by agreement between the parties; (ii) reverse engineer, decompile, disassemble, or otherwise seek to obtain the intellectual property contained within Solutions, except as otherwise expressly permitted under the Copyright Laws which may not be excluded by agreement between the parties; (iii) interfere with or disrupt the integrity or performance of the Solutions or the data and information contained therein or block or disrupt any use or enjoyment of the Solutions by any third party; (iv) attempt to gain unauthorized access to the Arctic Wolf Technology or related systems or networks; (v) remove or obscure any proprietary or other notice contained in the Arctic Wolf Technology, including on any reports or data printed from the Arctic Wolf Technology; (vi) unless Customer is an Authorized MSP Partner of Arctic Wolf, use the Solutions in connection with a service bureau, service provider or like activity whereby Customer operates or uses the Solutions for the benefit of a third party (excluding use with Customer’s Affiliates); (vii) use the Solutions to monitor or scan any environments for which Customer has not received consent; or (viii) with respect to Customer’s subscription to the Managed Security Awareness Solution, include material or information that is obscene, defamatory, libelous, slanderous, that violates any person's right of publicity, privacy or personality, or otherwise results in any tort, injury, damage or harm to any person. Customer agrees to abide by the terms of the Acceptable Use Policy at https://arcticwolf.com/terms/acceptable-user-policy/, as may be updated from time-to-time in accordance with Section 13 below. If Arctic Wolf, in its reasonable discretion, determines that Customer’s use of or access to the Solutions imposes an actual or imminent threat to the security or stability of Arctic Wolf’s infrastructure or that Customer is abusing its use of the Solutions in contravention with the terms of this Agreement, Arctic Wolf may, in addition to any other right herein, temporarily suspend Customer’s access to the Solutions, without liability except as otherwise provided by Consumer Protection Laws, until such activity is rectified. If commercially practicable, Arctic Wolf shall provide Customer with notice prior to any such suspension and shall work with Customer in good faith to reinstate the Solutions promptly.

5.2 Arctic Wolf Responsibilities. Arctic Wolf shall provide the Solutions Customer subscribes to as set forth on an Order Form in accordance with the terms of this Agreement, as further described in the Solutions Terms. The Solutions provided under this Agreement shall include any updates, upgrades, bug fixes, version upgrades or any similar changes that are made generally available to Arctic Wolf’s customers free of charge from time to time during the Subscription Term.

5.3. Customer Responsibilities. Customer must identify the administrative users for its account which may include Customer’s and its Affiliates’ authorized (email authorization sufficient) third party service providers and agents (“Administrators”). Each Administrator will receive an administrator ID and password and will need to register with Arctic Wolf. Customer is responsible for registering and updating its Administrators, or notifying Arctic Wolf, as applicable, about changes to Administrators, including but not limited to termination, change of authority, and the addition of Administrators. Customer acknowledges and agrees that Administrators will be able to view all Solutions Data and other traffic and activities that occur on Customer’s network and that Customer is responsible for all activities that occur under Administrator accounts.

Administrator IDs are granted to individual, named persons and cannot be shared or used by more than one Administrator but may be reassigned from time-to-time to new Administrators. Notwithstanding anything contrary herein, Customer understands and agrees that transmission of Solutions Data to Arctic Wolf may be impacted by in-country technical issues and requirements. Arctic Wolf will provide reasonable assistance to Customer in such instances but is not liable if the Solutions Data cannot be transmitted outside of such country. Customer is responsible for implementing appropriate internal procedures and oversight to the extent it utilizes the configuration of workflows and processes, including but not limited to containment actions, and similar functionalities in conjunction with the Services. Arctic Wolf may recommend Customer, depending on the scope of the deployment, implement software and services to enable features of the Solutions or to permit increased visibility into Customer’s environment. Customer is responsible for making such determinations in its discretion and Arctic Wolf has no liability for Customer’s decisions related thereto. Customer acknowledges that any changes Customer makes to its code, infrastructure, or configuration of the Solutions after initial deployment may cause the Solutions to cease working or function improperly or could prevent Arctic Wolf from delivering the Solutions

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and Arctic Wolf will have no responsibility for the impact of any such Customer changes. Customer understands that depending on the Solution deployed, a Solution may consume additional CPU and memory in Customer’s environment while running in production.

