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HomeMy WebLinkAboutR-2007-008 Financial Consulting Solutions Group, Inc. AgreementRESOLUTION NO. R-2007- os A RESOLUTION authorizing the City Manager to execute a consulting services agreement with Financial Consulting Solutions Group, Inc., for financial consulting services related to the development and completion of a domestic water cost of service and rate study update. WHEREAS, the City of Yakima requires financial consulting services related to the development and completion of a domestic water cost of service and rate study update; and WHEREAS, Financial Consulting Solutions Group, Inc., has the necessary experience and expertise to provide these services to the City and is willing to do so in accordance with the attached agreement; and WHEREAS, the City Council deems it to be in the best interest of the City of Yakima to authorize execution of the attached agreement with Financial Consulting Solutions Group, Inc., for financial consulting services; Now, Therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: The City Manager is hereby authorized and directed to execute the attached and incorporated "Consulting Services Agreement" with Financial Consulting Solutions Group, Inc., for financial consulting services related to the development and completion of a domestic water cost of service and rate study update. ADOPTED BY THE CITY COUNCIL this 16th day of January, 2007. David Edler, Mayor City Clerk CONSULTING SERVICES AGREEMENT THIS CONSULTING SERVICES AGREEMENT (hereinafter "Agreement") is made and entered into by and between the City of Yakima, a Washington municipal corporation (hereinafter the "City"), and Financial Consulting Solutions Group, Inc , a professional corporation (hereinafter the "Consultant"). WHEREAS, the City requires financial and economic consulting services related to the 2007 Domestic Water System Rate Update. WHEREAS, the Consultant represents that it has the expertise necessary and is willing to perform the Consulting services required by the City in accordance with the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements set forth herein, it is agreed by and between the City and Consultant as follows: 1. Scope of Services. The Consultant shall provide the City with professional services associated with and in support of the 2007 Domestic Water System Rate Update. These services are described in more detail on attached and incorporated Exhibit "A." 2. Time Period for Performance of Services. The term of this Agreement shall commence upon full execution hereof and shall terminate at the time of completion of all services/tasks required hereunder, or unless the Agreement is earlier terminated by either party under Section 21 of this Agreement. The Consultant shall provide such services as are described on Exhibit A in accordance with the time schedule set forth on attached and incorporated Exhibit B. The Consultant shall proceed with such services in a timely and diligent manner, but shall not be responsible for delays beyond the Consultant's control or which the parties could not have reasonably foreseen. 3. Compensation. a. Fees for Services The Consultant shall be paid for the services described on Exhibit A on a time -spent basis in accordance with the fee schedule attached hereto as Exhibit "C" and incorporated herein by this reference. Said fee schedule is subject to revision by the Consultant not sooner than one (1) year after execution of this Agreement, and no more than once each year thereafter. Subconsultants and other direct costs shall be invoiced to the City at actual cost without mark-up. b Maximum Fee for Services. The Consultant's total compensation for the performance of the services set forth in Exhibit A shall not exceed the amount of Fifteen Thousand Dollars ($15,000.00), without additional written authorization from City. c. Renegotiation of Maximum Fee. The Consultant reserves the right to renegotiate the maximum fee specified if the scope of services described in Exhibit A is changed by the City, or if conditions beyond the control of the parties shall cause the Consultant to incur additional costs and expenses in providing the services required under Exhibit A. In either event, the Consultant shall promptly notify the City in writing of the anticipated additional fees or reduction of fees. Thereafter, and unless otherwise agreed by the parties, the Consultant shall not proceed with the modified/changed services until the parties agree in writing to the renegotiated maximum fee. d. Payment of Compensation. Consultant shall submit monthly invoices to the City. Said invoices shall itemize all services rendered during the preceding monthly period. Payment shall be due and payable upon receipt of Consultant's invoice by the City. All payments are expressly conditioned upon the Consultant providing services hereunder which are satisfactory to the City. In the event the City