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BAWA Resolution No. 2009-05 RESOLUTION NO.2009-05 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY AUTHORIZING AN AGREEMENT WITH BURTON& ASSOCIATES.INC..FOR A WHOLESALE WATER RATE STUDY FOR THE BAYTOWN AREA WATER AUTHORITY:AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY: Section 1:That the Board of Directors of the Baytown Area Water Authority hereby authorizes and directs the General Manager to execute and the Assistant Secretary to attest to an agreement with Bul1on& Associates.Inc.,for a wholesale water rate study for the Baytown Area Water Authority.A copy of the agreement is attached hereto.marked Exhibit"A."and made a part hereof for all intents and purposes. Section 2:That the Board of Directors of the Baytown Area Water Authority authorizes payment to Burton&Associates.Inc.,in an amount not to exceed THIRTY-NINE THOUSAND SIX HUNDRED TWENTY-FOUR AND NO/I 00 DOLLARS($39,624.00)for consulting and financial services in accordance with the agreement authorized in Section I hereinabove. Section 3:That the General Manager is hereby granted general authority to approve a decrease or an increase in costs by TWENTY-FIVE THOUSAND AND NO/100 DOLLARS($25,000.00)or less. provided that the amount authorized in Section 2 hereof may not be increased by more than ten percent(10%). Section 4:This resolution shall take effect immediately from and after its passage by the Board of Directors of the Baytown Area Water Authority. INTRODUCED,READ and PASSED.by the affirmative vote of the Board of Directors of the Baytown Area Water Authority this the 20`h day of May.2009. JOHN R.SANDHOP,President t ST: t KAY71 DARNEL.Assistant Secret APPROVED AS TO FORM: ACID RAMIREZ.SR..Gener I Nounsel \\eobsry I U.egar4Luen\F iles\BA\1,'A\Resolution\2W9\ResolutionforRateStudyAgreement.doc Exhibit"A" AGREEMENT FOR WHOLESALE WATER RATE STUDY FOR THE BAYTOWN AREA WATER AUTHORITY STATE OF TEXAS§ COUNTY OF HARRIS§ WHEREAS,on the_day of.2009,the Baytown Area Water Authority,hereinafter referred to as"BAWA,"received the proposal from Burton&Associates, Inc.,a corporation,hereinafter referred to as the"Consultant,"for the performance of a wholesale water rate study for BAWA,hereinafter the"Agreement';and WHEREAS,based upon such proposal,the Consultant and BAWA desire to enter into an agreement specifying the terms and conditions of such rate study;and NOW THEREFORE,for and in consideration of the foregoing premises and the mutual covenants and agreements herein contained,the Parties hereto do hereby mutually agree as follows: I. CONSULTANT'S OBLIGATIONS 1.01 Basic Services.The Consultant shall diligently perform all services specified in Exhibit "A,"which is attached hereto and incorporated herein for all intents and purposes.These services shall be for the term of this Agreement,and are expressly subject to the contingency specified in Section 2.04.It is expressly understood and agreed that should there be a conflict between the terms contained in Exhibit"A"and those contained in this Agreement, the terms of this Agreement shall control,The services provided under Basic Services shall be completed no later than sixty(60)days from receipt of a notice to proceed unless extended in writing upon agreement of both parties. 1.02 Annual Services.The Consultant shall diligently perform ad hoc rate and/or financial analyses as and when requested in writing by BAWA of Baytown.These services may be requested throughout the term of this Agreement,and are expressly subject to the contingency specified in Section 2.04.The services provided under Annual Services shall be completed no later than sixty(60)days from receipt of a notice to proceed unless extended in writing upon agreement of both parties. 1.03 Update Services.The Consultant shall diligently perform all services specified in Exhibit "B,"which is attached hereto and incorporated herein for all intents and purposes,as and when requested in writing by BAWA of Baytown in the form of notice to proceed.These services may be requested throughout the term of this Agreement,and are expressly subject to the contingency specified in Section 2.04.It is expressly understood and agreed that should there be a conflict between the terms contained in Exhibit"B"and those contained in this Agreement,the terms of this Agreement shall control.The services provided under Agreement for Wholesale Water Rate Study.Page 1 Update Services shall be completed no later than sixty(60)days from receipt of a notice to proceed unless extended in writing upon agreement of both parties. II. FEES 2.01 Basic Services.The Consultant hereby commits to performing the Basic Services as specified in Exhibit"A"at a fee not to exceed THIRTY-SIX THOUSAND EIGHT HUNDRED SIXTY AND NO/100 DOLLARS($36,860.00),based upon the actual time spent at the rate schedule below: Principal...............................................