5.4 Anti-corruption. In no event shall Arctic Wolf be obligated to take any action (including the shipping of any product or the provision of any service) or omit to take any action that Arctic Wolf believes in good faith would cause it to be in violation of any U.S. or foreign laws or regulations, including, without limitation, the U.S. Foreign Corrupt Practices Act (the “FCPA”). Neither party will (i) attempt to, directly or indirectly, improperly influence the sale or purchase of products by payments or other actions contrary to law or regulation, or (ii) take any action or permit or authorize any action that would violate or cause a party to violate the FCPA, the UK Bribery Act, or other applicable anti-corruption laws or regulations. Neither party will, for the purpose of influencing any act or decision to obtain or retain business or direct business to any person, pay, offer or promise to pay, or authorize the payment of, directly or indirectly, any money or anything of value to or for the use or benefit of any of the following: (a) any government official (including any person holding an executive, legislative, judicial or administrative office, whether elected or appointed, or any representative of any public international organization, or any person acting in any official capacity for or on behalf of any government, state-owned business or public organization); (b) any political party, official thereof, or candidate for political office; or (c) any other person if a party or any respective partner, officer, director, employee, agent, representative or shareholder of such party knows or has reason to suspect or know that any. part of such money or thing of value will be offered, given, or promised, directly or indirectly, to any of the aboveidentified persons or organizations. Each party acknowledges and agrees that none of its officers, directors, employees, agents or representatives is a government official or employee or an official or employee of any department or instrumentality of any government, nor is any of them an officer of a political party or candidate for political office, who will share directly or indirectly any part of the sums that may be paid pursuant to performance of this Agreement; and each party agrees to immediately notify the other party should the foregoing change during the term of this Agreement. Each party represents and warrants that neither this Agreement nor the performance of or exercise of rights under this Agreement is restricted by, in conflict with, requires registration or approval or tax withholding under, or will require any termination or expiration, compensation, or any compulsory licensing under, any applicable law or regulation of any country or other governmental entity, and each party will not make any claim to the contrary (each party is relying on this representation and warranty, among other provisions of this Agreement, in entering this Agreement and would not enter this Agreement in its absence).

5.5 Trade Controls. Customer understands that the Solutions may be subject to the export control, economic sanctions, customs, import, and anti-boycott laws, regulations, and orders promulgated or enforced by Canada, the United States, Customer’s jurisdictions of incorporation and operations, and any other country or governmental body having jurisdiction over the parties to this Agreement (“Trade Controls”). Customer shall ensure that the Solutions are not re-exported, provided or transferred to any person or entity listed on any restricted or prohibited persons list issued by Canada, the United States, Germany, or any governmental authority of any applicable jurisdiction, including but not limited to the Bureau of Industry and Security’s Denied Persons, Entity, or Unverified List or the Office of Foreign Assets Control’s Specially Designated Nationals and Blocked Persons List, Foreign Sanctions Evaders List, or Sectoral Sanctions Identifications List (collectively, the “Restricted Persons Lists”). Customer represents and warrants that it and its shareholders, members, partners, or other owners are not listed on, or owned 50% or more, collectively or individually, by anyone on a Restricted Persons List. Customer shall not use the Solutions (a) for a military application, wherever located; or (b) with knowledge or reason to know that the Solutions will be used for nuclear, chemical, or biological weapons proliferation or (c) for any other end use or by any end user otherwise prohibited by applicable Trade Controls. Upon request by Arctic Wolf, Customer will complete and provide an end use certificate in the form requested by Arctic Wolf. Arctic Wolf may suspend and/or cancel the export, delivery, and or servicing of the Solutions, if: (i) Arctic Wolf has not received requested end-user certifications; (ii) Arctic Wolf has not received any government approvals required to comply with Trade Controls, or (iii) Arctic Wolf believes that such activity may violate any Trade Controls. If the Solutions are resold or transferred in violation of any Trade Controls or the provision of this Agreement, Arctic Wolf shall not be obligated to provide any warranty service or technical support for such Items.

