CITY OF UPLAND
APPROPRIATIONS LIMIT COMPUTATION
2023 — 2024
2023-24
Change in Per Capita Personal Income 4.44%
Population Change
County Population Growth 0.12%
A. Change in Per Capita Personal Income Converted to a Ratio 1.0444 B. Population Growth Converted to a Ratio 1.0012 Calculation of Growth Factor (A x B) 1.0457
2022 - 2023 Appropriations Limit $ 130,667,622
2023 - 2024 Appropriations Limit
($130,667,622 x 1.0457) $ 136,639,132
3
Van Lant &
Fankhanel LLP
Certified Public Accountants (-
January 30, 2025
City Council
City of Upland
Upland, CA
We have audited the financial statements of the governmental activities, business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Upland for the year ended June 30, 2024. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated June 18, 2024. Professional standards also require that we communicate to you the following information related to our audit.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements.
No new accounting policies were adopted and the application of existing policies was not changed during the fiscal year. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were:
Management's estimate of the fair value of investments is based on information provided by financial institutions. We evaluated the key factors and assumptions used to develop the fair value of investments in determining that it is reasonable in relation to the financial statements as a whole.
Van Lant&Fankhanel,LLP
29970 Technology Drive. Suite 105 A
hv1urrieta. CA 92563
909.856.6879 1 Page 217 of 377
Management's estimate of capital assets depreciation is based on historical estimates of each capitalized item's useful life. We evaluated key factors and assumptions used to develop the estimated useful lives in determining that they are reasonable in relation to the financial statements as a whole.
Management's estimate of the net pension and net OPEB liabilities are based on actuarial information provided by the California Public Employee Retirement System's (CaIPERS) actuarial office, and other sources. We evaluated the key factors and assumptions used to develop these liabilities in determining that the estimated liabilities are reasonable in relation to the financial statements as a whole.
Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosure affecting the financial statements were:
The disclosure of the fair value of investments in Note 2 to the financial statements represents amounts susceptible to market fluctuation.
The disclosure of accumulated depreciation in Note 4 to the financial statements is based on estimated useful lives which could differ from actual useful lives of each capitalized item.
The disclosures for the net OPEB and net pension liabilities in Notes 6 and 10 to the financial statements are based on assumptions for discount rates, etc., which could differ from actual experience. The notes disclose the differences in these liabilities if different assumptions are used in estimating these liabilities.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit's financial statements taken as a whole.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit.
2 Page 218 of 377
Management Representations
We have requested certain representations from management that are included in the management representation letter dated January 30, 2025.
Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge,there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards,with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
Other Matters
With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.
Restrictions on Use
This information is intended solely for the use of the City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties.
Very truly yours,
/Ci--1.• 4" Yomid4raif iif
3 Page 219 of 377
Van Lant &
Fankhanel LLP
Certified Public Accountants E-
Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards City Council
City of Upland
Upland, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, business-type activities, each major fund and the aggregate remaining fund information of the City of Upland (City), as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated January 30, 2025.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.
Van Lant&Fankhanel,LLP
29970 Technology Drive. Suite 105 A
hv1urrieta. CA 92563
909.856.6879 Page 220 of 377
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. 1C1- 4,t YelMA4071-11 lif
January 30, 2025
4��a �p19� CITY UPLAND
�5, _�� "The City of Gracious Living"
CltIFOBS
1. Stall(kr Ctilt
DATE: February 10,2025
TO: MAYOR AND CITY COUNCIL
FROM: MICHAEL BLAY,CITY MANAGER
PREPARED BY:CHRIS ALANIS,INTERIM PUBLIC WORKS DIRECTOR
SUBJECT: CONSIDER ADOPTING A RESOLUTION OPPOSING THE SOUTH COAST AIR QUALITY DISTRICT PROPOSED RULES 1111 AND 1121
RECOMMENDED ACTION:
It is recommended that the City Council adopt a Resolution Opposing South Coast Air Quality Management District Proposed Rules 1111 (Reduction of NOx Emissions from Natural Gas-Fired Furnaces)and 1121 (Reduction of NOx Emissions from Small Natural Gas-Fired Water Heaters)due to potential financial impacts on homeowners,renters, and businesses.
GOAL STATEMENT
The proposed action supports the City's commitment to balancing environmental goals with economic feasibility by ensuring that regulatory changes do not place excessive financial burdens on residents and businesses.
BACKGROUND
The South Coast Air Quality Management District (SCAQMD) has proposed amendments to Rule 1111 and Rule 1121, which aim to transition natural gas-fired furnaces and water heaters to zero-emission alternatives. If implemented,these changes would require the replacement of existing appliances with zero-emission units upon the end of their service life.
ISSUES AND ANALYSIS
SCAQMD's proposal is part of a broader strategy to meet federal air quality standards.However, staff has identified potential cost increases for homeowners,renters,and businesses due to the expense of transitioning to zero-emission appliances. The San Bernardino Council of Governments (SBCOG) has reviewed this matter and recommended opposing these rule changes due to their economic impact. • Economic Impact:Compliance with the proposed rules would require homeowners and businesses to replace natural gas-fired appliances with zero-emission alternatives,which could be significantly more expensive. • Regulatory Burden:The transition to zero-emission appliances would necessitate infrastructure upgrades and increased costs for property owners.
• Local Opposition: The SBCOG Board has already taken a position against the proposed rules, and staff recommends that the City of Upland align with SBCOG in opposing these regulations.
ENVIRONMENTAL DETERMINATION
The proposed action is exempt from the California Environmental Quality Act(CEQA)under Section 15378 of the CEQA Guidelines,as it involves policy adoption rather than a physical project.
FISCAL IMPACTS
There is no fiscal impact associated with this action.
ALTERNATIVES
Provide alternative direction — The City Council may request further analysis or propose a modified response to SCAQMD's proposed rules.
CEQA:Not a Project.
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF UPLAND,
CALIFORNIA, OPPOSING THE SOUTH COAST AIR QUALITY
MANAGEMENT DISTRICT (SCAQMD) PROPOSED RULES 1111
AND 1121
WHEREAS, the South Coast Air Quality Management District (SCAQMD) is a regional air pollution control agency regulating stationary sources of air pollution in Los Angeles, Orange, Riverside, and San Bernardino counties; and
WHEREAS, SCAQMD is considering two rules that would have a significant impact on residents and businesses in the South Coast region:
• Rule 1111 regulates air emissions from gas-powered central furnaces; and • Rule 1121 regulates air emissions from residential natural gas-powered water heaters; and
WHEREAS, Proposed Rules 1111 and 1121 would impose substantial costs on homeowners, renters, and businesses while providing limited measurable air quality benefits for the four-county region covered by SCAQMD; and
WHEREAS, these rules would ban the use of natural gas-powered furnaces and water heaters in new construction beginning in 2026 and phase out existing units in 2027, requiring replacement with zero-emission electric appliances; and WHEREAS, compliance with Rules 1111 and 1121 would require extensive and costly retrofitting of homes, apartments, and businesses, including electrical panel upgrades, new plumbing, and physical renovations; and
WHEREAS, the increased costs of transitioning from natural gas to electric heating appliances would be passed on to tenants by apartment owners, further exacerbating housing affordability issues in the region; and
WHEREAS, these regulations would increase demand on the electrical grid, which has already faced reliability issues, leading to greater risks of brownouts or power outages for millions of residents and businesses; and
WHEREAS, unlike traditional SCAQMD regulations that focus on large industrial polluters, Rules 1111 and 1121 directly impact individual homeowners, renters, and small businesses, disproportionately burdening lower-income households.
NOW, THEREFORE, the City Council of the City of Upland hereby finds, determines and resolves as follows:
Section 1. The City Council finds and determines that Rules 1111 and 1121 will impose significant financial burdens on residents and businesses while providing minimal air quality benefits.
Section 2. The City of Upland opposes the implementation of SCAQMD Proposed Amended Rules 1111 and 1121 and urges SCAQMD to indefinitely delay or cease consideration of these regulations.
Section 3. Compliance with California Environmental Quality Act. The City Council finds that this Resolution is not subject to the California Environmental Quality Act ("CEQA")
Resolution No.
pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the State CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. Further, if the activity is deemed a project this City Council finds that this Resolution is exempt pursuant to Section 15061(b)(3) of the State CEQA Guidelines.
Section 4. The City Clerk is directed to send copies of this Resolution to the South Coast Air Quality Management District (SCAQMD), the San Bernardino Council of Governments (SBCOG), and other relevant agencies.
Section 5. Certification. The City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original resolutions.
Section 6. Severability. If any section, subsection, subdivision, sentence, or clause or phrase in this Resolution or any part thereof is for any reason held to be unconstitutional, invalid or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this Resolution or any part thereof. The City Council hereby declares that it would have adopted each section irrespective of the fact that any one or more subsections, subdivisions, sentences, clauses, or phrases are declared unconstitutional, invalid, or ineffective.
Section 7. This Resolution shall become effective immediately upon its adoption.
PASSED, APPROVED, AND ADOPTED this 10th day of February, 2025.
Bill Velto, Mayor
I, Keri Johnson, City Clerk of the City of Upland, do hereby certify that the foregoing Resolution was adopted at a regular meeting of the City Council held on the 10th day of February, 2025, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAINED:
ATTEST:
Keri Johnson, City Clerk
UpCit of U land
_______________
._ byor'sTelephone(909931-4122
February 10, 2025
South Coast Air Quality Management District
do Public Affairs Office
21865 Copley Drive
Diamond Bar, CA 91765
RE: Letter Opposing SCAQMD Proposed Rules 1111 and 1121
The City of Upland opposes Proposed Rules 1111 and 1121, two rules South Coast Air Quality Management District are considering transitioning natural gas-fired furnaces and water heaters to zero-emission alternatives. While I fully support the overarching goals of improving air quality, I am deeply concerned about the significant financial burdens these new regulations could impose on homeowners, renters, and businesses—particularly those who are already struggling in a challenging economic environment.
One of the most pressing concerns is the potential for increased costs to residential property owners and renters. As the regulations are implemented, many homeowners may be required to invest in costly upgrades to their homes to comply with the new NOx standards. Renters will also feel the impact indirectly, as landlords may pass on these added costs in the form of higher rents.
Similarly, businesses, especially small businesses, could face substantial financial strain as they work to meet the new emissions standards. Many will be forced to make expensive equipment upgrades or invest in new technologies that may not be financially feasible in the short term. This could lead to layoffs, reduced working hours, or even the closure of some businesses, further exacerbating the economic challenges faced by local communities.
While environmental protections are essential, it is crucial that the costs of these measures do not disproportionately burden everyday people and local businesses. I urge you to consider alternative approaches that allow for meaningful emissions reductions without causing severe financial hardship.
I respectfully ask that you re-evaluate the proposed rules and explore other innovative solutions that balance environmental goals with economic realities.A more balanced approach is needed to ensure that we protect both our environment and the economic well-being of our communities.
Sincerely,
b/;(11/4".„_
Bill Velto,
Mayor of Upland
UplandCA.gov • (909) 931-4100 • City of Upland, 460 N. Euclid Avenue, U {g,aig, g g$�
4��a �p19� CITY UPLAND
�5, _�� "The City of Gracious Living"
CltIFOBS
1. Stall(kr Ctilt
DATE: February 10,2025
TO: MAYOR AND CITY COUNCIL
FROM: MICHAEL BLAY,CITY MANAGER
PREPARED BY:CHRIS ALANIS,INTERIM PUBILC WORKS DIRECTOR
NICOLE DEMOET,ENVIRONMENTAL COMPLIANCE PROGRAMS MANAGER
ED DIGGS,INTERIM UTILITIES MANAGER
SUBJECT: CONSIDER APPROVAL OF PROFESSIONAL SERVICES AGREEMENT FOR THE
PREPARATION OF A WATER AND RECYCLED WATER RATE STUDY
RECOMMENDED ACTION
It is recommended that the City Council approve a professional services agreement with Raftelis Financial Consultants Inc. in the amount of$100,120 for the preparation of the 2025 Water and Recycled Water Rate Study; and authorize the City Manager to execute the agreement.
GOAL STATEMENT
The proposed action supports the City's goal of establishing equitable customer rates that are cost effective,equitable, and generate the necessary revenue to cover operational, debt service, capital investments, and reserves for the implementation of program requirements and to continue providing high quality and reliable water and recycled water services to the community.
BACKGROUND
The City's water and recycled water system plays a crucial role in the protection of public health and the environment, while also supporting community growth and development. As part of maintaining financial sustainability for water and recycled water services, it is necessary to periodically review and update the water and recycled water rate structure to ensure that rates are equitable, sufficient, and aligned with industry standards. The Water Utility is responsible for providing safe,reliable, and compliant water services to the community. The City's Water Utility is a not-for-profit programs. Water rates are established to provide sufficient revenue to cover operational,debt service, capital investments,and reserves for the program requirements.
To support this process,a water rate study is typically conducted every five years to evaluate the current rate structure, analyze cost of service,identify any adjustment needed to ensure compliance with relevant regulations,and assess the financial stability of the water fund.The most recent Administrative Draft Cost of Service and Rate Study Report was completed January 2018,with a follow up rate study completed in 2020.
ISSUES AND ANALYSIS
The completion of a comprehensive water and recycled water rate study is essential to ensuring the ongoing financial sustainability of the City's water system.Rate Studies are typically conducted on a 5-year increment.The most recent Administrative Draft Cost of Service and Rate Study Report was completed January 2018,with a follow up rate study completed in 2020. A Water and Recycled Water Master Plan is currently in process by Brown and Caldwell Inc.,in which projects and system upgrades will be identified on a prioritized timeline for capital improvement. Timing the cost-of-service study with a prioritized Capital Improvement Project timeline as proposed in the Water and Recycled Water Master Plan would benefit the City,ensuring adequate funding of prioritized system repairs.
In conjunction with the City's Purchasing Policy, Section 11.1 Bid Process Exemptions and Documentation — Professional Services,"Technical consultant services are of a professional nature and...do not readily fall within the competitive bidding process." As such, the City received a proposal for services by Raftelis Financial Consultants, Inc., providing information on the proposed methodology for the water and recycled water rate study, the cost of services, and relevant experience with similar projects. After a comprehensive review of the proposal, Raftelis Financial Consultants,Inc.,was selected to complete the 2025 Water and Recycled Water Rate Study.
The consultant will be responsible for:
• Conducting a thorough analysis of the existing water and recycled water rate structure. • Reviewing the financial health of the water systems and identifying future funding needs. • Development of an updated rate structure that ensures financial sustainability and regulatory compliance. • Preparing a financial report and presenting the findings to City Council upon completion.
Awarding this contract to Raftelis Financial Consultants,Inc. will allow the City to move forward with updating the rate structure to reflect current needs and conditions. Staff recommends approval of the proposed Professional Services Agreement to ensure timely completion of this critical project.
ENVIRONMENTAL DETERMINATION
The proposed action includes the award of a professional service agreement for a rate study and is not subject to the California Environmental Quality Act(CEQA). Section 15378 of the CEQA guidelines defines a project subject to CEQA. The proposed action is not included within the definition of a"project"and thus is exempt.
FISCAL IMPACTS
The total cost for the water and recycled water rate study including all optional tasks is$100,120,with additional work provisions that if approved by the City Manager could raise the cost of the agreement to$110,132. There are available funds in the Water Utility Capital Projects Account No. 6407500-5540-91011.
ALTERNATIVES
Provide alternative direction to staff.
CEQA:Not a Project.
CITY OF UPLAND
PROFESSIONAL SERVICES AGREEMENT
This Agreement is made and entered into as of February 10, 2025 by and between the City of Upland, a public agency organized and operating under the laws of the State of California with its principal place of business at 460 N. Euclid Avenue, Upland, CA 91786 ("City"), and Raftelis Financial Consultants, Inc., a North Carolina Corporation, with its principal place of business at 227 W. Trade Street Suite 1400, Charlotte, NC 28202 (hereinafter referred to as "Consultant"). City and Consultant are sometimes individually referred to as "Party" and collectively as "Parties" in this Agreement.
RECITALS
A. City is a public agency of the State of California and is in need of professional services for the following project:
2025 Water and Recycled Water Rate Study (hereinafter referred to as"the Project") B. Consultant is duly licensed and has the necessary qualifications to provide such services.
C. The Parties desire by this Agreement to establish the terms for City to retain Consultant to provide the services described herein.
AGREEMENT
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Services.
Consultant shall provide the City with the services described in the Scope of Services attached hereto as Exhibit "A."
2. Compensation.
a. Subject to paragraph 2(b) below, the City shall pay for such services in accordance with the Schedule of Charges set forth in Exhibit "B." b. In no event shall the total amount paid for services rendered by Consultant under this Agreement exceed the sum of $100,120.00. This amount is to cover all printing and related costs, and the City will not pay any additional fees for printing expenses. Periodic payments shall be made within 30 days of receipt of an invoice which includes a detailed description of the work performed. Payments to Consultant for work performed will be made on a monthly billing basis.
c. The City Manager may approve Additional Work, as further defined in Section 3, up to ten percent (10%) of the amount of the Agreement or fifty thousand dollars ($50,000.00). In no event shall the total sum of the agreement (original compensation amount and Additional Work) exceed $110,132.00. Any additional work in excess of this amount shall be approved by the City Council.
1
3. Additional Work.
If changes in the work seem merited by Consultant or the City, and informal consultations with the other party indicate that a change is warranted, it shall be processed in the following manner: a letter outlining the changes shall be forwarded to the City by Consultant with a statement of estimated changes in fee or time schedule. An amendment to this Agreement shall be prepared by the City and executed by both Parties before performance of such services, or the City will not be required to pay for the changes in the scope of work. Such amendment shall not render ineffective or invalidate unaffected portions of this Agreement.
4. Maintenance of Records.
Books, documents, papers, accounting records, and other evidence pertaining to costs incurred shall be maintained by Consultant and made available at all reasonable times during the contract period and for four (4) years from the date of final payment under the contract for inspection by City.
5. Term
The term of this Agreement shall be from February 10, 2025, to December 31, 2025, unless earlier terminated as provided herein. The Parties may, by mutual, written consent, extend the term of this Agreement if necessary to complete the Project. Consultant shall perform its services in a prompt and timely manner within the term of this Agreement and shall commence performance upon receipt of written notice from the City to proceed ("Notice to Proceed"). The Notice to Proceed shall set forth the date of commencement of work.
Consultant shall perform its services in a prompt and timely manner and shall commence performance upon receipt of written notice from the City to proceed ("Notice to Proceed").
Consultant shall complete the services required hereunder within 324 calendar days. The Notice to Proceed shall set forth the date of commencement of work.
6. Delays in Performance.
a. Neither City nor Consultant shall be considered in default of this Agreement for delays in performance caused by circumstances beyond the reasonable control of the non- performing party. For purposes of this Agreement, such circumstances include but are not limited to, abnormal weather conditions; floods; earthquakes; fire; epidemics; pandemics; war; riots and other civil disturbances; strikes, lockouts, work slowdowns, and other labor disturbances; sabotage or judicial restraint.
b. Should such circumstances occur, the non-performing party shall, within a reasonable time of being prevented from performing, give written notice to the other party describing the circumstances preventing continued performance and the efforts being made to resume performance of this Agreement.
7. Compliance with Law.
a. Consultant shall comply with all applicable laws, ordinances, codes and regulations of the federal, state and local government, including Cal/OSHA requirements. b. If required, Consultant shall assist the City, as requested, in obtaining and maintaining all permits required of Consultant by federal, state and local regulatory agencies. 2
c. If applicable, Consultant is responsible for all costs of clean up and/ or removal of hazardous and toxic substances spilled as a result of his or her services or operations performed under this Agreement.
8. Standard of Care
Consultant's services will be performed in accordance with generally accepted professional practices and principles and in a manner consistent with the level of care and skill ordinarily exercised by members of the profession currently practicing under similar conditions at the location the services are provided. In providing the services hereunder, Consultant may rely on all data and information provided by or on behalf of City.
9. Assignment and Subconsultant
Consultant shall not assign, sublet, or transfer this Agreement or any rights under or interest in this Agreement without the written consent of the City, which may be withheld for any reason. Any attempt to so assign or so transfer without such consent shall be void and without legal effect and shall constitute grounds for termination. Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement. Nothing contained herein shall prevent Consultant from employing independent associates, and subconsultants as Consultant may deem appropriate to assist in the performance of services hereunder.
10. Independent Contractor
Consultant is retained as an independent contractor and is not an employee of City. No employee or agent of Consultant shall become an employee of City. The work to be performed shall be in accordance with the work described in this Agreement, subject to such directions and amendments from City as herein provided.
a. PERS Eligibility Indemnification
In the event that Consultant or any employee, agent, or subcontractor of Consultant providing services under this Agreement claims or is determined by a court of competent jurisdiction or the California Public Employees Retirement System ("PERS") to be eligible for enrollment in PERS as an employee of the City, Consultant shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of Consultant or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of City.
Notwithstanding any other agency, state or federal policy, rule, regulation, law or ordinance to the contrary, Consultant and any of its employees, agents, and subcontractors providing service under this Agreement shall not qualify for or become entitled to, and hereby agree to waive any claims to, any compensation, benefit, or any incident of employment by City, including but not limited to eligibility to enroll in PERS as an employee of City and entitlement to any contribution to be paid by City for employer contribution and/or employee contributions for PERS benefits.
11. Insurance. Consultant shall not commence work for the City until it has provided evidence satisfactory to the City it has secured all insurance required under this section. In addition, Consultant shall not allow any subcontractor to commence work on any subcontract until it has secured all insurance required under this section. 3
a. Commercial General Liability
(i) The Consultant shall take out and maintain, during the performance of all work under this Agreement, in amounts not less than specified herein, Commercial General Liability Insurance, in a form and with insurance companies acceptable to the City. (ii) Coverage for Commercial General Liability insurance shall be at least as broad as the following:
(1) Insurance Services Office Commercial General Liability coverage (Occurrence Form CG 00 01) or exact equivalent. (iii) Commercial General Liability Insurance must include coverage for the following:
(1) Bodily Injury and Property Damage
(2) Personal Injury/Advertising Injury
(3) Premises/Operations Liability
(4) Products/Completed Operations Liability
(5) Aggregate Limits that Apply per Project
(6) Explosion, Collapse and Underground (UCX) exclusion deleted
(7) Contractual Liability with respect to this Agreement (8) Property Damage
(9) Independent Contractors Coverage
(iv) The policy shall contain no endorsements or provisions limiting coverage for (1) contractual liability; (2) cross liability exclusion for claims or suits by one insured against another; (3) products/completed operations liability; or (4) contain any other exclusion contrary to the Agreement.
(v) The policy shall give City, its officials, officers, employees, agents and City designated volunteers additional insured status using ISO endorsement forms CG 20 10 10 01 and 20 37 10 01, or endorsements providing the exact same coverage. (vi) The general liability program may utilize either deductibles or provide coverage excess of a self-insured retention, subject to written approval by the City, and provided that such deductibles shall not apply to the City as an additional insured. b. Automobile Liability
(i) At all times during the performance of the work under this Agreement, the Consultant shall maintain Automobile Liability Insurance for bodily injury and property damage including coverage for owned, non-owned and hired vehicles, in a form and with insurance companies acceptable to the City.
(ii) Coverage for automobile liability insurance shall be at least as broad as Insurance Services Office Form Number CA 00 01 covering automobile liability (Coverage Symbol 1, any auto).
(iii) The policy shall give City, its officials, officers, employees, agents and City designated volunteers additional insured status. 4
(iv) Subject to written approval by the City, the automobile liability program may utilize deductibles, provided that such deductibles shall not apply to the City as an additional insured, but not a self-insured retention.
c. Workers' Compensation/Employer's Liability
(i) Consultant certifies that he/she is aware of the provisions of Section 3700 of the California Labor Code which requires every employer to be insured against liability for workers' compensation or to undertake self-insurance in accordance with the provisions of that code, and he/she will comply with such provisions before commencing work under this Agreement.
(ii) To the extent Consultant has employees at any time during the term of this Agreement, at all times during the performance of the work under this Agreement, the Consultant shall maintain full compensation insurance for all persons employed directly by him/her to carry out the work contemplated under this Agreement, all in accordance with the "Workers' Compensation and Insurance Act," Division IV of the Labor Code of the State of California and any acts amendatory thereof, and Employer's Liability Coverage in amounts indicated herein.
Consultant shall require all subconsultants to obtain and maintain, for the period required by this Agreement, workers' compensation coverage of the same type and limits as specified in this section.
d. Professional Liability (Errors and Omissions)
At all times during the performance of the work under this Agreement the Consultant shall maintain professional liability or Errors and Omissions insurance appropriate to its profession, in a form and with insurance companies acceptable to the City and in an amount indicated herein.
This insurance shall be endorsed to include contractual liability applicable to this Agreement and shall be written on a policy form specifically designed to protect against acts, errors or omissions of the Consultant. "Covered Professional Services" as designated in the policy must specifically include work performed under this Agreement. The policy must"pay on behalf of"the insured and must include a provision establishing the insurer's duty to defend. e. Minimum Policy Limits Required
(i) The following insurance limits are required for the Agreement:
Combined Single Limit
Commercial General Liability $1,000,000 per occurrence/ $2,000,000 aggregate for bodily injury, personal injury, and property
damage
Automobile Liability $1,000,000 combined single limit Employer's Liability $1,000,000 per accident or disease Professional Liability $1,000,000 per claim and aggregate (errors and omissions)
(ii) Defense costs shall be payable in addition to the limits. 5
(iii) Requirements of specific coverage or limits contained in this section are not intended as a limitation on coverage, limits, or other requirement, or a waiver of any coverage normally provided by any insurance. Any available coverage shall be provided to the parties required to be named as Additional Insured pursuant to this Agreement. f. Evidence Required
Prior to execution of the Agreement, the Consultant shall file with the City evidence of insurance from an insurer or insurers certifying to the coverage of all insurance required herein.
Such evidence shall include original copies of the ISO CG 00 01 (or insurer's equivalent) signed by the insurer's representative and Certificate of Insurance (Acord Form 25-S or equivalent), together with required endorsements. All evidence of insurance shall be signed by a properly authorized officer, agent, or qualified representative of the insurer and shall certify the names of the insured, any additional insureds, where appropriate, the type and amount of the insurance, the location and operations to which the insurance applies, and the expiration date of such insurance.
g. Policy Provisions Required
(i) Consultant shall provide the City at least thirty(30)days prior written notice of cancellation of any policy required by this Agreement, except that the Consultant shall provide at least ten (10) days prior written notice of cancellation of any such policy due to non- payment of premium. If any of the required coverage is cancelled or expires during the term of this Agreement, the Consultant shall deliver renewal certificate(s) including the General Liability Additional Insured Endorsement to the City at least ten (10) days prior to the effective date of cancellation or expiration.
(ii) The Commercial General Liability Policy and Automobile Policy shall each contain a provision stating that Consultant's policy is primary insurance and that any insurance, self-insurance or other coverage maintained by the City or any named insureds shall not be called upon to contribute to any loss.
