HomeMy WebLinkAboutAgreement - NBS Government Finance Group - Agreement for Water and Waste Water Utility Rate Study - Signed 2022-04-15City of Gilroy
Agreement/Contract Tracking
Today’s Date:
April 18, 2022 Your Name: Carina Baksa
Contract
Type:
Services over $5k - Consultant Phone Number: 408-
846-0215
Contract Effective Date:
(Date contract goes into effect)
4/15/2022
Contract Expiration Date: 6/30/2023
Contractor / Consultant Name:
(if an individual’s name, format
as last name, first name)
NBS Government Finance Group
Contract Subject:
(no more than 100 characters)
Agreement for Water and Wasterwater Utility Rate Study
Contract Amount:
(Total Amount of contract. If no
amount, leave blank)
79558
By submitting this form, I
confirm this information is
complete:
➢ Date of Contract
➢ Contractor/Consultant name and complete address
➢ Terms of the agreement (start date, completion date or “until
project completion”, cap of compensation to be paid)
➢ Scope of Services, Terms of Payment, Milestone Schedule and
exhibit(s) attached
➢ Taxpayer ID or Social Security # and Contractors License # if
applicable
➢ Contractor/Consultant signer’s name and title
➢ City Administrator or Department Head Name, City Clerk (Attest),
City Attorney (Approved as to Form)
Routing Steps for Electronic Signature
Risk Manager
City Attorney Approval As to Form
City Administrator or Department Head
City Clerk Attestation
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AGREEMENT FOR SERVICES
(For contracts over $5,000 - CONSULTANT)
This AGREEMENT made this 13 day of April, 2022, between:
CITY: City of Gilroy, having a principal place of business at
7351 Rosanna Street, Gilroy, California
and CONSULTANT: NBS Government Finance Group, having a principal place of business at
32605 Temecula Parkway, Suite 100, Temecula, CA. 92592.
ARTICLE 1. TERM OF AGREEMENT
This Agreement will become effective on April 15, 2022 and will continue in effect through June
30, 2023 unless terminated in accordance with the provisions of Article 7 of this Agreement.
Any lapse in insurance coverage as required by Article 5, Section D of this Agreement shall
terminate this Agreement regardless of any other provision stated herein. ______
Initial
ARTICLE 2. INDEPENDENT CONTRACTOR STATUS
It is the express intention of the parties that CONSULTANT is an independent contractor and not
an employee, agent, joint venturer or partner of CITY. Nothing in this Agreement shall be
interpreted or construed as creating or establishing the relationship of employer and employee
between CITY and CONSULTANT or any employee or agent of CONSULTANT. Both parties
acknowledge that CONSULTANT is not an employee for state or federal tax purposes.
CONSULTANT shall not be entitled to any of the rights or benefits afforded to CITY’S
employees, including, without limitation, disability or unemployment insurance, workers’
compensation, medical insurance, sick leave, retirement benefits or any other employment
benefits. CONSULTANT shall retain the right to perform services for others during the term of
this Agreement.
ARTICLE 3. SERVICES TO BE PERFORMED BY CONSULTANT
A. Specific Services
CONSULTANT agrees to: Perform the services as outlined in Exhibit “A” (“Specific
Provisions”) and Exhibit “B” (“Scope of Services”), within the time periods described in Exhibit
“C” (“Milestone Schedule”).
B. Method of Performing Services
CONSULTANT shall determine the method, details and means of performing the above-described
services. CITY shall have no right to, and shall not, control the manner or determine the method
of accomplishing CONSULTANT’S services.
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C. Employment of Assistants
CONSULTANT may, at the CONSULTANT’S own expense, employ such assistants as
CONSULTANT deems necessary to perform the services required of CONSULTANT by this
Agreement, subject to the prohibition against assignment and subcontracting contained in
Article 5 below. CITY may not control, direct, or supervise CONSULTANT’S assistants in the
performance of those services. CONSULTANT assumes full and sole responsibility for the
payment of all compensation and expenses of these assistants and for all state and federal income
tax, unemployment insurance, Social Security, disability insurance and other applicable
withholding.
D. Place of Work
CONSULTANT shall perform the services required by this Agreement at any place or location
and at such times as CONSULTANT shall determine is necessary to properly and timely perform
CONSULTANT’S services.
ARTICLE 4. COMPENSATION
A. Consideration
In consideration for the services to be performed by CONSULTANT, CITY agrees to pay
CONSULTANT the amounts set forth in Exhibit “D” (“Payment Schedule”). In no event
however shall the total compensation paid to CONSULTANT exceed $79,558.00.
B. Invoices
CONSULTANT shall submit invoices for all services rendered.
C. Payment
Payment shall be due according to the payment schedule set forth in Exhibit “D”. No payment
will be made unless CONSULTANT has first provided City with a written receipt of invoice
describing the work performed and any approved direct expenses (as provided for in Exhibit “A”,
Section IV) incurred during the preceding period. If CITY objects to all or any portion of any
invoice, CITY shall notify CONSULTANT of the objection within thirty (30) days from receipt
of the invoice, give reasons for the objection, and pay that portion of the invoice not in dispute. It
shall not constitute a default or breach of this Agreement for CITY not to pay any invoiced amounts
to which it has objected until the objection has been resolved by mutual agreement of the parties.
D. Expenses
CONSULTANT shall be responsible for all costs and expenses incident to the performance of
services for CITY, including but not limited to, all costs of equipment used or provided by
CONSULTANT, all fees, fines, licenses, bonds or taxes required of or imposed against
CONSULTANT and all other of CONSULTANT’S costs of doing business. CITY shall not be
responsible for any expenses incurred by CONSULTANT in performing services for CITY, except
for those expenses constituting “direct expenses” referenced on Exhibit “A.”
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ARTICLE 5. OBLIGATIONS OF CONSULTANT
A. Tools and Instrumentalities
CONSULTANT shall supply all tools and instrumentalities required to perform the services under
this Agreement at its sole cost and expense. CONSULTANT is not required to purchase or rent
any tools, equipment or services from CITY.
B. Workers’ Compensation
CONSULTANT agrees to provide workers’ compensation insurance for CONSULTANT’S
employees and agents and agrees to hold harmless, defend with counsel acceptable to CITY and
indemnify CITY, its officers, representatives, agents and employees from and against any and all
claims, suits, damages, costs, fees, demands, causes of action, losses, liabilities and expenses,
including without limitation reasonable attorneys’ fees, arising out of any injury, disability, or
death of any of CONSULTANT’S employees.
C. Indemnification of Liability, Duty to Defend
1. As to professional liability, to the fullest extent permitted by law, CONSULTANT
shall defend, through counsel approved by CITY (which approval shall not be unreasonably
withheld), indemnify and hold harmless CITY, its officers, representatives, agents and employees
against any and all suits, damages, costs, fees, claims, demands, causes of action, losses, liabilities
and expenses, including without limitation attorneys’ fees, to the extent arising or resulting directly
or indirectly from any willful or negligent acts, errors or omissions of CONSULTANT or
CONSULTANT’S assistants, employees or agents, including all claims relating to the injury or
death of any person or damage to any property.
2. As to other liability, to the fullest extent permitted by law, CONSULTANT shall
defend, through counsel approved by CITY (which approval shall not be unreasonably withheld),
indemnify and hold harmless CITY, its officers, representatives, agents and employees against any
and all suits, damages, costs, fees, claims, demands, causes of action, losses, liabilities and
expenses, including without limitation attorneys’ fees, arising or resulting directly or indirectly
from any act or omission of CONSULTANT or CONSULTANT’S assistants, employees or
agents, including all claims relating to the injury or death of any person or damage to any property.
