AGENDA REPORT. Meeting Date: December 18, 2018 Item Number: F 14 To: From:

AGENDA REPORT Meeting Date: December 18, 2018 Item Number: F 14 To: From: Honorable Mayor & City Council Gil Borboa, Assistant Director of Public Works Michael Hensley, Senior Management Analyst Subject: APPROVAL OF AMENDMENT NO. 2 TO THE AGREEMENT BETWEEN THE CITY OF BEVERLY HILLS AND HF&H CONSULTANTS, LLC FOR SERVICES RELATED TO WATER RATE EVALUATION AND RESTRUCTURING; AND APPROVAL OF A CHANGE PURCHASE ORDER IN THE AMOUNT OF $100,000 TO HF&H CONSULTANTS, LLC FOR A TOTAL NOT TO EXCEED AMOUNT OF $171,315.28 Attachment: 1. Amendment No. 2 2. Agreement # 26-18 RECOMMENDATION Staff recommends that City Council move to approve Amendment No. 2 to Agreement #26-18 between the City of Beverly Hills and HF&H Consultants, LLC for services related to phase 2 of the water rates evaluation and restructuring. Staff also recommends that City Council move to approve a change purchase order to HF&H Consultants, LLC in the amount of $100,000 for a total not to exceed amount of $171315.28. INTRODUCTION On December 19, 2017, City Council approved Agreement #26-18 between the City of Beverly Hills and HF&H Consultants, LLC (HF&H) for Phase 2 of the water rates evaluation and restructuring. The scope for the original agreement included two elements. The first element is completion of a cost-of-service study for existing water rates to ensure that customers are paying the appropriate amount for their water. This study includes a review of the base model assumptions and the updated Water Enterprise Plan (WEP) costs and schedule based on the completed Preliminary Design Report. Page 1 of 2 12/10/18

Meeting Date: December 18, 2018 The second element of Phase 2 is a water reliability charge. This fee would fund expansion of the City s water system and increase local groundwater production. On June 20, 2018, staff executed Amendment No. 1 to the agreement with HF&H to add $50,000 to the agreement. This increase to the agreement covered additional costs resulting from development of rate structure alternatives while conducting the cost-ofservice analysis. DISCUSSION The original scope of work contained the two elements detailed earlier. During the process, staff determined that additional elements would be appropriate to add into Phase 2. These elements revenue stabilization rates and irrigation rates were outside of the original scope of work and required an increase in the agreement to cover additional work by HF&H. Staff directed HF&H to develop revenue stabilization rates. Bringing a revenue stabilization rates schedule to City Council for approval as part of Phase 2 would allow for the rates schedule to go through the Proposition 218 process with the other rate adjustments; this would allow for quicker implementation of the temporary rates schedule during mandatory water restrictions and reduce negative impacts to Water Utility revenues. This addition to the current scope of work required additional work hours by HF&H. As part of the rate adjustment, staff requested that HF&H develop irrigation rates for each customer class. Establishing an irrigation rate for each customer class will be necessary as more irrigation meters come online. Establishment of an irrigation rate was outside of the original scope of work and required additional consultant time to develop and present. Under the original scope of work, HF&H analyzed the cost-of-service and developed recommended rate structures using billing data. After review, the Water Rates Ad Hoc committee requested that HF&H conduct an analysis using water consumption data from the City s Advanced Meter Infrastructure (AMI) system. The rationale was that AMI data would provide more accurate water usage. HF&H scrubbed the data for inaccuracies, categorized the data by customer class, and analyzed the data to determine peak usage among customer classes. The data proved invaluable in providing the most accurate depiction of actual City water use. HF&H expended considerable effort in this task outside of the scope of work and resulted in additional consultant time. FISCAL IMPACT The $100,000 increase to consideration is included in the Department s Fiscal Year 2018/19 Water Operating Budget. J. Aproved uir By ( / ia ps pfrov in By Page2of2 12/10/2018

