Agr - Robert D. Niehaus, Inc. - 2021-08-25AGREEMENT FOR WASTEWATER RATE STUDY
Robert D. Niehaus, Inc.
This Agreement ("AGREEMENT") is made and effective as of August 25, 2021,
between the Costa Mesa Sanitary District, a sanitary district ("DISTRICT"), and Robert
D. Niehaus, Inc., a Corporation ("CONSULTANT"). In consideration of the mutual
covenants and conditions set forth herein, the parties agree as follows:
Recitals
WHEREAS, the DISTRICT is responsible for providing a wastewater collection
system to residents and businesses throughout the City of Costa Mesa and a portion of
the City of Newport Beach and the unincorporated County of Orange; and
WHEREAS, the DISTRICT must
improvements of its wastewater collection
avoid sanitary sewer overflows; and
provide proper maintenance and capital
system to ensure proper operations and
WHEREAS, funding for operations, maintenance and capital improvements of
the DISTRICT's wastewater collection system comes from fees collected on the
property tax roll as special assessments; and
WHEREAS, on July 1, 2021, the DISTRICT began soliciting proposals from
qualified professional consulting firms who have experience performing wastewater fee
studies; and
WHEREAS, on August 5, 2021, CONSULTANT submitted a proposal that is
considered "Best Value" and the DISTRICT has determined that CONSULTANT is fully
qualified to provide the services required by this Agreement; and
WHEREAS, the DISTRICT desires to enter into an Agreement with
CONSULTANT to provide the services described herein.
NOW, THEREFORE the parties hereto agree as follows:
1. TERM
This AGREEMENT shall commence on August 25, 2021, and shall remain and
continue in effect until the project is completed and approved by the DISTRICT as
complete.
PSA 12 10
2. SERVICES
CONSULTANT shall perform the tasks described and set forth in Exhibit A,
attached hereto and incorporated herein as though set forth in full. CONSULTANT shall
complete the tasks according to the schedule of performance which is also set forth in
Exhibit A.
3. PERFORMANCE
CONSULTANT shall, at all times, faithfully, competently, and to the best of
his/her/its ability, experience, and talent perform all tasks described herein.
CONSULTANT shall employ, at a minimum, generally accepted standards and
practices utilized by persons engaged in providing similar services as are required of
CONSULTANT hereunder in meeting its obligations under this AGREEMENT.
CONSULTANT shall warrant that all services provided and equipment installed shall
perform in a workmanlike manner and be fit for its particular purpose.
4. DISTRICT MANAGEMENT
The General Manager shall represent DISTRICT in all matters pertaining to the
administration of this AGREEMENT, including review and approval of all products
submitted by CONSULTANT. Notwithstanding the foregoing, the General Managers
authority to enlarge the tasks to be performed or change CONSULTANT's
compensation is subject to Section 5 hereof.
5. PAYMENT
(a) DISTRICT agrees to pay CONSULTANT in accordance with Exhibit A,
attached hereto and incorporated herein by reference. This amount shall not exceed
Twenty -Nine Thousand Five Hundred Dollars ($29,500) for the total term of this
AGREEMENT unless additional payment is approved as provided in this AGREEMENT.
Said sum includes travel and other costs.
(b) CONSULTANT shall not be compensated for any services rendered in
connection with its performance of this AGREEMENT that are in addition to those set
forth herein, unless such additional services are requested in a written change order
and are approved in advance and in writing by DISTRICT. The written change order
requirement cannot be waived. The General Manager may approve change orders for
additional work not to exceed the cumulative value of ten percent (10%) of the total
contract sum. Any additional work in excess of this cumulative amount shall be
approved by the Board of Directors.
2
PSA 12 10
(c) CONSULTANT will submit invoices upon task completion unless
otherwise agreed. Payment shall be made within thirty (30) days of receipt of each
invoice as to all non -disputed fees. If DISTRICT disputes any of CONSULTANT's fees,
DISTRICT shall give written notice to CONSULTANT within thirty (30) days of receipt of
an invoice of any disputed fees contained in the invoice.
6. SUSPENSION OR TERMINATION OF AGREEMENT WITHOUT CAUSE
(a) The DISTRICT may, at any time, for any reason, with or without cause,
suspend or terminate this AGREEMENT, or any portion hereof, by serving upon the
CONSULTANT written notice. Upon receipt of said notice, the CONSULTANT shall
immediately cease all work under this AGREEMENT, unless the notice provides
otherwise. If the DISTRICT suspends or terminates a portion of this AGREEMENT,
such suspension or termination shall not make void or invalidate the remainder of this
AGREEMENT.
