2003-380ORDINANCE NO. 2003- o730
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS
AUTHORIZING THE CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES
AGREEMENT WITH BLACK & VEATCH CORPORATION, FOR PROFESSIONAL
CONSULTING SERVICES RELATING TO THE DENTON MUNICIPAL UTILITIES
WATER UTILITIES COST OF SERVICE AND RATE DESIGN STUDY; AUTHORIZING
THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, the City Council deems it in the public interest to engage Black & Veatch
Corporation, a Delaware Corporation, (`B&V"), to provide professional consulting services to
the City relating to the Denton Municipal Utilities water utilities cost of service and rate design
study; and
WHEREAS, the City staff has reported to the City Council that there is a substantial need
for the above-described specialized professional consulting services, and that limited City staff
cannot adequately perform the services and tasks with its own personnel; and
WHEREAS, Chapter 2254 of the Texas Government Code, known as the "Professional
Services Procurement Act", generally provides that a City may not select a provider of
professional services on the basis of competitive bids, but must select the provider on the basis of
demonstrated competence, knowledge, and qualifications, and for a fair and reasonable price;
and
WHEREAS, the City Council has provided in the City Budget for the appropriation of
funds to be used for the purchase of the professional consulting services, as set forth in the
Professional Services Agreement; NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1: That the City Manager is hereby authorized to execute a Professional
Services Agreement with Black & Veatch Corporation, a Delaware Corporation, for professional
consulting services relating to the Denton Municipal Utilities, in an amount not to exceed
$55,000, as described therein, in substantially the form of the Professional Services Agreement
attached hereto and incorporated herewith by reference.
SECTION 2: That the award of this Agreement by the City is on the basis of the
demonstrated competence, knowledge, and qualifications of B&V and the ability of B&V to
perform the professional consulting services needed by the City for a fair and reasonable price.
SECTION 3: That the expenditure of funds as provided in the attached Professional
Services Agreement is hereby authorized.
SECTION 4: That this ordinance shall become effective immediately upon its passage
and approval.
PASSED AND APPROVED this the ,2lub day of A izp ~ '2003.
EULINE BROCK, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
By:
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
By:
S:\Our Documents\Ordinances\03\Black & Veatch-PSA-DMU-Water Rate Study 2003.doc
, i•.
STATE OF TEXAS §
COUNTY OF DENTON §
PROFESSIONAL SERVICES AGREEMENT
FOR WATER UTILITIES COST OF SERVICE AND RATE DESIGN
THI$ AGREEMENT is made and entered into as of the Ad, day of
2003, by and between the City of Denton, Texas, a Texas Municipal
Corporation, with its principal offices at 215 East McKinney Street, Denton, Texas 76201
(hereafter "OWNER") and Black & Veatch Corporation, a Delaware Corporation, with its offices
at 14100 San Pedro, Suite 310, San Antonio, Texas 78232 (hereafter "CONSULTANT"); the
parties acting herein, by and through their duly-authorized representatives and officers.
WITNESSETH, that in consideration of the mutual promises, covenants, agreements
herein, and in consideration of the premises, the parties hereto do mutually AGREE as follows:
ARTICLE I
EMPLOYMENT OF CONSULTANT
The OWNER hereby contracts with CONSULTANT, as an independent contractor, and
the CONSULTANT hereby agrees to perform the professional services provided for herein in
connection with the Project as stated in the Articles to follow, with diligence and in accordance
with the professional standards customarily obtained for such services in the State of Texas. The
professional services set forth herein are in connection with the following described project (the
"Project"):
Denton Municipal Utilities - Water Utilities Cost of Service Study and Rate Design
If during the two-year period following completion of the Services, it is shown that there
is an error in the Services caused solely by CONSULTANT'S failure to meet such standards and
OWNER has notified CONSULTANT in writing of any such error within that period,
CONSULTANT shall re-perform, at no additional cost to OWNER, such Services within the
original Scope of Services as may be necessary to remedy such error.
The obligations and representations contained in this Article I are CONSULTANT'S sole
warranty and guarantee obligations and OWNER'S exclusive remedy in respect of quality of the
Services. EXCEPT AS PROVIDED IN THIS ARTICLE, CONSULTANT MAKES NO
OTHER WARRANTIES OR GUARANTEES, EXPRESS OR IMPLIED, RELATING TO
CONSULTANT'S SERVICES AND CONSULTANT DISCLAIMS ANY IMPLIED
WARRANTIES OR WARRANTIES IMPOSED BY LAW INCLUDING WARRANTIES
OF MECHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. This Article
I governs, modifies, and supersedes any other terms in this Agreement which may be construed
to address warranties or guarantees or the quality of the Services.
Page 1 of 12
ARTICLE II
SCOPE OF SERVICES
The CONSULTANT shall perform the following Basic Services in a professional
manner:
A. To perform those professional services as set forth and as described in the 9 page document
entitled Exhibit A - Scope of Services, City of Denton, Texas, Municipal Utilities, Water
Utility Cost of Service Study and Rate Design-which documents are collectively attached
hereto as Exhibit A, which are incorporated herewith by reference.
B. If any conflict arises between the terms of this Agreement and Exhibit A, the terms and
conditions of this Agreement shall control over the terms and conditions of the Exhibit.