disputes any invoice item, City shall give Consultant written notice of such disputed item within ten 1 (10) business days after receipt of such invoice and shall pay to Consultant the undisputed portion of the invoice according to the provisions hereof. e Payment in the Event of Termination In the event that either party terminates this Agreement under Section 21, Consultant shall be compensated in accordance with the above terms for all satisfactory services provided to the City up to the effective termination date. f. Maintenance of Financial Records/Documents. The Consultant shall make the cost records, accounts and related financial documents pertaining to this Agreement available for inspection by representatives of the City during the term of this Agreement and for a period of three (3) years following the final payment to the Consultant by the City. In the event that any audit or inspection identifies any discrepancy in such financial records, the Consultant shall provide the City with appropriate clarification and/or financial adjustments within thirty (30) calendar days of notification of the discrepancy. g. Permit and Advertising Cost. The City shall pay the cost of all necessary permits, advertising and similar items that are normally associated with public works projects. 4. Standard of Performance. The Consultant shall perform all work and services required under this Agreement in a manner consistent with that degree of care and skill ordinarily exercised by members of the same profession practicing in similar circumstances, and shall be responsible for the technical soundness and accuracy of all work and services furnished pursuant to this Agreement. 5. Financial Forecasts. Neither Consultant's name nor the report and its financial projections may be referred to or included in any prospectus or as a part of any offering or representation made in connection with the sale of securities or participation interest to the public, whether through a public or private offering. The information used in developing the forecast assumptions will be derived from published information and other sources Consultant considers appropriate. However, Consultant cannot assume responsibility for the accuracy of such material. Moreover, forecasts are subject to many uncertainties as to the future; therefore Consultant cannot represent that the financial projections will be representative of the results that actually occur. Consultant will endeavor to include appropriate comments drawing the readers' attention to these matters. 6. Ownership of Documents. The materials, computer spreadsheets, reports, calculations, analyses, etc., generated by Consultant under this Agreement including the final report shall be the joint property of the City and Consultant. Consultant may retain copies thereof for work paper documentation and their own use unless specifically restricted in writing by the City as to use. Consultant shall use the City's financial spreadsheet model for the water rate update. Any computer spreadsheet model created by Consultant shall be for the joint use of the City and Consultant. Consultant explicitly retains the right to make use of the models developed by Consultant in this effort for use in marketing, training or on other engagements. Computer models use generally available software, such as Microsoft Excel, and Consultant does not intend or imply any warranty of those programs. 7. Information to be provided by the City. The City shall provide the Consultant with access to all information at its disposal that is pertinent to the project, including but not limited to previous reports, drawings, spreadsheet models, utility records, and other similar data. Absent specific written direction to the contrary, the Consultant shall be entitled to rely upon the completion and accuracy of such documentation. 8. Status of Consultant. Consultant and the City understand and expressly agree that Consultant is an independent contractor in the performance of each and every part of this Agreement. The Consultant shall have the sole judgment of the means, mode or manner of the actual performance of 2 work/services required under this Agreement. The Consultant, as an independent contractor, assumes the entire responsibility for carrying out and accomplishing the work/services required under this Agreement. Additionally, and as an independent contractor, the Consultant and its employees shall make no claim of City employment nor shall claim against the City any related employment benefits, social security, and/or retirement benefits. 