D. Insurance
In addition to any other obligations under this Agreement, CONSULTANT shall, at no cost to
CITY, obtain and maintain throughout the term of this Agreement: (a) Commercial Liability
Insurance on a per occurrence basis, including coverage for owned and non-owned automobiles,
with a minimum combined single limit coverage of $1,000,000 per occurrence for all damages due
to bodily injury, sickness or disease, or death to any person, and damage to property, including the
loss of use thereof; and (b) Professional Liability Insurance (Errors & Omissions) with a minimum
coverage of $1,000,000 per occurrence or claim, and $2,000,000 aggregate; provided however,
Professional Liability Insurance written on a claims made basis must comply with the requirements
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set forth below. Professional Liability Insurance written on a claims made basis (including without
limitation the initial policy obtained and all subsequent policies purchased as renewals or
replacements) must show the retroactive date, and the retroactive date must be before the earlier
of the effective date of the contract or the beginning of the contract work. Claims made
Professional Liability Insurance must be maintained, and written evidence of insurance must be
provided, for at least five (5) years after the completion of the contract work. If claims made
coverage is canceled or non-renewed, and not replaced with another claims-made policy form with
a retroactive date prior to the earlier of the effective date of the contract or the beginning of the
contract work, CONSULTANT must purchase so called “extended reporting” or “tail” coverage
for a minimum of five (5) years after completion of work, which must also show a retroactive date
that is before the earlier of the effective date of the contract or the beginning of the contract work.
As a condition precedent to CITY’S obligations under this Agreement, CONSULTANT shall
furnish written evidence of such coverage (naming CITY, its officers and employees as additional
insureds on the Comprehensive Liability insurance policy referred to in (a) immediately above via
a specific endorsement) and requiring thirty (30) days written notice of policy lapse or cancellation,
or of a material change in policy terms.
E. Assignment
Notwithstanding any other provision of this Agreement, neither this Agreement nor any duties or
obligations of CONSULTANT under this Agreement may be assigned or subcontracted by
CONSULTANT without the prior written consent of CITY, which CITY may withhold in its sole
and absolute discretion.
F. State and Federal Taxes
As CONSULTANT is not CITY’S employee, CONSULTANT shall be responsible for paying all
required state and federal taxes. Without limiting the foregoing, CONSULTANT acknowledges
and agrees that:
• CITY will not withhold FICA (Social Security) from CONSULTANT’S
payments;
• CITY will not make state or federal unemployment insurance contributions on
CONSULTANT’S behalf;
• CITY will not withhold state or federal income tax from payment to
CONSULTANT;
• CITY will not make disability insurance contributions on behalf of
CONSULTANT;
• CITY will not obtain workers’ compensation insurance on behalf of
CONSULTANT.
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ARTICLE 6. OBLIGATIONS OF CITY
A. Cooperation of City
CITY agrees to respond to all reasonable requests of CONSULTANT and provide access, at
reasonable times following receipt by CITY of reasonable notice, to all documents reasonably
necessary to the performance of CONSULTANT’S duties under this Agreement.
B. Assignment
CITY may assign this Agreement or any duties or obligations thereunder to a successor
governmental entity without the consent of CONSULTANT. Such assignment shall not release
CONSULTANT from any of CONSULTANT’S duties or obligations under this Agreement.
ARTICLE 7. TERMINATION OF AGREEMENT
A. Sale of Consultant’s Business/ Death of Consultant.
CONSULTANT shall notify CITY of the proposed sale of CONSULTANT’s business no later
than thirty (30) days prior to any such sale. CITY shall have the option of terminating this
Agreement within thirty (30) days after receiving such notice of sale. Any such CITY termination
pursuant to this Article 7.A shall be in writing and sent to the address for notices to
CONSULTANT set forth in Exhibit A, Subsection V.H., no later than thirty (30) days after CITY’
receipt of such notice of sale.
If CONSULTANT is an individual, this Agreement shall be deemed automatically terminated
upon death of CONSULTANT.
B. Termination by City for Default of Consultant
Should CONSULTANT default in the performance of this Agreement or materially breach any of
its provisions, CITY, at CITY’S option, may terminate this Agreement by giving written
notification to CONSULTANT. For the purposes of this section, material breach of this
Agreement shall include, but not be limited to the following:
1. CONSULTANT’S failure to professionally and/or timely perform any of the
services contemplated by this Agreement.
2. CONSULTANT’S breach of any of its representations, warranties or covenants
contained in this Agreement.
CONSULTANT shall be entitled to payment only for work completed in accordance with the
terms of this Agreement through the date of the termination notice, as reasonably determined by
CITY, provided that such payment shall not exceed the amounts set forth in this Agreement for
the tasks described on Exhibit C” which have been fully, competently and timely rendered by
CONSULTANT. Notwithstanding the foregoing, if CITY terminates this Agreement due to
CONSULTANT’S default in the performance of this Agreement or material breach by
CONSULTANT of any of its provisions, then in addition to any other rights and remedies CITY
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may have, CONSULTANT shall reimburse CITY, within ten (10) days after demand, for any and
all costs and expenses incurred by CITY in order to complete the tasks constituting the scope of
work as described in this Agreement, to the extent such costs and expenses exceed the amounts
CITY would have been obligated to pay CONSULTANT for the performance of that task pursuant
to this Agreement.
C. Termination for Failure to Make Agreed-Upon Payments
Should CITY fail to pay CONSULTANT all or any part of the compensation set forth in Article 4
of this Agreement on the date due, then if and only if such nonpayment constitutes a default under
this Agreement, CONSULTANT, at the CONSULTANT’S option, may terminate this Agreement
if such default is not remedied by CITY within thirty (30) days after demand for such payment is
given by CONSULTANT to CITY.
D. Transition after Termination
Upon termination, CONSULTANT shall immediately stop work, unless cessation could
potentially cause any damage or harm to person or property, in which case CONSULTANT shall
cease such work as soon as it is safe to do so. CONSULTANT shall incur no further expenses in
connection with this Agreement. CONSULTANT shall promptly deliver to CITY all work done
toward completion of the services required hereunder, and shall act in such a manner as to facilitate
any the assumption of CONSULTANT’s duties by any new consultant hired by the CITY to
complete such services.
ARTICLE 8. GENERAL PROVISIONS
A. Amendment & Modification
No amendments, modifications, alterations or changes to the terms of this Agreement shall be
effective unless and until made in a writing signed by both parties hereto.
B. Americans with Disabilities Act of 1990
Throughout the term of this Agreement, the CONSULTANT shall comply fully with all applicable
provisions of the Americans with Disabilities Act of 1990 (“the Act”) in its current form and as it
may be amended from time to time. CONSULTANT shall also require such compliance of all
subcontractors performing work under this Agreement, subject to the prohibition against
assignment and subcontracting contained in Article 5 above. The CONSULTANT shall defend
with counsel acceptable to CITY, indemnify and hold harmless the CITY OF GILROY, its
officers, employees, agents and representatives from and against all suits, claims, demands,
damages, costs, causes of action, losses, liabilities, expenses and fees, including without limitation
reasonable attorneys’ fees, that may arise out of any violations of the Act by the CONSULTANT,
its subcontractors, or the officers, employees, agents or representatives of either.