ARTICLE III
ADDITIONAL SERVICES
Any additional services to be performed by the CONSULTANT, if authorized by the OWNER,
which are not included as Basic Services in the above-described Scope of Services, set forth as
provided by Article II. above, shall be later agreed-upon by OWNER and CONSULTANT, who
shall determine, in writing, the scope of such additional services, the amount of compensation for
such additional services, and other essential terms pertaining to the provision of such additional
services by the CONSULTANT.
ARTICLE IV
PERIOD OF SERVICE
This Agreement shall become effective upon its execution by the OWNER and the
CONSULTANT, and upon the issuance of a notice to proceed by the OWNER. It shall remain
in force and effect for the period that may reasonably be required for the completion of the
Project, including Additional Services, if any; or until the funds provided for herein are
exhausted, whichever event shall first occur; together with any required extensions approved by
the OWNER. This Agreement may be sooner terminated in accordance with the provisions
hereof. CONSULTANT shall make all reasonable efforts to complete the services set forth
herein as expeditiously as possible and to meet the schedule reasonably established by the
OWNER, acting through its Assistant City Manager for Utilities, or his designee.
ARTICLE V
COMPENSATION
A. COMPENSATION TERMS:
1. "Subcontract Expense" is defined as those expenses, if any, incurred by
CONSULTANT in the employment of others in outside firms, for services in the area
of professional consulting, or related services. Any subcontractor or sub-consultant
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billing reasonably incurred by the CONSULTANT in connection with the Project
shall be invoiced to OWNER at the actual cost.
2. "Direct Non-Labor Expense" is defined as that expense, based upon actual cost, for
any out-of-pocket expense reasonably incurred by the CONSULTANT in the
performance of this Agreement for long distance telephone charges, telecopy charges,
messenger services, printing and reproduction expenses, out-of-pocket expenses for
purchased computer time, prudently incurred travel expenses (including without
limitation subsistence and lodging away from home) related to the work on the
Project, and similar incidental expenses incurred in connection with the Project.
B. BILLING AND PAYMENT:
For and in consideration of the professional services to be performed by the CONSULTANT
herein, the OWNER agrees to pay CONSULTANT, based upon the satisfactory completion
of the Basic Services tasks set forth in the Scope of Services as shown in Article II above; as
follows:
1. CONSULTANT shall perform its work on this Project in accordance with the provisions
of those tasks which are set forth in Exhibit A attached hereto and incorporated herewith
by reference. CONSULTANT shall bill from time sheets, on a once-monthly or longer
basis, in minimum .1 (one-tenth) hour or smaller time increments, at the established
hourly Billing Rates or as otherwise provided herein. For and in consideration of the
professional services to be performed by the CONSULTANT herein, the OWNER agrees
to pay, at the hourly rates as shown in Exhibit A, a total fee, including reimbursement for
direct non-labor expenses and for its subcontractor expense, an amount not to exceed
$55,000.
2. Partial payments to the CONSULTANT will be made monthly in accordance with the
statements reflecting the actual completion of the Basic Services, rendered to and
approved by the OWNER through its Assistant City Manager for Utilities, or his
designee. However, under no circumstances shall any monthly statement for services
exceed the value of the work performed at the time a statement is rendered.
3. Nothing contained in this Article shall require the OWNER to pay for any work which is
improper, as reasonably determined by its Assistant City Manager for Utilities, or his
designee, or which is not submitted by CONSULTANT to the OWNER in compliance
with the terms of this Agreement. The OWNER shall not be required to make any
payments to the CONSULTANT at any time when the CONSULTANT is in default
under this Agreement.
4. It is specifically understood and agreed that the CONSULTANT shall not be authorized
to undertake any work pursuant to this Agreement which would require additional
payments by the OWNER for any charge, expense or reimbursement above the not-to-
exceed amount as stated hereinabove, without first having obtained the prior written
authorization from the OWNER. CONSULTANT shall not proceed to perform any
Page 3 of 12
services to be later provided for under Article III. "Additional Services" without first
obtaining prior written authorization from the OWNER.
C. ADDITIONAL SERVICES: For additional services authorized in writing by the OWNER in
Article III. hereinabove, CONSULTANT shall be paid based on a to-be-agreed-upon
Schedule of Charges. Payments for additional services shall be due and payable upon
submission by the CONSULTANT, and shall be in accordance with the provisions of Article
V.B. hereinabove. Statements for Basic Services and any Additional Services shall be
submitted to OWNER no more frequently than once monthly.
D. PAYMENT: If the OWNER fails to make payments due the CONSULTANT for services
and expenses within thirty (30) days after receipt of the CONSULTANT'S undisputed
statement thereof, the amounts due the CONSULTANT will be increased by the rate of one
percent (1%) per month from and after the said thirtieth (30th) day, and in addition,
thereafter, the CONSULTANT may, after giving seven (7) days written notice to the
OWNER, suspend services under this Agreement until the CONSULTANT has been paid in
full for all amounts then due and owing, and not disputed by OWNER, for services, expenses
and charges. Provided, however, nothing herein shall require the OWNER to pay the late
charge of one percent (1%) per month as set forth herein, if the OWNER reasonably
determines that the CONSULTANT' work is unsatisfactory, in accordance with Article V.B.
of this Agreement, and OWNER has notified CONSULTANT, in writing, within thirty (30)
days of receipt of the billing statement in question, of that fact in writing.