Attachment 1

AMENDMENT NO.2 TO THE AGREEMENT BETWEEN THE CITY OF BEVERLY HILLS AND HF&H CONSULTANTS, LLC FOR SERVICES RELATED TO WATER RATE EVALUATION AND RESTRUCTURING NAME OF CONSULTANT: RESPONSIBLE PRINCIPAL OF CONSULTANT: HF&H Consultants, LLC John W. Farnkopf, Senior Vice President CONSULTANT S ADDRESS: 201 North Civic Drive, Suite 230 Walnut Creek, CA 94596 Attn. John W. Farnkopf CITY S ADDRESS: City of Beverly Hills 345 Foothill Road Beverly Hills, CA 90210 Attention: Director of Public Works COMMENCEMENT DATE: December 18, 2017 TERMINATION DATE: CONSIDERATION: June 30, 2019, unless extended pursuant to Section 2 of the original Agreement Not to exceed: Original Agreement: $100,000.00 Amendment No. 1: $50,000.00 Amendment No. 2: $100,000.00 Total: $250,000.00 B0785-0001\2242799v1.doc 1

AMENDMENT NO.2 TO THE AGREEMENT BETWEEN THE CITY OF BEVERLY HILLS AND HF&H CONSULTANTS, LLC FOR SERVICES RELATED TO WATER RATE EVALUATION AND RESTRUCTURING This Amendment No, 2 is to that certain Agreement between the City of Beverly Hills (hereinafter called CITY ), and HF&H Consultants, LLC (hereinafter called CONSULTANT ) dated February 2, 2018 and identified as Contract No. 26-18, and as amended by Amendment No. 1, dated June 20, 2018 and identified as Contract No. 328-18 ( Agreement ). RECITALS A. CITY and CONSULTANT entered into an Agreement for services related to water rate evaluation and restructuring which was previously amended. B. CITY and CONSULTANT desire to further amend the Agreement to expand the Scope of Work, and increase the Consideration to compensate CONSULTANT for such work. NOW, THEREFORE, the parties agree as follows: Section 1. The CONSIDERATION shall be amended as set forth on the cover page. and incorporated herein. Section 2. Exhibit A, Scope of Work, shall be amended as attached hereto Section 3. Exhibit B, Schedule of Payment and Rates, shall be amended as attached hereto and incorporated herein. B0785-0001\2242799v1.doc 2

Section 4. Except as specifically amended by Section 1 of Amendment No. 1 and this Amendment No. 2, the remaining provisions of the Agreement shall remain in full force and effect. EXECUTED the day of 20, at Beverly Hills, California. CITY OF BEVERLY HILLS A Municipal Corporation JULIAN A. GOLD, MD Mayor of the City of Beverly Hills, California ATTEST: LOURDES SY-RODRIGUEZ Assistant City Clerk CONSULTANT: HF&H CONSULTANTS, LLC fliw MASFfEEHAN Vice President/Partner RICHARD J.lMONSON Vice President/CFO [Signatures continue] B0785-000 I \2242799v I doc 3

AEDAS LAURENCE S. WIEJER City Attorney APPROVED AS TO CONTENT: MAHDI HEUREUX DRESSEL Risk Manager B0785-0001\2242799v1.doc 4

EXHIBIT A SCOPE OF WORK ORIGINAL AGREEMENT: CONSULTANT completed the Phase I restructuring. study regarding CITY water rates evaluation and The Phase Il study will complete the work begun in Phase I. The Phase I study culminated in recommended rate increases that was adopted at the December 5, 2017 City Council meeting. The recommended rate increases adjusted the current rates across-the-board without modifying the rate structure. An adjustment mechanism for increases in pass-through costs was also added. The Phase II study will focus on the cost of service among customer classes and potential rate structure modifications, both of which have already been studied at some length in Phase I. The Phase II study will build on and refine the previous work. Task 1. Data Collection CONSULTANT shall collect budgetary data needed to update the revenue requirement projections in the existing rate model. This data should reflect the capital improvement program that includes the Water Enterprise Plan ( WEP ). CONSULTANT shall also collect recent postdrought customer billing data to update the cost of service allocations and rate design in the existing rate model. Task 2. Evaluate Scenarios CONSULTANT shall work with CITY staff to develop scenarios that evaluate the following: Revenue requirement projections and cost of service allocations that reflect different levels of capital improvements including the WEP. Rate design that balances revenue from service and volumetric charges. Previous input from the Public Works Commission has called for increases in the amount of revenue from service charges relative to the volumetric charges. Design of volumetric charges for each customer class. The types of customer classes (i.e., single family residential, multi-family residential, and commercial) and the tier structures for each class (e.g., tiered, uniform) will be confirmed and the rates calculated. Design of a new water supply charge that will cover the costs of the WEP. The scenarios will be developed in draft form, reviewed telephonically with CITY staff and the Public Works Commission Water Rates Ad-Hoc Subcommittee, and revised accordingly before bringing them forward to the Public Works Commission and City Council. Task 3. Meetings and Presentations In addition to telephonic meetings to develop the scenarios in Task 2, the following on-site meetings will be held: B0785-000 I 2242799v I.doc 5