$205.00/hour Project Director....................................$l 85.00/hour Project Consultant................................$105.00/hour Clerical.................................................$40.00/hour Subject to the limit set forth herein,BAWA shall pay Consultant for reimbursable expenses at actual cost times a multiplier of 1.10;however,mileage shall not exceed the IRS rate.The total reimbursable expenses for which BAWA shall be liable shall not exceed TWO THOUSAND SEVEN HUNDRED SIXTY-FOUR AND NO/100 DOLLARS($2,764.00).BAWA must approve in writing all travel expenses before the same are incurred.If such approval is not obtained,BAWA shall not be liable for such travel expenses. 2.02 Annual Services.The Consultant hereby commits to performing the Annual Services as specified in Section 1.02 at a fee not to exceed FIVE THOUSAND AND NO/100 DOLLARS($5,000.00)annually,based upon the actual time spent at the Consultant's hourly rate,plus travel and other out-of-pocket costs.The rate schedule to be used for purposes of the Annual Services pursuant to this Agreement is as follows: Principal...............................................$205.00/hour Project Director....................................$185.00/hour Project Consultant................................$105.00/hour Clerical.................................................$40.00/hour Subject to the limit set forth herein,BAWA shall pay Consultant for out-of-pocket costs at actual cost times a multiplier of 1.10;however,mileage shall not exceed the IRS rate.Furthermore, BAWA must approve in writing all travel expenses before the same are incurred.If such approval is not obtained,BAWA shall not be liable for such travel expenses. 2.03 Update Services.The Consultant hereby commits to performing the Update Services as specified in Exhibit"B"at a fee not to exceed NINETEEN THOUSAND FOUR HUNDRED EIGHTY AND NO/100 DOLLARS($19,480.00),based upon the actual time spent at the Consultant's standard hourly rate specified below: Principal...............................................$205.00/hour Project Director....................................$185.00/hour Agreement for Wholesale Water Rate StudX Page 2 Project Consultant................................$105.00/hour Clerical.................................................$40.00/hour Subject to the limit set forth herein,BAWA shall pay Consultant for reimbursable expenses at actual cost times a multiplier of 1.10;however,mileage shall not exceed the IRS rate.The total reimbursable expenses for which BAWA shall be liable shall not exceed ONE THOUSAND FOUR HUNDRED SIXTY-ONE AND NO/100 DOLLARS($1,461.00).BAWA must approve in writing all travel expenses before the same are incurred.if such approval is not obtained,BAWA shall not be liable for such travel expenses. 2.04 Contingency.It is expressly understood and agreed by both the Consultant and BAWA that this Agreement for fiscal years beyond 2008-09 are contingent upon funds being appropriated by the Board of Directors of BAWA of Baytown for rate study expenses. Should funds not be appropriated for more than two(2)years,this Agreement shall become null and void and both parties shall be relieved of any and all obligations hereunder without liability to the other party or to any other person or entity,with the exception of the liabilities assumed by the Consultant pursuant to Article IV hereof. 2.05 Increases.The rate schedules and the resulting not to exceed amounts specified in Sections 2.02 and 2.03 may be adjusted to reflect the Consumer Price Index(Urban)sixty-four(64)days prior to October 1;provided,there shall be no such increase until after September 30,2010. The Consultant must give written notice to BAWA of an updated rate schedule prior to any services being performed under the new rate schedule.If more than two years elapse since the last authorization by BAWA for updated services,the scope and price must be renegotiated by the parties subject to the terms and conditions specified herein. 