(iii) The retroactive date (if any) of each policy is to be no later than the effective date of this Agreement. Consultant shall maintain such coverage continuously for a period of at least three years after the completion of the work under this Agreement. Consultant shall purchase a one (1) year extended reporting period A) if the retroactive date is advanced past the effective date of this Agreement; B) if the policy is cancelled or not renewed; or C) if the policy is replaced by another claims-made policy with a retroactive date subsequent to the effective date of this Agreement.
(iv) All required insurance coverages, except for the professional liability coverage, shall contain or be endorsed to provide a waiver of subrogation in favor of the City, its officials, officers, employees, agents, and volunteers or shall specifically allow Consultant or others providing insurance evidence in compliance with these specifications to waive their right of recovery prior to a loss. Consultant hereby waives its own right of recovery against City, and shall require similar written express waivers and insurance clauses from each of its subconsultants.
(v) The limits set forth herein shall apply separately to each insured against whom claims are made or suits are brought, except with respect to the limits of liability.
Further the limits set forth herein shall not be construed to relieve the Consultant from liability in excess of such coverage, nor shall it limit the Consultant's indemnification obligations to the City 6
and shall not preclude the City from taking such other actions available to the City under other provisions of the Agreement or law.
h. Qualifying Insurers
(i) All policies required shall be issued by acceptable insurance companies, as determined by the City, which satisfy the following minimum requirements:
(1) Each such policy shall be from a company or companies with a current A.M. Best's rating of no less than A:VII and admitted to transact in the business of insurance in the State of California, or otherwise allowed to place insurance through surplus line brokers under applicable provisions of the California Insurance Code or any federal law.
Additional Insurance Provisions
(i) The foregoing requirements as to the types and limits of insurance coverage to be maintained by Consultant, and any approval of said insurance by the City, is not intended to and shall not in any manner limit or qualify the liabilities and obligations otherwise assumed by the Consultant pursuant to this Agreement, including but not limited to, the provisions concerning indemnification.
(ii) If at any time during the life of the Agreement, any policy of insurance required under this Agreement does not comply with these specifications or is canceled and not replaced, City has the right but not the duty to obtain the insurance it deems necessary and any premium paid by City will be promptly reimbursed by Consultant or City will withhold amounts sufficient to pay premium from Consultant payments. In the alternative, City may cancel this Agreement.
(iii) The City may require the Consultant to provide complete copies of all insurance policies in effect for the duration of the Project. (iv) Neither the City nor any of its officials, officers, employees, agents or volunteers shall be personally responsible for any liability arising under or by virtue of this Agreement.
j. Subconsultant Insurance Requirements. Consultant shall not allow any subcontractors or subconsultants to commence work on any subcontract until they have provided evidence satisfactory to the City that they have secured all insurance required under this section.
Policies of commercial general liability insurance provided by such subcontractors or subconsultants shall be endorsed to name the City as an additional insured using ISO form CG 20 38 04 13 or an endorsement providing the exact same coverage. If requested by Consultant, City may approve different scopes or minimum limits of insurance for particular subcontractors or subconsultants.
12. Indemnification.
a. To the fullest extent permitted by law, Consultant shall defend (with counsel reasonably acceptable to City), indemnify and hold the City, its officials, officers, employees, and volunteers, free and harmless from all claims, demands, causes of action, costs, expenses, liability, loss, damage or injury of any kind, in law or equity, to property or persons, including wrongful death, to the extent caused by the negligent acts, errors or omissions, or willful 7
misconduct of Consultant, its officials, officers, employees, subcontractors, consultants or agents in the performance of the Consultant's services, the Project or this Agreement. Consultant's obligation to indemnify shall not be restricted to insurance proceeds, if any, received by Consultant, the City, its officials, officers, employees, agents, or volunteers. Consultant shall have no obligation to indemnify the City or any other indemnified person against liability for claims by a third party for failure to comply with its obligations under Article XIII D of the California Constitution (Proposition 218) The indemnity obligations outlined in this Section shall not extend to claims arising out of the City's sole negligence or willful misconduct. b. If Consultant's obligation to defend, indemnify, and/or hold harmless arises out of Consultant's performance of "design professional" services (as that term is defined under Civil Code section 2782.8), then, and only to the extent required by Civil Code section 2782.8, which is fully incorporated herein, Consultant's indemnification obligation shall be limited to claims to the extent caused by the negligence, recklessness, or willful misconduct of the Consultant, and Consultant's liability for such claim, including the cost to defend, shall not exceed the Consultant's proportionate percentage of fault.
13. California Labor Code Requirements.
a. Consultant is aware of the requirements of California Labor Code Sections 1720 et seq. and 1770 et seq., which require the payment of prevailing wage rates and the performance of other requirements on certain "public works" and "maintenance" projects ("Prevailing Wage Laws"). 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. Consultant shall defend, indemnify and hold the City, its officials, officers, employees and agents free and harmless from any claims, liabilities, costs, penalties or interest arising out of any failure or alleged failure to comply with the Prevailing Wage Laws. It shall be mandatory upon the Consultant and all subconsultants to comply with all California Labor Code provisions, which include but are not limited to prevailing wages (Labor Code Sections 1771, 1774 and 1775), employment of apprentices (Labor Code Section 1777.5), certified payroll records (Labor Code Sections 1771.4 and 1776), hours of labor(Labor Code Sections 1813 and 1815) and debarment of contractors and subcontractors (Labor Code Section 1777.1). The requirement to submit certified payroll records directly to the Labor Commissioner under Labor Code section 1771.4 shall not apply to work performed on a public works project that is exempt pursuant to the small project exemption specified in Labor Code Section 1771.4. b. If the services are being performed as part of an applicable "public works" or "maintenance" project, then pursuant to Labor Code Sections 1725.5 and 1771.1, the Consultant and all subconsultants performing such services must be registered with the Department of Industrial Relations. Consultant shall maintain registration for the duration of the Project and require the same of any subconsultants, as applicable. Notwithstanding the foregoing, the contractor registration requirements mandated by Labor Code Sections 1725.5 and 1771.1 shall not apply to work performed on a public works project that is exempt pursuant to the small project exemption specified in Labor Code Sections 1725.5 and 1771.1. c. This Agreement may also be subject to compliance monitoring and enforcement by the Department of Industrial Relations. It shall be Consultant's sole responsibility to comply with all applicable registration and labor compliance requirements. Any stop orders issued by the Department of Industrial Relations against Consultant or any subcontractor that affect Consultant's performance of services, including any delay, shall be Consultant's sole responsibility. Any delay arising out of or resulting from such stop orders shall be considered 8
Consultant caused delay and shall not be compensable by the City. Consultant shall defend, indemnify and hold the City, its officials, officers, employees and agents free and harmless from any claim or liability arising out of stop orders issued by the Department of Industrial Relations against Consultant or any subcontractor.
14. Verification of Employment Eligibility.
By executing this Agreement, Consultant verifies that it fully complies with all requirements and restrictions of state and federal law respecting the employment of undocumented aliens, including, but not limited to, the Immigration Reform and Control Act of 1986, as may be amended from time to time, and shall require all subconsultants and sub-subconsultants to comply with the same.
15. Reserved
Consultant is hereby made aware of the City's requirements regarding materials, as set forth in which are deemed to be a part of this Agreement.
16. Laws and Venue.
This Agreement shall be interpreted in accordance with the laws of the State of California.
If any action is brought to interpret or enforce any term of this Agreement, the action shall be brought in a state or federal court situated in the County of San Bernardino, State of California. 17 Termination or Abandonment
a. City has the right to terminate or abandon any portion or all of the work under this Agreement by giving ten (10)calendar days written notice to Consultant. In such event, City shall be immediately given title and possession to all original field notes, drawings and specifications, written reports and other documents produced or developed by Consultant for that portion of the work completed and/or being abandoned and intended by Consultant as a deliverable hereunder. City shall pay Consultant the reasonable value of services rendered for any portion of the work completed prior to termination. If said termination occurs prior to completion of any task for the Project for which a payment request has not been received, the charge for services performed during such task shall be the reasonable value of such services, based on an amount mutually agreed to by City and Consultant of the portion of such task completed but not paid prior to said termination. City shall not be liable for any costs other than the charges or portions thereof which are specified herein. Consultant shall not be entitled to payment for unperformed services, and shall not be entitled to damages or compensation for termination of work.
b. Consultant may terminate its obligation to provide further services under this Agreement upon thirty(30) calendar days'written notice to City only in the event of substantial failure by City to perform in accordance with the terms of this Agreement through no fault of Consultant.
18 Documents. Except as otherwise provided in "Termination or Abandonment," above, all original field notes, written reports, Drawings and Specifications and other documents, produced or developed for the Project by Consultant and intended by Consultant as a deliverable hereunder shall, upon payment in full for the services described in this Agreement, be furnished to and become the property of the City. Nothing in this Agreement shall be deemed or construed 9
as a waiver, release, transfer, assignment or divestiture by Consultant of any of its intellectual property, know-how or trade secrets.
19. Organization
Consultant shall assign Sudhir Pardiwala Project Manager. The Project Manager shall not be removed from the Project or reassigned without the prior written consent of the City.
20. Limitation of Agreement.
This Agreement is limited to and includes only the work included in the Project described above.
21. Notice
Any notice or instrument required to be given or delivered by this Agreement may be given or delivered by depositing the same in any United States Post Office, certified mail, return receipt requested, postage prepaid, addressed to:
CITY: CONSULTANT:
City of Upland Raftelis Financial Consultants, Inc. 460 N. Euclid Avenue 227 West Trade Street, Suite 1400 Upland, CA 91786 Charlotte, NC 28202
Attn: Environmental Compliance Programs Attn: Sudhir Pardiwala Manager, Public Works Department
and shall be effective upon receipt thereof.
22. Third Party Rights
Nothing in this Agreement shall be construed to give any rights or benefits to anyone other than the City and the Consultant.
23. Equal Opportunity Employment.
Consultant represents that it is an equal opportunity employer and that it shall not discriminate against any employee or applicant for employment because of race, religion, color, national origin, ancestry, sex, age or other interests protected by the State or Federal Constitutions. 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.
24. Entire Agreement
This Agreement, with its exhibits, represents the entire understanding of City and Consultant as to those matters contained herein, and supersedes and cancels any prior or contemporaneous oral or written understanding, promises or representations with respect to those matters covered hereunder. Each Party acknowledges that no representations, inducements, promises or agreements have been made by any person which are not incorporated 10
herein, and that any other agreements shall be void. This Agreement may not be modified or altered except in writing signed by both Parties hereto. This is an integrated Agreement.
25. Severability
The unenforceability, invalidity or illegality of any provision(s) of this Agreement shall not render the remaining provisions unenforceable, invalid or illegal.
26. Successors and Assigns
This Agreement shall be binding upon and shall inure to the benefit of the successors in interest, executors, administrators and assigns of each Party to this Agreement. However, Consultant shall not assign or transfer by operation of law or otherwise any or all of its rights, burdens, duties or obligations without the prior written consent of City. Any attempted assignment without such consent shall be invalid and void.
27. Non-Waiver
None of the provisions of this Agreement shall be considered waived by either Party, unless such waiver is specifically specified in writing.
28. Time of Essence
Time is of the essence for each and every provision of this Agreement.
29. City's Right to Employ Other Consultants
City reserves its right to employ other consultants, including engineers, in connection with this Project or other projects.
30. 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. 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 director, official, 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.
[SIGNATURES ON FOLLOWING PAGE]
11
SIGNATURE PAGE FOR PROFESSIONAL SERVICES AGREEMENT
BETWEEN CITY OF UPLAND
AND RAFTELIS FINANCIAL CONSULTANTS, INC.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date first above written.
CITY OF UPLAND Raftelis Financial Consultants, Inc.
Approved By:
By: By:
Michael Blay
City Manager Its: Executive Vice President
Printed Name:
ATTEST:
By: By:
Keri Johnson
City Clerk Its: Vice President
Printed Name:
APPROVED AS TO FORM:
By:
Best Best & Krieger LLP
City Attorney
12
EXHIBIT A
13
RAFTELIS 5
Scope of Work
TASK 1 - PROJECT MANAGEMENT AND INITIATION (KICK-OFF MEETING) Task 1.1 — Ongoing Project Management and Quality Assurance/Quality Control Process The proposed project approach entails several different yet interrelated work efforts that will require effective coordination between City staff and the Raftelis Team. Our management approach stresses communication, teamwork, objectivity,and accountability for meeting project objectives to ensure that all deadlines and objectives are met in a timely and efficient manner.We believe in a no-surprises approach so that the client is aware of the status of the project at all times.This task includes general administrative duties,including client communication, billing,project documentation,and overall project administration.We assumed that staff meetings are virtual and City Council meetings are in person.We can have in-person meetings if preferred. Both the Project Manager and Technical Reviewer will perform QA/QC on the model results and our recommendations to ensure they are consistent with industry standards and the current rate-setting environment.
Task 1.2— Project Initiation and Data Collection
The kick-off meeting provides a solid foundation for the project and serves as a forum in which City staff can provide input on the project's objectives,approach,work plan,scheduling,and priorities. Raftelis will develop a kick-off meeting package that contains the meeting agenda,and a broad list of questions related to the City's water and recycled water system operations.This kick-off meeting will also serve as a forum for Raftelis to develop an understanding of the City's pricing objectives,financial goals,and other important utility issues.
Raftelis will review the rate study report previously prepared to understand the City's current rate structure development.A detailed data request list is submitted prior to the kick-off meeting so that the City can assemble the appropriate data in the required format.The Raftelis team studies the data to understand revenue streams, operating and capital expenses,and customer counts and use patterns. In addition, Raftelis will review the current reserve structure and propose reserve recommendations that are consistent with industry standards as well as the City's risk management tolerance to maintain financial stability.
MEETINGS
• One kick-off meeting with City staff
DELIVERABLES
• Data request list and kick-off meeting summary memorandum TASK 2 - DATA COLLECTION AND REVIEW
The purpose of this task is to gather and review the relevant information,documents,and analyses that will be required to conduct the rate study.As part of this task,a detailed data request list will be prepared and submitted to City staff upon notice to proceed so all appropriate data can be forwarded to Raftelis before the kick-off meeting, where the data can be reviewed and any questions answered.
DELIVERABLES
• Data request list and kick-off meeting summary memorandum
RAFTELIS 6
TASK 3 — QUALITY ASSURANCE (QA) AND QUALITY CONTROL (QC) PROCESS The QA/QC process ensures that all work performed by Raftelis on this project will be accurate and of the highest quality. Steve Gagnon, PE,will be the lead Technical Reviewer for this project,ensuring it meets both Raftelis'and industry standards.The QA/QC reviewer's primary responsibility is to review the work effort for consistency, accuracy,and validity and ensure that the cost of service and rate models are functioning properly and based on sound rate-making principles and standard industry practice.The reviewer also ensures that the report produced is comprehensive,consistent with the results,and meets the high-quality standards of Raftelis.The QA/QC process is accomplished through periodic reviews of the models throughout the course of their development.
TASK 4 — FINANCIAL PLAN DEVELOPMENT
The financial plan is a cash flow modelling exercise that ascertains the additional revenue needed to ensure the financial integrity of the utility. It does so by projecting existing rate revenue,other operating and non-operating revenues,debt service payments,and operating and capital expenses over a 10-year period. Existing rate revenue is based on anticipated water sales and the number of customers served by the utilities.We will make prudent water sales and customer growth assumptions with input from City staff.
Raftelis will develop a 10-year cash flow analysis to determine revenue adjustments.We will also review reserve policies to recommend appropriate reserve balances (operating, capital,rate stabilization, etc.) that are consistent with industry standards as well as the City's risk tolerance.The financial plan will be presented in an easy-to- understand format on an interactive dashboard that shows the impacts of various assumptions so that informed decisions regarding revenue adjustments,capital financing through rates or debt,and reserve balances can be made efficiently.
Several features of the model dashboards include the ability to show or indicate:
1. Revenue adjustments required over the planning horizon to meet debt coverage,fund capital projects,and achieve reserve targets
2. Reserve balances and reserve targets as well as debt service coverage ratios (days cash on hand, reserve funding levels)
3. Projected operating costs and revenue streams
4. Operating cost breakdown(O&M,water purchases,debt service payments,pay-as-you-go (PAYGO) capital, etc.)
5. Different capital funding sources such as PAYGO (rate funding),debt financing,or grant funding We will work with City staff to determine the most appropriate financial plan and rate design. Raftelis models are designed to be user-friendly while being flexible enough to show the City's sensitivity to various assumptions, allowing both City staff and City Council to make informed decisions.
MEETINGS
• Two webinars to review the results of the financial plan
DELIVERABLES
• Financial plan model in Excel
RAFTELIS 7
TASK 5 - COST-OF-SERVICE ANALYSIS
The annual costs of providing services will be allocated among customer classes commensurate with their service requirements -i.e.,how they use the system. Costs are identified and allocated to cost components and distributed to respective customer classes according to the industry standards provided in the AWWA M1 Manual.
Throughout the cost allocation process,Raftelis will incorporate the City's policy considerations,as well as current federal,state,and local rules and regulations such as Proposition 218.We will liaise with the City's legal counsel on rates to ensure proposed cost allocations bases and cost recovery rationale is consistent with Proposition 218, recent case law,and overall defensibility of rates.
The water and recycled water cost-of-service analyses will be based on industry standards and methodologies approved by the AWWA and described in their Manual M1 Principles of Water Rates,Fees and Charges(co- authored by Raftelis staff). Cost allocations among customer classes for water and recycled water will likely be based on the AWWA-approved Base-Extra Capacity approach which focuses on the different usage patterns (or peaking characteristics) demonstrated by each customer class. During the cost of service analysis Raftelis will evaluate the City's distinct customer classes, if warranted. Based on the revenue requirement identified in the financial plan,water expenses,such as the purchase,treatment, and distribution of water, are allocated to cost causation components,including supply, delivery,capacity-related costs,meter-related costs,customer costs, conservation costs,and other direct and indirect costs consistent with industry standards. • Webinars if needed
DELIVERABLES
• Cost-of-service analyses in Excel
TASK 6 - Design Rates
Properly designed rates support and optimize a blend of various utility objectives,such as affordability for essential needs,fairness and equity,revenue stability,and ease of implementation. Raftelis will develop comparable rate alternatives according to the City's objectives,with consideration of industry standards and defensibility considering recent legal challenges and Proposition 218.
Task 6.1 Develop Rate Design Options
Raftelis will develop rate models with the flexibility to evaluate alternative rate structures including options such as inclining tiers,seasonal rates,and a uniform rate.The model will have the capability to examine the different rate structure scenarios to enhance revenue stability,fully fund operations and capital projects through rates,further promote rate affordability,and address fairness of rates within each class. Raftelis will examine the water utility's current three-tier Single Family Residential (SFR) rate structure,uniform class rates,and the recovery of fixed and volumetric revenues based on fixed and volumetric costs.
Tiered Water Rates
In today's rate-setting environment,it is imperative to show the nexus between the cost to serve water and the rate charged for service in each tier.For any tiered structure, Raftelis will calculate and demonstrate the nexus between
RAFTELIS 8
costs and rates by tabulating the tiered rates to show each unit cost component individually.These cost components may include water supply costs,system delivery costs, capacity or peaking costs,meter servicing costs,customer service costs,and conservation costs,among others.This rate derivation will communicate to customers the cost drivers behind the rate in each tier and each class.An example of our build-up of"rate components"to final commodity rates is shown in the table below.The five rate components, derived from the cost of service,are summed to derive the final commodity rates.
IW V ILuc
Delivery Peaking Conservation Proposed
Supply Offset Rates
Residential
Tier I $1.82 $1.96 $0.92 $0.00 ($0.32) $4.39
Tier II $4.04 $1.96 $1.22 $0.00 ($0.32) $6.91 Tier III $6.45 $1.96 $1.91 $0.10 $0.00 $10.43 During our analyses,we will examine how the current tiers and tier breakpoints serve the utility's objectives and discuss any recommended revisions.We design our rate models to allow for multiple rate scenario analyses to show:
1. Different rate structures based on achieving different policy and rate philosophy objectives
2. Different levels of water use-for example an optimistic,most likely,and pessimistic scenario
3. Varying breakpoints for tiered water rates
Task 6.2 Comparison of Alternative Rate Design Structures Rate adjustments stem from a change in the total rate revenue needs and/or a change in the rate structure.The total rate adjustment can sometimes cause"rate shock"to certain customer groups. In our impact analysis graphics,we calculate estimated monthly bills at each level of usage assuming the proposed rate structure was already in place to determine the true impact of the new rate structure.The customer impact analysis will include a series of tables and figures that show projected rate impacts by customer class at various levels of usage.
Understanding customer impacts, and taking corrective action,if necessary,allows us to design public outreach strategies for generating customer buy-in and successful rate implementation.As an example,the customer impact illustration shown below-left indicates that a customer with a 5/8-inch meter using 20 hcf per billing period will see a$0.80,or 1.2%,increase in the bimonthly bill.We also calculate the bill impacts in aggregate to be able to appreciate how different rate proposals and structures impact classes in aggregate.This visual has proved powerful in discussions with staff and elected officials when entertaining changes to rate structures.
Sample Bi-Monthly Customer Biliswf 5J8 inch meter %Bills All Customer Bill Impacts 5160 35% 32%
S120 - 30% -
sa0 I I 25% =
15%
159L - 13% 13%
11% 11)
% 11% 476
61-Mont,h,0, 20 hcf 25 hcf 30 hcf 40 hcf 50 hcf 10% _ ■CY 2015 Bills $64.21 $7321 $82.21 $101.31 $120.41 5% ■CY 2016 Bilk $65.01 $72.81 580.61 5110.41 $140.21 Impact($) $0.80 -50.40 -$i.so $9.10 519-80 0% s$o $a-53 $3-$5 $5-$10 $10-520 $20-$50 >$50
Impact(%) 1.2% -0.5% -1.9% 9.0% 16.4% $Change in Bi-Monthly Bills
L
Proposed rates will be designed to be defensible and to fall within regulatory and legal requirements.While Raftelis is not a law firm,we have helped numerous agencies throughout the State develop rates and rate structures that are Page 244 of 377
RAFTELIS 9
defensible and meet Proposition 218 requirements. Raftelis assisted the Sweetwater Authority, City of San Juan Capistrano,and Soquel Creek Water District with revised rates after recent legal challenges.We will work with the City's legal counsel on water rates throughout the study to ensure legal counsel,staff,and the Raftelis Project Team agree prior to presenting any modifications to or new rate structures in a public forum.
Raftelis will discuss preliminary results with staff during two webinars and one in-person meeting. In the meetings,we will discuss the benefits and challenges of each rate structure and each scenario and refine the options that will be presented to City Council.
PLANNED MEETINGS:
• Two (2) meetings with City staff to discuss rate options and one (1)meeting with City staff to discuss the comparison of alternative rate structures
DELIVERABLES:
• Rate model and customer bill impacts in Microsoft Excel Task 7 - Develop Drought Rates
Raftelis will provide drought rates derived from the underlying existing rate structure. In order to simulate drought conditions,the rate Model will reduce revenue associated with a drop in consumption,but at the same time it will reduce any variable costs related to water production. Based on the usage analysis,we can identify where drought rates need to be set in order to ensure all revenue requirements are met during a period of reduced consumption.
Penalty rates can also be set for multiple years and will be ready to implement as soon as conditions warrant,so that valuable time is not lost.
TASK 8 - PRESENTATION TO CITY COUNCIL
Raftelis will present the study process and results to the City Council.With luck,we would get City Council approval to proceed with the Public Notice at the first City Council presentation. However,sometimes the City Council would like to see different rate adjustments or have other input before providing direction.We have assumed one City Council presentation and have provided a price for an additional City Council presentation.
MEETING
• One presentation to City Council (presentation materials will be provided to City staff prior to the presentation for review)
DELIVERABLES
• Graphics and/or charts in PowerPoint
TASK 9 - REPORT PREPARATION
The last step of the rate-making process,and in part to comply with Proposition 218 requirements, documents the study results in a study report to inform the public about the proposed changes,the rationale and justifications behind the changes,and their anticipated financial impacts in lay terms.The study report serves as part of the City's administrative record to justify the proposed rates.
RAFTELIS 10
Task 9.1 Draft Report
The draft report will include an executive summary highlighting the major issues addressed,decisions reached, and recommended rates developed during the study.The main body of the report will include brief physical descriptions of the system and City characteristics,details of the financial plan and reserve policies,cost of service analysis,rate design details,and the proposed rates.They will also contain discussions on rate structure selection and rate design assumptions.The methodology describing the cost of service,rate calculations, and proposed five- year rates will be described in detail so that the nexus between costs and rates is clearly defined and understandable. Raftelis will provide a draft report to staff and external legal counsel for review. Raftelis will complete a draft report in time for City Council meetings where the Council will select their preferred rates.Any changes, comments,and feedback will be incorporated into the final models and final reports.
Task 9.2 Final Report
Recent legal challenges and court decisions have emphasized the importance of a thorough administrative record and defensible methodology of the final rates for service.To ensure that the study includes a thorough administrative record,the final report will include exhibits listing all assumptions and methodologies used to develop the financial plan,allocate costs to serve customers,and derive rates.The report will lead the reader from the adopted budgets through final rates and customer impacts,with the ability to do the math along the way.
Raftelis will incorporate changes,comments,and edits from City staff,legal counsel,and City Council when completing the final reports.
MEETINGS:
• One(1)meeting with City staff and legal counsel to discuss and review the draft report DELIVERABLES:
• Presentation materials
• Draft and final study reports in Microsoft Word and Adobe PDF TASK 10 - PROPOSITION 218 PUBLIC HEARING PRESENTATION
Raftelis will present the study results at a Proposition 218 hearing, during which we will address the City Council and the public's questions and comments. Presentation materials will be provided to City staff for review before the Proposition 218 presentation.
MEETINGS
• One Proposition 218 presentation
DELIVERABLES
• Graphics and/or charts in PowerPoint
OPTIONAL TASK 11 - PROPOSITION 218 NOTICE
Raftelis will prepare the Proposition 218 Notice for review by the City's Attorney.The notice will outline the proposed rate changes,will explain the right to challenge the rates,and will meet and comply with the noticing requirements of Proposition 218.
RAFTELIS 11
MEETINGS
• Web meeting to discuss the Proposition 218 Notice
DELIVERABLES
• Proposition 218 Notice
OPTIONAL TASK 12 — ADDITIONAL CITY COUNCIL MEETINGS
Should additional City Council meetings be required,we have shown the cost per meeting.
MEETINGS
• As needed
DELIVERABLES
• Graphics and/or charts in PowerPoint format
OPTIONAL TASK 13 — CAPITAL IMPROVEMENT PLAN & OPERATING BUDGET
SERVICES
Financial forecasting and determining water rates are only as good as the operating and capital costs that go into them. If there is uncertainty in operating or capital costs,asset management costs, or opportunities to reduce costs, those can have direct impacts on the finances and rates of the utility.We can also help you make your master plans and asset management plans an actionable capital improvement plan that can provide a high level of service while maintaining rates as low as good service will permit.We offer capital improvement program and operating budget review services compared to utility best practices to help our clients make sure they have the right amount of capital, asset management,and operating costs in their budgets and look for ways to increase efficiencies,reduce costs,and align their budgets with utility best practices.This service could potentially reduce your cost of service,reduce or eliminate any needed rate increases,and find some ways to help deliver your CIP or Operations more efficiently depending on your exact needs. It could also help you justify increases to the CIP and rates to address ongoing asset management needs or needed facility/equipment improvements consistent with utility best practices.This type of review also offers an independent third party review of your budgets compared to utility best practices which we have found is beneficial to our clients as rates are developed,proposed,and ultimately approved.