(b) In the event this AGREEMENT is terminated pursuant to this Section, the
DISTRICT shall pay to CONSULTANT the actual value of the work performed up to the
time of termination, provided that the work performed is of value to the DISTRICT.
CONSULTANT shall immediately turn over all work -product to DISTRICT in a readily
usable form. Upon termination of the AGREEMENT pursuant to this Section, the
CONSULTANT will submit an invoice to the DISTRICT pursuant to Section 5.
7. DEFAULT OF CONSULTANT
(a) The CONSULTANT's failure to comply with the provisions of this
AGREEMENT shall constitute a default. In the event that CONSULTANT is in default
for cause under the terms of this AGREEMENT, DISTRICT shall have no obligation or
duty to continue compensating CONSULTANT for any work performed after the date of
default and can terminate this AGREEMENT immediately by written notice to the
CONSULTANT. If such failure by the CONSULTANT to make progress in the
performance of work hereunder arises out of causes beyond the CONSULTANT's
control, and without fault of negligence of the CONSULTANT, it shall not be considered
a default.
(b) As an alternative to the procedure for immediate termination for default set
forth in subparagraph (a), if the District Manager or his/her delegate determines that the
CONSULTANT is in default in the performance of any of the terms or conditions of this
AGREEMENT, he/she may in his/her discretion cause to be served upon the
CONSULTANT a written notice of the default and demand to cure. The CONSULTANT
shall have ten (10) days after service upon it of said notice to cure the default by
rendering a satisfactory performance. In the event that the CONSULTANT fails to cure
its default within such period of time, the DISTRICT shall have the right, notwithstanding
any other provision of this AGREEMENT, to terminate this AGREEMENT without further
3
PSA 12 10
notice and without prejudice to any other remedy to which it may be entitled at law, in
equity or under this AGREEMENT.
8. OWNERSHIP OF DOCUMENTS
(a) CONSULTANT shall maintain complete and accurate records with respect
to the professional services required by this AGREEMENT and will produce the work
product specified in Exhibit A and other such information required by DISTRICT that
relate to the performance of services under this AGREEMENT. CONSULTANT shall
maintain adequate records of services provided in sufficient detail to permit an
evaluation of services. All such records shall be maintained in accordance with
generally accepted accounting principles and shall be clearly identified and readily
accessible. CONSULTANT shall provide free access to the representatives of
DISTRICT or its designees at reasonable times to such books and records; shall give
DISTRICT the right to examine and audit said books and records; shall permit
DISTRICT to make transcripts therefrom as necessary; and shall allow inspection of all
work, data, documents, proceedings, and activities related to this AGREEMENT. Such
records, together with supporting documents, shall be maintained for a period of three
(3) years after receipt of final payment.
(b) Upon completion, termination, or suspension of this AGREEMENT, all
work product reduced to any medium and other documents prepared in the course of
providing the services to be performed pursuant to this AGREEMENT shall become the
sole property of the DISTRICT and may be used, reused, or otherwise disposed of by
the DISTRICT without the permission of the CONSULTANT. With respect to computer
files, CONSULTANT shall make available to the DISTRICT, at the CONSULTANT's
office and upon reasonable written request by the DISTRICT, the necessary computer
software and hardware for purposes of accessing, compiling, transferring, and printing
computer files. Said software and hardware shall be made available to DISTRICT at
CONSULTANT's cost.
9. INDEMNIFICATION
(a) Indemnification for Professional Liability. When the law establishes a
professional standard of care for CONSULTANT's services, to the fullest extent
permitted by law, CONSULTANT shall indemnify, protect, defend, and hold harmless
DISTRICT and any and all of its officials, employees, and agents from and against any
and all losses, liabilities, damages, costs, and expenses, including attorney's fees and
costs to the extent the same arise out of, pertain to, or relate to the negligence,
recklessness, or willful misconduct of CONSULTANT, its officers, agents, employees, or
subconsultants (or any entity or individual that CONSULTANT shall bear the legal
liability thereof) in the performance of professional services under this AGREEMENT.
4
PSA 12 10
(b) Indemnification for Other than Professional Liability. Other than in the
performance of professional services and to the fullest extent permitted by law,
CONSULTANT shall indemnify, defend, and hold harmless DISTRICT and any and all
of its employees, officials, and agents from and against any liability (including liability for
claims, suits, actions, arbitration proceedings, administrative proceedings, regulatory
proceedings, losses, expenses, or costs of any kind, whether actual, alleged, or
threatened, including attorney's fees and costs, court costs, interest, defense costs, and
expert witness fees), where the same arise out of, pertain to, relate to, are a
consequence of, or are in any way attributable to, in whole or in part, the performance of
this AGREEMENT by CONSULTANT or by any individual or entity for which
CONSULTANT is legally liable, including, but not limited to, officers, agent, employees,
or subconsultants of CONSULTANT.
