Loading...
HomeMy WebLinkAbout10 137 Water & Wastewater Rate By-law Study & Financial Plan Contract Acceptance (Hemson) THE CORPORATION OF THE MUNICIPALITY OF KINCARDINE O.= +. u m narm" BY -LAW NO. 2010 - 137 BEING A BY -LAW TO ACCEPT A CONTRACT FOR THE HIRING OF A CONSULTANT TO SUPPLY PROFESSIONAL SERVICES TO CONDUCT A WATER AND WASTEWATER RATE STUDY AND FINANCIAL PLAN FOR THE MUNICIPALITY OF KINCARDINE (Hemson Consulting Ltd.) WHEREAS the Municipal Act, 2001, S.O. 2001, c. 25, as amended, Section 8 (1) • and 9 provides that the powers of a municipality under this or any other Act shall be interpreted broadly so as to confer broad authority on the municipality to enable the municipality to govern its affairs as it considers appropriate and to enhance the municipality's ability to respond to municipal issues and a municipality has the capacity, rights, powers and privileges of a natural person for the purpose of exercising its authority under this or any other Act; AND WHEREAS Sections 11 (1) and (3) of the Municipal Act, 2001, S.O. 2001, c. 25 as amended gives broad authority to lower -tier municipalities to provide any service or thing that the municipality considers necessary or desirable for the public and authorizes lower -tier municipalities to pass by -laws respecting public utilities; AND WHEREAS Section 33 of the Safe Drinking Water Act, 2002 S.O. 2002, Chapter 32 and Regulation 188/07, requires that an owner of a municipal drinking water system shall apply to the Director for a drinking water works permit and a municipal drinking water licence for the system. • AND WHEREAS a condition of the licence includes the completion of a Financial Plan; AND WHEREAS the Public Works Department, in conjunction with the Financial Plan, wishes to develop a Water and Wastewater Rate By -law; AND WHEREAS the Council of The Corporation of the Municipality of Kincardine deems it necessary to conduct a Water and Wastewater Rate Study and Financial Plan for the Municipality of Kincardine and requires a qualified consultant to supply professional services for the completion of said Study; AND WHEREAS the Council of The Corporation of the Municipality of Kincardine deems it expedient to accept a contract from Hemson Consulting Ltd. in the amount of $20,000.00 (excluding taxes); NOW THEREFORE the Council of The Corporation of the Municipality of Kincardine ENACTS as follows: • .../2 By -law No. 2010 - 137 Water & Wastewater Rate By -law Study & Financial Plan Contract Acceptance (Hemson) By -law Page 2 • 1. That the purchase of services from Hemson Consulting Ltd. be subject to provisions under the Purchasing and Procurement Policy GG.2.17 Section 6.2 Best Value Methodology 2. That The Corporation of the Municipality of Kincardine award the contract to conduct a Water and Wastewater Rate Study and Financial Plan for the Municipality of Kincardine and to supply professional services for the completion of said Study to Hemson Consulting Ltd. at a cost of $20,000.00 (excluding taxes). 3. That the Mayor and Chief Administrative Officer be authorized and directed to sign and execute, on behalf of the Council of The Corporation of the Municipality of Kincardine, any contracts and other documents required to authorize such work to commence. 4. This by -law shall come into full force and effect upon its final passage. 5. This by -law may be cited as the "Water & Wastewater Rate By -law Study & 111 Financial Plan Contract Acceptance (Hemson) By -law ". READ a FIRST and SECOND TIME this 3rd day of November, 2010. ■ • `ice yor Clerk READ a THIRD TIME and FINALLY PASSED this 3rd day of November, 2010. /r 1 a or Clerk 110 • � 4 THIS AGREEMENT MADE THIS C / � DAY OF De r t. , 2010 BETWEEN: THE CORPORATION OF THE MUNICIPALITY OF KINCARDINE (the "Municipality ") -and - HEMSON CONSULTING LTD. (the "Consultant ") For the provision of professional services to complete a Water and Wastewater Study and Financial Plan for the Municipality of Kincardine. Hemson Consulting Ltd. shall carry out the work in accordance with the Proposal attached as Schedule 'A' dated September 27 2010. Hemson Consulting Ltd. is retained to deliver the results as listed in Schedule 'A'. Hemson Consulting Ltd. agrees to furnish and perform professional services in the preparation of the work as set out in Schedule 'A' for an amount not exceeding $20,000.00, (net of HST). NOW THEREFORE IN CONSIDERATION of the mutual covenants hereinafter contained the parties hereto do covenant and agree each with the other as follows: SECTION 1 - DEFINITIONS In this Agreement: 1.1 "Consultant" means Hemson Consulting Ltd. 1.2 "Municipality" means the Corporation of the Municipality of Kincardine SECTION 2 - THE CONSULTANT'S SERVICES 2.1 General