Public Works Commission To present the draft recommendation. City Council worksession Input received from the Public Works Commission will be incorporated into the model for presentation to the City Council. City Council meeting Input received from the City Council worksession will be incorporated into the model and presented at a City Council meeting where the City Council will direct staff to mail Proposition 218 notices to rate payers. City Council public hearing CONSULTANT shall provide a brief summary presentation at the Proposition 218 protest hearing when the City Council can adopt new rates. CONSULTANT shall assist in preparing the presentations, which will be made in conjunction with CITY staff. Task 4. Implementation Assistance CONSULTANT shall assist in preparing the Proposition 218 notices to rate payers, ordinances and resolutions, and public outreach material including an update to the customer bill calculator. CONSULTANT shall also assist in preparing staff reports. Task 5. Report Preparation CONSULTANT shall document the scenarios in a draft report for review by staff. The report will include customer bill impacts and comparisons with rates at other local cities. CITY staff will provide comments to CONSULTANT and a revised draft will be prepared for presentation to the City Council at the time it authorizes mailing notices to rate payers in Task 3. A final draft will be prepared for posting on CITY s website for review during the 45-day protest period. CONSULTANT shall perform additional as needed services related to Phase II of the water rate evaluation and restructuring upon written request of CITY s Public Works Director or her designee. AMENDMENT NO. 2: In the course of conducting the preceding tasks required by the original Scope of Work, the following changes occurred leading to either additional or reduced services that serve as the basis for this amendment to the Scope of Work. Task 1. Data Collection Additional customer billing data from CITY s Water Tracker system was collected, filtered, and used for deriving allocation factors based on non-seasonal base, average day, maximum day, and maximum hour peaks for each customer class. In addition, the Water Tracker data was used for determining the number of tiers for single and multi-family quantity charges and the breakpoints between tiers. Task 2. Evaluate Scenarios In addition to the original scenarios, the following evaluations were conducted: Net present value analysis of the Hollywood and La Brea Basins were compared with the cost of supply from Metropolitan Water District ( MWD ). B0785-000 I \2242799v1.doc 6

Irrigation rates were analyzed using customer billing data. Irrigation customer classes were recommended, including a technical memorandum for a Public Works Commission member concerning when it would be appropriate to re-evaluate separate rates for irrigation customers. Revenue stabilization factors were developed for each customer class reflecting conservation reductions for each shortage Stage based on reductions in indoor and outdoor water use. The differential between Inside CITY and Outside CITY rates was evaluated for different scenarios involving credits to Beverly Hills customers for lease revenue and surcharges to West Hollywood customers to reimburse CITY General Fund for public safety, governmental facilities, and right-of-way maintenance costs. This task integrated the results of the reimbursement study conducted under a separate agreement into the development of a cost-based differential.1 Alternative Water Reliability Charges were evaluated using a 30-plus year cash flow model. The model was based on the operating and capital costs from the NPV analysis. Separate Water Reliability Charges were calculated for Inside and Outside City customers for different amounts of bonds, General Fund contributions, and the use of reserves. CONSULTANT assisted in coordinating the Water Reliability Charge with the Water Supply Charge by participating in telephone calls and meetings with CITY staff and consultants. These other scenarios were also developed in draft form, reviewed telephonically with CITY staff and the Public Works Commission Water Rates Ad-Hoc Subcommittee, and revised accordingly for presentation to the Public Works Commission and City Council. Task 3. Meetings and Presentations The original scope included four on-site meetings with the Public Works Commission and City Council. CONSULTANT attended nine additional meetings on-site or telephonically. Eight meetings with the Public Works Commission and/or City Council and staff during development of the rate adjustments One meeting with the City of West Hollywood regarding rate study objectives and process. Task 4. Implementation Assistance CONSULTANT assisted in preparing the Proposition 218 notice to rate payers, public outreach material including an update to and expansion of the customer bill calculator, and in preparing staff reports. The update to the customer bill calculator incorporated the Water Reliability Charge as well as the changes in the tier structures. 1 Exhibit B of the February 9, 2018 Scope stated, CONSULTANT also assumes that there is no change in how rates are set for outside-city service. B0785-0001\2242799v1.doc 7