We can include this utility best practice review in our scope of work to review your CIP and Operations Budgets as we work with you to perform the rate study.
MEETINGS
• As needed
DELIVER ARLF
• CIP and/or Operating Budget reviews with improvement recommendations in Word and/or Excel format
EXHIBIT B
Schedule of Charges/Payments
Consultant will invoice City on a monthly cycle. Consultant will include with each invoice a detailed progress report that indicates the amount of budget spent on each task. Consultant will inform City regarding any out-of-scope work being performed by Consultant. This is a time-and-materials contract.
Fee
The table below shows the hourly rates, hours, and total estimated fee for this project. At the bottom we show a per meeting cost should additional City Council meetings be required. 14
RAFTELIS 13
Fee
The table below shows the hourly rates,hours,and total estimated fee for this project.At the bottom we show a per meeting cost should additional City Council meetings be required. i
Meetings Hours
In Sudhir Steve Brandon Graphic Total Total Fees& Tasks Virtual Person Pardiwala Gagnon _Consultant Vatter Designer Admin Hours Expenses
1.Project Management and Initiation 1 10 2 4 2 18 $6,300 (Kick-Off Meeting)
2.Data Collection and Review 1 2 8 10 $2,790
3.Quality Assurance(QA)and 2 8 10 $3,950 Quality Control(QC)Process
4.Financial Plan Development 2 10 40 50 $13,950
5.Cost of Service Analysis 10 24 34 $10,110
6.Design Rates 2 10 24 34 $10,110
7.Develop Drought Rates 4 16 20 $5,580
8.Presentation to City Council 1 8 8 16 $5,510
9.Report Preparation 1 10 2 50 2 64 $17,340
10.Proposition 218 Public Hearing 1 8 8 2 18 $5,730 Presentation
Total Meetings/Hours 7 2 74 12 182 0 0 6 274 — Hourly Billing Rates — — $425 $375 $230 $340 $170 $100 — — Total Professional Fees — — $31,450 $4,500 $41,860 $0 $0 $600 — $78,410 Travel Expenses $210
Technology Fee $2,740
Total Expenses $2,950
Total Fees&Expenses $81,360
11.Optional-Proposition 218 Notice 1 2 8 6 I 16 $3,870
12.Optional-Additional City Council 1. 8 8 16 $5,620 Meetings
13.Optional-Capital Improvement 2 2 24 26 $9,270 Plan&Operating Budget Services
Total Optional Tasks $18,760
EXHIBIT C
Activity Schedule
Schedule
Raftelis proposes to complete the study by November 2025 as shown below:
15
RAFTELIS 12
Schedule
Raftelis proposes to complete the study by November 2025 as shown below:
TASKS Feb Mar Apr May Jun Jul 2025 Aug Sep Oct Nov 2025 2025 2025 2025 2025 2025 2025 2025 2025
1.Project Management and Initiation(Kick- •
Off Meeting)
2.Data Collection and Review •
3.Quality Assurance(QA)and Quality
Control(QC)Process
4.Financial Plan Development
5.Cost of Service Analysis
6.Design Rates
7. Develop Drought Rates
8.Presentation to City Council •
9.Report Preparation
10.Proposition 218 Public Hearing
•
Presentation
11.Optional-Proposition 218 Notice
12.Optional-Additional City Council
Meetings.
i
13.Optional-Capital Improvement Plan&
Operating Budget Services.
• Meetings
City of Upland
Water and Recycled Water Rate Study
PROPOSAL/January 8, 2025
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RAFTELIS RAFTELIS 1
January 8, 2025
City of Upland
Mr. Chris Alanis
Public Works Director
460 N. Euclid Avenue
Upland, CA 91786
Subject: Proposal for Water and Recycled Water Rate Study Dear Mr.Alanis:
Raftelis Financial Consultants, Inc. (Raftelis) is pleased to submit this proposal to conduct a Water and Recycled Water Rate Study for the City of Upland (City).We believe that our unique combination of qualifications,staff resources,local presence, California experience,and City knowledge will ensure a value-added project for the City and its ratepayers.
Raftelis was established in 1993 to provide financial, rate, and management consulting services of the highest quality to water and wastewater utilities. Since that time, Raftelis has grown to have the largest water and wastewater utility rate and financial consulting services practice in the country,with more than 160 consultants.
Our staff has provided rate and/or financial planning assistance to over 1,000 utilities across the United States and have conducted thousands of studies. Our mission has always been focused on assisting our clients in meeting their goals of financial viability.
Over the past several years,water providers around the country have experienced increasing challenges in an already demanding industry.This includes several years of supply chain issues,higher rates of operational and capital inflation,and extreme wet-dry climate cycles. In addition,tightening regulations,legislation,and litigation throughout California further compound the challenges of being a water provider at a time when cost-of-living concerns and affordability are on top of the minds of customers.
Raftelis is confident in our ability to develop optimal rate structures and deliver sustainable financial plans that are in alignment with Proposition 218 and achieve the City's short-term and long-term goals and objectives.A primary objective of this study will be to clearly show a nexus between the costs incurred by the City and the proposed rates and fees to be charged to customers. In our studies we work between agency staff,legal counsel,and industry standards to develop rate proposals that harmonize policy objectives,legal requirements,and accepted industry frameworks. Recent examples of cost-of-service studies conducted by our proposed project team of neighboring agencies include the cities of Ontario, Pomona, Redlands, Chino, Covina, etc.
To assist the City with this project,we have assembled a team with extensive experience in financial planning, demand forecasting,and rate setting; extensive knowledge in San Bernardino County and California water; and a reputation for quality of service. I, Sudhir Pardiwala,will serve as Project Manager,managing the day-to-day aspects of the project and ensuring it stays on schedule,on budget,and effectively meets the City's objectives. I 227 W.Trade Street,Suite 1400,Charlotte,NC 28202
www.raftelis.com Page 253 of 377
RRAFTELIS RAFTELIS 2
have more than forty years of experience assisting water utilities. Steve Gagnon will serve as Technical Reviewer.
He has assisted numerous agencies in Southern California as well. I will work closely with our staff consultants in conducting analyses and preparing deliverables for the project. Should you have any questions,please do not hesitate to contact me at 626.827 8931 or by email at [email protected].
Sincerely,
q / —A °
Sudhir Pardiwala
Executive Vice President
227 W.Trade Street,Suite 1400,Charlotte,NC 28202
www.raftelis.com Page 254 of 377
RAFTELIS 3
Understanding and Scope of Work
Decreased Water Use
Nearly all water agencies in California saw significant declines in consumption as a result of wetter than normal winters the past two years.This comes in the wake of decreased demand from the last drought and demand hardening at lower than historical averages.Since water sales are the City's primary source of revenue for the water utility,it is critical to examine conservative scenarios for short-term and long-term water demand.
Water Supply Costs
The City obtains most of its water from external sources.The San Antonio Water Company(SAWCo) delivers most of the City's water,with supplementary supply through The Water Facilities Authority to meet the City's peak summer and irrigation demands. Recent wet years and inflationary cost increases have resulted in large wholesale water rate adjustments across the state.Rates will need to be able to recover any rising water purchase costs for the City as a result of wholesale rate increases or supply mix changes.
Operations and Maintenance & Capital Costs
Higher rates of operational and capital inflation have impacted the City's water utility.The City's budget shows a 56%increase in water operating expenses from FY 2022-23 to FY 2023-24,with Reservoir 15 coming online in February of this year. It also has $29.4 million budgeted for capital expenditures for the current and next fiscal years. Proposed rates will need to reflect these changes while also mitigating rate shock to customers.
Methodology
There are five main steps to our rate studies:
1. Due Diligence and Policy Review
Raftelis will start with a due diligence phase to understand the underlying reason and/or goals for the rate study.
2. Financial Plan Development
We then determine future revenue requirements to sufficiently fund the utility's operation and maintenance and capital replacement and refurbishment program.We evaluate current and projected revenues,water use,and expenses,including water purchase costs.The City's Capital Improvement Programs for the utility will be integrated into their respective financial plans to fully fund capital investment.
3. Cost-of-service Analysis
The annual costs of providing water and recycled water should be allocated among customer classes commensurate with their service requirements (i.e.,how they use the system). In this step,costs are identified and allocated to functional cost components and distributed to respective customer classes according to the industry standards provided in AWWA's Manual M1,Principles of Water Rates,Fees and Charges(Manual M1).
RAFTELIS 4
4. Rate Design
Properly designed rates support and optimize a blend of utility objectives,such as affordability for essential needs, fairness and equity,revenue sufficiency,and stability. Raftelis will work with City staff to design rates according to industry standards that meet the City's rate-setting objectives and are defensible in light of recent court cases.
Raftelis will develop a customized rate model to assess different rate alternative customer impacts to facilitate informed decision making.
5. Rate Adoption
In the last step of the rate-making process,to comply with the Proposition 218 requirements,the results of the analyses are documented in a study report to help educate the public about the proposed changes,the rationale and justifications behind the changes,and their anticipated financial impacts in layman's terms.The report will detail the proposed rate structure derivation.At a public hearing,45 days after sending out the public notices, Raftelis can present our recommendations to assist in the City's rate adoption.
Scope of Work
TASK 1 — PROJECT MANAGEMENT AND INITIATION (KICK-OFF MEETING) Task 1.1 — Ongoing Project Management and Quality Assurance/Quality Control Process The proposed project approach entails several different yet interrelated work efforts that will require effective coordination between City staff and the Raftelis Team. Our management approach stresses communication, teamwork, objectivity,and accountability for meeting project objectives to ensure that all deadlines and objectives are met in a timely and efficient manner.We believe in a no-surprises approach so that the client is aware of the status of the project at all times.This task includes general administrative duties,including client communication, billing,project documentation,and overall project administration.We assumed that staff meetings are virtual and City Council meetings are in person.We can have in-person meetings if preferred. Both the Project Manager and Technical Reviewer will perform QA/QC on the model results and our recommendations to ensure they are consistent with industry standards and the current rate-setting environment.
Task 1.2 — Project Initiation and Data Collection
The kick-off meeting provides a solid foundation for the project and serves as a forum in which City staff can provide input on the project's objectives,approach,work plan, scheduling,and priorities. Raftelis will develop a kick-off meeting package that contains the meeting agenda,and a broad list of questions related to the City's water and recycled water system operations.This kick-off meeting will also serve as a forum for Raftelis to develop an understanding of the City's pricing objectives, financial goals,and other important utility issues.
Raftelis will review the rate study report previously prepared to understand the City's current rate structure development.A detailed data request list is submitted prior to the kick-off meeting so that the City can assemble the appropriate data in the required format.The Raftelis team studies the data to understand revenue streams, operating and capital expenses,and customer counts and use patterns. In addition,Raftelis will review the current reserve structure and propose reserve recommendations that are consistent with industry standards as well as the City's risk management tolerance to maintain financial stability.
MEETINGS
• One kick-off meeting with City staff
RAFTELIS 5
DELIVERABLES
• Data request list and kick-off meeting summary memorandum TASK 2 — DATA COLLECTION AND REVIEW
The purpose of this task is to gather and review the relevant information, documents,and analyses that will be required to conduct the rate study.As part of this task,a detailed data request list will be prepared and submitted to City staff upon notice to proceed so all appropriate data can be forwarded to Raftelis before the kick-off meeting, where the data can be reviewed and any questions answered.
DELIVERABLES
• Data request list and kick-off meeting summary memorandum TASK 3 — QUALITY ASSURANCE (QA) AND QUALITY CONTROL (QC) PROCESS The QA/QC process ensures that all work performed by Raftelis on this project will be accurate and of the highest quality. Steve Gagnon, PE,will be the lead Technical Reviewer for this project,ensuring it meets both Raftelis'and industry standards.The QA/QC reviewer's primary responsibility is to review the work effort for consistency, accuracy,and validity and ensure that the cost of service and rate models are functioning properly and based on sound rate-making principles and standard industry practice.The reviewer also ensures that the report produced is comprehensive, consistent with the results,and meets the high-quality standards of Raftelis.The QA/QC process is accomplished through periodic reviews of the models throughout the course of their development.
TASK 4 — FINANCIAL PLAN DEVELOPMENT
The financial plan is a cash flow modelling exercise that ascertains the additional revenue needed to ensure the financial integrity of the utility. It does so by projecting existing rate revenue,other operating and non-operating revenues,debt service payments,and operating and capital expenses over a 10-year period. Existing rate revenue is based on anticipated water sales and the number of customers served by the utilities.We will make prudent water sales and customer growth assumptions with input from City staff.
Raftelis will develop a 10-year cash flow analysis to determine revenue adjustments.We will also review reserve policies to recommend appropriate reserve balances (operating, capital,rate stabilization, etc.) that are consistent with industry standards as well as the City's risk tolerance.The financial plan will be presented in an easy-to- understand format on an interactive dashboard that shows the impacts of various assumptions so that informed decisions regarding revenue adjustments, capital financing through rates or debt,and reserve balances can be made efficiently.
Several features of the model dashboards include the ability to show or indicate:
1. Revenue adjustments required over the planning horizon to meet debt coverage,fund capital projects, and achieve reserve targets
2. Reserve balances and reserve targets as well as debt service coverage ratios (days cash on hand, reserve funding levels)
RAFTELIS 6
3. Projected operating costs and revenue streams
4. Operating cost breakdown (O&M,water purchases,debt service payments,pay-as-you-go (PAYGO) capital,etc.)
5. Different capital funding sources such as PAYGO (rate funding),debt financing,or grant funding We will work with City staff to determine the most appropriate financial plan and rate design. Raftelis models are designed to be user-friendly while being flexible enough to show the City's sensitivity to various assumptions, allowing both City staff and City Council to make informed decisions.
MEETINGS
• Two webinars to review the results of the financial plan
DELIVERABLES
• Financial plan model in Excel
TASK 5 — COST-OF-SERVICE ANALYSIS
The annual costs of providing services will be allocated among customer classes commensurate with their service requirements -i.e.,how they use the system. Costs are identified and allocated to cost components and distributed to respective customer classes according to the industry standards provided in the AWWA M1 Manual.
Throughout the cost allocation process,Raftelis will incorporate the City's policy considerations,as well as current federal,state,and local rules and regulations such as Proposition 218.We will liaise with the City's legal counsel on rates to ensure proposed cost allocations bases and cost recovery rationale is consistent with Proposition 218, recent case law,and overall defensibility of rates.
The water and recycled water cost-of-service analyses will be based on industry standards and methodologies approved by the AWWA and described in their Manual M1 Principles of Water Rates,Fees and Charges(co- authored by Raftelis staff).Cost allocations among customer classes for water and recycled water will likely be based on the AWWA-approved Base-Extra Capacity approach which focuses on the different usage patterns (or peaking characteristics) demonstrated by each customer class. During the cost of service analysis Raftelis will evaluate the City's distinct customer classes,if warranted.Based on the revenue requirement identified in the financial plan,water expenses,such as the purchase,treatment,and distribution of water,are allocated to cost causation components,including supply,delivery,capacity-related costs,meter-related costs,customer costs, conservation costs, and other direct and indirect costs consistent with industry standards.
MEETINGS
• Webinars if needed
DELIVERABLES
• Cost-of-service analyses in Excel
RAFTELIS 7
TASK 6 - Design Rates
Properly designed rates support and optimize a blend of various utility objectives,such as affordability for essential needs,fairness and equity,revenue stability,and ease of implementation. Raftelis will develop comparable rate alternatives according to the City's objectives,with consideration of industry standards and defensibility considering recent legal challenges and Proposition 218.
Task 6.1 Develop Rate Design Options
Raftelis will develop rate models with the flexibility to evaluate alternative rate structures including options such as inclining tiers,seasonal rates,and a uniform rate.The model will have the capability to examine the different rate structure scenarios to enhance revenue stability,fully fund operations and capital projects through rates, further promote rate affordability,and address fairness of rates within each class. Raftelis will examine the water utility's current three-tier Single Family Residential (SFR) rate structure,uniform class rates,and the recovery of fixed and volumetric revenues based on fixed and volumetric costs.
Tiered Water Rates
In today's rate-setting environment,it is imperative to show the nexus between the cost to serve water and the rate charged for service in each tier. For any tiered structure, Raftelis will calculate and demonstrate the nexus between costs and rates by tabulating the tiered rates to show each unit cost component individually.These cost components may include water supply costs,system delivery costs, capacity or peaking costs, meter servicing costs,customer service costs, and conservation costs,among others.This rate derivation will communicate to customers the cost drivers behind the rate in each tier and each class.An example of our build-up of"rate components"to final commodity rates is shown in the table below.The five rate components, derived from the cost of service,are summed to derive the final commodity rates.
Water Revenue Proposed
Supply Delivery Peaking Conservation Offset Rates Residential
Tier I $1.82 $1.96 $0.92 $0.00 ($0.32) $4.39
Tier II $4.04 $1.96 $1.22 $0.00 ($0.32) $6.91 Tier III $6.45 $1.96 $1.91 $0.10 $0.00 $10.43 During our analyses,we will examine how the current tiers and tier breakpoints serve the utility's objectives and discuss any recommended revisions.We design our rate models to allow for multiple rate scenario analyses to show:
1. Different rate structures based on achieving different policy and rate philosophy objectives
2. Different levels of water use-for example an optimistic,most likely, and pessimistic scenario
3. Varying breakpoints for tiered water rates
Task 6.2 Comparison of Alternative Rate Design Structures Rate adjustments stem from a change in the total rate revenue needs and/or a change in the rate structure.The total rate adjustment can sometimes cause"rate shock"to certain customer groups. In our impact analysis graphics,we calculate estimated monthly bills at each level of usage assuming the proposed rate structure was already in place to determine the true impact of the new rate structure.The customer impact analysis will include a series of tables and figures that show projected rate impacts by customer class at various levels of usage.
Understanding customer impacts, and taking corrective action,if necessary,allows us to design public outreach
RAFTELIS 8
strategies for generating customer buy-in and successful rate implementation.As an example,the customer impact illustration shown below-left indicates that a customer with a 5/8-inch meter using 20 hcf per billing period will see a$0.80,or 1.2%,increase in the bimonthly bill.We also calculate the bill impacts in aggregate to be able to appreciate how different rate proposals and structures impact classes in aggregate.This visual has proved powerful in discussions with staff and elected officials when entertaining changes to rate structures.
Sample Bi-Monthly Customer Bills wf S/8 inch meter %Bilk All Customer Bill Impacts $160 35% - 32%
$120 = 30%
r = 25%
II II 5 15%9C = 13% 13°d
11% 1(% 11% g%
6i-Monthly usage 20 hcf 25 hcf 30 hcf 90 hcf 56 hcf 1 CY2015Bills $64.21 57321 582.21 $101.31 5120.41 - ' 5%
•CY2016Bills $65.01 572.81 580.61 $116.41 5140.21 Impact(5) 50.80 -$0.40 -51.50 59.10 $19.80 5 50 50-$3 53-55 55-510 $10-$20 $20-550 >$50
Impact{%} 1.2% -0.5% -1.9% 9.0% 16.4% — — $Change in Bi-Monthly Bills L
Proposed rates will be designed to be defensible and to fall within regulatory and legal requirements.While Raftelis is not a law firm,we have helped numerous agencies throughout the State develop rates and rate structures that are defensible and meet Proposition 218 requirements. Raftelis assisted the Sweetwater Authority, City of San Juan Capistrano,and Soquel Creek Water District with revised rates after recent legal challenges.We will work with the City's legal counsel on water rates throughout the study to ensure legal counsel,staff,and the Raftelis Project Team agree prior to presenting any modifications to or new rate structures in a public forum.
Raftelis will discuss preliminary results with staff during two webinars and one in-person meeting. In the meetings,we will discuss the benefits and challenges of each rate structure and each scenario and refine the options that will be presented to City Council.
PLANNED MEETINGS:
• Two (2) meetings with City staff to discuss rate options and one (1) meeting with City staff to discuss the comparison of alternative rate structures
DELIVERABLES:
• Rate model and customer bill impacts in Microsoft Excel Task 7 - Develop Drought Rates
Raftelis will provide drought rates derived from the underlying existing rate structure. In order to simulate drought conditions,the rate Model will reduce revenue associated with a drop in consumption,but at the same time it will reduce any variable costs related to water production. Based on the usage analysis,we can identify where drought rates need to be set in order to ensure all revenue requirements are met during a period of reduced consumption. Penalty rates can also be set for multiple years and will be ready to implement as soon as conditions warrant, so that valuable time is not lost.
RAFTELIS 9
TASK 8 — PRESENTATION TO CITY COUNCIL
Raftelis will present the study process and results to the City Council.With luck,we would get City Council approval to proceed with the Public Notice at the first City Council presentation. However,sometimes the City Council would like to see different rate adjustments or have other input before providing direction. We have assumed one City Council presentation and have provided a price for an additional City Council presentation.
MEETINGS
• One presentation to City Council (presentation materials will be provided to City staff prior to the presentation for review)
DELIVERABLES
• Graphics and/or charts in PowerPoint
TASK 9 — REPORT PREPARATION
The last step of the rate-making process,and in part to comply with Proposition 218 requirements, documents the study results in a study report to inform the public about the proposed changes,the rationale and justifications behind the changes,and their anticipated financial impacts in lay terms.The study report serves as part of the City's administrative record to justify the proposed rates.
Task 9.1 Draft Report
The draft report will include an executive summary highlighting the major issues addressed, decisions reached, and recommended rates developed during the study.The main body of the report will include brief physical descriptions of the system and City characteristics, details of the financial plan and reserve policies,cost of service analysis,rate design details,and the proposed rates.They will also contain discussions on rate structure selection and rate design assumptions.The methodology describing the cost of service,rate calculations,and proposed five- year rates will be described in detail so that the nexus between costs and rates is clearly defined and understandable. Raftelis will provide a draft report to staff and external legal counsel for review. Raftelis will complete a draft report in time for City Council meetings where the Council will select their preferred rates.Any changes, comments,and feedback will be incorporated into the final models and final reports.
Task 9.2 Final Report
Recent legal challenges and court decisions have emphasized the importance of a thorough administrative record and defensible methodology of the final rates for service.To ensure that the study includes a thorough administrative record,the final report will include exhibits listing all assumptions and methodologies used to develop the financial plan,allocate costs to serve customers,and derive rates.The report will lead the reader from the adopted budgets through final rates and customer impacts,with the ability to do the math along the way.
Raftelis will incorporate changes,comments, and edits from City staff,legal counsel,and City Council when completing the final reports.
MEETINGS:
• One (1) meeting with City staff and legal counsel to discuss and review the draft report
RAFTELIS 10
DELIVERABLES:
• Presentation materials
• Draft and final study reports in Microsoft Word and Adobe PDF TASK 10 - PROPOSITION 218 PUBLIC HEARING PRESENTATION
Raftelis will present the study results at a Proposition 218 hearing,during which we will address the City Council and the public's questions and comments. Presentation materials will be provided to City staff for review before the Proposition 218 presentation.
MEETINGS
• One Proposition 218 presentation
DELIVERABLES
• Graphics and/or charts in PowerPoint
OPTIONAL TASK 11 - PROPOSITION 218 NOTICE
Raftelis will prepare the Proposition 218 Notice for review by the City's Attorney.The notice will outline the proposed rate changes,will explain the right to challenge the rates,and will meet and comply with the noticing requirements of Proposition 218.
MEETINGS
• Web meeting to discuss the Proposition 218 Notice
DELIVERABLES
• Proposition 218 Notice
OPTIONAL TASK 12 - ADDITIONAL CITY COUNCIL MEETINGS
Should additional City Council meetings be required,we have shown the cost per meeting.
MEETINGS
• As needed
DELIVERAPI_FQ
• Graphics and/or charts in PowerPoint format
OPTIONAL TASK 13 - CAPITAL IMPROVEMENT PLAN & OPERATING BUDGET
SERVICES
Financial forecasting and determining water rates are only as good as the operating and capital costs that go into them. If there is uncertainty in operating or capital costs,asset management costs, or opportunities to reduce costs, those can have direct impacts on the finances and rates of the utility.We can also help you make your master plans and asset management plans an actionable capital improvement plan that can provide a high level of service while
RAFTELIS 11
maintaining rates as low as good service will permit.We offer capital improvement program and operating budget review services compared to utility best practices to help our clients make sure they have the right amount of capital, asset management,and operating costs in their budgets and look for ways to increase efficiencies,reduce costs,and align their budgets with utility best practices.This service could potentially reduce your cost of service,reduce or eliminate any needed rate increases,and find some ways to help deliver your CIP or Operations more efficiently depending on your exact needs. It could also help you justify increases to the CIP and rates to address ongoing asset management needs or needed facility/equipment improvements consistent with utility best practices. This type of review also offers an independent third party review of your budgets compared to utility best practices which we have found is beneficial to our clients as rates are developed, proposed,and ultimately approved.
We can include this utility best practice review in our scope of work to review your CIP and Operations Budgets as we work with you to perform the rate study.
MEETINGS
• As needed
DELIVERABLES
• CIP and/or Operating Budget reviews with improvement recommendations in Word and/or Excel format Schedule
Raftelis proposes to complete the study by November 2025 as shown below:
RAFTELIS 12
TASKS Feb Mar Apr May Jun Jul2025 Aug Sep Oct Nov 2025 2025 2025 2025 2025 2025 2025 2025 2025
1.Project Management and Initiation(Kick- •
Off Meeting)
2.Data Collection and Review •
3.Quality Assurance(QA)and Quality
Control(QC)Process
4.Financial Plan Development
5.Cost of Service Analysis
6.Design Rates
7.Develop Drought Rates
8.Presentation to City Council •
9.Report Preparation
10.Proposition 218 Public Hearing •
Presentation
11.Optional-Proposition 218 Notice
12.Optional-Additional City Council
Meetings.
13.Optional-Capital Improvement Plan&
Operating Budget Services.
• Meetings
RAFTELIS 13
Fee
The table below shows the hourly rates,hours,and total estimated fee for this project.At the bottom we show a per meeting cost should additional City Council meetings be required.