C. Attorneys’ Fees
If any action at law or in equity, including an action for declaratory relief, is brought to enforce or
interpret the provisions of this Agreement, the prevailing party will be entitled to reasonable
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attorneys’ fees, which may be set by the court in the same action or in a separate action brought
for that purpose, in addition to any other relief to which that party may be entitled.
D. Captions
The captions and headings of the various sections, paragraphs and subparagraphs of the Agreement
are for convenience only and shall not be considered nor referred to for resolving questions of
interpretation.
E. Compliance with Laws
The CONSULTANT shall keep itself informed of all State and National laws and all municipal
ordinances and regulations of the CITY which in any manner affect those engaged or employed in
the work, or the materials used in the work, or which in any way affect the conduct of the work,
and of all such orders and decrees of bodies or tribunals having any jurisdicti on or authority over
the same. Without limiting the foregoing, CONSULTANT agrees to observe the provisions of the
Municipal Code of the CITY OF GILROY, obligating every contractor or subcontractor under a
contract or subcontract to the CITY OF GILROY for public works or for goods or services to
refrain from discriminatory employment or subcontracting practices on the basis of the race, color,
sex, religious creed, national origin, ancestry of any employee, applicant for employment, or any
potential subcontractor.
F. Conflict of Interest
CONSULTANT certifies that to the best of its knowledge, no CITY employee or office of any
public agency interested in this Agreement has any pecuniary interest in the business of
CONSULTANT and that no person associated with CONSULTANT has any interest that would
constitute a conflict of interest in any manner or degree as to the execution or performance of this
Agreement.
G. Entire Agreement
This Agreement supersedes any and all prior agreements, whether oral or written, between the
parties hereto with respect to the rendering of services by CONSULTANT for CITY and contains
all the covenants and agreements between the parties with respect to the rendering of such services
in any manner whatsoever. Each party to this Agreement acknowledges that no representations,
inducements, promises or agreements, orally or otherwise, have been made by any party, or anyone
acting on behalf of any party, which are not embodied herein, and that no other agreement,
statement or promise not contained in this Agreement shall be valid or binding.
No other agreements or conversation with any officer, agent or employee of CITY prior to
execution of this Agreement shall affect or modify any of the terms or obligations contained in
any documents comprising this Agreement. Such other agreements or conversations shall be
considered as unofficial information and in no way binding upon CITY.
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H. Governing Law and Venue
This Agreement shall be governed by and construed in accordance with the laws of the State of
California without regard to the conflict of laws provisions of any jurisdiction. The exclusive
jurisdiction and venue with respect to any and all disputes arising hereunder shall be in state and
federal courts located in Santa Clara County, California.
I. Notices
Any notice to be given hereunder by either party to the other may be effected either by personal
delivery in writing or by mail, registered or certified, postage prepaid with return receipt requested.
Mailed notices shall be addressed to the parties at the addresses appearing in Exhibit “A”, Section
V.H. but each party may change the address by written notice in accordance with this paragraph.
Notices delivered personally will be deemed delivered as of actual receipt; mailed notices will be
deemed delivered as of three (3) days after mailing.
J. Partial Invalidity
If any provision in this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remaining provisions will nevertheless continue in full force without being
impaired or invalidated in any way.
K. Time of the Essence
All dates and times referred to in this Agreement are of the essence.
L. Waiver
CONSULTANT agrees that waiver by CITY of any one or more of the conditions of performance
under this Agreement shall not be construed as waiver(s) of any other condition of performance
under this Agreement.
Executed at Gilroy, California, on the date and year first above written.
CONSULTANT: CITY:
NBS Government Finance Group CITY OF GILROY
By: By:
Name: Michael Rentner Name: Jimmy Forbis
Title: Principal-In-Charge Title: City Administrator
Social Security or Taxpayer
Identification Number 33-0712512
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Approved as to Form ATTEST:
City Attorney City Clerk
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EXHIBIT “A”
SPECIFIC PROVISIONS
I. PROJECT MANAGER
CONSULTANT shall provide the services indicated on the attached Exhibit “B”, Scope of
Services (“Services”). (All exhibits referenced are incorporated herein by reference.) To
accomplish that end, CONSULTANT agrees to assign Allan Highstreet, who will act in the
capacity of Project Manager, and who will personally direct such Services.
Except as may be specified elsewhere in this Agreement, CONSULTANT shall furnish all
technical and professional services including labor, material, equipment, transportation,
supervision and expertise to perform all operations necessary and required to complete the Services
in accordance with the terms of this Agreement.
II. NOTICE TO PROCEED/COMPLETION OF SERVICE
A. NOTICE TO PROCEED
CONSULTANT shall commence the Services upon delivery to CONSULTANT of a written
“Notice to Proceed”, which Notice to Proceed shall be in the form of a written communication
from designated City contact person(s). Notice to Proceed may be in the form of e-mail, fax or
letter authorizing commencement of the Services. For purposes of this Agreement, Vickie
Rahman, Finance Manager, shall be the designated City contact person(s). Notice to Proceed shall
be deemed to have been delivered upon actual receipt by CONSULTANT or if otherwise delivered
as provided in the Section V.H. (“Notices”) of this Exhibit “A”.
B. COMPLETION OF SERVICES
When CITY determines that CONSULTANT has completed all of the Services in accordance with
the terms of this Agreement, CITY shall give CONSULTANT written Notice of Final Acceptance,
and CONSULTANT shall not incur any further costs hereunder. CONSULTANT may request
this determination of completion when, in its opinion, it has completed all of the Services as
required by the terms of this Agreement and, if so requested, CITY shall make this determination
within two (2) weeks of such request, or if CITY determines that CONSULTANT has not
completed all of such Services as required by this Agreement, CITY shall so inform
CONSULTANT within this two (2) week period.
III. PROGRESS SCHEDULE
The schedule for performance and completion of the Services will be as set forth in the attached
Exhibit “C”.
IV. PAYMENT OF FEES AND DIRECT EXPENSES
Payments shall be made to CONSULTANT as provided for in Article 4 of this Agreement.
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Direct expenses are charges and fees not included in Exhibit “B”. CITY shall be obligated to pay
only for those direct expenses which have been previously approved in writing by CITY.
CONSULTANT shall obtain written approval from CITY prior to incurring or billing of direct
expenses.
Copies of pertinent financial records, including invoices, will be included with the submission of
billing(s) for all direct expenses.
V. OTHER PROVISIONS
A. STANDARD OF WORKMANSHIP
CONSULTANT represents and warrants that it has the qualifications, skills and licenses necessary
to perform the Services, and its duties and obligations, expressed and implied, contained herein,
and CITY expressly relies upon CONSULTANT’S representations and warranties regarding its
skills, qualifications and licenses. CONSULTANT shall perform such Services and duties in
conformance to and consistent with the standards generally recognized as being employed by
professionals in the same discipline in the State of California.
Any plans, designs, specifications, estimates, calculations, reports and other documents furnished
under this Agreement shall be of a quality acceptable to CITY. The minimum criteria for
acceptance shall be a product of neat appearance, well-organized, technically and grammatically
correct, checked and having the maker and checker identified. The minimum standard of
appearance, organization and content of the drawings shall be that used by CITY for similar
purposes.
