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Home My WebLink About2023-03-07 Finance Committee Agenda PacketFINANCE COMMITTEE Regular Meeting Tuesday, March 07, 2023 Community Conference Room & Hybrid 5:30 PM Pursuant to AB 361 Palo Alto City Council meetings will be held as “hybrid” meetings with the option to attend by teleconference/video conference or in person. To maximize public safety while still maintaining transparency and public access, members of the public can choose to participate from home or attend in person. Information on how the public may observe and participate in the meeting is located at the end of the agenda. Masks are strongly encouraged if attending in person. The meeting will be broadcast on Cable TV Channel 26, live on YouTube https://www.youtube.com/c/cityofpaloalto, and streamed to Midpen Media Center https://midpenmedia.org. VIRTUAL PARTICIPATION CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/99227307235) Meeting ID: 992 2730 7235 Phone: 1(669)900‐6833 PUBLIC COMMENTS Public comments will be accepted both in person and via Zoom for up to three minutes or an amount of time determined by the Chair. All requests to speak will be taken until 5 minutes after the staff’s presentation. Written public comments can be submitted in advance to city.council@CityofPaloAlto.org and will be provided to the Council and available for inspection on the City’s website. Please clearly indicate which agenda item you are referencing in your subject line. PowerPoints, videos, or other media to be presented during public comment are accepted only by email to city.clerk@CityofPaloAlto.org at least 24 hours prior to the meeting. Once received, the Clerk will have them shared at public comment for the specified item. To uphold strong cybersecurity management practices, USB’s or other physical electronic storage devices are not accepted. CALL TO ORDER PUBLIC COMMENT Members of the public may speak to any item NOT on the agenda. ACTION ITEMS 1.Utilities Advisory Commission and Staff Recommendation That the Finance Committee Recommend the City Council Adopt a Resolution Approving the Fiscal Year 2024 Water Utility Financial Plan, Including Proposed Reserve Transfers, and Increasing Water Rates by Amending Rate Schedules W‐1 (General Residential Water Service), W‐2 (Water Service From Fire Hydrants), W‐3 (Fire Service Connections), W‐4 (Residential Master‐ Metered and General Non‐Residential Water Service), and W‐7 (Non‐Residential Irrigation Water Service) 2.The Utilities Advisory Commission and Staff Request That the Finance Committee Recommend the City Council Adopt a Resolution Approving the FY 2024 Wastewater Collection Utility Financial Plan Including Proposed Reserve Transfers and Increasing Wastewater Rates by Amending Rate Schedules S‐1 (Residential Wastewater Collection and Disposal), S‐2 (Commercial Wastewater Collection and Disposal), S‐6 (Restaurant Wastewater Collection and Disposal) and S‐7 (Commercial Wastewater Collection and Disposal – Industrial Discharger) 3.Adoption of a Resolution Amending Utility Rate Schedule D‐1 (Storm and Surface Water Drainage) Reflecting a 4.9 Percent Consumer Price Index Rate Increase to $16.76 per Month Per Equivalent Residential Unit for Fiscal Year 2024 4.Approval of the Electric Utility Construction Services Contract with VIP Powerline Corp. (C23185980) for a Total Not‐to‐Exceed Amount of $20,000,000 over Five Years; CEQA status –exempt (existing facilities, replacement or reconstruction) FUTURE MEETINGS AND AGENDAS Members of the public may not speak to the item(s) ADJOURNMENT PUBLIC COMMENT INSTRUCTIONS Members of the Public may provide public comments to teleconference meetings via email, teleconference, or by phone. 1. Written public comments may be submitted by email to city.council@cityofpaloalto.org. 2. For in person public comments please complete a speaker request card located on the table at the entrance to the Council Chambers and deliver it to the Clerk prior to discussion of the item. 3. Spoken public comments using a computer or smart phone will be accepted through the teleconference meeting. To address the Council, click on the link below to access a Zoom‐based meeting. Please read the following instructions carefully. You may download the Zoom client or connect to the meeting in‐ browser. If using your browser, make sure you are using a current, up‐to‐date browser: Chrome 30 , Firefox 27 , Microsoft Edge 12 , Safari 7 . Certain functionality may be disabled in older browsers including Internet Explorer. Or download the Zoom application onto your smart phone from the Apple App Store or Google Play Store and enter in the Meeting ID below. You may be asked to enter an email address and name. We request that you identify yourself by name as this will be visible online and will be used to notify you that it is your turn to speak. When you wish to speak on an Agenda Item, click on “raise hand.” The Clerk will activate and unmute speakers in turn. Speakers will be notified shortly before they are called to speak. When called, please limit your remarks to the time limit allotted. A timer will be shown on the computer to help keep track of your comments. 4. Spoken public comments using a phone use the telephone number listed below. When you wish to speak on an agenda item hit *9 on your phone so we know that you wish to speak. You will be asked to provide your first and last name before addressing the Council. You will be advised how long you have to speak. When called please limit your remarks to the agenda item and time limit allotted. CLICK HERE TO JOIN Meeting ID: 992‐2730‐7235 Phone: 1‐669‐900‐6833 Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329‐2550 (voice) or by emailing ada@cityofpaloalto.org. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service. FINANCE COMMITTEERegular MeetingTuesday, March 07, 2023Community Conference Room & Hybrid5:30 PMPursuant to AB 361 Palo Alto City Council meetings will be held as “hybrid” meetings with theoption to attend by teleconference/video conference or in person. To maximize public safetywhile still maintaining transparency and public access, members of the public can choose toparticipate from home or attend in person. Information on how the public may observe andparticipate in the meeting is located at the end of the agenda. Masks are strongly encouraged ifattending in person. The meeting will be broadcast on Cable TV Channel 26, live onYouTube https://www.youtube.com/c/cityofpaloalto, and streamed to Midpen MediaCenter https://midpenmedia.org.VIRTUAL PARTICIPATION CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/99227307235)Meeting ID: 992 2730 7235 Phone: 1(669)900‐6833PUBLIC COMMENTSPublic comments will be accepted both in person and via Zoom for up to three minutes or anamount of time determined by the Chair. All requests to speak will be taken until 5 minutesafter the staff’s presentation. Written public comments can be submitted in advance tocity.council@CityofPaloAlto.org and will be provided to the Council and available for inspectionon the City’s website. Please clearly indicate which agenda item you are referencing in yoursubject line. PowerPoints, videos, or other media to be presented during public comment are accepted only by email to city.clerk@CityofPaloAlto.org at least 24 hours prior to the meeting. Once received, the Clerk will have them shared at public comment for the specified item. To uphold strong cybersecurity management practices, USB’s or other physical electronic storage devices are not accepted. CALL TO ORDER PUBLIC COMMENT Members of the public may speak to any item NOT on the agenda. ACTION ITEMS 1.Utilities Advisory Commission and Staff Recommendation That the Finance Committee Recommend the City Council Adopt a Resolution Approving the Fiscal Year 2024 Water Utility Financial Plan, Including Proposed Reserve Transfers, and Increasing Water Rates by Amending Rate Schedules W‐1 (General Residential Water Service), W‐2 (Water Service From Fire Hydrants), W‐3 (Fire Service Connections), W‐4 (Residential Master‐ Metered and General Non‐Residential Water Service), and W‐7 (Non‐Residential Irrigation Water Service) 2.The Utilities Advisory Commission and Staff Request That the Finance Committee Recommend the City Council Adopt a Resolution Approving the FY 2024 Wastewater Collection Utility Financial Plan Including Proposed Reserve Transfers and Increasing Wastewater Rates by Amending Rate Schedules S‐1 (Residential Wastewater Collection and Disposal), S‐2 (Commercial Wastewater Collection and Disposal), S‐6 (Restaurant Wastewater Collection and Disposal) and S‐7 (Commercial Wastewater Collection and Disposal – Industrial Discharger) 3.Adoption of a Resolution Amending Utility Rate Schedule D‐1 (Storm and Surface Water Drainage) Reflecting a 4.9 Percent Consumer Price Index Rate Increase to $16.76 per Month Per Equivalent Residential Unit for Fiscal Year 2024 4.Approval of the Electric Utility Construction Services Contract with VIP Powerline Corp. (C23185980) for a Total Not‐to‐Exceed Amount of $20,000,000 over Five Years; CEQA status –exempt (existing facilities, replacement or reconstruction) FUTURE MEETINGS AND AGENDAS Members of the public may not speak to the item(s) ADJOURNMENT PUBLIC COMMENT INSTRUCTIONS Members of the Public may provide public comments to teleconference meetings via email, teleconference, or by phone. 1. Written public comments may be submitted by email to city.council@cityofpaloalto.org. 2. For in person public comments please complete a speaker request card located on the table at the entrance to the Council Chambers and deliver it to the Clerk prior to discussion of the item. 3. Spoken public comments using a computer or smart phone will be accepted through the teleconference meeting. To address the Council, click on the link below to access a Zoom‐based meeting. Please read the following instructions carefully. You may download the Zoom client or connect to the meeting in‐ browser. If using your browser, make sure you are using a current, up‐to‐date browser: Chrome 30 , Firefox 27 , Microsoft Edge 12 , Safari 7 . Certain functionality may be disabled in older browsers including Internet Explorer. Or download the Zoom application onto your smart phone from the Apple App Store or Google Play Store and enter in the Meeting ID below. You may be asked to enter an email address and name. We request that you identify yourself by name as this will be visible online and will be used to notify you that it is your turn to speak. When you wish to speak on an Agenda Item, click on “raise hand.” The Clerk will activate and unmute speakers in turn. Speakers will be notified shortly before they are called to speak. When called, please limit your remarks to the time limit allotted. A timer will be shown on the computer to help keep track of your comments. 4. Spoken public comments using a phone use the telephone number listed below. When you wish to speak on an agenda item hit *9 on your phone so we know that you wish to speak. You will be asked to provide your first and last name before addressing the Council. You will be advised how long you have to speak. When called please limit your remarks to the agenda item and time limit allotted. CLICK HERE TO JOIN Meeting ID: 992‐2730‐7235 Phone: 1‐669‐900‐6833 Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329‐2550 (voice) or by emailing ada@cityofpaloalto.org. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service. FINANCE COMMITTEERegular MeetingTuesday, March 07, 2023Community Conference Room & Hybrid5:30 PMPursuant to AB 361 Palo Alto City Council meetings will be held as “hybrid” meetings with theoption to attend by teleconference/video conference or in person. To maximize public safetywhile still maintaining transparency and public access, members of the public can choose toparticipate from home or attend in person. Information on how the public may observe andparticipate in the meeting is located at the end of the agenda. Masks are strongly encouraged ifattending in person. The meeting will be broadcast on Cable TV Channel 26, live onYouTube https://www.youtube.com/c/cityofpaloalto, and streamed to Midpen MediaCenter https://midpenmedia.org.VIRTUAL PARTICIPATION CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/99227307235)Meeting ID: 992 2730 7235 Phone: 1(669)900‐6833PUBLIC COMMENTSPublic comments will be accepted both in person and via Zoom for up to three minutes or anamount of time determined by the Chair. All requests to speak will be taken until 5 minutesafter the staff’s presentation. Written public comments can be submitted in advance tocity.council@CityofPaloAlto.org and will be provided to the Council and available for inspectionon the City’s website. Please clearly indicate which agenda item you are referencing in yoursubject line.PowerPoints, videos, or other media to be presented during public comment are accepted onlyby email to city.clerk@CityofPaloAlto.org at least 24 hours prior to the meeting. Once received,the Clerk will have them shared at public comment for the specified item. To uphold strongcybersecurity management practices, USB’s or other physical electronic storage devices are notaccepted.CALL TO ORDERPUBLIC COMMENT Members of the public may speak to any item NOT on the agenda.ACTION ITEMS1.Utilities Advisory Commission and Staff Recommendation That the Finance CommitteeRecommend the City Council Adopt a Resolution Approving the Fiscal Year 2024 WaterUtility Financial Plan, Including Proposed Reserve Transfers, and Increasing Water Ratesby Amending Rate Schedules W‐1 (General Residential Water Service), W‐2 (WaterService From Fire Hydrants), W‐3 (Fire Service Connections), W‐4 (Residential Master‐Metered and General Non‐Residential Water Service), and W‐7 (Non‐ResidentialIrrigation Water Service)2.The Utilities Advisory Commission and Staff Request That the Finance CommitteeRecommend the City Council Adopt a Resolution Approving the FY 2024 WastewaterCollection Utility Financial Plan Including Proposed Reserve Transfers and IncreasingWastewater Rates by Amending Rate Schedules S‐1 (Residential Wastewater Collectionand Disposal), S‐2 (Commercial Wastewater Collection and Disposal), S‐6 (RestaurantWastewater Collection and Disposal) and S‐7 (Commercial Wastewater Collection andDisposal – Industrial Discharger)3.Adoption of a Resolution Amending Utility Rate Schedule D‐1 (Storm and Surface WaterDrainage) Reflecting a 4.9 Percent Consumer Price Index Rate Increase to $16.76 perMonth Per Equivalent Residential Unit for Fiscal Year 20244.Approval of the Electric Utility Construction Services Contract with VIP Powerline Corp.(C23185980) for a Total Not‐to‐Exceed Amount of $20,000,000 over Five Years; CEQAstatus –exempt (existing facilities, replacement or reconstruction)FUTURE MEETINGS AND AGENDAS Members of the public may not speak to the item(s) ADJOURNMENT PUBLIC COMMENT INSTRUCTIONS Members of the Public may provide public comments to teleconference meetings via email, teleconference, or by phone. 1. Written public comments may be submitted by email to city.council@cityofpaloalto.org. 2. For in person public comments please complete a speaker request card located on the table at the entrance to the Council Chambers and deliver it to the Clerk prior to discussion of the item. 3. Spoken public comments using a computer or smart phone will be accepted through the teleconference meeting. To address the Council, click on the link below to access a Zoom‐based meeting. Please read the following instructions carefully. You may download the Zoom client or connect to the meeting in‐ browser. If using your browser, make sure you are using a current, up‐to‐date browser: Chrome 30 , Firefox 27 , Microsoft Edge 12 , Safari 7 . Certain functionality may be disabled in older browsers including Internet Explorer. Or download the Zoom application onto your smart phone from the Apple App Store or Google Play Store and enter in the Meeting ID below. You may be asked to enter an email address and name. We request that you identify yourself by name as this will be visible online and will be used to notify you that it is your turn to speak. When you wish to speak on an Agenda Item, click on “raise hand.” The Clerk will activate and unmute speakers in turn. Speakers will be notified shortly before they are called to speak. When called, please limit your remarks to the time limit allotted. A timer will be shown on the computer to help keep track of your comments. 4. Spoken public comments using a phone use the telephone number listed below. When you wish to speak on an agenda item hit *9 on your phone so we know that you wish to speak. You will be asked to provide your first and last name before addressing the Council. You will be advised how long you have to speak. When called please limit your remarks to the agenda item and time limit allotted. CLICK HERE TO JOIN Meeting ID: 992‐2730‐7235 Phone: 1‐669‐900‐6833 Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650) 329‐2550 (voice) or by emailing ada@cityofpaloalto.org. Requests for assistance or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service. Item No. 1.Page 1 of 18 1 6 9 1 Finance Committee Staff Report From: Kiely Nose, Assistant City Manager Report Type: Action Item Lead Department: Utilities Meeting Date: March 7, 2023 Report #: 2301-1011 TITLE Utilities Advisory Commission and Staff Recommendation That the Finance Committee Recommend the City Council Adopt a Resolution Approving the Fiscal Year 2024 Water Utility Financial Plan, Including Proposed Reserve Transfers, and Increasing Water Rates by Amending Rate Schedules W-1 (General Residential Water Service), W-2 (Water Service From Fire Hydrants), W-3 (Fire Service Connections), W-4 (Residential Master-Metered and General Non- Residential Water Service), and W-7 (Non-Residential Irrigation Water Service) RECOMMENDATION The Utilities Advisory Commission (UAC) and Staff recommend that the Finance Committee Recommend the City Council: 1. Adopt a resolution (Attachment A): a. Approving the Fiscal Year (FY) 2024 Water Utility Financial Plan (Linked Document); and b. Approving a transfer of up to $3.746 million from the Capital Improvement Program (CIP) Reserve to the Operations Reserve in FY 2023; and c. Approving a transfer of up to $3.0 million from the Rate Stabilization Reserve to the Operations Reserve in FY 2023; and d. Increasing Water Utility Rates Via the Amendment of Rate Schedules W-1 (General Residential Water service), W-2 (Water Service from Fire Hydrants), W-3 (Fire Service Connections), W-4 (Residential Master-Metered and General Non- Residential Water Service), and W-7 (Non-Residential Irrigation Water Service) (Attachment B) EXECUTIVE SUMMARY The City’s water rate schedules currently consist of a volumetric charge for each CCF (100 Cubic Feet or 748 gallons) of water consumed during the billing period and a monthly service charge for each customer, based on water meter size. The volumetric charge has two parts: a wholesale Item 1 Staff Report Packet Pg. 4 Item No. 1.Page 2 of 18 1 6 9 1 commodity rate (or San Francisco Public Utilities Commission or SFPUC wholesale rate), and a customer volumetric rate. Water rates are designed to recover the City’s costs of buying and distributing water while maintaining adequate financial reserves. The customer volumetric rate and the monthly service charge together are considered the distribution rates; revenue from those rates pay for the upkeep of Palo Alto’s distribution system. Revenue from the wholesale commodity rate pays for the City’s cost of buying water from the SFPUC. The FY 2024 Water Utility Financial Plan includes projections of the utility’s costs and revenues for FY 2023 through FY 2028. The Financial Plan projects costs to rise by about 2-3% per year over the next several years. Despite the recent weather events, the drought remains ongoing1 and customer response to state, regional and local calls for water conservation has reduced water sales revenue. In FY 2022, water sales revenue declined by 7% compared with FY 2021; the FY 2023 Financial Plan anticipated this level of reduction and there was adequate funding in the Operations Reserve as well as offsetting cost reductions due to lower water purchase costs. Staff expects the drought to continue at least through FY 2023, further reducing water sales relative to prior forecasts. Recovery is projected to be slow, and as in prior droughts, some conservation is projected to be permanent. Other revenues also declined below prior forecast levels primarily due to reductions in water service connection and capacity fee revenue. These drought impacts put upward pressure on water rates. While these rate increases can be perceived as decreasing the benefit of conservation, bills for customers who conserve will be lower in the future than they would have been without conservation. The Water Fund’s healthy reserve levels allowed the Water Utility to hold rates flat for two years (FY 2021 and FY 2022) and provide adequate funding for the first year of drought-related sales revenue reductions in FY 2022. Additionally, staff propose for the Water Utility to use remaining reserves to mitigate distribution rate increases (rates that cover the cost to deliver water within the City) to 3% in FY 2024 and to 6% annually from FY 2025 through FY 2028 while still funding essential capital investments. Customers have a separate commodity rate for purchased water from the San Francisco Public Utilities Commission (SFPUC) relative to the rest of the distribution-related portion of the volumetric rates. This commodity charge passes through SFPUC rate increases to customers (Resolution 9844). The pass-through commodity rate is currently $4.75 per hundred cubic feet (CCF) and will increase to $5.30 per CCF on July 1, 2023, according to SFPUC’s February 2023 forecast. The SFPUC will not determine its final wholesale customer rate for FY 2024 until May or 1 On November 23, 2021, the SFPUC declared a local water shortage emergency by Resolution No. 21-0177 calling for voluntary system-wide 10% water use reductions. On May 24, 2022 SFPUC increased the system-wide voluntary water use reduction to 11%. SFPUC serves retail customers in San Francisco as well as Palo Alto and 25 other Wholesale Customers in the Bay Area. Wholesale Customers’ collective voluntary water purchase cutback level is 16% from FY 2020 levels while Palo Alto’s voluntary water purchase cutback level is 8% from FY 2020 levels. Item 1 Staff Report Packet Pg. 5 Item No. 1.Page 3 of 18 1 6 9 1 June 2023. If SFPUC’s final rate for FY 2024 does increase, Palo Alto will notify customers 30 days in advance of the pass-through rate increase via their billing statements or by any other mailing by CPAU to the customer’s regular billing address. BACKGROUND Every year staff presents the UAC with Financial Plans for the Electric, Gas, Water, and Wastewater Collection Utilities. The Financial Plans recommend rate adjustments required to maintain the financial health of these enterprises. These Financial Plans include a comprehensive overview of the operations of each enterprise, both retrospective and prospective, and are intended to be a reference for UAC and Council members as they review the budget and staff’s rate recommendations. Each Financial Plan also contains a set of Reserve Management Practices describing the reserves for each utility and the management practices for those reserves. All of the City’s potable water comes from the SFPUC’s Hetch Hetchy Regional Water System. This same system serves San Francisco and other Bay Area cities. San Francisco operates the system, but as much as two thirds of the water is used outside of San Francisco by 26 cities, water districts, and private utilities. These agencies, including the City, are frequently referred to as the “wholesale customers” (as compared to the SFPUC’s “retail customers” in San Francisco). The Bay Area Water Supply and Conservation Agency (BAWSCA) represents the wholesale customers and negotiates with the SFPUC on their behalf. BAWSCA also ensures contract compliance through regular review of the SFPUC’s accounting and capital expenditures.2 The Water Utility has two main costs: water supply costs (primarily the cost of water delivered to Palo Alto from the Hetch Hetchy Regional Water System) and the costs of operating the distribution system (the system of pipes, pumps, reservoirs, and other infrastructure that carries water to Palo Alto customers). Both cost components have been increasing and are expected to continue to increase. For many years, the largest cost increases have been on the water supply side. This is due primarily to major capital investments the SFPUC has made since 2010, which were undertaken partly due to pressure from wholesale customers. The Water System Improvement Program (WSIP) is a $4.8 billion capital improvement program, one of the largest in the country, to rehabilitate and seismically strengthen the lower portions of the Hetch Hetchy Regional Water System. One of the goals is to achieve the capability to return to service within 24 hours after a major earthquake. Although much of the work is complete (the program was 98.7% complete as of September 2022), some of the projects are still under construction and bond financing of WSIP projects over the next several years will continue to drive wholesale rates up. The program has greatly improved the resiliency of the Hetch Hetchy Regional Water System but has also led water supply costs to approximately double. 2 For a video summary of BAWSCA’s activities, see https://vimeo.com/283596665/5619ce2c11 Item 1 Staff Report Packet Pg. 6 Item No. 1.Page 4 of 18 1 6 9 1 CPAU’s operational costs for the water utility have increased by approximately 4.8% per year over the last five years; allocated charges (charges allocated to the water utility for administrative services provided by the General Fund) and operations and maintenance costs (including engineering) costs were the primary reasons for the increase. Capital costs have fluctuated from year to year. This Financial Plan projects increases in capital and operational costs that align as much as possible with the City’s Budget and Long-Range Financial Forecast and average approximately 3% per year over the next five years. ANALYSIS Staff completes an annual assessment of the financial position of the City’s water utility to plan for adequate revenue to fund operations, in compliance with the cost of service requirements set forth in the California Constitution (Proposition 218). This includes making long-term projections of market conditions, the physical condition of the system, and other factors that could affect utility costs, and setting rates adequate to recover these costs. The current rate proposals are also based on the cost of service (COS) methodology described in the 2012 Palo Alto Water Cost of Service & Rate Study, which was updated in 2015, and the 2015 Drought Rate memorandum completed by Raftelis Financial Consultants, and the 2019 update titled “Proposed FY 2020 Water Rates,” (see Attachment Q to staff report 10295.3) Proposed Actions 1. Increase rates for Rate Schedules W-1 (General Residential Water service), W-2 (Water Service from Fire Hydrants), W-3 (Fire Service Connections), W-4 (Residential Master- Metered and General Non-Residential Water Service), and W-7 (Non-Residential Irrigation Water Service); and 2. Transfer up to $3.746 million from the CIP Reserve to the Operations Reserve in FY 2023. 3. Transfer up to $3.0 million from the Rate Stabilization Reserve to the Operations Reserve in FY 2023. The FY 2024 Water Utility Financial Plan describes these proposed actions in detail. Tables 1 through 4 below illustrate the current and proposed water distribution rates under the attached Financial Plan. The rates shown below are in addition to the pass-through commodity rate charged to customers based on SFPUC supply charges. The pass-through commodity rate is currently $4.75 per CCF. SFPUC’s proposed rate increase in FY 2024 is 11.6%; the current rate would increase on or around July 1, 2023 to $5.30 per CCF, with no additional increase projected in the SFPUC meter charge. 3 A cost of service study (COS) is a study using industry-standard techniques to determine how the costs of running the utility should be recovered from its customers; charges to each customer are set in proportion to the cost of serving that customer. Item 1 Staff Report Packet Pg. 7 Item No. 1.Page 5 of 18 1 6 9 1 Table 1: Current and Proposed Water Consumption Charges Current (7/1/2022) Proposed (7/1/2023) Change ($/CCF) Change (%) W-1 (Residential) Volumetric Rates ($/CCF) Tier 1 Rates 2.67 2.75 0.08 3% Tier 2 Rates 6.21 6.39 0.18 3% W-2 (Construction) Volumetric Rates ($/CCF) Uniform Rate 3.76 3.87 0.11 3% W-4 (Commercial) Volumetric Rates ($/CCF) Uniform Rate 3.76 3.87 0.11 3% W-7 (Irrigation) Volumetric Rates ($/CCF) Uniform Rate 5.72 5.89 0.17 3% Item 1 Staff Report Packet Pg. 8 Item No. 1.Page 6 of 18 1 6 9 1 Table 2 and Table 3 show the current monthly service charges for rate schedules W-1, W-4 and W-7. Table 2: Current and Proposed Monthly Service Charges for Residential W-1 Monthly Service Charge ($/month based on meter size) Change Meter Size Current (7/1/2022) Proposed (7/1/2023) $% 5/8”21.06 21.69 0.63 3% 3/4”21.06 21.69 0.63 3% 1”21.06 21.69 0.63 3% 1 ½”68.02 70.06 2.04 3% 2”105.22 108.37 3.15 3% 3”223.02 229.71 6.69 3% 4”396.63 408.52 11.89 3% 6”812.03 836.39 24.36 3% 8”1,494.04 1,538.86 44.82 3% 10”2,362.05 2,432.91 70.86 3% 12”3,106.07 3,199.25 93.18 3% Item 1 Staff Report Packet Pg. 9 Item No. 1.Page 7 of 18 1 6 9 1 Table 3: Current and Proposed Monthly Service Charges for W-4 and W-7 Monthly Service Charge ($/month based on meter size) Change Meter Size Current (7/1/2022) Proposed (7/1/2023) $% 5/8”18.42 18.97 0.55 3% 3/4”24.62 25.35 0.73 3% 1”37.02 38.13 1.11 3% 1 ½”68.02 70.06 2.04 3% 2”105.22 108.37 3.15 3% 3”223.02 229.71 6.69 3% 4”396.63 408.52 11.89 3% 6”812.03 836.39 24.36 3% 8”1,494.04 1,538.86 44.82 3% 10”2,362.05 2,432.91 70.86 3% 12”3,106.07 3,199.25 93.18 3% Table 4 shows the current and proposed monthly service charges for rate schedule W-3. Table 4: Current and Proposed Monthly Service Charges for Fire Services (W-3) Monthly Service Charge ($/month based on meter size) Change Meter Size Current (7/1/2022) Proposed (7/1/2023) $% 2”$4.34 $4.47 0.13 3% 4”26.85 27.66 0.81 3% 6”77.96 80.30 2.34 3% 8”166.13 171.11 4.98 3% 10”298.77 307.73 8.96 3% 12”482.59 497.07 14.48 3% Item 1 Staff Report Packet Pg. 10 Item No. 1.Page 8 of 18 1 6 9 1 Bill Impact of Proposal Error! Reference source not found. and Error! Reference source not found. show the impact of the proposed July 1, 2023 rate changes on the median residential, commercial and irrigation bills including the SFPUC commodity pass-through rate increase of 11.6% or $5.30 per CCF. The bill increases shown in Table 5 and 6 vary by usage because the SFPUC increase per CCF is more than the distribution rate increases. Table 5: Impact of Proposed Water Rate Changes on Residential Bills ChangeUsage (CCF/mo.)Bill under Current Rates (7/1/2022) Bill under Proposed Rates (7/1/2023)$/mo.