Services The Consultant agrees to furnish and perform professional services in the preparation of the work as set out in Schedule 'A'. Said Schedule 'A' is attached hereto and forms part of this Agreement. The Consultant shall perform these services for an amount not exceeding $20,000.00 broken down as follows: Total Professional Fees $20,000.00 Project Cost $20,000.00 HST $ 2,600.00 Total Project Cost $22,600.00 Page 1 of 6 2.2 Specific Services Without limiting the generality of the foregoing, the Consultant agrees to perform the following services: (a) Performance The Consultant shall exercise reasonable care, skill and diligence in performing the services set out herein. (b) Confidentiality The Consultant shall keep strictly confidential any personal or confidential information communicated to or acquired by the Consultant during the course of completing the Project. (c) Return of Documents The Consultant shall, upon completion of the work, return all documents and materials provided by the Municipality as well as documents generated on behalf of the Municipality over the course of the Project. 2.3 Errors and Omissions The Consultant agrees that any corrections of errors and omissions will be provided at no additional cost to the Municipality, during a period of three months after the final submission of the study provided that the required corrections relate directly to the work program as described in attached Schedule 'A'. SECTION 3 - THE MUNICIPALITY'S RESPONSIBILITY 3.1 Fiscal Responsibilities The Municipality shall review and comment on all aspects of the Project as described in Schedule 'A'. The Municipality shall be fiscally responsible for all costs as described in Schedule 'A' associated with the Project. SECTION 4 - FEES AND DISBURSEMENTS 4.1 Fees The Municipality agrees and covenants with the Consultant that the Consultant having in all respects complied with the provisions of this Contract , will be paid for and in respect of the works a sum not exceeding $20,000.00 (plus HST) as follows: This includes $13,000.00 for the preparation of the Water and Sewer Rate By- law, and $7,000.00 for the preparation of the Financial Plan. Professional fees are based on consulting time. 4.2 Accounting Billings will be submitted in accordance with the fee schedule outlined in Section 4.1 and sent to The Municipality of Kincardine attention of the Public Works Manager. Payment to the Consultant will be made within thirty days of receipt by the Municipality. 4.3 Additional Services If during the term of agreement, additional work is required outside of the scope of the contract as listed in Schedule 'A', the Consultant shall not proceed with additional work, or incur additional expenses, without the written authorization of the Municipality. Page 2 of 6 SECTION 5 - GENERAL CONDITIONS 5.1 Right of Use The Project material and report shall be performed and completed for the sole benefit of the Municipality which shall have the exclusive right to utilize and reproduce the material therein as the Municipality may see fit. The Municipality shall, however, acknowledge the Consultant's authorship of any material contained in the report which the Municipality may reproduce in either original or abbreviated form in any publication which it may issue or cause to be issued. All documents and material prepared pursuant to proposal are the property of the Municipality. 5.1.1 Copyright of Project Reports, etc. No report, document, or other data produced in whole or in part with project funds shall be copyrighted by the Consultant; neither shall any notice or copyright be registered by the Consultant in connection with any report, document, or other data developed by him for the project. The Municipality reserves all rights for copyright of all reports, documents and other material developed for the project. 5.2 Adherence to Time Schedules The services of the Consultant are to commence as soon as practicable after execution of this Agreement. The Consultant shall carry out the work with the utmost dispatch and subject to delays beyond its control, shall complete the work in accordance with Schedule 'A' or any subsequent revision that may be required. 5.3 Dismissal Clause In the event that the work performed by the Consultant is unsatisfactory to the Municipality, this agreement may be terminated by the Municipality upon notice to the Consultant and payment will be made to the Consultant for work performed to that date. 5.4 Upset Limit The upset limit for carrying out this project as specified in Schedule 'A' is $20,000.00 (plus HST). No funds above that limit are to be paid for work carried out by the Consultant unless prior written approval is given by the Municipality. 