CONSULTANT shall also assist preparing ordinances and resolutions and future staff reports, which is included in the original scope. Task 5. Report Preparation CONSULTANT shall document the scenarios in a draft report for review by staff. The report will include customer bill impacts and comparisons with rates at other local cities. CITY staff will provide comments to CONSULTANT and a revised draft will be prepared. A final draft will be prepared for posting on CITY s website. This work is included in the original scope. Task 6. Additional Support Services CONSULTANT shall provide additional support/analyses as requested. Such support could include assistance in dispute resolution, additional meetings, modeling, and report drafts. BO7#5-OOO1\2242799v.doc $

EXHIBIT B SCHEDULE OF PAYMENT AND RATES CITY shall compensate CONSULTANT for the satisfactory performance of the work described in this Agreement in an amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000.00) at the rates set forth in this Exhibit B. Task 1. Data collection Task hours Task fees 2 4 4 10 $530 5900 $580 $2,010 34 $7,770 Task 2. Evaluate Scenarios Task hours 40 60 80 180 Task fees $10600 $13,500 $11600 $35,700 $43,200 360 $78,900 Task 3. Meetings and Presentations Task 4. ImplementatIon Task hours Task fees Task hours Task fees 44 36 6 86 96 182 $11,660 $8,100 $870 $20,630 $23,040 $43,670 8 4 2 14 14 28 $2,120 $900 $290 $3,310 $3,360 $6,670 Task 5. Report Preparation Task hours Task fees Task 6. Additional Support Services Task hours Task fees Total hours Total fees Total Fees and Expenses 26 22 12 60 0 60 $6,890 $4,950 $1,740 $13,580 $0 513,580 0 70 70 $0 $0 50 $0 $16,800 $16,800 120 126 104 350 384 734 $31,800 $28350 $15,080 $75,230 $92,760 $167,390 as needed servces 570 000 $70 000 Direct expenses (Tra ei and lodging) $4,770 $7,840 $12,610 $150,000 $100 000 $250 000 CONSULTANT assumes that it will use the existing rate model to update the revenue requirement projections and cost of service allocations. Further, the rate model will need to be expanded to include any additional rate structure alternatives that are developed. CONSULTANT shall submit to CITY a detailed invoice, on a monthly basis or less frequently, for the services performed pursuant to this Agreement. CONSULTANT shall bill CITY on an hourly basis for services rendered. Each invoice shall itemize the services rendered during the billing period and the amount due. Within 30 days of receipt of each invoice, CITY shall pay all undisputed amounts included on the invoice. B0785-000I\2242799v1.doc 9

Attachment 2

AGREEMENT NO. I %-is 1 AGREEMENT BETWEEN THE CITY OF BEVERLY HILLS AND HF&H CONSULTANTS, LLC FOR SERVICES RELATED TO WATER RATE EVALUATION AND RESTRUCTURING NAME OF CONSULTANT: HF&H CONSULTANTS, LLC RESPONSIBLE PRINCIPAL OF CONSULTANT: John W. Farnkopf, Senior Vice President CONSULTANTS ADDRESS: 201 North Civic Drive, Suite 230 Walnut Creek, California 94596 Attention: John W. Farnkopl, Senior Vice President CITY S ADDRESS: City of Beverly Hills 455 N. Rexford Drive Beverly Hills, CA 90210 Attention: Director of Public Works COMMENCEMENT DATE: December 18, 2017 TERMINATION DATE: June 20, 2018 CONSIDERATION: Not to exceed $100,000 (includes expenses) 3O7X54)OOh2 I I2X9eLdoc