% 4 $50.74 $53.89 $3.15 6% (Winter median) 7 $76.54 $81.68 $5.14 7% (Annual median) 9 $98.46 $105.06 $6.60 7% (Summer median) 14 $153.26 $163.51 $10.25 7% 25 $273.82 $292.10 $18.28 7% Table 6: Impact of Proposed Water Rate Changes on Commercial Bills Change Usage (CCF/mo.)Bill under Current Rates (7/1/2022) Bill under Proposed Rates (7/1/2023)$/mo.% Commercial (W-4) (5/8” meters) (Annual median) 12 $120.54 $129.01 $8.47 7% (Annual average) 64 $563.06 $605.85 $42.79 8% Irrigation (W-7) (1 ½” meters) (Winter median) 9 $162.25 $170.77 $8.52 5% (Summer median) 37 $455.41 $484.09 $28.68 6% (Winter average) 56 $654.34 $696.70 $42.36 6% (Summer average) 199 $2,151.55 $2,296.87 $145.32 7% Item 1 Staff Report Packet Pg. 11 Item No. 1.Page 9 of 18 1 6 9 1 Staff expects median quantities of water use to decrease from pre-drought levels, however, as calls for water conservation continue. Customers who conserve will experience less of a bill increase than those customers who are not reducing water consumption. FY 2024 Financial Plan’s Projected Rate Adjustments for the Next Five Fiscal Years Table 7 shows the projected rate adjustments over the next five years and their impact on the annual median residential water bill for 5/8” customers. These projected rate adjustments include the impact of the projected changes to the pass-through commodity rate. Table 7: Projected Rate Adjustments, FY 2024 to FY 2028 (5/8” meter) Fiscal Year FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 Water Utility 7%3%3%3%5% Estimated Monthly Bill $6.60 $3.45 $3.66 $3.89 $6.27 Estimated Bill Impact ($/mo)1 $105.06 $108.51 $112.17 $116.06 $122.33 1) estimated impact on median monthly residential water bill for customers with 5/8” meter, which is currently $98.46. Figures 1 and 2 below illustrate the projected increases in the Water Utility’s costs between FY 2023 and FY 2028. Figure 1: Projected FY 2023 and FY 2028 costs Item 1 Staff Report Packet Pg. 12 Item No. 1.Page 10 of 18 1 6 9 1 Figure 2: Percentage of Total Cost Increase from FY 2023 to FY 2028 Attributed to Supply, Capital, and Operations Costs The “Capital” bars on Figure 1 reflect the capital program contributions to the CIP Reserve. Additionally, this Financial Plan includes a one-time transfer to the CIP Reserve to fund seismic reservoir replacement work. CIP funds available for projects that were budgeted in FY 2022 and prior years that are carried forward or reappropriated to FY 2023 will be used to offset the new CIP budget. Water Supply Costs The cost of water is a major driver for the increase in the water utility’s costs (and therefore rates) in FY 2024. Wholesale water costs are adopted by the SFPUC, and generally have changed on an annual basis. The SFPUC is currently engaged in a $4.8 billion Water System Improvement Program (WSIP) for regional projects. As of September 30, 2022, 48 of the 52 regional projects were complete or in close-out while three of the regional projects were under construction.4 This has resulted and will continue to result in large increases in the annual debt service costs assigned to wholesale customers like Palo Alto. After each WSIP project is completed, wholesale 4 First Quarter FY 2022 - 2023 WSIP Regional Quarterly Report, https://www.sfpuc.org/sites/default/files/documents/Q1FY23_WSIP_Regional_Qtrly_Report_4_Web.pdf The additional regional projects do not include construction: Long-Term Mitigation Endowment and Watershed and Environmental Improvement Program. Item 1 Staff Report Packet Pg. 13 Item No. 1.Page 11 of 18 1 6 9 1 customers must start paying the debt service costs within 3 to 4 years. For most of those costs, funded with bond financing, the costs will be paid off over approximately 30 years. The currently estimated WSIP completion date is February 7, 2027, as adopted by the SFPUC in April of 2022. As the SFPUC completes WSIP projects, the SFPUC is pursuing a suite of other capital improvement work; dam safety improvements and Mountain Tunnel repairs are rate increase drivers during the next 10-year timeframe. Future and in-progress construction work will require bond funding, and the SFPUC’s financial plans show debt service cost for the water enterprise growing by 32% between FY 2021 and FY 2026, and by 40% by FY 2028.5 Changes in usage due to drought, or recovery from drought, can make the magnitude of future increases difficult to predict. The SFPUC’s costs to operate the Regional Water System are primarily fixed costs, so the water rate charged to wholesale customers like the City of Palo Alto is highly dependent on water usage by all users of the Regional Water System. The SFPUC has been accumulating funds in its Wholesale Customer Balancing Account due to a variety of factors, including: SFPUC sold more wholesale water than the sales projection it used for rate setting, there were cost savings in the wholesale revenue requirement due to the SFPUC’s debt refinancing, and BAWSCA’s annual review of the wholesale revenue requirement resulted in credits applied to the balancing account. The SFPUC has been returning these funds to wholesale customers by using the balancing account funds to offset the required revenues from wholesale customers. Using this method, SFPUC held rates constant from FY 2017 through June 30, 2022. Because of the water use reductions expected during the ongoing drought conditions and calls for voluntary conservation (11% system-wide and 16% for the wholesale customers collectively), all of the available funding in the balancing account (approximately $86 million at year end FY 2021) is expected to be returned to wholesale customers in FY 2022 and FY 2023. Without the use of the balancing account, SFPUC’s rate forecast would be higher. BAWSCA Revenue Bond Refunding On January 5, 2023, BAWSCA completed the settlement of BAWSCA’s revenue bond series 2023A to refund bonds issued in 2013 at a lower rate. BAWSCA locked-in the bond rates in October 2021 at an all-in true interest rate of 2.06%. What this means for Palo Alto is that its share of the debt service - approximately $1.74 million per year (or $0.36 per CCF) will decrease to an estimated $1.17 million per year (or $0.26 per CCF), a savings of $0.57 million annually through 2034 when the bonds will be paid off. Staff projects the total water rate increase of 7% in FY 2024 for Palo Alto customers with the pass-through of the commodity rate increase and the Palo Alto distribution rate increase. This is equivalent to a monthly water bill increase of $6.60 for residential customers with annual median water usage. 5 FY 2018-19 & FY 2019-20 Adopted SFPUC Budget, https://sfwater.org/modules/showdocument.aspx?documentid=13147 Item 1 Staff Report Packet Pg. 14 Item No. 1.Page 12 of 18 1 6 9 1 Capital Projects & Reserves The Water Utility deferred some capital project spending in FY 2022 leading to lower capital costs than budgeted. Staff anticipates completing many of these capital projects in FY 2023. Despite these deferrals, the 5-year capital budget of $55.7 million (not including budgets carried forward from prior years) remained the same within 1% in the current Financial Plan at $56.4M. Customer rates still need to recover the full amount of revenue to pay for these costs over the 5-year timeframe. The capital budget includes one-time seismic water system upgrades and/or replacements for the Park and Dahl reservoirs to improve earthquake resistance. This work will improve protection from water loss at these reservoirs in a seismic event. The attached Financial Plan also updates the transfer proposals due to project cost increases and available reserve balances. For CIP, the Plan projects that rate funding needs to cover $12.846 million of planned CIP in FY 2023. This figure is the portion of planned CIP in FY 2023 that will not be paid for through funds collected in prior years (essentially the FY 2023 Capital budget, less funds available in the Reappropriations and Commitments Reserves), shown in line 12 of Table 8 for FY 2023. This capital budget is projected to be funded by the capital program contribution of $9.1 million together with $3.746 million from the CIP Reserve. Because withdrawals from the CIP Reserve for use on capital projects require Council action, 6 staff requests Council approval to transfer up to $3.746 million from the CIP Reserve to the Operations Reserve. The need for each of the transfers will be re-evaluated once the year end reserve balances for FY 2023 are known. Figure 3 shows the CIP Reserve year end balances. 6 See Section 5(b) of the Water Utility Reserves Management Practices; Appendix C to the attached Water Financial Plan. Item 1 Staff Report Packet Pg. 15 Item No. 1.Page 13 of 18 1 6 9 1 Figure 3: Actual FY 2022 and Projected Capital Reserve Balances FY 2023 to FY 2028 Figure 4 illustrates the year end reserve balances for FY 2022 (actual) and projected through FY 2028. Water Utility reserve levels remain healthy at year end FY 2022: the CIP Reserve is at the maximum guideline level of $10.7 million and the Operations Reserve is also at the maximum guideline level of approximately $14 million with an additional $0.3 million above the maximum that is considered unassigned. In accordance with the reserve guidelines, any funds above the maximum guideline level must be assigned a specific purpose or be returned to ratepayers. The funds will be assigned and used to cover water utility operational and capital costs in FY 2023. There is also $9 million available in the Rate Stabilization Reserve at year end FY 2022. This Financial Plan uses reserve funding (from the Operations Reserve, Rate Stabilization Reserve and CIP Reserve) together with rate increases to manage the decreased sales revenue and increasing costs from FY 2023 through FY 2028. Item 1 Staff Report Packet Pg. 16 Item No. 1.Page 14 of 18 1 6 9 1 Figure 4: Actual Reserve Levels for FY 2022 and Projections through FY 2028 Rate Stabilization Reserve Staff plans to use the Rate Stabilization Reserve balances to buffer rate increases. Staff expects to transfer $3 million from the Rate Stabilization Reserve to the Operations Reserve in FY 2023 and $2 million from the Rate Stabilization Reserve to the Operations Reserve in FY 2024, FY 2025 and FY 2026. The use of the Rate Stabilization Reserve balances in this way, together with the cost and revenue projections in this Financial Plan, is expected to hold CPAU water distribution rate increases to 3% in FY 2024 and 6% annually from FY 2025 through FY 2028, while continuing to fund essential capital work. This Financial Plan projects that the Rate Stabilization Reserve will be exhausted by the end of FY 2026 (see line 7 in Table 8). Item 1 Staff Report Packet Pg. 17 Item No. 1.Page 15 of 18 1 6 9 1 Table 8: Operations & Unassigned, Rate Stabilization and CIP Reserves Starting and Ending Balances, Revenues, Transfers To/(From) Reserves and Capital Program Contribution To/(From) Reserves Projected for FY 2023 to FY 2028 ($000) * Planned CIP (item 12) is reflected as an expense in the CIP Reserve and does not include CIP funded through Reappropriations or Commitments reserves. Water Bill Comparison with Surrounding Cities Table 9 compares water bills for residential customers to those in surrounding communities as of October 2022 (under the City’s current water rates). Palo Alto customers have some of the highest monthly bills of the group, although bills for smaller water users are lower than in some surrounding communities. The bill difference between Palo Alto and neighboring communities has decreased over the past several years as other agencies invest more in capital improvement. It is unclear at this time what water rate changes may be implemented in surrounding communities for FY 2023. The average community rate calculated in the following table is the mean of the six surrounding communities listed. These communities are the same six that Palo Alto compares itself to in the annual budget across Water, Wastewater, Gas and Electric industries. FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 Starting Balance (1)Operations/Unassigned 14,420 13,028 12,582 10,527 9,385 9,480 (2)Rate Stabilization 9,069 6,069 3,000 3,000 -- (3)CIP 10,707 6,961 3,088 8,533 1,861 6,847 Revenues (4)Total Revenue 48,343 52,911 55,766 57,105 58,523 61,046 (5)Transfers In 332 342 353 363 374 385 Transfers (6)Operations/Unassigned 3,000 3,069 -500 -- (7)Rate Stabilization (3,000)(3,069)-(3,000)-- (8)CIP ---2,500 -- Capital Program Contribution (9)Operations/Unassigned (9,100)(9,100)(9,100)(9,100)(9,100)(9,100) (10)CIP 9,100 9,100 9,100 9,100 9,100 9,100 Expenses (11)Total Expenses other than CIP (43,825)(47,523)(48,923)(49,245)(48,932)(50,372) (12)Planned CIP (12,846)(12,973)(3,655)(18,272)(4,114)(12,456) (13)Transfers Out (142)(146)(151)(765)(770)(775) Ending Balance (1)+(4)+(5)+(6)+(9)+(11)+(13)Operations/Unassigned 13,028 12,582 10,527 9,385 9,480 10,664 (2)+(7)Rate Stabilization 6,069 3,000 3,000 --- (3)+(8)+(10)+(12)CIP 6,961 3,088 8,533 1,861 6,847 3,491 Operations Reserve Guideline Levels (14)Minimum Guideline Level 7,227 7,836 8,067 8,221 8,170 8,408 (15)Maximum Guideline Level 14,455 15,672 16,134 16,442 16,340 16,815 Item 1 Staff Report Packet Pg. 18 Item No. 1.Page 16 of 18 1 6 9 1 Table 1: Residential Monthly Water Bill Comparison Residential monthly bill comparison ($/month)* As of October 2022 Usage (CCF/month) Palo Alto Menlo Park Mountain View Hayward Redwood City Santa Clara Los Altos Average of Surrounding Communities 4 $50.74 $62.83 $43.47 $41.03 $54.04 $29.32 $53.29 $47.33 (Winter median) 7 76.54 87.32 67.29 63.23 76.09 51.31 $72.46 $69.62 (Annual median) 9 98.46 103.65 83.17 78.03 90.79 65.97 $85.24 $84.47 (Summer median) 14 153.26 148.02 122.87 123.48 138.94 102.62 $120.01 $125.99 25 273.82 257.41 257.81 223.47 267.39 183.25 $212.91 $233.71 *Based on the FY 2013 BAWSCA survey, the percentage of SFPUC as the source of potable water supply was 100% for Palo Alto, 95% for Menlo Park, 100% for Redwood City, 87% for Mountain View, 10% for Santa Clara and 100% for Hayward. Los Altos does not receive water supply from SFPUC. Changes from Last Year’s Financial Plan Table 10 shows rate projections from the last two Financial Plans for FY 2022 and FY 2023 as well as the impact of SFPUC’s wholesale rate increase projections when combined with Palo Alto’s distribution rate increase. Table 10: Proposed and Projected Water Revenue Changes for FY 2024 to FY 2028 Projection FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2024 Plan (Current)7%3%3%3%5% FY 2023 Plan 9%3%2%0%- FY 2022 Plan 5%5%5%-- Item 1 Staff Report Packet Pg. 19 Item No. 1.Page 17 of 18 1 6 9 1 Table 11 shows the proposed water rate increases broken out into the needed increases to commodity revenues, to cover the costs of purchasing water from SFPUC and separately the distribution revenue increases to pay for the upkeep of Palo Alto’s water distribution system. Table 11: Proposed Commodity and Distribution Water Rate Changes FY 2024 to FY 2028 Projection FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 Commodity Rate (SFPUC Wholesale Rate)11.6%0%0%0%4.5% Distribution Rate 3%6%6%6%6% Total Rate 7%3%3%3%5% This plan uses the Rate Stabilization Reserve and CIP Reserve to stabilize rates while anticipating a large wholesale water rate increase in FY 2024 and funding needed for critical water CIP budgets. NEXT STEPS The Finance Committee plans to consider the recommended water rate changes in March. Assuming the Finance Committee supports the proposed rate adjustments, staff will send notification of the potential rate increases to customers as required by Article XIIID of the State Constitution (added by Proposition 218) expected in April 2023. The City Council will consider the proposed Financial Plans and amended rate schedules with the FY 2024 budget, expected in June, at which time the public hearing required by Article XIIID of the State Constitution will be held. FISCAL/RESOURCE IMPACT Staff projects estimated revenue for the Water Utility in FY 2024 to increase approximately 7% ($3.2 million) as a result of the proposed rate increases. The FY 2024 Budget is being developed concurrent with these rates and, depending on the final rates, adjustments to the budget may be necessary at a later time. See the FY 2024 Water Utility Financial Plan for a more comprehensive overview of the projected cost and revenue changes for the next five years. POLICY IMPLICATIONS The proposed water rate adjustments are consistent with Council-adopted Reserve Management Practices that are part of the Financial Plans. Staff developed the water rate adjustments using a cost-of-service study and methodology consistent with the cost of service requirements of Proposition 218. Item 1 Staff Report Packet Pg. 20 Item No. 1.Page 18 of 18 1 6 9 1 STAKEHOLDER ENGAGEMENT At the Utilities Advisory Commission (UAC) March 1, 2023 meeting, staff will present the attached Financial Plan. Staff will share the UAC vote on the motion to the Finance Committee. Staff, the UAC, and the Finance Committee’s recommendation on the FY 2024 water rate increases will be presented to City Council in June during the budget adoption process. ENVIRONMENTAL REVIEW The Finance Committee’s review and recommendation to Council on the FY 2024 Water Financial Plan and rate adjustments does not meet the definition of a project requiring California Environmental Quality Act (CEQA) review under Public Resources Code Section 21065 thus no environmental review is required. ATTACHMENTS Attachment A: Water Resolution FY 2024 Attachment B: Water Rate Schedules FY 2024 APPROVED BY: Dean Batchelor, Director Utilities Item 1 Staff Report Packet Pg. 21 Attachment A 027021423 * NOT YET APPROVED * Resolution No. Resolution of the Council of the City of Palo Alto Approving the FY 2024 Water Utility Financial Plan and Reserve Transfers, and Increasing Water Rates by Amending Rate Schedules W-1 (General Residential Water Service), W-2 (Water Service from Fire Hydrants), W-3 (Fire Service Connections), W-4 (Residential Master-Metered and General Non- Residential Water Service), and W-7 (Non-Residential Irrigation Water Service) R E C I T A L S A. Each year the City of Palo Alto (“City”) assesses the financial position of its utilities with the goal of ensuring adequate revenue to fund operations. This includes making long-term projections of market conditions, the physical condition of the system, and other factors that could affect utility costs, and setting rates adequate to recover these costs. The City does this with the goal of providing safe, reliable, and sustainable utility services at competitive rates. The City adopts Financial Plans to summarize these projections. B. The City uses reserves to protect against contingencies and to manage other aspects of its operations, and regularly assesses the adequacy of these reserves and the management practices governing their operation. The status of utility reserves and their management practices are included in Reserves Management Practices attached to and made part of the Financial Plans. C. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of the City of Palo Alto may by resolution adopt rules and regulations governing utility services, fees and charges. D. On , 2023, the City Council held a full and fair public hearing regarding the proposed rate increase and considered all protests against the proposals. E. As required by Article XIII D, Section 6 of the California Constitution and applicable law, notice of the , 2023 public hearing was mailed to all City of Palo Alto Utilities water customers by , 2023. F. The City Clerk has tabulated the total number of written protests presented by the close of the public hearing, and determined that it was less than fifty percent (50%) of the total number of customers and property owners subject to the proposed water rate amendments, therefore a majority protest does not exist against the proposal. The Council of the City of Palo Alto does hereby RESOLVE, as follows: Item 1 Attachment A, Water Resolution FY 2024 Packet Pg. 22 Attachment A 027021423 SECTION 1. The Council hereby adopts the FY 2024 Water Utility Financial Plan. SECTION 2. The Council hereby approves a transfer from the Capital Improvement Program Reserve to the Operations Reserve of up to $3,746,000 in FY 2023 as described in the FY 2024 Water Utility Financial Plan. SECTION 3. The Council hereby approves a transfer from the Rate Stabilization Reserve to the Operations Reserve of up to $3,000,000 in FY 2023 as described in the FY 2024 Water Utility Financial Plan. SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-1 (General Residential Water Service) is hereby amended to read as attached and incorporated. Utility Rate Schedule W-1, as amended, shall become effective July 1, 2023. SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-2 (Water Service from Fire Hydrants) is hereby amended to read as attached and incorporated. Utility Rate Schedule W-2, as amended, shall become effective July 1, 2023. SECTION 6. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-3 (Fire Service Connections) is hereby amended to read as attached and incorporated. Utility Rate Schedule W-3, as amended, shall become effective July 1, 2023. SECTION 7. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-4 (Residential Master-Metered and General Non-Residential Water Service) is hereby amended to read as attached and incorporated. Utility Rate Schedule W-4, as amended, shall become effective July 1, 2023. SECTION 8. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule W-7 (Non-Residential Irrigation Water Service) is hereby amended to read as attached and incorporated. Utility Rate Schedule W-7, as amended, shall become effective July 1, 2023. SECTION 9. The City Council finds as follows: a. Revenues derived from the water rates approved by this resolution do not exceed the funds required to provide water service. b. Revenues derived from the water rates approved by this resolution shall not be used for any purpose other than providing water service, and the purposes set forth in Article VII, Section 2, of the Charter of the City of Palo Alto. c. The amount of the water rates imposed upon any parcel or person as an incident of Item 1 Attachment A, Water Resolution FY 2024 Packet Pg. 23 Attachment A 027021423 property ownership shall not exceed the proportional cost of the water service attributable to the parcel. SECTION 10. The Council finds that the fees and charges adopted by this resolution are charges imposed for a specific government service or product provided directly to the payor that are not provided to those not charged, and do not exceed the reasonable costs to the City of providing the service or product. // // // // // // // // // // // // // // // // // // // Item 1 Attachment A, Water Resolution FY 2024 Packet Pg. 24 Attachment A 027021423 // SECTION 11. The Council finds that the adoption of this resolution approving the FY 2024 Water Financial Plan and Reserve transfers does not meet the California Environmental Quality Act’s (CEQA) definition of a project under Public Resources Code Section 21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative governmental activity which will not cause a direct or indirect physical change in the environment, and therefore, no environmental review is required. The Council finds that the adoption of this resolution changing water rates to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED: Assistant City Attorney City Manager Director of Utilities Director of Administrative Services Item 1 Attachment A, Water Resolution FY 2024 Packet Pg. 25 GENERAL RESIDENTIAL WATER SERVICE UTILITY RATE SCHEDULE W-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-1-1 Effective 7-1-20232 dated 7-1-202219 Sheet No W-1-1 A. APPLICABILITY: This schedule applies to separately metered single-family residential dwellings receiving Water Service from the City of Palo Alto Utilities. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Water Service. C. RATES: Per Meter Monthly Service Charge: Per Month For meters 5/8-inch to 1 inch .................................................................................... $ 21.6906 For 1 1/2 inch meter .................................................................................................. 70.0668.02 For 2-inch meter ........................................................................................................ 108.37105.22 For 3-inch meter ........................................................................................................ 229.71223.02 For 4-inch meter ........................................................................................................ 408.52396.63 For 6-inch meter ........................................................................................................ 836.39812.03 For 8-inch meter ........................................................................................................1,538.861,494.04 For 10-inch meter ......................................................................................................2,432.912,362.05 For 12-inch meter .......................................................................................................3,199.253,106.07 Per Hundred Cubic Feet Volumetric Rates: (To be added to Service Charge, applicable to all pressure zones.) Per Month Commodity Rate: Water Delivery Charge from SFPUC (through July 31, 2022) .................................. $4.10 Water Delivery Charge from SFPUC (effective August 1, 2022) .............................. $5.304.75 Distribution Rate: Tier 1 usage ........................................................................................................................$2.7567 Tier 2 usage (All usage over 100% of Tier 1) ....................................................................... 6.3921 Item 1 Attachment B, Water Rate Schedules FY 2024 Packet Pg. 26 GENERAL RESIDENTIAL WATER SERVICE UTILITY RATE SCHEDULE W-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-1-2 Effective 7-1-20232 dated 7-1-202219 Sheet No W-1-2 Drought Surcharges (deactivated): A drought surcharge will be added to the Customer’s applicable commodity rate for Tier 1 and Tier 2 Water usage when the City Council has determined that a Water reduction level is in effect for the City as described in Section D.4. The drought surcharges in the table below are measured in dollars per hundred cubic feet (ccf). Water Usage Reduction level Level 1 (10/15%) Level 2 (20%) Level 3 (25%) Tier 1 0.20 0.43 0.64 Tier 2 0.58 1.21 1.85 Temporary Service – Developers Temporary unmetered service to residential subdivision developers, per connection ........................................................................ $6.00 D. SPECIAL NOTES: 1. Calculation of Cost Components The actual bill amount is calculated based on the applicable rates in Section C above and adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill statement, the bill amount may be broken down into appropriate components as calculated under Section C. 2. Commodity Rate The Commodity Charge is based on the water delivery rate per the San Francisco Public Utility Commission (SFPUC) Water Rate Schedule W-25: Wholesale Use with Long-Term Contract. The Commodity Charge will be passed through automatically via periodic rate adjustments to account for increases in wholesale water charges, as well as inflation. The pass-through period will be effective for fiscal years 2020 through 2024, inclusive. Customers will be provided notice of any adjustments via their billing statements or by any other mailing by CPAU to the customer’s regular billing address. Item 1 Attachment B, Water Rate Schedules FY 2024 Packet Pg. 27 GENERAL RESIDENTIAL WATER SERVICE UTILITY RATE SCHEDULE W-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-1-3 Effective 7-1-20232 dated 7-1-202219 Sheet No W-1-3 3. Calculation of Usage Tiers Tier 1 Water usage shall be calculated and billed based upon a level of 0.2 ccf per day rounded to the nearest whole ccf, based on Meter reading days of Service. As an example, for a 30-day bill, the Tier 1 level would be 0 through 6 ccf. For further discussion of bill calculation and proration, refer to Rule and Regulation 11. 4. Drought Surcharge During period of Water shortage or restrictions on local Water use, the City Council may, by resolution, declare the need for citywide Water conservation at the 10/15%, 20% or 25% level. While such a resolution is in effect, a drought surcharge will apply. The purpose of the drought surcharge is to recover revenues lost as a result of reduced consumption. {End} Item 1 Attachment B, Water Rate Schedules FY 2024 Packet Pg. 28 WATER SERVICE FROM FIRE HYDRANTS UTILITY RATE SCHEDULE W-2 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-2-1 Effective 7-1-20232 dated 7-1-202219 Sheet No W-2-1 A. APPLICABILITY: This schedule applies to all Water taken from fire hydrants for construction, maintenance, and other uses in conformance with provisions of a Hydrant Meter Permit. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Water Service. C. RATES: 1. Monthly Service Charge. METER SIZE 5/8 inch ........................................................................................................................... 50.00 3 inch ........................................................................................................................... 125.00 2. Volumetric Rate: (per hundred cubic feet) Commodity Rate: Water Delivery Charge from SFPUC (through July 31, 2022) ......................... $4.10 Water Delivery Charge from SFPUC (effective August 1, 2022) ..................... $5.304.75 Distribution Rate: .................................................................................................................$3.873.76 4. Drought Surcharges (deactivated): A drought surcharge will be added to the Customer’s applicable Commodity rate when the City Council has determined that a Water reduction level is in effect for the City as described in Section D.6. The drought surcharges in the table below are measured in dollars per hundred cubic feet (ccf). Water Usage Reduction level Level 1 (10/15%) Level 2 (20%) Level 3 (25%) Surcharge 0.26 0.53 0.77 Item 1 Attachment B, Water Rate Schedules FY 2024 Packet Pg. 29 WATER SERVICE FROM FIRE HYDRANTS UTILITY RATE SCHEDULE W-2 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-2-2 Effective 7-1-20232 dated 7-1-202219 Sheet No W-2-2 D. SPECIAL NOTES: 1. Monthly charges shall include the applicable monthly Service Charge in addition to usage billed at the commodity rate. 2. The Commodity Charge is based on the water delivery rate per the San Francisco Public Utility Commission (SFPUC) Water Rate Schedule W-25: Wholesale Use with Long-Term Contract. The Commodity Charge will be passed through automatically via periodic rate adjustments to account for increases in wholesale water charges, as well as inflation. The pass-through period will be effective for fiscal years 2020 through 2024, inclusive. Customers will be provided notice of any adjustments via their billing statements or by any other mailing by CPAU to the customer’s regular billing address. 