10. INSURANCE
CONSULTANT shall, at its expense, procure and maintain for the duration
of this AGREEMENT insurance against claims for injuries to persons or damages to
property which may arise from or in connection with the performance of this
AGREEMENT by the CONSULTANT, its agents, representatives, employees, or
subcontractors. CONSULTANT shall also require all of its subcontractors to procure
and maintain the same insurance for the duration of this AGREEMENT. If
CONSULTANT is an employer or otherwise hires one (1) or more employees during the
term of this PROJECT, CONSULTANT shall procure and maintain workers'
compensation coverage for such employees which meets all requirements of state law
(Labor Code § 1861).
At a minimum, CONSULTANT is required to submit proof of insurance in
accordance with the following standards:
Minimum Scope of Insurance: Coverage shall be at least as broad as the
latest version of the following: (1) General Liability. Insurance Services Office
Commercial General Liability coverage (occurrence form CG 0001): (2) Automobile
Liability: Insurance Services Office Business Auto Coverage form number CA 0001,
code 1 (any auto); and (3) Workers' Compensation and Employer's Liability: Workers'
Compensation insurance as required by the State of California and Employers Liability
Insurance.
Minimum Limits of Insurance: CONSULTANT shall maintain limits of no less
than:
(A) General Liability. One Million Dollars ($1,000,000.00) per occurrence for
bodily injury, personal injury and property damage. If Commercial General Liability
Insurance or other form with general aggregate limit is used, either the general
aggregate limit shall apply separately to this AGREEMENT/location or the general
aggregate limit shall be twice the required occurrence limit.
5
PSA 12 10
(B)Automobile Liability. One Million Dollars ($1,000,000.00) per accident for
bodily injury and property damage.
(C)Workers' Compensation and Employer's Liability,. Workers'
Compensation limits as required by the Labor Code of the State of California.
Employer's Liability limits of One Million Dollars ($1,000,000.00) per accident for bodily
injury or disease.
Insurance Endorsements: The insurance policies shall contain the following
provisions, and a separate endorsement stating to add the following provisions to the
insurance policies shall be submitted and approved by DISTRICT:
(A) General Liability. The general liability policy shall be endorsed to state that:
(1) DISTRICT, its directors, officials, officers, employees, agents, and volunteers shall
be covered as additional insureds with respect to the work or operations performed by
or on behalf of the CONSULTANT, including materials, parts, or equipment furnished in
connection with such work; and (2) the insurance coverage shall be primary insurance
as respects DISTRICT, its directors, officials, officers, employees, agents, and
volunteers, or if excess, shall stand in an unbroken chain of coverage excess of the
CONSULTANT's scheduled underlying coverage. Any insurance or self-insurance
maintained by DISTRICT, its directors, officials, officers, employees, agents, and
volunteers shall be excess of the CONSULTANT's insurance and shall not be called
upon to contribute with it in any way.
(B)Workers' Compensation and Employer's Liability Coverage. The insurer
shall agree to waive all rights of subrogation against DISTRICT, its directors, officials,
officers, employees, agents, and volunteers for losses paid under the terms of the
insurance policy which arise from work performed by the CONSULTANT.
(C)AI1 Coverage. Each insurance policy required by this AGREEMENT shall be
endorsed to state that: (A) coverage shall not be suspended, voided, reduced, or
canceled except after thirty (30) days prior written notice by certified mail, return receipt
requested, has been given to DISTRICT, and (B) any failure to comply with reporting or
other provisions of the policies, including breaches or warranties, shall not affect
coverage provided to DISTRICT, its directors, official, officers, employees, agents, and
volunteers.
Acceptability of Insurers: Insurance is to be placed with insurers with a current
A.M. Best's rating of no less than A-:Vill, licensed to do business in California, and
satisfactory to DISTRICT.
All insurance documents must be submitted and approved by the District's Risk
Manager prior to execution of any AGREEMENT with DISTRICT.