Meetings Hours
In Sudhir Steve Brandon Graphic Total Total Fees& Tasks Virtual Person Pardiwala Gagnon Consultant Vatter Designer Admin Hours Expenses
1.Project Management and Initiation 1 10 2 4 2 18 $6,300 (Kick-Off Meeting)
2. Data Collection and Review 1 2 8 10 $2,790
3.Quality Assurance(QA)and 2 8 10 $3,950
Quality Control(QC)Process
4.Financial Plan Development 2 10 40 50 $13,950
5.Cost of Service Analysis 10 24 34 $10,110
6.Design Rates 2 10 24 34 $10,110
7.Develop Drought Rates 4 16 20 $5,580 r
8.Presentation to City Council 1 8 8 16 $5,510
9.Report Preparation 1 10 2 50 2 64 $17,340 •
10.Proposition 218 Public Hearing 1 8 8 2 18 $5,730 Presentation
Total Meetings/Hours 7 2 74 12 182 0 0 6 274 — Hourly Billing Rates — — $425 $375 $230 $340 $170 $100 — — Total Professional Fees — — $31,450 $4,500 $41,860 $0 $0 $600 — $78,410 Travel Expenses $210
Technology Fee $2,740
Total Expenses $2,950
Total Fees&Expenses $81,360
11.Optional-Proposition 218 Notice 1 2 8 6 16 $3,870 r
12.Optional-Additional City Council 1. 8 8 16 $5,620 Meetings
13.Optional-Capital Improvement 2 2 24 26 $9,270 Plan&Operating Budget Services
Total Optional Tasks $18,760
RAFTELIS 14
The City accepts the terms of this engagement letter and proposal:
Approved: Date:
Name of Signatory: Title:
4 or UN
`tCALIFORNIA LEVINE ACT DISCLOSURE STATEMENT
Ogt�� 4Q"
California Government Code Section 84308, commonly referred to as the "Levine Act," prohibits City Officers from participating in any action concerning a license, permit,other entitlement for use,franchise, or contract(collectively"license, permit,or contract") if they receive political contribution(s)from a party, or its agent(s), totaling more than $500 within the twelve (12) months before the proceeding, while a proceeding is pending, and for twelve (12) months following the date of a final decision in a proceeding.
The Levine Act also requires a member of the Upland City Council who has received such a contribution to disclose the contribution on the record of the proceeding and recuse themselves before the proceeding unless the violation has been properly cured.
Current Upland City Council Members are listed at:
https://www.uplandca.gov/city-council-treasurer
Parties and their Agents are responsible for accessing the link to review the names and disclosing their applicable contributions to City Officers on the record of a proceeding.
As a party to a proceeding,you are also required to provide information below about contributions made by you, your agents on behalf of you or your organization, your organization subject to the proceeding with the City, and any organization you direct or control pursuant to the aggregation rules at FPPC Reg. § 18438.5, except for uncompensated officers of a nonprofit organization. This form is to be submitted to the City of Long Beach and is a public record. If you have any questions about this form, please contact your City representative for assistance.
1. Have you or your company,or any agent/board member on behalf of you or your company/entity, made any political contributions of more than $500 to any Upland City Council Member in the 12 months preceding the date of the submission of your proposal or application,or the anticipated date of any Council action?
YES If yes, please identify the Council Member(s): _ ✓ NO
2. Do you or your company/entity, or any agency on behalf of you or your company/entity, anticipate or plan to make any political contribution of more than $500 to any Upland City Council Member in the 12 months following any Council action related to your proposal or application? YES If yes, please identify the Council Member(s):
✓ NO
Answering yes to either of the two questions above does not preclude the Upland City Council from awarding a contract or approving an application or any subsequent action. It does, however, preclude the identified Council Member(s)from participating in any actions related to your proposal or application. 1/23/2025 qtgn-- we..
Date Signature of authorized individual
Sudhir Pardiwala
Company/Applicant Name
(Levine Act definitions on reverse side)
LEVINE ACT DISCLOSURE STATEMENT DEFINITIONS
Term Definition Law
A proceeding to grant, deny, revoke, restrict, or modify a license, permit or other entitlement for use, that
does not solely involve purely ministerial decisions
and is:
Covered (1)Applied for by the party; FPPC Reg 18438.2(a) "proceedings" (2) Formally or informally requested by the party; or (3)A contract between the agency and the party or a
franchisee granted by the agency to the party, other
than a contract that is competitively bid, a labor
contract, or a personal employment contract.
Any person who files an application for, or is the
Party subject of, a proceeding involving a license, permit, or Gov. Code 84308(a)(1) other entitlement for use.
Any person who is not a party but who actively
supports or opposes a particular decision in a
proceeding involving a license, permit, or other
entitlement for use and who has a financial interest in Gov. Code 84308(a)(2) Participant the decision.A person actively supports or opposes a FPPC Reg 18438.4 particular decision in a proceeding if that person
lobbies in person the officers or employees of the
agency, testifies in person before the agency, or
otherwise acts to influence officers of the agency.
A person who represents a party or participant for
compensation and appears before or otherwise
Agent communicates with the governmental agency for the FPPC Reg 18438.3 purpose of influencing the pending proceeding. See
FPPC Reg 18438.3 for exceptions for certain
consultants.
A contract required by law to be awarded to the lowest
responsible bidder with a responsive bid, or, if the FPPC Reg Competitively Bid successful bidder refuses or fails to execute the 18438.2(a)(3)(A) contract, to the next lowest bidder with a responsive
bid.
A contract or agreement reached through collective
bargaining or with a representative group regarding
Labor Contract the salary, benefits, or terms and conditions under an FPPC Reg employment or retirement policy for employees or 18438.2(a)(3)(B) retirees, including a project labor agreement entered
under Public Contract Code Section 2500.
Personal A contract for employment, including the terms and Employment conditions of employment, between the agency and FPPC Reg Contract an agency employee.A contract with an independent 18438.2(a)(3)(C)-(D) contractor is NOT a personal employment contract.
4��a �p19� CITY UPLAND
�5, _�� "The City of Gracious Living"
CltIFOBS
1. Stall(kr°ill
DATE: February 10,2025
TO: MAYOR AND CITY COUNCIL
FROM: MICHAEL BLAY,CITY MANAGER
PREPARED BY:CHRISTOPHER ALANIS,INTERIM PUBLIC WORKS DIRECTOR
NICOLE DEMOET,ENVIRONMENTAL COMPLIANCE PROGRAMS MANAGER SUBJECT: CONSIDER APPROVAL OF PROFESSIONAL SERVICES AGREEMENT FOR THE
PREPARATION OF A WASTEWATER RATE STUDY
RECOMMENDED ACTION:
It is recommended that the City Council approve a professional services agreement to Raftelis Financial Consultants, Inc. in the amount of$58,520 for the preparation of a comprehensive wastewater rate study; and authorize the City Manager to execute the agreement.
GOAL STATEMENT
The proposed action supports the City's goal of establishing equitable customer rates that are cost effective,equitable, and generate the necessary revenue to cover operational, debt service, capital investments, and reserves for the implementation of program requirements and to continue providing high quality and reliable wastewater services to the community.
BACKGROUND
The City's wastewater collection system plays a crucial role in the protection of public health and the environment, while also supporting community growth and development. As part of maintaining financial sustainability for wastewater services,it is necessary to periodically review and update the wastewater rate structure to ensure that rates are equitable,sufficient,and aligned with industry standards.
To support this process, a wastewater rate study is conducted to evaluate the current rate structure, analyze cost of service, identify any adjustment needed to ensure compliance with relevant regulations, and assess the financial stability of the wastewater fund.
ISSUES AND ANALYSIS
The completion of a comprehensive wastewater rate study is essential to ensuring the ongoing financial sustainability of the City's wastewater system.Rate Studies are typically conducted on a 5-year increment.A Wastewater Facilities Master Plan is currently in process by Brown and Caldwell Inc., in which projects and system upgrades will be identified on a prioritized timeline for capital improvement.Timing the cost-of-service study with a prioritized Capital Improvement Project timeline as proposed in the Wastewater Facilities Master Plan would benefit the City, ensuring adequate funding of prioritized system repairs.
In conjunction with the City's Purchasing Policy, Section 11.1 Bid Process Exemptions and Documentation — Professional Services, "Technical consultant services are of a professional nature and...do not readily fall within the competitive bidding process." As such,the City received a proposal for services by Raftelis Financial Consultants, Inc., providing information on the proposed methodology for the wastewater rate study, the cost of services, and relevant experience with similar projects. After a comprehensive review of the proposal, Raftelis Financial Consultants,Inc.,was selected to complete the 2025 Wastewater Rate Study.
The consultant will be responsible for:
• Conducting a thorough analysis of the existing wastewater rate structure. • Reviewing the financial health of the wastewater system and identifying future funding needs. • Development of an updated rate structure that ensures financial sustainability and regulatory compliance. • Preparing a financial report and presenting the findings to City Council upon completion.
Awarding this contract to Raftelis Financial Consultants,Inc. will allow the City to move forward with updating the rate structure to reflect current needs and conditions. Staff recommends approval of the proposed Professional Services Agreement to ensure timely completion of this critical project.
ENVIRONMENTAL DETERMINATION
The proposed action includes the award of a professional service agreement for a rate study and is not subject to the California Environmental Quality Act(CEQA). Section 15378 of the CEQA guidelines defines a project subject to CEQA. The proposed action is not included within the definition of a"project"and thus is exempt.
FISCAL IMPACTS
The total cost for the wastewater rate study including all optional tasks is $58,520, with additional work provisions that if approved by the City Manager could raise the cost of the agreement to $64,372. There are available funds in the Sewer Utility Capital Projects Account No. 6457500-5540-94007.
ALTERNATIVES
Provide alternative direction to staff.
CEQA:Not a Project.
CITY OF UPLAND
PROFESSIONAL SERVICES AGREEMENT
This Agreement is made and entered into as of February 10, 2025, by and between the City of Upland, a public agency organized and operating under the laws of the State of California with its principal place of business at 460 N. Euclid Avenue, Upland, CA 91786 ("City"), and Raftelis Financial Consultants, Inc., a North Carolina Corporation with its principal place of business at 227 W. Trade Street Suite 1400, Charlotte, NC 28202 (hereinafter referred to as "Consultant"). City and Consultant are sometimes individually referred to as "Party" and collectively as "Parties" in this Agreement.
RECITALS
A. City is a public agency of the State of California and is in need of professional services for the following project:
2025 Wastewater Rate Study (hereinafter referred to as "the Project").
B. Consultant is duly licensed and has the necessary qualifications to provide such services.
C. The Parties desire by this Agreement to establish the terms for City to retain Consultant to provide the services described herein.
AGREEMENT
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Services.
Consultant shall provide the City with the services described in the Scope of Services attached hereto as Exhibit "A."
2. Compensation.
a. Subject to paragraph 2(b) below, the City shall pay for such services in accordance with the Schedule of Charges set forth in Exhibit "B." b. In no event shall the total amount paid for services rendered by Consultant under this Agreement exceed the sum of $ 58,520.00. This amount is to cover all printing and related costs, and the City will not pay any additional fees for printing expenses. Periodic payments shall be made within 30 days of receipt of an invoice which includes a detailed description of the work performed. Payments to Consultant for work performed will be made on a monthly billing basis.
c. The City Manager may approve Additional Work, as further defined in Section 3, up to ten percent (10%) of the amount of the Agreement or fifty thousand dollars ($50,000.00). In no event shall the total sum of the agreement (original compensation amount and Additional Work) exceed $64,372.00. Any additional work in excess of this amount shall be approved by the City Council.
1
3. Additional Work.
If changes in the work seem merited by Consultant or the City, and informal consultations with the other party indicate that a change is warranted, it shall be processed in the following manner: a letter outlining the changes shall be forwarded to the City by Consultant with a statement of estimated changes in fee or time schedule. An amendment to this Agreement shall be prepared by the City and executed by both Parties before performance of such services, or the City will not be required to pay for the changes in the scope of work. Such amendment shall not render ineffective or invalidate unaffected portions of this Agreement.
4. Maintenance of Records.
Books, documents, papers, accounting records, and other evidence pertaining to costs incurred shall be maintained by Consultant and made available at all reasonable times during the contract period and for four (4) years from the date of final payment under the contract for inspection by City.
5. Term .
The term of this Agreement shall be from February 10, 2025 to December 31, 2025, unless earlier terminated as provided herein. The Parties may, by mutual,written consent, extend the term of this Agreement if necessary to complete the Project. Consultant shall perform its services in a prompt and timely manner within the term of this Agreement and shall commence performance upon receipt of written notice from the City to proceed ("Notice to Proceed"). The Notice to Proceed shall set forth the date of commencement of work.
Consultant shall perform its services in a prompt and timely manner and shall commence performance upon receipt of written notice from the City to proceed ("Notice to Proceed").
Consultant shall complete the services required hereunder within 324 calendar days. The Notice to Proceed shall set forth the date of commencement of work.
6. Delays in Performance.
a. Neither City nor Consultant shall be considered in default of this Agreement for delays in performance caused by circumstances beyond the reasonable control of the non- performing party. For purposes of this Agreement, such circumstances include but are not limited to, abnormal weather conditions; floods; earthquakes; fire; epidemics; pandemics; war; riots and other civil disturbances; strikes, lockouts, work slowdowns, and other labor disturbances; sabotage or judicial restraint.
b. Should such circumstances occur, the non-performing party shall, within a reasonable time of being prevented from performing, give written notice to the other party describing the circumstances preventing continued performance and the efforts being made to resume performance of this Agreement.
7. Compliance with Law.
a. Consultant shall comply with all applicable laws, ordinances, codes and regulations of the federal, state and local government, including Cal/OSHA requirements. b. If required, Consultant shall assist the City, as requested, in obtaining and maintaining all permits required of Consultant by federal, state and local regulatory agencies. 2
c. If applicable, Consultant is responsible for all costs of clean up and/ or removal of hazardous and toxic substances spilled as a result of his or her services or operations performed under this Agreement.
8. Standard of Care
Consultant's services will be performed in accordance with generally accepted professional practices and principles and in a manner consistent with the level of care and skill ordinarily exercised by members of the profession currently practicing under similar conditions at the location the services are provided. In providing the services hereunder, Consultant may rely on all data and information provided by or on behalf of City.
9. Assignment and Subconsultant
Consultant shall not assign, sublet, or transfer this Agreement or any rights under or interest in this Agreement without the written consent of the City, which may be withheld for any reason. Any attempt to so assign or so transfer without such consent shall be void and without legal effect and shall constitute grounds for termination. Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement. Nothing contained herein shall prevent Consultant from employing independent associates, and subconsultants as Consultant may deem appropriate to assist in the performance of services hereunder.
10. Independent Contractor
Consultant is retained as an independent contractor and is not an employee of City. No employee or agent of Consultant shall become an employee of City. The work to be performed shall be in accordance with the work described in this Agreement, subject to such directions and amendments from City as herein provided.
a. PERS Eligibility Indemnification
In the event that Consultant or any employee, agent, or subcontractor of Consultant providing services under this Agreement claims or is determined by a court of competent jurisdiction or the California Public Employees Retirement System ("PERS") to be eligible for enrollment in PERS as an employee of the City, Consultant shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of Consultant or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of City.
Notwithstanding any other agency, state or federal policy, rule, regulation, law or ordinance to the contrary, Consultant and any of its employees, agents, and subcontractors providing service under this Agreement shall not qualify for or become entitled to, and hereby agree to waive any claims to, any compensation, benefit, or any incident of employment by City, including but not limited to eligibility to enroll in PERS as an employee of City and entitlement to any contribution to be paid by City for employer contribution and/or employee contributions for PERS benefits.
11. Insurance. Consultant shall not commence work for the City until it has provided evidence satisfactory to the City it has secured all insurance required under this section. In addition, Consultant shall not allow any subcontractor to commence work on any subcontract until it has secured all insurance required under this section. 3
a. Commercial General Liability
(i) The Consultant shall take out and maintain, during the performance of all work under this Agreement, in amounts not less than specified herein, Commercial General Liability Insurance, in a form and with insurance companies acceptable to the City. (ii) Coverage for Commercial General Liability insurance shall be at least as broad as the following:
(1) Insurance Services Office Commercial General Liability coverage (Occurrence Form CG 00 01) or exact equivalent. (iii) Commercial General Liability Insurance must include coverage for the following:
(1) Bodily Injury and Property Damage
(2) Personal Injury/Advertising Injury
(3) Premises/Operations Liability
(4) Products/Completed Operations Liability
(5) Aggregate Limits that Apply per Project
(6) Explosion, Collapse and Underground (UCX) exclusion deleted
(7) Contractual Liability with respect to this Agreement (8) Property Damage
(9) Independent Contractors Coverage
(iv) The policy shall contain no endorsements or provisions limiting coverage for (1) contractual liability; (2) cross liability exclusion for claims or suits by one insured against another; (3) products/completed operations liability; or (4) contain any other exclusion contrary to the Agreement.
(v) The policy shall give City, its officials, officers, employees, agents and City designated volunteers additional insured status using ISO endorsement forms CG 20 10 10 01 and 20 37 10 01, or endorsements providing the exact same coverage. (vi) The general liability program may utilize either deductibles or provide coverage excess of a self-insured retention, subject to written approval by the City, and provided that such deductibles shall not apply to the City as an additional insured. b. Automobile Liability
(i) At all times during the performance of the work under this Agreement, the Consultant shall maintain Automobile Liability Insurance for bodily injury and property damage including coverage for owned, non-owned and hired vehicles, in a form and with insurance companies acceptable to the City.
(ii) Coverage for automobile liability insurance shall be at least as broad as Insurance Services Office Form Number CA 00 01 covering automobile liability (Coverage Symbol 1, any auto).
(iii) The policy shall give City, its officials, officers, employees, agents and City designated volunteers additional insured status. 4
(iv) Subject to written approval by the City, the automobile liability program may utilize deductibles, provided that such deductibles shall not apply to the City as an additional insured, but not a self-insured retention.
c. Workers' Compensation/Employer's Liability
(i) Consultant certifies that he/she is aware of the provisions of Section 3700 of the California Labor Code which requires every employer to be insured against liability for workers'compensation or to undertake self-insurance in accordance with the provisions of that code, and he/she will comply with such provisions before commencing work under this Agreement.
(ii) To the extent Consultant has employees at any time during the term of this Agreement, at all times during the performance of the work under this Agreement, the Consultant shall maintain full compensation insurance for all persons employed directly by him/her to carry out the work contemplated under this Agreement, all in accordance with the "Workers' Compensation and Insurance Act," Division IV of the Labor Code of the State of California and any acts amendatory thereof, and Employer's Liability Coverage in amounts indicated herein.
Consultant shall require all subconsultants to obtain and maintain, for the period required by this Agreement, workers' compensation coverage of the same type and limits as specified in this section.
d. Professional Liability(Errors and Omissions)
At all times during the performance of the work under this Agreement the Consultant shall maintain professional liability or Errors and Omissions insurance appropriate to its profession, in a form and with insurance companies acceptable to the City and in an amount indicated herein.
This insurance shall be endorsed to include contractual liability applicable to this Agreement and shall be written on a policy form specifically designed to protect against acts, errors or omissions of the Consultant. "Covered Professional Services" as designated in the policy must specifically include work performed under this Agreement. The policy must"pay on behalf of"the insured and must include a provision establishing the insurer's duty to defend. e. Minimum Policy Limits Required
(i) The following insurance limits are required for the Agreement:
Combined Single Limit
Commercial General Liability $1,000,000 per occurrence/ $2,000,000 aggregate for bodily injury, personal injury, and property
damage
Automobile Liability $1,000,000 combined single limit Employer's Liability $1,000,000 per accident or disease Professional Liability $1,000,000 per claim and aggregate (errors and omissions)
(ii) Defense costs shall be payable in addition to the limits. 5
(iii) Requirements of specific coverage or limits contained in this section are not intended as a limitation on coverage, limits, or other requirement, or a waiver of any coverage normally provided by any insurance. Any available coverage shall be provided to the parties required to be named as Additional Insured pursuant to this Agreement. f. Evidence Required
Prior to execution of the Agreement, the Consultant shall file with the City evidence of insurance from an insurer or insurers certifying to the coverage of all insurance required herein.
Such evidence shall include original copies of the ISO CG 00 01 (or insurer's equivalent) signed by the insurer's representative and Certificate of Insurance (Acord Form 25-S or equivalent), together with required endorsements. All evidence of insurance shall be signed by a properly authorized officer, agent, or qualified representative of the insurer and shall certify the names of the insured, any additional insureds, where appropriate, the type and amount of the insurance, the location and operations to which the insurance applies, and the expiration date of such insurance.
g. Policy Provisions Required
(i) Consultant shall provide the City at least thirty(30)days prior written notice of cancellation of any policy required by this Agreement, except that the Consultant shall provide at least ten (10) days prior written notice of cancellation of any such policy due to non- payment of premium. If any of the required coverage is cancelled or expires during the term of this Agreement, the Consultant shall deliver renewal certificate(s) including the General Liability Additional Insured Endorsement to the City at least ten (10) days prior to the effective date of cancellation or expiration.
(ii) The Commercial General Liability Policy and Automobile Policy shall each contain a provision stating that Consultant's policy is primary insurance and that any insurance, self-insurance or other coverage maintained by the City or any named insureds shall not be called upon to contribute to any loss.
(iii) The retroactive date (if any) of each policy is to be no later than the effective date of this Agreement. Consultant shall maintain such coverage continuously for a period of at least three years after the completion of the work under this Agreement. Consultant shall purchase a one (1) year extended reporting period A) if the retroactive date is advanced past the effective date of this Agreement; B) if the policy is cancelled or not renewed; or C) if the policy is replaced by another claims-made policy with a retroactive date subsequent to the effective date of this Agreement.
(iv) All required insurance coverages, except for the professional liability coverage, shall contain or be endorsed to provide a waiver of subrogation in favor of the City, its officials, officers, employees, agents, and volunteers or shall specifically allow Consultant or others providing insurance evidence in compliance with these specifications to waive their right of recovery prior to a loss. Consultant hereby waives its own right of recovery against City, and shall require similar written express waivers and insurance clauses from each of its subconsultants.
(v) The limits set forth herein shall apply separately to each insured against whom claims are made or suits are brought, except with respect to the limits of liability.
Further the limits set forth herein shall not be construed to relieve the Consultant from liability in excess of such coverage, nor shall it limit the Consultant's indemnification obligations to the City 6
and shall not preclude the City from taking such other actions available to the City under other provisions of the Agreement or law.
h. Qualifying Insurers
(i) All policies required shall be issued by acceptable insurance companies, as determined by the City, which satisfy the following minimum requirements:
(1) Each such policy shall be from a company or companies with a current A.M. Best's rating of no less than A:VII and admitted to transact in the business of insurance in the State of California, or otherwise allowed to place insurance through surplus line brokers under applicable provisions of the California Insurance Code or any federal law.
Additional Insurance Provisions
(i) The foregoing requirements as to the types and limits of insurance coverage to be maintained by Consultant, and any approval of said insurance by the City, is not intended to and shall not in any manner limit or qualify the liabilities and obligations otherwise assumed by the Consultant pursuant to this Agreement, including but not limited to, the provisions concerning indemnification.
(ii) If at any time during the life of the Agreement, any policy of insurance required under this Agreement does not comply with these specifications or is canceled and not replaced, City has the right but not the duty to obtain the insurance it deems necessary and any premium paid by City will be promptly reimbursed by Consultant or City will withhold amounts sufficient to pay premium from Consultant payments. In the alternative, City may cancel this Agreement.
(iii) The City may require the Consultant to provide complete copies of all insurance policies in effect for the duration of the Project. (iv) Neither the City nor any of its officials, officers, employees, agents or volunteers shall be personally responsible for any liability arising under or by virtue of this Agreement.
j. Subconsultant Insurance Requirements. Consultant shall not allow any subcontractors or subconsultants to commence work on any subcontract until they have provided evidence satisfactory to the City that they have secured all insurance required under this section.
Policies of commercial general liability insurance provided by such subcontractors or subconsultants shall be endorsed to name the City as an additional insured using ISO form CG 20 38 04 13 or an endorsement providing the exact same coverage. If requested by Consultant, City may approve different scopes or minimum limits of insurance for particular subcontractors or subconsultants.
12. Indemnification.
a. To the fullest extent permitted by law, Consultant shall defend (with counsel reasonably acceptable to City), indemnify and hold the City, its officials, officers, employees, and volunteers, free and harmless from all claims, demands, causes of action, costs, expenses, liability, loss, damage or injury of any kind, in law or equity, to property or persons, including wrongful death, to the extent caused by the negligent acts, errors or omissions, or willful 7
misconduct of Consultant, its officials, officers, employees, subcontractors, consultants or agents in the performance of the Consultant's services, the Project or this Agreement. Consultant's obligation to indemnify shall not be restricted to insurance proceeds, if any, received by Consultant, the City, its officials, officers, employees, agents, or volunteers. Consultant shall have no obligation to indemnify the City or any other indemnified person against liability for claims by a third party for failure to comply with its obligations under Article XIII D of the California Constitution (Proposition 218) The indemnity obligations outlined in this Section shall not extend to claims arising out of the City's sole negligence or willful misconduct. b. If Consultant's obligation to defend, indemnify, and/or hold harmless arises out of Consultant's performance of "design professional" services (as that term is defined under Civil Code section 2782.8), then, and only to the extent required by Civil Code section 2782.8, which is fully incorporated herein, Consultant's indemnification obligation shall be limited to claims to the extent caused by the negligence, recklessness, or willful misconduct of the Consultant, and Consultant's liability for such claim, including the cost to defend, shall not exceed the Consultant's proportionate percentage of fault.
13. California Labor Code Requirements.
a. Consultant is aware of the requirements of California Labor Code Sections 1720 et seq. and 1770 et seq., which require the payment of prevailing wage rates and the performance of other requirements on certain "public works" and "maintenance" projects ("Prevailing Wage Laws"). 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. Consultant shall defend, indemnify and hold the City, its officials, officers, employees and agents free and harmless from any claims, liabilities, costs, penalties or interest arising out of any failure or alleged failure to comply with the Prevailing Wage Laws. It shall be mandatory upon the Consultant and all subconsultants to comply with all California Labor Code provisions, which include but are not limited to prevailing wages (Labor Code Sections 1771, 1774 and 1775), employment of apprentices (Labor Code Section 1777.5), certified payroll records (Labor Code Sections 1771.4 and 1776), hours of labor (Labor Code Sections 1813 and 1815) and debarment of contractors and subcontractors (Labor Code Section 1777.1). The requirement to submit certified payroll records directly to the Labor Commissioner under Labor Code section 1771.4 shall not apply to work performed on a public works project that is exempt pursuant to the small project exemption specified in Labor Code Section 1771.4. b. If the services are being performed as part of an applicable "public works" or "maintenance" project, then pursuant to Labor Code Sections 1725.5 and 1771.1, the Consultant and all subconsultants performing such services must be registered with the Department of Industrial Relations. Consultant shall maintain registration for the duration of the Project and require the same of any subconsultants, as applicable. Notwithstanding the foregoing, the contractor registration requirements mandated by Labor Code Sections 1725.5 and 1771.1 shall not apply to work performed on a public works project that is exempt pursuant to the small project exemption specified in Labor Code Sections 1725.5 and 1771.1. c. This Agreement may also be subject to compliance monitoring and enforcement by the Department of Industrial Relations. It shall be Consultant's sole responsibility to comply with all applicable registration and labor compliance requirements. Any stop orders issued by the Department of Industrial Relations against Consultant or any subcontractor that affect Consultant's performance of services, including any delay, shall be Consultant's sole responsibility. Any delay arising out of or resulting from such stop orders shall be considered 8
Consultant caused delay and shall not be compensable by the City. Consultant shall defend, indemnify and hold the City, its officials, officers, employees and agents free and harmless from any claim or liability arising out of stop orders issued by the Department of Industrial Relations against Consultant or any subcontractor.
14. Verification of Employment Eligibility.
By executing this Agreement, Consultant verifies that it fully complies with all requirements and restrictions of state and federal law respecting the employment of undocumented aliens, including, but not limited to, the Immigration Reform and Control Act of 1986, as may be amended from time to time, and shall require all subconsultants and sub-subconsultants to comply with the same.