9. Taxes and Assessments. Consultant shall be solely responsible for compensating its employees and for paying all related taxes, deductions, and assessments, including but not limited to, federal income tax, FICA, social security tax, assessments for unemployment and industrial injury, and other deductions from income which may be required by law or assessed against either party as a result of this Agreement. In the event the City is assessed a tax or assessment as a result of this Agreement; Consultant shall pay the same before it becomes due. 10. Nondiscrimination Provision. During the performance of this Agreement, Consultant shall not discriminate on the basis of race, age, color, sex, religion, national origin, creed, marital status, political affiliation, or the presence of any sensory, mental or physical handicap. This provision shall include but not be limited to the following: employment, upgrading, demotion, transfer, recruitment, advertising, layoff or termination, rates of pay or other forms of compensation, selection for training, and the provision of services under this Agreement. 11. Compliance With Law. Consultant agrees to perform all work/services under and pursuant to this Agreement in full compliance with any and all applicable laws, rules, and regulations adopted or promulgated by any governmental agency or regulatory body, whether federal, state, local, or otherwise. If a change in any law or regulation increases the cost of Consultant's work or services, then Consultant will be entitled to an equitable adjustment to the Agreement. 12. No Insurance. It is understood the City does not maintain liability insurance for Consultant or its employees and subcontractors. 13. Indemnification and Hold Harmless. a. Consultant agrees to protect, defend, indemnify, and hold harmless the City, its elected officials, officers, employees and agents from any and all claims, demands, losses, liens, liabilities, penalties, fines, lawsuits, and other proceedings and all judgments, awards, costs and expenses (including reasonable attorneys' fees and disbursements) resulting from death or bodily injury to any person or damage or destruction to a third -party to the extent caused by any negligent act and/or omission of the Consultant, its officers, employees, agents, and/or subcontractors, arising out of the performance of this Agreement. b. In the event that both Consultant and the City are negligent, the Consultant's liability for indemnification of the City shall be limited to the contributory negligence for any resulting suits, actions, claims, liability, damages, judgments, costs and expenses (including reasonable attorney's fees) that can be apportioned to the Consultant, its officers, employees, agents, and/or subcontractors. c Nothing contained in this Section or this Agreement shall be construed to create a liability or a right of indemnification in any third party. d. This Section of the Agreement shall survive the term or expiration of this Agreement and shall be binding on the parties to this Agreement. 14. Insurance provided by Consultant. a. Commercial Liability Insurance. On or before the date this Agreement is fully executed by the parties, the Consultant shall provide the City with a certificate of insurance as proof of commercial liability insurance with a minimum liability limit of One Million Dollars ($1,000,000.00) combined single limit bodily injury and property damage. The certificate shall clearly state who the provider is, the amount 3 of coverage, the policy number, and when the policy and provisions provided are in effect. Said policy shall be in effect for the duration of this Agreement. The policy shall name the City, its elected officials, officers, agents, and employees as an additional insured, and shall contain a clause that the insurer will not cancel or change the insurance without first giving the City thirty (30) calendar days prior written notice. The insurance shall be with an insurance company or a company rated A-VII or higher in Best's Guide and admitted in the State of Washington b Commercial Automobile Liability Insurance. On or before the date this Agreement is fully executed by the parties, the Consultant shall provide the City with a certificate of insurance as proof of commercial automobile liability insurance with a minimum liability limit of One Million Dollars ($1,000,000.00) combined single limit bodily injury and property damage. The certificate shall clearly state who the provider is, the amount of coverage, the policy number, and when the policy and provisions provided are in effect). Said policy shall be in effect for the duration of this Agreement. The policy shall name the City, its elected officials, officers, agents, and employees as an additional insured, and shall contain a clause that the insurer will not cancel or change the insurance without first giving the City thirty (30) calendar days prior written notice. The insurance shall be with an insurance company or a company rated A-VII or higher in Best's Guide and admitted in the State of Washington c. Professional Liability Insurance. On or before the date this Agreement is fully executed by the parties, the Consultant shall provide the City with a certificate of insurance as evidence of Professional Errors and Omissions Liability