6
PSA 12 10
11. INDEPENDENT CONSULTANT
(a) CONSULTANT is and shall at all times remain as to the DISTRICT a
wholly independent consultant. The personnel performing the services under this
AGREEMENT on behalf of CONSULTANT shall at all times be under CONSULTANT's
exclusive direction and control. Neither DISTRICT nor any of its officers, employees, or
agents shall have control over the conduct of CONSULTANT or any of CONSULTANT's
officers, employees, or agents, except as set forth in this AGREEMENT.
CONSULTANT shall not at any time or in any manner represent that it or any of its
officers, employees, or agents are in any manner officers, employees, or agents of the
DISTRICT. CONSULTANT shall not incur or have the power to incur any debt,
obligation, or liability whatsoever against DISTRICT or bind DISTRICT in any manner.
(b) No employee benefits shall be available to CONSULTANT in connection
with the performance of this AGREEMENT. Except for the fees paid to CONSULTANT
as provided in the AGREEMENT, DISTRICT shall not pay salaries, wages, or other
compensation to CONSULTANT for performing services hereunder for DISTRICT.
DISTRICT shall not be liable for compensation or indemnification to CONSULTANT for
injury or sickness arising out of performing services hereunder.
12. LEGAL RESPONSIBILITIES
The CONSULTANT shall keep itself informed of State and Federal laws and
regulations which in any manner affect those employed by it or in any way affect the
performance of its service pursuant to this AGREEMENT. The CONSULTANT shall at
all times observe and comply with all such laws and regulations. The DISTRICT and its
officers and employees shall not be liable at law or in equity occasioned by failure of the
CONSULTANT to comply with this Section.
13. UNDUE INFLUENCE
CONSULTANT declares and warrants that no undue influence or pressure has
been used against or in concert with any officer or employee of the DISTRICT in
connection with the award, terms, or implementation of this AGREEMENT, including
any method of coercion, confidential financial arrangement, or financial inducement. No
officer or employee of the DISTRICT will receive compensation, directly or indirectly,
from CONSULTANT or from any officer, employee, or agent of CONSULTANT in
connection with the award of this AGREEMENT or any work to be conducted as a result
of this AGREEMENT. Violation of this Section shall be a material breach of this
AGREEMENT entitling the DISTRICT to any and all remedies at law or in equity.
7
PSA 12 10
14. NO BENEFIT TO ARISE TO LOCAL EMPLOYEES
No member, officer, or employee of DISTRICT, or their designees or agents, and
no public official who exercises authority over or has responsibilities with respect to the
project during his/her tenure or for one year thereafter shall have any interest, direct or
indirect, in any agreement or sub -agreement, or the proceeds thereof, for work to be
performed in connection with the project performed under this AGREEMENT.
15. RELEASE OF INFORMATION / CONFLICTS OF INTEREST
(a) All information gained by CONSULTANT in the performance of this
AGREEMENT shall be considered confidential and shall not be released by
CONSULTANT without DISTRICT's prior written authorization. CONSULTANT and its
officers, employees, agents, or subconsultants shall not, without written authorization
from the General Manager or unless requested by the District Counsel, voluntarily
provide declarations, letters of support, testimony at depositions, response to
interrogatories, or other information concerning the work performed under this
AGREEMENT or relating to any project or property located within the DISTRICT.
Response to a subpoena or court order shall not be considered "voluntary" provided
CONSULTANT gives DISTRICT notice of such court order or subpoena.
(b) CONSULTANT shall promptly notify DISTRICT should CONSULTANT or its
officers, employees, agents, or subconsultants be served with any summons, complaint,
subpoena, notice of deposition, request for documents, interrogatories, requests for
admissions, or other discovery request, court order, or subpoena from any person or
party regarding this AGREEMENT or the work performed thereunder or with respect to
any project or property located within the DISTRICT. DISTRICT retains the right, but
has no obligation, to represent CONSULTANT and/or be present at any deposition,
hearing, or similar proceeding. CONSULTANT agrees to cooperate fully with DISTRICT
and to provide the opportunity to review any response to discovery requests provided by
CONSULTANT. However, DISTRICT's right to review any such response does not
imply or mean that DISTRICT has a right to control, direct, or rewrite said response.
(c) CONSULTANT covenants that neither he/she/it nor any officer or principal
of their firm have any interest in, or shall acquire any interest, directly or indirectly, which
will conflict in any manner or degree with the performance of their services hereunder.