15. Reserved
Consultant is hereby made aware of the City's requirements regarding materials, as set forth in which are deemed to be a part of this Agreement.
16. Laws and Venue.
This Agreement shall be interpreted in accordance with the laws of the State of California.
If any action is brought to interpret or enforce any term of this Agreement, the action shall be brought in a state or federal court situated in the County of San Bernardino, State of California. 17 Termination or Abandonment
a. City has the right to terminate or abandon any portion or all of the work under this Agreement by giving ten (10)calendar days written notice to Consultant. In such event, City shall be immediately given title and possession to all original field notes, drawings and specifications, written reports and other documents produced or developed by Consultant for that portion of the work completed and/or being abandoned and intended by Consultant as a deliverable hereunder. City shall pay Consultant the reasonable value of services rendered for any portion of the work completed prior to termination. If said termination occurs prior to completion of any task for the Project for which a payment request has not been received, the charge for services performed during such task shall be the reasonable value of such services, based on an amount mutually agreed to by City and Consultant of the portion of such task completed but not paid prior to said termination. City shall not be liable for any costs other than the charges or portions thereof which are specified herein. Consultant shall not be entitled to payment for unperformed services, and shall not be entitled to damages or compensation for termination of work.
b. Consultant may terminate its obligation to provide further services under this Agreement upon thirty(30) calendar days'written notice to City only in the event of substantial failure by City to perform in accordance with the terms of this Agreement through no fault of Consultant.
18 Documents. Except as otherwise provided in "Termination or Abandonment," above, all original field notes, written reports, Drawings and Specifications and other documents, produced or developed for the Project by Consultant and intended by Consultant as a deliverable hereunder shall, upon payment in full for the services described in this Agreement, be furnished to and become the property of the City. Nothing in this Agreement shall be deemed or construed 9
as a waiver, release, transfer, assignment or divestiture by Consultant of any of its intellectual property, know-how or trade secrets.
19. Organization
Consultant shall assign Sudhir Pardiwala as Project Manager. The Project Manager shall not be removed from the Project or reassigned without the prior written consent of the City.
20. Limitation of Agreement.
This Agreement is limited to and includes only the work included in the Project described above.
21. Notice
Any notice or instrument required to be given or delivered by this Agreement may be given or delivered by depositing the same in any United States Post Office, certified mail, return receipt requested, postage prepaid, addressed to:
CITY: CONSULTANT:
City of Upland Raftelis Financial Consultants, Inc. 460 N. Euclid Avenue 227 West Trade Street, Suite 1400 Upland, CA 91786 Charlotte, NC 28202
Attn: Environmental Compliance Programs Attn: Sudhir Pardiwala Manager
Public Works Department
and shall be effective upon receipt thereof.
22. Third Party Rights
Nothing in this Agreement shall be construed to give any rights or benefits to anyone other than the City and the Consultant.
23. Equal Opportunity Employment.
Consultant represents that it is an equal opportunity employer and that it shall not discriminate against any employee or applicant for employment because of race, religion, color, national origin, ancestry, sex, age or other interests protected by the State or Federal Constitutions. 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.
24. Entire Agreement
This Agreement, with its exhibits, represents the entire understanding of City and Consultant as to those matters contained herein, and supersedes and cancels any prior or contemporaneous oral or written understanding, promises or representations with respect to those matters covered hereunder. Each Party acknowledges that no representations, 10
inducements, promises or agreements have been made by any person which are not incorporated herein, and that any other agreements shall be void. This Agreement may not be modified or altered except in writing signed by both Parties hereto. This is an integrated Agreement.
25. Severability
The unenforceability, invalidity or illegality of any provision(s) of this Agreement shall not render the remaining provisions unenforceable, invalid or illegal.
26. Successors and Assigns
This Agreement shall be binding upon and shall inure to the benefit of the successors in interest, executors, administrators and assigns of each Party to this Agreement. However, Consultant shall not assign or transfer by operation of law or otherwise any or all of its rights, burdens, duties or obligations without the prior written consent of City. Any attempted assignment without such consent shall be invalid and void.
27. Non-Waiver
None of the provisions of this Agreement shall be considered waived by either Party, unless such waiver is specifically specified in writing.
28. Time of Essence
Time is of the essence for each and every provision of this Agreement.
29. City's Right to Employ Other Consultants
City reserves its right to employ other consultants, including engineers, in connection with this Project or other projects.
30. 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. 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 director, official, 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.
[SIGNATURES ON FOLLOWING PAGE]
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SIGNATURE PAGE FOR PROFESSIONAL SERVICES AGREEMENT
BETWEEN CITY OF UPLAND
AND RAFTELIS FINANCIAL CONSULTANTS, INC.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date first above written.
CITY OF UPLAND Raftelis Financial Consultants, Inc.
Approved By:
By: By:
Michael Blay
City Manager Its: Executive Vice President
Printed Name:
ATTEST:
By: By:
Keri Johnson
City Clerk Its: Vice President
Printed Name:
APPROVED AS TO FORM:
By:
Best Best & Krieger LLP
City Attorney
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EXHIBIT A
Scope of Services
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RAFTELIS 4
Scope of Work
TASK 1 — PROJECT MANAGEMENT AND INITIATION (KICK-OFF MEETING) Task 1.1 — Ongoing Project Management and Quality Assurance/Quality Control Process The proposed project approach entails several different yet interrelated work efforts that will require effective coordination between City staff and the Raftelis Team. Our management approach stresses communication, teamwork, objectivity,and accountability for meeting project objectives to ensure that all deadlines and objectives are met in a timely and efficient manner.We believe in a no-surprises approach so that the client is aware of the status of the project at all times.This task includes general administrative duties,including client communication, billing,project documentation,and overall project administration.We assumed that staff meetings are virtual and City Council meetings are in person.We can have in-person meetings if preferred. Both the Project Manager and Technical Reviewer will perform QA/QC on the model results and our recommendations to ensure they are consistent with industry standards and the current rate-setting environment.
Task 1.2— Project Initiation and Data Collection
The kick-off meeting provides a solid foundation for the project and serves as a forum in which City staff can provide input on the project's objectives,approach,work plan,scheduling,and priorities. Raftelis will develop a kick-off meeting package that contains the meeting agenda and a broad list of questions related to the City's wastewater system operations.This kick-off meeting will also serve as a forum for Raftelis to develop an understanding of the City's pricing objectives, financial goals,and other important utility issues.
A detailed data request list is submitted prior to the kick-off meeting so that the City can assemble the appropriate data in the required format.The Raftelis team studies the data to understand revenue streams,operating and capital expenses,and customer counts. In addition, Raftelis will review the current reserve structure and propose reserve recommendations that are consistent with industry standards as well as the City's risk management tolerance to maintain financial stability.
MEETINGS
• One kick-off meeting with City staff
DELIVERABLES
• Data request list and kick-off meeting summary memorandum TASK 2 — DATA COLLECTION AND REVIEW
The purpose of this task is to gather and review relevant information,documents,and analyses required to conduct the rate study.As part of this task,a detailed data request list will be prepared and submitted to City staff upon notice to proceed so all appropriate data can be forwarded to Raftelis before the kick-off meeting,where the data can be reviewed and any questions answered.
DELIVERABLES
• Data request list and kick-off meeting summary memorandum
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TASK 3 — QUALITY ASSURANCE (QA) AND QUALITY CONTROL (QC) PROCESS The QA/QC process ensures that all work performed by Raftelis on this project will be accurate and of the highest quality. Steve Gagnon, PE,will be the lead Technical Reviewer for this project,ensuring it meets both Raftelis'and industry standards.The QA/QC reviewer's primary responsibility is to review the work effort for consistency, accuracy,and validity and ensure that the cost of service and rate models are functioning properly and based on sound rate-making principles and standard industry practice.The reviewer also ensures that the report produced is comprehensive,consistent with the results,and meets the high-quality standards of Raftelis.The QA/QC process is accomplished through periodic reviews of the models throughout the course of their development.
TASK 4 — FINANCIAL PLAN DEVELOPMENT
The financial plan is a cash flow modeling exercise that ascertains the additional revenue needed to ensure the financial integrity of the utilities. It does so by projecting existing rate revenue,other operating and non-operating revenues,debt service payments,and operating and capital expenses over a 10-year period. Existing rate revenue is based on the anticipated number of customers of each customer type served by the utilities.We will make prudent customer growth assumptions with input from City staff.
Raftelis will develop a 10-year cash flow analysis to determine revenue adjustments.We will also review reserve policies to recommend appropriate reserve balances (operating, capital,rate stabilization, etc.) that are consistent with industry standards as well as the City's risk tolerance.The financial plan will be presented in an easy-to- understand format on an interactive dashboard that shows the impacts of various assumptions so that informed decisions regarding revenue adjustments,capital financing through rates or debt,and reserve balances can be made efficiently.
Several features of the model dashboards include the ability to show or indicate:
1. Revenue adjustments required over the planning horizon to meet debt coverage,fund capital projects,and achieve reserve targets
2. Reserve balances and reserve targets as well as debt service coverage ratios (days cash on hand, reserve funding levels)
3. Projected operating costs and revenue streams
4. Operating cost breakdown(O&M,water purchases,debt service payments,pay-as-you-go (PAYGO) capital, etc.)
5. Different capital funding sources such as PAYGO (rate funding),debt financing,or grant funding We will work with City staff to determine the most appropriate financial plan and rate design. Raftelis models are designed to be user-friendly while being flexible enough to show the City's sensitivity to various assumptions, allowing both City staff and City Council to make informed decisions.
MEETINGS
• Two webinars to review the results of the financial plans
DELIVERABLES
• Financial plan model in Excel
RAFTELIS 6
TASK 5 — COST-OF-SERVICE ANALYSIS
The annual costs of providing services will be allocated among customer classes commensurate with their service requirements -i.e.,how they use each system. Costs are identified and allocated to cost components and distributed to respective customer classes according to the industry standards provided in the Water Environmental Federation (WEF) Manual of Practice.
Throughout the cost allocation process, Raftelis will incorporate the City's policy considerations,as well as current federal,state,and local rules and regulations such as Proposition 218.We will liaise with the City's legal counsel on rates to ensure that proposed cost allocation bases and cost recovery rationale are consistent with Proposition 218, recent case law,and overall defensibility of rates.
The wastewater cost-of-service analysis will be based on industry standards and methodologies approved by the Water Environmental Federation (WEF) Manual of Practice No.27,Financing and Charges for Wastewater Systems, 2018.Wastewater expenses are allocated based on collection,treatment,customer costs,and indirect costs.The goal is to distribute cost components to classes based on responsibility.This results in the total cost to service each and is the basis for developing rates.
MEETINGS
• Webinars if needed
DELIVERARI F
• Cost-of-service analyses in Excel
TASK 6 — UTILITY RATE MODEL DEVELOPMENT
Properly designed rates support and optimize a blend of various utility objectives,such as affordability for essential needs,fairness and equity,revenue stability,and ease of implementation. Raftelis will develop comparable rate alternatives according to the City's objectives,with consideration of industry standards and defensibility considering recent legal challenges and Proposition 218.
Task 6.1 Develop Rate Design Options
Raftelis will develop rate models with the flexibility to evaluate alternative rate structures,including options such as variable rates,rates for different customer classes, and a uniform rate.The model will have the capability to examine the different rate structure scenarios to enhance revenue stability,fully fund operations and capital projects through rates,further promote rate affordability,and address fairness of rates within each class. Raftelis will review the utility's current rate per equivalent dwelling unit(EDU) structure as well as EDU classes, definitions,and current ratios.
Task 6.2 Comparison of Alternative Rate Design Structures Rate adjustments stem from a change in the total rate revenue needs and/or a change in the rate structure.The total rate adjustment can sometimes cause"rate shock"to certain customer groups. In our impact analysis graphics,we calculate estimated monthly bills at each level of usage assuming the proposed rate structure was already in place to determine the true impact of the new rate structure.The customer impact analysis will include a series of tables and figures that show projected rate impacts by customer class at various levels of usage.Understanding customer impacts,and taking corrective action,if necessary,allows us to design public outreach strategies for generating
RAFTELIS 7
customer buy-in and successful rate implementation.This visual has proved powerful in discussions with staff and elected officials when entertaining changes to rate structures.
Proposed rates will be designed to be defensible and to fall within regulatory and legal requirements.While Raftelis is not a law firm,we have helped numerous agencies throughout the State develop rates and rate structures that are defensible and meet Proposition 218 requirements.We will work with the City's legal counsel on rates throughout the study to ensure legal counsel,staff,and the Raftelis Project Team agree prior to presenting any modifications to existing or new rate structures in a public forum.
Raftelis will discuss preliminary results with staff during two webinars and one in-person meeting. In the meetings,we will discuss the benefits and challenges of each rate structure and each scenario and refine the options that will be presented to City Council.
PLANNED MEETINGS:
• Two (2) meetings with City staff to discuss rate options DELIVERABLES:
• Rate model and customer bill impacts in Microsoft Excel TASK 7 - PRESENTATION TO CITY COUNCIL
Raftelis will present the study process and results to the City Council.With luck,we would get City Council approval to proceed with the Public Notice at the first City Council presentation. However,sometimes the City Council would like to see different rate adjustments or have other input before providing direction.We have assumed one City Council presentation and have provided a price for each additional City Council presentation.
MEETINGS
• One presentation to City Council (presentation materials will be provided to City staff prior to the presentation for review)
DELIVERABLES
• Graphics and/or charts in PowerPoint
TASK 8 - REPORT PREPARATION
The last step of the rate-making process,and in part to comply with Proposition 218 requirements, documents the study results in a study report to inform the public about the proposed changes,the rationale and justifications behind the changes,and their anticipated financial impacts in lay terms.The study report serves as part of the City's administrative record to justify the proposed rates.
Task 8.1 Draft Report
The draft report will include an executive summary highlighting the major issues addressed,decisions reached, and recommended rates developed during the study.The main body of the reports will include brief physical descriptions of the system and City characteristics, details of the financial plan and reserve policies,cost of service analysis,rate design details,and the proposed rates.They will also contain discussions on rate structure selection and rate design assumptions.The methodology describing the cost of service,rate calculations, and proposed five-
RAFTELIS 8
year rates will be described in detail so that the nexus between costs and rates is clearly defined and understandable. Raftelis will provide the draft report to staff and external legal counsel for review. Raftelis will complete a draft report in time for City Council meetings where the Council will select their preferred rates.Any changes,comments,and feedback will be incorporated into the final models and final reports.
Task 8.2 Final Report
Recent legal challenges and court decisions have emphasized the importance of a thorough administrative record and defensible methodology of the final rates for service.To ensure that the study includes a thorough administrative record,the final report will include exhibits listing all assumptions and methodologies used to develop the financial plan,allocate costs to serve customers,and derive rates.The reports will lead the reader from the adopted budgets through final rates and customer impacts,with the ability to do the math along the way.
Raftelis will incorporate changes,comments,and edits from City staff,legal counsel,and City Council when completing the final reports.
MEETINGS:
• One(1)meeting with City staff and legal counsel to discuss and review the draft report DELIVERABLES:
• Presentation materials
• Draft and final study report in Microsoft Word and Adobe PDF TASK 9 - PROPOSITION 218 PUBLIC HEARING PRESENTATION
Raftelis will present the study results at a Proposition 218 hearing in which we will address the City Council and public's questions and comments. Presentation materials will be provided to City staff beforehand for review prior to the Proposition 218 presentation.
MEETINGS
• One Proposition 218 presentation
DELIVERABLES
• Graphics and/or charts in PowerPoint
OPTIONAL TASK 10 - PROPOSITION 218 NOTICE
Raftelis will prepare the Proposition 218 Notice for review by the City's Attorney.The notice will outline the proposed rate changes,will explain the right to challenge the rates,and will meet and comply with the noticing requirements of Proposition 218.
MEETINGS
• Web meeting to discuss the Proposition 218 Notice
DELIVFRARI FS
• Proposition 218 Notice
RAFTELIS 9
OPTIONAL TASK 11 — ADDITIONAL CITY COUNCIL MEETINGS
Should additional City Council meetings be required,we have shown the cost per meeting.
MEETINGS
• As needed
DELIVERABLES
• Graphics and/or charts in PowerPoint format
OPTIONAL TASK 12 — CAPITAL IMPROVEMENT PLAN & OPERATING BUDGET
SERVICES
Financial forecasting and determining sewer rates are only as good as the operating and capital costs that go into them. If there is uncertainty in operating or capital costs,asset management costs, or opportunities to reduce costs, those can have direct impacts on the finances and rates of the utility.We can also help you make your master plans and asset management plans an actionable capital improvement plan that can provide a high level of service while maintaining rates as low as good service will permit.We offer capital improvement program and operating budget review services compared to utility best practices to help our clients make sure they have the right amount of capital, asset management,and operating costs in their budgets and look for ways to increase efficiencies,reduce costs,and align their budgets with utility best practices.This service could potentially reduce your cost of service,reduce or eliminate any needed rate increases,and find some ways to help deliver your CIP or Operations more efficiently depending on your exact needs. It could also help you justify increases to the CIP and rates to address ongoing asset management needs or needed facility/equipment improvements consistent with utility best practices.This type of review also offers an independent third party review of your budgets compared to utility best practices which we have found is beneficial to our clients as rates are developed,proposed,and ultimately approved.
We can include this utility best practice review in our scope of work to review your CIP and Operations Budgets as we work with you to perform the rate study.
MEETINGS
• As needed
DELIVERABLES
• CIP and/or Operating Budget reviews in Word and/or Excel format
EXHIBIT B
Schedule of Charges/Payments
Consultant will invoice City on a monthly cycle. Consultant will include with each invoice a detailed progress report that indicates the amount of budget spent on each task. Consultant will inform City regarding any out-of-scope work being performed by Consultant. This is a time-and-materials contract.
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RAFTELIS 11
Fee
The table below shows the hourly rates,hours,and total estimated fee for this project.At the bottom we show a per meeting cost should additional City Council meetings be required. It is assumed that the water and wastewater meetings with City Council occur together so the meeting time is reduced along with the travel expenses. i
Meetings Hours
In Sudhir Steve Brandon Graphic Total Total Fees& Tasks Virtual Person Pardiwala Gagnon Consultant Vatter Designer Admin Hours Expenses
1.Project Management and Initiation 1 8 2 4 2 16 $5,430 (Kick-Off Meeting)
2.Data Collection and Review 1 1 6 7 $1,875
3.Quality Assurance(QA)and 1 2 3 $1,205
Quality Control(QC)Process
4.Financial Plan Development 2 10 20 30 $9,150
5.Cost of Service Analysis 2 8 10 $2,790
6.Design Rates 2 6 12 18 $5,490
7.Presentation to City Council 1 2 2 4 $1,350
8.Report Preparation 1 8 30 2 40 $10,900
9.Proposition 218 Public Hearing 1 2 2 2 6 $1,570 Presentation
Total Meetings/Hours 7 2 40 4 84 0 0 6 134 — Hourly Billing Rates — — $425 $375 $230 $340 $170 $100 — — Total Professional Fees — — $17,000 $1,500 $19,320 $0 $0 $600 — $38,420 Travel Expenses $0
It is assumed that the water and wastewater meetings with City Council will occur together so there will not be Technology Fee $1,340 additional travel expenses. Total Expenses $1,340 Total Fees&Expenses $39,760
10.Optional-Proposition 218 Notice 1 2 8 6 16 $3,870 —
11.Optional-Additional City Council 1 8 8 16 I $5,620 Meetings
12.Optional-Capital Improvement 2 2 24 26 $9,270 Plan&Operating Budget Services
Total Optional Tasks $18,760
RAFTELIS 12
The hourly rates for Raftelis staff are shown below:
Position Billing Rate
Executive Vice President $425
Vice President $375
Senior Manager $340
Manager $295
Senior Consultant $260
Consultant $230
Associate Consultant $195
Graphic Designer $170
Administration $100
Technology/Communications Charge** $10
EXHIBIT C
Activity Schedule
Schedule
Raftelis proposes to complete the study by November 2025 as shown below:
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RAFTELIS 10
Schedule
Raftelis proposes to complete the study by November 2025 as shown below:
TASKS Feb I Mar I Apr I May I Jun Jul 2025 Aug I Sep Oct Nov 2025 2025 2025 2025 2025 2025 2025 2025 I 2025
1.Project Management and Initiation(Kick- •
Off Meeting)
2.Data Collection and Review •
3.Quality Assurance(QA)and Quality
Control(QC)Process
4.Financial Plan Development
5.Cost of Service Analysis
6.Design Rates
7.Presentation to City Council •
8.Report Preparation
9.Proposition 218 Public Hearing
Presentation •
• Meetings
City of Upland
Wastewater Rate Study
PROPOSAL/ December 2, 2024
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RAFTELIS RAFTELIS 1
December 2, 2024
City of Upland
Mr. Chris Alanis
Public Works Director
460 N. Euclid Avenue
Upland, CA 91786
Subject: Proposal for Wastewater Rate Study
Dear Mr.Alanis:
Raftelis Financial Consultants, Inc. (Raftelis) is pleased to submit this proposal to conduct a Wastewater Rate Study for the City of Upland (City).We believe that our unique combination of qualifications,staff resources,local presence, California experience,and City knowledge will ensure a value-added project for the City and its ratepayers.
Raftelis was established in 1993 to provide financial, rate, and management consulting services of the highest quality to water and wastewater utilities. Since that time, Raftelis has grown to have the largest water and wastewater utility rate and financial consulting services practice in the country,with more than 160 consultants.
Our staff has provided rate and/or financial planning assistance to over 1,000 utilities across the United States and have conducted thousands of studies. Our mission has always been focused on assisting our clients in meeting their goals of financial viability.
Over the past several years,utility providers around the country have experienced increasing challenges in an already demanding industry.This includes several years of supply chain issues and higher rates of operational and capital inflation. In addition,tightening regulations,legislation,and litigation throughout California further compound the challenges of being a utility service provider at a time when cost of living concerns and affordability are top of mind for customers.
Raftelis is confident in our ability to develop optimal rate structures and deliver sustainable financial plans that align with Proposition 218 and achieve the City's short-term and long-term goals and objectives.A primary objective of this study will be to clearly show a nexus between the costs incurred by the City and the proposed rates and fees to be charged to customers. In our studies we work between agency staff,legal counsel,and industry standards to develop rate proposals that harmonize policy objectives,legal requirements,and accepted industry frameworks. Recent examples of cost-of-service studies conducted by our proposed project team of neighboring agencies include the cities of Ontario, Chino, Pomona, Redlands, etc.
To assist the City with this project,we have assembled a team with extensive experience in financial planning, demand forecasting,and rate setting, extensive knowledge in San Bernardino County and California,and a reputation for quality of service. I, Sudhir Pardiwala,will serve as Project Manager,managing the day-to-day aspects of the project and ensuring it stays on schedule, on budget,and effectively meets the City's objectives. I 227 W.Trade Street,Suite 1400,Charlotte,NC 28202
www.raftelis.com Page 296 of 377
RRAFTELIS RAFTELIS 2
have over 40 years of experience serving utilities in Southern California. Steve Gagnon,will serve as Technical Reviewer. He has assisted numerous agencies in Southern California as well. I will work closely with our staff consultants in conducting analyses and preparing deliverables for the project. Should you have any questions, please do not hesitate to contact me at 626.583.1894 or by email at [email protected].
Sincerely,
www.raftelis.com Page 297 of 377
RAFTELIS 3
Understanding and Scope of Work
Operations and Maintenance & Capital Costs
Higher rates of operational and capital inflation have impacted the City's wastewater utility.The City's budget shows a 30%increase in wastewater operating expenses from FY 2022-23 to FY 2023-24.Proposed rates will need to reflect these changes while also mitigating rate shock to customers.
Methodology
There are five main steps to our rate studies:
1. Due Diligence and Policy Review
Raftelis will start with a due diligence phase to understand the underlying reason and/or goals for the rate study.
2. Financial Plan Development
We then determine future revenue requirements to sufficiently fund the utility's operation and maintenance and capital replacement and refurbishment program.We evaluate current and projected revenues and expenses including treatment cost agreements.The City's Capital Improvement Programs for the utility will be integrated into their respective financial plans to fully fund capital investment.
3. Cost-of-service Analysis
The annual costs of providing wastewater service should be allocated among customer classes commensurate with their service requirements (i.e.,how they use the system).In this step,costs are identified and allocated to functional cost components and distributed to respective customer classes according to the industry standards provided in the Water Environmental Federation (WEF) Manual of Practice No.27,,Financing and Charges for Wastewater Systems,2004 for wastewater.
4. Rate Design
Properly designed rates support and optimize a blend of utility objectives,such as affordability for essential needs, fairness and equity,revenue sufficiency,and stability. Raftelis will work with City staff to design rates according to industry standards that meet the City's rate-setting objectives and are defensible in light of recent court cases.
Raftelis will develop a customized rate model to assess different rate alternative customer impacts to facilitate informed decision making.
5. Rate Adoption
In the last step of the rate-making process,to comply with Proposition 218 requirements,the results of the analyses are documented in a study report to help educate the public about the proposed changes,the rationale and justifications behind the changes,and their anticipated financial impacts in layman's terms.The report will detail the proposed rate structure derivation.At a public hearing,45 days after sending out the public notices, Raftelis can present our recommendations to assist in the City's rate adoption.
RAFTELIS 4
Scope of Work
TASK 1 - PROJECT MANAGEMENT AND INITIATION (KICK-OFF MEETING) Task 1.1 — Ongoing Project Management and Quality Assurance/Quality Control Process The proposed project approach entails several different yet interrelated work efforts that will require effective coordination between City staff and the Raftelis Team. Our management approach stresses communication, teamwork, objectivity,and accountability for meeting project objectives to ensure that all deadlines and objectives are met in a timely and efficient manner.We believe in a no-surprises approach so that the client is aware of the status of the project at all times.This task includes general administrative duties,including client communication, billing,project documentation,and overall project administration.We assumed that staff meetings are virtual and City Council meetings are in person.We can have in-person meetings if preferred. Both the Project Manager and Technical Reviewer will perform QA/QC on the model results and our recommendations to ensure they are consistent with industry standards and the current rate-setting environment.
Task 1.2 — Project Initiation and Data Collection
The kick-off meeting provides a solid foundation for the project and serves as a forum in which City staff can provide input on the project's objectives,approach,work plan, scheduling,and priorities. Raftelis will develop a kick-off meeting package that contains the meeting agenda and a broad list of questions related to the City's wastewater system operations.This kick-off meeting will also serve as a forum for Raftelis to develop an understanding of the City's pricing objectives, financial goals,and other important utility issues.
A detailed data request list is submitted prior to the kick-off meeting so that the City can assemble the appropriate data in the required format.The Raftelis team studies the data to understand revenue streams, operating and capital expenses,and customer counts. In addition, Raftelis will review the current reserve structure and propose reserve recommendations that are consistent with industry standards as well as the City's risk management tolerance to maintain financial stability.
MEETINGS
• One kick-off meeting with City staff
DELIVERABLES
• Data request list and kick-off meeting summary memorandum TASK 2 - DATA COLLECTION AND REVIEW
The purpose of this task is to gather and review relevant information,documents,and analyses required to conduct the rate study.As part of this task,a detailed data request list will be prepared and submitted to City staff upon notice to proceed so all appropriate data can be forwarded to Raftelis before the kick-off meeting,where the data can be reviewed and any questions answered.