5.6 Public Entity Customers. If Customer is a public entity, Customer acknowledges and agrees this Agreement is the sole set of terms governing the delivery of the Solutions to Customer and for the avoidance of doubt, terms related to acceptance related to any services or work product shall not apply. The terms of any request for proposal(s), request for information, invitation to qualify, purchasing agreement or cooperative contract, or similar agreement Customer is using to purchase the Solutions (as defined below) from an Authorized Partner do not apply to Arctic Wolf. Further, Customer understands, and hereby consents, that Solutions Data may be accessed and processed by Arctic Wolf and its non-US Affiliates and their non-US citizen employees and Arctic Wolf’s authorized third-party service providers in the United States, Europe, or other locations around the world. Notwithstanding anything contrary in any other agreement or purchasing contract, Customer understands and agrees that during the Subscription Term, Arctic Wolf will maintain security controls and processes no less restrictive than those set forth in its SOC 2 Type II report and ISO 27001 certification. Customer is responsible for determining if Arctic Wolf’s controls and processes comply with Customer’s data handling and security policies.

Customer represents that in purchasing the Solutions, (i) Customer is not relying on Arctic Wolf for performance of a federal prime contract or subcontract and (ii) Customer is not receiving federal funds to purchase the Solutions. If Customer does intend to rely on Arctic Wolf Solutions to fulfill its obligations under a federal prime contract or subcontract or utilize federal funds to purchase the Solutions, Customer agrees to provide Arctic Wolf advance written notice of that intention, and Arctic Wolf shall have the option to terminate this Agreement.

Arctic Wolf Technology is a “commercial item”, “commercial computer software” and “commercial computer software documentation,” pursuant to DFARS Section 227.7202 and FAR Sections 12.211-12.212, as applicable. All Arctic Wolf Technology is and was developed solely at private expense and the use of Arctic Wolf Technology by the United States Government are governed solely by this Agreement and are prohibited except to the extent expressly permitted by this Agreement.

Customer represents it has the requisite authority to enter into and perform under this Agreement.

6. Fees, Payment, Taxes, and Audit.

6.1 Fees, Payment, & Taxes. Customer will purchase the Solutions through the Authorized Partner. The Order Form containing terms related to fees, payment, taxes, audit, and any other related terms shall be between Customer and the Authorized Partner. Customer will pay

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any owed amounts to the Authorized Partner, as agreed between Customer and Authorized Partner. Customer agrees that Arctic Wolf may suspend or terminate Customer’s use of the Solutions upon ten (10) days’ written notice to Customer if Arctic Wolf does not receive payment of Fees from the Authorized Partner. The amounts paid by Authorized Partner to Arctic Wolf for Customer’s use of the Solutions under this Agreement will be deemed the amount actually paid or payable under this Agreement for purposes of calculating Arctic Wolf’s liability under Section 11. Customer’s renewal pricing will be communicated to Customer by the Authorized Partner in accordance with the terms Customer has with the Authorized Partner or by Arctic Wolf prior to the renewal Subscription Term.

6.2 Audit. During the term of this Agreement and for one year thereafter, Customer shall provide Arctic Wolf, or its designated representative, promptly upon request with appropriate records requested by Arctic Wolf to verify Customer’s compliance with the Agreement, including specifically its license counts as set forth on an Order Form. Arctic Wolf, at its option, may require that an executive officer of Customer certify in writing to Customer’s compliance with this Agreement and disclose the scope of use of the Solutions by Customer. If, because of such audit, Arctic Wolf determines that Customer has exceeded the number of licenses subscribed to by Customer on an Order Form, Arctic Wolf will notify Customer of the number of additional licenses, along with the associated Subscription Fees prorated through the end of the then-current Subscription Term, and Customer will remit payment for such Subscription Fees in accordance with this Section 6.