Insurance with coverage of at least One Million Dollars ($1,000,000.00) per occurrence and an annual aggregate limit of at least One Million Dollars ($1,000,000 00) The certificate shall clearly state who the provider is, the amount of coverage, the policy number, and when the policy and provisions provided are in effect. The insurance shall be with an insurance company rated A-VH or higher in Bests Guide. If the policy is on claims made basis, the retroactive date of the insurance policy shall be on or before January 1, 2007, or shall provide full prior acts. The insurance coverage shall remain in effect during the term of this Agreement and for a minimum of three (3) years following the termination of this Agreement. d. Insurance provided by Subcontractors. The Consultant shall ensure that all subcontractors it utilizes for work/services required under this Agreement shall comply with all of the above insurance requirements. 15. Delegation of Professional Services. The services provided for herein shall be performed by Consultant, and no person other than regular associates or employees of Consultant shall be engaged upon such work or services except upon written approval of the City. 16. Assignment. This Agreement, or any interest herein, or claim hereunder, shall not be assigned or transferred in whole or in part by Consultant to any other person or entity without the prior written consent of the City, except that it may be assigned without such consent to a related entity, an affiliate or wholly-owned subsidiary of either party. In the event that such prior written consent to an assignment is granted, then the assignee shall assume all duties, obligations, and liabilities of Consultant stated herein. 17. No Conflict of Interest. Consultant represents that it or its employees do not have any interest and shall not hereafter acquire any interest, direct or indirect, which would conflict in any manner or degree with the performance of this Agreement. Consultant further covenants that it will not hire anyone or any entity having such a conflict of interest during the performance of this Agreement. 18. Severability. a. If a court of competent jurisdiction holds any part, term or provision of this Agreement to be illegal, or invalid in whole or in part, the validity of the remaining provisions shall not be affected, and the parties' rights and obligations shall be construed and enforced as if the Agreement did not contain the particular provision held to be invalid. 4 b. If any provision of this Agreement is in direct conflict with any statutory provision of the State of Washington, that provision which may conflict shall be deemed inoperative and null and void insofar as it may conflict, and shall be deemed modified to conform to such statutory provision. c. Should the City determine that the severed portions substantially alter this Agreement so that the original intent and purpose of the Agreement no longer exists, the City may, in its sole discretion, terminate this Agreement. 19. Non -Waiver. The waiver by either the City or the Consuttant of the breach of any provision of this Agreement by the other party shall not operate and/or be construed as a waiver of any subsequent breach by either party or prevent either party thereafter enforcing such provision. 20. Drafting of Agreement. Both the Consultant and the City have participated in the drafting of this Agreement. As such, it is agreed by the parties that the general contract rule of law that ambiguities in the contract language shall be construed against the drafter of a contract shall have no application to any legal proceeding, arbitration and/or action in which this Agreement and its terms and conditions are being interpreted and/or enforced. 21. Termination The City or Consultant may terminate this Agreement, with or without cause, by giving the other party thirty (30) calendar days written notice of termination 22. Notices. Unless stated otherwise herein, all notices and demands shall be in writing and sent or hand delivered to the parties to their addresses as follows: TO CITY: David Brown Water/Irrigation Manager City of Yakima Water/Irrigation Division 2301 Fruitvale Blvd Yakima, WA 98902 TO CONSULTANT: Karyn Johnson FCS GROUP 8201 164th Avenue NE, Suite 300 Redmond, WA 98052 or to such other addresses as the parties may hereafter designate in writing. Notices and/or demands shall be sent by registered or certified mail, postage prepaid, or hand delivered. Such notices shall be deemed effective when mailed or hand delivered at the addresses specified above. 23. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Washington. 24. Venue The venue for any action to enforce or interpret this Agreement shall lie in the Superior Court of Washington for Yakima County, Washington. 