2.06 Invoice and Payment.The Consultant shall invoice BAWA each month as work progresses.BAWA shall,in turn,pay the Consultant for its services actually performed within 30 days after receipt of an invoice or receipt of services,whichever is later,In the event of a disputed or contested invoice,the parties understand and agree that BAWA may withhold the portion so contested,but the undisputed portion will be paid. III. TERM AND TERMINATION 3.01 Term.The initial term of this Agreement shall commence on the date of execution by BA WA's General Manager and terminate October 31,2010,or after the Consultant has fully complied with all terms and conditions herein,whichever is later.Thereafter,this Agreement shall be automatically renewed subject to the termination provisions of this Article 111, 3.02 Termination.BAWA,besides all other rights or remedies it may have,shall have the right to terminate this Agreement with or without cause upon ten(10)days'written notice from General Manager to the Consultant of BAWA's election to do so.Furthermore,BAWA may immediately terminate this Agreement if the Consultant breaches the terms hereof.A breach of this Agreement shall include,but not be limited to,the following: Agreetnent foLWholesale Water Rate Study,Page 3 1.failing to pay insurance premiums,claims or other charges; 2.failing to pay any payments due BAWA,State or Federal Government from the Consultant or its principals,including,but not limited to,any taxes,fees, assessments,liens,or any payments identified in this Agreement; 3.the institution of voluntary or involuntary bankruptcy proceeding against the Consultant; 4.the dissolution of the Consultant; 5.the violation of any provision of this Agreement;and/or 6.the abandonment of the Agreement or any portion thereof and discontinuance of the Consultant's services or any portion thereof,as determined by the General Manager. Upon delivery of any notice of termination required herein,the Consultant shall discontinue all services in connection with the performance of the Agreement.Within ten(10)days after receipt of the notice of termination,the Consultant shall submit a final statement showing in detail the services satisfactorily performed and accepted and all other appropriate documentation required herein for payment of services together with all instruments of service. IV. Indemnity,Release and Insurance 4.01 INDEMNITY. THE CONSULTANT AGREES TO AND SHALL INDEMNIFY,HOLD HARMLESS AND DEFEND BAWA,ITS OFFICERS,AGENTS AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES,DAMAGES,CAUSES OF ACTION,SUITS,AND LIABILITY OF EVERY KIND,INCLUDING ALL EXPENSES OF LITIGATION, COURT COSTS,AND ATTORNEYS'FEES,FOR DAMAGE TO ANY PROPERTY,LOSS OF REVENUE,OR ANY OTHER INJURIES OR DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE SERVICES PERFORMED BY THE CONSULTANT PURSUANT TO THIS AGREEMENT,THE CONDUCT OR MANAGEMENT OF THE CONSULTANT'S ACTIVITIES,OR FROM ANY ACT OR OMISSION BY THE CONSULTANT,ITS AGENTS,EMPLOYEES,OR SUBCONTRACTORS,WHERE SUCH DAMAGES,LOSSES OR INJURIES ARE CAUSED BY THE JOINT OR SOLE NEGLIGENCE OF THE CONSULTANT.IT IS THE EXPRESSED INTENTION OF Agreement for Wholesale Water Rate Study.Page 4 THE PARTIES HERETO,BOTH THE CONSULTANT AND BAWA, THAT THE INDEMNITY PROVIDED FOR IN THIS PARAGRAPH IS INDEMNITY BY THE CONSULTANT TO INDEMNIFY AND PROTECT BAWA FROM THE CONSEQUENCES OF THE CONSULTANT'S SOLE OR JOINT NEGLIGENCE. FURTHERMORE,THE INDEMNITY PROVIDED FOR IN THIS PARAGRAPH SHALL HAVE NO APPLICATION TO BAWA FOR ANY CLAIM,LOSS,DAMAGE,CAUSE OF ACTION,SUIT AND LIABILITY WHERE THE INJURY,LOSS OR DAMAGE RESULTS FROM THE SOLE NEGLIGENCE OF BAWA,UNMIXED WITH THE FAULT OF ANY OTHER PERSON OR ENTITY. In the event that any action or proceeding is brought against BAWA by reason of any matter from which BAWA is indemnified herein,the Consultant further agrees and covenants to defend the action or proceeding by legal counsel acceptable to BAWA.This article shall survive the expiration or termination of this Agreement. 4.02 Release.By this Agreement,BAWA does not consent to litigation or suit,and BAWA hereby expressly revokes any consent to litigation that it may have granted by the terms of this Agreement or any other contract or agreement,any charter,or applicable state law. Nothing herein shall be construed so as to limit or waive BAWA's sovereign immunity.The Consultant assumes full responsibility for its work performed hereunder and hereby releases, relinquishes and discharges BAWA,its officers,agents,and employees from all claims, demands,and causes of action of every kind and character,including the cost of defense thereof,for any injury to or death of any person(whether they be either of the parties hereto, their employees,or other third parties)and any loss of or damage to property(whether the property be that of either of the parties hereto,their employees,or other third parties)that is caused by or alleged to be caused by,arising out of,or in connection with the Consultant's work to be performed hereunder.This release shall apply with respect to the Consultant's work regardless of whether said claims,demands,and causes of action are covered in whole or in part by insurance. 