7. Confidentiality; Data.

7.1 Confidentiality. Either party (as a “Discloser”) may disclose confidential and proprietary information, orally or in writing (“Confidential Information”) to the other party (as a “Recipient”). Confidential Information (a) shall be marked with a restrictive legend of the Discloser or, (b) if orally or visually disclosed to Recipient by Discloser, or disclosed in writing without an appropriate letter, proprietary stamp, or legend, shall be confidential if it would be apparent to a reasonable person that such information is confidential or proprietary. Confidential Information of Arctic Wolf includes the following: any pricing, trade secrets, know-how, inventions (whether or not patentable), techniques, ideas, or processes related to the Arctic Wolf Technology; the design and architecture of the Arctic Wolf Technology; the computer code, internal documentation, and design and functional specifications of the Arctic Wolf Technology; Arctic Wolf’s security and privacy due diligence material such as SOC2 reports, security and privacy questionnaire responses & memos; and any intellectual property and know-how included in the problem reports, analysis, and performance information related to the Arctic Wolf Technology, and Threat Intelligence Data. Confidential Information of Customer may include the following:
(i) If the MA or MA+ Solution is deployed: First name, last name, corporate email address, phone number, job title, address, and organization hierarchy (collectively, “Point of Contact information”); User setup details (User email, work title, and name), Solution metrics related to such Users, including your Users' learning status, training scores, and Phishing results associated with such Users' use of the Solution (collectively “Learner Data”); if the Arctic Wolf Email Report Button is deployed by Customer, information pertaining to phishing email(s) selfreported by a User and includes or may include name of User, email address of User, json web token, full content of email, and version data (collectively, “Phishtel Data”); and Customer created and owned content, if any; and (ii) If MDR and/or MR Solutions are deployed: Points of Contact Information and Solutions Data (as defined in Section 7.2 below).

Each party agrees to hold the other party’s Confidential Information in strict confidence, not to disclose such Confidential Information to third parties not authorized by the Discloser to receive such Confidential Information, and not to use such Confidential Information for any purpose except as expressly permitted hereunder and as described in the Privacy Notice. Each party agrees to take commercially reasonable steps to protect the other party’s Confidential Information and to ensure that such Confidential Information is not disclosed, distributed, or used in violation of the provisions of this Agreement. The Recipient may disclose Confidential Information only: (a) with the Discloser’s prior written consent; or (b) to those employees, officers, directors, agents, consultants, third party service providers, and advisors with a clear and well-defined “need to know” purpose who are informed of and bound by confidentiality obligations no less restrictive than those set forth in this Section 7.

Notwithstanding the foregoing, the Recipient may disclose Confidential Information to the extent required by law; however, the Recipient will give, to the extent legally permissible and reasonably practical, the Discloser prompt notice to allow the Discloser a reasonable opportunity to obtain a protective order and such Confidential Information disclosed to the extent required by law shall otherwise remain confidential and subject to the protections and obligations of this Agreement. For the avoidance of doubt, Arctic Wolf may share Customer’s name with Customer’s services providers to assist Customer in the resolution of technical issues pertaining to the Solutions. To the extent legally required, Arctic Wolf may report any violations of law pertaining to Customer’s use of the Solutions. The Discloser agrees that the foregoing confidentiality obligations shall not apply with respect to any information that the Recipient can document is: (i) rightfully in its possession or known to it prior to receipt from the Discloser without an obligation of confidentiality; (ii) or has become public knowledge through no fault of the Recipient; (iii) rightfully obtained by the Recipient from a third party without breach of any confidentiality obligation; or (iv) independently developed by employees of the Recipient who had no access to Discloser’s Confidential Information. Upon expiration or termination of this Agreement for any reason, and except as otherwise provided in Section 14 below, each party shall promptly destroy all copies of the other party's Confidential Information and copies, notes or other derivative material relating to the Confidential Information. Notwithstanding the foregoing, and subject to the Privacy Notice, Arctic Wolf may retain Contract Account Information which may include Customer name, contact first name and last name, corporate email address, phone number, job title, address, and organization hierarchy following termination of this Agreement for its internal business purposes.