B. RESPONSIBILITY OF CONSULTANT
CONSULTANT shall be responsible for the professional quality, technical accuracy, and the
coordination of the Services furnished by it under this Agreement. CONSULTANT shall not be
responsible for the accuracy of any project or technical information provided by the CITY. The
CITY’S review, acceptance or payment for any of the Services shall not be construed to operate
as a waiver of any rights under this Agreement or of any cause of action arising out of the
performance of this Agreement, and CONSULTANT shall be and remain liable to CITY in
accordance with applicable law for all damages to CITY caused by CONSULTANT’S negligent
performance of any of the services furnished under this Agreement.
C. RIGHT OF CITY TO INSPECT RECORDS OF CONSULTANT
CITY, through its authorized employees, representatives or agents, shall have the right, at any and
all reasonable times, to audit the books and records (including, but not limited to, invoices,
vouchers, canceled checks, time cards, etc.) of CONSULTANT for the purpose of verifying any
and all charges made by CONSULTANT in connection with this Agreement. CONSULTANT
shall maintain for a minimum period of three (3) years (from the date of final payment to
CONSULTANT), or for any longer period required by law, sufficient books and records in
accordance with standard California accounting practices to establish the correctness of all charges
submitted to CITY by CONSULTANT, all of which shall be made available to CITY at the CITY’s
offices within five (5) business days after CITY’s request.
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D. CONFIDENTIALITY OF MATERIAL
All ideas, memoranda, specifications, plans, manufacturing procedures, data (including, but not
limited to, computer data and source code), drawings, descriptions, documents, discussions or
other information developed or received by or for CONSULTANT and all other written and oral
information developed or received by or for CONSULTANT and all other written and oral
information submitted to CONSULTANT in connection with the performance of this Agreement
shall be held confidential by CONSULTANT and shall not, without the prior written consent of
CITY, be used for any purposes other than the performance of the Services, nor be disclosed to an
entity not connected with the performance of the such Services. Nothing furnished to
CONSULTANT which is otherwise known to CONSULTANT or is or becomes generally known
to the related industry (other than that which becomes generally known as the result of
CONSULTANT’S disclosure thereof) shall be deemed confidential. CONSULTANT shall not
use CITY’S name or insignia, or distribute publicity pertaining to the services rendered under this
Agreement in any magazine, trade paper, newspaper or other medium without the express written
consent of CITY.
E. NO PLEDGING OF CITY’S CREDIT.
Under no circumstances shall CONSULTANT have the authority or power to pledge the credit of
CITY or incur any obligation in the name of CITY.
F. OWNERSHIP OF MATERIAL.
All material including, but not limited to, computer information, data and source code, sketches,
tracings, drawings, plans, diagrams, quantities, estimates, specifications, proposals, tests, maps,
calculations, photographs, reports and other material developed, collected, prepar ed (or caused to
be prepared) under this Agreement shall be the property of CITY, but CONSULTANT may retain
and use copies thereof subject to Section V.D of this Exhibit “A”.
CITY shall not be limited in any way in its use of said material at any time for any work, whether
or not associated with the City project for which the Services are performed. However,
CONSULTANT shall not be responsible for, and City shall indemnify CONSULTANT from,
damages resulting from the use of said material for work other than PROJECT, including, but not
limited to, the release of this material to third parties for work other than on PROJECT.
G. NO THIRD PARTY BENEFICIARY.
This Agreement shall not be construed or deemed to be an agreement for the benefit of any third
party or parties, and no third party or parties shall have any claim or right of action hereunder for
any cause whatsoever.
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H.NOTICES.
Notices are to be sent as follows:
CITY: Vickie Rahman, Finance Manager
City of Gilroy
7351 Rosanna Street
Gilroy, CA 95020
CONSULTANT: Allan Highstreet, Project Manager, NBS
32605 Temecula Parkway
Suite 100
Temecula, CA. 92592
I.FEDERAL FUNDING REQUIREMENTS.
If the box to the left of this sentence is checked, this Agreement involves federal
funding and the requirements of this Section V.I. apply.
If the box to the left of this sentence is checked, this Agreement does not involve
federal funding and the requirements of this Section V.I. do not apply.
1.DBE Program
CONSULTANT shall comply with the requirements of Title 49, Part 26, Code of Federal
Regulations (49 CFR 26) and the City-adopted Disadvantaged Business Enterprise programs.
2.Cost Principles
Federal Acquisition Regulations in Title 48, CFR 31, shall be used to determine the allowable cost
for individual items.
3.Covenant against Contingent Fees
The CONSULTANT warrants that he/she has not employed or retained any company or person,
other than a bona fide employee working for the CONSULTANT, to solicit or secure this
Agreement, and that he/she has not paid or agreed to pay any company or person, other than a
bona fide employee, any fee, commission, percentage, brokerage fee, gift or any other
consideration, contingent upon or resulting from the award or formation of this Agreement. For
breach or violation of this warranty, the Local Agency shall have the right to annul this Agreement
without liability or, at its discretion, to deduct from the agreement price or consideration, or
otherwise recover, the full amount of such fee, commission, percentage, brokerage fee, gift or
contingent fee.
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-1- 4835-2267-0361v1
LAC\04706083
EXHIBIT “B”
SCOPE OF SERVICES
See attached "APPENDIX B| SCOPE OF SERVICES"
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-1- 4835-2267-0361v1
LAC\04706083
EXHIBIT “C”
MILESTONE SCHEDULE
See attached "APPENDIX C| WORK SCHEDULE"
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4835-2267-0361v1
LAC\04706083
EXHIBIT “D”
PAYMENT SCHEDULE
Services will be billed according to the hourly labor rates agreed as shown on "APPENDIX
D| FEE" (attached). Projected total cost of requested deliverables is $72,325. A contingency of 10%
($7,233) has been built in for any additional hours needed for a not to exceed contract amount of
$79,558.00
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APPENDIX B | SCOPE OF SERVICES
Scope of Services
NBS follows established industry standards and the cost-of-service principles embodied in manuals such as
the American Water Works Association (AWWA) Principles of Water Rates, Fees, and Charges1, also referred
to as Manual M1, and the Water Environment Federation Financing and Charges for Wastewater Systems
(Manual of Practice No. 27). We will provide guidance and advice throughout the rate study to ensure that
rates not exceed the proportionate cost of providing the service and that rate alternatives developed in this
study comply with Prop 218. The figure below outlines the process we use to develop updated utility rates
for the City.
Figure 1. Components of a Comprehensive Rate Study
1 FINANCIAL PLAN/
REVENUE
REQUIREMENTS 2 COST-OF-SERVICE
ANALYSIS 3 RATE DESIGN
ANALYSIS
Step 1: Financial Plan/ Revenue
Requirements – Compares
current sources and uses of
funds, and determines the
revenue needed from rates and
projected rate adjustments.
Step 2: Cost-of-Service Analysis –
Proportionately allocates the
revenue requirements to the
customer classes in compliance
with industry standards and State
Law.
Step 3: Rate Design - Considers
what rate structure will best
meet the City’s need to collect
rate revenue from each
customer class.
Based on the 2015 San Juan Capistrano court decision2, municipal agencies are required to demonstrate
the cost basis for utility rates. Because of this, this rate study should clearly outline the rationale for how
costs have been equitably allocated to customer classes, the equity of the rate designs, and the cost basis
for rate alternatives. Additionally, projected rates over the next ten years will need to provide sufficient
revenues to cover all operational and administrative costs.
NBS will work cooperatively with City staff to develop financial plans and rate recommendations that are
well suited to the City’s needs. Based on this input, we expect to make adjustments that result in practical
and implementable rates. NBS will provide the leadership necessary to guide the City through the various
issues and will explain the key concerns and the strengths and weaknesses of the various options. The
following sections explain our detailed approach to this study.