E. METHOD OF PAYMENT: Payments due and owing CONSULTANT under this
Agreement shall be made by check and mailed to the post office box identified in the
remittance instructions on the CONSULTANT'S most recent invoice, and received by
CONSULTANT no later than the payment due date. Invoice number and project name shall
be referenced on the remittance advice and mailed with the check to the post office box.
ARTICLE VI
OBSERVATION AND REVIEW OF THE WORK
The CONSULTANT will exercise reasonable care and due diligence in discovering and
promptly reporting to the OWNER any defects or deficiencies in the work of the
CONSULTANT or any of its subcontractors or sub-consultants.
ARTICLE VII
OWNERSHIP OF DOCUMENTS
A. All documents prepared by the CONSULTANT (and CONSULTANT' subcontractors or
subconsultants) pursuant to this Agreement are instruments of service and shall become the
property of the OWNER upon the termination of this Agreement. The CONSULTANT is
entitled to retain copies of all such documents. The documents prepared and furnished by the
CONSULTANT are intended only to be applicable to this Project and OWNER'S use of these
documents in other projects shall be at OWNER'S sole risk and expense. In the event the
OWNER uses any of the information or materials developed pursuant to this Agreement in
Page 4 of 12
another project or for other purposes than specified herein, CONSULTANT is released from any
and all liability relating to their use in that project.
B. At all times, each party shall retain all of its rights in its drawing details, designs,
specifications, databases, computer software, copyrights, trade and service marks, patents, trade
secrets, and any other proprietary property. OWNER shall not use in a written prospectus or
other investment memorandum, any CONSULTANT report constituting or including
CONSULTANT'S professional opinion, except with CONSULTANT'S prior written consent,
which shall not be unreasonably withheld.
ARTICLE VIII
INDEPENDENT CONTRACTOR
CONSULTANT shall provide services to OWNER as an independent contractor, not as
an employee of the OWNER. CONSULTANT shall not have or claim any right arising from
employee status.
ARTICLE IX
INDEMNITY AGREEMENT
Notwithstanding any other provision of this Agreement, the CONSULTANT shall
indemnify and save and hold harmless the OWNER and its officials, officers, agents, attorneys
and employees from and against any and all liability, claims, demands, damages, losses and
expenses, including but not limited to court costs and reasonable attorney's fees incurred by the
OWNER for bodily injury, death, or third-party property damage, resulting from the negligent
acts or omissions of the CONSULTANT or its officers, shareholders, agents, subcontractors,
subconsultants, attorneys, and/or employees in the execution, operation, or performance of this
Agreement.
Nothing in this Agreement shall be construed to create a liability to any person who is not
a party to this Agreement and nothing herein shall waive any of the party's defenses, both at law
or equity, to any claim, cause of action or litigation filed by anyone not a party to this
Agreement, including the defense of governmental immunity, which defenses are hereby
expressly reserved.
ARTICLE X
INSURANCE
During the performance of the Services under this Agreement, CONSULTANT shall
maintain the following insurance with an insurance company licensed to do business in the State
of Texas by the State Insurance Board or any successor agency, that has a rating with A. M. Best
Rate Carriers of at least an "A-" or above:
A. Commercial General Liability Insurance with bodily injury limits of $1,000,000 for each
occurrence and $1,000,000 in the aggregate; and with property damage limits of $100,000 for
each occurrence, and $100,000 in the aggregate.
Page 5 of 12
B. Automobile Liability Insurance with combined single limit of $1,000,000.
C. Worker's Compensation Insurance in accordance with statutory requirements and Employer's
Liability Insurance with limits of not less than $100,000 for each accident.
D. Professional Liability Insurance with limits of $1,000,000 aggregate.
E. CONSULTANT shall furnish insurance certificates to the OWNER to evidence such
insurance coverage. The insurance policies (except the Worker's Compensation and
Professional Liability policies) but only to the extent of the policy limits stated herein, shall
name the OWNER as an additional insured on all such policies to the extent that is legally
possible, and shall contain a provision that such insurance shall not be cancelled or modified
without at least thirty (30) days prior written notice to OWNER and CONSULTANT. In the
event of a claim, CONSULTANT shall make applicable insurance policies available for
review by OWNER. CONSULTANT shall retain its rights to restrict disclosure of
CONSULTANT'S proprietary information.
ARTICLE XI
TERMINATION OF AGREEMENT
A. Notwithstanding any other provision of this Agreement, either party may terminate this
Agreement by providing thirty (30) days advance written notice to the other party.
B. This Agreement may alternatively be terminated in whole or in part in the event of either
party substantially failing to fulfill its obligations under this Agreement. No such termination
will be effected unless the other party is given (1) written notice (delivered by certified mail,
return receipt requested) of intent to terminate and setting forth the reasons specifying the
nonperformance or other reason(s), and not less than thirty (30) calendar days to cure the
failure; and (2) an opportunity for consultation with the terminating party prior to
termination.
C. If this Agreement is terminated prior to completion of the services to be provided hereunder,
CONSULTANT shall immediately cease all services upon receipt of the written notice of
termination from OWNER, and shall render a final bill for services to the OWNER within
thirty (30) days after the date of termination. The OWNER shall pay CONSULTANT for all
services properly rendered and performed, and for reimbursable expenses prior to notice of
termination being received by CONSULTANT, in accordance with Article V. of this
Agreement. Should the OWNER subsequently contract with a new consultant for the
continuation of services on the Project, CONSULTANT shall cooperate in providing
information to the OWNER and to the new consultant. If applicable, OWNER shall allow
CONSULTANT a reasonable time to transition and to turn over the Project to a new
consultant. CONSULTANT shall turn over all documents prepared by CONSULTANT
pursuant to this Agreement to the OWNER on or before the date of termination, but may
maintain copies of such documents for its files.