4.03 Insurance.Throughout the term of this Agreement,the Consultant at its own expense shall purchase,maintain and keep in force and effect insurance against claims for injuries to or death of persons or damages to property which may arise out of or result from the Consultant's services,whether such services be by the Consultant,its agents,representatives, volunteers,employees or subcontractors or by anyone directly or indirectly employed by any of them,or by anyone for whose acts any of them may be liable. The Consultant's insurance coverage shall be primary insurance with respect to BAWA,its officers,agents and employees.Any insurance or self-insurance maintained by BAWA,its officials,agents and employees shall be considered in excess of the Consultant's insurance and shall not contribute to it.All coverage for subcontractors shall be subject to all of the Agreement for Wholesale Water Rate Study.Page 5 requirements stated herein. The following insurance shall be required under this Agreement and shall meet or exceed the minimum requirements set forth herein: 1.Commercial General Liability ■General Aggregate:$2,000,000 ■Per Occurrence:$1,000,000 ■Coverage shall be at least as broad as ISO CG 00 01 10 93 ■No coverage shall be deleted from standard policy without notification of individual exclusions being attached for review and acceptance. 2.Business Automobile Policy ■This coverage shall be required only if the Consultant provides vehicles for its employees. ■Combined Single Limits:$1,000,000 ■Coverage for"Any Auto" 3.Professional Liability ■General Aggregate:$2,000,000 ■Per Occurrence:$1,000,000 ■Claims-made form is acceptable.Coverage will be in force for two years after services are completed and accepted by BAWA 4.Workers'Compensation ■Statutory Limits ■Employer's Liability$500,000 ■Waiver of Subrogation required. Prior to any services being performed,the Consultant shall file with BAWA valid Certificates of Insurance and endorsements acceptable to BAWA.Such Certificates shall contain a provision that coverage afforded under the policies will not be canceled, suspended,voided,or reduced until at least thirty(30)days'prior written notice has been given to BAWA via certified mail,return receipt requested. The Consultant shall also file with BAWA valid Certificates of Insurance covering all subcontractors. The following are general requirements applicable to all policies: ➢AM Best Rating of A-;VII or better. ➢insurance carriers licensed and admitted to do business in State of Texas will be accepted. ➢Upon request of and without cost to BAWA,certified copies of all insurance policies and/or certificates of insurance shall be fumished to BAWA's representative. Aereement for Wholesale Water Rate Study.Page 6 Certificates of insurance showing evidence of insurance coverage shall be provided to BAWA's representative prior to any work being perfomned at the site. ➢Liability policies must be on occurrence form. ➢Each insurance policy shall be endorsed to state that coverage shall not be suspended, voided,canceled or reduced in coverage or in limits except after thirty(30)days'prior written notice by certified mail,return receipt requested,has been given to BAWA. ➢BAWA,its officers,agents and employees are to be added as Additional Insureds to all liability policies. ➢Upon request and without cost to BAWA,certified copies of all insurance polices and/or certificates of insurance shall be furnished to BAWA. ➢Upon request of and without cost to BAWA,loss runs(claims listing)of any and/or all insurance coverage shall be furnished to BAWA's representative. V. GENERAL PROVISIONS 5.01 No Assignment.The Consultant shall not sell,assign,or transfer any of its rights or obligations under this Contract,in whole or in part,without prior written consent of BAWA. 5.02 Notice.Unless otherwise provided in this Contract,any notice provided for or permitted to be given must be in writing and delivered in person or by depositing same in the United States mail,postpaid and registered or certified,and addressed to the party to be notified, with return receipt requested,or by delivering the same to an officer of such party.Notice deposited in the mail as described above shall be conclusively deemed to be effective,unless otherwise stated in this Contract,from and after the expiration of three(3)days after it is so deposited. For the purpose of notice,the addresses of the parties shall be as follows unless properly changed as provided for hereinbelow: BAYTOWN AREA WATER AUTHORITY Attn:General Manager P.O.Box 424 Baytown,Texas 77522-0424 BURTON&ASSOCIATES,INC. Attn:Mr.Michael E.Burton,President 200 Business Park Circle,Suite 101 St.Augustine,Florida 32095 Each party shall have the right from time to time at any time to change its respective address and each shall have the right to specify a new address,provided that at least fifteen(15)days' written notice is given of such new address to the other party. 