HomeMy WebLinkAboutR-1997-088 Preston Gates and Ellis LLPRESOLUTION NO. R- 97- 8 8
A RESOLUTION authorizing execution of a contract among Preston Gates and Ellis
LLP, and with Black & Veatch for financial management services
relating to the City's position in litigation
WHEREAS, the City of Yakima has need for consulting services related to the
City's claims in Department of Ecology v. Acquavella; and
WHEREAS, the City does not possess adequate in-house staff to perform the
necessary work involved in the development of the financial modeling/analysis
software; and
WHEREAS, the City of Yakima has complied with the provisions of RCW 39.80
which concerns the procurement of engineering and architectural services by a city;
and
WHEREAS, the City Council deems it to be in the best interest of the City to
enter into a contract among Preston Gates and Ellis LLP, and Black & Veatch, for the
financial management services necessary to model and analysis issues relating to the
City's legal claims in "Acquavella" now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
The City Manager, City Clerk, and the Assistant City Manager are hereby authorized
and directed to execute the attached and incorporated "Consulting Agreement"
together with its attachments, including Task Order 1 and 2.
ADOPTED BY THE CITY COUNCIL this 17th day of June, 1997.
ATTEST:
Karen Roberts, City Clerk
f
ynn Buchanan, Mayor
CONSULTING AGREEMENT
THIS AGREEMENT is made and entered into by and between City of Yakima
(hereinafter the "City"), Preston Gates & Ellis LLP (hereinafter "Outside Counsel"), and Black &
Veatch (hereinafter the "Consultant").
WHEREAS, Outside Counsel and the City have determined that retention of Black &
Veatch, a consultant familiar with analysis of water rate and financing issues, is necessary to
assist with legal analysis relating to the City's claims in Department of Ecology v. Acquavella.
NOW, THEREFORE, IT IS HEREBY UNDERSTOOD AND AGREED by and between
Outside Counsel, the City, and Black & Veatch ("Consultant") as follows:
Services To Be Performed by Consultant
1. Consultant agrees to provide consulting services to Outside Counsel as set forth in
Task Orders 1 and 2, which are contained in Exhibit 1 hereto, and in such further Task Orders as
may be mutually approved by all parties to this Agreement.
2. It is agreed between the parties that Outside Counsel, in conjunction with the City,
shall determine the scope of any specific services to be rendered by the Consultant and that
Outside Counsel will make assignments and request work products on an as -needed basis.
Outside Counsel shall discuss the scope of specific services with Consultant and they shall
mutually agree on the scope of such services before Consultant begins such services.
3. Outside Counsel and the City shall not attempt to prejudice the outcome of the
analysis performed by Consultant. The manner and means of conducting the work are under the
control of Consultant. The work is subject to the City's and Outside Counsel's general right to
review. Outside Counsel and Consultant intend and agree that an independent contractor
relationship is created by this contract.
4. Consultant understands that the services required under this Agreement are
provided to assist the City in a dispute regarding the City's surface water rights.
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5. Consultant understands and agrees that all information and documents to which
the Consultant is given access will be held confidential and all other written reports, summaries,
analyses or other documents prepared by the Consultant will be held confidential as privileged
attorney-client communications and/or work product. Consultant agrees that disclosure of any of
the aforesaid will be only at the specific direction of Outside Counsel or the City.
6. This contract is personal and Consultant may not assign or delegate this contract,
or any part of it, or any right to any money to be paid under it, except with the written consent of
Outside Counsel.
7. No claim for additional services, not specifically provided in this contract and
requested by Outside Counsel, performed or furnished by the Consultant, will be allowed, nor
may the Consultant do any work or furnish any material not covered by the contract unless the
work or material is ordered in writing by Outside Counsel.
8. All written reports, graphs, analyses, computer programs, drawings, notes, and
other work developed in the performance of this Agreement (the "Work") are and remain the
joint property of the City and Consultant. The Work may be used by the City for any purpose
without additional compensation to the Consultant. The Consultant agrees not to assert any
rights and not to establish any claim under the patent or copyright laws with respect to the Work.
The Consultant, for a period of three years after final payment under this contract, agrees to
furnish and provide access to the Work at the request of Outside Counsel.
Consideration
9(a) The City agrees to pay Consultant for the work performed under this contract at
the rates set forth in Exhibit 2, attached hereto.