CONSULTANT further covenants that in the performance of this AGREEMENT, no
person having such interest shall be employed by it/them as an officer, employee,
agent, or subconsultant. CONSULTANT further covenants that CONSULTANT has not
contracted with nor is performing any services, directly or indirectly, with any
developer(s) and/or property owner(s) and/or firm(s) and/or partnership(s) owning
property in the DISTRICT or the study area and further covenants and agrees that
CONSULTANT and/or its subconsultants shall provide no service or enter into any
agreement or agreements with a/any developer(s) and/or property owner(s) and/or
8
PSA 12 10
firm(s) and/or partnership(s) owning property in the DISTRICT or the study area prior to
the completion of the work under this AGREEMENT.
16. NOTICES
Any notices which either party may desire to give to the other party under this
AGREEMENT must be in writing and may be given by: (i) personal service, (ii) delivery
by a reputable document delivery service, such as, but not limited to, Federal Express,
which provides a receipt showing date and time of delivery, or (iii) mailing in the United
States Mail, certified mail, postage prepaid, return receipt requested, addressed to the
address of the party as set forth below or at any other address as that party may later
designate by notice:
To DISTRICT: Costa Mesa Sanitary District
290 Paularino Avenue
Costa Mesa, California 92626
Attn: District Clerk/Public Information
Email: nmliddenwaycrnsdca,qov
To CONSULTANT: Robert D. Niehaus, Inc.
140 E. Carrillo Street
Santa Barbara, CA 93101
Attn: Project Manager
Email: lchikogRDNielhaus.com
17. ASSIGNMENT
The CONSULTANT shall not assign the performance of this AGREEMENT, nor
any part thereof, nor any monies due hereunder, without prior written consent of the
DISTRICT.
Because of the personal nature of the services to be rendered pursuant to this
AGREEMENT, only Ms. Ichiko Kido shall perform the services described in this
AGREEMENT. Ms. Kido may use assistants, under her direct supervision, to perform
some of the services under this AGREEMENT; however, all client contact and
interaction regarding professional services shall be provided by Ms. Ichiko Kido.
CONSULTANT shall provide DISTRICT fourteen (14) days' notice prior to the departure
of Ms. Kido from CONSULTANT's employ. Should he/she leave CONSULTANT's
employ, the DISTRICT shall have the option to immediately terminate this
AGREEMENT within three (3) days of the close of said notice period. Upon termination
of this AGREEMENT, CONSULTANT's sole compensation shall be payment for actual
services performed up to, and including, the date of termination or as may be otherwise
agreed to in writing between the Board of Directors and CONSULTANT.
9
PSA 12 10
18. SAFETY AND SITE CONDITION CONSULTANT shall perform all operations
with due regard for safety and in strict compliance with all applicable laws relating
thereto. It shall be CONSULTANT'S responsibility to keep the site in a clean, neat and
orderly condition. It shall also be CONSULTANT'S duty to dust -palliate all working
areas and access routes, if applicable. All operations shall be conducted by
CONSULTANT so that no fire hazards are created.
19. LICENSES
At all times during the term of this AGREEMENT, CONSULTANT shall have in
full force and effect all licenses required of it by law for the performance of the services
described in this AGREEMENT.
20. GOVERNING LAW
DISTRICT and CONSULTANT understand and agree that the laws of the State
of California shall govern the rights, obligations, duties, and liabilities of the parties to
this AGREEMENT and also govern the interpretation of this AGREEMENT. Any
litigation concerning this AGREEMENT shall take place in the superior or federal district
court with jurisdiction over the DISTRICT.
21. ENTIRE AGREEMENT
This AGREEMENT contains the entire understanding between the parties
relating to the obligations of the parties described in this AGREEMENT. All prior or
contemporaneous agreements, understandings, representations, and statements, oral
or written, are merged into this AGREEMENT and shall be of no further force or effect.
Each party is entering into this AGREEMENT based solely upon the representations set
forth herein and upon each party's own independent investigation of any and all facts
such party deems material.
22. CONTENTS OF REQUEST FOR PROPOSAL AND PROPOSAL
CONSULTANT is bound by the contents of Exhibit A, hereto and incorporated
herein by this reference. In the event of conflict, the requirements of DISTRICT's
Request for Proposals and this AGREEMENT shall take precedence over those
contained in the CONSULTANT's proposals.
10
PSA 12 10
23. MODIFICATION
No modification to this AGREEMENT shall be effective unless it is in writing and
signed by authorized representatives of the parties hereto. This written modification
requirement cannot be waived.
24. AUTHORITY TO EXECUTE THIS AGREEMENT
The person or persons executing this AGREEMENT on behalf of CONSULTANT
warrant(s) and represent(s) that he/she/they has/have the authority to execute this
AGREEMENT on behalf of the CONSULTANT and has/have the authority to bind
CONSULTANT to the performance of its obligations hereunder.