Page 6 of 12
ARTICLE XII
RESPONSIBILITY FOR CLAIMS AND LIABILITIES
Approval of the work by the OWNER shall not constitute, nor be deemed a release of the
responsibility and liability of the CONSULTANT, its officers, employees, agents,
subcontractors, and sub-consultants for the accuracy and competency of their designs or other
work performed pursuant to this Agreement; nor shall such approval by the OWNER be deemed
as an assumption of such responsibility by the OWNER for any defect in the design or other
work prepared by the CONSULTANT, its principals, officers, employees, agents,
subcontractors, and sub-consultants.
ARTICLE XIH
NOTICES
All notices, communications, and reports required or permitted under this Agreement
shall be personally delivered to; or telecopied to; or mailed to the respective parties by depositing
same in the United States Mail at the addresses shown below mailed postage prepaid, certified
mail, return receipt requested, unless otherwise specified herein:
To CONSULTANT: To OWNER:
Black & Veatch Corporation
14100 San Pedro, Suite 310
San Antonio, Texas 78232
Attn: Mr. Larry Peart
Fax: (210) 404-1370
City of Denton, Texas
Denton Municipal Utilities
215 East McKinney Street
Denton, Texas 76201
Attn: Gary Calmes, Utility Rate Administrator
Fax: (940) 349-8120
and
City of Denton, Texas
City Manager
215 East McKinney Street
Denton, Texas 76201
Fax: (940) 349-8596
All notices given under this Agreement shall be effective upon their actual receipt by the
party to whom such notice is given.
ARTICLE XIV
ENTIRE AGREEMENT
This Agreement consisting of twelve (12) pages and one (1) exhibit constitutes the
complete and final expression of the agreement of the parties and is intended as a complete and
Page 7 of 12
exclusive statement of the terms of their agreements, and supersedes all prior contemporaneous
offers, promises, representations, negotiations, discussions, communications, understandings,
and agreements which may have been made in connection with the subject matter of this
Agreement.
ARTICLE XV
SEVERABILTY
If any provision of this Agreement is found or deemed by a court of competent
jurisdiction to be invalid or unenforceable, it shall be considered severable from the remainder of
this Agreement, and shall not cause the remainder to be invalid or unenforceable. In such event,
the parties shall reform this Agreement, to the extent reasonably possible, to replace such
stricken provision with a valid and enforceable provision which comes as close as possible to
expressing the original intentions of the parties respecting any such stricken provision.
ARTICLE XVI
COMPLIANCE WITH LAWS
The CONSULTANT shall comply with all federal, state, local laws, rules, regulations,
and ordinances applicable to the work performed by CONSULTANT hereunder, as they may
now read or as they may hereafter be amended.
ARTICLE XVII
DISCRIMINATION PROHIBITED
In performing the services required hereunder, the CONSULTANT shall not discriminate
against any person on the basis of race, color, religion, sex, national origin or ancestry, age, or
physical handicap.
ARTICLE XVIII
PERSONNEL
A. CONSULTANT represents that it has or will secure at its own expense all personnel required
to perform all the services required under this Agreement. Such personnel shall not be
employees or officers of, nor have any contractual relations with the OWNER.
CONSULTANT shall immediately inform the OWNER in writing of any conflict of interest
or potential conflict of interest that CONSULTANT may discover, or which may arise during
the term of this Agreement.
B. All services required hereunder will be performed by CONSULTANT or under its direct
supervision. All personnel engaged in performing the work provided for in this Agreement,
shall be qualified, and shall be authorized and permitted under state and local laws to perform
such services.
Page 8 of 12
ARTICLE XD{
ASSIGNABIL] TY
The CONSULTANT shall not assign any interest in this Agreement and shall not transfer
any interest in this Agreement (whether by assignment, novation or otherwise) without the prior
written consent of the OWNER. CONSULTANT shall further promptly notify OWNER in
writing of any change of its name as well as of any significant change in its corporate structure,
its business address, its operations, or regarding its solvency.
ARTICLE XX
MODIFICATION
No waiver or modification of this Agreement or of any covenant, condition, limitation
herein contained shall be valid unless in writing and duly executed by the party to be charged
therewith. No evidence of any waiver or modification shall be offered or received in evidence in
any proceeding arising between the parties hereto arising out of, or affecting this Agreement, or
the rights or obligations of the parties hereunder, unless such waiver or modification is in
writing, duly executed. The parties further agree that the provisions of this Article will not be
waived unless as herein set forth.
ARTICLE XXI
MISCELLANEOUS
A. The following Exhibit is attached to, incorporated herewith by reference, and is made a part
of this Agreement for all purposes pertinent:
Exhibit A - Scope of Services, City of Denton, Texas, Municipal Utilities, Water Utility
Cost of Service Study and Rate Design.
B. CONSULTANT agrees that OWNER shall, until the expiration of three (3) years after the
final payment made by OWNER under this Agreement, have access to and the right to
examine any directly pertinent books, documents, papers and records of the CONSULTANT
involving transactions relating to this Agreement. CONSULTANT agrees that OWNER
shall have access during normal working hours to all necessary CONSULTANT facilities
and shall be provided adequate and appropriate working space in order to conduct
examinations or audits in compliance with this Article. OWNER shall give CONSULTANT
reasonable advance notice of all intended examinations or audits.