AGREEMENT BETWEEN THE CITY OF BEVERLY HILLS AND HF&H CONSULTANTS, LLC FOR SERVICES RELATED TO WATER RATE EVALUATION AND RESTRUCTURING THIS AGREEMENT is made by and between the City of Beverly Hills (hereinafter called CITY ), and HF&H Consultants, LLC, (hereinafter called CONSULTANT ), RECITALS A. CITY desires to have certain services andlor goods provided as set forth in Exhibit A (the Scope of Work ), attached hereto and incorporated herein. B. CONSULTANT represents that it is qualified and able to perform the Scope of Works. NOW, THEREFORE, the parties agree as follows: Section 1, CONSULTANT s Scope of Work. CONSULTANT shall perform the Scope of Work described in Exhibit A in a manner satisfactory to CITY and consistent with that level of care and skill ordinarily exercised by members of the profession currently practicing in the same locality under similar conditions. CITY shall have the right to order, in writing, changes in the Scope of Work. Any changes in the Scope of Work by CONSULTANT must be made in writing and approved by both parties. The cost of any change in the Scope of Work must be agreed to by both parties in writing. Section 2. Time of Performance. CONSULTANT shall commence its services under this Agreement upon the Commencement Date or upon a written receipt of a notice to proceed from CITY. CONSULTANT shall complete the performance of services by the Termination Date set forth above. The City Manager or his designee may extend the time of performance In writing for two additional one-year terms or such other term not to exceed two years from the date of termination pursuant to the same terms and conditions of this Agreement. Section 3, (a) Compensation. Compensation CITY agrees to compensate CONSULTANT for the services and/or goods provides under this Agreement, and CONSULTANT agrees to accept in full satisfaction for such services, a sum not to exceed the Consideration set forth above and more particularly described in Exhibit B, attached hereto and incorporated herein, based on the hourly rates set forth In Exhibit B. fb) Expenses CONSULTANT shall be entitled to reimbursement only for those expenses expressly set forth in Exhibit B: Any expenses incurred by CONSULTANT which are not expressly authorized by this Agreement will not be reimbursed by CITY. BO7854)OO1\2I4289vt d4c

(C) Additional Services. CITY may from time to time require CONSULTANT to perform additional services not included in the Scope of Work, Such requests for additional services shall be made by CITY in writing and agreed upon by both parties in writing. Section 4. CITY shall pay CONSULTANT said Consideration in accordance with the method and schedule of payment set forth in Exhibit B. Section 5. Independent Contractor, CONSULTANT is and shall at all times remain, as to CITY, a wholly independent contractor. Neither CITY not any of its agents shall have control over the conduct of CONSULTANT or any of CONSULTANT s employees, except as herein set forth. CONSULTANT shall not, at any time, or in any manner, represent that it or any of its agents or employees are in any manner agents or employees of CITY. Section 6. Assicinment. This Agreement shall not be assigned in whole or in part, by CONSULTANT without the prior written approval of CITY. Any attempt by CONSULTANT to so assign this Agreement or any rights, duties or obligations arising hereunder shall be void and of no effect. Section 7. Responsible Principal(s) (a) CONSULTANT s Responsible Principal set forth above shall be principally responsible for CONSULTANT s obligations under this Agreement and shall serve as principal liaison between CITY and CONSULTANT. Designation of another Responsible Principal by CONSULTANT shall not be made without prior written consent of CITY. (b) CITY s Responsible Principal shall be the City Manager or his designee set forth above who shall administer the terms of the Agreement on behalf of CITY. Section 8. Personnel. CONSULTANT represents that it has, or shall secure at its own expense, all personnel required to perform CONSULTANT s Scope of Work under this Agreement. All personnel engaged in the work shall be qualified to perform such Scope of Work. Section 9. Permits and Licenses. CONSULTANT shall obtain and maintain during the Agreement term all necessary licenses, permits and certificates required by law for the provision of services under this Agreement, including a business license. Section 10. Interests of CONSULTANT. CONSULTANT affirms that it presently has no interest and shall not have any interest, direct or indirect, which would conflict in any manner with the performance of the Scope of Work contemplated by this Agreement. No person having any such interest shall be employed by or be associated with CONSULTANT. Section 11. Insurance. (a) CONSULTANT shall at all times during the term of this Agreement carry. maintain, and keep in full force and effect, insurance as follows: (1) A policy or policies of Comprehensive General Liability Insurance, with minimum limits of Two Million Dollars ($2,000,000) for each occurrence, combined single limit, against any personal injury, death, loss or damage resulting from the wrongful or negligent acts by CONSULTANT. 130785-00012I42S8QvI doc 3