3. Any person or company using a hydrant without first obtaining a valid Hydrant Meter Permit shall pay a fee of $50.00 for each day of such use in addition to all other costs and fees provided in this schedule. A hydrant permit may be denied or revoked for failure to pay such fee. 4. A Meter deposit of $750.00 may be charged any applicant for a Hydrant Meter Permit as a prerequisite to the issuance of a permit and Meter(s). A charge of $50.00 per day will be added for delinquent return of hydrant Meters. A fee will be charged for any Meter returned with missing or damaged parts. 5. Any person or company using a fire hydrant improperly or without a permit, or who draws Water from a hydrant without a Meter installed and properly recording usage shall, in addition to all other applicable charges be subject to criminal prosecution pursuant to the Palo Alto Municipal Code. 6. During period of Water shortage or restrictions on local Water use, the City Council may, by resolution, declare the need for citywide Water conservation at the 10/15%, 20% or 25% level. While such a resolution is in effect, a drought surcharge will apply. The purpose of the drought surcharge is to recover revenues lost as a result of reduced consumption. {End} Item 1 Attachment B, Water Rate Schedules FY 2024 Packet Pg. 30 FIRE SERVICE CONNECTIONS UTILITY RATE SCHEDULE W-3 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-3-1 Effective 7-1-202322 dated 7-1-202219 Sheet No W-3-1 A. APPLICABILITY: This schedule applies to all public fire hydrants and private fire Service connections. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Water Service. C. RATES: 1. Monthly Service Charges Public Fire Hydrant .................................................................................................... $5.00 Private Fire Service: 2-inch connection .......................................................................................................$4.34 4.47 4-inch connection .......................................................................................................26.85 27.66 6-inch connection ....................................................................................................... 77.96 80.30 8-inch connection .......................................................................................................166.13 171.11 10-inch connection .....................................................................................................298.77 307.73 12-inch connection .....................................................................................................482.59 497.07 2. Commodity (To be added to Service Charge unless Water is used for fire extinguishing or testing purposes.) Per Hundred Cubic Feet All water usage .......................................................................................................... $10.00 D. SPECIAL NOTES: 1. Service under this schedule may be discontinued if Water is used for any purpose other than fire extinguishing or testing and repairing the fire extinguishing facilities. Using hydrants and fire Services for other purposes is illegal and will be subject to the commodity charge as noted above, fines, and criminal prosecution pursuant to the Palo Alto Municipal Code. 2. For a combination Water and fire Service, the Water Service schedule shall apply. Item 1 Attachment B, Water Rate Schedules FY 2024 Packet Pg. 31 FIRE SERVICE CONNECTIONS UTILITY RATE SCHEDULE W-3 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-3-2 Effective 7-1-202322 dated 7-1-202219 Sheet No W-3-2 3. Utilities Rule and Regulation No. 21 provides additional information on Automatic Fire Services. 4. Repairs and testing of fire extinguishing facilities are not considered unauthorized use of Water if records and documentation are supplied by the Customer. {End} Item 1 Attachment B, Water Rate Schedules FY 2024 Packet Pg. 32 RESIDENTIAL MASTER-METERED AND GENERAL NON-RESIDENTIAL WATER SERVICE UTILITY RATE SCHEDULE W-4 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-4-1 Effective 7-1-20232 dated 7-1-202219 Sheet No W-4-1 A. APPLICABILITY: This schedule applies to Water Services to non-residential buildings, and multi-family residential dwellings served through a Master-Meter. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Water Service. C. RATES: Per Meter Monthly Service Charge Per Month For 5/8-inch meter .................................................................................... $ 18.9742 For 3/4-inch meter .................................................................................... 24.62 25.35 For 1-inch meter .................................................................................... 37.02 38.13 For 1 ½-inch meter .................................................................................... 68.02 70.06 For 2-inch meter .................................................................................... 105.22 108.37 For 3-inch meter .................................................................................... 223.02 229.71 For 4-inch meter .................................................................................... 396.63 408.52 For 6-inch meter .................................................................................... 812.03 836.39 For 8-inch meter ....................................................................................1,494.04 1,538.86 For 10-inch meter ....................................................................................2,362.05 2,432.91 For 12-inch meter ....................................................................................3,106.07 3,199.25 Per Hundred Cubic Feet Volumetric Rates: (to be added to Service Charge, applicable to all pressure zones) Per Month Commodity Rate: Water Delivery Charge from SFPUC (through July 31, 2022) ............... $ 4.10 Water Delivery Charge from SFPUC (effective August 1, 2022) ........... 4.75 5.30 Distribution Rate: ........................................................................................... 3.76 3.87 Item 1 Attachment B, Water Rate Schedules FY 2024 Packet Pg. 33 RESIDENTIAL MASTER-METERED AND GENERAL NON-RESIDENTIAL WATER SERVICE UTILITY RATE SCHEDULE W-4 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-4-2 Effective 7-1-20232 dated 7-1-202219 Sheet No W-4-2 Drought Surcharges (deactivated): A drought surcharge will be added to the Customer’s applicable commodity rate when the City Council has determined that a Water reduction level is in effect for the City as described in Section D.3. The drought surcharges in the table below are measured in dollars per hundred cubic feet (ccf). Water Usage Reduction level Level 1 (10/15%) Level 2 (20%) Level 3 (25%) Surcharge 0.26 0.53 0.77 D. SPECIAL NOTES: 1. Calculation of Cost Components The actual bill amount is calculated based on the applicable rates in Section C above and adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill statement, the bill amount may be broken down into appropriate components as calculated under Section C. 2. Commodity Rate The Commodity Charge is based on the water delivery rate per the San Francisco Public Utility Commission (SFPUC) Water Rate Schedule W-25: Wholesale Use with Long-Term Contract. The Commodity Charge will be passed through automatically via periodic rate adjustments to account for increases in wholesale water charges, as well as inflation. The pass-through period will be effective for fiscal years 2020 through 2024, inclusive. Customers will be provided notice of any adjustments via their billing statements or by any other mailing by CPAU to the customer’s regular billing address. 3. Drought Surcharge During period of Water shortage or restrictions on local Water use, the City Council may, by resolution, declare the need for citywide Water conservation at the 10/15%, 20% or 25% level. While such a resolution is in effect, a drought surcharge will apply. The purpose of the drought surcharge is to recover revenues lost as a result of reduced consumption. {End} Item 1 Attachment B, Water Rate Schedules FY 2024 Packet Pg. 34 NON-RESIDENTIAL IRRIGATION WATER SERVICE UTILITY RATE SCHEDULE W-7 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-7-1 Effective 7-1-20232 dated 7-1-202219 Sheet No W-7-1 A. APPLICABILITY: This schedule applies to non-residential Water Service supplying dedicated irrigation Meters. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Water Services. C. RATES: Per Meter Monthly Service Charge Per Month For 5/8-inch meter .................................................................................... $ 18.42 18.97 For 3/4-inch meter .................................................................................... 24.62 25.35 For 1-inch meter .................................................................................... 37.02 38.13 For 1 1/2 inch meter .................................................................................... 68.02 70.06 For 2-inch meter .................................................................................... 105.22 108.37 For 3-inch meter .................................................................................... 223.02 229.71 For 4-inch meter .................................................................................... 396.63 408.52 For 6-inch meter .................................................................................... 812.03 836.39 For 8-inch meter ....................................................................................1,494.04 1,538.86 For 10-inch meter ....................................................................................2,362.05 2,432.91 For 12-inch meter ....................................................................................3,106.07 3,199.25 Per Hundred Cubic Feet Volumetric Rates: (to be added to Service Charge, applicable to all pressure zones) Per Month Commodity Rate: Water Delivery Charge from SFPUC (through July 31, 2022) ..................... $ 4.10 Water Delivery Charge from SFPUC (effective July 1August 1, 20232) ..... 4.75 5.30 Distribution Rate: ..................................................................................................... 5.72 5.89 Item 1 Attachment B, Water Rate Schedules FY 2024 Packet Pg. 35 NON-RESIDENTIAL IRRIGATION WATER SERVICE UTILITY RATE SCHEDULE W-7 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No W-7-2 Effective 7-1-20232 dated 7-1-202219 Sheet No W-7-2 Drought Surcharges (deactivated): A drought surcharge will be added to the Customer’s applicable commodity rate when the City Council has determined that a Water reduction level is in effect for the City as described in Section D.3. The drought surcharges in the table below are measured in dollars per hundred cubic feet (ccf). Water Usage Reduction level Level 1 (10/15%) Level 2 (20%) Level 3 (25%) Surcharge 0.53 1.25 2.02 D. SPECIAL NOTES: 1. Calculation of Cost Components The actual bill amount is calculated based on the applicable rates in Section C above and adjusted for any applicable discounts, surcharges and/or taxes. On a Customer’s bill statement, the bill amount may be broken down into appropriate components as calculated under Section C. 2. Commodity Rate The Commodity Charge is based on the water delivery rate per the San Francisco Public Utility Commission (SFPUC) Water Rate Schedule W-25: Wholesale Use with Long-Term Contract. The Commodity Charge will be passed through automatically via periodic rate adjustments to account for increases in wholesale water charges, as well as inflation. The pass-through period will be effective for fiscal years 2020 through 2024, inclusive. Customers will be provided notice of any adjustments via their billing statements or by any other mailing by CPAU to the customer’s regular billing address. 3. Drought Surcharge During period of Water shortage or restrictions on local Water use, the City Council may, by resolution, declare the need for citywide Water conservation at the 10/15%, 20% or 25% level. While such a resolution is in effect, a drought surcharge will apply. The purpose of the drought surcharge is to recover revenues lost as a result of reduced consumption. {End} Item 1 Attachment B, Water Rate Schedules FY 2024 Packet Pg. 36 Item No. 2.Page 1 of 15 Finance Committee Staff Report From: Kiely Nose, Assistant City Manager Report Type: Action Item Lead Department: Utilities Meeting Date: March 7, 2023 Report #: 2302-0944 TITLE The Utilities Advisory Commission and Staff Request That the Finance Committee Recommend the City Council Adopt a Resolution Approving the FY 2024 Wastewater Collection Utility Financial Plan Including Proposed Reserve Transfers and Increasing Wastewater Rates by Amending Rate Schedules S-1 (Residential Wastewater Collection and Disposal), S-2 (Commercial Wastewater Collection and Disposal), S-6 (Restaurant Wastewater Collection and Disposal) and S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger) RECOMMENDATION The Utilities Advisory Commission (UAC) and staff request that the Finance Committee recommend that the City Council: 1. Adopt a resolution (Attachment A): a. Approving the Fiscal Year (FY) 2024 Wastewater Collection Financial Plan (Linked Document); and b. Approving a transfer of up to $3.178 million from the Capital Improvement Program Reserve to the Operations Reserve in FY 2023; and c. Approving a transfer of up to $342,000 from the Rate Stabilization Reserve to the Operations Reserve in FY 2023; and d. Increasing Wastewater Collection Utility Rates Via the Amendment of Rate Schedules S-1 (Residential Wastewater Collection and Disposal), S-2 (Commercial Wastewater Collection and Disposal), S-6 (Restaurant Wastewater Collection and Disposal) and S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger) (Attachment B). EXECUTIVE SUMMARY The FY 2024 Wastewater Collection Utility Financial Plan includes projections of the utility’s costs and revenues through FY 2028. The Financial Plan projects costs to rise over the forecast horizon due to increasing treatment costs related to capital improvements and operational costs at the Item 2 Staff Report Packet Pg. 37 Item No. 2.Page 2 of 15 Regional Water Quality Control Plant (RWQCP), as well as increasing collection system operational and Capital Improvement Program (CIP) costs. Staff recommends accelerating the rate of main replacements, from 1 mile to 2.5 miles per year beginning in FY 2026. This acceleration will allow the Wastewater Collection Utility to replace the last main no more than approximately 8 years beyond its anticipated 100-year life expectancy. The Financial Plan also includes three alternative scenarios based upon feedback from the UAC1 and the Finance Committee.2 Staff’s recommendation attempts to minimize rate impacts while also prudently managing the City’s infrastructure and maintaining an acceptable level of risk. Staff proposes a 9% overall revenue increase in FY 2024, 9% annual rate increases in FY 2025 and FY 2026, 8% in FY 2027 and 5% in FY 2028, to cover current and projected costs. BACKGROUND Every year staff presents the UAC with Financial Plans for the Electric, Gas, Water, and Wastewater Collection Utilities. The Financial Plans recommend rate adjustments if necessary to maintain the financial health of these enterprises. These Financial Plans include a comprehensive overview of the operations of each enterprise, both retrospective and prospective, and are intended to be a reference for UAC, Finance Committee, and Council members as they review the budget and staff’s rate recommendations. Each Financial Plan also contains a set of Reserves Management Practices describing the reserves for each utility and the management practices for those reserves. The City’s sewer system collects wastewater from Palo Alto residents and delivers it to the RWQCP for treatment. The City of Palo Alto runs the RWQCP, which also treats wastewater for five other partner agencies (Stanford, East Palo Alto Sanitary District, Los Altos Hills, Los Altos, and Mountain View). Some of the wastewater for certain partner agencies is also transported across the City’s wastewater collection system. The Wastewater Collection Utility has two main costs: the costs of operating the collection system and Palo Alto’s share of the cost of running the RWQCP.3 Both cost components have been increasing and are expected to continue to increase. The RWQCP has been in operation since 1934. Aging equipment, new regulatory requirements, and the movement to full sustainability will require rehabilitation, replacement and new processes. Palo Alto has seen increases in operational costs in recent years, and debt service for the plant is expected to increase substantially in coming years as a major rehabilitation and replacement plan adopted in 1 UAC Staff Report #14610, October 12, 2022 and UAC Staff Report #13879, April 6, 2022. 2 Finance Committee Staff Report #14611, November 29, 2022 3 The costs associated with the RWQCP are shared among Palo Alto and the partner agencies based primarily on wastewater flows and the composition of the wastewater each agency sends to the treatment plant. Palo Alto’s share varies from year to year but is roughly one third of the total cost. Item 2 Staff Report Packet Pg. 38 Item No. 2.Page 3 of 15 2012 (Long Range Facilities Plan) is implemented. Rehabilitation and replacement of plant equipment that has been in use for over 40 years is necessary to ensure the city can provide wastewater treatment safely and in compliance with regulatory requirements for the discharge of treated wastewater 24 hours a day. Collection system costs are also increasing. This is primarily driven by increases in collection system capital costs. Over the last few years, main replacement costs have been increasing for utilities due to economic activity in the Bay Area causing construction cost inflation. Staff assumes future CIP spending to increase by about 5.4% annually, which will significantly increase CIP costs over the forecast period. Staff also recommends an accelerated CIP program to increase the sewer main replacement rate from 1 mile to 2.5 miles per year (or from 2 miles to 5 miles per project constructed every other year) to fulfil the goal of replacing pipes near their life expectancy. There are 138 miles of original sewer mains to be replaced or rehabilitated and most of these are vitrified clay pipe originally installed between 1950 and 1970. Staff’s experience suggests that pipe can last around 100 years in Palo Alto’s underground condition. This financial plan proposes to begin the accelerated CIP replacement rate in FY 2026, with alternative scenarios starting FY 2028, FY 2030, or FY 2034. Other operational costs have also greatly increased (e.g., salaries and benefits and administrative overhead). This Financial Plan projects revenue reductions due to COVID-19 primarily from the Restaurant and Commercial customer classes. Non-residential revenue declined in FY 2022 by 11% relative to FY 2020 levels (prior to the pandemic), despite the 3% rate increase that was effective September 1, 2021. This is equivalent to a 4% reduction in FY 2022 sales revenue relative to FY 2020 sales revenue. Staff projects a linear recovery through FY 2025. DISCUSSION Staff completes an annual assessment of the financial position of the City’s wastewater collection utility to ensure adequate revenue to fund operations, in compliance with the cost of service requirements set forth in the California Constitution (Proposition 218). This includes making long- term projections of market conditions, the physical condition of the system, and other factors that could affect utility costs, and setting rates adequate to recover these costs. The rates proposed in this Financial Plan were developed based on the 2021 Cost of Service and Rate Study completed by Raftelis Financial Consultants, Inc., the “City of Palo Alto 2021 Wastewater COS Report.”4 4 A cost of service study is a study using industry-standard techniques to determine how the costs of running the utility should be recovered from its customers. Charges to each customer are set in proportion to the cost of serving that customer. Item 2 Staff Report Packet Pg. 39 Item No. 2.Page 4 of 15 Proposed Actions 1. Approve the Fiscal Year 2024 Wastewater Collection Financial Plan; and 2. Approve a transfer of up to $3.178 million from the Capital Improvement Program Reserve to the Operations Reserve in FY 2023; and 3. Approve a transfer of up to $342,000 transfer from the Rate Stabilization Reserve to the Operations Reserve in FY 2023; and 4. Increase Water Collection Utility Rates Via the Amendment of Rate Schedules S-1 (Residential Wastewater Collection and Disposal), S-2 (Commercial Wastewater Collection and Disposal), S-6 (Restaurant Wastewater Collection and Disposal) and S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger); and The FY 2024 Wastewater Collection Financial Plan describes these proposed actions in detail. Staff proposes to adjust wastewater rates as shown in Table 1 below, effective July 1, 2023. The proposed adjustments will increase the system average rate by 9%. These proposed rate changes are included in the amended rate schedules (Attachment B). Residential customers pay a monthly fixed service charge while commercial customers (other than restaurants) are billed monthly based on average winter water usage for the months of January, February and March, applied in the following July. This closely approximates non- irrigation water consumption, which represents sewer use. Restaurant customers are charged based on monthly water usage as they generally lack irrigation but are charged higher rates due to higher grease and oil discharges necessitating additional treatment costs. Currently there are no customers on the S-7 (Industrial) rate schedule; however, CPAU continues to maintain the S-7 rate schedule in case of future need. Table 1: Current and Proposed Wastewater Collection Charges ChangeCurrent (as of 7/1/2022) Proposed (effective 7/1/2023)$% Monthly Service Charges ($/Month) S-1 (Residential)Service Charge $ 44.62 $ 48.64 $ 4.02 9.0% Water Quantity Rates ($/CCF) S-2 (Commercial) Quantity Rates 8.33 9.08 0.75 9.0% S-6 (Restaurant)Quantity Rates 12.43 13.55 1.12 9.0% Item 2 Staff Report Packet Pg. 40 Item No. 2.Page 5 of 15 FY 2024 Financial Plan’s Projected Rate Adjustments for the Next Five Fiscal Years Table 2 shows the projected rate adjustments included in the Wastewater Collection Utility Financial Plans and their impact on a residential wastewater bill. Table 2: Projected Rate Adjustments and Residential Bill Impact, FY 2024 to FY 2028 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 Wastewater Collection Utility 9%9%9%8%5% Estimated Bill Impact for Residential Customers ($/mo) (1)$4.02 $4.38 $4.78 $4.63 $3.13 Estimated Monthly Bill $48.64 $53.02 $57.79 $62.41 $65.53 (1) estimated impact on residential wastewater monthly bill, which is currently $44.62 As noted above, one of the main drivers for the increase in the Wastewater Collection Utility’s costs (and therefore rates) over the next several years is the cost for wastewater treatment, which is projected to increase by an average of 6.2% annually from FY 2022 to FY 2028 as the City makes several upgrades to the RWQCP. Increases to capital expenses begin in FY 2024 with the Joint Intercepting Sewer Rehabilitation construction, funded on a pay-as-you-go basis. Additional debt service payments begin in FY 2025 for the Primary Sedimentation Tank, in FY 2028, for the construction of an Outfall Line, Lab/Technical Services building, and Operations building remodel, and in 2029 for Secondary Treatment Upgrades and Headworks. Staff projects Wastewater Collection operations and CIP costs (excluding costs associated with treatment) to increase by approximately 3.7% annually from FY 2022 to FY 2028; operations costs are projected to grow an average of 1.4% annually over the same time period. The Wastewater Collection Utility undertakes a larger main replacement project every other year. A project is scheduled to begin in the current year (instead of FY 2024) because of coordination with Caltrans to limit or avoid digging into newly paved street on El Camino Real. The next project is scheduled for FY 2026. Undertaking a larger main replacement project every other year allows staff to continue replacing wastewater mains that are in poor condition, while easing scheduling difficulties for inspection coverage due to shared staffing across water, wastewater, gas, and large development services projects. Over the last few years, main replacement costs have been increasing for utilities due to economic activity in the Bay Area causing construction cost inflation. It is likely that this trend will continue in the short term. Staff has not observed any dip in Item 2 Staff Report Packet Pg. 41 Item No. 2.Page 6 of 15 construction costs although more information will be known once the Utilities Department issues more construction bids.5 Figure 1 and 2 below illustrate the increase in the Wastewater Collection Utility’s costs. RWQCP costs for the Wastewater Collection Utility are included in “Treatment,” while “Capital” and “Operations” include only collection system costs. 33% of the increase from FY 2018 to FY 2028 is due to treatment cost increases, 29% is due to increases in operations costs, and collection capital costs are responsible for 39% of the increase from FY 2018 to FY 2028. Note that treatment costs increase an additional 28% from FY 2028 to FY 2029 due to debt service coming online for the Secondary Treatment Upgrades and Headworks. Figure 1: FY 2018 and FY 2028 Costs ($ Millions) 5 As an additional reference, the California Construction Cost index increased from 2.8% in December 2020 to 13.4% in December 2021 and then decreased to 9.3% in December 2022. See: https://www.dgs.ca.gov/RESD/Resources/Page-Content/Real-Estate-Services-Division-Resources-List-Folder/DGS- California-Construction-Cost-Index-CCCI Item 2 Staff Report Packet Pg. 42 Item No. 2.Page 7 of 15 Figure 2: Percentage of Cost Increase from FY 2018 to FY 2028 Attributed to Treatment, and Operations Costs To promote rate stability and provide continuity in collection system CIP expenditure levels, this plan continues the steady annual capital program contribution to the CIP Reserve. The CIP Reserve will then absorb annual spending fluctuations, reducing the impact on the Operations Reserve. Figure 3 below shows the projected CIP Reserve balances and Figure 4 below shows year-end reserve balance levels for each reserve from FY 2023 projected through FY 2028. Because the Sanitary Sewer Replacement project budgeted for construction in FY 2024 is now scheduled to move up to FY 2023 to minimize street repavement on El Camino Real, this will draw down the CIP Reserve in FY 2023 to zero and slowly replenish the reserve throughout the forecast period so that by FY 2027 the reserve remains within the guideline range as shown in Figure 3. Item 2 Staff Report Packet Pg. 43 Item No. 2.Page 8 of 15 Figure 3: Projected Capital Reserve Balances, FY 2023 to FY 2028 Figure 4: Wastewater Collection Utility Year-End Reserve Levels, FY 2022 to FY 2028 Item 2 Staff Report Packet Pg. 44 Item No. 2.Page 9 of 15 Table 3: Operations, Rate Stabilization and CIP Reserves Starting and Ending Balances, Revenues, Transfers To/(From) Reserves, Expenses, Capital Program Contribution To/(From) Reserves, and Operations Reserve Guideline Levels for FY 2023 to FY 2028 ($000) * Planned CIP (item 12) is reflected as an expense in the CIP Reserve and does not include CIP funded through Reappropriations or Commitments reserves. This Financial Plan utilizes $8.345 million for Planned CIP from the CIP Reserve in FY 2023; this total includes $3.75 million (item 9) and $1.417 million (item 7) as well as $3.178 million from the CIP Reserve. Staff requests Council approval to transfer $3.178 million from the CIP Reserve to the Operations Reserve in FY 2023. Capital Projects and Reserves The CIP Reserve aims to stabilize uneven annual funding associated with ongoing CIP projects including sanitary sewer main replacements that are scheduled to occur every other year and is a source for one-time or immediately needed projects. In June 2021 Council approved consistent annual funding from the Operations to the CIP Reserve. The attached Financial Plan projects that rate funding is needed to cover $8.345 million of planned CIP in FY 2023. This figure is the portion of planned CIP in FY 2023 that will not be paid for through funds collected in prior years (the FY 2023 capital budget, less funds available in the Reappropriations and Commitments Reserves) shown in line 12 of Table 3. The $8.345 million will be funded by the capital program contribution of $3.75 million plus $1.417 million in one-time funds from the Operations Reserve (lines 9 and 2023 2024 2025 2026 2027 2028 Starting Balance (1)Operations 4,252 3,049 4,315 3,586 3,693 5,805 (2)Rate Stabilization 342 ----- (3)CIP 3,178 0 916 3,665 849 5,853 Revenues (4)Total Revenue 21,859 23,896 26,164 28,435 30,648 32,177 Transfers (5)Operations (1,075)--(700)-- (6)Rate Stabilization (342)----- (7)CIP 1,417 --700 -- Capital Program Contribution (8)Operations (3,750)(2,333)(7,100)(7,313)(7,725)(7,957) (9)CIP 3,750 2,333 7,100 7,313 7,725 7,957 Expenses (10)Total Expenses (w/o CIP and Debt)(18,108)(20,168)(19,794)(20,315)(20,812)(22,541) (11)Debt Service (129)(129)---- (12)Planned CIP (8,345)(1,418)(4,351)(10,828)(2,722)(11,917) Ending Balance (1)+(4)+(5)+(8)+(10)+(11)Operations 3,049 4,315 3,586 3,693 5,805 7,484 (2)+(6)Rate Stabilization ------ (3)+(7)+(9)+(12)CIP 0 916 3,665 849 5,853 1,893 Operations Reserve Guideline Levels (13)Minimum Guideline Level 2,998 3,336 3,254 3,339 3,421 3,705 (14)Maximum Guideline Level 7,495 8,341 8,134 8,349 8,553 9,264 Fiscal Year Item 2 Staff Report Packet Pg. 45 Item No. 2.Page 10 of 15 7 from Table 3), together with $3.178 million from the CIP Reserve. Withdrawals from the CIP Reserve for use on capital projects require Council action.6 The attached Financial Plan therefore requests Council approval to transfer up to $3.178 million from the CIP Reserve to the Operations Reserve. Wastewater Bill Comparison with Surrounding Cities The monthly equivalent sewer bill for a Palo Alto resident is $44.62 under current rates, 28% lower than the average neighboring community. Table 4 shows the monthly sewer bills at current rates for residential customers compared to what they would be in surrounding communities. These communities are the same six cities that Palo Alto compares itself to in the annual budget across Water, Wastewater, Gas, and Electric utilities. Table 4: Residential Monthly Equivalent Sewer Bill Comparison ($) at Current Rates Neighboring Communities Palo Alto Menlo Park Redwood City Santa Clara Mountain View Los Altos Hayward 44.62 106.67 89.28 46.82 50.10 42.05 38.58 If Council adopts the proposed wastewater rate change, and assuming other agencies do not change their sewer rates, Palo Alto’s residential rates would remain 26% lower than the current average neighboring community. Furthermore, under the attached Financial Plan, Palo Alto’s residential monthly bills would rise to $65.56 per month in FY 2028 which is only 5% above the current neighboring community average of $62.25 per month. Staff has no information at this time as to whether or when the surrounding communities are planning wastewater rate changes. However, as most agencies are also requiring renovations to their respective treatment plants, increases at other agencies are likely. Note that as partners in the RWQCP, Mountain View and Los Altos will be affected by similar treatment cost increases as Palo Alto. Table 5 shows the monthly sewer bills for Commercial and Restaurant customers. Palo Alto is less competitive with surrounding cities with regards to commercial sewer rates but is not the most expensive jurisdiction. Palo Alto’s commercial bills are 7% higher than the neighboring community average while Palo Alto’s restaurant bills are 12% below the neighboring community average. Table 5 assumes 14 units of water for general commercial and 56 units of water for restaurants. 