C. Venue of any suit or cause of action under this Agreement shall lie exclusively in Denton
County, Texas. This Agreement shall be governed by and construed in accordance with the
laws of the State of Texas.
D. For purposes of this Agreement, the parties agree that the Project Principal shall be Mr. Bart
Foster, and the key persons who will perform most of the work as the Project Team, include
the Project Manager, Mr. Larry Peart and Technical Lead, Mr. Dustin Bishop, under, and in
Page 9 of 12
accordance with this Agreement, shall be as specifically identified and set forth in Exhibit A
attached hereto. This Agreement has been entered into with the understanding, expectation,
and the OWNER's reliance, that the above-stated employees of CONSULTANT shall
perform all or a significant portion of the work on the Project. Any proposed changes
regarding the change of the Project Manager or other key personnel, requested by
CONSULTANT, respecting one or more of the above-stated employees, shall be subject to
the approval of the OWNER, which approval the OWNER shall not unreasonably withhold.
Nothing herein shall limit CONSULTANT from using other equally qualified and competent
members of its firm to perform the other incidental services required herein, under its
supervision or control.
E. CONSULTANT shall commence, carry on, and complete its work on the Project with all
applicable dispatch, and in a sound, economical, efficient manner, and in accordance with the
provisions hereof in accomplishing the Project, CONSULTANT shall take such steps as are
appropriate to ensure that the work involved is properly coordinated with any related work
being carried on by the OWNER.
F. The OWNER shall assist the CONSULTANT by placing at the CONSULTANT's disposal
all available information pertinent to the Project, including previous reports, any other data
relative to the Project, and arranging for the access thereof. CONSULTANT may rely on
such information, and OWNER shall make all provisions for the CONSULTANT to enter in
or upon, public and private property as required for the CONSULTANT to perform
professional services under this Agreement. OWNER and CONSULTANT agree that
CONSULTANT is entitled to rely upon information furnished to it by OWNER without the
need for further inquiry or investigation into such information.
G. The captions of this Agreement are for informational purposes only and shall not in any way
affect the substantive terms or conditions of this Agreement.
H. Neither party shall be liable to the other party for loss of profits or revenue; loss of use; loss
of opportunity; loss of goodwill; cost of substitute facilities, goods or services; cost of
capital; cost of replacement power; governmental and regulatory sanctions; and claims of
customers for such damages; or for any special, consequential, incidental, indirect or
exemplary damages whether a claim for any such loss arises out of breach of contract,
warranty, tort (including negligence), strict liability, indemnity, or another theory. Except for
an obligation to make payments, neither party shall be in default to the extent any
nonperformance is caused by a circumstance beyond such party's reasonable control. The
warranties, obligations, liabilities and remedies of the parties, as provided herein, are
exclusive and in lieu of any others available at law or in equity. CONSULTANT'S total
aggregate liability under this Agreement shall not exceed the compensation received by
CONSULTANT under this Agreement. To the fullest extent allowed by law, releases from,
and limitations of liability shall apply notwithstanding the breach of contract, tort, including
negligence, strict liability or other theory of legal liability of the party released or whose
liability is limited. CONSULTANT may subcontract portions of the Services to its related
entities.
Page 10 of 12
I. Since CONSULTANT has no control over the cost of labor, materials, or equipment
furnished by others, or over the resources provided by others to meet Project schedules,
CONSULTANT'S opinion of probable costs and of Project schedules shall be made on the
basis of experience and qualifications as a professional consultant. CONSULTANT does not
guarantee that proposals, bids, or actual Project costs of other contractors will not vary from
CONSULTANT'S cost estimates or that actual schedules of other contractors will not vary
from CONSULTANT'S projected schedules.
IN WITNESS WHEREOF, the OWNER, the City of Denton, Texas has executed this
Agreement in four (4) original counterparts, by and through its duly authorized City Manager;
and CONSULTANT has executed this At b and through its duly authorized
undersigned officer on this the day of gre men 2003.
"OWNER"
CITY OF DENTON, TEXAS
A Texas Municipal Corporation
By
Michael A. Conduff, City ana r
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
By:
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
B Aua Lj
U 11 of 12
"CONSULTANT"
BLACK & VEATCH CORPORATION
A Delaware Corporation
B
6
Rodger Smith
President, Enterprise Consulting Division
ATTEST:
By: o
M. y n Hartman
Page 12 of 12
EXHIBIT A - SCOPE OF SERVICES
City of De Eton; Texas
Mumma LHIP:e.sAhiprer PiNies
Cost of Se vice Sia[i and Rate Desie!:
Task 1- Project Initiation
Subtask 1.1 - Data Collection
At the initiation of the project, we will visit Denton's offices to collect and review basic
financial and statistical data provided by the Utility to include historical and current
financial information, reports by others, and operating and capital budgets. Where
possible, financial data will be reviewed in its current form and/or collected in an
electronic format to avoid duplication of effort with regard to data entry and to ensure
data accuracy. Specific subtasks will include:
Data Request
We will furnish the Utility with a list of basic data needed to conduct the study. The
list will detail requests for: customer information by service area, background
information on current billing policies, financial and operating data, historical
customer account and billing records, reports by others, audits, budgets, fixed asset
records, bond prospectuses, debt service schedules, and ordinances.