7.2 Solutions Data. “Solutions Data” means, depending on the Solution deployed, the operational system log data and any other information provided by Customer in furtherance of its use of the Solutions and which Customer may elect to submit to Arctic Wolf through the Solutions, including, but not limited to operational values, event logs, and network data such as flow, HTTPS, TLS, DNS metadata, cursory inventory data, operating systems and versions, users and groups from Active Directory, system level inventory, event data, and network vulnerability data, but excluding Threat Intelligence Data (as defined below). As between the parties, Customer shall retain all right, title, and interest (including any and all intellectual property rights) in and to the Solutions Data (excluding any Arctic Wolf Technology used with the Solutions Data). Customer hereby grants Arctic Wolf, during the term of the Agreement, a non-exclusive, worldwide, royalty-free right to collect, use, copy, store, transmit, modify, and create derivative works of the Solutions Data solely to the extent necessary to provide the Solutions to Customer. The location of the storage of raw Solutions Data within Arctic Wolf’s third-party service providers’ data centers will be as set forth in the Solutions Terms.

7.3 Threat Intelligence Data. "Threat Intelligence Data" means any malware, spyware, virus, worm, trojan, or other potentially malicious or harmful code or files, URLs, DNS data, public IP addresses, network telemetry, commands, processes or techniques, tradecraft used by threat actors, metadata, or other information or data, in each case that is potentially related to unauthorized third parties associated therewith and that:

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(i) Customer provides to Arctic Wolf in connection with this Agreement, or (ii) is collected or discovered during the course of Arctic Wolf providing Solutions, excluding any such information or data that identifies Customer or to the extent that it includes Personal Data (as defined below) of the data subjects of Customer (but including personal information of threat actors).

8. Data Privacy.

8.1 Personal Information. Point of Contact Information, Solutions Data, Learner Data, and Phishtel Data (or any other Confidential Information provided by Customer) may include information that identifies, relates to, describes, is reasonably capable of being associated with or linked to a particular individual, whether directly or indirectly (“Personal Information”). Customer is responsible for the lawfulness of any such Personal Information and the receipt, use, and processing of it under the Agreement. Customer represents and warrants that, where it provides Personal Information to Arctic Wolf or requests Arctic Wolf collect or process such information, it (1) has complied with any applicable laws relating to the collection or provision of such information, (2) possesses any consents, authorizations, rights and authority, and has given all required notices to individual data subjects as are required to transfer or permit Arctic Wolf to collect, receive, or access any Personal Information for the Solutions, and (3) to the extent required by applicable law, informed the individuals of the possibility of Arctic Wolf processing their Personal Information on Customer’s behalf and in accordance with its instructions.

8.2 European Union and United Kingdom General Data Protection Regulation. If and to the extent Customer submits to Arctic Wolf personal data (as that term is defined under the General Data Protection Regulation (“GDPR”)) of individuals located in the European Economic Area or United Kingdom, the Arctic Wolf Data Processing Agreement available at https://arcticwolf.com/terms/dpa/, as may be updated by Arctic Wolf from time-to-time in accordance with its terms (the “DPA”), may be executed by Customer and upon execution and return to Arctic Wolf in accordance with its terms will be incorporated into this Agreement. It is Customer’s sole responsibility to notify Arctic Wolf of requests from data subjects related to the modification, deletion, restriction and/or objection of personal data. Customer represents and warrants that any processing of personal data in accordance with its instructions is lawful.