5.5 Notices All notices, requests and other communications required in writing in this Agreement shall be deemed to have been duly given at the time of delivery or two days after the day of mailing if mailed by first class mail postage prepaid and addressed. 5.6 Non - Assignment Clause The Consultant will not assign this Agreement or any part of it without first obtaining the prior written approval of the Municipality, which approval may be withheld by the Municipality in its sole discretion, or given subject to such terms and conditions as the Municipality may impose. Page 3 of 6 � e The Consultant agrees to indemnify and hold harmless the Municipality from and against all suits, judgements, claims, demands, expenses actions, causes of action and losses and for any and all liability for damages to property and injury to persons (including death) which the Municipality may incur, otherwise than by reason of their own negligence or willful misconduct, as a result of or arising out of or in relation to any breach of the terms of this Agreement, or the Municipality's own negligence or willful misconduct. 5.7 Insurance The Consultant shall put in effect and maintain in its name, at its expense, all the necessary insurance that would be considered appropriate for a prudent consultant undertaking this type of agreement for the period during which the Agreement is in effect with insurers acceptable to the Municipality, including: 1. General Liability Insurance, professional liability and property damage to an inclusive limit of not less than Two Million Dollars ($2,000,000.00) per occurrence. The policy shall include: a) The Corporation of the Municipality of Kincardine as an additional insured; b) Cross liability c) Contractual liability; d) A thirty (30) day written notice of cancellation 2. The Consultant shall provide the Municipality with a valid Certificate of Insurance as evidence of the above coverage upon signing the agreement. The Consultant shall provide the Municipality with any renewal replacement certificates as may be necessary during the term of the Agreement 5.8 Personnel The Consultant shall assign the following personnel to perform the work referred to in this Agreement: Craig Binning, Partner Russell Mathew, Associate Partner Janet Lee, Consultant 5.9 Notice For the purposes of this agreement, notice shall be provided as follows: TO THE MUNICIPALITY: Jim O'Rourke, Public Works Manager Public Works Department Municipality of Kincardine 1475 Concession 5, R.R. #5, Kincardine, ON N2Z 2X6 TO THE CONSULTANT: Craig Binning, Partner Hemson Consulting Ltd. 30 St.Patrick Street, Suite 1000 Toronto, ON M5T 3A3 Page 4 of 6 J i This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns. Hemson Consulting Ltd. Craig S. Binning, Partn I /we have authority to bind the Corporation THE CORPORATION OF THE MUNICIPALITY OF KINCARDINE • , . _ .... „:„ . , M ayor - l J' Kra emer ; , --- „-- ,_ ...„ 6, -.. ._� , ,� - -._- - Chief Administrative Officer - John deRoserutiF We have the authority to bind the Corporation Page 5 of 6 SCHEDULE `A' HEMSON ConsultingLtd. 30 St. Patrick Street, Suite 1000, Toronto, Ontario, Canada M5T 3A3 Facsimile (416) 595 -7144 Telephone (416) 593 -5090 e -mail: hemson@hemson.com Via e-mail September 27, 2010 Mr. Jim O'Rourke, Public Works Manager Municipality of Kincardine 1475 Concession 5, RR #5 Kincardine, ON, N2Z 2X6 Dear Mr. O'Rourke: Re: Water Rate By -law and Financial Plan Further to our phone conversation, I am pleased to submit this revised proposal, on behalf of Hemson Consulting Ltd., to provide consulting services to the Municipality of Kincardine to further develop and refine its Water Rate By -law and complete the Financial Plan as required under the Safe Drinking Water Act. A. BACKGROUND AND ISSUES The Municipality has requested that Hemson provide consulting assistance with the following: 1. Water and Sewer Rate By -law Our understanding of the assignment is that the Municipality of Kincardine proposes to conduct a study to establish water and waste water utility consumption rates. It is assumed that the rates should give consideration to the Provincial Sustainable Water and Sewage Systems Act and other related legislation, regulations and guidelines. The rates will provide a cost of service plan to recover full costs. Alternative rate structures will be considered recognizing the desire of the Municipality to stabilize the revenue stream and the need to maintain affordable rates. Page 6 of 6 2 The assignment will produce a long -term business plan including a full review of operating costs (direct and indirect), capital renewal and replacement costs, capital expansion costs and related financing options. It will take into consideration any water and sewer