• Review and Evaluation of Basic Data
We will meet with Utility administrative and financial staff and review all data
received in detail to ensure its completeness and our understanding of historical water
and wastewater operations and requirements reflected therein.
• Supplemental Data Request
As the study progresses after initial data is reviewed, we may submit requests for
additional data and/or seek clarification of initial information received, as necessary.
Task2 - Water Utilities Cost of Service
Subtask 2.1 - Commodity Volume and Financial Forecasting Review
The Utility's current methodologies used to forecast billable volume and revenues will be
examined in depth for the proposed budget year and the general methodology used for
future planning years will be reviewed. We will determine if the existing methodologies
are economically sound and recommend improvements as deemed necessary.
Billable Volume Forecast
We will review the Utility's current billable volume forecast to verify that the
assumptions used in the forecast are sound in design and adequately take into account
past customer growth, normalized consumption, and economic activity.
• Revenue Forecast Analysis
We will review and recommend improvements to the Utility's current methodology
used to forecast revenues. We will verify that the Utility's approach to project future
sales and associated revenues under current rate levels are based upon historical and
projected growth of customers and usage characteristics.
• Revenue Requirements Analysis
Methodologies used to develop operations and maintenance expense, routine capital
replacement expenditures, the capital improvement program and financing plan and
Black & Veatch Page • 1
EXHIBIT A - SCOPE OF SERVICES
City o' Denton, Terns
Mu Il a2 U"V e's-Jlaler Uilt~,}ies
Cost of Service S Ay aria Hale Dos.g
debt service expense will be reviewed and improvements recommended to ensure
that the Utility is accurately forecasting its revenue requirements.
Revenue Adequacy and Indicated Adjustments
We will prepare an analysis summarizing the above revenues and revenue
requirements to determine the adequacy of revenues under existing rate levels and the
validity of any proposed revenue adjustments. Separate income statements will be
prepared for each of the water and wastewater utilities which will indicate any
needed revenue adjustments.
Subtask 2.2 - Wholesale and Retail Water and Wastewater Cost of Service
Fiscal year (FY) 2004 will be used for the purpose of conducting cost allocations for the
wholesale water and wastewater customer classifications. The data for test year (FY)
2004 will be obtained from (FY) 2002-2003 actual data and adjusted to include any
known or verifiable changes. The retail water and wastewater cost of service will be
completed in concurrence with the wholesale cost of service. The test years FY 2004 -
FY 2008 will be used to develop rates for retail water and wastewater service. The cost of
service to be recovered from the wholesale customer class will be calculated on the utility
basis while the retail cost of service will be developed using the cash basis methodology.
Separate water and wastewater costs of service to be recovered equate revenue under
existing rates plus the recommended overall revenue increase for each utility system.
Costs of service will be determined for the various customer classes and types of service
provided by the Utility.
Subtask 2.3 - Determination of Customer Classes
Cost of service will be allocated to groups of customers with similar service requirements
and contractual requirements. Customers are typically grouped into residential,
commercial, industrial, high volume and high strength users, inside/outside city
customers, and wholesale groups. Additional classification can be applied to recognize
specific characteristics as deemed necessary by utility management. We will:
• Determine Appropriate Customer Classes
Review the existing customer class designations to determine appropriateness and
equitability and recommend to the Utility any revised and/or new customer class
designations, as needed.
• Estimate Customer Class Characteristics
Estimate usage and billing characteristics of each customer class and type of service.
The characteristics include total annual water use, ratio of peak to average rates of
use, wastewater pollutant characteristics, responsibility for infiltration and inflow in
the sewer system, and customer billing requirements. Estimates of class loading will
be based on bill tabulation data, system operating statistics, available special studies,
and our judgment and experience.
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EXHIBIT A - SCOPE OF SERVICES
M of De ton, T.!xas
:"u^iciua U~ ~ -:P9 U/a:er JH ties
Cost of Svvico S u N ane Hale Des u-
Subtask 2.4 - Allocation of Costs of Service
Costs of service, or revenue requirements to be met from water and wastewater utility
service rates, will be first allocated to functional cost components to provide a basis for
subsequent allocations to customer classes, which will recognize estimates of each class'
service requirements. Class allocations will be compared to estimates of corresponding
class revenues under existing rates to identify relative adjustments by class, and in total
for the utility systems, to align revenues
with allocated costs. This process will Our considerable utility system design expert ence
recognize existing wholesale contractual ::,,,provides a:basls for.cletermining.which parameters
requirements, accepted water (AWWA) :,,.4hould be. used for' assigning, costs,: to water and
wastewater functional components.7 s:combined
and wastewater (WEF) industry rate-
making standards, and will comply with all applicable State and Federal
qualities ~ Us to cletermin.e.... appropriate, , cost allocations and: to-1,explain. . '66 ratlonale,, behind
regulatory requirements. sludy.findings.to the public and policy makers;
• Functional Cost Allocations
We will allocate costs of service to various cost components that constitute functional
classifications of the types of service each utility is required to provide. The
development of functional cost allocations will recognize cost-causative factors
including annual and peak rates of water use; wastewater volume, capacity, and
strengths for sewer allocations; and service delivery considerations for any specific
customer classes.