25. INTERPRETATION
In the event of conflict or inconsistency between this AGREEMENT and any
other document, including any proposal or Exhibit hereto, this AGREEMENT shall
control unless a contrary intent is clearly stated.
26. BUSINESS LICENSE
CONSULTANT shall obtain a business license from the City of Costa Mesa
unless legally exempt.
IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT to
be executed this day and year first above written.
COSTA MESA SANITARY DISTRICT
General Manager
ATTEST:
District tler-k--'7
PSA 12 10
ROBERT D. NIEHAUS, INC.
Signature
Robert D. Niehaus
Typed Name
Managing Director
Title
11
District Counsel
12
PSA 12 10
Exhibit A
Task 1. Project Management/Meetings
Objective: RDN is committed to providing transparent project management that fosters collaboration and
ensures study success. We will prepare a Project Management Plan that will guide project administration. Our
quality assurance processes will ensure that products are delivered error free. Ahead of the kick-off meeting,
we will provide the District with a detailed data request form. At the kick-off meeting, we will solidify the
project timeline and priorities. We will also hold bi-weekly virtual meetings to discuss project progress.
Task I. 1. Project Management
RDN incorporates best practices from the Project Management Institute's Project Management Body of
Knowledge to establish processes that guide management procedures. For a project to be considered a success,
all work must be completed on schedule, within budget, and error -free. Our project manager will prepare a Project
Management Plan (PMP) to document all information necessary to execute a successful project. The PMP serves
as a roadmap for the project team, defining project goals and objectives, scope of work, deliverables, budget,
schedule, administrative procedures, and filing requirements.
Task 1.2. Data Collection and Validation
Prior to the Kickoff meeting, RDN will submit a detailed data request to the District. The data request will include
audits, budgets, general plans, capital improvement plans, customer billing records, debt service schedule, and
reserve policies. For data validation and quality assurance, RDN may request additional data throughout the study
to reconcile any inconsistencies.
Task 1.3. Kick -Off Meeting/Progress Meetings
The kick-off meeting will serve as a forum where District staff and the RDN team will meet to discuss project
objectives, approach, work plan, schedule, and priorities. Bi-weekly progress meetings with District staff will be
held via teleconference. At the end of each month, RDN will provide a summary report charting the current
progress on each task, data needs, current issues that need to be resolved, project schedule updates, and status
of action items from the previous report.
RDN is committed to providing transparent project management and open communication with the District. As
State, County, and District protocols continue to evolve over the course of the Study, RDN will work closely with
staff to adjust meeting schedules and venues as needed. In addition to the kick-off meeting, RDN plans to attend
two in -person progress meetings, one at 60 percent project completion and another at 90 percent completion.
■ In -person kick-off meeting
Progress meetings via teleconference
Two (2) in -person progress meetings
■ Data request
' - • - ■ Meeting agendas and minutes
• Monthly progress reports and expenditures
■ Respond to data request
Attend meetings and provide input
11
Task 2. 10-Year Financial Plan
Objective: RDN will meticulously review District data to develop a 14-year financial plan based on revenue
generated from current rates, non -rate revenues, projected expenses, existing and potential debt service
payments, and reserve contributions. To project revenue and costs, we use an econometric, data -driven
approach that provides the highest level of accuracy and reliability for the District's financial plan.
Task 2.I. Growth/Revenue Analysis
RDN will conduct detailed growth projections to ensure the District's revenue forecast is accurate. As part of this
analysis, we will consider the impact of ADUs on the sewer system. Using Orange County permit data from local
cities of Costa Mesa and Newport Beach, RDN will create a database of currently permitted ADUs as well as a
projection for future ADU expansion. Under the City of Costa Mesa's current ADU regulations, detached ADUs
cannot exceed a certain square footage per bedroom, giving us a base metric to evaluate the flow impact of the
additional ADUs.
Task 2.2, Operation and Maintenance Expenses
Using the District's budgetary documents and audited financial reports, we will project operating and
maintenance (O&M) expenses using reasonable inflationary factors for relevant itemized expenses based on
reliable published sources or District's historical data. We also incorporate any known changes to personnel, level
of service, or projected growth.
`T`�-vs,k _3'. Capital Improvement Funding
According to the District's Sewer System Management Plan, the District has at least $4.5 million in capital expenses
planned within the study period. RDN will review the District's capital projects plan and explore financing options
(reserves, debt proceeds, grants, and PAYGO) based on the timing of scheduled repairs and replacements and
debt service requirements. In consultation with the District, we will create an optimal capital project plan, ensuring
the District has sufficient funding to maintain and replace sewers, pump stations, and assets while mitigating rate
impacts on customers.