5.03 Non-waiver.Failure of either party hereto to insist on the strict performance of any of the agreements herein or to exercise any rights or remedies accruing thereunder upon default or Aereement for Wholesale Water Rate Study.Page 7 failure of performance shall not be considered a waiver of the right to insist on and to enforce by an appropriate remedy,strict compliance with any other obligation hereunder to exercise any right or remedy occurring as a result of any future default or failure of performance. 5.04 Choice of Law and Venue.This Agreement shall in all respects be interpreted and construed in accordance with and governed by the laws of the State of Texas,regardless of the place of its execution or performance.The place of making and the place of performance for all purposes shall be Baytown,Harris County,Texas. 5.05 Severability.All parties agree that should any provision of this Agreement be determined to be invalid or unenforceable,such determination shall not affect any other term of this Agreement,which shall continue in full force and effect. 5.06 No Third-Party Beneficiaries.This Agreement shall not bestow any rights upon any third parry,but rather,shall bind and benefit the Consultant and BAWA only. 5.07 Independent Contractor.The Consultant shall operate as an independent contractor as to all services to be performed under this Agreement and not as an officer,agent,servant,or employee of BAWA.The Consultant shall have exclusive control of its operations and performance of services hereunder,and such persons,entities,or organizations performing the same and the Consultant shall be solely responsible for the acts and omissions of its directors,officers, employees,agents,and subcontractors.The Consultant shall not be considered a partner orjoint venturer with BAWA,nor shall the Consultant be considered nor in any manner hold itself out as an agent or official representative of BAWA. 5.08 Entire Agreement.This Agreement contains all the agreements of the parties relating to the subject matter hereof and is the full and final expression of the agreement between the parties. 5.09 Ambiguity.In the event of any ambiguity in any of the terms of this Agreement,it shall not be construed for or against any party hereto on the basis that such parry did or did not author the same. 5.10 No Arbitration.Notwithstanding anything to the contrary contained in this Agreement, BAWA and the Consultant hereby agree that no claim or dispute between BAWA and the Consultant arising out of or relating to this Agreement shall be decided by any arbitration proceeding including,without limitation,any proceeding under the Federal Arbitration Act (9 U.S.C.Sections 1-14),or any applicable State arbitration statute,including,but not limited to,the Texas General Arbitration Act,provided that in the event that BAWA is subjected to an arbitration proceeding notwithstanding this provision,the Consultant consents to be joined in the arbitration proceeding if the Consultant's presence is required or requested by BAWA for complete relief to be recorded in the arbitration proceeding. Agreement for Wholesale Water Rate Study.Page 8 5.11 Authority.The officers executing this Agreement on behalf of the parties hereby represent that such officers have full authority to execute this Agreement and to bind the party he represents. IN WITNESS WHEREOF,the parties hereto have executed this Agreement in multiple copies,each of which shall be deemed to be an original,but all of which shall constitute but one and the same agreement,this day of.2009. BAYTOWN AREA WATER AUTHORITY GARRISON C.BRUMBACK,General Manager A'Cf EST: KAYTHIE DARNELL,Secretary APPROVED AS TO DORM: IGNACIO RAMIREZ.SR.,General Counsel BURTON&/Ae�'SOCIATES,C. MICI-IAEL BURTON,President srA'rE OFF l or i d a- COUNTY OF SI'J0K✓I S§ Before me on this day personally appeared Michael Burton,in his capacity as President of Burton&Associates,Inc.,on behalf ofsuch corporation,known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed, SUBSCRIBED AND SWORN before Inc this I31"day of AQ.2009. Nolary Public in and for the State Uf'1'rett q cub,nlLCIPId;3nv'J'il4„Cwltl4LI`Buiusi&A,wKijtcbRaicSludyCunlnct%UAWAW1cStudy%[IAWARntctitudyAgrccrmni.Jhx fLaritOA �-r.