Development of Customer Class Units of Service
We will estimate customer class service characteristics (use, demand, strengths,
etc.) associated with each of the functional cost elements recognizing the bill
distribution analysis, applicable data available in Utility records, engineering
judgment about customer class service requirements, and experience with other
utility operations with similar usage characteristics and patterns.
• Allocation of Costs to Customer Classes
We will distribute costs by functional
component to customer classes using unit costs
of service applicable to all system users and
class units of service to determine each class'
proportional responsibility for total system
costs. The relative responsibility of each class
of utility customers will be specifically
determined based on each class' or users'
estimated service requirements.
• Determination of Revenue Adequacy by Customer Class
We will prepare a comparison of class revenues under existing utility rates with
allocated class costs of service to determine the level of cost recovery by class and in
total, and to demonstrate any needed adjustments to align class revenues and
allocated costs.
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EXHIBIT A - SCOPE OF SERVICES
City o' N ton, Teva
u is ; Url+e5 t:aer tJfllities
Cosi of 9enrico Scc anc Rale ue.!r
Subtask 2.5 - Management Accounting Documentation and Processes
We will review the Utility's revenues, expenses, and cost accounting documentation.
This task will examine the Utility's processes for generating the adequate financial
information, current accounting, and financial processes to support the departmental
financial and project cost information. 'We will also review and provide written
comments about the Utility's monthly standard and "ad hoc" reports. The review and
comments will detail the value and appropriateness of such reports and recommend any
additional reports that would enhance the management reporting process.
Task 3 - Wholesale and Retail Water and Wastewater Hate Design
Subtask 3.1 - Review of Existing Rate Methodologies
The purpose of this task will be to analyze the current rate methodologies used for the
wholesale and retail customer classes in order to gain an understanding of the existing
cost recovery mechanisms of the Utility. Specific subtasks of this analysis will include:
Review of Existing Rate Methodologies
We will conduct a review of the current methodologies the Utility uses to develop
rates and charges for water and wastewater service. This review will include
discussions with utility management regarding rate policy issues and as applicable,
review of contractual provisions with entities that receive utility service from Denton.
This review will form the foundation for assessing the adequacy of the existing
methodologies to equitably recover cost of service as developed in subsequent tasks,
and to determine that the existing customer classes used are satisfactory.
Identify and Evaluate Alternative Rate Structures
Review of the existing rates will form the initial basis for identifying alternative rate
structures and practices that the City of Denton may wish to consider in the
formulation of new rates. The general guidelines for evaluating utility rates include
the following:
- Rate schedules should be clear and readily understood.
- Rates should be designed to allow recovery of the cost of providing service.
- Rates should reflect the cost of service by customer classification.
- Rates should be competitive with other regional utilities.
- Rates should promote revenue stability.
Recommendations will be developed with consideration to the above guidelines
consistent with management goals and policies.
Subtask 3.2 - Wholesale Rate Design
The purpose of this task will be to develop wholesale water and wastewater rates to
recover their respective cost of service. Wholesale water rates will be designed to include
a facility charge, a volume charge, and annual demand charge per unit of peak day usage.
Wholesale wastewater rates will be designed to incorporate a facility and a volume
charge. We will hold discussions with management to understand and determine how the
wastewater pretreatment program charges and sampling and analysis charges are to be
recovered.
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EXHIBIT A - SCOPE OF SERVICES
DW v. De ion, Texas
1'unidoai l1i1:•ies-Mater flkfies
Cost of se vico Sia(! f m(1 Rale Doss-
Subtask 3.3 - Retail Rate Design
Schedules of rates and charges will be developed for each utility, which recover the costs
of service from each customer class for the test year within practical limits. Specific
subtasks will include:
Determination of Revenue to be Generated by Rates.
Revenue to be recovered from rate structures Tfi
will reflect the total cost of service by customer pa
class. cuw
• Development of Water and Wastewater Rates
We will develop a schedule of rates and charges that equitably and efficiently recover
total revenue requirements. In addition, we will recommend rates that are competitive
for each respective customer class and will include a multi-year phase in approach in
the case of a large rate increases. Specific issues to be addressed include:
• Water Irrigation Rates
We will review and recommend a methodology for the possible implementation of
irrigation rates for the residential and commercial classifications. In the development
of an irrigation rate we will take into account system demand and the impact of
irrigation rates on Denton's water supply.
• Water and Wastewater Facility Charges
The Utility's current facility charge will be reviewed and a methodology will be
developed to charge all customers regardless of classification the same charge based
upon their meter size. During this analysis we will also identify the pros and cons of
establishing a volume allowance in the facility charge for the retail customer class.
• Commercial Water Rate Block Methodology
An analysis will performed for the appropriateness of implementing an inverted rate
block structure for commercial customers. We will provide an analysis on the
positives and negatives on the use of inverted rates for the commercial class and
identify specific customer groups the inverted rate structure might be appropriate.
• Commercial Wastewater Billed Volume Methodology
We will analyze the methodology the Utility uses to determine commercial billable
wastewater volume. We will provide written recommendations and survey how other
utilities bill their commercial wastewater customers.
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EXHIBIT A - SCOPE OF SERVICES
City o1 Dorton, Texas
u icier. t rt es VOarer,7;tlities
Cant of Se.,Oco Study and Ralo Desgr.
Subtask 3.4 - Determination of Customer Impacts
• Proposed Rate Revenue Adequacy
We will compare revenues expected from each
customer class under proposed rates with the cost of
service to be recovered from individual customer
classes and for the water and wastewater systems in
general to determine their adequacy.