Task 2.4. Reserve Funding
RDN will work with District staff to understand future reserve targets and develop an implementation plan that
maintains recommended balances that are consistent with the District's future financial goals, risk tolerance, and
capital improvement projects.
Task 2.1 Revenue Requirements
Total revenue requirements determined through the cash flow analysis will be offset by other sources of revenue
such as property taxes, investment earnings, rental income, and other water service charges. Proposed revenue
adjustments to meet the revenue requirements will also meet the required debt service coverage ratio. The
objective is to achieve a healthy cash flow mechanism for the next five years while keeping rates affordable.
a Progress meetings via GoToMeeting
:i DeivI
• Demand projection summary
■ Aes
Draft financial planning model
■ Financial information and input
9�
Task 3. Cost of Service Analysis
Objective: RDN will perform a cost of service analysis and allocate costs to customers commensurate with
their service requirements. We will evaluate existing customer classes and recommend necessary changes.
The cost of service analysis will ensure that proposed rates are in compliance with Proposition 218 and that
established rates adequately recover the costs to provide safe and reliable service to the District's customers.
We will employ methodologies approved by the WEF Manual 27 to ensure the analysis meets industry
standards.
bask 3. L Review Customer Classes
RDN will evaluate District customer classifications and recommend any necessary changes. Assigning costs
accurately to classes of customers based on their service requirements is critical to designing Proposition 218-
compliant rates. We will explore alternative customer class definitions to best align with the District's goals.
.,,sk 3.2. Allocation of Casts to Cost Causative Components
The previous wastewater rate study identified four major cost components of the District's system: customer
accounts, flow, biochemical oxygen demand (BOD), and total suspended solids (TSS). RDN will carefully review the
District's expenses and allocate the costs to each of the four components. Because the District only operates a
collection system, the vast majority of costs will be allocated to the flow component. However, some costs will be
allocated to the strength components since the concentration of BOD and TSS will affect the system's maintenance
cost such as cleaning.
Xsk 3. -1. Unit Cast of Service
Based on the cost allocations determined in Task 3.2, RDN will calculate the total system units of service associated
with each cost component. This allows for an estimation of the total system unit costs of service for each function.
T<lsk 34 Cost Allocation to Customer Classes
As a final step of the cost of service analysis, the unit costs are used to allocate the costs back to each customer
class commensurate with their service requirements. This analysis permits the District to adhere to the general
principle of cost proportionality (particularly relevant under Proposition 218), under which the rates paid by
customer classes are directly proportional to the costs each class imposes on the District as a whole.
■ Progress meetings via teleconference
■ Cost of service analysis in Excel
Cost of service analysis feedback
10 (=
Task 4. Rate Design
Objective: RDN will design wastewater rates that follow cost of service ratemaking principles as outlined in
the WEF Manual 27. We will review the District's current rate structure and provide recommendations to
ensure revenue adequacy while maintaining rate affordability. Recommended rates will have a clear
connection between the costs and pricing to ensure compliance with all legal requirements.
Task 4.1. Evaluate the Current Rate Structures and Identify Rate Alternatives
We will perform a comprehensive review of the District's current rate structures to assess the advantages and
disadvantages of the existing rates. The District's current structure consists of fixed annual charges for residential
customers while commercial and industrial customers are charged a rate per 1,000 square feet. We will also
evaluate alternative structures that might be appropriate for the District, including options based on commodity
rates and pressure zones. Depending on the impacts of ADUs on total sewer flows, additional recommendations
may be presented which provide equitable billing for this type of account. In consultation with the District, RDN
will assess any additional administrative costs associated with alternative rate structures such as a purchase of
new billing software and training of staff.
Task 4,2, Develop Recommended Rates
Based on the evaluation of the different rate structure alternatives, RDN will recommend the rate structure that
optimizes wastewater rates to meet the District's goals. Rate recommendations will be based upon the updated
cost of service analysis, which may include adjustments to customer class designations. The recommended rates
will be easy to understand and administer, provide revenue adequacy, promote conservation, and comply with
Proposition 218. RDN's final recommendation will fund planned capital improvement projects, be supported by
statistical/econometric analyses, data, plans, and comparative examples, and be in full compliance with all legal
requirements including Propositions 218. Any review, evaluation, or conclusion regarding the legality of the rate
structures will be performed in cooperation with District staff, and if necessary, District legal counsel.