9(b) Consultant agrees to bill Outside Counsel for fees and expenses on about a
monthly basis. Expenses will be itemized by task. If requested by Outside Counsel, Consultant
will provide an estimated budget and schedule for each task assigned. Upon receipt of a billing,
documented as described herein, Outside Counsel agrees to forward that bill within ten (10)
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business days to the City. Payment in full by the City direct to the Consultant shall be due within
thirty (30) days of receipt of the bill.
Period of Performance
10. The period of the contract begins June 1, 1997, and ends December 31, 1998. The
City or Outside Counsel, by written notice, may terminate this contract, in whole or in part, at
any time. The City is liable only for payment in accordance with the payment provisions of this
contract for services rendered before the effective date of termination. Performance may be
extended for additional periods by the written agreement of the parties.
Governing Law
11. This contract is governed by the laws of the State of Washington and all disputes
arising out of this contract which cannot be settled by mutual agreement shall be resolved in the
Washington state courts.
Amendments
12. The terms of this contract including, but not limited to, the definition of services
to be performed, the period of performance, and the amount of consideration to be paid may be
amended or modified at any time by written agreement of all the parties.
Insurance
13. During the performance of the Services under this Agreement, Consultant shall
maintain the following insurance:
a) General Liability Insurance, with a combined single limit of $1,000,000 for each
occurrence and $1,000,000 in the aggregate.
b) Automobile Liability Insurance, with a combined single limit of $1,000,000 for each
person and $1,000,000 for each accident.
c) Workers' Compensation Insurance in accordance with statutory requirements and
Employers' Liability Insurance, with a limit of $500,000 for each occurrence.
d) Professional Liability Insurance, with a limit of $1,000,000 annual aggregate.
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Consultant shall, upon written request, furnish City certificates of insurance which shall include a
provision that such insurance shall not be canceled without at least thirty days' written notice to
City.
Limitations
14. To the fullest extent permitted by law, Consultant shall not be liable to City or
Outside Counsel for any special, indirect, or consequential damages resulting in any way from
the performance of the services. To the fullest extent permitted by law, Consultant's total
liability to City or Outside Counsel for all claims, losses, damages, and expenses resulting in any
way from the performance of the Services shall not exceed the total compensation received by
Consultant under this Agreement.
PRESTON GATES & ELLIS LLP
CONSULTANT:
BLACK & VEATCH
k;:(i By:
/Eliz d etli Thomas, Partner William G. Stannard, Senior Partner
+ a
_ 1 � , 1997 Date: a -ion e
AGREEMENT APPROVED BY
THE CITY OF YAKIMA:
By:
Date:
By:
chard A. Zais, Jr. C. ager
G1••n
ice, Assistant City Manager
Date: &1,;. 3/6/ 7
ATTEST:
Karen S. Roberts, CMC
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, 1997
CITY CONTRACT nO:
nuck.ITION ?3O: ..m d CJ e
EXHIBIT 1
SCOPE OF WORK
Task Order No. 1 Water Utility Model Enhancements
As part of the latest rate review, Black & Veatch developed cost allocation and rate
design modules to enhance the City's existing Water Utility computer model. These
modules allow staff to calculate allocated costs of service for each customer class, and to
design rates to reflect cost of service and other rate policies. Along with the most recent
rate increase, several customer classes were eliminated and the City implemented rates
that reflect a phased approach in moving toward conservation -oriented rates.
In this task, Black & Veatch will provide further enhancements and improvements to the
Water Utility rate model. We will adjust the model to reflect only the existing customer
classes, and will consolidate historical information, as necessary, to help ensure accurate
comparison of historical and projected customers.
Task Order No. 2: Development of Water Utility Connection Charges
Based on the goals and objectives of the City, Black & Veatch will recommend the most
appropriate method for calculating connection charges which will recover the capital needs of the
Water Utility in the development of capacity -related elements of its infrastructure. The factors to be
considered in establishing the proportionate share of capital costs to be allocated to new customers
include:
• The cost of capital facilities.
• The method of financing those facilities.
• The extent to which new development will pay for existing facilities through
user fees, debt service and other payments toward capital improvements.
• Other factors established by statute and case law.
To the extent possible, the proposed connection charges will be based on existing records and data
contained in the City's files. Specific subtasks will include:
2.1 Review State laws and administrative rules, and locally adopted land -use policies as they
pertain to the development and implementation of connection charges.
2.2 Develop a list of connection charge -eligible projects by reviewing the Water
Comprehensive Plan and related information.
2.3 Review and update "order of magnitude" cost estimates of connection charge -eligible
proj ects.