-i RO&IN W.MW EXPTRES:NcvertDtl'?A.2ptt� ltoneW 21�u►lend RIDk lkiaoreun� Agrrcemmi for Wholmle Water Rate Study,Pagc 9 e Exhibit"A" Basic Services I.Purpose. The Consultant shall perform wholesale water rate studies(i)to compare current versus proposed utility rates of BAWA to the rates in surrounding areas and(ii)to provide a benchmark for rate adjustments.The consultant shall perform an impact analysis to provide a"before and after"comparison of typical residential water bills to translate new rates or rate structure into meaningful numbers,i.e.,how much the new rate will cost(or save)the average homeowner. The rate study will allocate all costs to cost drivers,which are incurred for the benefit of certain customers.These customers should pay for these specific costs.For example,supplying water to large commercial users requires BAWA to incur significant capital expenses that it would otherwise not incur in supplying water only to residential users.These capital expenses are cost drivers that must be periodically reviewed and reflected in the commercial rate structure.Based on the result of the study,the revised structure may increase(or reduce)rates for various classes of customers. II.General. A.Rate Study Considerations. The rate study shall take into consideration,but not be limited to a transition plan whereby changes in the rate are phased in over a period of time to allow BAWA the ability to correct subsidies in their rates while minimizing the financial impact on any customer group.The rate study shall show purpose of task to forecast the revenues required to support the wholesale water over a multi-year planning period,including the cost of the capital projects over the planning period and usage of impact fees to partially pay for eligible projects.The Consultant shall prepare forecasts of revenues,operation and maintenance expenditures and capital improvements.The test year for establishing wholesale water rates for service shall be the projected Fiscal Year 2009-2010.Test year data shall be obtained from Fiscal Year 2007-2008,and shall be used to protect costs over the fiscal periods 2010-2020. B.General Approach. The Consultant shall use its proprietary interactive Financial Analysis and Management System(FAMS-XL®)model.To properly calibrate FAMS-XL®to precisely simulate the financial dynamics of your utility systems,the Consultant will review BAWA's CAFR, budget documents,financial policies,outstanding debt,capital improvement program, system configuration,customer constituency,historical and projected water demand flows, current rate structure and make adjustments to the FAMS-XL®functionality as required to replicate BAWA's utility system. The Consultant will then conduct a number of interactive decision support work sessions with BAWA staff with the FAMS-XL®model up and running with the"control panel" protected on a large viewing screen.The Consultant shall evaluate alternative financial plan, cost allocation and rate scenarios with instantaneous feedback.The Consultant shall work with BAWA staff'towards solutions while building consensus and confidences in the decision alternatives and the short-and long-term consequences of each. Exhibit"A"Page I The Consultant shall link the various FAMS-XL®modules based upon BAWA's specific requirements. C.Project Management The Consultant will use proven project management approaches to ensure on time and on budget completion of the services under this Agreement.The Consult shall schedule and conduct a number of in-person meetings during the project and Consultant's key staff will be available at all times during the study,whether in person or via phone or intemet. UI.Work Plan. The Consultant will undertake a comprehensive and integrated approach to the design of a rate program and financial plan that meets BAWA's needs and shall develop rates in accordance with that rate program in a multi-year analysis that integrates all components of the rate requirements. The Consultant shall abide by the following work plan: A.Work Element I-Wholesale Water Utility Cost of Service Task I:Project Initiation-Initiate the Project 1.1 Conduct Kickoff Meeting 1.2 Review of Background Information Task 2:Revenue Sufficiency Analysis-Develop a Multi-year Financial Forecast and Financial Plan for the Wholesale Water System. 2.1 Prepare water customer and demand analysis to determine projected growth trends in usage patterns and total projected water system customers,ERCs and usage. 