DELIVERABLES
• Data request list and kick-off meeting summary memorandum
RAFTELIS 5
TASK 3 - QUALITY ASSURANCE (QA) AND QUALITY CONTROL (QC) PROCESS The QA/QC process ensures that all work performed by Raftelis on this project will be accurate and of the highest quality. Steve Gagnon, PE,will be the lead Technical Reviewer for this project,ensuring it meets both Raftelis'and industry standards.The QA/QC reviewer's primary responsibility is to review the work effort for consistency, accuracy,and validity and ensure that the cost of service and rate models are functioning properly and based on sound rate-making principles and standard industry practice.The reviewer also ensures that the report produced is comprehensive, consistent with the results, and meets the high-quality standards of Raftelis.The QA/QC process is accomplished through periodic reviews of the models throughout the course of their development.
TASK 4 - FINANCIAL PLAN DEVELOPMENT
The financial plan is a cash flow modeling exercise that ascertains the additional revenue needed to ensure the financial integrity of the utilities. It does so by projecting existing rate revenue, other operating and non-operating revenues,debt service payments,and operating and capital expenses over a 10-year period. Existing rate revenue is based on the anticipated number of customers of each customer type served by the utilities.We will make prudent customer growth assumptions with input from City staff.
Raftelis will develop a 10-year cash flow analysis to determine revenue adjustments.We will also review reserve policies to recommend appropriate reserve balances (operating, capital,rate stabilization, etc.) that are consistent with industry standards as well as the City's risk tolerance.The financial plan will be presented in an easy-to- understand format on an interactive dashboard that shows the impacts of various assumptions so that informed decisions regarding revenue adjustments, capital financing through rates or debt,and reserve balances can be made efficiently.
Several features of the model dashboards include the ability to show or indicate:
1. Revenue adjustments required over the planning horizon to meet debt coverage,fund capital projects, and achieve reserve targets
2. Reserve balances and reserve targets as well as debt service coverage ratios (days cash on hand, reserve funding levels)
3. Projected operating costs and revenue streams
4. Operating cost breakdown (O&M,water purchases,debt service payments,pay-as-you-go (PAYGO) capital, etc.)
5. Different capital funding sources such as PAYGO (rate funding),debt financing, or grant funding We will work with City staff to determine the most appropriate financial plan and rate design. Raftelis models are designed to be user-friendly while being flexible enough to show the City's sensitivity to various assumptions, allowing both City staff and City Council to make informed decisions.
MEETINGS
• Two webinars to review the results of the financial plans
DELIVERABLES
• Financial plan model in Excel
RAFTELIS 6
TASK 5 — COST-OF-SERVICE ANALYSIS
The annual costs of providing services will be allocated among customer classes commensurate with their service requirements-i.e.,how they use each system. Costs are identified and allocated to cost components and distributed to respective customer classes according to the industry standards provided in the Water Environmental Federation (WEF) Manual ofPractice.
Throughout the cost allocation process,Raftelis will incorporate the City's policy considerations,as well as current federal,state,and local rules and regulations such as Proposition 218.We will liaise with the City's legal counsel on rates to ensure that proposed cost allocation bases and cost recovery rationale are consistent with Proposition 218,recent case law,and overall defensibility of rates.
The wastewater cost-of-service analysis will be based on industry standards and methodologies approved by the Water Environmental Federation (WEF) Manual ofPractice No.27,,Financing and Charges for Wastewater Systems,2018.Wastewater expenses are allocated based on collection,treatment,customer costs,and indirect costs.The goal is to distribute cost components to classes based on responsibility.This results in the total cost to service each and is the basis for developing rates.
MEETINGS
• Webinars if needed
DELIVERABLEP
• Cost-of-service analyses in Excel
TASK 6 - UTILITY RATE MODEL DEVELOPMENT
Properly designed rates support and optimize a blend of various utility objectives,such as affordability for essential needs,fairness and equity,revenue stability,and ease of implementation. Raftelis will develop comparable rate alternatives according to the City's objectives,with consideration of industry standards and defensibility considering recent legal challenges and Proposition 218.
Task 6.1 Develop Rate Design Options
Raftelis will develop rate models with the flexibility to evaluate alternative rate structures,including options such as variable rates,rates for different customer classes,and a uniform rate.The model will have the capability to examine the different rate structure scenarios to enhance revenue stability,fully fund operations and capital projects through rates,further promote rate affordability,and address fairness of rates within each class. Raftelis will review the utility's current rate per equivalent dwelling unit(EDU) structure as well as EDU classes, definitions,and current ratios.
Task 6.2 Comparison of Alternative Rate Design Structures Rate adjustments stem from a change in the total rate revenue needs and/or a change in the rate structure.The total rate adjustment can sometimes cause"rate shock"to certain customer groups.In our impact analysis graphics,we calculate estimated monthly bills at each level of usage assuming the proposed rate structure was already in place to determine the true impact of the new rate structure.The customer impact analysis will include a series of tables and figures that show projected rate impacts by customer class at various levels of usage.
Understanding customer impacts,and taking corrective action,if necessary,allows us to design public outreach
RAFTELIS 7
strategies for generating customer buy-in and successful rate implementation.This visual has proved powerful in discussions with staff and elected officials when entertaining changes to rate structures.
Proposed rates will be designed to be defensible and to fall within regulatory and legal requirements.While Raftelis is not a law firm,we have helped numerous agencies throughout the State develop rates and rate structures that are defensible and meet Proposition 218 requirements.We will work with the City's legal counsel on rates throughout the study to ensure legal counsel, staff, and the Raftelis Project Team agree prior to presenting any modifications to existing or new rate structures in a public forum.
Raftelis will discuss preliminary results with staff during two webinars and one in-person meeting. In the meetings,we will discuss the benefits and challenges of each rate structure and each scenario and refine the options that will be presented to City Council.
PLANNED MEETINGS:
• Two (2) meetings with City staff to discuss rate options DELIVERABLES:
• Rate model and customer bill impacts in Microsoft Excel TASK 7 - PRESENTATION TO CITY COUNCIL
Raftelis will present the study process and results to the City Council.With luck,we would get City Council approval to proceed with the Public Notice at the first City Council presentation. However,sometimes the City Council would like to see different rate adjustments or have other input before providing direction.We have assumed one City Council presentation and have provided a price for each additional City Council presentation.
MEETINGS
• One presentation to City Council (presentation materials will be provided to City staff prior to the presentation for review)
DELIVERABLES
• Graphics and/or charts in PowerPoint
TASK 8 - REPORT PREPARATION
The last step of the rate-making process,and in part to comply with Proposition 218 requirements, documents the study results in a study report to inform the public about the proposed changes,the rationale and justifications behind the changes,and their anticipated financial impacts in lay terms.The study report serves as part of the City's administrative record to justify the proposed rates.
Task 8.1 Draft Report
The draft report will include an executive summary highlighting the major issues addressed, decisions reached, and recommended rates developed during the study.The main body of the reports will include brief physical descriptions of the system and City characteristics, details of the financial plan and reserve policies,cost of service analysis, rate design details,and the proposed rates.They will also contain discussions on rate structure selection
RAFTELIS 8
and rate design assumptions.The methodology describing the cost of service,rate calculations, and proposed five- year rates will be described in detail so that the nexus between costs and rates is clearly defined and understandable. Raftelis will provide the draft report to staff and external legal counsel for review. Raftelis will complete a draft report in time for City Council meetings where the Council will select their preferred rates.Any changes, comments,and feedback will be incorporated into the final models and final reports.
Task 8.2 Final Report
Recent legal challenges and court decisions have emphasized the importance of a thorough administrative record and defensible methodology of the final rates for service.To ensure that the study includes a thorough administrative record,the final report will include exhibits listing all assumptions and methodologies used to develop the financial plan,allocate costs to serve customers,and derive rates.The reports will lead the reader from the adopted budgets through final rates and customer impacts,with the ability to do the math along the way.
Raftelis will incorporate changes,comments, and edits from City staff,legal counsel,and City Council when completing the final reports.
MEETINGS:
• One (1) meeting with City staff and legal counsel to discuss and review the draft report DELIVERABLES:
• Presentation materials
• Draft and final study report in Microsoft Word and Adobe PDF TASK 9 - PROPOSITION 218 PUBLIC HEARING PRESENTATION
Raftelis will present the study results at a Proposition 218 hearing in which we will address the City Council and public's questions and comments. Presentation materials will be provided to City staff beforehand for review prior to the Proposition 218 presentation.
MEETINGS
• One Proposition 218 presentation
DELIVERABLES
• Graphics and/or charts in PowerPoint
OPTIONAL TASK 10 - PROPOSITION 218 NOTICE
Raftelis will prepare the Proposition 218 Notice for review by the City's Attorney.The notice will outline the proposed rate changes,will explain the right to challenge the rates,and will meet and comply with the noticing requirements of Proposition 218.
MEETINGS
• Web meeting to discuss the Proposition 218 Notice
DELIVERABLES
• Proposition 218 Notice
RAFTELIS 9
OPTIONAL TASK 11 — ADDITIONAL CITY COUNCIL MEETINGS
Should additional City Council meetings be required,we have shown the cost per meeting.
MEETINGS
• As needed
DELIVERABLES
• Graphics and/or charts in PowerPoint format
OPTIONAL TASK 12 — CAPITAL IMPROVEMENT PLAN & OPERATING BUDGET
SERVICES
Financial forecasting and determining sewer rates are only as good as the operating and capital costs that go into them. If there is uncertainty in operating or capital costs,asset management costs, or opportunities to reduce costs, those can have direct impacts on the finances and rates of the utility.We can also help you make your master plans and asset management plans an actionable capital improvement plan that can provide a high level of service while maintaining rates as low as good service will permit.We offer capital improvement program and operating budget review services compared to utility best practices to help our clients make sure they have the right amount of capital, asset management,and operating costs in their budgets and look for ways to increase efficiencies,reduce costs,and align their budgets with utility best practices.This service could potentially reduce your cost of service,reduce or eliminate any needed rate increases,and find some ways to help deliver your CIP or Operations more efficiently depending on your exact needs. It could also help you justify increases to the CIP and rates to address ongoing asset management needs or needed facility/equipment improvements consistent with utility best practices.This type of review also offers an independent third party review of your budgets compared to utility best practices which we have found is beneficial to our clients as rates are developed,proposed, and ultimately approved.
We can include this utility best practice review in our scope of work to review your CIP and Operations Budgets as we work with you to perform the rate study.
MEETINGS
• As needed
DELIVERABLES
• CIP and/or Operating Budget reviews in Word and/or Excel format
RAFTELIS 10
Schedule
Raftelis proposes to complete the study by November 2025 as shown below:
TASKS Feb Mar Apr May Jun Jul 2025 Aug Sep I Oct Nov 2025 2025 2025 2025 I 2025 2025 2025 I 2025 2025
1.Project Management and Initiation(Kick- •
Off Meeting)
2.Data Collection and Review •
3.Quality Assurance(QA)and Quality
Control(QC)Process
4.Financial Plan Development
5.Cost of Service Analysis
6.Design Rates
7.Presentation to City Council •
8.Report Preparation
9.Proposition 218 Public Hearing •
Presentation
• Meetings
RAFTELIS 11
Fee
The table below shows the hourly rates,hours,and total estimated fee for this project.At the bottom we show a per meeting cost should additional City Council meetings be required. It is assumed that the water and wastewater meetings with City Council occur together so the meeting time is reduced along with the travel expenses.
Meetings Hours
In Sudhir Steve Brandon Graphic Total Total Fees& Tasks Virtual Person Pardiwala Gagnon Consultant Vatter Designer Admin Hours Expenses
1.Project Management and Initiation 1 8 2 4 2 16 $5,430 (Kick-Off Meeting)
2. Data Collection and Review 1 1 6 7 $1,875
3.Quality Assurance(QA)and 1 2 3 $1,205
Quality Control(QC)Process
4.Financial Plan Development 2 10 20 30 $9,150
5.Cost of Service Analysis 2 8 10 $2,790
6.Design Rates 2 6 12 18 $5,490
7.Presentation to City Council 1 2 2 4 $1,350
8.Report Preparation 1 8 30 2 40 $10,900
9.Proposition 218 Public Hearing 1 2 2 2 6 $1,570 Presentation
Total Meetings/Hours 7 2 40 4 84 0 0 6 134 — Hourly Billing Rates — — $425 $375 $230 $340 $170 $100 — — Total Professional Fees — — $17,000 $1,500 $19,320 $0 $0 $600 — $38,420 Travel Expenses $0
It is assumed that the water and wastewater meetings with City Council will occur together so there will not be Technology Fee $1,340 additional travel expenses. Total Expenses $1,340 Total Fees&Expenses $39,760
10.Optional-Proposition 218 Notice 1 2 8 6 16 $3,870
11.Optional-Additional City Council 1. 8 8 16 $5,620 Meetings I I I 1
12.Optional-Capital Improvement 2 2 24 26 $9,270 Plan&Operating Budget Services
Total Optional Tasks $18,760
RAFTELIS 12
The hourly rates for Raftelis staff are shown below:
Position Billing Rate
Executive Vice President $425
Vice President $375
Senior Manager $340
Manager $295
Senior Consultant $260
Consultant $230
Associate Consultant $195
Graphic Designer $170
Administration $100
Technology/Communications Charge** $10
The City accepts the terms of this engagement letter and proposal:
Approved: Date:
Name of Signatory: Title:
4 or UN
`tCALIFORNIA LEVINE ACT DISCLOSURE STATEMENT
Ogt�� 4Q"
California Government Code Section 84308, commonly referred to as the "Levine Act," prohibits City Officers from participating in any action concerning a license, permit,other entitlement for use,franchise, or contract(collectively"license, permit,or contract") if they receive political contribution(s)from a party, or its agent(s), totaling more than $500 within the twelve (12) months before the proceeding, while a proceeding is pending, and for twelve (12) months following the date of a final decision in a proceeding.
The Levine Act also requires a member of the Upland City Council who has received such a contribution to disclose the contribution on the record of the proceeding and recuse themselves before the proceeding unless the violation has been properly cured.
Current Upland City Council Members are listed at:
https://www.uplandca.gov/city-council-treasurer
Parties and their Agents are responsible for accessing the link to review the names and disclosing their applicable contributions to City Officers on the record of a proceeding.
As a party to a proceeding,you are also required to provide information below about contributions made by you, your agents on behalf of you or your organization, your organization subject to the proceeding with the City, and any organization you direct or control pursuant to the aggregation rules at FPPC Reg. § 18438.5, except for uncompensated officers of a nonprofit organization. This form is to be submitted to the City of Long Beach and is a public record. If you have any questions about this form, please contact your City representative for assistance.
1. Have you or your company,or any agent/board member on behalf of you or your company/entity, made any political contributions of more than $500 to any Upland City Council Member in the 12 months preceding the date of the submission of your proposal or application,or the anticipated date of any Council action?
YES If yes, please identify the Council Member(s): _ ✓ NO
2. Do you or your company/entity, or any agency on behalf of you or your company/entity, anticipate or plan to make any political contribution of more than $500 to any Upland City Council Member in the 12 months following any Council action related to your proposal or application? YES If yes, please identify the Council Member(s):
✓ NO
Answering yes to either of the two questions above does not preclude the Upland City Council from awarding a contract or approving an application or any subsequent action. It does, however, preclude the identified Council Member(s)from participating in any actions related to your proposal or application. 1/23/2025 qtgn-- we..
Date Signature of authorized individual
Sudhir Pardiwala
Company/Applicant Name
(Levine Act definitions on reverse side)
LEVINE ACT DISCLOSURE STATEMENT DEFINITIONS
Term Definition Law
A proceeding to grant, deny, revoke, restrict, or modify a license, permit or other entitlement for use, that
does not solely involve purely ministerial decisions
and is:
Covered (1)Applied for by the party; FPPC Reg 18438.2(a) "proceedings" (2) Formally or informally requested by the party; or (3)A contract between the agency and the party or a
franchisee granted by the agency to the party, other
than a contract that is competitively bid, a labor
contract, or a personal employment contract.
Any person who files an application for, or is the
Party subject of, a proceeding involving a license, permit, or Gov. Code 84308(a)(1) other entitlement for use.
Any person who is not a party but who actively
supports or opposes a particular decision in a
proceeding involving a license, permit, or other
entitlement for use and who has a financial interest in Gov. Code 84308(a)(2) Participant the decision.A person actively supports or opposes a FPPC Reg 18438.4 particular decision in a proceeding if that person
lobbies in person the officers or employees of the
agency, testifies in person before the agency, or
otherwise acts to influence officers of the agency.
A person who represents a party or participant for
compensation and appears before or otherwise
Agent communicates with the governmental agency for the FPPC Reg 18438.3 purpose of influencing the pending proceeding. See
FPPC Reg 18438.3 for exceptions for certain
consultants.
A contract required by law to be awarded to the lowest
responsible bidder with a responsive bid, or, if the FPPC Reg Competitively Bid successful bidder refuses or fails to execute the 18438.2(a)(3)(A) contract, to the next lowest bidder with a responsive
bid.
A contract or agreement reached through collective
bargaining or with a representative group regarding
Labor Contract the salary, benefits, or terms and conditions under an FPPC Reg employment or retirement policy for employees or 18438.2(a)(3)(B) retirees, including a project labor agreement entered
under Public Contract Code Section 2500.
Personal A contract for employment, including the terms and Employment conditions of employment, between the agency and FPPC Reg Contract an agency employee.A contract with an independent 18438.2(a)(3)(C)-(D) contractor is NOT a personal employment contract.
..t �pl"� CITY FU P LA N D
"The City of Gracious Living"
tIFOBS
1. Stall rk-q)Ctilt
DATE: February 10,2025
TO: MAYOR AND CITY COUNCIL
FROM: MICHAEL BLAY,CITY MANAGER
PREPARED BY:CHRIS ALANIS,INTERIM PUBLIC WORKS DIRECTOR
NICOLE DEMOET,ENVIRONMENTAL COMPLIANCE PROGRAMS MANAGER
TANYA GARCIA,MANAGEMENT ANALYST, SOLID WASTE
SUBJECT: CONSIDER APPROVAL TO SET A HEARING FOR ANNUAL PARCEL FEES TO BE
PLACED ON THE SAN BERNARDINO COUNTY TAX ROLL AND AUTHORIZATION TO
MAIL NOTIFICATION POSTCARDS
RECOMMENDED ACTION:
It is recommended that the City Council approve setting a Public Hearing on May 12, 2025,to place all parcel fees for Wastewater(Sewer), Solid Waste(Trash),and Storm Drain on the property tax roll for billing and authorize staff to mail notification postcards to affected property owners 45 days in advance of the public hearing. Placing the fees on the tax roll is an administrative function only.These actions do not increase or alter the current billing amounts.
GOAL STATEMENT
The proposed action supports the City's goal of ensuring financial sustainability of enterprise funds by streamlining billing processes and securing a consistent revenue stream for wastewater,solid waste,and storm drain services.
BACKGROUND
In June 2022,the City directed Burrtec Waste Industries to handle billing and customer service on behalf of the City.
All revenues generated from utility services are remitted to the City,which retains the responsibility for administering debt collection.
In November 2023, the City Council approved Ordinance No. 1983 which established that property owners are the only eligible applicants for water service and clearly stated the City's intention and ability to pursue delinquent utility service charges through the recordation of a special assessment lien and collection of charges on the County tax roll.
In January 2024, the City implemented a policy requiring all utility accounts to be registered under the property owner's name rather than the tenant's.This change was made to enhance accountability and improve billing collection efficiency.
Annually,the City places delinquent bills on the County Tax roll as a method of collecting unpaid bills.
Wastewater (Sewer) and Solid Waste parcel fees are adopted using Proposition 218. Storm Drain parcel fees are established by Upland Municipal Code Ordinance 13.32.390
ISSUES AND ANALYSIS
Providing direct billing methods is a cumbersome process as it poses several challenges, including delinquent payments that increase collection efforts and administrative costs,fluctuating revenue streams that impact the stability of enterprise funds, and the printing and mailing expenses associated with invoice reproduction. To address these issues,the City is proposing to place all charges for these utilities onto the property tax roll. If approved,this initiative would eliminate the need for direct invoicing, ensure collection of fees through the County's property tax billing system, reduce administrative costs related to billing and collections, and provide a more stable revenue stream for the City's enterprise funds.
Cost savings would be realized by eliminating manual billing processes and reducing printing and mailing expenses.
Additionally,property tax billing would increase collection efficiency by ensuring all fees are collected without the
need for separate utility bills. This approach would also create a more predictable revenue stream by reducing fluctuations in enterprise fund revenues,thereby improving the City's financial planning.
The passage of Senate Bill 998 (SB 998)in California,signed into law in 2018 and effective as of February 1,2020, significantly altered the legal framework regarding water service disconnections. SB 998 prohibits the disconnection of water services due to unpaid bills related to other utilities,posing considerable challenges for the City of Upland Utility Division in maintaining timely utility payments from customers.Since its implementation,the City has accrued more than$2 million in total uncollected utility payments as of January 30,2025,with delinquency totals including $123,261.36 for the Sewer Parcel Fee, $1,126,331.02 for the Solid Waste Parcel Fee,and$0 for the Storm Drain Fee.
The balance of the delinquent accounts are within the water utility.
To address this issue,the City proposes segregating the residential Sewer, Solid Waste, and Storm Drain parcel fees from water fees,allowing these fees to be placed directly onto the San Bernardino County Tax Roll.This adjustment will reduce delinquency rates by leveraging the County's established property tax collection mechanisms, streamline the collection process, and enhance financial stability by ensuring reliable revenue streams. The City Council is recommended to approve this proposal and authorize staff to coordinate with San Bernardino County to implement the necessary changes to the tax roll process,ultimately supporting the long-term financial health of the City of Upland Utility Division.
ENVIRONMENTAL DETERMINATION
The proposed action is administrative in nature and does not constitute a project under the California Environmental Quality Act(CEQA)(Section 15378 of the CEQA Guidelines).
FISCAL IMPACTS
The cost of postcard mailings is nominal and there are available funds in the existing Wastewater and Solid Waste enterprise funds. Once the tax roll billing is implemented,ongoing administrative savings are expected from reduced billing and collection efforts.
ALTERNATIVES
1.Maintain the current billing system,which would continue to incur higher administrative costs and potential revenue losses due to delinquent payments.
2.Provide alternative direction to staff.
CEQA:Not a Project.
4��a �p19� CITY UPLAND
�5, _�� "The City of Gracious Living"
CltIFOBS
1. Stall(kr Ctilt
DATE: February 10,2025
TO: MAYOR AND CITY COUNCIL
FROM: MICHAEL BLAY,CITY MANAGER
PREPARED BY:CHRIS ALANIS,INTERIM PUBLIC WORKS DIRECTOR
NICOLE DEMOET,ENVIRONMENTAL COMPLIANCE PROGRAMS MANAGER
TANYA GARCIA,MANAGEMENT ANALYST, SOLID WASTE
SUBJECT: CONSIDER SETTING A PUBLIC HEARING DATE AND AUTHORIZE MAILING OF PROPOSITION 218 NOTICES FOR ESTABLISHMENT OF A SOLID WASTE FRANCHISE FEE
RECOMMENDED ACTION:
It is recommended that the City Council approve setting a Public Hearing on April 28, 2025, for the Solid Waste Enterprise Program rate adjustments; and authorize staff to mail Proposition 218 notices to all affected property owners at least 45 days prior to the public hearing to inform them of the proposed rate adjustments. These recommendations do not alter the solid waste rates. This portion of the 218 administrative process allows a full discussion and presentation at the public hearing.
GOAL STATEMENT
The proposed action ensures compliance with Proposition 218 and the City's contractual obligations while maintaining financial stability in the Solid Waste Enterprise Program. This action provides an equitable means of cost recovery and reduces the financial burden on the General Fund.
BACKGROUND
In July 2022, the City Council approved a Restated and Amended Agreement with Burrtec Waste Industries, Inc., which revised service terms and agreement length. The agreement was Restated and Amended a second time on December 12,2024,incorporating additional services administered by Burrtec.Additionally,this second amendment introduced a provision allowing the City to collect an administrative Franchise Fee to recover overhead costs associated with solid waste services.
On January 14,2025,the Public Works Committee received a presentation on the establishment of this Franchise Fee.
The Public Works Committee provided support to move forward with a Franchise Fee in the amount of 15%to cover overhead costs associated with the administration of solid waste enterprise program.
ISSUES AND ANALYSIS
Currently, the City of Upland incurs approximately $1,000,000 in solid waste-related overhead expenses which are absorbed by the General Fund and not passed through to residents.Proposition 218 allows the City to recover all costs associated with solid waste services,ensuring that fees are equitable and financially sustainable.
The Proposition 218 process requires the following steps:
• Council Action(February 2025) —City Council must approve the setting of a public hearing date and authorize the mailing of Proposition 218 notices to affected property owners. • Notice to Property Owners (March 2025)—Affected property owners must receive a mailed notice at least 45 days before the hearing.
• Public Hearing(April 28,2025)—The City will present the proposed rate adjustments,financial analysis, and justifications for the increase.
Key Financial Considerations:
• The City currently absorbs more than$1,000,000 in overhead costs for activities such as internal service allocations,personnel costs,landfill maintenance,and legal expenses relating to solid waste activities.
• The Franchise Fee proposal allows for a more sustainable cost recovery model,ensuring that operational costs are covered without impacting the General Fund.
Next Steps and Preliminary Timeline:
City Council approval to set Public Hearing and mail Proposition 218 notices February 2025 Mail Proposition 218 notices to property owners of record March 2025 Proposition 218 Public Hearing and Protest Count April 2025 Implementation of approved rate adjustments July 2025 If rate adjustments are approved, they will take effect on July 1, 2025, and be reflected in future solid waste billing cycles.
ENVIRONMENTAL DETERMINATION
The proposed action is administrative in nature and does not constitute a project under the California Environmental Quality Act(CEQA)(Section 15378 of the CEQA Guidelines).
FISCAL IMPACTS
The cost of mailing Proposition 218 notices is nominal,and available funds are in the existing Solid Waste operating budget. If the proposed rate adjustments are approved,it is anticipated that all costs associated with the Solid Waste Program will be fully funded through user fees,thereby reducing reliance on the General Fund.
ALTERNATIVES
Provide alternative direction to staff.
CEQA:Not a Project.
� �p1
4�� 94. CITY UPLAND
�5, _�� "The City of Gracious Living"
CltIFOBS
1. Stall(kr Ctilt
DATE: February 10,2025
TO: MAYOR AND CITY COUNCIL
FROM: MICHAEL BLAY,CITY MANAGER
PREPARED BY:CHRIS ALANIS,INTERIM PUBLIC WORKS DIRECTOR
STEVEN NIX,CONTRACT PROJECT MANAGER
SUBJECT: CONSIDER APPROVING THE NOTICE OF COMPLETION FOR THE POLICE
DEPARTMENT'S MEN'S&WOMEN'S LOCKER REPLACEMENT PROJECT
RECOMMENDED ACTION:
It is recommended that the City Council approve the work; authorize the City Manager or his designee to record the Notice of Completion;and reduce the Faithful Performance Bond to 10%for the Police Department's(PD)Men's& Women's Locker Replacement Project.