2.4 Review and update the funding assumptions for connection charge -eligible projects by
testing the rationale, benefits associated rate impacts, and connection charges.
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2.5 Recommend connection charges or other funding source adjustments to undertake the
connection charge -eligible projects. Provide comparison of connection charge schedules of
other selected communities. In developing connection charges for the Water Utility, Black
& Veatch will develop two separate connection charges. The first charge will be developed
to recover the costs of capacity associated with serving a new customer with domestic water
usage only. The second charge will be developed to recover the costs of serving the
irrigation needs of a new customer. This could be either a new customer who either does
not have the ability to be served by or chooses not to be served by the Irrigation Utility, or
an existing Water Utility customer who chooses to discontinue service that has historically
been provided by the Irrigation Utility.
2.6 Review the basis of connection charge revenues, connection charge cashflow and timing of
connection charge project expenditures to accommodate orderly growth and development.
2.7 Recommend implementation and financing strategies for large connection charge -eligible
projects that benefit large sectors of the community.
2.8 Black & Veatch will be available to participate in meetings and telephone conference
calls, as needed. For the purposes of estimating the cost of this task, we have allocated up
to 16 hours for such activities.
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EXHIBIT 2
TASK ORDER(S) & ESTIMATED FEES
The cost estimate for Tasks 1 and 2 of the services required in this Agreement are shown in the
table immediately following. Expenses include direct out-of-pocket expenses and direct charges
for computer equipment. Out-of-pocket expenses include such things as travel, communications,
postage, and reproduction costs.
Task Labor Hours Labor Costs ($) Expenses ($) Total ($)
1 24 2,200 160 2,360
2 132 12,020 1,120 13,140
Total of the Services required by this Agreement $15,500
J:\ET\25739-00 025\2FAB-V DOC 6/6/97 2:44 PM
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BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No.
For Meeting of 6-17-97
ITEM TITLE: Consideration of a Resolution Authorizing execution of an Agreement with Preston
Gates and Ellis LLP, and Black & Veatch for financial management services for
development of irrigation rate utility model.
SUBMITTED BY:
Dueane Calvin, Water/Irrigation Manager
Glenn Rice, Assistant City Manager
John Hanson, Director of Finance and Budget
CONTACT PERSON/TELEPHONE: Dueane Calvin 576-6154
SUMMARY EXPLANATION:
As a result of current activities related to the Acquavella proceeding it has been determined that it is
necessary that Black & Veatch be retained to provide services to Preston Gates and Ellis LLP, in
conjunction with the City, for the analysis of financial issues relating to the City's claims.
The cost for these services is not to exceed $15,500.00, and funding will be from the Irrigation
Professional Services Account for Acquavella related matters (146-4-146-342-W002-53800-410).
Refer to attachment 'Acquavella and other Legal Service Costs', funding is identified as item #3.
Resolution X Ordinance Contract X Other (specify)
Funding Source Irrigation Operations - Fund 146
APPROVED FOR SUBMITTAL: i• ;
City Manager
STAFF RECOMMENDATION' Staff recommends approval of the resolution authorizing the City
Manager to execute the accompanying "Consultant Agreement" with Preston Gates and Ellis LLP,
and Black & Veatch for the services described therein.
COUNCIL ACTION: Resolution adopted. Resolution No. R-97-88
Acquavella and other Legal Service Costs
It appears at this time that the vast majority of activities remaining to be accomplished this year
involves the domestic water system. Should the Judge issue a preliminary report in 1997 as
promised, the required level of participation could again change.
Water % of Total Irrigation % of Total
1997 Budget 75,000.00 45,000.00
Charges through April 21,856.00 65 11,742.00 35
Current Balance 53,144.00 33,258.00
1..50cfs/Canal Comp Acq. 60,000.00 100
2..Develop Irrigation Ord 24,000.00 100
3..Financial Model Update 15,500.00 100
4..Ongoing Acquavella 30,000.00 100 0
Sub Total (36,856.00) (6,242.00)
Necessary Appropriations 37,000.00 6,500.00
1997 revised budget 112,000.00 69 51,500.00 31
..These issues are significant and the City will be required to address them in order to
continue to meet the demands being placed on domestic water system.
2..The development of this ordinance involves a very unique circumstance and needs to be
approached very carefully and completely. To our knowledge, no other community in
this State, or possibly the Region have addressed changing from the Assessment
District format to a Utility. There are operation, and debt issues which must be
completely resolved in this ordinance.