25. Integration. This written document constitutes the entire agreement between the City and Consultant. There are no other oral or written Agreements between the parties as to the subjects covered herein. No changes or additions to this Agreement shall be valid or binding upon either party unless such change or addition be in writing and executed by both parties. CITY OF YAKIMA FINANCIAL CONSULTING SOLUTIONS GROUP, INC., 5 By: R. A. Zais, City Manager DATE: / -/er- O ATTEST: a Professional Corporat /1 r By: DATE: City Clerk Linda.WAIF(/'7s, eP. Resolution R-2007- 08 City Contract No.: 2007-04 6 64 EXHIBIT A CITY OF YAKIMA, WA (CITY) AND FINANCIAL CONSULTING SOLUTIONS GROUPS, INC., A PROFESSIONAL CORPORATION (RATE CONSULTANT) City of Yakima, WA 2007 Domestic Water System Rate Update PURPOSE The RATE CONSULTANT'S scope of services, time of completion and compensation shall be as set forth herein. Services shall generally be described as financial and economic services in support of the City's 2007 Domestic Water System Rate Update. FINANCIAL/ECONOMIC SERVICES The following services shall be performed under this Task Order. Task 1 — Revenue Requirement Analysis 1.1. Data Collection/Review — Prepare an initial data request identifying specific data to be collected from the City for the rate update, including such items as financial statements, operating budgets, capital improvement program, debt service schedules, fixed assets listing, customer data, rate ordinances, and copies of the previous rate model and report. Once the data has been received, we will review the data and make requests for any additional items or explanations as necessary. 1.2. Financial/Economic Assumptions — Initialize the model for the current budget year and update model input sections to reflect current information for the following: • Customer growth, inflation rates, interest rates, and debt issuance terms. • Customer billing records (water consumptions, number of customers/meters, etc.) for year ending 2006. City to provide updated customer statistics in the City's Rbillcon.xls spreadsheet. • 2005 actual performance, 2006 actual or projected performance, and 2007 operating budget, including detail revenues, expenditures, and fund balances. • Six-year capital improvement program (City may update this in model). 1.3 Capital Financing Plan —Identify potential funding sources for the current CIP and develop altemative financing strategies for the water utility. We will project capital funding needs, borrowing requirements, and associated cash flows and fund balance for the six-year study period. We expect to consider such funding options as bonded debt, state grants and loans (SRF/PWTF), and/or cash financing from rates. -1- The budget provides for up to three (3) alternative capital financing plans. 1.4 Operating Forecast — Forecast ongoing operating & maintenance expense, debt service, and other cash obligations of the utility over the study period. Incorporate economic assumptions, additional O&M expense, if any, resulting the CIP, and/or other known changes in operational requirements. 1.5 Revenue Needs Assessment — The revenue needs assessment identifies the total rate revenue to be collected from customers. Incorporate results of Subtask 1.1 through 1.4 and develop alternative operating cash flows for the water utility. Compare projected cash requirements against projected revenue under existing rate levels to determine annual rate adjustments needed to satisfy projected cash obligations. The proposed budget provides for up to three (3) alternative scenarios. Task 2 — Cost of Service Allocations 2.1. Customer Statistics — Review/evaluate summary water system and customer billing histones and statistics, as provided by the City, to determine whether changing usage patterns indicate a need to revise current customer class designations or peaking requirements. 2.2. Cost Allocations — Update model to reflect current fixed asset records Review existing plant and O&M cost allocation factors and distribution of costs to customer classes to determine if existing parameters remain valid. Update or revise as warranted. 2 3. Rate Design — Develop rate alternatives that reflect cost of service findings and other policies considerations. The rate structure alternatives could include reducing the number of usage blocks to transition toward a uniform volume (rather than declining) rate structure and/or phase-in strategies for cost recovery between customer classes. The budget provides for up to three (3) altemative rate scenarios. 2.4. Typical Bills — Update structure and results for typical bills, consistent with the rate structure alternatives. Task 3 — Meetings & Documentation 3.1. Staff Meetings — Prepare for and attend up to two (2) meetings with Division staff to collect data and review interim findings. Meetings to be held at FCS Group offices in Redmond, Washington. 3.2. Presentations — Prepare materials for and attend up to two (2) work sessions or City Council meetings to present study results. 8.1. 