8.3 California Consumer Privacy Act. The parties acknowledge and agree that Arctic Wolf is a service provider for the purposes of the California Consumer Privacy Act, as supplemented by the California Privacy Rights Act (collectively, the “CCPA”) and may receive personal information (as defined by the CCPA) from Customer pursuant to this Agreement for a business purpose. The parties agree to always comply with the applicable provisions of the CCPA in respect to the collection, transmission, and processing of all personal information (as defined by the CCPA) exchanged or shared pursuant to the Agreement. Arctic Wolf shall not (i) sell any such personal information; (ii) retain, use or disclose any personal information provided by Customer pursuant to this Agreement except as necessary for the specific purpose of performing the Solutions for Customer pursuant to this Agreement or as permitted by the CCPA; (iii) retain, use, or disclose such personal information for a commercial purpose other than providing the Solutions unless otherwise explicitly permitted under the Agreement; (iv) retain, use, or disclose such personal information outside of the direct business relationship between Customer and Arctic Wolf unless otherwise permitted under the Agreement; or (v) combine any such personal information with personal information that it receives from or on behalf of any other person(s) or collects from its own interaction with the consumer, provided that Arctic Wolf may combine personal information to perform any business purpose as defined in and as permitted under the CCPA. The terms “personal information,” “service provider,” “sale,” “share,” and “sell” are as defined in Section 1798.140 of the CCPA. Arctic Wolf certifies that it understands the restrictions of this Section 8.4 and will notify Customer if Arctic Wolf decides that it can no longer meet its obligations under the CCPA. It is Customer’s sole responsibility to notify Arctic Wolf of any requests from consumers (as defined in the CCPA) seeking to exercise rights afforded in the CCPA regarding personal information received or processed in connection with the Solutions. Arctic Wolf agrees to provide reasonable cooperation to Customer in connection with such requests.

8.4 Canadian Privacy Laws. If and to the extent Customer submits to Arctic Wolf personal information (as that term is defined under applicable Canadian privacy laws, being all applicable federal, and provincial laws and regulations relating to the processing, protection or privacy of personal information (“Privacy Laws”), of individuals located in Canada, Customer agrees that it is solely responsible for and shall obtain from all such individuals, all required consents and/or provide all required notifications, regarding the collection, use, disclosure, and processing of their personal information by Arctic Wolf/Arctic Wolf’s subcontractors/third party service providers (which may be located outside of Canada), and/or the transfer by Customer of such individual’s personal information to Arctic Wolf/Arctic Wolf’s subcontractors/third party service providers (which may be located outside of Canada). Upon request of Customer, Arctic Wolf will inform Customers of the locations to which the personal information is transferred and processed by Arctic Wolf and/or its subcontractors/third party service providers.

Customer retains control of the personal information and remains solely responsible for its compliance with Privacy Laws and for the processing instructions it gives to Arctic Wolf. The parties agree that this Agreement, together with Customer’s use of the Solution in accordance with this Agreement, constitutes Customer’s instructions to Arctic Wolf in relation to the processing of such personal information. Subject to Section 8.1 of this Agreement, Arctic Wolf will only process the personal information to the extent, and in such a manner, as is necessary for the performance of the Solutions. Arctic Wolf will reasonably assist Customer with meeting the Customer’s compliance obligations under applicable Privacy Laws, considering the nature of Arctic Wolf’s processing and the information available to Arctic Wolf.

Arctic Wolf shall:
• Comply with its obligations as a third-party service provider/mandatory under applicable Privacy Laws, including by implementing appropriate technical, physical and organizational measures to safeguard the personal information; • Periodically conduct audits of its information security controls for facilities and systems used to deliver the Solutions and make relevant audit reports available to Customer for review. The Customer will treat such audit reports as Arctic Wolf’s Confidential Information; • Within seventy-two (72) hours of discovery notify Customer of any unauthorized or unlawful access to or processing of the personal information;
• Limit access to those employees who require the personal information access to meet Arctic Wolf’s obligations under this Agreement and ensure that all employees are informed of the personal information’s confidential nature; • Notify Customer if it receives any complaint, notice, or communication that directly or indirectly relates to the personal information processing or to either party’s compliance with Privacy Laws, and provide its full co-operation and assistance in responding to such complaint, notice or communication; and
• Upon Customer’s request, provide the Customer a copy of or access to all or part of the Customer’s personal information in its possession or control in the format reasonably agreed to by the parties.