(2) A policy or policies of Comprehensive Vehicle Liability Insurance covenng personal injury and property damage, with minimum limits of One Million Dollars ($1,000,000) per occurrence combined single limit, covering any vehicle utilized by CONSULTANT in performing the Scope of Work required by this Agreement. California. (3) Workers compensation insurance as required by the State of (4) Professional Liability Insurance A policy or policies of Professional Liability Insurance (errors and omissions) with minimum limits of One Million Dollars ($1,000,000) per claim and in the aggregate. Any deductibles or self-insured retentions attached to such policy or policies must be declared to and be approved by CITY, Further, CONSULTANT agrees to maintain in full force and effect such insurance for one year after performance of work under this Agreement is completed. (b) CONSULTANT shall require each of its sub-consultants to maintain insurance coverage which meets all of the requirements of this Agreement. (c) The policy or policies required by this Agreement shall be issued by an insurer admitted in the State of California and with a rating of at least a A+;Vll in the latest edition of Best s Insurance Guide. (d) CONSULTANT agrees that if it does not keep the aforesaid insurance in full force and effect CITY may either immediately terminate this Agreement or, if insurance is available at a reasonable cost, CITY may take out the necessary insurance and pay, at CONSULTANT s expense, the premium thereon. Ce) At all times during the term of this Agreement, CONSULTANT shall maintain on file with the City Clerk a certificate or certificates of insurance on the form set forth in Exhibit C, attached hereto and incorporated herein, showing that the aforesaid policies are in effect in the required amounts CONSULTANT shall, prior to commencement of work under this Agreement, file with the City Clerk such certificate or certificates The general liability insurance shall contain an endorsement naming the CITY as an additional insured All of the policies required under this Agreement shall contain an endorsement providing that the policies cannot be canceled or reduced except on thirty (30) days prior written notice to CITY, and specifically stating that the coverage contained in the policies affords insurance pursuant to the terms and conditions as set forth in this Agreement. (f The insurance provided by CONSULTANT shall be primary to any coverage available to CITY. The policies of insurance required by this Agreement shall include provisions for waiver of subrogation. (g) Any deductibles or self-insured retentions must be declared to and approved by CITY. At the option of CITY, CONSULTANT shall either reduce or eliminate the deductibles or self-insured retentions with respect to CITY, or CONSULTANT shall procure a bond guaranteeing payment of losses and expenses. fh) The insurance coverage amounts required under the Agreement do not limit CITY s right to recover against CONSULTANT and its insurance carriers. [3O?S5OOOR2 142889v1 dac 4

Section 12. Indemnification, CONSULTANT agrees to indemnify, hold harmless and defend CITY, City Council and each member thereof, and every officer, employee and agent of CITY, from any claim, liability or financial loss (including, without limitation, attorneys fees and costs) arising from any intentional, reckless, negligent, or otherwise wrongful acts, errors or omissions of CONSULTANT or any person employed by CONSULTANT in the performance of this Agreement. Section 13. Termination, (a) CITY shall have the right to terminate this Agreement for any reason or for no reason upon five calendar days written notice to CONSULTANT. CONSULTANT agrees to cease all work under this Agreement on or before the effective date of such notice. (b) In the event of termination or cancellation of this Agreement by CITY, due to no fault or failure of performance by CONSULTANT, CONSULTANT shall be paid based on the percentage of work satisfactorily performed at the time of termination. In no event shall CONSULTANT be entitled to receive more than the amount that would be paid to CONSULTANT for the full performance of the services required by this Agreement. CONSULTANT shall have no other claim against CITY by reason of such termination, including any claim for compensation. Section 14. CITY s Responsibility. CITY shall provide CONSULTANT with all pertinent data, documents, and other requested information as is available for the proper performance of CONSULTANT s Scope of Work. Section 15, Information and Documents. All data, information, documents and drawings prepared for CITY and required to be furnished to CITY in connection with this Agreement shall become the property of CITY, and CITY may use all or any portion of the work submitted by CONSULTANT and compensated by CITY pursuant to this Agreement as CITY deems appropriate. Section 16. Records and Inspections, CONSULTANT shall maintain full and accurate records with respect to all matters covered under this Agreement for a period of three years. CITY shall have access, without charge, during normal business hours to such records, and the right to examine and audit the same and to make copes and transcripts therefrom, and to inspect all program data, documents, proceedings and activities. Section 17, Notice, Any notices, bills, invoices, etc. required by this Agreement shall be deemed received on (a) the day of delivery if delivered by hand during the receiving party s regular business hours or by facsimile before or during the receiving party s regular business hours; or (b) on the second business day following deposit in the United States mail, postage prepaid to the addresses set forth above, or to such other addresses as the parties may, from time to time, designate in writing pursuant to this section. Section 18. Attorney s Fees, In the event that either party commences any legal action or proceeding to enforce or interpret the provisions of this Agreement, the prevailing party in such action shall be entitled to reasonable attorney s fees, costs and necessary disbursements, in addition to such other relief as may be sought and awarded Section 19. Entire Agreement. This Agreement represents the entire integrated agreement between CITY and CONSULTANT, and supersedes all prior negotiations, Bo7gs,ooaI2i42sgvi dx