3..This proposal is a further development of the modeling program initiated in 1996 for the
domestic water system. This segment will develop similar capabilities for the new
irrigation utility. Further work will be required at a later date.
4..It appears at this time that the vast majority of activities remaining to be accomplished this
year involves the domestic water system. Should the judge issue a preliminary report in
1997 as promised, the required level of participation could again change.
06/u4/97 DIED tu:14 FAX 20u J23 Iva2
P G & E SEATTLE
PRESTON GATES & ELLIS LLP
ATTORNEYS
MEMORANDUM
To: Dick Zais
From: Liz Thomas
Date: June 4, 1997
Subject: Timing of Black & Veatch Study and Irrigation Utility Ordinance
Q002
Glenn Rice and Dueane Calvin asked me to write you this brief memorandum regarding
the relative timing of the Black & Veatch cost of service study vis a vis the Council's
consideration of the ordinance establishing the irrigation utility.
Under the current draft scope of work for Black & Veatch, the focus of the cost of service
study is establishing the cost imposed on the domestic system by new connections and by
conversion of irrigation demand from the irrigation system to the domestic system. Establishing
these conversion fees is critical to the City's ability to avoid costly drop-off from the irrigation
utility Accordingly, it would be helpful to obtain the results of the Black & Veatch work prior to
the City Council's consideration of the ordinance.
Significance of Connection Fees for the Irrigation Utility
We feel that the City should consider adopting a fee for connection to the domestic water
system, analogous to the proposed wastewater connection fee, in order to achieve the City's
objectives for the irrigation utility. Our reasoning is as follows.
We understand that one of the City's objectives for the irrigation utility is to ensure that
the costs of the irrigation system are spread broadly among citizens living in areas served by the
irrigation system. A utility can raise revenues only through rates and charges to customers, not
through levies on property owners. The City has no express statutory authority to require
households to connect to the irrigation utility, and we doubt that the City has implied authority to
require connection. Therefore, the only way for the irrigation utility to spread costs broadly is for
the utility to maintain a broad customer base. That, in turn, requires a mechanism to discourage
individual customers from dropping irrigation service.
A second reason exists to discourage individual customers from dropping irrigation
service. Generally, customers who drop irrigation service do not cease to irrigate. Instead, they
use domestic system water for irrigation purposes. This increases the demand they place upon the
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Memorandum
June 4, 1997
Page 2
Rowe mill water treatment plant and other domestic facilities. By increasing their domestic
system demand, these customers both utilize a greater portion of existing facilities and advance
the date upon which the City will have to finance construction of additional facilities. Thus, a
customer's decision to shift demand for irrigation water from the irrigation system to the domestic
system imposes significant costs upon the domestic system.
Fireilly, as individual customers drop off the irrigation system; fewer and fewer customers
are left on the irrigation utility. But the irrigation utility's costs are largely fixed. Therefore, with
fewer customers to cover the same fixed costs, the drop off of some irrigation customers will
drive up irrigation utility costs for the remaining customers.
Together with Water/Irrigation staff, we have analyzed a number of approaches to
discourage drop off from the irrigation system and to recognize the costs that drop-off imposes on
the domestic system. From a legal and administrative standpoint, it appears that the most viable
approach is to impose a "conversion" fee: each customer who drops offthe irrigation system
would be charged a fee representing the increase in costs that the customer is imposing on the
domestic system. This conversion fee would be imposed by the domestic water utility.
However, this conversion fee seems appropriate only if wholly new customers of the
domestic system (e.g. connection of new homes) are also charged a fee representing costs
associated with
it t C portion of existing facilities that they will use and with their advancement of
the date for construction of new facilities. Because new customers impose even greater costs on
the domestic system than do existing domestic customers who drop irrigation service, it would be
difficult to justify a conversion fee unless the City also charged a fee for new connections.
Black & Veatch Analysis
Black & Veatch will quantify the costs imposed on the domestic system both by new
connections and by customers converting irrigation demand from the irrigation to the domestic
system. This analysis will form the basis for establishment of connection fees similar to those that
the Council has just approved for the wastewater utility. The Council will probably want to know
the magnitude of the new connection and conversion fees as it considers the irrigation utility
ordinance, since these fees are integral to the Council's policy objective of preventing drop-off
I understand that the study will require approximately one month. It would be helpful to
defer Council consideration of the irrigation utility ordinance until the study has been completed
and its results incorporated into draft language establishing connection and conversion fees.
Cc: Glenn Rice
Dueane Calvin
Forrest Walls
Roger Wynne
1043