6 See Appendix C, Wastewater Collection Utility Reserves Management Practices Section 5(b). Item 2 Staff Report Packet Pg. 46 Item No. 2.Page 11 of 15 Table 5: Non-Residential Monthly Equivalent Sewer Bill Comparison ($) Neighboring Communities Palo Alto Menlo Park Redwood City Santa Clara Mountain View Los Altos Hayward General Commercial 116.62 144.34 117.74 75.74 156.66 72.23 87.92 Restaurant 696.08 1,216.88 1,128.40 718.48 718.48 288.90 660.80 Changes from Prior Financial Forecasts Table 6 compares the projected overall rate changes in the current Financial Plan with the projected rate changes in the FY 2022 and FY 2023 Financial Plans. The current plan recommends accelerating the rate of main replacement which increases rates necessary to cover rising costs and maintain adequate reserves for both the Operations and CIP reserves. Table 6: Proposed/Projected Wastewater Rate Changes for FY 2024 to FY 2028 Projection FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 Current Plan (FY 2024)9%9%9%8%5% FY 2023 Financial Plan 5%5%5%5%N/A FY 2022 Financial Plan 5%5%5%N/A N/A Alternative Scenarios The attached Financial Plan includes staff’s recommendation along with three alternative rate trajectories (A, B and C) summarized in Table 7 and 8 below. These alternatives show the impact of a longer transition from 1 mile to 2.5 miles per year of main replacement (or 5-miles per Sanitary Sewer Replacement or SSR) over longer time periods in order to lessen the impact on sewer rates. The more that wastewater assets are operated past their useful life the greater the likelihood of substantial pipe failures resulting in additional repair and maintenance costs, sanitary sewer overflows, sinkholes, or other catastrophic impacts. The anticipated useful life of wastewater mains is estimated at approximately 100 years and the proposed rate increase would set the City on track to replace the last main approximately 8 years after the end of its expected Item 2 Staff Report Packet Pg. 47 Item No. 2.Page 12 of 15 useful life (or 108 years). To replace mains within the 100-year lifespan, rate increases were projected to be more than desired by the UAC (e.g., more than 15% in FY 2024). Alternatives A, B and C in the table below provide lower rate increases but would further increase the duration these assets are operated past their estimated useful life. Staff’s recommendation attempts to minimize rate impacts while also prudently managing the City’s infrastructure and maintaining an acceptable level of risk. Table 7: Recommendation and Alternate Scenarios for Wastewater Rate Changes Rate Scenarios Fiscal Year of First 5-mile SSR Construction FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 Age of Last Remaining Sewer Main Replaced Recommendation FY 2026 9%9%9%8%5%108 years Alternative A FY 2028 9%8%6%6%6%110 years Alternative B FY 2034 7%7%5%5%5%114 years Alternative C Later than FY 2034 5%5%5%5%5%> 114 years Table 8: Projected Residential Bill Impact and Estimated Monthly Bill, FY 2024 to FY 2028 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 Recommendation $4.02 $4.38 $4.77 $4.62 $3.12 Alternative A 4.02 3.89 3.15 3.34 3.54 Alternative B 3.12 3.34 2.55 2.68 2.82 Estimated Bill Impact for Residential Customers ($/mo) (1)Alternative C 2.23 2.34 2.46 2.58 2.71 Recommendation 48.64 53.02 57.79 62.41 65.53 Alternative A 48.64 52.53 55.68 59.02 62.56 Alternative B 47.74 51.08 53.63 56.31 59.13 Estimated Monthly Bill ($) Alternative C 46.85 49.19 51.65 54.23 56.94 Item 2 Staff Report Packet Pg. 48 Item No. 2.Page 13 of 15 (1) estimated impact on residential wastewater monthly bill, which is currently $44.62 NEXT STEPS The City Council will consider the proposed Financial Plans and amended rate schedules with the FY 2024 budget, expected in June, at which time the public hearing required by Article XIIID of the State Constitution will be held. If Council approves the proposed rate increases, they will become effective July 1, 2023. Assuming the UAC and the Finance Committee support the proposed rate adjustments, staff will send notification of the potential rate increases to customers as required by Article XIIID of the State Constitution (added by Proposition 218) expected in April 2023. If the UAC recommends one of the alternative scenarios for wastewater rate changes, staff will describe the UAC’s recommendation to the Finance Committee in March. If the Finance Committee recommends one of the alternative scenarios for wastewater rate changes, or any other recommendation in March, staff will bring the Finance Committee recommendation to the City Council in June or return to the Finance Committee in April with revised rate scenarios, as directed by the Finance Committee. Staff plans to include the Finance Committee’s recommended rate scenario for wastewater rate changes in the notification of potential rate increases to customers as required by Article XIIID of the State Constitution expected in April 2023. RESOURCE IMPACT Staff projects normal year revenues for the Wastewater Collection Utility to increase by approximately 9% ($1.8 million) in FY 2024 as a result of the proposed rate changes. See the FY 2024 Wastewater Collection Utility Financial Plan for a more comprehensive overview of projected cost and revenue changes for the next five years. The FY 2024 Budget is being developed concurrent with these rates and depending on final rates, adjustments to the budget may be necessary at a later time. POLICY IMPLICATIONS The proposed wastewater rate adjustments are consistent with Council-adopted Reserve Management Practices that are part of the Financial Plans. Staff developed the wastewater rate adjustments using a cost of service study and methodology that was completed in compliance with the cost of service requirements of Proposition 218 in 2021 (Raftelis Financial Consultants, Inc. completed a cost of service (COS) study for the Wastewater Collection Utility in 2021 City of Palo Alto 2021 Wastewater COS Report). Item 2 Staff Report Packet Pg. 49 Item No. 2.Page 14 of 15 STAKEHOLDER ENGAGEMENT At the Utilities Advisory Commission (UAC) April 2022 meeting, staff presented the need to increase the rate of sewer main replacement from 1 mile per year to 2.5 miles per year in order to replace the remaining 138 miles of sewer mains scheduled for replacement before they exceed their expected life (Staff Report #13879). UAC Commissioners expressed support for increasing the rate of sewer main replacement to 2.5 miles per year (See UAC Meeting Minutes of April 6, 2022 Special Meeting). At the UAC’s October 12, 2022 meeting, staff presented three alternative approaches to accelerate the sanitary sewer main replacement (Staff Report #14610 and UAC meeting minutes). One Commissioner stated that immediately moving to 2.5 miles/year in FY 2024 funded through pay-as-you-go financing or SRF loan is reasonable while two Commissioners opposed the immediate move to 2.5 miles per year in FY 2024 alternatives. Three Commissioners supported transitioning to 2.5 miles per year over four years (beginning in FY 2026). One Commissioner questioned whether transitioning to 2.5 miles per year slowly by 2034 to keep rates low may also be acceptable. Additionally, staff brought this item to the Finance Committee for discussion on November 29, 2022 (Staff Report #14611 and Finance Committee summary meeting minutes). Staff presented a series of alternative rate trajectories that included the proposal from this Financial Plan, a more accelerated time frame for reaching the 2.5 miles per year of main replacement by FY 2024 through higher rate increases or debt financing and a 5% annual rate increase. Finance Committee members expressed a preference to see the rate trajectory in the main proposal in the attached Financial Plan with additional scenarios that showed the transition to 2.5 miles per year of main replacement over 6 years (by 2028) instead of 4 years (by 2026) and with fewer years of 9% increases. The attached Financial Plan includes three alternative scenarios in response to the Finance Committee’s feedback. At the Utilities Advisory Commission (UAC) March 1, 2023 meeting, staff will present the attached Financial Plan. Staff will share the UAC vote on the motion to the Finance Committee. Staff, the UAC, and the Finance Committee’s recommendation on the FY 2024 wastewater rate increases will be presented to City Council in June during the budget adoption process. ENVIRONMENTAL REVIEW The Finance Committee’s review and recommendation to Council on the proposed FY 2024 Wastewater Collection Financial Plan and rate adjustments do not meet the definition of a project, pursuant to Section 21065 of the California Environmental Quality Act, thus no environmental review is required. Item 2 Staff Report Packet Pg. 50 Item No. 2.Page 15 of 15 ATTACHMENTS Attachment A - Wastewater FY24 Resolution Attachment B - Wastewater FY24 Rate Schedules APPROVED BY: Dean Batchelor, Director Utilities Report #: 2302-0944 Item 2 Staff Report Packet Pg. 51 Attachment A 027021423 * NOT YET APPROVED * Resolution No. Resolution of the Council of the City of Palo Alto Approving the FY 2024 Wastewater Collection Utility Financial Plan, Including Reserve Transfers, and Adjusting Wastewater Rates by Amending Rate Schedules S-1 (Residential Wastewater Collection and Disposal), S-2 (Commercial Wastewater Collection and Disposal), S-6 (Restaurant Wastewater Collection and Disposal) and S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger) R E C I T A L S A. Each year the City of Palo Alto (“City”) assesses the financial position of its utilities with the goal of ensuring adequate revenue to fund operations. This includes making long-term projections of market conditions, the physical condition of the system, and other factors that could affect utility costs, and setting rates adequate to recover these costs. The City does this with the goal of providing safe, reliable, and sustainable utility services at competitive rates. The City adopts Financial Plans to summarize these projections. B. The City uses reserves to protect against contingencies and to manage other aspects of its operations, and regularly assesses the adequacy of these reserves and the management practices governing their operation. The status of utility reserves and their management practices are included in Reserves Management Practices attached to and made a part of the Financial Plans. C. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of the City of Palo Alto may by resolution adopt rules and regulations governing utility services, fees and charges. D. On , 2023, the City Council held a full and fair public hearing regarding the proposed rate increase and considered all protests against the proposals. E. As required by Article XIII D, Section 6 of the California Constitution and applicable law, notice of the , 2023 public hearing was mailed to all City of Palo Alto Utilities wastewater customers by , 2023. F. The City Clerk has tabulated the total number of written protests presented by the close of the public hearing, and determined that it was less than fifty percent (50%) of the total number of customers and property owners subject to the proposed wastewater rate amendments, therefore a majority protest does not exist against the proposal. The Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1. The Council hereby adopts the FY 2024 Wastewater Collection Utility Financial Plan. Item 2 Attachment A - Wastewater FY24 Resolution Packet Pg. 52 Attachment A 027021423 * NOT YET APPROVED * SECTION 2. The Council hereby approves the following transfers as described in the FY 2024 Wastewater Collection Utility Financial Plan: a. Up to $3,178,000 in FY 2023 from the Capital Improvement Projects Reserve to the Operations Reserve. b. Up to $342,000 in FY 2023 from the Rate Stabilization Reserve to the Operations Reserve. SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-1 (Residential Wastewater Collection and Disposal) is hereby amended to read as attached and incorporated. Utility Rate Schedule S-1, as amended, shall become effective July 1, 2023. SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-2 (Commercial Wastewater Collection and Disposal) is hereby amended to read as attached and incorporated. Utility Rate Schedule S-2, as amended, shall become effective July 1, 2023. SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-6 (Restaurant Wastewater Collection and Disposal) is hereby amended to read as attached and incorporated. Utility Rate Schedule S-6, as amended, shall become effective July 1, 2023. SECTION 6. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger) is hereby amended to read as attached and incorporated. Utility Rate Schedule S-7, as amended, shall become effective July 1, 2023. SECTION 7. The Council finds that the revenue derived from the wastewater rates approved by this resolution do not exceed the funds required to provide wastewater service, and the revenue derived from the adoption of this resolution shall be used only for the purposes set forth in Article VII, Section 2, of the Charter of the City of Palo Alto. SECTION 8. The Council finds that the fees and charges adopted by this resolution are charges imposed for a specific government service or product provided directly to the payor that are not provided to those not charged, and do not exceed the reasonable costs to the City of providing the service or product. // // // // Item 2 Attachment A - Wastewater FY24 Resolution Packet Pg. 53 Attachment A 027021423 * NOT YET APPROVED * // SECTION 9. The Council finds that the adoption of this resolution approving the FY 2024 Wastewater Financial Plan and Reserve transfers does not meet the California Environmental Quality Act’s definition of a project under Public Resources Code Section 21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative governmental activity which will not cause a direct or indirect physical change in the environment, and therefore, no environmental review is required. The Council finds that the adoption of this resolution changing Wastewater collection rates to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED: Assistant City Attorney City Manager Director of Utilities Director of Administrative Services Item 2 Attachment A - Wastewater FY24 Resolution Packet Pg. 54 RESIDENTIAL WASTEWATER COLLECTION AND DISPOSAL UTILITY RATE SCHEDULE S-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No S-1-1 Effective 7-1-20232 dated 79-1-20221 Sheet No S-1-1 A. APPLICABILITY: This schedule applies to each Occupied Domestic Dwelling unit. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Wastewater Service. C. RATES: Per Month Each Occupied Domestic Dwelling unit ................................................................................ $44.6248.64 D. SPECIAL NOTES: 1.Any dwelling unit being individually served by a Water, Gas, or Electric Meter will be considered continuously occupied. 2. For two or more Occupied Domestic Dwelling units served by one Water Meter, themonthly Wastewater charge will be calculated by multiplying the current Wastewater rateby the number of dwelling units. 3. Each developed separate lot shall have a separate service lateral to a sanitary main ormanhole. {End} Attachment BItem 2 Attachment B - Wastewater FY24 Rate Schedules Packet Pg. 55 COMMERCIAL WASTEWATER COLLECTION AND DISPOSAL UTILITY RATE SCHEDULE S-2 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No S-2-1 Effective 7-1-20232 dated 79-1-20221 Sheet No S-2-1 A. APPLICABILITY: This schedule applies to all commercial establishments other than those served under Utility Rate Schedule S-1 (Residential Wastewater Collection and Disposal), Rate Schedule S-6 (Restaurant Wastewater Collection and Disposal) or Rate Schedule S-7 (Commercial Establishments Wastewater Disposal – Industrial Discharger). B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Wastewater Service. C. RATES: Quantity Rate, per 100 cubic feet (See Section D.1) .......................................................... $9.088.33 D. SPECIAL NOTES: 1. The monthly charge for the quantity rate set forth in Section C of this rate schedule will be based upon the average Water usage for the months of January, February and March, and applied in the following July. If a Water Meter is identified as exclusively serving irrigation landscaping, such Meter will be exempted from Wastewater charge calculations. Customers without an applicable usage history will be rebuttably presumed to have usage of 4.8 ccf per month until such time as such usage may reasonably be established by the City of Palo Alto Utilities Department. 2. The City of Palo Alto Utilities Department may require Wastewater Metering facilities, in which case Service will be governed by terms of a special agreement between the City and the Customer. {End} Item 2 Attachment B - Wastewater FY24 Rate Schedules Packet Pg. 56 RESTAURANT WASTEWATER COLLECTION AND DISPOSAL UTILITY RATE SCHEDULE S-6 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No S-6-1 Effective 7-1-20232 dated 79-1-20221 Sheet No S-6-1 A. APPLICABILITY: This schedule applies to all restaurants. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Wastewater Service. C. RATES: Quantity Rates, per 100 cubic feet of monthly metered Water usage ...................................$ 13.5512.43 D. SPECIAL NOTES: 1. The City of Palo Alto Utilities Department may require Wastewater Metering facilities, in which case Service will be governed by terms of a special agreement between the City and the Customer. {End} Item 2 Attachment B - Wastewater FY24 Rate Schedules Packet Pg. 57 COMMERCIAL WASTEWATER COLLECTION AND DISPOSAL – INDUSTRIAL DISCHARGER UTILITY RATE SCHEDULE S-7 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No S-7-1 Effective 7-1-20232 dated 79-1-20221 Sheet No S-7-1 A. APPLICABILITY: This schedule applies to any establishment requiring sampling of industrial discharges in excess of 25,000 gallons per day, or special discharge monitoring, as defined in Rule 23, Section C. B. TERRITORY: This schedule applies everywhere the City of Palo Alto provides Wastewater Service. C. RATES: 1. Collection System Operation, Maintenance, and Infiltration Inflow: $ 4.144.51 per 100 cubic feet of metered water use. 2. Advanced Waste Treatment Operations and Maintenance Charge: $ 1.651.80 per 100 cubic feet of metered water use 3. $220.43202.23 per 1000 pounds (lbs) of COD (Chemical Oxygen Demand) 4. $ 531.46 487.58 per 1000 lbs of SS (Suspended Solids) 5. $ 3,672.26 3,369.05 per 1000 lbs of NH3 (Ammonia) 6. $ 16,111.5614,781.25 per 1000 lbs of toxics (chromium, copper, cyanide, lead, nickel, silver, and zinc) D. SPECIAL NOTES: 1. Water usage will be determined as defined in Rule 23, Section C. If a Water Meter is identified as exclusively serving irrigation landscaping, such Meter will be exempted from Wastewater charge calculations. 2. The City of Palo Alto Utilities Department may require Wastewater Metering facilities, in which case Service will be governed by terms of a special agreement between the City of Palo Alto and the Customer. 3. Charges for large discharges will be determined on the basis of sampling as outlined in Utilities Rule 23, Section C. However, for purposes of arriving at an accurate flow estimate, discharge Meters, if installed, can be utilized to measure outflow for billing purposes. Annual charges will be determined and allocated monthly for billing purposes. {End} Item 2 Attachment B - Wastewater FY24 Rate Schedules Packet Pg. 58 Item No. 3.Page 1 of 3 1 7 0 4 Finance Committee Staff Report From: Kiely Nose, Assistant City Manager Report Type: Action Item Lead Department: Public Works Meeting Date: March 7, 2023 Report #: 2302-0957 TITLE Adoption of a Resolution Amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage) Reflecting a 4.9 Percent Consumer Price Index Rate Increase to $16.76 per Month Per Equivalent Residential Unit for Fiscal Year 2024. RECOMMENDATION Staff recommends that the Finance Committee recommend that Council adopt the attached resolution (Attachment A) amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage), to implement a 4.9% rate increase consistent with the applicable Consumer Price Index, increasing the monthly charge per Equivalent Residential Unit (ERU) by $0.78, from $15.98 to $16.76 for Fiscal Year 2024. BACKGROUND On April 11, 2017, a majority of Palo Alto property owners approved a ballot measure adopting a monthly Storm Water Management Fee to fund storm drain capital improvement projects, enhanced maintenance of the storm drain system, and storm water quality protection programs. The ballot measure authorizes the Council to consider raising the Storm Water Management Fee each year to account for inflation and subject to a maximum annual increase of 6 percent. Specifically, the ballot measure states: “In order to offset the effects of inflation on labor and material costs, the maximum rate for the Storm Water Management Fee (and each component of the Storm Water Management Fee) will be increased annually each July 1 (beginning July 1, 2018), by the lesser of (i) the percentage change in the Consumer Price Index [CPI] for the San Francisco-Oakland-San Jose CSMA, published by the United States Department of Labor, Bureau of Labor Statistics during the prior calendar year or (ii) 6%. The City Council would have the authority to set the rate for the Storm Water Management Fee (and each component of the Storm Water Management Fee) at any rate that is less than or equal to the inflation adjusted maximum rate.” On June 13, 2022, Council adopted a resolution to implement the Storm Water Management Fee to be $15.98 per month per ERU, effective July 1, 2022. Item 3 Staff Report Packet Pg. 59 Item No. 3.Page 2 of 3 1 7 0 4 ANALYSIS According to Bureau of Labor Statistics records, the CPI for the San Francisco-Oakland-San Jose CMSA increased by 4.9 percent between December 2021 and December 2022. This CPI increase is lower than 6 percent, and therefore consistent with the ballot measure, staff recommends that the Storm Water Management Fee be increased by 4.9 percent to allow fee revenues to keep pace with general cost increases and to provide sufficient funds for planned storm water management capital and operating expenditures. To enact the Storm Water Management Fee increase, Council must adopt the attached resolution amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage). The new rate for the Storm Water Management Fee will be $16.76 per month per ERU. Single-family residential properties are billed a monthly amount based on parcel size, in accordance with the following table: RESIDENTIAL RATES (Single-Family Residential Properties) PARCEL SIZE (sq.ft.)ERU < 6,000 sq.ft.0.8 ERU 6,000-11,000 sq.ft.1.0 ERU > 11,000 sq.ft.1.4 ERU Commercial, industrial, institutional, and multi-family residential properties are billed monthly at a rate of 1.0 ERU for each 2,500 square feet of impervious surface on the parcel. FISCAL/RESOURCE IMPACT The proposed 4.9 percent fee increase is expected to increase annual revenue to the Stormwater Management Fund by approximately $400,000 and, if adopted, will be reflected in the Public Works Department Stormwater Management Fund Fiscal Year 2024 Proposed Operating Budget revenue. The Storm Water Management Fee increase will take effect on July 1, 2023. STAKEHOLDER ENGAGEMENT The proposed rate increase was discussed at a meeting of the Stormwater Management Oversight Committee on February 2, 2023. ENVIRONMENTAL REVIEW Council action on the proposed resolution is not a project subject to CEQA review because it is a fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. (CEQA Guidelines Section 15378(b)(4)). Item 3 Staff Report Packet Pg. 60 Item No. 3.Page 3 of 3 1 7 0 4 ATTACHMENTS Attachment A: Rate Schedule D-1 Attachment B: Resolution Amending Utility Rate Schedule D-1 APPROVED BY: Brad Eggleston, Director of Public Works/City Engineer Report #: 2302-0957 Item 3 Staff Report Packet Pg. 61 GENERAL STORM AND SURFACE WATER DRAINAGE UTILITY RATE SCHEDULE D-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2023 Supersedes Sheet No.D-1-1 dated 7-1-2022 Sheet No.D-1-1 A. APPLICABILITY: This schedule applies to all storm and surface water drainage service, excepting only those users and to the extent that they are constitutionally exempt under the Constitution of the State of California or who are determined to be exempt pursuant to Rule and Regulation 25. B. TERRITORY: Inside the incorporated limits of the city of Palo Alto and land owned or leased by the city. C. RATES: Per Month: Stormwater Management Fee per Equivalent Residential Unit (ERU) ....................................... $16.76 D. SPECIAL NOTES: 1. An Equivalent Residential Unit (ERU) is the basic unit for computation of stormwater management fees for residential and non-residential customers. All single-family residential properties shall be billed the number of ERUs specified in the following table, based on an analysis of the relationship between impervious area and lot size for Palo Alto properties. RESIDENTIAL RATES (Single-Family Residential Properties PARCEL SIZE (sq.ft.) ERU <6,000 sq.ft. 0.8 ERU 6,000 - 11,000 sq.ft. 1.0 ERU >11,000 sq.ft. 1.4 ERU All other properties will have ERU's computed to the nearest 1/10 ERU using the following formula: No. of ERU = Impervious Area (Sq. Ft.) 2,500 Sq. Ft. 2. For more details on the storm drainage fee, refer to Utilities Rule and Regulation 25. Item 3 Attachment A - Rate Schedule D-1 (DRAFT) Packet Pg. 62 GENERAL STORM AND SURFACE WATER DRAINAGE UTILITY RATE SCHEDULE D-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2023 Supersedes Sheet No.D-1-1 dated 7-1-2022 Sheet No.D-1-1 {End} Item 3 Attachment A - Rate Schedule D-1 (DRAFT) Packet Pg. 63 NOT YET APPROVED 1 Resolution No. ______ Resolution of the Council of the City of Palo Alto Amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage) to Increase Storm Water Management Fee Rates by 4.9% Per Month Per Equivalent Residential Unit for Fiscal Year 2024 A. In April 2017, a majority of property owners approved a ballot measure adopting a monthly Storm Water Management Fee to fund storm drain capital improvements projects, enhanced maintenance of the storm drain system, storm water quality protection programs, and related activities. B. The ballot measure allowed for annual increases to the fee based on lesser of the local rate of inflation (based on changes to the Consumer Price Index for the San Francisco-Oakland-San Jose region as published by the Bureau of Labor Statistics) or 6%. C. According to the Bureau of Labor Statistics, the Consumer Price Index for the San Francisco-Oakland-San Jose region increased by 4.9% between December 2021 and December 2022. The Council of the City of Palo Alto RESOLVES as follows: SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule D-1 (Storm and Surface Water Drainage) is hereby amended to read in accordance with sheet D-1-1, attached hereto and incorporated herein. The foregoing Utility Rate Schedule, as amended, shall become effective July 1, 2023. SECTION 2. The Council finds that this rate increase is being imposed to offset the effects of inflation on labor and material costs pursuant to the annual inflationary fee escalator provision of the Storm Water Management Fee ballot measure, which was approved by a majority of Palo Alto property owners on April 11, 2017. SECTION 3. The Council finds that the revenue derived from the authorized adoption enumerated herein shall be used only for the purpose set forth in Article VII, Section 2, of the Charter of the City of Palo Alto. / / / / / / / / / / Item 3 Attachment B - Resolution Amending Utility Rate Schedule D-1 (DRAFT Storm & Surface Water Drainage) Packet Pg. 64 NOT YET APPROVED 2 / / / / / / / / / / / / SECTION 4. The Council finds that the adoption of this resolution changing the Storm Water Management Fee to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15378(b)(4). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: __________________________ _____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ _____________________________ Assistant City Attorney City Manager _____________________________ Director of Public Works _____________________________ Item 3 Attachment B - Resolution Amending Utility Rate Schedule D-1 (DRAFT Storm & Surface Water Drainage) Packet Pg. 65 NOT YET APPROVED 3 Director of Administrative Services Item 3 Attachment B - Resolution Amending Utility Rate Schedule D-1 (DRAFT Storm & Surface Water Drainage) Packet Pg. 66 GENERAL STORM AND SURFACE WATER DRAINAGE UTILITY RATE SCHEDULE D-1 CITY OF PALO ALTO UTILITIES Issued by the City Council Effective 7-1-2023 Supersedes Sheet No.D-1-1 dated 7-1-2022 Sheet No. D-1-1 A. APPLICABILITY: This schedule applies to all Storm and Surface Water Drainage Service, excepting only those users and to the extent that they are constitutionally exempt under the Constitution of the State of California or who are determined to be exempt pursuant to Rule and Regulation 25. B. TERRITORY: Inside the incorporated limits of the city of Palo Alto and land owned or leased by the City. C. RATES: Per Month: Storm Water Management Fee per Equivalent Residential Unit (ERU) .......................... $16.76 D. SPECIAL NOTES: 1. An Equivalent Residential Unit (ERU) is the basic unit for computation of storm drainage fees for residential and non-residential Customers. All single-family residential properties shall be billed the number of ERUs specified in the following table, based on an analysis of the relationship between impervious area and lot size for Palo Alto properties. RESIDENTIAL RATES (Single-Family Residential Properties PARCEL SIZE (sq.ft.) ERU <6,000 sq.ft. 0.8 ERU 6,000 - 11,000 sq.ft. 1.0 ERU >11,000 sq.ft. 1.4 ERU All other properties will have ERUs computed to the nearest 1/10 ERU using the following formula: No. of ERU = Impervious Area (Sq. Ft.) 2,500 Sq. Ft. 2. For more details on the Storm Water Management Fee, refer to Utilities Rule and Regulation 25. {End} Item 3 Attachment B - Resolution Amending Utility Rate Schedule D-1 (DRAFT Storm & Surface Water Drainage) Packet Pg. 67 Item No. 4. Page 1 of 5 Finance Committee Staff Report From: Kiely Nose, Assistant City Manager Report Type: Action Item Lead Department: Utilities Meeting Date: March 7, 2023 Report #: 2301-0718 TITLE Approval of the Electric Utility Construction Services Contract with VIP Powerline Corp. (C23185980) for a Total Not-to-Exceed Amount of $20,000,000 over Five Years; CEQA status – exempt (existing facilities, replacement or reconstruction) RECOMMENDATION Staff recommends that the Finance Committee recommend the Council: 1. Adopt a determination that this action is exempt from environmental review under Class 1 (Existing Facilities) and/or Class 2 (Replacement or Reconstruction) (CEQA Guidelines section 15301-15302); and 2. Approve and authorize the City Manager to execute the construction contract C23185980 (Attachment A) with VIP Powerline Corp. (VIP) in an amount not-to-exceed $20,000,000 over five (5) years, with an annual not-to-exceed amount of $4,000,000 for Electric Construction Services to provide essential ongoing operational work including construction maintenance and system improvement work on the City’s electric distribution system at various locations throughout the City of Palo Alto. BACKGROUND The Electric Utility has routinely hired contractors over the last 25+ years to assist City crews in offsetting the labor shortages caused by the inability to hire qualified electrical journey-level line workers. In addition, these contractors have provided maintenance and capital system improvement construction work to replace or reconstruct infrastructure as required. The most recent utility construction services contract was for a three-year term with Hot Line Construction Inc. (HLC). The City issued an Invitation for Bid (IFB) in July 2019 (IFB #172366A) for overhead construction services. Council awarded Contract No. C20172366A to HLC1 on October 7, 2019 1 Contract #C20172366A HLC, https://www.cityofpaloalto.org/files/assets/public/agendas-minutes- reports/reports/city-manager-reports-cmrs/attachments/03-06-2023-id-2301-0718-c20172366a-hot-line- construction-inc.pdf Item 4 Staff Report Packet Pg. 68 Item No. 4. Page 2 of 5 (Staff Report #105022), with the Notice to Proceed issued February 24, 2020. Under this contract through February 23, 2023, the total not-to-exceed amount was originally $4,500,000 for three years, with an annual not-to-exceed amount of $1,500,000. An amendment was then submitted (Staff Report #134703) for approval of an exemption to Competitive Solicitation and Change Order No. 1 to the existing Contract C20172366A with HLC for additional underground construction and emergency construction on-call services, increasing the contract amount by $6,800,000 for a new not-to-exceed amount of $11,300,000 for the entire three-year term of the contract. Throughout the industry, Utilities are struggling with a labor shortage of qualified electrical journey-level line workers. There is a high demand for this type of work and resources are scarce. There is increased pressure on Investor-Owned Utilities such as PG&E to reduce the potential for fires around their electric infrastructure, this has resulted in a dramatic increase in utility construction work and has contributed to the lack of available qualified electrical journey-level lineperson workers. Over the past 10 years, Utility Electric Operations has not been able to successfully hire and retain qualified electrical journey-level staff, specifically in the line construction section, to perform the required work on the electric distribution system. This contract will provide electric line construction crew(s) and relative equipment to be used on an ongoing, as-needed basis to assist with construction, operating activities, and emergency response on the City of Palo Alto Utilities Electric Distribution System. ANALYSIS/DISCUSSION The Electric Line Construction division currently has insufficient resources to meet daily operational demands, complete required work, connect new services, and respond to emergencies/unplanned outages. This is due to the high number of vacancies and the inability to retain and hire qualified electrical journey-level line workers in a high demand labor market. Critical utility electric operations would be compromised if the City does not contract out this work until it can hire qualified electrical journey-level line workers and/or train internal staff in the form of an apprenticeship program, which takes four (4) years to complete. This contract will also support emergency or unplanned service outage response. A standby unit is needed to assess and isolate a system outage and perform corrective repairs. The City’s ability to adequately staff the standby unit with existing internal staffing is very limited, and there is 2 City Council, October 7, 2019, Staff Report #10520, https://www.cityofpaloalto.org/files/assets/public/agendas- minutes-reports/reports/city-manager-reports-cmrs/attachments/03-06-2023-id-2301-0718-c20172366a-hot-line- construction-inc.pdf 3 City Council, October 4, 2021, Staff Report #13470, https://www.cityofpaloalto.org/files/assets/public/agendas- minutes-reports/reports/city-manager-reports-cmrs/attachments/03-06-2023-id-2301-0718-c20172366a-hot-line- construction-inc.pdf Item 4 Staff Report Packet Pg. 69 Item No. 4. Page 3 of 5 similarly limited availability of additional qualified internal staff to address the corrective actions and repairs to the system. Some system failures require emergency repair work matched with specialized electrical journey-level line workers, construction equipment, and other such resources that a licensed contractor crew can provide. The award of this contract is essential to provide the ongoing operational work necessary to ensure the City provides safe, reliable power to the City’s utility customers and to keep the electric distribution system in compliance with state and utility regulations. The City proposes to utilize contract labor and equipment to supplement City electric utility crews in the construction of necessary maintenance, pole replacements, emergency response, and existing facilities upgrades on the electric distribution system at various locations throughout the City. Staff prepared an Invitation for Bids (“IFB”) soliciting qualified contractors to provide Electric Construction crew(s) at the City’s request and billed on a time/labor and equipment basis. These bids were for labor and equipment costs only, materials were not included as a bid item since they will be supplied by the City. A Scope of Services was included in the IFB describing the type of construction work that is expected to be completed. The proposers bid on the contract by providing labor and equipment rates for the various personnel and equipment that make up the typical electrical construction crew(s). Staff received and evaluated a total of three (3) bids and VIP was declared the lowest base bid. Staff confirmed the Contractor's State License and they are registered with the Department of Industrial Relations (DIR). Staff checked references supplied by the contractor for previous work performed and found references to be satisfactory. This contractor demonstrates the knowledge and skills required to perform the work. Therefore, staff considers the low based bid acceptable for the work involved and recommends the award of the contract to VIP. The following table summarizes the bid process initiated on August 18, 2022: Summary of Proposal Process Bid Name/Number Electric Utility Construction Services Project - IFB 185980 Proposed Length of Project 5 years Number of Bids Emailed to Contractors 1,339 Number of Bids Emailed to Builder’s Exchanges 3 Total Days to Respond to Bid 35 Pre-Bid Meeting?Yes Number of Company Attendees at Pre-Bid Meeting 7 Number of Bids Received:3 Bid Price Range (Annual Estimate) $4,191,000 to $4,625,570 Item 4 Staff Report Packet Pg. 70 Item No. 4. Page 4 of 5 *Proposal summary provided in Attachment B. This contract is on the City’s task order construction contract template, which permits the City to terminate without cause/for convenience by providing written notice to the contractor in the event the City finds itself facing budget shortfalls or amending the contract to reduce the cost, for example, by reducing the scope of work. The term of the contract is five (5) years, and staff has found that a multi-year contract is advantageous to the City as it allows us to retain continuity with a contractor that can source highly qualified workers. The work by the contractor will be continually monitored and evaluated. All work under this contract for subsequent fiscal years will be subject to satisfactory performance by the contractor and appropriation of required funds in the respective fiscal years. TIMELINE If Council approves the Contract, the Contractor will provide the City with the requested operation crew(s) within seven (7) days of the issuance of the Notice to Proceed. POLICY IMPLICATIONS The approval of this contract is consistent with existing City policies, including the Council approved Utilities Strategic Plan-Strategic Strategic Plan 2018 Objectives: Priority 4: Financial Efficiency and Resource Optimization; we must manage our finances optimally and use resources efficiently to meet our customers’ service priorities. Strategy 1. Establish a proactive infrastructure replacement program based on planned replacement before failure to support reliability and resiliency. FISCAL/RESOURCE IMPACT Funding the $4,000,000 for the first year of this contract is available in the FY 2023 Electric Operating and Capital Fund budgets. The Electric Operating budget will fund $2,000,000, this includes a transfer of $800,000 in annual salary savings from vacant electrical lineperson positions to the operating budget fund. The Electric Capital budget funds the remainder $2,000,000 of the contract based on anticipated work among various existing projects (specific projects subject to change based on actual services rendered to each project). For example: Electric Customer Connections (EL-89028) $500,000, Wood Pole Replacement (EL-19004) $500,000, and Electric System Improvements (EL-98003) $1,000,000. Continued work and funding under this contract for FY 2024 through FY 2028 will be subject to satisfactory performance by the contractor and Council approval of annual appropriations. Staff is advancing this recommendation as reflected in the City’s adopted budget. Item 4 Staff Report Packet Pg. 71 Item No. 4. Page 5 of 5 STAKEHOLDER ENGAGEMENT This was completed as a public request for proposals and coordinated with internal stakeholders, including the procurement division and legal reviews. ENVIRONMENTAL REVIEW This work is categorically exempt from the California Environmental Quality Act (CEQA), under section 15301 (repair or maintenance of existing facilities), and section 15302 (replacement or reconstruction of existing structures and facilities) of Title 14 of the California Code of Regulations (“CEQA Guidelines”). There are no reasonably foreseeable adverse impacts from this resolution, and there is no possibility that the activity in question would have a significant effect on the environment. ATTACHMENTS Attachment A: VIP Powerline Corp. Contract, C23185980 Attachment B: Proposal Summary IFB185980 APPROVED BY: Dean Batchelor, Director Utilities Report #: 2301-0718 Item 4 Staff Report Packet Pg. 72 1 Invitation for Bid (IFB) Package Rev. July 2022 CONSTRUCTION CONTRACT TASK ORDER CONSTRUCTION CONTRACT Contract No. C23185980 City of Palo Alto Electric Utility Construction Project 2023-2028 Year Task Order Contract Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 73 2 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT TASK ORDER CONSTRUCTION CONTRACT TABLE OF CONTENTS SECTION 1 INCORPORATION OF RECITALS AND DEFINITIONS……………………………………...…………..6 1.1 Recitals…………………………………………………………………………………………………………………….6 1.2 Definitions……………………………………………………………………………………………………………….7 SECTION 2 THE PROJECT………………………………………………………………………………………………………...8 SECTION 3 THE CONTRACT DOCUMENTS………………………………………………………………………………..8 3.1 List of Documents……………………………………………………………………………………….…….........8 3.2 Order of Precedence……………………………………………………………………………………………......9 SECTION 4 CONTRACTOR’S DUTY……………………………………………………………………………….…………..9 4.1 Contractor's Duties…………………………………………………………………………………………………..9 4.2 On-Call Provision………………………………………………………………………………………………………9 4.3 Guarantee to Repair Period………………………………………………………………………………………10 SECTION 5 PROJECT TEAM……………………………………………………………………………………………………..10 5.1 Contractor's Co-operation………………………………………………………………………………….…..10 SECTION 6 TIME OF COMPLETION………………………………………………………………………..………….......11 6.1 Time Is of Essence………………………………………………………………………………..………………….11 6.2 Commencement of Work…………………………………………………………………...……………………11 6.3 Contract Time…………………………………………………………………………………..……………………..11 6.4 Liquidated Damages…………………………………………………………………………………………………11 6.4.1 Other Remedies……………………………………………………………………………………………………..11 6.5 Adjustments to Contract Time………………………………………………………………………………….11 SECTION 7 COMPENSATION TO CONTRACTOR……………………………………………………………….……….11 7.1 Maximum Compensation and Contract Sum……….…………………………………………….………11 7.2 Full Compensation……………………………………………………………………………………………………12 7.3 Payment..…………………………………………………………………………………………………………………12 SECTION 8 STANDARD OF CARE…………………………………………………………………………………….………..12 8.1 Standard of Care…………………………………………………………………………………..…………………12 SECTION 9 INDEMNIFICATION……………………………………………………………………………………………..…13 Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 74 3 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT 9.1 Hold Harmless……………………………………………………………………………………………..………….13 9.2 Survival………………………………………………………………………………………………………...…………13 SECTION 10 NON-DISCRIMINATION……..……………………………………………………………………...…………13 10.1 Municipal Code Requirement…………….………………………………..……………………..………….13 SECTION 11 INSURANCE AND BONDS.…………………………………………………………………….………………133 11.1 Evidence of Coverage……………………………………………………………………….….………………..13 SECTION 12 PROHIBITION AGAINST TRANSFERS………………………………………………………………..….…14 12.1 Assignment………………………………………………………………………………………….…………….….14 12.2 Assignment by Law.…………………………………………………………………………………………….…14 SECTION 13 NOTICES ……………………………………………………………………………………………………….…….14 13.1 Method of Notice …………………………………………………………………….……………………………14 13.2 Notice Recipents ……………………………………………………………………..…………………………….14 13.3 Change of Address…………………………………………………………………………………….…..……….15 SECTION 14 DEFAULT……………………………………………………………………………………….………….………...15 14.1 Notice of Default…………………………………………………………………………………………………….15 14.2 Opportunity to Cure Default……………………………………………………………………………………16 SECTION 15 CITY'S RIGHTS AND REMEDIES………………………………………………………………………….....16 15.1 Remedies Upon Default………………………………………………………………………………………….16 15.1.1 Delete Certain Services……………………………………………………………………………………….16 15.1.2 Perform and Withhold………………………………………………………………………………………..16 15.1.3 Suspend The Construction Contract……………………………………….……………………………16 15.1.4 Terminate the Construction Contract for Default……………………………………..…………16 15.1.5 Invoke the Performance Bond…………………………………………………………………………….16 15.1.6 Additional Provisions………………………………………………………………………………………….17 15.2 Delays by Sureties………………………………………………………………………………………………….17 15.3 Damages to City……………………………………………………………………………………………………..177 15.3.1 For Contractor's Default……………………………………………………………………………………..177 15.3.2 Compensation for Losses……………………………………………….……………………………………177 15.4 Suspension by City………………………………………………………………………………………………….177 15.4.1 Suspension for Convenience………………………………………………………………………………..177 Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 75 4 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT 15.4.2 Suspension for Cause…………………………………………………..…………………………………..18 15.5 Termination Without Cause……………………………………………………………………………….…18 15.5.1 Compensation………………………………………………………………………………………………….18 15.5.2 Subcontractors………………………………………………………………………………………………..18 15.6 Contractor’s Duties Upon Termination………………………………………………………………...19 SECTION 16 CONTRACTOR'S RIGHTS AND REMEDIES…………………….………………………………………19 16.1 Contractor’s Remedies……………………………………..………………………………..…………..…….19 16.2 Damages to Contractor………………………………………………………………………………………..19 SECTION 17 ACCOUNTING RECORDS………………………………………………………………………………….…19 17.1 Financial Management and City Access………………………………………………………………..19 17.2 Compliance with City Requests…………………………………………………………………………….20 SECTION 18 INDEPENDENT PARTIES……………………………………………………………………………………..200 18.1 Status of Parties……………………………………………………………………………………………….…20 SECTION 19 NUISANCE……………………………………………………………………………………………………...…200 19.1 Nuisance Prohibited………………………………………………………………………………….………..20 SECTION 20 PERMITS AND LICENSES…………………………………………….…………………………..………….200 20.1 Payment of Fees……………………………………………………………………………………..…………..20 SECTION 21 WAIVER…………………………………………………………………….……………………….………….….20 21.1 Waiver………………………………………………………………………………………………….…….……….20 SECTION 22 GOVERNING LAW AND VENUE; COMPLIANCE WITH LAWS………………..………………..21 22.1 Governing Law.……………………………………………………………………………………….…………..21 22.2 Compliance with Laws…………………………………………………………………………………………21 22.2.1 Palo Alto Minimum Wage Ordinance…………….………………………………………………….21 SECTION 23 COMPLETE AGREEMENT……………………………………………………………………………………21 23.1 Integration………………………………………………………………………………………………………….21 SECTION 24 SURVIVAL OF CONTRACT…………………………………………………………………………………..21 24.1 Survival of Provisions…………………………………………………………………………….……………21 SECTION 25 PREVAILING WAGES………………………………………………………………………………………….21 SECTION 26 NON-APPROPRIATION……………………………………………………………………………………...22 26.1 Appropriation…………………………………………………………………………………………………..…22 Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 76 5 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT SECTION 27 AUTHORITY……………………………………………………………………………………………………….22 27.1 Representation of Parties…………………………………………………………………………………….22 SECTION 28 COUNTERPARTS………………………………………………………………………………………………..22 28.1 Multiple Counterparts………………………………………………………………………………………….22 SECTION 29 SEVERABILITY……………………………………………………………………………………………………22 29.1 Severability………………………………………………………………………………………….……………..22 SECTION 30 STATUTORY AND REGULATORY REFERENCES ……………………………………….…………...22 30.1 Amendments of Laws…………………………………………………………………………….……………22 SECTION 31 WORKERS’ COMPENSATION CERTIFICATION………………………………………..……….…..23 31.1 Workers Compensation…………………………………………………………………….………………..23 SECTION 32 DIR REGISTRATION AND OTHER SB 854 REQUIREMENTS…………………….………..….23 32.1 General Notice to Contractor………………………………………………………………………………23 32.2 Labor Code section 1771.1(a)………………………………………………………………………….....23 32.3 DIR Registration Required…………………………………………………………………………….…….23 32.4 Posting of Job Site Notices…………………………………………………………………………….......23 32.5 Payroll Records…………………………………………………………………………………………….…….23 Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 77 6 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT TASK ORDER CONSTRUCTION CONTRACT THIS TASK ORDER CONSTRUCTION CONTRACT (“Construction Contract”) entered into on January 23, 2023 (“Execution Date”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation ("City"), and VIP POWERLINE CORPORATION ("Contractor"), is made with reference to the following: R E C I T A L S: A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. Contractor is a corporation duly organized and in good standing in the State of California, Contractor’s License Number 1078161 and Department of Industrial Relations Registration Number PW-LR-1000843267. Contractor represents that it is duly licensed by the State of California and has the background, knowledge, experience and expertise to perform the obligations set forth in this Construction Contract. C. On August 18. 2022, City issued an Invitation for Bids ("IFB") to contractors for the Electric Utility Construction Services (“Project”). In response to the IFB, Contractor submitted a Bid. D. City and Contractor desire to enter into this Construction Contract for the Project, and other services as identified in the Contract Documents for the Project upon the following terms and conditions. NOW THEREFORE, in consideration of the mutual promises and undertakings hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is mutually agreed by and between the undersigned parties as follows: SECTION 1 INCORPORATION OF RECITALS AND DEFINITIONS. 1.1 Recitals. All of the recitals are incorporated herein by reference. // // // // // // // // Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 78 7 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT 1.2 Definitions. Capitalized terms shall have the meanings set forth in this Construction Contract and/or in the General Conditions. If there is a conflict between the definitions in this Construction Contract and in the General Conditions, the definitions in this Construction Contract shall prevail. The following definitions apply to this Construction Contract and the General Conditions, notwithstanding and superseding any differing definitions in Article 1 of the General Conditions: Acceptance: The point at the end of the Term (as defined in Section 2) when Contractor has fully performed each Task Order in compliance with the Contract Documents and the Project as a whole is accepted by the City in writing, including each Task Order which has been Conditionally Accepted. Change Order: A duly authorized written instrument signed by the City or by the City and Contractor, which operates to amend the scope of Work in a Task Order, and which also amends the Task Order Compensation Amount or Contract Time. Conditional Acceptance/Conditionally Accepted: The City's provisional acceptance of a completed Task Order, subject to final Acceptance of the Project at the end of the Term. Contract Sum: The maximum amount of compensation stated in Section 7 of this Construction Contract that is payable to Contractor for performance of the Work encompassed in the Task Orders issued by the City for the performance of the Work in accordance with the Contract Documents, including adjustments made by Change Order. Contract Time: The total number of days set forth in a Task Order within which completion of the Task Order Work, including any adjustments of time (increases or decreases) made by Change Order. Field Order: A written instrument signed by the City or its Construction Manager that authorizes and directs performance of the Work described therein, and which may or may not include adjustments (increase or decrease) to the Task Order Compensation Amount or Contract Time. Final Completion: Full completion of the Work required by a Task Order, including all punch list items and submission of Record Documents, all to City's satisfaction. Final Payment: Final Payment of any undisputed amounts due to Contractor following Acceptance, less any amounts withheld or offset pursuant to the Contract Documents, including, but not limited to, liquidated damages, unreleased stop notices, amounts subject to setoff, up to 150% of unresolved third-party claims for which Contractor is required to indemnify City, and up to 150% of any amounts in dispute as authorized by Public Contract Code section 7107. Task Order: A written directive issued by the City to the Contractor using the Task Order form attached as Exhibit A-1 to this Construction Contract which specifies a scope of Work to be performed by the Contractor as well as the time for commencement and completion of the Work and the Task Order Compensation Amount, including any documents attached thereto or incorporated therein, and which may be modified by Change Order. Task Order Compensation Amount: The total amount payable to Contractor for satisfactory completion of a Task Order in accordance with the Contract Documents. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 79 8 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT Work: All labor, materials, equipment, services, permits, fees, licenses, and taxes, and all other things necessary for Contractor to perform its obligations and complete a Task Order, including, without limitation, any changes or additions requested by City, in accordance with the Contract Documents and all Applicable Code Requirements. SECTION 2 THE PROJECT. The Project is located at various locations within Palo Alto, CA. The Project requires the Contractor to perform Work as specified in any Task Order issued by the City from time to time over a five (5) year period of time, beginning on the Execution Date set forth above (the "Term"). In the event that the Work specified in any Task Order is not completed by the expiration of the Term, the City, in its sole discretion, may elect to extend the Term until completion of the Work and the City's final Acceptance of the Project as a whole. SECTION 3 THE CONTRACT DOCUMENTS. 3.1 List of Documents. The Contract Documents consist of the following documents which are on file with the City's Purchasing Division and are hereby incorporated by reference. 1) Change Orders 2) Field Orders 3) Construction Contract 4) Bidding Addenda 5) Task Orders, and attachments thereto 6) Special Provisions 7) General Conditions 8) Project Plans and Drawings 9) Technical Specifications 10) Instructions to Bidders 11) Invitation for Bids 12) Contractor's Bid and Non-Collusion Declaration 13) Reports listed in the Contract Documents 14) Public Works Department’s Standard Drawings and Specifications (most current version at time of Bid) Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 80 9 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT 15) Utilities Department’s Water, Gas, Wastewater, Electric Utilities Standards (most current version at time of Bid) 16) City of Palo Alto Traffic Control Requirements 17) City of Palo Alto Truck Route Map and Regulations 17) Notice Inviting Pre-Qualification Statements, Pre-Qualification Statement, and Pre-Qualification Checklist (if applicable) 18) Performance and Payment Bonds 3.2 Order of Precedence. For the purposes of construing, interpreting and resolving inconsistencies between and among the provisions of this Contract, the Contract Documents shall have the order of precedence as set forth in the preceding section. If a claimed inconsistency cannot be resolved through the order of precedence, the City shall have the sole power to decide which document or provision shall govern as may be in the best interests of the City. SECTION 4 CONTRACTOR’S DUTY. 4.1 Contractor’s Duties. Contractor agrees to perform all of the Work required for the Project, as specified in the Contract Documents and individual Task Orders, all of which are fully incorporated herein. Contractor shall provide, furnish, and supply all things necessary and incidental for the timely performance and completion of the Work as specified in each Task Order and in the Contract Documents, including, but not limited to, provision of all necessary labor, materials, equipment, transportation, and utilities, unless otherwise specified in the Contract Documents. Contractor also agrees to use its best efforts to complete the Work in a professional and expeditious manner and to meet or exceed the performance standards required by the Contract Documents. Unless otherwise specified in a Task Order: 4.1.1 Work should be performed during normal work hours (Monday through Friday between 8 AM and 6 PM). 4.1.2 Each excavation must be fully restored within forty-eight (48) hours. 4.1.3 City representative shall be present to inspect Work performed and obtain necessary measurements/survey data if applicable. 4.1.4 Contractor must coordinate with the City’s representative to schedule soil compaction testing prior to pavement restoration. 4.1.5 Contractor shall anticipate up to 24-hour turn-around time for City’s contracted testing lab to perform soil compaction testing. 4.2 On-Call Provision. 4.2.1 Work performed under the Contract will be performed within the Term, on an on-call basis, as requested by the City from time to time, as needed, with a Task Order assigned and approved by the City’s Project Manager. Each Task Order shall be in substantially the same form as Exhibit A-1. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 81 10 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT 4.2.2 Prior to issuing the first Task Order, the City will schedule a mandatory pre-construction meeting with the Contractor, which will include review of the Task Order procedures and Project requirements. 4.2.3 Each Task Order shall designate a City Project Manager and shall contain a specific scope of Work, a specific schedule of performance, and the Task Order Compensation Amount. Because each Task Order will contain a specific schedule of performance, unless otherwise specified in a Task Order, the Construction Schedule submittal requirements set forth in Section 3.10 (Schedules Required of Contractor) or in part 1.05 of Section 800 (Additional Provisions for Utilities Construction) of the Technical Specifications will not apply to this Construction Contract. 4.2.3 Time is of the essence in completion of all Task Order Work. Therefore, Contractor must sign each Task Order issued by the City and return it to the Project Manager in PDF form sent via email, as indicated on the Task Order form, within 2 days of the issuance date shown on the Task Order. 4.2.4 If Contractor has any objections to or questions regarding a Task Order it must notify City of such objections or questions promptly following receipt of the Task Order so any such issues may be resolved without delaying the Work as scheduled. Contractor's failure to timely comply with the requirements in this paragraph will be deemed a material breach of this Construction Contract. 