representations or agreements, either written or oral, This Agreement may be amended only by a written instwment signed by both CITY and CONSULTANT. Section 20. Exhibits: Precedence, All documents referenced as exhibits in this Agreement are hereby incorporated in this Agreement. In the event of any material discrepancy between the express provisions of this Agreement and the provisions of any document incorporated herein by reference, the provisions of this Agreement shall prevail. Section 21. Governing Law. The interpretation and implementation of this Agreement shall be governed by the domestic law of the State of California. Section 22. CITY Not Obligated to Third Parties. CITY shall not be obligated or liable under this Agreement to any party other than CONSULTANT. Section 23. Severability. lnvalklation of any provision contained herein or the application thereof to any person or entity by judgment or court order shall in no way affect any of the other covenants conditions, restrictions, or provisions hereof, or the application thereof to any other person or entity, and the same shall remain in full force and effect. California. EXECUTED the day of Fo.rL 20j&, at Beverly Hills, CITY 0 B ERLY HILLS A pai Cor ation M H UZRI Cit lvi nager CONSULTANT: HF&H Consultants Inc. RO RT D. HILTON President L RICHARD]. SIMONSON Vice PresidenUCFO [Signatures continue] U0785.000 I\2I42SS9v I dc 6

APPROVED AS TO FORM: APP,D A CONTENT: / I LAURENCE S. WIENER / s-ra EPS City Attorney / Dire or of Porks F[ARON teureux DRESSEL Interim Risk Manager t3o7s5otxj I\2 I42S9vl dcc 7

EXHIBIT A SCOPE OF WORK CONSULTANT completed the Phase I restructuring. study regarding CITY water rates evaluation and The Phase II study will complete the work begun in Phase I. The Phase I study culminated in recommended rate increases that was adopted at the December 5, 2017 City Council meeting. The recommended rate increases adjusted the current rates across-the-board without modifying the rate structure. An adjustment mechanism for increases in pass-through costs was also added. The Phase II study will focus on the cost of service among customer classes and potential rate structure modifications, both of which have already been studied at some length in Phase I. The Phase II study will build on and refine the previous work. Task 1. Data Collection CONSULTANT shall collect budgetary data needed to update the revenue requirement projections in the existing rate model. This data should reflect the capital improvement program that includes the Water Enterprise Plan ( WEP), CONSULTANT shall also collect recent postdrought customer billing data to update the cost of service allocations and rate design in the existing rate model. Task 2. Evaluate Scenarios CONSULTANT shall work with CITY staff to develop scenarios that evaluate the following: Revenue requirement projections and cost of service allocations that reflect different levels of capital improvements including the WEP. Rate design that balances revenue from service and volumetric charges. Previous input from the Public Works Commission has called for increases in the amount of revenue from service charges relative to the volumetric charges. Design of volumetric charges for each customer class. The types of customer classes (Le, single family residential, multi-family residential, and commercial) and the tier structures for each class (e.g., tiered, uniform) will be confirmed and the rates calculated. Design of a new water supply charge that will cover the costs of the WEP. The scenarios will be developed in draft form, reviewed telephonically with CITY staff and the Public Works Commission Water Rates Ad-Hoc Subcommittee, and revised accordingly before bringing them forward to the Public Works Commission and City Council. Task 3. Meetings and Presentations In addition to telephonic meetings to develop the scenarios in Task 2, the following on-site meetings will be held: Public Works Commission To present the draft recommendation. no7s5oao I.2 I428S9v $

City Council worksession Input received from the Public Works Commission will be incorporated into the model for presentation to the City Council. City Council meeting Input received from the City Council worksession will be incorporated into the model and presented at a City Council meeting where the City Council will direct staff to mail Proposition 218 notices to rate payers. City Council public hearing CONSULTANT shall provide a brief summary presentation at the Proposition 218 protest hearing when the City Council can adopt new rates. CONSULTANT shall assist in preparing the presentations, which will be made in conjunction with CITY staff. Task 4. Implementation Assistance CONSULTANT shall assist in preparing the Proposition 218 notices to rate payers, ordinances and resolutions, and public outreach material including an update to the customer bill calculator, CONSULTANT shall also assist in preparing staff reports. Task 5. Report Preparation CONSULTANT shall document the scenarios in a draft report for review by staff. The report will include customer bill impacts and comparisons with rates at other local cities. CITY staff will provide comments to CONSULTANT and a revised draft will be prepared for presentation to the City Council at the time it authorizes mailing notices to rate payers in Task 3. A final draft will be prepared for posting on CITY s website for review during the 45-day protest period. CONSULTANT shall perform additional as needed services related to Phase II of the water rate evaluation and restructuring upon written request of CITY s Public Works Director or her designee. 130785 000I2l42S89vl doc 9