GOAL STATEMENT
The proposed action supports the City's goal of maintaining and improving the City's public building facilities.
BACKGROUND
On January 8, 2024, the City Council awarded the PD Men's & Women's Locker replacement Project to Y4M Developing, Inc. DBA Construction Masters and authorized up to $725,000(including contingencies) for the work.
The project consisted of removal of one hundred eleven(111) existing lockers with concrete bases in the men's and women's locker rooms, removal of the existing towel room and sauna room adjacent to the exercise room, re- configuration of the added space to increase the size of the women's locker room,installation of one hundred twenty- six(126)new lockers including six(6)ADA compliant lockers and the installation of an epoxy coating on the walls and floors of each men's and women's shower rooms.
ISSUES AND ANALYSIS
The contractor has since satisfactorily completed the required improvements. The city can now accept the work, file the Notice of Completion, and reduce the Faithful Performance Bond to 10%. The city will retain the Labor & Materials Bond for six (6) months and release it, thereafter, provided no liens or stop notices are filed against the project.
ENVIRONMENTAL DETERMINATION
The project has been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act "CEQA", and the State CEQA Guidelines, and determined to be categorically exempt from further environmental review pursuant to Section 15301(c) (Existing Facilities), of the CEQA guidelines. The project involved repair and maintenance of existing public facilities, and did not involve any expansion of use beyond that which is existing.
FISCAL IMPACTS
There is no fiscal impact associated with this action.
ALTERNATIVES
Provide alternative direction to staff.
CEQA: Determined to be categorically exempt from further environmental review pursuant to Section 15301(c).
Recording requested by
and when recorded mail to:
City of Upland, City Clerk's Office
460 N. Euclid Avenue
Upland, CA 91786
(Space above this line for Recorder's use)
This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383
Notice of Completion
Pursuant to Civil Code Section 3093, NOTICE is hereby given that:
The undersigned is the owner of the interest or estate stated below in the property hereinafter described. The full name and address of owner is City of Upland, 460 North Euclid Avenue, Upland, California 91786.
Assessors Parcel Numbers 1006-391-01, in and to the hereinafter described property.
The work was completed on that certain work known as Protect No. 80001 & 80002, PD Men's & Women's Locker Replacement Protect for the undersigned City of Upland, a Municipal Corporation, on the 10th day of January,2025.
The City accepted the job on the 22nd day of January, 2025.
The Contractor on said job was Y4M Developing, Inc. DBA Construction Masters of Ontario, California.
The improvement(s) consisted of the removal and replacement of all existing men's and women's lockers at the City of Upland Police Station, removal of the existing towel room and sauna room, and the re:
configuration of the additional space to enlarge the women's locker room; and the location of the improvements occurred at the Police Station located at 1499 W. 13th Street, in Upland, California.
The surety was The Gray Casualty & Surety Company.
All communications relating to the contract should bear the number above mentioned.
I hereby certify under penalty of perjury that the foregoing is true and correct.
Executed this 10th day of February 2025 at Upland, California.
City of Upland, a Municipal Corporation
Michael Blay, City Manager
4,a trpl CITY FUPLAND
"The City of Gracious Living"
tIFOBS
1. Stall(kr Ctilt
DATE: February 10,2025
TO: MAYOR AND CITY COUNCIL
FROM: MICHAEL BLAY,CITY MANAGER
PREPARED BY:CHRIS ALANIS,INTERIM PUBLIC WORKS DIRECTOR
BOB CRITCHFIELD,ENGINEERING MANAGER
KIRK SWANNER,ASSOCIATE ENGINEER
SUBJECT: CONSIDER APPROVING THE NOTICE OF COMPLETION FOR THE BALDY VIEW DOG
PARK IMPROVEMENT PROJECT
RECOMMENDED ACTION:
It is recommended that the City Council approve the work; authorize the City Manager or designee to record the Notice of Completion;and reduce the Faithful Performance Bond to 10%for the Baldy View Dog Park Project.
GOAL STATEMENT
The proposed action supports the City's goal of maintaining and improving the City's public park facilities.
BACKGROUND
On February 26,2024,the City Council awarded the Baldy View Dog Park Improvements to Green Giant Landscape, Inc. and authorized up to $1,600,000 (including contingencies) for the work. The project consisted of removal and replacement of dog park fencing;irrigation system replacement;turf soil preparation and sod installation;new potable water lines for water fountains;ADA improvements;LED lighting improvements;installation of a sail shade pavilion structure;installation of dog leash posts and waste stations;installation of concrete benches,and concrete picnic tables.
On April 8,2024,the City Council approved recommendations of the Public Works Committee in removing additive item Al entirely(two Adirondack chairs); increasing additive item A2 (two concrete tables, for a total of 12 tables) by utilizing the savings from the removal of item Al; and maintaining additive item A3 (concrete walking path) as shown on the plans.
ISSUES AND ANALYSIS
The contractor has since satisfactorily completed the required improvements. The City can now accept the work,file the Notice of Completion,and reduce the Faithful Performance Bond to 10%. The City will retain the Labor Materials Bond for six(6)months and release it,thereafter,provided no liens or stop notices are filed against the project.
ENVIRONMENTAL DETERMINATION
The project has been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act ("CEQA"), and the State CEQA Guidelines, and determined to be categorically exempt from further environmental review pursuant to Section 15301(c)(Existing Facilities),of the CEQA guidelines.The project involves repair and maintenance of existing public facilities and does not involve any expansion of use beyond that which is existing. The City filed the Notice of Exemption with the County of San Bernardino on September 6,2022.
FISCAL IMPACTS
There is no fiscal impact associated with this action.
ALTERNATIVES
Provide alternative direction to staff.
CEQA: Determined to be categorically exempt from further environmental review pursuant to Section 15301(c) (Existing Facilities),of the CEQA guidelines.
Recording requested by
and when recorded mail to:
City of Upland, City Clerk's Office
460 N. Euclid Avenue
Upland, CA 91786
(Space above this line for Recorder's use)
This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383
Notice of Completion
Pursuant to Civil Code Section 3093, NOTICE is hereby given that:
The undersigned is the owner of the interest or estate stated below in the property hereinafter described. The full name and address of owner is City of Upland, 460 North Euclid Avenue, Upland, California 91786.
Assessors Parcel Numbers N/A, in and to the hereinafter described property.
The work was completed on that certain work known as Project No. 82339, Baldy View Dog Park for the undersigned City of Upland, a Municipal Corporation, on the 23rd day of August, 2024.
The City accepted the job on the 10th day of February, 2025.
The Contractor on said job was Green Giant Landscape, Inc. of La Habra, California.
The improvement(s) consisted of removal and replacement of dog park fencing; irrigation system replacement; turf soil preparation and sod installation; new potable water lines for water fountains; ADA improvements; LED lighting improvements; installation of a sail shade pavilion structure; installation of dog leash posts and waste stations; installation of concrete benches; and, installation of concrete picnic tables; and the location of the improvements occurred at Baldy View Dog Park on the north side of 11th Street, east of Mountain Avenue, in Upland, California.
The surety was Philadelphia Indemnity Insurance Company.
All communications relating to the contract should bear the number above mentioned.
I hereby certify under penalty of perjury that the foregoing is true and correct.
Executed this 10th day of February, 2025 at Upland, California.
City of Upland, a Municipal Corporation
Michael Blay, City Manager
of IIp
CITUPLAND
Staff
� The City of Gracious Liuing"
DATE: February 10,2025
TO: MAYOR AND CITY COUNCIL
FROM: MICHAEL BLAY,CITY MANAGER
PREPARED BY:CHRIS ALANIS,INTERIM PUBLIC WORKS DIRECTOR
RICHARD SMIDERLE,OPERATIONS MANAGER
SUBJECT: CONSIDER APPROVAL OF CHANGE ORDER NO. 1 FOR PROJECT NO. 82350 UPLAND PUBLIC LIBRARY-HVAC REPLACEMENT PROJECT(BID NO.2024-10) RECOMMENDED ACTION:
It is recommended that the City Council approve Change Order No. 1 for Project No. 82350,Upland Public Library- HVAC Replacement Project with Eco Green Vision,LLC.,in the amount of$80,000.
GOAL STATEMENT
The proposed action supports the city's objective to continue to maintain and improve the City's public building facilities.
BACKGROUND
The current City of Upland Public Library located at 450 N.Euclid Ave.was constructed and occupied fifty-one years ago in 1973.In early 2004,the City contracted with Pardess Air,Inc.,which included the purchase and installation of an all-new HVAC chiller&boiler system,and all pertinent upgrades required at the City's Public Library building.
Following research with reputable commercial HVAC vendors,it was determined that the average life expectancy of the current size/configuration of HVAC boiler and chiller equipment is approximately 20 years.
On November 11,2024,the City Council awarded a construction contract to Eco Green Vision,LLC.,in the amount of$620,000 for the contract amount of$570,000 and approved a construction contingency in the amount of$50,000 for the replacement of the HVAC equipment as detailed in the Bid Documents—Scope of Work.
ISSUES AND ANALYSIS
To take advantage of the efficiency,longevity and complete system reliability of the new HVAC system,Eco Green Vision,LLC.suggested that the City consider adding to the Scope of Work,including replacing additional components related to and support the HVAC system, as well as replacing a section of the cold-water piping that was discovered has rust& deterioration which was not seen/identified prior to the bid process. Additional component replacements include the following:auxiliary cold water buffer tank,cold&hot water air separators,and domestic hot water heater.
Also suggested,was to clean/sanitize all existing HVAC ducts&vents within the Library building at the conclusion of the new equipment installation. The majority of the extra costs are related to the unforeseen cold water piping rust and deterioration.
The total cost to complete this additional work is$70,000,with an additional$10,000 in contingency funds requested.
ENVIRONMENTAL DETERMINATION
The Project has been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA) and the State CEQA Guidelines and determined to be categorically exempt from further environmental review pursuant to Section 15301 (Existing Facilities), of the CEQA guidelines. The project involves the replacement of existing equipment within the existing facility footprint and does not involve any expansion of use beyond that which exists.
FISCAL IMPACTS
The project cost has increased by$80,000 for a revised estimated project total of$700,000. There are available funds in the Capital Projects Library HVAC Account No.4257500-5540-82350.
ALTERNATIVES
1. Reject Contract Change Order No. 1 and not replace additional components&water piping.
Staff does not recommend this alternative.
2. Provide Alternative direction to staff.
CEQA: Determined to be categorically exempt from further environmental review pursuant to Section 15301 (Existing Facilities)of the CEQA guidelines.
g12 EcoGreenVision
Energy Solutions•Engineers•Contractors
30 N.Jefferson St. Unit M,Anaheim,CA 92807
Tel: (805)827-4882 • www.EcoGreenVision.com
CHANGE ORDER REQUEST
Date: 1/12/2025 Change Order#: 2 thru 8
Project Name: Public Library HVAC Replacement Client Project Number: 82350 Client: City of Upland EGV Project Number: 24-C1030-COUL Address: 450 N. Euclid Ave., Original Quote#: $570,000.00 Upland, California 91786 This Change Order Amount: $118,500.00 CHANGE ORDER DESCRIPTION:
COR-2: CHW BUFFER TANK REPLACEMENT (add to scope of work).
COR-3: HW& CHW AIR SEPERATORS REPLACEMENT (add to scope of work).
COR-4: DOMESTIC HOT WATER HEATER REPLACEMENT (add to scope of work).
COR-5: CLEAN EXISITNG HVAC SUPPLY AND RETURN UNITS (add to scope of work).
COR-6: CHW PIPING REPLACEMENT (add to scope of work).
COR-7: HW& CHW EXPANSION TANKS (remove from scope of work).
COR-8: MAKE-UP WATER PRESSURE REGULATOING (remove from scope of work).
CHANGE ORDER BREAKDOWN:
Original Contract Amount: $570,000.00
Change Order Amount $ 1,500.00
Previous Adds or (Credits): $118,500.00
Total Change Order Amount : $120,000.00
Revised Contract Amount: $ 690,000.00
(Six Hundred and Ninety Thousand Dollars)
Submitted By: Ecogreenvision Accepted By: City of Upland Weew EQdeee
Signature Signature
Hebat Badiee 1/12/2025
Printed Name Date Printed Name Date
EcoGreenV[slon CHANGE ORDER REQUEST SUMMARY
Energy Solutions••Engineers••Contractors
Date: January 12,2025 Client's Job#: 82350 Project: Public Library HVAC Replacement Area of Work: Chiller and Boiler Yard Location: 450 N.Euclid Ave.,Upland,California 91786 EGV Director: Hebat Badiee EGV Job#: 24-C1030-COUL
SCHEDULE IMPACT: Yes TIME EXPENTION: Deadline for Approving 1/8/25 COR TOTAL LABOR&
DESCRIPTION LABOR MATERIA
NUMBER MATERIAL
2 CHW BUFFER TANK REPLACEMENT $7,989.76 $25,876,82 $33,866.58 3 HW&CHW AIR SEPERATORS REPLACEMENT $8,056.16 $7,620.00 $15,676.16 4 DOMESTIC HOT WATER HEATER REPLACEMENT $4,527.64 $8,231.40 $12,759.04 5 CLEAN EXISITNG HVAC SUPPLY AND RETURN UNITS $10,705.92 $2,000.00 $12,705.92 6 CHW PIPING REPLACEMENT $22,231.12 $17,300.00 $39,531.12 7 HW&CHW EXPANSION TANKS(remove from scope of work)*1 ($3,583.77) ($3,326.00) ($6,909.77) 8 MAKE-UP WATER PRESSURE REGULATOING(remove from scope)*2 ($3,450.00) ($2,500.00) ($5,950.00) $0.00
$0.00
$0.00
Total Labor: $46,476.83 $55,202.22 $101,679.05
NOTES: Total Labor $46,476.83
1. COR-7 to be removed(Item 5 in Scope of Work) Total Material $55,202.22
2. COR-8 to be removed(item 1.3.A.7except Chemical Pot Feeders) 7.75% Sales Tax $4,278.17 Total(Labor/Mat) $105,957.22
Overhead 10% $10,595.72
Profit 10% $10,595.72
Courtesy Discount ($9,135.34)
Total Price: J $118,013.32 _I
EcoGreenVision-Project#24C1030-COUL Public Library HVAC Replacement, Date:1/12/2025 Project#82350
..t �pl"� CITY FU P LA N D
"The City of Gracious Living"
tIFOBS
1. Staff(kr°flit
DATE: February 10,2025
TO: MAYOR AND CITY COUNCIL
FROM: MICHAEL BLAY,CITY MANAGER
PREPARED BY:ROBERT D.DALQUEST,DEVELOPMENT SERVICES DIRECTOR
JAMIE DAVIDSON,MANAGEMENT ANALYST II
SUBJECT: CONSIDER APPROVAL OF A BUDGET ADJUSTMENT FOR STAFF AUGMENTATION RECOMMENDED ACTION:
It is recommended that the City Council approve a net zero budget adjustment in the amount of$132,654 for staff augmentation and authorize the City Manager to execute the budget amendment.
GOAL STATEMENT
The proposed action supports the City's goal of providing timely customer service and ensuring an expedited development review process.
BACKGROUND
In 2024,unanticipated staffing changes in the Building and Safety Division resulted in the need to utilize consulting services to fill several vacancies.The Development Services Department has used consultants for staff augmentation for many years.
ISSUES AND ANALYSIS
The salaries and benefits from vacant positions are transferred to the Professional Services account to fund consulting services. In the 1st and 2' Quarters of Fiscal Year 2024/25, a total of$130,487 was transferred and comprised 6 months of the Plans Examiner salary,three months Building Official salary,and three months Development Services Technician salary. In October 2024, a Building Official was hired to manage the Building & Safety Division, there was an additional staffing change with the Development Services Technician position,and in January 2025 one of the Building Inspectors moved out of state.
Consulting services have been secured through Professional Service Agreements with Annealta and Willdan who provide counter permit technician assistance and Interwest who provides plan check engineer services.The proposed budget adjustment will reallocate funding for necessary staff augmentation in these positions.
Due to timing and contractual obligations,the proposed budget transfer is being taken ahead of the mid-year budget review. The 3rd and 4th Quarter salary and benefit savings encompass six months of the Plans Examiner position, six months of the Development Services Technician position,and only two months of Building Inspector position due to an active recruitment.
ENVIRONMENTAL DETERMINATION
This is not considered a "project" under the California Environmental Quality Act (CEQA) pursuant to Section 15378(b)(4)of the CEQA Guidelines. Under this section, a project under CEQA does not include the creation of a government funding mechanism or other government fiscal activities,which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.
FISCAL IMPACTS
The vacancies of the Plans Examiner,Development Services Technician and Building Inspector positions resulted in budget savings from unused salary and benefits,this encompasses$115,647 from Building and Safety(1012201)and $17,007 from Housing Fund(2012931). Transferring $132,654 of salaries and benefits to professional services will have a net zero impact.
ALTERNATIVES
Provide alternative direction to staff.
CEQA:Not a Project.
of'
a CITY OF UPLAND
/ \'i, .1 dy
t BUDGET AMENDMENT
atroa�4
Date: 1/29/2025 Fiscal Year: FY24-25
Requested by: Jamie Davidson Amount: $ - Dept/Div: Dev Services/ Building &Housing Divison Description: Transfer Salaries to Professional Services Plans Examiner,DS Tech II,Inspector Q3&4
EXPENDITURES
Account Number Dept/Account Description Adopted Budget Current Budget Proposed Amendment Amended Budget 1012201-5111 Building/Salaries - Full Time 659,050.00 577,650.00 (83,521.00) 494,129.00 1012201-5116 Building/Fringe Benefits 162,930.00 143,110.00 (22,266.00) 120,844.00 Building/Retirement
1012201-5117 Contributions 75,720.00 66,026.00 (9,860.00) 56,166.00 1012201-5252 Building/Professional Services 256,000.00 366,914.00 115,647.00 482,561.00 2012931-5111 Housing/Salaries - Full Time 669,980.00 684,346.00 (12,259.00) 672,087.00 2012931-5116 Housing/ Fringe Benefits 168,020.00 171,517.00 (3,289.00 168,228.00 Housing/ Retirement
2012931-5117 Contributions 76,290.00 78,000.00 (1,459.00) 76,541.00 2012931-5252 Housing/ Professional Services 335,760.00 316,187.00 17,007.00 333,194.00 Total 2,403,750.00 2,403,750.00 - I 2,403,750.00
REVENUES
Account Number Account Description Adopted Budget Current Budget Proposed Amendment Amended Budget Total - - ___ - -
Fiscal Impact+ -
REASON/JUSTIFICATION (Please be specific)
EO Reallocation of Maintenance &operations to cover actual expense/encumbrances ❑ Estimated revenue adjustment for donations/other sources of revenue ❑ Appropriation line item adjustment to match funds received by grant,donations of other sources (deposit) ❑ Emergency purpose:
Description of Expense:
❑ Other- Explain: Transfer$132,654 from salaries to professional services for staff augmentation of budgeted positions; net zero to GL• Plans Examiner salary$60,532(6 months)to professional services for Q3&Q4; not recruiting during FY25.
Development Services Technician II $52,840 (6 months)to professional services for staff vacancy in Q3 &Q4.
Buildinn Insnertnr• $19 7R2 (2 months) to professional services for 03 This request is directly related to:
❑ Purchase Requisition No. Vendor:
O Council Meeting of: (Attach copy of minutes) Increase Purchase Orders OR Process Requisition # APPROVALSOaL77"- •
3o �]
Dept Head Approval*: Date: '' L
*Nat required if approved by Council
Finance Officer: Date: % ! 11 --' Funds Available? Wes oNo
g' ❑Approved ❑ Denied
City Manager: Date:
(over$25,000).Not required if approved by Council
Comment:
Finance Division Only:
BA#: Help Ticket#: _
Journal #: Initial/Date:
Revised:3/2024 Page 323cafi i:75AM
FY25 Q3-transferring 6 months salaries to fund staff augmentation Plans Examiner-03&Q4 No forseeable recruitment for vacancy;staff agumentation needed Total Salary 6 months Rounded
1012201.5111 Salary $ 75,331.00 $ 37,665.50 $ 37,665.00 2012931.5111 Salary $ 13,294.00 $ 6,647.00 $ 6,647.00 1012201.5116 Fringe $ 18,605.00 $ 9,302.50 $ 9,303.00 2012931.5116 Fringe $ 3,283.00 $ 1,641.50 $ 1,642,00 1012201.5117 PERS $ 8,969.00 $ 4,484.50 0 4,484.00 2012931.5117 PERS $ 1,583.00 $ 791.50 Eit 791.00 j Q3&4 talcs for total salary/benefits $ 121,065 00 $ 60,532,50 $ 60,532.00 $ 60,532.50 Development Services Technician II Q3 844 No forseeable recruitment for vacancy;staff agumentation needed Total Salary 6 months Rounded
1012201.5111 Salary $ 63,600.00 $ 31,800.00 $ 31,800.00 2012931.5111 Salary $ 11,224.00 $ 5,612.00 $ 5,612.00 1012201.5116 Fringe $ 18,656.00 $ 9,329.00 $ 9,329.00 2012931.5116 Fringe $ 3,293.00 $ 1,646.50 Si 1,647.00 1012201.5117 PERS $ 7,568.00 $ 3,784.00 2012931.5117 PERS $ 1,336.00 $ 668.00 Q3&4 talcs for total salary/benefits $ 105,679.00 $ 52,839.50 $ 52,840.00 $ 52,839.50 Building Inspector Vacant 1119125-Anticipated 2 month vacancy Total Salary 2 months Rounded
1012201.5111 Salary $ 84,336.00 $ 14,056.00 $ 14,056.00 1012201.5116 Fringe $ 21,806.00 $ 3,634.33 $ 3,634.00 1012201.5117 PERS $ 9,554.00 $ 1,592.33 I=Ir592.00' 0,3&4 talcs for total salary/benefits $ 115,696.00 $ 19,282.67 $ 19,282,00 $ 19,282.67 Totals by account
Salaries Professional Services
1012201.5111 Salary $ 83,521.00 1012201.5252 $115,647.00 2012931.5111 Salary $ 12,259.00 2012931.5252 $ 17,007.00 1012201.5116 Fringe $ 22,266.00 Total $132,654.00 2012931.5116 Fringe $ 3,289.00
1012201.5117 PERS
2012931.5117 PERS
Total $ 132,654.00
,GJ,.1 Coy or Upland ADOYTFO
) 4 Sunman,of Salary SPlee
V.� BysplO/Corn Center
FY2024-26 Budget
Development Services Department
Stepp F. EV24-25 F125-26
Position EFO Employee Name 06/30/25 Fr/Pr assigned Org FIE salty Normal Pr9T5 Fringe Benefits Salmi Denedrs Salary 59aner Plan,Faa,Y46er 6EV-Pt VACANT•OEV-PUNS MOHR 3 FT 35.001E 1612203 1.60 75,331 9,969 Jaws 162.005 10.3,203 (Unfreeze,F125) 15.00 2012931 13,394 1,543 3,2133 18460 19,094 10006% 88,671 10.552 21.606 121.065 127.304 Oevelopnsent 5crvlcas Technician it E. FS 03_00% 101220E L00 63,600 7,566 19,6S6 69,326 94,619 15901E 2612951 11,224 1,336 3,293 15.953 16,697 100.644 74.24 8,904 21.951 165,679 111,315 BurFding Inspector II 4 Ft 106.00% 1012201 LBO 34,336 9,554 2L606 135,896 126,204
0.00% 2012931
100.13133 84,336 9,554 21,606 115,696 126,2134
• �p1
4�� 94. CITY UPLAND
�5, _�� "The City of Gracious Living"
CltIFOBS
1. Staff(kr°flit
DATE: February 10,2025
TO: MAYOR AND CITY COUNCIL
FROM: MICHAEL BLAY,CITY MANAGER
PREPARED BY:ROBERT D.DALQUEST,DEVELOPMENT SERVICES DIRECTOR
GIOVANNI ARELLANO,REHABILITATION PROGRAMS ADMINISTRATOR SUBJECT: CONSIDER APPROVAL TO REAPPROPRIATE$8,030 IN AMERICAN RESCUE PLAN ACT
FUNDS FOR THE SANTA FE DEPOT BUILDING PATIO ROOF PROJECT RECOMMENDED ACTION:
It is recommended that the City Council reappropriate $8,030 of unused American Rescue Plan Act funds for the Santa Fe Depot Patio Roof Project from the following completed projects: 1)$100 from the Downtown Small Business Rehab Program;2)$4,787.62 from the Micro-Retail Resiliency Program;3)$2.127.11 from the Small Business Rental Assistance Program; and 4) $1,015.27 from the Downtown Parklets Project; and adopt a Resolution approving an interdepartmental Memorandum of Understanding between the City Manager's Office and the Development Services Department to obligate American Rescue Plan Act funds in the total amount of$8,030 towards the Santa Fe Depot Patio Roof Project.
GOAL STATEMENT
The proposed action supports the City's goal to eliminate blight and promote economic development activities in Historic Downtown Upland.
BACKGROUND
The City's share of American Rescue Plan Act("ARPA")funds was$15.2 million with all funds to be obligated prior to December 31, 2024. However, any obligated ARPA funding remaining from a completed program could be reappropriated by a memorandum from the Development Services Department to the City Manager. The ARPA funded projects below from the Development Services Department had a small balance after the projects were completed. Below is a brief summary of the projects for the Council's reference. • On February 27,2023,the City funded the Restaurant Assistance for Increased Sales and Efficiency-Upland (RAISE-UP)Program utilizing$325,000 in ARPA funds to provide up to $6,700 in grant funding to assist local restaurants negatively affected by the coronavirus pandemic improve their operations by purchasing new business equipment,making tenant improvements,investing in digital marketing and business signage. • On October 09, 2023,the City funded the Micro-Retail Resiliency Program(M-RRP)utilizing $50,000 in ARPA funding to provide forgivable loans to Downtown micro businesses needing assistance with in-arrears rents,business signage, adaptive marketing strategies, security shutters and/or cameras recovering from the coronavirus pandemic and ensuing economic downturn caused by historic inflation. • On October 09, 2023,the City funded the Downtown Upland Parklets Projects for a total of$1,345,286.00 consisting of mixed source funding of which ARPA provided$120,000. The project created four new urban open spaces in the public realm of Historic Downtown Upland encouraging a pedestrian orientated environment for patrons to enjoy open air in an outdoor setting. • On October 14, 2024 the City increased funding of the Downtown Commercial Rehabilitation Program (CRP)originally funded at$350,000 with an additional$166,600 of ARAP fund balance from the Downtown Business Attraction and Assistance Program for a revised CRP budget of$516,600.
Staff seeks to reappropriate these funds to continue with the intent of the above programs which were mainly to foster economic development in the Downtown for commercial property and businesses.
ISSUES AND ANALYSIS
Staff has received competitive quotes to install a solid patio roof cover at the Santa Fe Depot building located at 220 E.A Street to maximize the use of the patio space for a future tenant's outdoor dining capacity. The lowest responsive
bidder was Labastida Construction at $7,300. Including a 10% contingency, the total project cost is estimated at $8,030.