This scope of work is intended to develop stand-alone rate studies for the water and sewer rates. While
the scope of work for each utility is nearly the same, the differences in each utility are described herein.
TASK 1 – KICK-OFF MEETING AND DATA COLLECTION
NBS will provide the City with a data request and hold a kickoff meeting (by videoconference or phone) to
review and discuss the data requirements for the study, scope of work, study timeline, and ensure there is
1 Principles of Water Rates, Fees, and Charges, Manual of Water Supply Practices, M1, AWWA, seventh edition, 2017.
2 Capistrano Taxpayer’s Association, Inc. vs. City of San Juan Capistrano.
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a clear understanding of how the study objectives will be met. The data required to conduct the study
includes information, such as:
• Financial data typically reported in financial statements.
• Operating and maintenance budget for each utility including water supply costs, sewer treatment,
personnel costs, and infrastructure replacement costs.
• Customer billing information such as water meter sizes, customer class, property type, and
monthly water consumption within each customer class.
• Current cash balances in each reserve fund for each of the utilities.
• Capital Improvement and/or Master Plans.
• Details of total annual rate revenue for residential and commercial customers for the past two
years.
TASK 2. REVIEW CURRENT RATES AND RELATED POLICIES
Task Objectives: Work with City staff to review, prioritize, and evaluate the City’s concerns about the
current rate structures, reserve funds, and related policies at the beginning of the study. This will help
clarify the technical approach this study will take in addressing various rate-related concerns. For example,
the basic equity and fairness of rate structure alternatives, revenue stability vs. water conservation,
drought-related supply reductions, and the pros and cons of the existing customer classes will be
evaluated.
Because the City has raised a number of questions, we see this task is not merely a cursory review, but
instead a thorough review of the relevant issues in a manner that will allow the City to make important
decisions on these issues. Topics addressed will also include how accessory dwelling units (ADUs) are
handled, whether pressure zone charges should be considered, questions about multi-family/commercial
facilities (laundry, pool, etc.) and master-metered facilities, and other issues in the City’s RFP.
We will discuss these issues in detail with City staff and help evaluate and prioritize the potential changes
recommended. We will then summarize this review in a concise white paper for the City’s internal review.
If requested, NBS can also retain the services of Michael Colantuono of Colantuono, Highsmith and
Whatley, LLC, who specializes in Prop 218 related legal matters.
Task Deliverables:
• Assessment of current rate structures (pros and cons, areas for improvement, etc.) compared to
industry practices and how they may relate to possible rate alternatives.
• Assessment of equity of the rates for the various customer classes.
• Assessment of conservation impacts (current rates and potential new rate designs).
• Summary of pros and cons of current and alternative reserve fund policies and target year-end
balances.
• Recommendations for changes to and/or additional policies for the City to consider, as well as
direction on rate alternatives for further evaluation.
• A white paper summarizing this review and clarifying the recommendations developed based on
discussions with City staff.
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TASK 3 – FINANCIAL PLAN
NBS will prepare financial plans for each utility that summarize revenues, expenditures, reserves, and will
identify the net revenue requirements – that is, the revenue that must be collected from customer
charges.
Task deliverables will include, for each utility:
• A 10-year financial projection model that will serve as a financial “roadmap.”
• Summary of current and projected net revenue requirements.
• Updated reserve fund policies and targets potentially including reserves for operations, rate
stabilization, repair and replacement, debt service, and capital projects.
• Projected year-end reserve fund levels.
• Calculated debt service coverage ratios.
These financial plans will lay the groundwork for the cost-of-service and rate design analyses addressed in
Tasks 3 and 4. The following subtasks are anticipated:
1.Projected Revenues and Expenditures – NBS will prepare a 10-year rate model for each utility that
projects revenues, expenses, and increases in rate revenue needed to meet all obligations. The
analysis will use a cash-basis approach when addressing the City’s system of accounts. The work
will provide the City with a financial tool that is able to model rate adjustments, varying operating
and maintenance costs, infrastructure improvements, debt issuance, asset replacement, and
appropriate reserve fund levels. The City’s projected customer growth rates from master plan
documents and planned cost inflation factors will be incorporated into the analysis.
2.Evaluate Reserve Fund Sufficiency – NBS will evaluate the sufficiency of existing reserve funds,
target reserves, reserve fund policies, and related issues, such as meeting debt service coverage
ratios and other rate covenants. NBS will provide recommendations for reserve fund targets that
are tailored to the City’s specific needs. If it is determined a deficit in reserves exists, we will
consider a phased approach to funding reserves to minimize the impact to ratepayers.
3.Review Capital Improvement Program Funding – NBS will incorporate the City’s plans for new
facilities, infrastructure improvements, and asset replacement into the financial plan. We will
evaluate the timing, costs, and available reserves needed to fund all projects. NBS will collaborate
with City staff to develop a well-conceived approach to funding these capital needs. The solution
will include an appropriate balance between rate and system development fee funded projects
and, if necessary, the use of outside financing. NBS will develop up to three scenarios to fund the
capital improvement program for modeling and comparison purposes.
The financial plans will be presented in a format similar to that shown in Figures 2 and 3 and will be
tailored to the City’s chart of accounts. Reserve fund policies will also be evaluated and presented in a
format like that shown in Figures 4 and 5.
Figure 2. Example of a Financial Plan Summary
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Figure 3. Example of a Financial Plan Summary
Figure 4. Example of a Financial Reserve Fund Summary
Budget
FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25
Sources of Funds
Rate Revenue Under Prevailing Rates 15,203,655$ 15,315,705$ 15,429,586$ 15,546,465$ 15,685,153$ 15,828,338$
Non-Rate Revenues 599,330 635,770 600,769 575,976 571,953 571,970
Interest Earnings 49,648 44,365 46,139 55,338 43,480 55,118
Total Sources of Funds 15,852,634$ 15,995,840$ 16,076,494$ 16,177,778$ 16,300,587$ 16,455,426$
Uses of Funds
Operating Expenses 12,791,032$ 13,197,960$ 13,312,000$ 13,813,880$ 14,928,296$ 15,546,000$
Debt Service 498,608 489,138 488,652 490,108 492,153 463,855
Rate-Funded Capital Expenses - 3,515,232 7,310,656 5,620,544 5,217,171 4,346,899
Total Use of Funds 13,289,640$ 17,202,330$ 21,111,308$ 19,924,532$ 20,637,620$ 20,356,754$
Additional Revenue from Rate Increases - 765,785 1,581,533 2,450,511 3,561,824 4,565,472
Surplus / (Deficiency) after Rate Increase 2,562,994$ (440,704)$ (3,453,281)$ (1,296,243)$ (775,210)$ 664,144$
Projected Annual Rate Increase 0.00% 5.00% 5.00% 5.00% 6.00% 5.00%
Debt Coverage After Rate Increase 4.25 1.30 1.30 1.30 1.30 1.30
Net Revenue Requirement 12,690,310$ 16,566,560$ 20,510,539$ 19,348,556$ 20,065,667$ 19,784,784$
Summary of Sources and Uses of Funds
and Net Revenue Requirements
Projected
Reserve Fund Balances and
Recommended Reserve Targets FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25
Operating Reserve 1,708,000$ 1,586,173$ 1,781,660$ 1,938,000$ 1,605,258$ 2,095,000$
Recommended Minimum Target 1,708,000 1,781,000 1,858,000 1,938,000 2,015,000 2,095,000
Capital Rehab & Replacement Reserve 1,726,922$ 1,426,100$ 1,372,500$ 1,952,055$ 1,336,200$ 1,777,507$
Recommended Minimum Target 1,565,400 1,426,100 1,372,500 1,320,100 1,336,200 1,249,300
Debt Reserve 536,949$ 536,949$ 536,949$ 536,949$ 536,949$ 536,949$
Recommended Minimum Target 536,949 536,949 536,949 536,949 536,949 536,949
Total Ending Balance 3,971,871$ 3,549,223$ 3,691,110$ 4,427,004$ 3,478,408$ 4,409,456$
Total Recommended Minimum Target 3,810,349$ 3,744,049$ 3,767,449$ 3,795,049$ 3,888,149$ 3,881,249$
Surplus / (Deficit)161,522$ (194,827)$ (76,340)$ 631,955$ (409,742)$ 528,207$
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Figure 5. Example of a Financial Reserve Fund Summary
TASK 4 – COST-OF-SERVICE ANALYSIS
Using the net revenue requirements developed in Task 2, we will equitably allocate costs to each customer
class based on cost-of-service principles that comply with Prop 218. NBS will review the City’s existing
customer classifications for each utility and analyze the historical usage characteristics to determine if any
changes should be made to provide more equity among user classes or comply with industry standards.