EXHIBIT B SCHEDULE OF PAYMENT AND RATES CITY shall compensate CONSULTANT for the services required by this Agreement as follows: Estimated Hours and Fees Fprnkppf Simonson Mkhaiczvk Proj. Rate Tasks Director Manager Analyst Total Hourly rates $265 5225 5145 Task 1, Data Collection Task hours 2 4 4 10 Task fees 5530 5900 5580 52,010 Task 2. Evaluate Scenarios Task hours 40 60 80 180 Task fees $10600 $13,500 $11600 $35,700 Task 3. Meetings and Presentations Task hours 44 36 6 86 Task fees $11660 58100 5870 520,630 Task 4. Implementation Task hours 8 4 2 14 Task fees $2,120 $900 $290 53,310 Task 5. Report Preparation Task hours 26 22 12 60 Task lees $6,890 54,950 51,740 513,580 Total hours 120 126 104 350 Total fees $31,800 $28,350 $15,080 $75,230 as needed services $20,000 Direct expenses (travel and $4,770 lodging.) Total Fees and Expenses Not to Exceed 00,000 CONSULTANT assumes that it will use the existing rate model to update the revenue requirement projections and cost of service allocations Further, the rate model will need to be expanded to include any additional rate structure alternatives that are developed. CONSULTANT also assumes that there is no change in how rates are set for outside-city service. CONSULTANT shall submit to CITY a detailed invoice, on a monthly basis or less frequently, for the services performed pursuant to this Agreement. Each invoice shall itemize the services rendered during the billing period and the amount due. Within 30 days of receipt of each invoice, CITY shalt pay all undisputed amounts included on the invoice. a0?s5000 h%i42s89l doe 10

EXHIBIT C CERTIFICATE OF INSURANCE This is to certit that the following endorsement is part of the policy(ies) described below: NAMED insured ADDRESS A. B. C. FRDiNGOVE COttPANY POLICY EXPtRATIOt B I LIMITS AGGREGATE (A a ci COVERAGE NUMBER DTh DAUTOMOBILE UABtUTV DGENERAL UABILHY DPRoDUCTS!COMrLETI0 OPERATIONS DBLANtET CONTRACTUAL DCONSULTANTS PROTECTIVE DPERSONAL INJURY DEXCESS LIABILITY DWORKERS COMPENSATION 0 It is hereby understood and agreed that the City of Beverly Kills, its City Council and each member tuereof and every officer and employee of the Cit shall be named as joint and several assureds with respect to claims arising out of the following project or agreement: It is further agreed that the following indemnity agreement between the City of Beverly Hills and the named insured is cotered under the police: CONSULTANT agrees to indemni&. Itold harmless and defend City, its City Council and each member thereof and eery officer and employee of Cite from any and all liability or financial loss resulting from any suits, claims, losses or actions brought against and from all costs and expenses of litigation brought against City, its City Council and each member thereof and any officer or employee of City which results directly or indirectly from the wrongful or negligent actions of CONSULTANTs officers, employees, agents or others employed by CONSULTANT while engaged by CONSULTANT in the (performance of this agreement) construction or this project. It is further agreed that the inclusion ofmore than one assured shall not operate to increase the limit of the company s liability and that insurer waives any right of contribution with insurance which may be available to the City of Beverly Hills. In the event of cancellation or material change in the above coverage, the company will give 30 days written notice of cancellation or material change to the certificate holder. Except to ccrtify that the policy(ies described above have the above endorsement attached, this certificate or verification of insurance is not an insurance polrcy and does not amend, extend or alter the coverage afforded by the policies listed herein. Notwithstanding any requirement. term. or condition of any contract or other document with respect to which this certificate or verification of insurance may be issued or may pertain, the insurance afthrded by the policies described herein is subject to all the terms, exclusions and conditions of such policies. DATE: AGENCY: BY: TITLE: ADDRESS: Authorized Insurance Representative EXHIBIT C B075c.1y)OI 2 142589vt doe 11 RMO2 DOC REVISED 10114/96.