4.2.5 The aggregated Task Order Compensation Amount issued under this Construction Contract shall not exceed the maximum Contract Sum set forth in Section 7, below. Contractor shall only be compensated for Work performed under an authorized Task Order and the City may elect, but is not required, to authorize Work up to the maximum Contract Sum set forth in Section 7. 4.3 Guarantee to Repair Period. Notwithstanding any provision in the Contract Documents to the contrary, the one-year "Guarantee To Repair Period" specified in Section 12.2 of the General Conditions (Correction of Defective Work and Guarantee to Repair Period) will commence separately for each Task Order, beginning from the date of Conditional Acceptance by the City of each Task Order. If Contractor fails to repair Defective Work within the applicable Guarantee To Repair Period, the City may deduct its cost of having such Defective Work repaired from any payments otherwise due to Contractor. SECTION 5 PROJECT TEAM. 5.1 Contractor’s Co-operation. In addition to Contractor, City has retained, or may retain, consultants and contractors to provide professional and technical consultation for the design and construction of the Project. The Contract requires that Contractor operate efficiently, effectively and cooperatively with City as well as all other members of the Project Team and other contractors retained by City to construct other portions of the Project. // // // // Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 82 11 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT SECTION 6 TIME OF COMPLETION. 6.1 Time Is of Essence. Time is of the essence with respect to all time limits set forth in the Contract Documents, including each Task Order. 6.2 Commencement of Work. Contractor shall commence the Work on the date specified in each Task Order, notwithstanding references elsewhere in the Contract Documents to commencing Work on the date specified in the Notice to Proceed. 6.3 Contract Time. Work hereunder shall begin on the date specified in each Task Order, and the specific work authorized by each Task Order shall be completed no later than the time/schedule requirements specified therein, and in conformance with the Contract Documents. 6.4 Liquidated Damages. Pursuant to Public Contract Code Section 7203 and Government Code Section 53069.85, if Contractor fails to achieve Final Completion of the entire Work within the Contract Time specified in a Task Order, including any approved extensions thereto, City may assess liquidated damages on a daily basis for each day of Unexcused Delay in achieving Final Completion of the Task Order, based on the amount of zero dollars ($0) per day, or as otherwise specified in the Special Provisions. Liquidated damages may also be separately assessed for failure to meet milestones specified elsewhere in the Contract Documents, regardless of impact on the time for achieving Final Completion. The assessment of liquidated damages is not a penalty but considered to be a reasonable estimate of the amount of damages City will suffer by delay in completion of the Work. The City is entitled to set off the amount of liquidated damages assessed against any payments otherwise due to Contractor, including, but not limited to, setoff against any payment otherwise due or to become due to Contractor. If the total amount of liquidated damages assessed exceeds payment otherwise due to Contractor, City is entitled to recover the balance from Contractor or its sureties. Occupancy or use of the Project in whole or in part prior to Final Completion, shall not operate as a waiver of City’s right to assess liquidated damages. This provision takes precedence over and supersedes any inconsistent or conflicting provisions elsewhere in the Contract Documents, including Section 13.0 of the Instructions to Bidders. 6.4.1 Other Remedies. City is entitled to any and all available legal and equitable remedies City may have where City’s Losses are caused by any reason other than Contractor’s failure to achieve Final Completion of the entire Work within the Contract Time specified in a Task Order. 6.5 Adjustments to Contract Time. The Contract Time for each Task Order may only be adjusted for time extensions approved by City and memorialized in a Change Order approved in accordance with the requirements of the Contract Documents. SECTION 7 COMPENSATION TO CONTRACTOR. 7.1 Maximum Compensation and Contract Sum. Contractor shall be compensated for the Task Order Compensation Amount specified in each Task Order for satisfactory completion of the Work specified in that Task Order in compliance with the Contract Documents, but the Contract Sum will not exceed Twenty Million Dollars ($20,000,000.00) for the Term. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 83 12 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT In addition, the total annual Task Order Compensation Amount may not exceed during each year of the Term. 7.2 Full Compensation. The Task Order Compensation amount, except as otherwise expressly permitted by the terms of the Contract Documents, shall cover all Losses arising out of the nature of the Work or from the acts of the elements or any unforeseen difficulties or obstructions which may arise or be encountered in performance of the Work required by each Task Order until its Conditional Acceptance by City, all risks connected with the Work, and any and all expenses incurred due to suspension or discontinuance of the Work, except as expressly provided herein. The Task Order Compensation Amount may only be adjusted by a Change Order approved in accordance with the requirements of the Contract Documents. 7.3 Payment. Notwithstanding any conflicting or inconsistent provisions in the Contract Documents, including Article 9 (Payments and Completion) of the General Conditions, the following will apply to this Construction Contract: 7.3.1 The Task Order Compensation Amount will be based upon the unit prices set forth in the Bid Schedule and not on a separate Schedule of Values. 7.3.2 The City will withhold five percent (5%) retention from each payment to Contractor. All undisputed retention will be released to Contractor within sixty (60) days following: The end of each one-year period during the Term, measured from the Execution Date. Other: ______N/A________________________________________________. 7.3.3 The City may also withhold or make deductions from payments otherwise due or to become due to the Contractor as otherwise specified within the Contract Documents, including deductions for liquidated damages or withholding for unreleased stop notices. 7.3.4 Section 9.7 (Substantial Completion) of the General Conditions will not apply to this Construction Contract and all other references to "Substantial Completion" in the Contract Documents will be deemed to mean "Final Completion," as defined herein. SECTION 8 STANDARD OF CARE. 8.1 Standard of Care. Contractor agrees that the Work shall be performed by qualified, experienced and well-supervised personnel. All Work performed in connection with this Construction Contract shall be performed in a manner consistent with the standard of care under California law applicable to those who specialize in providing such work for projects of the type, scope and complexity of the Project. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 84 13 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT SECTION 9 INDEMNIFICATION. 9.1 Hold Harmless. To the fullest extent allowed by law, Contractor will defend, indemnify, and hold harmless City, its City Council, boards and commissions, officers, agents, employees, representatives and volunteers (hereinafter individually referred to as an “Indemnitee” and collectively referred to as "Indemnitees"), through legal counsel acceptable to City, from and against any and liability, loss, damage, claims, expenses (including, without limitation, attorney fees, expert witness fees, paralegal fees, and fees and costs of litigation or arbitration) (collectively, “Liability”) of every nature arising out of or in connection with the acts or omissions of Contractor, its employees, Subcontractors, representatives, or agents, in performing the Work or its failure to comply with any of its obligations under the Contract, except such Liability caused by the active negligence, sole negligence, or willful misconduct of an Indemnitee. Contractor shall pay City for any costs City incurs to enforce this provision. Nothing in the Contract Documents shall be construed to give rise to any implied right of indemnity in favor of Contractor against City or any other Indemnitee. Pursuant to Public Contract Code Section 9201, City shall timely notify Contractor upon receipt of any third-party claim relating to the Contract. 9.2 Survival. The provisions of Section 9 shall survive the termination of this Construction Contract. SECTION 10 NON-DISCRIMINATION. 10.1 Municipal Code Requirement. As set forth in Palo Alto Municipal Code section 2.30.510, Contractor certifies that in the performance of this Agreement, it shall not discriminate in the employment of any person because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight or height of such person. Contractor acknowledges that it has read and understands the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and will comply with all requirements of Section 2.30.510 pertaining to nondiscrimination in employment. SECTION 11 INSURANCE AND BONDS. 11.1 Evidence of coverage. Within ten (10) business days following issuance of the Notice of Award, Contractor shall provide City with evidence that it has obtained insurance and shall submit Performance and Payment Bonds satisfying all requirements in Article 11 of the General Conditions. Notwithstanding any conflicting or inconsistent provisions elsewhere in the Contract Documents, the amount for each of the bonds must be based upon one hundred percent (100%) of the Contract Sum, as defined in this Construction Contract. // // Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 85 14 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT SECTION 12 PROHIBITION AGAINST TRANSFERS. 12.1 Assignment. City is entering into this Construction Contract in reliance upon the stated experience and qualifications of the Contractor and its Subcontractors set forth in Contractor’s Bid. Accordingly, Contractor shall not assign, hypothecate or transfer this Construction Contract or any interest therein, including any Task Order, directly or indirectly, by operation of law or otherwise without the prior written consent of City. Any assignment, hypothecation or transfer without said consent shall be null and void, and shall be deemed a substantial breach of contract and grounds for default in addition to any other legal or equitable remedy available to the City. 12.2 Assignment by Law. The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Contractor or of any general partner or joint-venturer or syndicate member of Contractor, if the Contractor is a partnership or joint venture or syndicate or co-tenancy shall result in changing the control of Contractor, shall be construed as an assignment of this Construction Contract. Control means more than fifty percent (50%) of the voting power of the corporation or other entity. SECTION 13 NOTICES. 13.1 Method of Notice. All notices, demands, requests or approvals to be given under this Construction Contract shall be given in writing and shall be deemed served on the earlier of the following: (i) On the date delivered if delivered personally; (ii) On the third business day after the deposit thereof in the United States mail, postage prepaid, and addressed as hereinafter provided; (iii) On the date sent if sent by facsimile transmission; (iv) On the date sent if delivered by electronic mail; or (v) On the date it is accepted or rejected if sent by certified mail. 13.2 Notice to Recipients. All notices, demands or requests (including, without limitation, Change Order Requests and Claims) from Contractor to City shall include the Project name and the number of this Construction Contract and shall be addressed to City at: To City: City of Palo Alto City Clerk 250 Hamilton Avenue P.O. Box 10250 Palo Alto, CA 94303 Copy to: City of Palo Alto Public Works Administration 250 Hamilton Avenue Palo Alto, CA 94301 Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 86 15 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT Attn: AND [Include Construction Manager, If Applicable.] _______________________________ _______________________________ _______________________________ _______________________________ City of Palo Alto Utilities Engineering 250 Hamilton Avenue Palo Alto, CA 94301 Attn: Letty Rodriguez Letty.rodriguez@cityofpaloalto.org In addition, copies of all Claims by Contractor under this Construction Contract shall be provided to the following: Palo Alto City Attorney’s Office 250 Hamilton Avenue P.O. Box 10250 Palo Alto, California 94303 All Claims shall be sent by registered mail or certified mail with return receipt requested. All notices, demands, requests or approvals from City to Contractor shall be addressed to: VIP Powerline Corp, 15043 Wolfgang Road Truckee, CA 96161 Attn: Brent Tymchuk brent@vippowerline.com 13.3 Change of Address. In advance of any change of address, Contractor shall notify City of the change of address in writing. Each party may, by written notice only, add, delete or replace any individuals to whom and addresses to which notice shall be provided. SECTION 14 DEFAULT. 14.1 Notice of Default. In the event that City determines, in its sole discretion, that Contractor has failed or refused to perform any of the obligations set forth in the Contract Documents, including any Task Order, or is in breach of any provision of the Contract Documents, City may give written notice of default to Contractor in the manner specified for the giving of notices in the Construction Contract, with a copy to Contractor’s performance bond surety. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 87 16 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT 14.2 Opportunity to Cure Default. Except for emergencies, Contractor shall cure any default in performance of its obligations under the Contract Documents within two (2) Days (or such shorter time as City may reasonably require) after receipt of written notice. However, if the breach cannot be reasonably cured within such time, Contractor will commence to cure the breach within two (2) Days (or such shorter time as City may reasonably require) and will diligently and continuously prosecute such cure to completion within a reasonable time, which shall in no event be later than ten (10) Days after receipt of such written notice. SECTION 15 CITY'S RIGHTS AND REMEDIES. 15.1 Remedies Upon Default. If Contractor fails to cure any default of this Construction Contract within the time period set forth above in Section 14, then City may pursue any remedies available under law or equity, including, without limitation, the following: 15.1.1 Delete Certain Work. City may, without terminating the Construction Contract, delete certain portions of the Work from one or more Task Orders, reserving to itself all rights to Losses related thereto. 15.1.2 Perform and Withhold. City may, without terminating the Construction Contract, engage others to perform the Work or portion of the Work from one or more Task Orders that has not been adequately performed by Contractor and withhold the cost thereof to City from future payments to Contractor, reserving to itself all rights to Losses related thereto. 15.1.3 Suspend the Construction Contract. City may, without terminating the Construction Contract and reserving to itself all rights to Losses related thereto, suspend all or any portion of this Construction Contract or one or more Task Orders for as long a period of time as City determines, in its sole discretion, appropriate, in which event City shall have no obligation to adjust the Contract Sum, Task Order Compensation Amount or Contract Time, and shall have no liability to Contractor for damages if City directs Contractor to resume Work. 15.1.4 Terminate the Construction Contract for Default. City shall have the right to terminate this Construction Contract, in whole or in part, upon the failure of Contractor to promptly cure any default as required by Section 14. City’s election to terminate the Construction Contract for default shall be communicated by giving Contractor a written notice of termination in the manner specified for the giving of notices in the Construction Contract. Any notice of termination given to Contractor by City shall be effective immediately, unless otherwise provided therein. 15.1.5 Invoke the Performance Bond. City may, with or without terminating the Construction Contract and reserving to itself all rights to Losses related thereto, exercise its rights under the Performance Bond. // // // // Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 88 17 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT 15.1.6 Additional Provisions. All of City’s rights and remedies under this Construction Contract are cumulative, and shall be in addition to those rights and remedies available in law or in equity. Designation in the Contract Documents of certain breaches as material shall not waive the City’s authority to designate other breaches as material nor limit City’s right to terminate the Construction Contract, or prevent the City from terminating the Construction Contract for breaches that are not material. City’s determination of whether there has been noncompliance with the Construction Contract so as to warrant exercise by City of its rights and remedies for default under the Construction Contract, shall be binding on all parties. No termination or action taken by City after such termination shall prejudice any other rights or remedies of City provided by law or equity or by the Contract Documents upon such termination; and City may proceed against Contractor to recover all liquidated damages and Losses suffered by City. 15.2 Delays by Sureties. Time being of the essence in the performance of the Work, if Contractor’s surety fails to arrange for completion of the Work in accordance with the Performance Bond, within seven (7) calendar days from the date of the notice of termination, Contractor’s surety shall be deemed to have waived its right to complete the Work under the Contract, and City may immediately make arrangements for the completion of the Work through use of its own forces, by hiring a replacement contractor, or by any other means that City determines advisable under the circumstances. Contractor and its surety shall be jointly and severally liable for any additional cost incurred by City to complete the Work following termination. In addition, City shall have the right to use any materials, supplies, and equipment belonging to Contractor and located at the Worksite for a Task Order for the purposes of completing the remaining Work. 15.3 Damages to City. 15.3.1 For Contractor's Default. City will be entitled to recovery of all Losses under law or equity in the event of Contractor’s default under the Contract Documents. 15.3.2 Compensation for Losses. In the event that City's Losses arise from Contractor’s default under the Contract Documents, City shall be entitled to deduct the cost of such Losses from monies otherwise payable to Contractor. If the Losses incurred by City exceed the amount payable, Contractor shall be liable to City for the difference and shall promptly remit same to City. 15.4 Suspension by City. 15.4.1 Suspension for Convenience. City may, at any time and from time to time, without cause, order Contractor, in writing, to suspend, delay, or interrupt the Work under one or more Task Orders in whole or in part. The order shall be specifically identified as a Suspension Order by City. Upon receipt of a Suspension Order, Contractor shall, at City’s expense, comply with the order and take all reasonable steps to minimize costs allocable to the Work covered by the Suspension Order. During the Suspension or extension of the Suspension, if any, City shall either cancel the Suspension Order or, by Change Order, delete the Work covered by the Suspension Order. If a Suspension Order is canceled or expires, Contractor shall resume and continue with the Work. A Change Order will be issued to cover any adjustments of the Contract Sum or the Contract Time necessarily caused by such suspension. A Suspension Order shall not be the exclusive method for City to stop the Work. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 89 18 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT 15.4.2 Suspension for Cause. In addition to all other remedies available to City, if Contractor fails to perform or correct Work in accordance with the Contract Documents including the applicable Task Order(s), City may immediately order the Work, or any portion thereof, suspended until the cause for the suspension has been eliminated to City’s satisfaction. Contractor shall not be entitled to an increase in Contract Time or Contract Price for a suspension occasioned by Contractor’s failure to comply with the Contract Documents. City’s right to suspend the Work shall not give rise to a duty to suspend the Work, and City’s failure to suspend the Work shall not constitute a defense to Contractor’s failure to comply with the requirements of the Contract Documents. 15.5 Termination Without Cause. City may, at its sole discretion and without cause, terminate this Construction Contract in part or in whole upon written notice to Contractor. Upon receipt of such notice, Contractor shall, at City’s expense, comply with the notice and take all reasonable steps to minimize costs to close out and demobilize. The compensation allowed under this Paragraph 15.5 shall be the Contractor’s sole and exclusive compensation for such termination and Contractor waives any claim for other compensation or Losses, including, but not limited to, loss of anticipated profits, loss of revenue, lost opportunity, or other consequential, direct, indirect or incidental damages of any kind resulting from termination without cause. Termination pursuant to this provision does not relieve Contractor or its sureties from any of their obligations for Losses arising from or related to the Work performed by Contractor. 15.5.1 Compensation. Following such termination and within forty-five (45) Days after receipt of a billing from Contractor seeking payment of sums authorized by this Paragraph 15.5.1, City shall pay the following to Contractor as Contractor’s sole compensation for performance of the Work : .1 For Work Performed. The amount of the Contract Sum allocable to the portion of the Work properly performed by Contractor as of the date of termination, less sums previously paid to Contractor. .2 For Close-out Costs. Reasonable costs of Contractor and its Subcontractors: (i) Demobilizing and (ii) Administering the close-out of its participation in the Project (including, without limitation, all billing and accounting functions, not including attorney or expert fees) for a period of no longer than thirty (30) Days after receipt of the notice of termination. .3 For Fabricated Items. Previously unpaid cost of any items delivered to the Project Site which were fabricated for subsequent incorporation in the Work. .4 Profit Allowance. An allowance for profit calculated as four percent (4%) of the sum of the above items, provided Contractor can prove a likelihood that it would have made a profit if the Construction Contract had not been terminated. 15.5.2 Subcontractors. Contractor shall include provisions in all of its subcontracts, purchase orders and other contracts permitting termination for convenience by Contractor on terms that are consistent with this Construction Contract and that afford no greater rights of recovery against Contractor than are afforded to Contractor against City under this Section. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 90 19 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT 15.6 Contractor’s Duties Upon Termination. Upon receipt of a notice of termination for default or for convenience, Contractor shall, unless the notice directs otherwise, do the following: (i) Immediately discontinue the Work to the extent specified in the notice; (ii) Place no further orders or subcontracts for materials, equipment, services or facilities, except as may be necessary for completion of such portion of the Work that is not discontinued; (iii) For each Task Order, provide to City a description in writing, no later than fifteen (15) days after receipt of the notice of termination, of all subcontracts, purchase orders and contracts that are outstanding, including, without limitation, the terms of the original price, any changes, payments, balance owing, the status of the portion of the Work covered and a copy of the subcontract, purchase order or contract and any written changes, amendments or modifications thereto, together with such other information as City may determine necessary in order to decide whether to accept assignment of or request Contractor to terminate the subcontract, purchase order or contract; (iv) Promptly assign to City those subcontracts, purchase orders or contracts, or portions thereof, that City elects to accept by assignment and cancel, on the most favorable terms reasonably possible, all subcontracts, purchase orders or contracts, or portions thereof, that City does not elect to accept by assignment; and (v) Thereafter do only such Work as may be necessary to preserve and protect Work already in progress and to protect materials, plants, and equipment on the Project Site or in transit thereto. Upon termination, whether for cause or for convenience, the provisions of the Contract Documents remain in effect as to any Claim, indemnity obligation, warranties, guarantees, submittals of as-built drawings, instructions, or manuals, or other such rights and obligations arising prior to the termination date. SECTION 16 CONTRACTOR'S RIGHTS AND REMEDIES. 16.1 Contractor’s Remedies. If City does not make pay Contractor undisputed sums within ninety (90) Days after receipt of notice from Contractor, Contractor may terminate the Construction Contract (30) days following a second notice to City of Contractor’s intention to terminate the Construction Contract. 16.2 Damages to Contractor. In the event of termination for cause by Contractor, City shall pay Contractor the sums provided for in Paragraph 15.5.1 above. Contractor agrees to accept such sums as its sole and exclusive compensation and agrees to waive any claim for other compensation or Losses, including, but not limited to, loss of anticipated profits, loss of revenue, lost opportunity, or other consequential, direct, indirect and incidental damages, of any kind. SECTION 17 ACCOUNTING RECORDS. 17.1 Financial Management and City Access. Contractor shall keep full and detailed accounts and exercise such controls as may be necessary for proper financial management under this Construction Contract in accordance with generally accepted accounting principles and practices. City and City's accountants during normal business hours, may inspect, audit and copy Contractor's records, books, estimates, take-offs, cost reports, ledgers, schedules, correspondence, instructions, drawings, receipts, subcontracts, purchase orders, vouchers, memoranda and other data relating to this Project. Contractor Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 91 20 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT shall retain these documents for a period of three (3) years after the later of (i) Final Payment or (ii) final resolution of all Contract Disputes and other disputes, or (iii) for such longer period as may be required by law. 17.2 Compliance with City Requests. Contractor's compliance with any request by City pursuant to this Section 17 shall be a condition precedent to filing or maintenance of any legal action or proceeding by Contractor against City and to Contractor's right to receive further payments under the Contract Documents. City many enforce Contractor’s obligation to provide access to City of its business and other records referred to in Section 17.1 for inspection or copying by issuance of a writ or a provisional or permanent mandatory injunction by a court of competent jurisdiction based on affidavits submitted to such court, without the necessity of oral testimony. SECTION 18 INDEPENDENT PARTIES. 18.1 Status of parties. Each party is acting in its independent capacity and not as agents, employees, partners, or joint ventures of the other party. City, its officers or employees shall have no control over the conduct of Contractor or its respective agents, employees, subconsultants, or subcontractors, except as herein set forth. SECTION 19 NUISANCE. 19.1 Nuisance Prohibited. Contractor shall not maintain, commit, nor permit the maintenance or commission of any nuisance in connection in the performance of services under this Construction Contract. SECTION 20 PERMITS AND LICENSES. 20.1 Payment of Fees. Except as otherwise provided in the Special Provisions and Technical Specifications or an individual Task Order, The Contractor shall provide, procure and pay for all licenses, permits, and fees, required by the City or other government jurisdictions or agencies necessary to carry out and complete the Work. Payment of all costs and expenses for such licenses, permits, and fees shall be included in one or more Bid items. No other compensation shall be paid to the Contractor for these items or for delays caused by non-City inspectors or conditions set forth in the licenses or permits issued by other agencies. SECTION 21 WAIVER. 21.1 Waiver. A waiver by either party of any breach of any term, covenant, or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant, or condition contained herein, whether of the same or a different character. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 92 21 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT SECTION 22 GOVERNING LAW AND VENUE; COMPLIANCE WITH LAWS. 22.1 Governing Law. This Construction Contract shall be construed in accordance with and governed by the laws of the State of California, and venue shall be in a court of competent jurisdiction in the County of Santa Clara, and no other place. 22.2 Compliance with Laws. Contractor shall comply with all applicable federal and California laws and city laws, including, without limitation, ordinances and resolutions, in the performance of work under this Construction Contract. 