,tsl 4.3. hate Comparison Survey
We will prepare a rate comparison survey of at least five comparable agencies to benchmark the District's current
and proposed wastewater rates. Surveyed agencies may include the City of Santa Ana, Orange County Sanitation
District, East Orange County Water District, and Irvine Ranch Water District. We will coordinate with District staff
to finalize a list of agencies to include in the survey. The survey results will be added to the administrative report
as well as to the meeting presentations if requested by the District.
Task 4.4. Evaluate Impacts
RDN developed a web -based bill impact tool to analyze individual customer bill impacts for each customer class.
RDN uses this tool during the rate -design process to evaluate the impact of various rate alternatives on District
customers. This is a value-added step of our rate design process, as it allows the District to optimize revenue
stability while ensuring the proposed rates have the least impact on all customers.
Progress meetings via teleconference
• Draft rate model in MS Excel
■ Rate comparison survey
■ Policy goals and objectives for rates
Rate feedback
111
Task S. Reports and Model
Objective: RDN will provide a Microsoft Excel model for the rate study and train District staff to adjust future
inputs for future years. We will deliver draft executive reports at 60% and 90% completion. Feedback from the
District's CAC and Board will be incorporated into the final report, which will be presented to the District Board
Task 5.3. Rate Model
The model will be developed in an easy -to -use Microsoft Excel format designed to allow District staff to conduct
sensitivity scenarios by testing various assumptions through an interactive dashboard. Factors that may be
adjusted in the rate model include staff levels and salaries, operating expense levels, CIP spending, and capital
equipment funding. The model will be introduced to District staff early in the study process. We will add
worksheets gradually as we perform key analyses through the study process and ask for the District's review. By
the time the study is complete, District staff will be fully familiarized with the model and be able to use the model
to make data -driven decisions. Any changes to the underlying model will appear instantly in a dashboard for quick
executive evaluation.
Task 5.2. Rate Study Reports
RDN will deliver two draft reports, one at 60 percent completion and the other at 90 percent. The draft reports
will contain an overview, study objectives, assumptions, regulatory requirements, and methodologies. They will
discuss short- and long-term financial planning, capital planning, cost of services, rate -setting analysis, bill impacts,
and comparison surveys. Key outputs of data, analysis, and rationale will be visualized in the reports using R
ggplot2. The visualizations provided in the reports will be an effective tool to communicate conclusions to the
District Board, customers, and other stakeholders.
We will present the first draft to District staff and solicit feedback to ensure the direction and progress of the
study are exceeding District expectations. The second draft will receive initial feedback from District staff before
being reviewed at the Citizens Advisory Committee, the Board Study Session, and the full Board Meeting.
Feedback from each review session will be incorporated into the draft report before the next review session.
We will incorporate District feedback into the final report and clearly demonstrate the nexus between costs and
recommended rates in simple terms to fulfill Proposition 218 reporting requirements. The Final Report will be
delivered in PDF and MS Word and will be presented at a Board of Directors Meeting.
----- _,............... __........ .
■ Progress meetings via teleconference
■ Final study report presentation
r- ., -
• Final Rate model in MS Excel
•r
■ Draft and final reports in MS Word and PDF formats
- * - ■ Comments, responses, and recommendations to draft report
12 1
PROJECT SCHEDULE
Figure 2 presents a preliminary schedule for delivering a final report of the District's study by December 20, 2021.
The schedule assumes timely kick-off, District data, feedback, and availability for meetings. The final schedule will
be discussed and agreed upon at the Kick-off Meeting.
Task 1, Project Management/Meetings
Task 2. 10-hear Financial Plan
Task 3. Cost of Service Analysis
Task 4. Rate Design
Task S. Report & Model
Kickoff Meeting
Board Rate Workshop
CAC Meeting
Final Deport Board Presentation
fdr Draft Report
Final Report / Rate Model
13
i
13j
The table below presents RDN's cost proposal. Our not -to -exceed proposal to provide professional consulting
services to conduct the Costa Mesa Sanitary District's Wastewater rate study, including other direct costs and
travel expenses, is $29,500.
Perform Wastewater rate study as described in the Scope of Work on Pages 2 through 4 of the RFP.
The basis of award will be on a "best value" evaluation based on the criteria mentioned on page 7 of the RFP. The
submitted bid will be used to help evaluate the cost landscape and irrigation design services.
Price(s) given above are valid for 60 days after date of bid opening.
Addenda Nos. 1, 2, and 3 have been received and are included in this bid.
14(-