main replacement plan and expansion plans being proposed by the Municipality. Recognizing that need for stable rate increases, the assignment will also consider reserve fund adequacy, and the "smoothing" of reserve fund and capital contributions. The report will provide analysis and approaches to managing the fiscal needs of water servicing in the Municipality. The proposed work plan in establishing a water and sewer rate by -law can be divided into the following tasks: • Initial Consultation and Information Gathering • Financial Analysis • Reporting to Council The Initial Consultation and Information Gathering component will entail an on -site meeting to identify study needs and co- ordination amongst the key individuals, servicing plans including plans for upgrades, infrastructure renewal and replacements, capital expansion plans, operating and maintenance costs and revenues and other issues that may need to be addressed by the study. We will also review present revenue - raising practices and the objectives that the Municipality has regard to in establishing its water revenues (e.g. cost recovery, revenue security, conservation, equity). We will assemble and review all of relevant data. In addition to the information and data items discussed above, the review will cover items such as: • present and projected customer base information (current rates, consumption and growth); • water infrastructure renewal and replacement plans; • growth forecast; • development charges study and adopted rates and policies; • F. I. R. and other key financial information; • reserve and reserve fund balances and forecasts; • current operating and capital budgets; HEMSON 3 • capital funding sources such as assistance applications and approvals through upper - level government funding programs. The Financial Analysis component will entail the identification and analysis of financial options required to provide full cost recovery for the water systems. All capital and operating costs and revenues will be forecast for a ten -year (and possibly longer) period for the water systems. Utilizing the information gathered in Phase 1, we will look at alternative financing arrangements utilizing funding available and proposed from a number of sources such as development charges, reserves, rate revenues, capital grants, capital financing provisions of the Municipal Act, and any other sources which could be available. An evaluation of current reserves, reserve contribution levels and terms for any proposed long -term capital financing will be forecast so that the municipality has sufficient reserves in the future to fund the long -term repair and replacement of capital assets. Attention will be paid to producing a sustainable capital financing plan based upon the expected lives and condition of the system assets. Operating costs will be forecast including the annual costs for all normal maintenance and operating costs as well as long -term capital financing, annual renewal capital expenditures and required reserve contributions. Water consumption for each user class will be forecast to determine growth in rate revenue that will occur from changes in the number of users and any forecast changes to consumption patterns. As part of this analysis alternative revenue sources for each system will be assessed to determine the most appropriate mix of funding sources that allows for full cost recovery. Finally, the net impact on user rates for the customer classes will be forecast and analyzed to determine the impact that various cost allocation and recovery options will have on the Municipality's objectives such as cost recovery, equity, revenue security, conservation, etc. Financial management tools such as capital financing alternatives, reserve contribution levels and annual capital repairs from operating revenues will all be assessed as part of an iterative process designed to ensure sustainable financial plans are developed for the water systems. The final phase of this water and sewer rate by -law will include a formal meeting with Council to present the results of the analysis and recommendations. We will prepare and present a succinct summary of our findings at this meeting. 