22.2.1 Palo Alto Minimum Wage Ordinance. Contractor shall comply with all requirements of the Palo Alto Municipal Code Chapter 4.62 (Citywide Minimum Wage), as it may be amended from time to time. In particular, for any employee otherwise entitled to the State minimum wage, who performs at least two (2) hours of work in a calendar week within the geographic boundaries of the City, Contractor shall pay such employees no less than the minimum wage set forth in Palo Alto Municipal Code section 4.62.030 for each hour worked within the geographic boundaries of the City of Palo Alto. In addition, Contractor shall post notices regarding the Palo Alto Minimum Wage Ordinance in accordance with Palo Alto Municipal Code section 4.62.060. SECTION 23 COMPLETE AGREEMENT. 23.1 Integration. This Construction Contract, including the Contract Documents incorporated herein, represents the entire and integrated agreement between the parties and supersedes all prior negotiations, representations, and contracts, either written or oral. This Construction Contract may be amended only by a written instrument, which is signed by the parties. SECTION 24 SURVIVAL OF CONTRACT. 24.1 Survival of Provisions. The provisions of the Construction Contract which by their nature survive termination of the Construction Contract or expiration of the Term, including, without limitation, all warranties, indemnities, payment obligations, and City’s right to audit Contractor’s books and records, shall remain in full force and effect after expiration of the Term or any termination of the Construction Contract. SECTION 25 PREVAILING WAGES. This Project is not subject to prevailing wages. Contractor is not required to pay prevailing wages in the performance and implementation of the Project in accordance with SB 7, if the public works contract does not include a project of $25,000 or less, when the project is for construction work, or the contract does not include a project of $15,000 or less, when the project is for alteration, demolition, repair, or maintenance (collectively, ‘improvement’) work. Or Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 93 22 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT Contractor is required to pay general prevailing wages as defined in Subchapter 3, Title 8 of the California Code of Regulations and Section 16000 et seq. and Section 1773.1 of the California Labor Code. Pursuant to the provisions of Section 1773 of the Labor Code of the State of California, the City Council has obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work in this locality for each craft, classification, or type of worker needed to execute the contract for this Project from the Director of the Department of Industrial Relations (“DIR”). Copies of these rates may be obtained at the Purchasing Division’s office of the City of Palo Alto. Contractor shall provide a copy of prevailing wage rates to any staff or subcontractor hired, and shall pay the adopted prevailing wage rates as a minimum. Contractor shall comply with the provisions of all sections, including, but not limited to, Sections 1775, 1776, 1777.5, 1782, 1810, and 1813, of the Labor Code pertaining to prevailing wages. SECTION 26 NON-APPROPRIATION. 26.1 Appropriations. This Construction Contract is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Construction Contract will terminate without any penalty (a) at the end of any fiscal year in the event that the City does not appropriate funds for the following fiscal year for this event, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds for this Construction Contract are no longer available. This section shall take precedence in the event of a conflict with any other covenant, term, condition, or provision of this Construction Contract. SECTION 27 AUTHORITY. 27.1 Representation of Parties. The individuals executing this Construction Contract represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. SECTION 28 COUNTERPARTS 28.1 Multiple Counterparts. This Construction Contract may be signed in multiple counterparts, which shall, when executed by all the parties, constitute a single binding agreement. SECTION 29 SEVERABILITY. 29.1 Severability. In case a provision of this Construction Contract is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be affected. SECTION 30 STATUTORY AND REGULATORY REFERENCES. 30.1 Amendments to Laws. With respect to any amendments to any statutes or regulations referenced in these Contract Documents, the reference is deemed to be the version in effect on the date that the Contract was awarded by City, unless otherwise required by law. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 94 23 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT SECTION 31 WORKERS’ COMPENSATION CERTIFICATION. 31.1 Workers Compensation. Pursuant to Labor Code Section 1861, by signing this Construction Contract, Contractor certifies as follows: “I am aware of the provisions of Section 3700 of the Labor Code which require every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the Work on this Contract.” SECTION 32 DIR REGISTRATION AND OTHER SB 854 REQUIREMENTS. 32.1 General Notice to Contractor. City requires Contractor and its listed subcontractors to comply with the requirements of SB 854. 32.2 Labor Code section 1771.1(a) City provides notice to Contractor of the requirements of California Labor Code section 1771.1(a), which reads: “A contractor or subcontractor shall not be qualified to bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the Public Contract Code, or engage in the performance of any contract for public work, as defined in this chapter, unless currently registered and qualified to perform public work pursuant to Section 1725.5. It is not a violation of this section for an unregistered contractor to submit a bid that is authorized by Section 7029.1 of the Business and Professions Code or Section 10164 or 20103.5 of the Public Contract Code, provided the contactor is registered to perform public work pursuant to Section 1725.5 at the time the contract is awarded.” 32.3 DIR Registration Required. City will not accept a bid proposal from or enter into this Construction Contract with Contractor without proof that Contractor and its listed subcontractors are registered with the California Department of Industrial Relations (“DIR”) to perform public work, subject to limited exceptions. 32.4 Posting of Job Site Notices. Pursuant to Labor Code section 1771.4, City gives notice to Contractor and its listed subcontractors that Contractor is required to post all job site notices prescribed by law or regulation and Contractor is subject to -compliance monitoring and enforcement by DIR. 32.5 Payroll Records. City requires Contractor and its listed subcontractors to comply with the requirements of Labor Code section 1776, including: (i) Keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by, respectively, Contractor and its listed subcontractors, in connection with the Project. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 95 24 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT (ii) The payroll records shall be verified as true and correct and shall be certified and made available for inspection at all reasonable hours at the principal office of Contractor and its listed subcontractors, respectively. (iii) At the request of City, acting by its project manager, Contractor and its listed subcontractors shall make the certified payroll records available for inspection or furnished upon request to the project manager within ten (10) days of receipt of City’s request. City requests Contractor and its listed subcontractors to submit the certified payroll records to the project manager at the end of each week during the Project. (iv) If the certified payroll records are not produced to the project manager within the 10- day period, then Contractor and its listed subcontractors shall be subject to a penalty of one hundred dollars ($100.00) per calendar day, or portion thereof, for each worker, and City shall withhold the sum total of penalties from the progress payment(s) then due and payable to Contractor. This provision supplements the provisions of Section 15 hereof. (v) Inform the project manager of the location of contractor’s and its listed subcontractors’ payroll records (street address, city and county) at the commencement of the Project, and also provide notice to the project manager within five (5) business days of any change of location of those payroll records. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 96 25 Invitation for Bid (IFB) Package Rev. July 2022 CONSTRUCTION CONTRACT IN WITNESS WHEREOF, the parties have caused this Construction Contract to be executed the date and year first above written. CITY OF PALO ALTO ____________________________ City Manager APPROVED AS TO FORM: ____________________________ City Attorney or designee APPROVED: ____________________________ Utilities Director VIP Powerline Corporation Officer 1 By:_____________________________ Name:__________________________ Title:___________________________ Officer 2 By:____________________________ Name:_________________________ Title:__________________________ Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 97 26 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT EXHIBIT “A-1” TASK ORDER FORM Contractor hereby agrees to perform the Work detailed below in accordance with all the terms and conditions of the Construction Contract referenced in Item 1A below. All attachments listed in Item 7 are incorporated into this Task Order by this reference. The Contractor shall furnish the necessary labor, equipment, and materials required by this Task Order as described below, and as further specified in the Contract Documents. CONTRACT NO. ISSUE DATE Purchase Requisition No. 1A. TASK ORDER CONSTRUCTION CONTRACT NUMBER 1B. TASK ORDER NO. 2. CONTRACTOR 3. CONTRACT TIME: START: COMPLETION: 4 TASK ORDER COMPENSATION AMOUNT: $__________________ BALANCE REMAINING IN CONTRACT SUM: $__________________________________ 5. BUDGET CODE: _______________ COST CENTER: _________________ COST ELEMENT: ______________ WBS/CIP: ___PHASE: ___ 6. CITY PROJECT MANAGER’S NAME/DEPARTMENT:_____________________________________ 7. ATTACHMENTS: A: Task Order Scope of Work B (if any): __________________________________ ----------------------------------------------------------------------------------------------------------------------------------- I hereby authorize the performance of I hereby acknowledge receipt and acceptance the work described above in this Task Order. of this Task Order and warrant that I have authority to sign on behalf of Consultant. APPROVED: APPROVED: CITY OF PALO ALTO CONTRACTOR NAME: ______________________ BY:__________________________________ BY:____________________________________ Name ________________________________ Name __________________________________ Title_________________________________ Title___________________________________ Date _________________________________ Date ___________________________________ Contractor must sign and return this Task Order in PDF form via email to the Project Manager at ________________@CityofPaloAlto.org within two days following the Issue Date set forth above. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 98 27 Rev. July 25, 2022 TASK ORDER CONSTRUCTION CONTRACT EXHIBIT “A-1” TASK ORDER FORM Attachment A – Task Order Scope of Work 1. DESCRIPTION OF WORK TO BE PERFORMED. 2. SCHEDULE FOR PERFORMANCE OF WORK. 3. BASIS FOR TASK ORDER COMPENSATION AMOUNT. 4. SUBMITTAL REQUIREMENTS. 5. ADDITIONAL PROVISIONS. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 99 IFB 185980 OH & UG Scope of Services 2022 Page 1 of 3 ATTACHMENT A SCOPE OF SERVICES INTRODUCTION This contract will be to provide electric line construction crew(s) to be used on an ongoing basis to assist with construction, operating activities, and emergency response on the City’s 12kV and 4kV Electric Distribution System. The City proposes to utilize contract labor and equipment to supplement the City’s crews in the construction of necessary maintenance, pole replacements, and existing facilities upgrades on its Electric System, included in this work scope includes but is not limited to overhead and underground extensions to new customers, line conversions, and equipment installation or replacement. CONSTRUCTION SERVICES The City will identify, assign, and oversee work being performed. The Contractor’s crew(s) is to complete each assignment within the estimated time and schedule, and in compliance with pertinent City Specifications and State requirements (General Order 95 & 128 of the California Public Utilities Commission (CPUC). In addition, the Contractor must provide its own tools and equipment. Unless otherwise specified, all work is to be performed exclusively by the Contractor and all main and essential material for the work shall be provided by the City. A.Inspection tags or work orders for equipment and/or locations will be provided, these documents may not contain all the infractions or maintenance present but are required to be completed while performing work at that location. For example, where a G.O. 95 and/or 128 infraction exists but has not otherwise been identified by the City on such tag, the Contractor shall make corrections as though fully identified and specified. B.The Contractor shall provide all equipment, labor, and tools necessary to complete the assigned work. The necessary equipment and labor will vary based on the type of work the Contractor is asked to perform. C.The crew(s) will be used primarily to assist with a backlog of maintenance work, system improvements, and customer service work. The crew is expected to be capable of performing all the work described in the Electric Construction Specifications (Attachment B & C). The City can suspend the crew(s) for any period of time, this includes but not limited to due to lack of work, holidays, and available resources such as materials and budget deficits. D.The Contractor will be required to provide additional personnel on an as needed basis to work. The City will provide a minimum two (2) week notice when additional crew(s) will be required. E.The regular working hours will be from 7:00 a.m. to 5:30 p.m. working four (4) days a week, essentially a 4/10 work week, which will include a thirty (30) minute non- compensated lunch period. If the crew is requested to work more than forty (40) hours in a work week, the City will pay overtime rates based on bid items. Contractor shall be allotted one weekly thirty (30) minute safety meeting. The City reserves the right to change the work schedule and will provide a two (2) week notice of such change. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 100 IFB 185980 OH & UG Scope of Services 2022 Page 2 of 3 F.Contractor’s equipment and tools should be certified to meet all mandated requirements. All personnel must be certified and trained to operate all equipment being used. The Contractor shall be required to furnish all necessary safety equipment including personal protective equipment (PPE) for their crew(s) to perform all electrical work assigned. G.The Contractor shall provide personnel who are trained, certified, and proficient in the skills necessary to complete the assigned work in a safe and efficient manner. Valid certification for personnel will be required and submitted prior to beginning any work. An employee from the City’s Electric Operations division or an outside inspector will be assigned to oversee the construction crew(s) provided by the Contractor. The designated City employee(s) or inspector(s) will monitor the contracted crew(s) and assess the quality of work, ability to efficiently and safely complete assigned work, and proficiency of crew members’ skills to handle assigned tasks. H.The Contractor may be asked to work on larger projects, in which different crew sizes and equipment may be needed to complete the project. In these cases, the Contractor shall submit an estimate for the work based on the bid items and schedule of rates for labor and equipment. The City must approve the estimate before Contractor proceeds with construction. I.The Contractor is responsible for administrative management of the work performed, including but not limited to: •Provide list of all contract personnel and phone numbers. This list shall be updated any time there are personnel changes. •Keeping detailed records of work completed, the data will include address, time spent for work completed, equipment, labor, and material used. •Submitting as-built drawings •Tracking of invoices to ensure the contract amount does not exceed contract terms •Providing estimates for projects when requested •Providing written explanations for discrepancies for estimates and actuals for work completed •Submitting change order requests EMERGENCY OPERATIONS A.Upon the City’s request during normal work hours, the Contractor crew(s) shall be re- assigned to the requested location for emergency work. This crew(s) shall work at the standard hourly rate. B.Although normal work hours will be Monday through Thursday, 7:00 a.m. to 5:30 p.m., the Contractor shall have available sufficient skilled personnel and equipment to perform all work activities covered under this contract, 24 hours a day, seven days a week, and in all types of weather. C.Should an emergency occur, the Contractor may be contacted by the City to assist with the emergency. If needed to assist, the City will notify the Contractor with the location, scope of work to be performed, and what personnel is required to perform the work. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 101 IFB 185980 OH & UG Scope of Services 2022 Page 3 of 3 D.In the event of an emergency, the Contractor shall respond within two (2) hours of being notified by the City. Crew(s) should be assembled and onsite within the two (2) hours from time of call by the City representative. Communication with the Contractor shall be verbal, telephone/cell phone, text or email. E.All emergency construction services shall be in accordance with the procedures referenced in the Electric Construction Specifications. The Contractor will be responsible for restoration of all locations as notified by the City. F.The Contractor may charge no more than the overtime bid rates. Emergency crew(s) will be paid only for the hours worked on the job, not for “standby” time, outside the normal working hours. G.The Contractor shall be able to provide the City with up to two (2) four-man crews including one (1) Foreman for emergency services after the normal work hours of 7:00 a.m. to 5:30 p.m. when requested by the City. H.The Contractor shall provide the City with a current call-out list of all contract personnel and phone numbers. This list shall be updated any time there are personnel changes. However, the Contractor’s General Foreman shall be responsible for coordinating call-out personnel and be point of contact with the City. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 102 City of Palo Alto IFB 185980 Page 1 of 10 CITY OF PALO ALTO DEPARTMENT OF UTILITIES ELECTRIC OVERHEAD CONSTRUCTION SPECIFICATIONS 2022 SECTION I SPECIFICATIONS 2 - 5 SECTION II SAFETY REQUIREMENTS 6 SECTION III INSTALLATION AND REMOVAL OF WOOD 7 - 10 POLES, TRANSFORMERS, CONNECTORS, CONDUCTORS, ETC. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 103 City of Palo Alto IFB 185980 Page 2 of 10 SECTION I SPECIFICATIONS A.GENERAL 1.This specification covers the general requirements to perform work assigned to the Contractor on the City of Palo Alto’s (City) electric overhead distribution poles, conductors, and equipment. This also includes all reconstruction and any related maintenance works thereof to correct any General Orders 95 and 128 infractions. 2.Work may include replacements of poles, transformers, air switches, connectors, cut-outs, insulators, conductors, wires, brackets and miscellaneous line hardware where applicable. 3.All workmanship and materials shall comply with the City of Palo Alto’s Specifications in every aspect and shall meet all pertinent requirements of General Orders 95 and 128 of the California Public Utilities Commission. 4.The City will inspect the Contractor’s work for compliances with pertinent city and state requirements. All quality related infractions (General Orders 95 and 128) resulting from the work performed shall be corrected by the contractor prior to final payment. B.DEFINITIONS 1.All definitions, terms, and abbreviations used in this specification have the same meaning as defined in the City Public Works Department Standard Drawing and Specifications (https://www.cityofpaloalto.org/gov/depts/pwd/forms_and_permits/specs_drawings.asp#Techni cal%20Specifications ). C.CONTRACTOR RESPONSIBILITY 1.The Contractor shall assume all responsibility for the completion of work and unless otherwise specified, shall furnish all labor, supervision, equipment, transportation, tools, and other facilities and services to complete the work in accordance with these specifications and applicable sections of the City Standard Drawings and Specifications. 2.The Contractor shall assume the risk of loss, theft, or damage to all materials delivered and accepted until such materials have been completely installed and accepted by the City in writing. The Contractor's liability shall include damage to or loss of material in their possession, including material being loaded, unloaded, or handled. 3.The Contractor shall exercise due care and diligence to adequately protect all properties/materials through duration of this contract. The Contractor shall replace or make necessary repairs to all third party property damages. If the contractor fails to promptly make the said repairs, the City will replace or repair at the Contractor’s expense. 4.While working within the City of Palo Alto, the Contractor is representing the City and shall perform their work in a safe and professional manner. The Contractor shall avoid disputes with property owners/occupants, the general public, or others. Where practical, the Contractor shall perform the prescribed work to accommodate reasonable requests of the property owners/occupants. For any objections made by property owners/occupants, the City will assist the Contractor in developing a work plan before the work proceeds. 5.The Contractor shall operate their equipment in accordance with the requirements of the City and the State of California to ensure the safety of their employees, staff, and the general public. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 104 City of Palo Alto IFB 185980 Page 3 of 10 6. The Contractor shall perform the work at their own risk until the work is fully completed and accepted by the City. In the event of any accident occurring before completion of work and acceptance by the City, including destruction to any materials, equipment and apparatus on public or private property, repairs or replacement for any related materials, equipment and apparatus so injured, damaged or destroyed will be at the Contractor's expense and to the satisfaction of the City. 7. The Contractor is required to keep detailed, accurate records of equipment and personnel used to complete work. The Contractor is required to provide an estimate of time and equipment required for assigned work. The Contractor is expected to provide justifications for discrepancies in actual costs versus estimated costs. The Contractor is required to submit as- built drawings for map changes if required. 8. The Contractor shall coordinate and obtain permission with the City and work within a seventy- two (2) hour notice before performing distribution switching or live line work. 9. The Contractor is responsible for monitoring the total amount of money charged under the contract and outstanding invoices. It is the Contractor’s responsibility for ensuring that the total contract amount is not exceeded. 10. The Contractor shall contact Underground Service Alert (USA) 811, prior to any required excavation work and comply with all aspects of Government Code 4216. D. MATERIALS 1. Unless otherwise specified, all main and essential material for the work will be furnished by the City. 2. The contractor shall arrange for material pick up from the City's Municipal Service Center (MSC), located at 3201 East Bayshore Road, with a minimum of three (3) days advanced notice. It is the contractor’s responsibility to ensure they receive all the necessary material required for completing the work. The contractor shall notify the City of any needed changes to the material prior to proceeding with the prescribed work. 3. After the Contractor has accepted materials in proper condition, Contractor shall be responsible for their protection from loss and damage of any nature until permanently installed and the City accepts the work. 4. The Contractor is required to account for all material issued by the City. All unused material shall be returned within five (5) days of the contract end date. The Contractor shall be required to reimburse the City for all unaccounted material previously accepted and not installed. E. SCHEDULE 1. The regular working hours will be from 7:00 a.m. to 5:30 p.m. working four (4) days a week, essentially a 4/10 work week, which will include a thirty (30) minute non-compensated lunch period. If the crew is requested to work more than forty (40) hours in a work week, the City will pay overtime rates based on bid items. Contractor shall be allotted one weekly thirty (30) minute safety meeting. The City reserves the right to change the work schedule and will provide a two (2) week notice of such change. 2. The Contractor and City will schedule “tail-board” meetings to assign work, review general rules and best practices regarding safety, arranging shutdowns, clearances, typical installations, equipment, and compliance. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 105 City of Palo Alto IFB 185980 Page 4 of 10 F. CODES AND STANDARDS CODES, STANDARDS, ORDERS, & RULES The following Codes, Standards, Orders, and Rules are generally applicable for all construction under this contract. In case of a conflict between any standards of construction, the stricter standards shall prevail. 1. Rules for overhead electric line construction, General Order No. 95 State of California (CPUC). 2. Rules for underground electric line construction, General Order No. 128 State of California (CPUC). 3. The City of Palo Alto Public Works Standard Drawings & Specifications, which could be found @ https://www.cityofpaloalto.org/Departments/Public-Works/Engineering- Services/Public-Works-Standard-Drawings-and-Specifications 4. Electric Service Requirements, which could be found @ https://www.cityofpaloalto.org/files/assets/public/utilities/utilities- engineering/electrical/electric-service-requirements-2016.pdf 5. City of Palo Alto noise ordinance and demolition, construction and alteration activities, which could be found @ https://www.cityofpaloalto.org/files/assets/public/public- works/engineering-services/webpages/forms-and-permits/other-guidelines/cpa-noise- ordinance-030507.pdf 6. City of Palo Alto truck route map, Chapter 1048, Palo Alto Municipal Code and Traffic Control Requirements, which could be found @ https://www.cityofpaloalto.org/files/assets/public/public-works/engineering- services/webpages/forms-and-permits/other-guidelines/truckroutemap.pdf 7. CAL/OSHA Title 8 Electrical Safety Rules. G. PERMIT(S) 1. All rights-of-way, easements, and permits necessary for installations on private property, properties of other governmental agencies, or railroad crossings will be secured by the City. 2. The Contractor’s crew may be required to complete training for work on railroad rights of way if necessary. H . OTHER WORK & SERVICES 1. The City reserves the right to employ or contract with other entities for the performance of other work in or about the assigned work locations. 2. If any portion of the Contractor's work requires the work of another contractor or services provided by the City, the Contractor shall inspect and promptly report any defects in such work or services that render it unsuitable for the proper execution and results of the assigned work. Failure to inspect and report any defective work or unsatisfactory services shall constitute an acceptance by the Contractor as being fit and suitable for the proper execution and results of the work. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 106 City of Palo Alto IFB 185980 Page 5 of 10 I. PAYMENT 1. Payment of the services shall be made in monthly progress payments in proportion to the quantum of services performed. Invoices shall be turned in to the Project Manager. Completed work will be determined by the City and such determination will be final. 2. The City may withhold payment of the whole or part of any amount due or claimed by Contractor to such extent as may be necessary to protect City from loss on account of any of the following: a. Defective work not remedied. b. Any damages caused by Contractor, such as but not limited to third party claims or reasonable evidence indicating probable filing of such claims. c. Failure of Contractor to make payment promptly to its employees, Suppliers, or Subcontractors. d. Failure of Contractor to diligently maintain satisfactory progress required to meet the work completion schedule. e. Any other breach by Contractor of its obligations under the Contract Agreement. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 107 City of Palo Alto IFB 185980 Page 6 of 10 SECTION II SAFETY A. SCOPE 1. This part of the specification covers the general safety requirements. B. SAFETY 1. All work shall be conducted in a safe manner and in strict accordance with the rules of the State Division of Industrial Safety (Cal. OSHA) and Safety and Health Standards. The Contractor shall take all reasonable precautions necessary to protect all workers and other persons who may be in or about the construction area from personal injury and to prevent damage to the property of the City or others. Contractor shall submit their safety program. 2. Workers in the public rights-of-way shall wear high visibility safety vests and hard hats and all required Personal Protective Equipment (PPE). 3. If any portion of the work is being done in an unsafe manner, the work will be stopped until corrective actions have taken place to make it safe. 4. The Contractor shall notify the City in writing of all accidents arising out of work being performed and shall submit a detailed report for each accident within twenty-four (24) hours of the incident. 5. In any emergency threatening life, personal injury, or property, the Contractor shall, at its discretion and without instruction from City, immediately act to prevent such threat to loss of life or property. 6. The Contractor shall make arrangements for first aid and for the transportation of its own and its Subcontractors' injured personnel. The Contractor shall comply with all reporting regulations for all injuries. The Contractor shall notify the City of any injuries in writing/email within twenty-four (24) hours. 7. The Contractor shall conduct operations and maintain work site to ensure the least possible obstruction and inconvenience to traffic, pedestrians, cyclists, and adjacent property owners. 