Based on the level of detail in the City’s budgets, NBS will evaluate how costs should be allocated to
various cost components and types of customers, for each utility. The following subtasks explain the
differences for each utility.
4.1 Water Cost-of-Service Analysis
NBS will prepare a cost-of-service analysis to equitably allocate the revenue requirements to the individual
customer classes based on industry standards. We will review existing customer classes and analyze the
historical characteristics of each customer class. The main components of the cost-of-service analysis are
as follows:
1.Functionalization/Classification of Expenses – Functionalizing the expenses means arranging costs
into basic categories, such as source of supply, treatment, transmission, and distribution, as well as
administrative and overhead costs. Once the costs have been functionalized, they are then
classified into their various cost components (i.e., capacity, commodity, or customer-related costs).
2.Allocation of Costs to Customer Classes – These costs are then allocated to individual customer
classes based on allocation factors specific to each cost classification, producing fixed and variable
revenue requirements for each customer class. These allocations will be used for the actual rate
calculations.
Figure 6 provide examples of how water revenue requirements are classified and then allocated to
customer classes to establish the amount of rate revenue collected from each customer class. Figures 7
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and 8 provide examples of how commodity- and capacity-related costs are allocated to customer classes.
Figure 9 is an example of how allocated costs are summarized for each customer class.
Figure 6. Classification of Water Revenue Requirements
Figure 7. Example of Commodity Allocation Factor (Water)
Figure 8. Example of Capacity Allocation Factor (Water)
Figure 9. Example of Allocation of Water Revenue Requirements to Customer Classes
Regarding the City’s interest in developing rates specific to large industrial users, NBS would consider what
components of the water system are (or are not) being used by those industrial customers. For example,
Classification of Expenses
2013/14 (COM) (CAP) (CA) (COM) (CAP) (CA)
Administration Expenses 1,623,270$ 604,908$ 756,135$ 262,227$ 37% 47% 16%
Purchased Water Expenses 704,330$ 704,330$ -$ -$ 100% 0% 0%
Water Treatment Expenses 5,919,390$ 3,774,945$ 2,144,445$ -$ 64% 36% 0%
Water Distribution Expenses 4,950,970$ 1,579,595$ 1,579,595$ 1,791,780$ 32% 32% 36%
Total Operating Expenses 13,197,960$ 6,663,778$ 4,480,175$ 2,054,007$ 50% 34% 16%
Total Debt Service Payments 489,138$ 244,569$ 244,569$ -$ 50% 50% 0%
Rate Funded Capital Expenses 3,515,232$ 1,757,616$ 1,757,616$ -$ 50% 50% 0%
TOTAL REVENUE REQUIREMENTS 17,202,330$ 8,665,963$ 6,482,360$ 2,054,007$ 50% 38% 12%
Less: Non-Rate Revenues (476,925)$ (240,259)$ (179,720)$ (56,946)$ 50% 50% 0%
NET REVENUE REQUIREMENTS 16,248,479$ 8,185,445$ 6,122,920$ 1,940,115$
Allocation of Revenue Requirements 100%50%38%12%
Adjustment for Current Rate Level:Total (COM) (CAP) (CA)
2013/14 Target Rate Rev. After Rate Increases 16,081,490$
Current Level of Rate Revenue 15,315,705$
2013/14 Projected Rate Increase 5.00%
Adjusted Net Revenue Req'ts 16,081,490$ 8,101,321$ 6,059,994$ 1,920,176$
Percent of Revenue 50%38%12%
Operating Expenses
Basis of ClassificationBudget Categories
Total Revenue
Requirements Commodity Capacity Customer
Development of the Commodity Allocation Factor
Customer Class
FY 2011/12
Volume
(ccf)1,2
%
Conservation
Estimated Volume
Adjusted for
Conservation 3
Percent of
Adjusted
Volume
Residential 6,210,146 5%5,899,639 64%
Multi-Family 487,451 5%463,078 5%
Commercial 2,968,556 5%2,820,128 31%
Total 9,666,153 --9,182,845 100%
Development of the Capacity Allocation Factor
Customer Class Average Mo.
Use (Ccf)
Total Peak
Month Use
Peak Month
Factor
Capacity
Allocation %
Residential 517,512 962,235 1.86 67%
Multi-Family 40,621 61,603 1.52 4%
Commercial 247,380 412,591 1.67 29%
Total 805,513 1,436,429 1.78 100%
Single-
Family
Multi-
Family Commercial
Commodity-Related Costs 9,730,242$ 61%6,251,321$ 490,683$ 2,988,238$
Capacity-Related Costs 4,823,021$ 30%3,230,845$ 206,841$ 1,385,335$
Customer-Related Costs 1,528,227$ 10%1,284,960$ 57,405$ 185,862$
Net Revenue Requirement 16,081,490$ 100%10,767,126$ 754,929$ 4,559,436$
Classification Components Net Revenue Requirements
2013/14
Customer Classes
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distribution system assets may not be costs that should be allocated to industrial users, particularly if they
provide their own transmission line vs. using the City’s distribution system. Peak demands by industrial
customers may be offset by coordinating peak industrial flows with non-peak residential demands. On-site
storage may be another means industrial customers could off-shed some of the costs of the City’s water
system. We would work with City staff to explore these methodologies.
4.2 Sewer Cost-of-Service Analysis
NBS will follow a similar cost allocation process used in the water for the sewer cost of service analysis. We
will rely on the City’s sewer budget to classify all expenses into their various cost components, such as flow
(volume), strength (BOD or COD and TSS), and customer-related costs. With the City’s customer billing
data, we will develop the customer usage statistics, or allocation factors, that will be used to assign costs to
each customer class. The allocations will consider water consumption data, wastewater treatment plant
flow and loading data, and industry standard customer classification data. The cost allocation factors that
will be developed include:
• Volume Allocation Factor – Estimates of the total annual volume of wastewater treated for each
customer class.
• Strength Allocation Factors – Estimates of the annual pounds of BOD and TSS treated for each
customer class.
• Customer Allocation Factors – Calculate the number of customers by customer class in the City’s
sewer service area.