A cumulative total of$8,030.00 in ARPA funds remains unspent from the four previously mentioned Economic Development Programs as detailed below:
Program Fund Balance
1. RAISE-UP $2,127.11
2. M-RRP $4,787.62
3. DTU Parklets $1,015.27
4. CRP $100.00
Total: $8,030.00
The total of$8,030 of Development Services Department's ARPA-funded project balances can be attributed to a savings in administrative delivery costs and/or program applicants not fully expending approved funding amounts.
Staff seeks to utilize the balances for a final ARPA funded economic development project and install a solid roof structure over the patio of the Santa Fe Depot building to ensure a more weather-protected patio for outdoor seating and improving the ability of a future tenant to fully utilize this space.
The attached MOU expressly creates an obligation between the City Manager's Office and the Development Services Department. The MOU was executed on December 23, 2024, in order to ensure that funds were obligated towards this project by the December 31,2024 deadline. The action taken today by the City Council affirms this new project and reappropriate previously obligated funds towards the Santa Fe Depot Patio Roof Project. The Development Services Department is responsible for obligating and expending the ARPA funds towards this Project by December 31,2026.
ENVIRONMENTAL DETERMINATION
The action is not subject to the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3)(the activity is not a project as defined in Section 15378)of the State CEQA Guidelines,California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. Further,if the activity is deemed a project this City Council finds that this Resolution is exempt pursuant to Section 15061(b)(3)of the State CEQA Guidelines.
FISCAL IMPACTS
This action affirms the reappropriation of$8,030 in obligated ARPA funds to the Santa Fe Depot Patio Roof Project in Account No.2297500-5258-16169.
ALTERNATIVES
Provide alternative direction to staff.
CEQA:Not a Project.
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
UPLAND APPROVING AN INTERDEPARTMENTAL
MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY
MANAGER'S OFFICE AND THE DEVELOPMENT SERVICES
DEPARTMENT TO OBLIGATE AMERICAN RESCUE PLAN ACT
FUNDS IN THE AMOUNT OF $8,030 TOWARDS THE SANTA
FE DEPOT BUILDING PATIO ROOF PROJECT
WHEREAS, on March 11, 2021, the President signed into law the American Rescue Plan Act ("ARPA"). The federal stimulus program allocated $1.9 trillion over the following three years to help state and local governments respond to the economic and public health impacts of COVID-19; and
WHEREAS, under the law, each local government agency nationwide receives an allocation of ARPA funds based on a formula. The City's share is $15.2 million; and
WHEREAS, recipients much obligate all monies prior to December 31, 2024, with funds to be fully expended by December 31, 2026, except for transportation and Title I projects which must be expended by September 30, 2026; and WHEREAS, the City has remaining unspent funds from four separate approved ARPA projects that will be repurposed towards the Santa Fe Depot Building Patio Roof Project ("Project"); and
WHEREAS, the total Project cost is estimated at $8,030, including contingency; and
WHEREAS, the Project will install a solid patio roof cover (built-up roof) at the Santa Fe Depot's 220 E. A Street to maximize the use of the patio space for a future tenant's outdoor dining capacity; and
WHEREAS, this Project will ensure resiliency of a new downtown business venture; and
WHEREAS, the City currently has $8,030 in obligated ARPA funds which can be repurposed towards the Project.
NOW, THEREFORE, the City Council of the City of Upland hereby finds, determines and resolves, as follows:
Section 1. All of the above recitals are true and correct and are incorporated herein by this reference.
Section 2. The City Council hereby obligates $8,030 in ARPA funding towards the Project via the attached interdepartmental Memorandum of Understanding in accordance with the federal government's deadline of December 31, 2026.
Resolution No.
Section 3. The interdepartmental Memorandum of Understanding expressly creates an obligation between the City Manager's Office and the Development Services Department to expend all ARPA funds by December 31, 2026.
Section 4. The Development Services Department will comply with all reporting and recordkeeping requirements in compliance with federal guidelines on behalf of the City.
Section 5. The City Manager's Office will continue to track all ARPA project spending and any remaining obligated funds from completed projects will be transferred to the indirect administrative services support project account to ensure that all ARPA funding remains fully obligated and spent by the December 31, 2026 deadline.
Section 6. Compliance with California Environmental Quality Act. The City Council finds that this Resolution is not subject to the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the State CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. Further, if the activity is deemed a project this City Council finds that this Resolution is exempt pursuant to Section 15061(b)(3) of the State CEQA Guidelines.
Section 7. Certification. The City Clerk shall certify the adoption of this Resolution.
Section 8. Severability. If any section, subsection, subdivision, sentence, or clause or phrase in this Resolution or any part thereof is for any reason held to be unconstitutional, invalid or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this Resolution or any part thereof. The City Council hereby declares that it would have adopted each section irrespective of the fact that any one or more subsections, subdivisions, sentences, clauses, or phrases are declared unconstitutional, invalid, or ineffective.
Section 9. Effective Date. This Resolution shall become effective immediately.
PASSED, APPROVED AND ADOPTED this 10th day of February, 2025.
Bill Velto, Mayor
Resolution No.
I, Keri Johnson, City Clerk of the City of Upland, do hereby certify that the foregoing Resolution was adopted at a regular meeting of the City Council held on the 10th day of February, 2025, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAINED:
ATTEST:
Keri Johnson, City Clerk
4 OF Upt�
ME MOEtANDZTM
DATE: December 24, 2024
TO: Robert D. Dalquest, Development Services Director FROM: Stephen Parker, Acting City Manager
CC: Michael Blay, City Manager
RE: Obligation of $8,030 in ARPA Funds for the Santa Fe Depot Building Patio Roof Project
On March 11, 2021, the President signed into law the American Rescue Plan Act ("ARPA").
The federal stimulus program allocated $1.9 trillion over the following three years to help state and local governments respond to the economic and public health impacts of COVID-
19. Under the law, each local government agency nationwide receives an allocation of ARPA funds based on a formula, The City's share is $15.2 million.
Recipients much obligate all monies prior to December 31, 2024, with funds to be fully expended by December 31, 2026, except for transportation and Title I projects which must be expended by September 30, 2026.
The City has received competitive quotes to install a solid patio roof cover at the Santa Fe Depot's 220 E. A Street to maximize the use of the patio space for a future tenant's outdoor dining capacity. The total cost is estimated at $8,030,00, including contingency.
With the pending obligation deadline of December 31, 2024, there are unexpended ARPA balances in the following accounts:
Micro Retail Resiliency Program $4,787.62
Small Business Retail Assistance Program $2,127.11 Downtown Parklets $1,015.27
Downtown Small Business Rehab Program $ 100.00
TOTAL $8,030.00
The Development Services Department would like to repurpose the $8,030.00 toward the Santa Fe Depot Building Patio Roof Project. This item will be presented to the City Council at the January 13, 2025, regularly scheduled meeting to ratify the terms outlined in this MOU.
This MOU expressly creates an obligation between the City Manager's Office and the Development Services Department. The Development Services Department is responsible for obligating and expending the ARPA funds towards this capital improvement project by December 31, 2026.
Therefore, it is hereby acknowledged that the City of Upland is obligating $8,030 in APRA funding towards the Santa Fe Depot Building Patio Roof Project and confirms that this project is an eligible use of the funds.
The Development Services Department hereby acknowledges and confirms that they will comply with reporting and recordkeeping requirements in compliance with the program on behalf of the City.
• 13-41k(
Stephen Parker, Acting City Manager Date
1 f I Z Z3—Z, II
Robert D. Dalquest, Development Services Director Date
4 pF tip
.� CITY OF UPLAND
'`•
` 0 BUDGET AMENDMENT
r
L rt•o 9 RNt
Date: 12/24/2024 Fiscal Year: FY24-25
Requested by: Charles Kwon Amount: $ - Dept/Div: Finance Description: ARPA Santa Fe Depot Building Patio Roof Project _
EXPENDITURES
Account Number Dept/Account Description Adopted Budget Current Budget _Proposed Amendment Amended Budget 2292203-5310-16165 Micro Retail Resiliency Prog - 15,000.00 (4,788.00) 10,212.00 2292203-5258-16122 Sm Bus Retail Assist Prog - 3,927.00 (2,127.00) 1,800.00 2292501-5540-32337 Downtown Parklets 108,750.00 99,318.00 (1,015.00) 98,303.00 2292203-5258-16121 Downtown Sm Bus Rehab - 480,877.00 (100.00) 480,777.00 2297500-5258-16169 Santa Fe Depot Patio Roof - - 8,030.00 8,030.00 Total 108,750,00 r 599,122.00 - 599,122.00_
REVENUES
Account Number Account Description Adopted Budget Current Budget Proposed Amendment Amended Budget Total - I - - -
Fiscal Impact -
REASON/3USTIFICATION (Please be specific)
El Reallocation of maintenance&operations to cover actual expense/encumbrances ❑ Estimated revenue adjustment for donations/other sources of revenue El Appropriation line item adjustment to match funds received by grant,donations of other sources(deposit) ❑ Emergency purpose:
Description of Expense:
O Other- Explain:
ARPA funds for Santa Fe Depot Building Patio Roof Project This request is directly related to:
❑ Purchase Requisition No. Vendor:
❑ Council Meeting action: (Attach copy of minutes) Increase Purchase Order# OR Requisition 4
APPROVALS 1
Dept Head Approval: Date: ` ~ / 1 C C-54 Finance Officer: ` -------• Date: 1 1 I LI)att.+r7J Funds Available? res ❑No
II Approved o Denied
City Manager*: Date:
*Not required if approved by City Council
Comment:
Finance Division Only:
BA#: 0625B052 _ Help Ticket#: N/A Journal #: Initial/Date:
Revised:3/2024 1/5/2025 5,34 PM
..t �pl"� CITY FU P LA N D
"The City of Gracious Living"
tIFOBS
1. Staff(kr°flit
DATE: February 10,2025
TO: MAYOR AND CITY COUNCIL
FROM: MICHAEL BLAY,CITY MANAGER
PREPARED BY:ROBERT D.DALQUEST,DEVELOPMENT SERVICES DIRECTOR
DIANE COTTO,HOUSING MANAGER
JULIE HERNANDEZ,WEED ABATEMENT COORDINANTOR
SUBJECT: CONSIDER ADOPTING A RESOLUTION FOR THE 2025 WEED ABATEMENT PROGRAM RECOMMENDED ACTION:
It is recommended that the City Council adopt a Resolution declaring unmaintained weeds, grasses, vegetation, and dead or dying combustible debris a public nuisance and authorize staff to begin the 2025 Annual Weed Abatement Program.
GOAL STATEMENT
The proposed action supports the City's goal of reducing fire hazards and improving public health and safety by addressing excessive weed growth and debris accumulation, which poses a public nuisance and a fire risk within residential areas and the surrounding areas.
BACKGROUND
The City of Upland's Weed Abatement program is intended to reduce public nuisances from unmaintained properties and safeguard the community by reducing fire hazards. This includes inspecting properties within city limits and notifying owners of their obligations to keep their properties clear of weeds and trash.
ISSUES AND ANALYSIS
The City's Annual Weed Abatement Program will begin on February 11,2025 and continue through July 30,2025.
While the inspection program is limited to a five-month process,compliance with the City's Municipal Code is a year- round requirement and is enforced during the off-season by the City's Code Enforcement Division.
Notice Process:
1. Courtesy Notice: During February through March 2025, over 22,000 parcels will be inspected. Properties found to be non-compliant will receive a Courtesy Notice,requesting that owners address the issue within a 15- day timeframe. This notice does not carry a penalty fee.
2. Notice to Comply (NOC): If properties remain non-compliant after the first inspection and Courtesy Notice, a second inspection will occur.Those still in violation will receive a NOC,which also provides a 15-day timeframe to address the notice and carries a$115 administrative fee.Newly identified violations will also receive a Courtesy Notice.
3. Notice to Abate(NOA):Properties that continue to be non-compliant after a third inspection will receive a NOA and incur an additional$440 administrative fee.The total penalty for non-compliance(after both NOC and NOA) is$555. Failure to comply with these notices will result in the City arranging for property abatement.
Failure to Comply with the NOC and NOA
For those properties that fail to comply with the NOC and NOA,abatement services to bring the parcel into compliance will be arranged by the City. The City will obtain a warrant that allows the City to enter the property to remove the necessary hazards. Staff has contracted with four landscape companies to assist with the clean-up. All costs to bring the property into compliance with the City's ordinance will be charged to the property owner along with any outstanding administrative fees(e.g.NOC,NOA,or warrant)fees.
Fee Collection
Under the program guidelines,property owners have a specified amount of time to pay the assessed fees or costs.If left unpaid, the fees owed will result in them being placed on the property owners' property tax bill as a special assessment.
Weed Abatement Program Schedule
Below is an approximate schedule for the City's Annual Weed Abatement Program:
February 10,2025 Initial announcement is included in the City's water bill and distributed to vacant property owners. (First Courtesy Notice sent to all residents)
February 18,2025 First round of inspections to begin.
April 17,2025 Second round of inspections begin. _ June 2,2025 Third round inspections and additional fees assessed. _ June 23,2025 City Council Meeting to declare properties as a hazard and authorize city-arranged abatements with costs placed as a special assessment.
June 24,2025 Abatement work begins on non-compliant properties.
July 14,2025 Invoices for City-organized abatements mailed to the non-compliant property owners.
July 28,2025 City Council Meeting to approve the submittal of all Weed Abatement fees and abatement fee to the County Tax Collector.
ENVIRONMENTAL DETERMINATION
The proposed action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment)and 15060(c)(3)(the activity is not a project as defined in Section 15378)of the State CEQA Guidelines, California Code of Regulations,Title 14,Chapter 3,because it has no potential for resulting in physical change to the environment, directly or indirectly. Further, if the activity is deemed a project this City Council finds that this Resolution is exempt pursuant to Section 15061(b)(3)of the State CEQA Guidelines.
FISCAL IMPACTS
The total Fiscal Year 2024/25 approved budget is$80,090. There are available funds in the Weed Abatement program Account No. 1012202-5213/5222/5243/5253/5258.
Any revenue collected through violations will be deposited in the Weed Abatement program Account No. 1010000- 4009 and 1012202-4009.
ALTERNATIVES
Provide alternative direction to staff.
CEQA:Not a Project.
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
UPLAND, CALIFORNIA DECLARING UNMAINTAINED
WEEDS, GRASSES, AND VEGETATION, AND DEAD OR
DYING COMBUSTIBLE DEBRIS A PUBLIC NUISANCE AND
AUTHORIZING STAFF TO INITIATE THE ANNUAL WEED
ABATEMENT PROGRAM.
WHEREAS, the City of Upland, California a member of the San Bernardino County Fire Protection District, is committed to reducing fire risk and preventing emergencies through enforcement of health and safety laws; and WHEREAS, unmaintained weeds, grasses, vegetation, and dead or dying combustible debris may be declared a public nuisance under the City Municipal Code (8.12.180) and California Code (39561); and
WHEREAS, the City's annual Weed Abatement Program protects the community's health, safety, and welfare by inspecting properties, notifying owners, and ensuring the removal of fire hazards; and
WHEREAS, the inspection program is a five-month process, but compliance with health and safety codes is a year-round responsibility enforced by the Fire Marshal and Code Enforcement; and
WHEREAS, sufficient notice will be given to property owners to comply with the program; and
WHEREAS, failure to comply will result in the imposition of fees on property owners, including administrative, legal, abatement, and county fees; and WHEREAS, properties in violation will be abated by the City, with the associated costs being assessed as a lien against the property.
NOW, THEREFORE, the City Council of the City of Upland hereby finds, determines and resolves as follows:
Section 1. The above recitals are true and correct and are incorporated herein by this reference.
Section 2. Compliance with California Environmental Quality Act. The City Council finds that this Resolution is not subject to the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the State CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly.
Further, if the activity is deemed a project this City Council finds that this Resolution is exempt pursuant to Section 15061(b)(3) of the State CEQA Guidelines.
Section 3. Certification. The City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original resolutions.
Section 4. Severability. If any section, subsection, subdivision, sentence, or clause or phrase in this Resolution or any part thereof is for any reason held to be unconstitutional, invalid or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this Resolution or any part thereof. The City Council hereby declares that it would have adopted each section irrespective of the fact that any one or more subsections, subdivisions, sentences, clauses, or phrases are declared unconstitutional, invalid, or ineffective.
Section 5. Certification. The City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original resolutions.
Section 6. Effective Date. This Resolution shall become effective immediately.
PASSED, APPROVED and ADOPTED the 10th day of February, 2025.
Bill Velto, Mayor
I, Keri Johnson, City Clerk of the City of Upland, do hereby certify that the foregoing Resolution was adopted at a regular meeting of the City Council held on the 10th day of February, 2025, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAINED:
Keri Johnson, City Clerk
4��a �p19� CITY UPLAND
�5, _�� "The City of Gracious Living"
CltIFOBS
1. Staff(kr°flit
DATE: February 10,2025
TO: MAYOR AND CITY COUNCIL
FROM: MICHAEL BLAY,CITY MANAGER
PREPARED BY:ROBERT D.DALQUEST,DEVELOPMENT SERVICES DIRECTOR ANDREW R.ARELLANO,ASSISTANT PLANNER
SUBJECT: CONSIDER APPROVAL OF A 2025 MILLS ACT CONTRACT FOR AN HISTORIC PROPERTY LOCATED AT 506 N.EIGHTH AVENUE
RECOMMENDED ACTION:
It is recommended that the City Council approve the Mills Act contract for one historic property located at 506 N.
Eighth Avenue and authorize the City Manager to execute the documents.
GOAL STATEMENT
The proposed action supports the City's efforts to preserve,protect and restore the sites,structures and districts which have architectural and historical significance to the City of Upland.
BACKGROUND
On May 24, 1993,the City Council adopted Upland's Historic Preservation Ordinance(Ordinance No. 1580),which contains citywide policies and procedures for historic preservation. The Historic Preservation Ordinance (UMC Chapter 17.26)promotes the use of appropriate preservation incentives to encourage property owners to maintain their cultural resources through preservation incentives,such as a Mills Act contracts.
The Mills Act,adopted as State Law in 1972 and codified under California Revenue and Taxation Code Section 439, created an alternative method for determining assessed value for certain qualified historic properties. This legislation allows owners of properties listed on Upland's Local Register of Historic Places to obtain a reduction of property taxes in exchange for preserving or rehabilitating their properties. The Mills Act process involves the County Tax Assessor's re-evaluation of property values using the income/capitalization method rather than calculating market value of the properties. This method is calculated by determining what the property could reasonably be expected to yield or produce and divided by a capitalization rate. The Mills Act process could save a property owner an average of 40 percent on their property taxes for approved properties.
Each historical property within the City has been assigned a National Register of Historical Places eligibility code to determine the level of significance and potential for listing on the local,state,or national level.See Table 1 -Eligibility Codes.
Table 1 —Eligibility Codes
1 Listed on the National Register.
2 Determined eligible for listing in the National Register in a formal process. 3 Appears individually eligible for listing in the National Register in the judgment of the person completing or reviewing the inventory.
3D Appears eligible for listing only as a contributor to a potential National Register District. 4 May become individually eligible for listing in the National Register when:
• More architectural or historical research is performed; • The property is restored to an earlier appearance; • More significant examples of the property's architectural style are demolished; or
• The property becomes old enough to meet the Register's 50 year requirement.
4D May become individually eligible for listing in the National Register(as above)only as a contributor to a district.
5 Is individually listed or is eligible for listing under a local preservation landmark ordinance.
5D Is listed or eligible for listing as a contributor to a locally designated district or preservation area.
5S3 Is not eligible for separate listing under an existing or likely local ordinance, but is eligible for special consideration in the planning process. 5D3 Is a contributor to a district that is unlikely to be designated as a local district, but is eligible for special consideration in the planning process. 6 None of the Above/Not eligible.
To be eligible for a Mills Act contract,a property must be on the City's Local Register of Historic Places and be rated at least a 5D. There are currently 589 properties listed on the City's Local Register of Historic Places of which 182 properties have Mills Act contracts.
ISSUES AND ANALYSIS
As shown in Table 2 below, the property owner of the subject historic property is requesting the City Council's authorization to enter into a Mills Act contract for their historic property.
Table 2—Properties
Application Applicant Address APN District Year Built Code Local Register
MA-24-0001 Diana Sjol 506 N. Eighth 1046-212-01 Pleasant 1913 5D 5/28/03 Avenue View Historic
District
In return for lower property taxes,the property owners must commit to restoring and/or rehabilitating their property over a ten-year period. These improvements include restoring or replacing both the interior and exterior elements of the property such as roofs, floors, windows, exterior and interior paint, siding, landscaping, and fencing. A list of specific improvements for each of the properties is attached to each contract. The proposed improvements meet the following requirements:
• Improvements should meet or exceed the annual savings in tax dollars to the property owners; • At least one of the improvements is to be completed annually over the ten-year duration of the contract.
The proposed Mills Act contract includes the following general provisions:
• A ten-year duration with automatic renewal on an annual basis unless notice of non-renewal is filed by the property owner or the City.
• Requirements for restoration improvements or preservation of the property over a minimum ten-year period. • Transferable with no re-assessment of the property upon sale. • Cancellation provisions by the City,if the contract terms are breached. • A penalty of 12.5%of full property value,assessed to the property owner for early cancellation.
The Mills Act contract remains with the property and would keep taxes at a reduced rate for the benefit of a future owner.Therefore,the Mills Act is a good selling point for future buyers,due to the prospect of lower property taxes.
All of these provisions are implemented to provide an incentive-based program to assist in the continuing improvement of Upland's historic districts and resources.This program is consistent with Community Character Element Goal CC- 9 of the General Plan.Attached,please find a Standard Mills Act Contract,which has been reviewed and approved by the City Attorney and the proposed Mills Act improvement list.
Work Plan/Improvement List
A 10-year work plan has been included in Exhibit C of Attachment A(Draft Mills Act Agreement). Over the 10-year work plan,the applicant will take on major projects which will aid in the repair,maintenance,restoration,and long-
term use of the historic structure. These projects include: a complete re-roof and installation of weather proofing material;repainting of the exterior of the dwelling to cover and protect exterior materials from the elements;restoration of the front porch by removing floor tiles that were historically inappropriate for the period of significance and architectural style of the home and had sustained serious damage over time and restoring the original concrete flooring beneath;repairing of drain pipes;and the replacement of galvanized water pipes with updated piping to prevent water leaks that could lead to structural damage.
The property owner will also be required to ensure all work follows the Secretary of the Interior's Standards for the Treatment of Historic Buildings,for Rehabilitation,as included in Exhibit C of Attachment A.
Lastly, staff has worked with Upland Heritage to review and provide input on the Mills Act contract's work plan.
Upland Heritage has provided a written letter of support for the Mills Act contract, which as been included as Attachment B.
ENVIRONMENTAL DETERMINATION
The project is exempt from review under the California Environmental Quality Act ("CEQA") (California Public Resources Code Section 21000, et seq.), pursuant to State CEQA Regulation §15061(b)(3) (14 Cal. Code Regs. § 15061(b)(3)),the commonsense exemption covering activities with no possibility of having a significant effect on the environment because the action only approves of the Mills Act Agreement, which does not include any physical changes to the environment. Future improvements to the properties outlined in the Mills Act Agreements will be reviewed on a case-by-case basis,which will include a CEQA determination at the time of review and approval.
FISCAL IMPACTS
The City of Upland receives approximately 9.35%of the 1%ad valorem tax levied by the County of San Bernardino Tax Assessor. As shown Table 3 below,the San Bernardino County Tax Assessor's estimates of annual tax savings for the historic property and the estimated annual reduction in property tax revenue to the City.
Table 3 -Taxes
Address APN Approximate Total Tax Approximate Annual Loss Reduction to Upland
506 N.Eighth 1046-212-01 $2,479 $232
Avenue
As shown above,with approval of the proposed Mills Act Contract the reduction in City property tax revenue will be approximately$232. The annual reduction will change from year to year as property valuations are reassessed due to fluctuations in the market,or if the property becomes for rent which are assessed at a higher tax rate.On average,the County Assessor estimates that the average increase in property valuation is 2% per year; the most allowed under Proposition 13.The property is estimated to be reassessed in 2025,with the tax relief for the property owners reflected on the fall 2025 property tax bills.
The total approximate fiscal impact of all existing Mills Act contract on the City's revenue was also analyzed. To estimate the annual property tax reduction associated with the existing contracts, staff used an average of$2,150 per property per year. Because the City of Upland only receives $0.0935 for every dollar of property tax collected, the average loss of revenue per property is estimated at$201.00.Currently,a total of 182 properties have active Mills Act Contracts which result in an approximate total loss of$36,585 in property tax revenue for the City per year. The approval of the application this year would bring the annual total of lost revenue to approximately$36,817.
As noted in the previous section,it is mandated that tax dollars saved by the property owners is to be reinvested into the property for the completion of specific improvements included in the Standard Residential Mills Act Contract.
The estimated tax losses are expected to be offset by the overall enhancement, stabilization, and increased value of the surrounding properties,which could otherwise age and become a potential blight to the City.
ALTERNATIVES
1. The City Council could deny the Mills Act contract for the property. This would save the City approximately $232.00 per year in lost property tax revenue,however this alternative is not consistent with the City's goal of promoting historic preservation. Also, the proposed improvements to the historic homes and buildings have much greater value to those properties,as well as the neighborhoods in which they are located.
2. Provide alternative direction to staff.
CEQA: Determined to be Exempt pursuant to Section 15061(b)(3)
HISTORIC PROPERTY PRESERVATION AGREEMENT
THIS AGREEMENT is made and entered into on February 10, 2025 by and between the CITY OF UPLAND, a municipal corporation (hereinafter referred to as the "City") and Dianna Sjol, a Single Woman as Trustee. (hereinafter referred to as the "Owner").
WITNESSETH:
A. Recitals.
(i) California Government Code Sections 50280, et seq. authorizes cities to enter into contracts with the Owners of qualified historical property to provide for the use, maintenance and restoration of such historical property so as to retain its characteristics as a property of historical significance;
(ii) Owner possess fee title in and to certain real property, together with associated structures and improvements thereon, generally located at 506 N. Eighth Avenue, Upland, California, (hereinafter such property shall be referred to as the "Historic Property"). A legal description of the Historic Property is attached hereto, marked as Exhibit "A", and is incorporated herein by this reference;
(iii) On April 28, 2004,the Planning Commission of the City of Upland adopted its Resolution No. 4447 thereby declaring and designating the Historic Property as a historic landmark pursuant to the terms and provisions of the Upland Municipal Code; and, (iv) City and Owner, for their mutual benefit, now desire to enter into this Agreement both to protect and preserve the characteristics of historical significance of the Historic Property and to qualify the Historic Property for an assessment of valuation pursuant to the provisions of Chapter 3, of Part 2, of Division 1 of the California Revenue and Taxation Code.
B. Agreement.
NOW, THEREFORE, City and Owner, in consideration of the mutual covenants and conditions set forth herein, do hereby agree as follows:
1. Effective Date and Term of Agreement. This Agreement shall be effective and commence on Februaryl0, 2025, and shall remain in effect for a term of ten (10) years thereafter"Initial Term".
Historical Agreement Rev 2022 1