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8.5 Australian Privacy Laws. If and to the extent Customer submits to Arctic Wolf personal information (as that term is defined in the Australian Privacy Act 1988 (Cth)) on your behalf, as agent for you, Arctic Wolf will only handle your personal information for the purpose of performing the Solutions, in accordance with the Privacy Notice or as required by applicable law, and ensuring you have access to your Solutions Data in accordance with this Agreement. Customer will maintain effective control of how Solutions Data is handled by retaining the right to access, changing and retrieving Solutions Data, limiting others' use of Solutions Data and specifying security measures that are used in relation to Solutions Data as set forth in this Agreement, including the Privacy Notice.

8.6 South African Privacy Laws. If and to the extent Customer submits to Arctic Wolf personal information (as that term is defined in the Protection of Personal Information Act, 4 of 2013) of individuals located in South Africa, Customer agrees that it is solely responsible for and shall obtain from all such individuals, all required consents and/or provide all required notifications, regarding the collection, use, disclosure, and processing of their personal information by Arctic Wolf/Arctic Wolf’s subcontractors/third party service providers (which may be located outside of South Africa, and/or the transfer by Customer of such individual’s personal information to Arctic Wolf/Arctic Wolf’s subcontractors/third party service providers (which may be located outside of South Africa). Upon request of Customer, Arctic Wolf will inform Customers of the locations to which the personal information is transferred and processed by Arctic Wolf and/or its subcontractors/third party service providers. Arctic Wolf will only handle personal information for the purpose of performing the Solutions and ensuring Customer has access to its Solutions Data in accordance with this Agreement. Customer will maintain effective control of how Solutions Data is handled by retaining the right to access, changing, and retrieving Solutions Data, limiting others' use of Solutions Data. Arctic Wolf shall take appropriate, reasonable technical and organizational security measures to prevent the loss of, damage to or unauthorized destruction of personal information, and the unlawful access to or processing of personal information.

9. Indemnity.

9.1 Arctic Wolf’s Indemnity. Subject to Section 9.3, Arctic Wolf will defend and indemnify Customer from any unaffiliated third party claim or action to the extent based on the allegation that the Solutions infringe any intellectual property right (patents, utility models, design rights, copyrights and trademarks or any other intellectual property right) having effect in the United States, Canada, Australia, United Kingdom, and the European Union. Arctic Wolf will pay any settlements that Arctic Wolf agrees to in a writing signed by an authorized officer of Arctic Wolf or final judgments awarded to the third-party claimant by a court of competent jurisdiction. The foregoing obligations do not apply with respect to the Solutions, or portions or components thereof, that are: (a) not provided by Arctic Wolf; (b) combined with other products, processes or materials that are not reasonably contemplated by the Documentation where the alleged infringement relates to such combination; (c) modified other than with Arctic Wolf’s express consent; (d) used after Arctic Wolf’s notice to Customer of such activity’s alleged or actual infringement; or (e) not used by Customer in strict accordance with this Agreement or the published Documentation. The indemnification obligations set forth in this Section

9.1 are Arctic Wolf’s sole and exclusive obligations, and Customer’s sole and exclusive remedies, with respect to infringement or misappropriation of third-party intellectual property rights of any kind.

9.2 Customer Indemnity. Subject to Section 9.3, Customer agrees to defend and indemnify Arctic Wolf from any third-party claim or action brought against Arctic Wolf to the extent based on Customer’s alleged breach of Sections 5 or 8. Customer agrees to pay any settlements that Customer agrees to in a writing signed by an authorized officer of Customer or final judgments awarded to the third-party claimant by a court of competent jurisdiction.