2.2 Obtain,verify and input financial and billing data into Consultant's proprietary FAMS-XL®model,run the model and produce preliminary output,including a ten- year financial management program that will include the following,separately for the water system: ➢Capital Improvements Program -:•Project listing by year •:•Alternative financing options for capital projects •:•Optimum funding source by project by year ➢Borrowing Program Borrowing required(by source)to fund CIP projects not funded by other sources to include but not necessarily be limited to revenue bonds and state or other programs •:•Timing of bond issues)/loan(s)to provide required borrowed funds •:•Annual debt service of bond issue(s)/loan(s) ➢Revenue Sufficiency Analysis Annual revenue projections ❖Annual operations and maintenance expense projections ❖All other annual revenue requirements such as R&R,minor capital, transfers to other funds,current debt service/loan payments, replenishment of reserves,etc. Exhibit"A"Page 2 u •:•Alternative plans of annual percentage rate adjustments to the water rates to provide sufficient revenues for each service ➢Sources and Uses of Funds Analysis ➢Funds Analysis •:•Spend down limits(minimum reserve requirements)by fund Beginning and ending funds balances by fund year 2.3 Make adjustments to FAMS-XL®as required to model the utility's specific financial dynamics. 2.4 Review results with BAWA,make required adjustments and create alternative scenarios. 2.5 Meet with BAWA staff in an interactive work session to review preliminary results. 2.6 Make adjustments as required based upon input from BAWA staff in Task 2.4. 2.7 Meet with BAWA staff in a second interactive work session to review adjusted results and determine final plan of annual rate revenue adjustments and the revenue requirements for the test year for rate making. Task 3:Cost Allocation-Perform a Detailed Cost-of-Service Analysis for the Wholesale Water System. 3.1 Identify all test year cost/revenue requirements associated with the provision of water and reclaimed water service from the preferred financial forecast alternative indentified in Task 2. 3.2 Allocate costs/revenue requirements to service and to functional cost components, Fixed and variable cost components,customer classes and to retail service,as applicable,based upon appropriate allocation criteria. 3.3 Review allocation worksheet with BAWA staff. 3.4 Prepare final allocation worksheet based upon input from BAWA staff. B.Work Element II-Water Utility Rate Design Task 4:Rate Design-Develop Water Rates,Fees and Charges 4.1 Develop retail user fees: ➢Perform a diagnostic evaluation of the current rate design and identify adjustments to be considered in the development of rates. ➢Load billing history data into the FAMS-XL®rate model and create a billing frequency analysis. ➢Conduct a revenue test to ensure accuracy of billing data. ➢Set up the rate model in conformance with the cost allocation results of Task 3 and the rate design evaluation in 4.1. ➢Run the model and prepare retail rate structure scenarios. ➢Review results with BAWA and adjust as required. ➢Meet with BAWA staff in an interactive work session to review preliminary results. ➢Make adjustments as required based upon input from BAWA staff. ➢Meet with BAWA staffing a second interactive work session to review adjusted results and determine final alternative rate schedules. 4.2 Develop Specific Service and Miscellaneous Charges/Fees. Exhibit"A"Page 3 ➢Review BAWA operations to determine if additional service charges/revenue enhancements are appropriate. ➢Prepare cost computation template for each specific service fee to be evaluated (assume 12 fees). ➢Review cost computation templates with BAWA staff and adjust as required. ➢Prepare schedule of current and proposed specific service fees. 4.3 Conduct and Compile a Comparative Rate Study. Task 5:Presentation to Management-Conduct Presentation to BAWA Management 5.1 Prepare presentation. 5.2 Make adjustments based upon input from BAWA Staff. 5.3 Attending meetings with BAWA Management and present the preliminary results. Task 6:Final Report-Prepare a report of the Results of the Study 6_1 Prepare a Draft Report of the Results of the Study. 6+2 Review Draft Report with BAWA Staff and Management. 6_3 Present the results of the Study to the BAWA Board of Directors. ➢Meet with the BAWA Board to present the results of the Rate Study. ➢Make adjustments to the analyses as required based upon the direction of the BAWA Board of Directors. 6_4 Prepare Final report of the Results of the Rate Study. Task 7:Resolutions and Agreements-Provide Assistance in Development of Resolutions, Bulk Service Agreements,Development Agreements and Interlocal Agreements. 