• Typical Bill Comparison
We will prepare comparisons of
typical bills under existing and
proposed rates for each customer
class under various levels of water
usage and meter sizes for water
and wastewater customers.
Task 4 - Computer Cost of Service and Rate Design Model
Subtask 4.1 - Provide Computer Rate Model
We have the expertise to develop spreadsheet analyses that model established cost of
service and rate design procedures. These analyses become part of a personal computer
based cost of service and rate design model that enables each utility to periodically revise
and update studies and projections of the cost of service analyses, user charge
modifications, and the design of adequate rates on a routine basis. Our model's
framework will be specifically tailored and
designed to recognize the unique needs of the
Utility, its' characteristics and information base.
1 knowledge, loase,Ad- efficiently, and,
The model will incorporate required features
necessary to permit continuing, user-friendly, "in-
house" application by utility staff. The financial
planning and rate model development task will
include the following:
Model Features
• Automated ability to change study periods and retain relative information so that it
can be used on an annual basis by utility staff.
• Specifically tailored and designed to recognize the unique needs, characteristics, and
the information base of the utility, including compatibility with the utility's budgetary
and accounting systems.
• Ability to readily assess impact on cost of service allocations to user classes, user
charges, and utility rates of alternative management decisions.
• Capability to independently design and develop utility rates and charges on an annual
basis, thus permitting staff to examine the phase-in of needed rate adjustments over a
period of time.
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EXHIBIT A - SCOPE OF SERVICES
City o` Denton, Texas
muaidoa UN1 aes VI"a,er Utilities
Gesl of Ser ce S Idy and Rato Desiyn
The model tests revenue generation by class and in total for proposed rates and
indicates impacts on customers served through a typical monthly bill analysis.
Incorporation of advanced programming features to automate basic procedures such
as initializing the rate model for a new budget year, printing, transferring data files
into the rate model, setting-up screens for analyses, and navigating throughout the
rate model.
Subtask 4.2 - Provide Computer Rate Model Training
We will provide one (1) training session that will be conducted at the City's offices. The
training session will orient City staff members in the use of the water and wastewater
model.
Task 5 - Report and Meetings
Subtask 5.1 - Report Preparation & Deliverables
A comprehensive report will be developed which explains the study approach, key
assumptions, and the findings and recommendations for both utilities. The report will be
submitted in draft form for review by Utility representatives before a final report is
published and delivered. Specific subtasks will include:
• Draft Report Preparation
We will prepare the draft report covering development of revenue requirements, cost
of service analyses, rate design findings, and recommendations. This draft report will
be available for the Utility's review and approval. We will make every reasonable
effort to accommodate any recommendations and minor revisions requested by the
Utility as a result of the review process.
• Final Report Preparation
Based on review comments received, we will revise the draft report and deliver 15
copies of the final report to the Utility.
• Study Documentation
At the completion of the project, all data developed in electronic format will be
furnished in Microsoft Office format suitable for the Utility to use and document
study procedures, assumptions, and findings.
Subtask 5.2 - Meetings & Presentations
We will meet with Utility representatives to gather data and information, discuss study
progress, report on interim findings, and present our final findings and recommendations
to the Public Utilities Board and the City of Denton City Council. These meetings will be
conducted in a workshop format to encourage an active exchange of information by all
participants and provide a basis for complete understanding of relevant issues. Meetings
will include:
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EXHIBIT A - SCOPE OF SERVICES
Cit o'. Denton; Tetas
Municipal Utiles-Water Uiifties
Cost of Se-vice Study and Rate Des er
• Utility Staff Meetings
Attend three (3) meetings with Utility representatives during the course of the study
to gather data, review preliminary findings, discuss alternatives, and reach consensus
on recommendations for presentation to the governing body.
• Presentation to the Public Utilities Board
Meet with the members of the Public Utilities Board to discuss the results of the
wholesale water and wastewater cost of service and rate design. Comments received
from this meeting will be incorporated into the final results of wholesale water and
wastewater cost of service and rate design.
• Presentation to the City of Denton, Texas City Council
Meet with the City Manager, Mayor and Council of the City of Denton, Texas to
present final results of the study's findings and recommendations. It is anticipated
that one City Council meeting will be held. A Power Point presentation will be used
to present this information in summary form.
Task 6 - Additional Services
Subtask 6.1 - Expert Testimony
We are prepared to defend and provide testimony on the development of water and
wastewater costs and rates if they are challenged by wholesale customers. Standard
billing rates will be applicable for these services, project team members billing rates can
be found in the cost proposal section.
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EXHIBIT A - SCOPE OF SERVICES
City or Cordon, Texas
10inidpia Uflk ee. trJa er U;iI'fies
Cost of Service Surly ane Rave Cesiyr
Key Slack & Veatch Corporation Employees
Project Principal - Bart Foster, Vice President
Project Manager - Larry Peart, Senior Consultant
Technical Lead - Dustin Bishop, Senior Associate
Technical Advisor- Rowe McKinley, Director
Standard Billing Hates
Job Description
Hourly Billing Rates ($/hr)
Clerical/Administrative Support
60.00
Associate
80.00
Senior Associate
110.00
Consultant
140.00
Senior Consultant
175.00
Principal Consultant
215.00
Director
250.00
Vice President
300.00
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