9.3 Procedures. Each party’s indemnification obligations are conditioned on the indemnified party: (a) providing the indemnifying party with prompt written notice of any claim, provided that the failure to provide such notice shall only limit the indemnifying party’s obligation to indemnify to the extent that the failure prejudices the indemnifying party in its defense of the claim; (b) granting the indemnifying party the sole control of the defense or settlement of the claim; and (c) providing reasonable information and assistance to the indemnifying party in the defense or settlement of the claim at the indemnifying party’s expense. Notwithstanding the foregoing, the indemnifying party (i) may not make an admission of fault on behalf of the other party without written consent, (ii) any settlement requiring the party seeking indemnification to admit liability requires prior written consent, not to be unreasonably withheld or delayed, and (iii) the other party may join in the defense with its own counsel at its own expense.

9.4 Options. If Customer’s use of the Solutions has become, or in Arctic Wolf’s opinion is likely to become, the subject of any claim of infringement, Arctic Wolf may at its option and expense: (a) procure for Customer the right to continue using and receiving the Solutions as set forth hereunder; (b) replace or modify the Solutions to make them non-infringing; (c) substitute an equivalent for the Solutions; or (d) if Arctic Wolf, in its sole discretion, determines that options (a)-(c) are not reasonably practicable, terminate this Agreement and refund any pre-paid unused Fees as of the effective date of termination.

10. Warranty and Warranty Disclaimer.

10.1 Solutions Warranty. ARCTIC WOLF WARRANTS THAT DURING THE SUBSCRIPTION TERM AND PROVIDED THAT CUSTOMER

IS NOT IN BREACH OF THIS AGREEMENT OR AS OTHERWISE PROHIBITED BY CONSUMER PROTECTION LAWS INCLUDING ANY CUSTOMER RIGHTS UNDER SUCH CONSUMER PROTECTION LAWS THAT: (I) THE SOLUTIONS PROVIDED UNDER THIS AGREEMENT DO NOT INFRINGE OR MISAPPROPRIATE ANY INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY; (II) THE SOLUTIONS SHALL SUBSTANTIALLY PERFORM AS DESCRIBED IN THE DOCUMENTATION; AND (III) IT WILL COMPLY WITH ALL FOREIGN, PROVINCIAL,

FEDERAL, STATE AND LOCAL STATUTES, LAWS, ORDERS, RULES, REGULATIONS AND REQUIREMENTS, INCLUDING THOSE OF ANY

GOVERNMENTAL (INCLUDING ANY REGULATORY OR QUASI-REGULATORY) AGENCY APPLICABLE TO ARCTIC WOLF AS IT PERTAINS TO ITS OBLIGATIONS AND THE DATA REQUIRED FOR THE PERFORMANCE OF THE SOLUTIONS DESCRIBED HEREIN. IN THE EVENT OF ANY BREACH OF THIS SECTION 10.1, ARCTIC WOLF SHALL, AS ITS SOLE LIABILITY AND CUSTOMER’S SOLE REMEDY (OTHER THAN ARCTIC WOLF’S INDEMNIFICATION OBLIGATIONS IN SECTION 9.1 ABOVE, OR OTHERWISE PROHIBITED BY CONSUMER PROTECTION LAWS AND SECTION 10.2 OF THIS AGREEMENT), REPAIR OR REPLACE THE SOLUTIONS THAT ARE

SUBJECT TO THE WARRANTY CLAIM AT NO COST TO CUSTOMER OR IF ARCTIC WOLF IS UNABLE TO REPAIR OR REPLACE, THEN ARCTIC WOLF WILL REFUND ANY PRE-PAID FEES FOR THE SOLUTIONS, OR PARTS THEREOF, SUBJECT TO THE WARRANTY CLAIM.

EXCEPT FOR THE WARRANTIES DESCRIBED IN THIS SECTION, THE SOLUTIONS ARE PROVIDED WITHOUT WARRANTY OF ANY

KIND, EXPRESS OR IMPLIED INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OR CONDITIONS OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND ANY WARRANTIES OF TITLE. CUSTOMER ACKNOWLEDGES THAT