NBS will then apportion the costs to individual customer classes based on the allocation factors specific to
each cost classification, producing fixed and variable revenue requirements for each customer class. These
allocations will be used in the actual rate calculations for each customer class.
TASK 5 – RATE DESIGN ANALYSIS
NBS will work with City staff to review the current utility rate structures and develop alternatives to ensure
that proposed rates will meet the City’s broader rate design goals and objectives. Identifying and including
pass-through mechanisms in the rates would be incorporated in the rate resolutions and Prop 218 notices.
The following subtasks are anticipated:
5.1 Develop Rate Design Recommendations
Updated utility rates will be developed based on the cost-of-service analyses, and we will include a
discussion of the relative merits (pros and cons) of the current rate structures vs. new alternatives
developed in the study. Evaluating the City’s desired rate complexity and resulting customer bills will be
essential components of this process. To the extent that the City chooses to maintain the existing rate
structures, we will focus on ensuring new rates provide adequate revenues to support utility operations,
maintenance and capital improvement needs.
New rate alternatives will be designed to generate the exact same rate revenue as under the current rate
structure; the customer bill impacts will be a key focus of any new rate design alternatives, along with a
comparison of the pros and cons of each option.
Review Criteria for Improving the Rate Design – Primary considerations in the rate design include revenue
sufficiency, and financial resiliency. NBS’ general approach is to avoid significant under-collection of rate
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revenue, which is the worst-case scenario from a financial perspective. Other criteria for evaluating rate
structures include:
• Ease of understanding the rate structure by customers.
• How costs allocated to fixed and volumetric rates affect revenue stability.
• How water conservation is reflected in the water and sewer rate analyses.
• How annual changes over the last several years due to drought and conservation efforts should
be considered in the rates on a going-forward basis.
• Ensuring that meter sizes are appropriately used in calculating water fixed charges.
• If the City decides to add another tier to water rates, how much difference will there be in the
tiered rates based on source of supply and other costs.
• The amount of water allocated to each tier, how much revenue should be collected within
each tier, and whether cost-based tiers provide sufficient increases necessary to effectively
promote conservation.
• How differences in the amount of revenue collected from fixed and variable charges impact
customer bills.
• Impacts on customer bills by level of consumption (e.g., low-, average-, and high-consumption
customers).
The rate structure alternatives selected will ultimately provide the basis for comparing customer bills
under both the current and new rate structures. However, alternative rate structures will be “revenue
neutral” because they will all collect the same amount of revenue, both in total and within each customer
class.
5.2 Analysis of Consumption and Conservation
NBS will evaluate the number of customers at various levels of consumption (see the example shown in
Figure 10) and the total water use that occurs within each tier. This analysis can be used to quantify the
consumption changes in the last few years related to Covid-19 restrictions and post-drought consumption
trends, and help better project future demands, particularly in light of the apparently impending drought
conditions.
The City’s most recent water consumption data will be used for this analysis to ensure an accurate
projection of the revenue that will be collected within tiers or, if the City decides to continue with a
uniform tier, the revenue by consumption level, which also allows for testing various rate structure
alternatives (e.g., changing the fixed/variable percentages and/or tier breakpoints). This improves the
accuracy in designing water rate tiers and ensures that rates recover sufficient revenues.
Consumption data will also be used to evaluate the impact of various conservation levels along with
drought rate alternatives for offsetting the revenue losses. Alternatives may include (1) drought rates tied
to drought stages, (2) rate stabilization reserves with sufficient funding to cover conservation-related
revenue losses, and (3) revenue stabilization rates3. A combination of these options may also be used.
3 NBS prepared revenue stabilization rates for San Lorenzo Valley Water District that was set up to automatically implement
volumetric rate increases when monthly revenue fell 10-percent or more behind projections, and automatically be rescinded once
the revenue was back on track with annual projections.
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Figure 10. Consumption Distribution Analysis
5.3 Calculate Fixed and Volumetric Charges
In true cost-of-service methodologies, fixed charges ideally cover all fixed costs. However, since pricing
signals are often used to encourage water conservation, many water utilities struggle with revenue
stability during times of uncertain demands, particularly State-mandated conservation implemented during
the drought.
In contrast, volumetric rates should cover variable costs and be allocated in proportion to consumption.
However, the emphasis on conservation typically results in collecting some portion of fixed costs through
volumetric rates. While this exposes water utilities to revenue instability (e.g., when consumption drops
and the utility fails to cover all the fixed costs), the use of rate stabilization reserves and drought rates can
offset these challenges.
Determining the best combination of fixed and variable charges is also influenced by other factors, such as
ease of understanding and ease of administration. NBS will work with City staff to develop an appropriate
balance between fixed and variable charges in the new utility rates.
Calculate Drought Rates – Corresponding to the specific levels of conservation, NBS will prepare drought
rates that account for the variable costs that decrease when the City sells less water and also adjusts
volumetric rates in a revenue-neutral manner that mitigates a net loss in rate revenue. These drought rates
would be intended to go into effect whenever the City declares it is in a specific stage of its adopted
drought mitigation plan.
NBS has also successfully created and implemented “revenue-stabilization rates” with automatic increases
whenever projected monthly volumetric rate revenue falls by 10% or more. We will discuss this option with
the City to determine the approach that best serves the City’s needs.
0
50
100
150
200
250
300
350
400
450
500
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35Number of CustomersAverage Annual Consumption, Bi-Monthly (1,000 gallons)
Residential (Single Family Only) Water Consumption
Distribution Curve -FY 2020/21
Average Winter Consumption =
8,200 gallons bi-monthly
Average Annual Consumption =
13,700 gallons bi-monthly
Average Summer Consumption =
19,700 gallons bi-monthly
Average Annual Consumption:
*Consumption up to 7,000 gallons represents 32% of
Residential.
*Consumption between 7,000-12,000 gallons is 30%
of Residential. *Consumption above 12,000 gallons is
32% of Residential
Customers
29% of Residential
Customers
39% of Residential
Customers
AvgWinter ConsumptionAvgAnnual Avg.SummerDocuSign Envelope ID: 5670D227-6EBE-43DA-A29C-31A8C4E2118B
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5.4 Comparison of Customer Bills
For each utility, in order to compare the impacts on the monthly bills for each rate alternative, we will
prepare rate tables and monthly bill comparisons. Each customer class will have a separate bill comparison,
like the one shown in Figure 11. These tables and charts will be used as needed in the report and in public
workshops. NBS will also provide benchmarking of the City’s current vs. proposed rates by comparing them
to similar agencies in the region.
Figure 11. Example of Residential Water Bill Comparison
TASK 6 – PREPARE RATE MODELS
NBS will work with City staff to review the Excel-based rate models as they are developed during this study.
This means that we will share draft components of the rate models, such as the financial plans and reserve
fund balances, the cost-of-service worksheets, and the rate design calculations. City staff will be able to ask
questions during the study with the objective of having them familiar with the model for each utility by the
end of the study.
NBS does not use “proprietary” or “black-box” rate models that can be extremely difficult for non-
consultants to understand. Black-box models typically use complex formulas that are not apparent in
showing what the formula is calculating, making it difficult for City staff to follow the calculations. Instead,
NBS focuses on transparency and simplicity so City staff can follow, step-by-step, the process of taking
input data and resulting in proposed rates.