2. Financial Plan under the Safe Drinking Water Act The second deliverable of the analysis will be the Financial Plan report consistent with the requirements of the Safe Drinking Water Act. This will be completed in advance of the legislated completion date of six months past license issuance. HEMSON 4 The analysis prepared in establishing the water and sewer rate by -law will form the basis for the Financial Plan. B. CONSULTING RESOURCES The assignment will be directed by Craig Binning, a Partner at Hemson. Craig has managed and participated in a wide range of consulting assignments with a particular emphasis on municipal fiscal and economic impact modelling and analysis, cost — benefit assessment, rate setting, user fee evaluation, infrastructure planning and development charges. Craig directed most of Hemson's water and sewer rate studies. Craig will be assisted by other Hemson staff, as required, including Janet Lee, Consultant, and Jennifer Nelson, Senior Consultant. Janet and Jennifer are currently working with Craig on a number of similar projects that involve rate setting models and the treatment of asset replacement reserve calculations. C. BUDGETARY REQUIREMENT AND BILLING ARRANGEMENT Original Proposal We are prepared to undertake this assignment, as described above, for a fee of $20,000 (net of HST), including professional fees and out -of- pocket expenses (invoiced at cost). This includes $13,000 for the preparation of the water and sewer rate by -law, and $7,000 for the preparation of the financial plan. Professional fees are based on consulting time for Craig at a rate of $280 per hour, Jennifer at a rate of $190 per hour, and Janet at a rate of $120 per hour. We are prepared to commence the assignment within one week of the award of the contract. If the project commences in early October, we would be in position to have a revised water and sewer rate by -law prepared for early January. The Financial Plan would be completed at the end of January. Alternative Proposal Recognizing the Municipality's desire to contain costs, an alternative option could be considered. For a fee of $14,000 (net of HST), including professional fees and out -of- pocket expenses (invoiced at cost), analysis would be completed of the operating costs, capital needs, and reserve adequacy to determine the Municipality's revenue requirements to maintain a viable water system. This includes $ 7,000 for the preparation of the water and sewer rate by -law, and $7,000 for the preparation of the Financial Plan. HEMSON 5 The analysis completed under this approach would meet the minimum requirements for the preparation of a financial plan consistent with the Safe Drinking Water Act . This option would not include the following: • the "smoothing" of capital costs and reserve contributions to minimize rate impacts; • water consumption for each user class to determine growth in rate revenue that will occur from changes in the number of users and any forecast changes to consumption patterns; • alternative water and sewer rate structures; • alternative revenue sources for each system to determine the most appropriate mix of funding sources that allows for full cost recovery; • financial management tools as described in this proposal. In order to complete the Financial Plan, a six-year forecast of the Municipality's revenue, reserves, and operating and capital requirements must be completed. The alternative proposal will meet these minimum requirements. The original proposal provides the benefits of additional analysis that will provide Council with options for minimizing the water rate impact to users while maintaining a viable water system. Financial management tools will be considered to smooth capital and reserve contributions and minimize debt. In addition, alternative rate structures will be considered to stabilize revenues and maintain affordable rates. I trust this letter is sufficient for your needs. Should you require additional information or clarification, please contact me. We look forward to the opportunity of working with the Municipality on this assignment. Yours truly, HEMSON Consulting Ltd. Craig S. Binning Partner HEMSON MUNICIPALITY OF KINCARDINE: WATER RATE STUDY & FINANCIAL PLAN WORK PLAN SCHEDULE MONTH OCTOBER NOVEMBER DECEMBER JANUARY WEEK BEGINNING 101m111®1111111111® ®m1111® 20 ®© 1 laim® Phase 1: Kick -Off Meeting, Collection and Analysis of Data 1. Hold Orientation Meeting M 2. Identify All Current and Future Water and Wastewater Capital Needs 3. Identify Possible Methods of Full Cost Recovery 4. Identify Existing and Future Operating Costs .--. 5. Hold Working Session with Staff MEM M 5. Determine Potential Rate Structure EMMEN 6. Calculate Preliminary Water and Wastewater Rates 1111.111111 1 - Phase 2: Present Preliminary Rates to Staff 1. Hold Steering Committee Meeting 3 ... , � M 2. Present Preliminary Rates to Steering Committee 3. Identify Gaps and Potentially Refine Calculated Rates 4. Prepare Draft Report j II . 5. Schedule Date to Hold Council Presentation Phase 3: Water Financial Plan III 1. Prepare Water Financial Plan Phase 4: Present Results to Council 1. Prepare & Present Final Report C - R: Report W: Working Session with Staff (Date Flexible) C: Presentation of Final Report to Council HEMSON