3.3 Reports — Prepare a project report, similar in format to the City's previous water rate study report. It is anticipated that the City will provide input regarding historical accomplishments, future goals, etc. One (1) draft and one (1) final report will be submitted electronically to the City. -2- PAYMENT CITY shall pay RATE CONSULTANT on an hourly basis in accordance with the attached fee schedule (Exhibit C). FCS Group does not charge for ordinary project -related direct costs RATE CONSULTANT'S total compensation for the Scope of Services identified in this Task order shall not exceed the amount of $15,000, without additional written authorization from CITY. -3- EXHIBIT B TIME OF PERFORMANCE Performance of services described in Exhibit A shall begin immediately upon notice to proceed (NTP). Major milestones are estimated as follows • Estimated NTP: On or before February 15, 2007 • Review Initial Study Findings with Division Staff: Within 2 months of NTP (April 15, 2007) • Review Final Study Findings with Division Staff: Within 3 months of NTP (May 15, 2007) • Presentations to City Council: Within 4 months of NTP (June 15, 2007) • Submit Draft Report: Within 5 months of NTP (July 31, 2007) • Submit Final Report: Within 6 months of NTP (August 31, 2007) • Submit Electronic Copy of Updated Model: Within 6 months of NTP (August 31, 2007) • Proposed Rate Implementation. January 1, 2008 G:\My Docs\Water Rate Study\Rates Study Year\20071Legal\FCS Group -contract -exhibit b-1-07 doc LABOR Name David Findlay EXHIBIT C FCS GROUP 2007 FEE SCHEDULE Title Billing Rate Principal $200 California Consulting Practice Jeanette Hahn Senior Project Manager Giorgi Kaviladze Senior Analy st $170 $130 Management Consulting Program Peter Moy Principal $190 [as Study Manager] $170 Warren Cheney Project Manager $160 Stephen Land Project Manager $160 Gordon Wilson Project Manager $160 Jay Rogers Senior Analyst $120 Utility Finance Program Edward Cebron Principal $200 [as Study Manager] $175 John Ghilarducci Principal $180 [as Study Manager] $165 Karyn Johnson Principal $180 [as Study Manager] $165 Angie Sanchez Virnoche Senior Project Manager $160 Nihat Dogan Project Consultant $130 Courtney Black Senior Analyst $120 Michael Dean Senior Analyst $110 Chris Gonzalez Senior Analyst $110 Samantha Holert Senior Analyst $110 Brian Rice Analyst $100 Sean Senescall Analyst $100 Sergey Tarasov Analyst $100 Administrative and Technical Support Taree Bollinger Pam Heeke Diane Harmon Technical Writer/Graphic Artist Technical Writer/Graphic Artist Administrative Support $ 80 $ 80 $ 60 DIRECT EXPENSES Direct Expenses will not be charged for ordinary project -related expenses. For any client -requested extraordinary expenses, specific terms will be established pnor to expenditure and billing. ITEM TITLE: BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 9 For Meeting of January 16, 2007 Resolution authorizing Consulting Services Agreement with Financial Consulting Solutions Group, Inc., related to 2007 Domestic Water Cost of Service and Rate Study Update SUBMITTED BY: Dave Zabell, Assistant City Manager David Brown, Water/Irrigation Manager CONTACT PERSON/TELEPHONE: David Brown, 575-6204 SUMMARY EXPLANATION: In 2004, a cost of service and rate study ("COS&RS") was completed and a water rate adjustment were made in 2005, 2006, 2007 and adjustments scheduled for 2008 and 2009. The 2004 COS&RS predicted that the rate adjustment would be adequate through 2009 and that a COS&RS update would be required in 2008 to analyze the cost of service and to determine if a rate adjustment would be needed beyond 2009. The projected revenues from the rate adjustments that have been implemented have fallen significantly short of projections. A COS&RS is been conducted to determine what rate adjustment are necessary to keep revenues in line with expenditures and to sustain adequate reserves. City representatives have contacted Financial Consulting Solutions Group, Inc., to assist with the 2007 COS&RS update. (continued next page) Resolution X Ordinance Contract X Other (Specify) Mail to: Karyn Johnson, FCS Group, 8201 164th Ave NE, Suite 300 Redmond, WA 98052, Phone (425) 867-1802 Funding Source: 474 Water Operating Fund APPROVED FOR SUBMITTAL: '-.<- City Manager STAFF RECOMMENDATION: Adopt resolution authorizing Consulting Services Agreement with Financial Consulting Solutions Group, Inc. COUNCIL ACTION: Resolution adopted. RESOLUTION NO. R-2007-08 Financial Consulting Solutions Group, inc., has the expel ler ice arid expertise ileL,Vbbdi y tu develop and complete the 2007 COS&RS update and is willing to do so in accordance with the attached Consulting Services Agreement. In consideration of said services, Financial Consulting Solutions Group, Inc., would be paid approximately $15,000. City Council is respectfully requested to consider and pass the attached resolution authorizing the City Manager to execute said Consulting Services Agreement with Financial Consulting Colutions Group, Inc.