TASK 7 – PREPARE WRITTEN STUDY REPORT
NBS will prepare draft and final study reports for each of the utilities and work with City staff to review
drafts of these reports prior to public release. While we will provide the bulleted items listed in the City’s
RFP, our emphasis will be on clear and concise reports with an executive summary of no more than two
pages. Key assumptions, methodologies, and factors affecting the development of proposed rates will be $25.09$37.88$43.69$54.16$60.28$72.01$22.27$39.61$48.49$64.48$73.81$91.72$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
5 10 13 17 20 25Monthly BillMonthly Water Consumption (HCF)
Single-Family Residential Water Bill Comparison
Current vs. Proposed 2021/22 Rate Alternatives (3/4" meter)
Current Rates
Proposed Rates - 27% Fixed / 73% Variable (Tiered Rates)
Average
ANNUAL Bill
(13 hcf/mo.)
Average
WINTER Bill
(10 hcf/mo.)
Average
SUMMER Bill
(17 hcf/mo.)
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Proposal for City of Gilroy NBS | 59
highlighted with charts and graphs where helpful. However, more technical aspects of the study,
particularly the multiple tables documenting the calculations and sources of data, will be separately
provided in a technical appendix.
TASK 8 – MEETINGS AND PRESENTATIONS
NBS will talk with City staff on a regular basis regarding data collection, analysis, initial results, and to
answer questions staff may have. Public meetings may include working sessions, public Council meetings,
and public outreach meetings. We can provide these meetings and presentations either remotely (Zoom,
Teams, etc.) or in-person. Our cost proposal provides the City the option to select the format and number
of meetings.
Also, NBS has a public outreach practice called CivicMic that provides a wide range of services including
public outreach, public involvement, mailing materials, etc. We can adjust our cost proposal based on the
level of services the City would like NBS to provide.
TASK 9 – PROP 218 ASSISTANCE
NBS will work with City staff to answer any questions that come up and guide you through the adoption
process. The key technical tasks will be to prepare a draft Prop 218 Notice and provide the proposed rate
tables included in the notices. Modifying the City’s Municipal Code and rate resolutions are also included,
since they will need to be changed to accommodate the new rates. The City should also have legal counsel
review the notices for legal compliance with the provisions of Prop 218, wording related to pass-throughs,
etc.
DocuSign Envelope ID: 5670D227-6EBE-43DA-A29C-31A8C4E2118B
Proposal for City of Gilroy NBS | 5
APPENDIX C| WORK SCHEDULE
The following is an overview of our proposed project schedule. We will discuss a detailed schedule at the kick-off meeting, along with the expected timing
for individual tasks.
Weeks from Start 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
Task 1 – Kick-off Meeting & Data Collection
Task 2 – Review of Current Rates & Policies
Task 3 – Financial Plan and Revenue Reqts.
3.1 – Prepare Financial Plan (Water)
3.2 – Prepare Financial Plan (Sewer)
Task 4 – Cost-of-Service Analysis
4.1 – COSA (Water)
4.2 – COSA (Sewer)
Task 5 – Rate Design Analysis
5.1 – Develop Rate Design Recommendations
5.2 – Evaluation of Consumption Patterns
5.3 – Calculate Fixed & Volumetric Charges
5.4 – Monthly Bill Comparisons
Task 6 – Prepare Written Study Report
6.1 – Draft Rate Study Report Draft Report
6.2 – Final Rate Study Report Final Report
Task 7 – Meetings and Presentations
7.1 – Presentation to the City Council (two)
7.2 – Public Outreach/Workshops (one)
7.3 – Attend Prop 218 Hearing (one)Public Hearing
7.3 – Informational Mailer (optional)
Active task work.
Draft and Final Reports
Meeting or Presentation (estimated, to be scheduled as needed)
August September October November
Study Tasks
PROJECT SCHEDULE - City of Gilroy
Water and Sewer Rate Study April May June July
`
Prop 218
Noticing/
Protest
Period
(45 days)
Adoption
of New
Rates
DocuSign Envelope ID: 5670D227-6EBE-43DA-A29C-31A8C4E2118B
Proposal for City of Gilroy NBS | 4
APPENDIX D| FEE
Our professional fees are based on our understanding of City’s needs and the effort we believe is necessary
to complete the scope of services described in our proposal. Work will be performed on a time and materials
basis, at the hourly labor rates show in the budget table below, with a not-to-exceed fee of $72,325.
Additional services requested, such as additional public meetings or additional rate or fee alternatives, can
be provided based on these hourly labor rates. All tasks would be mutually agreed upon by NBS and City prior
to proceeding.
We note that this proposed study budget does not include multiple revisions to City data such as budgets,
capital improvement costs, consumption and/or customer account data, or multiple changes to rate
alternatives or draft reports. If the planned hours for those activities exceed those shown above in the
proposed budget, such activities will be considered out-of-scope work that will require additional budget to
complete such additional work.
Project
Manager
(Highstreet)
PIC/Senior
Reviewer
(Clumpner)
Consultants
(Bou &
Taylor)
Consultant
Labor (Hrs.)
Consultant
Costs ($)
$250 $255 $180
Task 1 – Kick-off Meeting & Data Collection 4.0 2.0 16.0 22.0 $4,390
Task 2 – Review of Current Rates & Policies 12.0 - 12.0 24.0 $5,160
Task 3 – Financial Plan
3.1 – Prepare Financial Plan (Water)6.0 1.0 18.0 25.0 $4,995
3.2 – Prepare Financial Plan (Sewer)6.0 1.0 18.0 25.0 $4,995
Task 4 – Cost-of-Service Analysis (COSA)
4.1 – COSA (Water)16.0 4.0 24.0 44.0 $9,340
4.2 – COSA (Sewer)16.0 4.0 24.0 44.0 $9,340
Task 5 – Rate Design Analysis
5.1 – Develop Rate Design Recommendations 6.0 1.0 - 7.0 $1,755
5.2 – Evaluation of Consumption Patterns 4.0 - 16.0 20.0 $3,880
5.3 – Calculate Fixed & Volumetric Charges 12.0 2.0 24.0 38.0 $7,830
5.4 – Monthly Bill Comparisons 1.0 - 6.0 7.0 $1,330
Task 6 – Prepare Draft & Final Study Reports 16.0 2.0 10.0 28.0 $6,310
Task 7 – Meetings and Presentations 1
7.1 – Presentations to the City Council (two)24.0 - - 24.0 $6,000
7.2 – Public Outreach/Workshops (one)12.0 - - 12.0 $3,000
7.3 – Attend Prop 218 Hearing (one)12.0 - - 12.0 $3,000
7.3 – Informational Mailings (optional 2 )(as needed)(as needed)- - $0
Task Totals 147.0 17.0 168.0 332.0 $71,325
Reimbursable Expenses 3 $1,000
147.0 17.0 168.0 332.0 $72,325
1. Meetings shown are assumed to be in-person per the City's request. For remote meetings, costs will be reduced by 50%.
The City may choose how many and the format for these meetings.
2. Cost for labor for designing informational mailers will be determined based on what the City requests. Direct costs
(e.g., printing, mailing, postage) will be charged at cost (no markups).
3. Travel-related cost and direct reimbursable expenses; all other expenses are included in labor rates. This cost will be $0 if all
meetings and presentations are held remotely.
All-Inclusive Maximum Price
Grand Totals
PROJECT BUDGET - City of Gilroy Water and Sewer Rate Study
Hourly Rate
Rate Study Tasks
Consultant Labor (Hours)
DocuSign Envelope ID: 5670D227-6EBE-43DA-A29C-31A8C4E2118B
DocuSign Envelope ID: 5670D227-6EBE-43DA-A29C-31A8C4E2118B