7.1 Prepare Rate Schedules for Inclusion in a Rate Resolution. 7.2 Review Resolution developed by General Counsel. 7.3 Participate in Conference calls with General Counsel to discuss Resolution 7.4 Attend Rate Hearings for Adoption. 7.5 Assist in Development of Bulk Service Agreements,Development Agreement and Interlocal Agreements as Required. Exhibit"A"Page 4 Exhibit"B" Updated Service I.Purpose. The Consultant shall perform annual wholesale water revenue sufficiency analysis update pursuant to the Agreement and as further described herein.Specifically,the Consultant shall perform an update of the ten-year financial plan developed as Basic Services. II.Work Plan. The Consultant will undertake a comprehensive and integrated approach to update the rate program and financial plan that meets BAWA's needs and shall develop rates in accordance with that rate program in a multi-year analysis that integrates all components of the rate requirements. The Consultant shall abide by the following work plan: A.Work Element I-Wholesale Water Utility Cost of Service Task 1:Project Initiation-Initiate the Project 1.1 Conduct Kickoff Meeting 1.2 Review of Background Information Task 2:Revenue Sufficiency Analysis-Develop a Multi-year Financial Forecast and Financial Plan for the Wholesale Water System 2.1 Prepare wholesale water customer and demand analysis to determine projected growth trends in usage patterns and total projected wholesale water system customers,ERCs and usage. 2.2 Obtain,verify and input financial and billing data into Consultant's proprietary FAMS-XL®model,run the model and produce preliminary output,including a ten- year financial management program that will include the following,separately for the wholesale water system: ➢Capital Improvements Program Project listing by year ❖Alternative financing options for capital projects Optimum funding source by project by year ➢Borrowing Program Borrowing required(by source)to fund CIP projects not funded by other sources to include but not necessarily be limited to revenue bonds and state or other programs ❖Timing of bond issue(s)/loan(s)to provide required borrowed funds ❖Annual debt service of bond issues)/loan(s) ➢Revenue Sufficiency Analysis +Annual revenue projections ❖Annual operations and maintenance expense projections All other annual revenue requirements such as R&R,minor capital, transfers to other funds,current debt service/loan payments, replenishment of reserves,etc. •:•Alternative plans of annual percentage rate adjustments to the wholesale water rates to provide sufficient revenues for each service Exhibit"B"Page I ➢Sources and Uses of Funds Analysis ➢Funds Analysis •:•Spend down limits(minimum reserve requirements)by fund •:•Beginning and ending funds balances by fund year 2.3 Make adjustments to FAMS-XG®as required to model the utility's specific financial dynamics. 2.4 Review results with BAWA,make required adjustments and create alternative scenarios. 2.5 Meet with BAWA staff in an interactive work session to review preliminary results. 2.6 Make adjustments as required based upon input from BAWA staff in Task 2.4. 2.7 Meet with BAWA staff in a second interactive work session to review adjusted results and determine final plan of annual rate revenue adjustments and the revenue requirements for the test year for rate making. Task 3:Conduct and Compile a Comparative Rate Study Task 4:Presentation to Management-Conduct Presentation to BAWA Management 4.1 Prepare presentation. 4.2 Make adjustments based upon input from BAWA Staff. 4.3 Attending meetings with BAWA Management and present the preliminary results. Task 6:Final Report-Prepare a report of the Results of the Study 5.1 Prepare a Draft Report of the Results of the Study. 5.2 Review Draft Report with BAWA Staff and Management. 5.3 Present the results of the Study to the BAWA Board of Directors. ➢Meet with BAWA Board to present the results of the Rate Study. ➢Make adjustments to the analyses as required based upon the direction of the BAWA Board of Directors. 5.4 Prepare Final report of the Results of the Rate Study. Task 6:Resolutions and Agreements-Provide Assistance in Development of Resolutions, Bulk Service Agreements,Development Agreements and interlocal Agreements. 6.1 Prepare Rate Schedules for Inclusion in a Rate Resolution. 6.2 Review Resolution developed by General Counsel. 6.3 Participate in Conference calls with General Counsel to discuss Resolution 6.4 Attend Rate Hearings for Adoption. 6.5 Assist in Development of Bulk Service Agreements,Development Agreement and Interlocal Agreements as Required. Exhibit"B"Page 2