8. The Contractor shall remove and cleanup all debris and excess material from the job site at the end of each workday. After work has been completed, the Contractor shall restore planting areas and other areas abutting the worksite to prior conditions. 9. Damage done by the Contractor during the course of work to City or private property shall be repaired at the Contractor’s expense. This includes but not limited to the repair of traffic loop detectors, tape striping, signs, markings, sidewalks, curb, gutter, pavement, etc. This work must be done immediately upon work completion. 10. The Contractor shall furnish and maintain barriers, lights, and signs needed to warn the public adequately of the construction worksite and any dangerous conditions to be encountered as a result of the work in progress. 11. When necessary, the Contractor is required to submit a Traffic Control Plan for City approval. The Contractor shall provide traffic control plans covering each typical situation to the City and get approval before starting any work. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 108 City of Palo Alto IFB 185980 Page 7 of 10 12. The Contractor shall not provide backup power by any means to the City’s customers. If the customer has a complaint about a planned outage, the contractor will notify the City to handle the matter directly with the customer. SECTION III INSTALLATION AND REMOVAL OF WOOD POLES, TRANSFORMERS, CONNECTORS, CONDUCTORS, ETC. A. SCOPE 1. This specification covers the general requirements to perform work assigned to Contractor crews on the City’s overhead electric transmission and distribution poles, conductors and equipment. This includes construction and maintenance thereof. 2. Work may include replacement of poles, transformers, air switches, connectors, insulators, conductors, and miscellaneous equipment. Inspection tags for poles will be provided, these tags may not contain all the infractions present but are required to be completed. Where a G.O. 95 and/or 128 infraction exists but has not otherwise been identified by the City on such tag, the contractor shall make corrections as though fully identified and specified. 3. All workmanship and materials shall comply with the City of Palo Alto’s Specifications in every respect and shall meet all pertinent requirements of General Orders 95 and 128 of the California Public Utilities Commission. In addition, the City will inspect Contractors work for compliance with pertinent City and State requirements. B. WOOD POLE INSTALLATION 1. New pole installation shall be identified by the City as “set in place” or “adjacent” to the existing pole and within one (1) foot radius from the existing pole. New poles should be set in the same yard when practical. Any deviation will require approval. 2. Setting Depth Pole Length (Feet) Depth in Soil (Feet) Depth in Rock (Feet) 40 5.5 3.5 45 6.0 4.0 50 6.5 4.0 55 6.5 4.0 3. Size of Holes a. Pole holes shall be excavated large enough to permit free entrance of the pole butt and proper tamping of backfill through the entire pole setting depth. 4. Backfill a. Native soil shall be used as backfilling material unless otherwise specified. 5. Tamping and Placing Backfills Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 109 City of Palo Alto IFB 185980 Page 8 of 10 a. Each hole shall be filled in layers not exceeding twelve (12) inches with suitable backfill as specified above and thoroughly tamped into a compact mass. The earth shall be banked up approximately 6-inches around the pole above ground level and tamped firmly. Air tamps utilizing 90-psi minimum pressure must be used for tamping. b. Any hole dug by mechanical means shall have the loose earth at the bottom of the hole tamped to original compaction before setting the pole. 6. Water in Holes a. Water standing in holes shall be removed before setting and tamping the pole. If water runs back in after the pole is set and cannot be removed before backfilling and tamping, fieldstones with sand tamped between the voids shall be used for backfill until the water level in the hole has been passed. The stone and backfill shall be tamped as specified above to form a compact mass. 7. Dry Earth Holes a. If earth removed from holes is too dry to prevent proper tamping, the backfill shall be moistened until the earth can be tamped into a compact mass. 8. Bolts a. Bolts shall extend a minimum of two (2) full threads and not more than one (1) inch beyond nut. 9. Exposed Wood a. All empty holes shall be plugged unless otherwise instructed. Where pole tops are removed the exposed cut shall be covered with an adhesive pole top protector. 10. Gaining a. Plastic or metal gains are the preferred method for new installations. Poles shall be framed true and square to the line and all hardware well tightened and fitted using double coil spring washers. 11. Angle and Dead-end Poles a. Angle and dead-end poles shall be raked at least one, but no more than two, pole top diameters against wire strain. 12. Anchors a. All anchors shall be placed in line with the strain they are to support. No conductors shall be sagged until the anchors are set and the guys at tension. C. INSULATOR AND HARDWARE INSTALLATION 1. Before installation, Contractor shall make sure that each type of insulator or insulator assembly is in accordance with the City specifications. 2. No chipped, broken, split, or torn insulators shall be utilized. The insulators shall be wiped with clean rags to remove dirt or other foreign matter. Porcelain surfaces shall be wiped to a bright finish. 3. All hardware shall be well tightened and fitted with double-coil spring washers. D. CONNECTOR INSTALLATION Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 110 City of Palo Alto IFB 185980 Page 9 of 10 1. Only “fired on” wedge connectors will be installed on all primary and secondary mainline conductors. This includes transformer leads, ground wires, and all jumpers regardless of configuration. 2. Tap clamps (sea-horse type) connectors are approved only for connecting cutouts supplying pole bolted transformers to the primary line. 3. Piercing tap connectors will only be used on the line side of Ariel cable for service connections. 4. Mini Wedges are permitted for single service connections on the lineside of the service. On the house side of the service mini wedges shall be sealed and covered with a layer of Aqua Seal and insulated with electrical tape. Service entrance sleeves (e.g. Insulink) may be used in lieu of mini wedges on the house side of service. E. CROSSARM INSTALLATION 1. All cross arm assembly supporting primary or secondary conductors shall have the braces bolted to the pole. F. CONDUCTOR INSTALLATION 1. Conductors shall be installed as directed by the City. 2. Conductor stringing operations shall be performed as to cause no damage to existing under- built utilities or to the conductor. 3. No conductor stringing shall take place until all guys and or anchors required to support the conductor are in place and at tension. 4. All final conductor installations shall present a neat, professional, and workman-like appearance. 5. All salvaged conductors shall be returned to MSC, segregated by type, with any hardware removed and placed in assigned bins. 6. No overhead service aerial trespass or G.O. 95 infraction shall be allowed. G. TRANSFORMER INSTALLATION AND REMOVAL 1. The contractor is expected to ensure the nameplates on all transformers to conform to circuit requirements before energizing and connecting any services to it. 2. Contractor shall use great caution in the removal and transportation of transformers, placing the transformers in provided oil containment bags as necessary, and returning them to the assigned area at the MSC. 3. Single phase transformers installed on poles where three phases are available, shall be placed on the phases as directed by the City. 4. The Contractor shall keep accurate records of all the transformers either being installed or removed. The data shall include address, pole number, size, City number, manufacturer, and serial number of all transformers being placed in service and/or removed. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 111 City of Palo Alto IFB 185980 Page 10 of 10 5. The Contractor shall test and record secondary voltage before connecting customer load. Phase rotation shall be checked, verified and recorded where applicable. The contractor will notify the City of any abnormal voltage measurements. 6. Transformers with taps shall be energized only on the proper tap for the primary voltage in use. H. AIR SWITCH INSTALLATION AND UPGRADES 1. All air switches will be framed with great care, adjusted, and tested for correct operation before being energized. 2. All existing air switches that are to remain in the system shall be retrofitted with "load-break" devices, fiberglass control rods, and fiberglass inter-phase rods. Cross arm mounted switches shall be fitted with "offset bell cranks" to allow the control rod to be moved to the pole quadrant. I. TREATED WOOD DISPOSAL 1. Deteriorated poles and/or cross arms shall be reduced to a maximum length of 4’ for proper disposal by the Contractor and placed in the treated wood bin at the MSC. J. SWITCHING OPERATIONS, CUSTOMER OUTAGES & COMMUNICATION 1. The Contractor shall follow established procedures for obtaining clearances, switching etc., from the City. No primary switching shall be done without permission. The Contractor shall obtain approval from the City prior to commencing any work that involves working on or near energized lines and shall notify upon completion of all such work. 2. The Contractor is responsible for properly testing circuits, de-energizing and grounding when required. 3. The Contractor is to arrange for a Non-Auto (Non-Test) on all circuits prior to any work where equipment or personnel could make contact with energized lines. This includes all live line work installing or removing poles, transformers or protective items. 4. The Contractor shall provide the City with an exact diagram of any circuit changes at the end of every workday upon verifying the accuracy of such changes. 5. A minimum seventy-two (72) hour notice is required for residential customer shutdowns. 6. A minimum two (2) week notice is required for any commercial customer shutdowns. 7. The contractor shall contact the occupants of the premises prior to working on their property. Notices shall be dropped/hanged/taped where feasible. 8. The Contractor shall post “No Parking Signs” at least seventy-two (72) hours in advance of the intended work date. The contractor will list their contact information on the signs when posting. 9. The Contractor will not trim trees without prior approval from the City and shall coordinate any tree trimming required. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 112 IFB 185980 Page 1 of 9 ATTACHMENT C CITY OF PALO ALTO DEPARTMENT OF UTILITIES ELECTRIC UNDERGROUND CONSTRUCTION SPECIFICATIONS 2021 SECTION I SPECIFICATIONS Pages 2-4 SECTION II SAFETY Page 5 SECTION III INSTALLATION AND REMOVAL OF UNDERGROUND CABLE AND EQUIPMENT Pages 6-9 Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 113 IFB 185980 Page 2 of 9 SECTION I SPECIFICATIONS A. GENERAL 1 . The work assigned to the Contractor will be performed on the City of Palo Alto’s (City) Utility electric underground distribution system and may include but not limited to: installation, replacement, and removal of cable, transformers, switches, connectors, load break cabinets, and miscellaneous equipment and/or devices. 2 . The Contractor shall provide all labor and equipment including hand and power operated tools necessary to complete the assigned work. Work to be performed is different at various locations and a scope of work for each assignment will be provided by the City. 3 . All workmanship, equipment, and materials shall comply with the City’s specifications in every respect and shall meet all pertinent requirements of General Orders 95 and 128 of the California Public Utilities Commission (CPUC). B . OTHER WORK & SERVICES 1. The City reserves the right to employ or contract with other entities for the performance of other work in or about the assigned work locations. 2. If any portion of the work requires the work of another contractor or services provided by the City, the Contractor shall inspect and promptly report any defects in such work or services that render it unsuitable for the proper execution and results of the assigned work. Failure to inspect and report any defective work or unsatisfactory services shall constitute an acceptance by the Contractor as being fit and suitable for the proper execution and results of the work. C. CONTRACTOR RESPONSIBILITY 1. The Contractor shall assume all responsibility for the completion of work and unless otherwise specified, shall furnish all labor, supervision, equipment, transportation, tools, and other services to complete the work in accordance with these specifications. 2. The Contractor shall exercise due care and diligence to adequately protect all properties and materials through duration of this contract. The Contractor shall replace or make necessary repairs to public or private property and to any materials, equipment, and apparatus if an incident should occur. If the contractor fails to promptly make the said repairs and to the satisfaction of the City, the City will replace or repair at the Contractor’s expense. 3. The Contractor shall operate their vehicles and equipment in accordance with the requirements of the City and the State of California to ensure the safety of their employees and the general public. 4. The Contractor is required to keep detailed and accurate records of equipment and personnel used to complete work. The Contractor is required to submit as-built drawings for map changes as required. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 114 IFB 185980 Page 3 of 9 5. The Contractor shall request a ticket via Underground Service Alert (USA) 811 prior to any required excavation work and comply with all aspects of Government Code 4216. D. SWITCHING OPERATIONS, CUSTOMER OUTAGES, & COMMUNICATION 1. The Contractor shall follow established procedures for obtaining clearances and switching from the City. No primary switching shall be done without permission. The Contractor shall obtain approval from the City prior to commencing any work that involves working on or near energized lines and shall notify upon completion of all such work. 2. The Contractor is responsible for properly testing circuits, de-energizing, and grounding when required. 3. The Contractor is to arrange for a Non-Auto (Non-Test) on all circuits prior to any work where equipment or personnel could make contact with energized lines. 4. The Contractor shall provide the City with an exact diagram of any circuit changes at the end of every workday upon verifying the accuracy of such changes. 5. The Contractor shall contact the occupants of the premises prior to working on their property in the form of Planned Shutdown Notices, which shall be hand delivered, hanged, or taped where feasible. The Contractor shall coordinate all planned shutdowns with City to ensure we meet the notice requirements for both residential and commercial customers. 6. The Contractor shall post “No Parking Signs” at least 72 hours in advance of the intended work date. The Contractor will list all required information on the signs such as their contact information. 7. The Contractor is representing the City and shall perform their work in a safe and professional manner. The Contractor shall avoid disputes with property owners/occupants, the general public, or others. Where practical, the Contractor shall perform the prescribed work to accommodate reasonable requests of the property owners/occupants. For any objections made by property owners/occupants, the City will assist the Contractor in developing a work plan before the work proceeds. 8. The Contractor will not clear vegetation without prior approval from the City and shall coordinate any vegetation issues with the City. E. MATERIALS 1. Unless otherwise specified, all main and essential material for the work will be furnished by the City. 2. The Contractor shall assume the risk of loss, theft, or damage to all materials delivered and accepted until such materials have been completely installed and accepted by the City. The Contractor's liability shall include damage to or loss of material in their possession, including material being loaded, unloaded, or handled. 3. The Contractor shall arrange for material pick up from the City's Municipal Service Center (MSC), located at 3201 East Bayshore Road, with a minimum of three (3) days advanced notice. It is the Contractor’s responsibility to ensure they receive all the necessary material required for completing the work. The Contractor shall notify the City of any needed changes to the material prior to proceeding with the prescribed work. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 115 IFB 185980 Page 4 of 9 4. The Contractor is required to account for all material issued by the City. All unused material shall be returned within five (5) days of the contract end date. The Contractor shall be required to reimburse the City for all unaccounted material previously accepted and not installed. F. CODES, STANDARDS, ORDERS, & RULES The following Codes, Standards, Orders, and Rules are generally applicable for all construction under this contract. In case of a conflict between any standards of construction, the stricter standards shall prevail. 1. Rules for overhead electric line construction, General Order No. 95 State of California (CPUC). 2. Rules for underground electric line construction, General Order No. 128 State of California (CPUC). 3. The City of Palo Alto Public Works Standard Drawings & Specifications, which could be found @ https://www.cityofpaloalto.org/Departments/Public- Works/Engineering-Services/Public-Works-Standard-Drawings-and-Specifications 4. Electric Service Requirements, which could be found @ https://www.cityofpaloalto.org/files/assets/public/utilities/utilities- engineering/electrical/electric-service-requirements-2016.pdf 5. City of Palo Alto noise ordinance and demolition, construction and alteration activities, which could be found @ https://www.cityofpaloalto.org/files/assets/public/public-works/engineering- services/webpages/forms-and-permits/other-guidelines/cpa-noise-ordinance- 030507.pdf 6. City of Palo Alto truck route map, Chapter 1048, Palo Alto Municipal Code and Traffic Control Requirements, which could be found @ https://www.cityofpaloalto.org/files/assets/public/public-works/engineering- services/webpages/forms-and-permits/other-guidelines/truckroutemap.pdf 7. CAL/OSHA Title 8 Electrical Safety Rules. G. PERMIT(S) 1. All rights-of-way, easements, and permits necessary for installations on private property, properties of other governmental agencies, or railroad crossings will be secured by the City. 2. The Contractor’s crew may be required to complete training for work on railroad rights of way when necessary. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 116 IFB 185980 Page 5 of 9 SECTION II GENERAL SAFETY REQUIREMENTS A. SAFETY 1. All work shall be conducted in a safe manner and in strict accordance with the rules of the Division of Occupational Safety and Health (DOSH), better known as Cal/OSHA. The Contractor shall take all reasonable precautions necessary to protect all workers and other persons who may be in or about the construction area from personal injury and to prevent damage to the property of the City or others. The Contractor shall submit their safety program. 2. The Contractor and City will schedule “tail-board” meetings to assign work, review general rules and best practices regarding safety, arranging shutdowns, clearances, typical installations, equipment, and compliance. 3. Workers in the public rights-of-way shall wear high visibility safety vests, hard hats, and all required Personal Protective Equipment (PPE). 4. If any portion of the work is being done in an unsafe manner, the work will be stopped until corrective actions have taken place to make it safe. 5. The Contractor shall notify the City in writing of all accidents arising out of work being performed and shall submit a detailed report for each accident within 24 hours of the incident. 6. In any emergency threatening life, personal injury, or property, the Contractor shall, at its discretion and without instruction from City, immediately act to prevent such threat to loss of life, personal injury, or property. 7. The Contractor shall make arrangements for first aid and for the transportation of its own injured personnel. The Contractor shall comply with all reporting regulations for all injuries. The Contractor shall notify the City of any injuries in writing/email within 24 hours. 8. The Contractor shall conduct operations and maintain work site to ensure the least possible obstruction and inconvenience to traffic, pedestrians, cyclists, and adjacent property owners. 9. The Contractor shall remove and cleanup all debris and excess material from the job site at the end of each work day. After work has been completed, the Contractor shall restore planting areas and other areas abutting the worksite to prior conditions. 10. The Contractor shall furnish and maintain barriers, lights, and signs needed to warn the public adequately of the worksite and any dangerous conditions to be encountered as a result of the work in progress. 11. When necessary, the Contractor is required to submit a Traffic Control Plan and get approval before starting any work. 12. The Contractor shall not provide backup power by any means to the City’s customers. If the customer has a complaint about a planned shutdown, the Contractor will notify the City to handle the matter directly with the customer. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 117 IFB 185980 Page 6 of 9 SECTION III INSTALLATION AND REMOVAL OF UNDERGROUND CABLE AND EQUIPMENT A. EQUIPMENT - PADMOUNT AND SUBMERSIBLE TRANSFORMERS, CABLE, CONNECTORS, SWITCHES, LOAD BREAK CABINETS, AND APPURTENANCES 1. All equipment shall be installed per manufacturer’s directions and in conformance with good industry practice. 2. The Contractor is expected to ensure the nameplates on all transformers to conform to circuit requirements before energizing and connecting any services to it. 3. The Contractor shall use great caution in the removal and transportation of transformers, placing the transformers in provided oil containment bags as necessary, and returning them to the assigned area. 4. The Contractor shall keep accurate records of all equipment being installed or removed. The data shall include all pertinent data, such as address, location number, size, City number, manufacturer, and serial number. 5. The Contractor shall test and record secondary voltage before connecting customer load. Phase rotation shall be checked, verified, and recorded where applicable. The Contractor will notify the City of any abnormal voltage measurements. 6. All transformers, switches, and miscellaneous equipment or devices shall be returned to MSC at designated locations and segregated by type. B. PRIMARY CABLE 1. The types of primary cable to be installed are both 15kV strand filled or 25kV non- strand filled ethylene propylene rubber insulated cable with jacketed concentric neutral. a. Standard cable length per reel are: 15kV, 1 conductor, 1/0 AWG Compressed Aluminum Strand Filled conductor, 220 mil EPR insulation, with 1/3 neutral copper concentric conductor 4000 ft. 25kV, 1 conductor, 600 kcmil Compact Aluminum NON-Strand Filled conductor, 260 mil EPR insulation, with 1/6 neutral copper concentric conductor 2000 ft. Cable, 15kV, 1 conductor, 750 kcmil Compressed Aluminum Strand Filled conductor, 220 mil EPR insulation, with 1/3 neutral concentric copper 2000 ft. 2. Largest reel size for primary cable has the following dimensions: Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 118 IFB 185980 Page 7 of 9 a. Maximum Flange Diameter - 78" b. Maximum Overall Width - 54" c. Minimum Drum Diameter - 36" C. SPLICES AND TERMINATIONS 1. All materials shall be installed per manufacturer’s directions and in conformance with good industry practice. 2. Splices in manholes shall be located midway between cable racks on walls of manholes, and supported with cable arms at approximately the same elevation as the enclosing duct. 3. Load-break terminations for indoor and outdoor use: Elbow-type unit with test point and 200-A load make/break and continuous-current rating. 4. Dead-break terminations for indoor and outdoor use: Elbow-type unit with test point and 600-A continuous-current rating. D. PED CONNECTORS 1. The Utilco PED connectors shall be installed per manufacturer’s directions and in conformance with good industry practice. 2. The Utilco PED connectors will be provided with provisions for 350MCM or 750MCM maximum size cable and to connect 3 to 6 cables per connector. 3. The specific Utilco PED connectors used in splice boxes will depend on the number and size of cables terminating in the box. Contractor shall select and use the appropriate connector with provisions to have unused positions available for all planned service connections. E. HANDLING REELS AND EQUIPMENT 1. The Contractor shall inspect each reel upon receipt to determine whether or not visible damage has occurred during transit and/or storage. 2. Loading and Unloading a. Reels and equipment shall be handled in such a manner as to prevent smashing, nicking, cutting or other damage to the cable. When unloading reels from trucks, reels shall not be dropped to the ground or allowed to roll freely down ramps. Cranes or other equipment of adequate capacity shall be utilized and care shall be taken to avoid damage to the equipment, cable, or reels. 3. Final Inspection a. After removing lagging or other protective coverings from reels, Contractor shall examine outside layer of each reel to ensure that the cable is undamaged and that no nails, staples, or other sharp objects, which would damage the cable during unreeling protrude on the inside of the reel heads. 4. The Contractor shall return all reels to the MSC upon completion of the work. F. CABLE INSTALLATION 1. All cable installation shall be installed per manufacturer’s directions and in conformance with good industry practice. A sufficient number of trained personnel and equipment shall be assigned to ensure the proper care and installation of the cable. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 119 IFB 185980 Page 8 of 9 2. Cable must be installed by accepted construction practices and the procedure outlined in City of Palo Alto Cable pulling Procedure – Operating Bulletin Number – UG/OH Construction P&P # 0407-1 shall be used as a guide during cable installation. 3. The sizes of the cable to be installed will be specified on the drawing(s). 4. Sufficient length of cable shall be left in manholes (20ft.) and secondary splice boxes for training and connection. 5. Cable shall be installed in conduit above grade and duct bank below grade. All cable of a feeder shall be pulled simultaneously. 6. Cable shall be pulled into ducts with equipment designed for this purpose, including power-driven winches, cable-feeding flexible tube guides, cable grips, pulling eyes, and lubricants. 7. Cable reels shall be set up at the side of the manhole opening and above the duct or hatch level, allowing cable to enter through the opening without reverse bending. Flexible tube guides shall be installed through the opening in a manner that will prevent cable from rubbing on the edges of any structural member. 8. Cable shall be pulled directly into the duct from the coil or reel on, which they are received. Cable shall not be pulled off and laid on the ground prior to installation. 9. Cable shall be unreeled from the top of the reel. Pay-out shall be carefully controlled. Cable to be pulled shall be attached through a swivel to the main pulling wire by means of a suitable cable grip and pulling eye. Woven-wire cable grips shall be used to grip the cable end when pulling small cable and short straight lengths of heavier cable. 10. Pulling eyes shall be attached to the cable conductors to prevent damage to the cable structure. 11. Cable shall be liberally coated with a City furnished lubricant as they enter the tube guide or duct. Rollers, sheaves, or tube guides around, which the cable is pulled from, shall conform to the minimum bending radius of the cable. 12. Cable shall be pulled into ducts at a reasonable speed. Cable pulling using a vehicle shall not be permitted. Pulling operations shall be stopped immediately at any indication of binding or obstruction and shall not be resumed until the potential for damage to the cable is corrected. Sufficient slack shall be provided for free movement of cable due to expansion or contraction. 13. Splices in manholes shall be firmly supported on cable racks. No splices shall be pulled in ducts. Cable ends shall overlap at the ends of a section to provide sufficient undamaged cable for splicing. 14. Cable cut in the field shall have the cut ends immediately sealed to prevent entrance of moisture. Cable ends shall be moisture proofed at all times until terminations are installed. Cable shall not be pulled with the ends open. Cable ends shall not be allowed to rest on the floor. 15. Whenever possible, the pullout manhole should be rigged to facilitate pulling into the manhole adequate amount (20ft minimum) of cable for splicing and racking without the necessity of taking hitches on the cable sheath or jacket. 16. Any and all sections of cable that are damaged by the application of grips shall be discarded. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 120 IFB 185980 Page 9 of 9 17. The Contractor shall pay close attention to the cable footage markers and plan pulls to minimize the amount of short unusable cable lengths left on the reels. 18. Cable location tags must be installed on cable outside of each duct indicating cable run destination. In each manhole and pull box, install permanent tags on each circuit's cable to clearly designate the circuit identification and voltage. Arrange tags such that they can be read without moving cable. 19. Cable phasing marks (colored tapes) must be installed on both ends of each cable identifying phases. Item 4 Attachment A - VIP Powerline Corp. Contract C23185980 Packet Pg. 121 Name of Company: Name of Company: Name of Company: BID ITEM ESTIMATED QTY. UNIT DESCRIPTION UNIT RATE TOTAL PRICE BID ITEM ESTIMATED QTY. UNIT DESCRIPTION UNIT RATE TOTAL PRICE BID ITEM ESTIMATED QTY. UNIT DESCRIPTION UNIT RATE TOTAL PRICE 1 2000 HR Foreman/ Crew Leader (12 kV rubber glove certification required) $ 257.00 $ 514,000.00 1 2000 HR Foreman/ Crew Leader (12 kV rubber glove certification required) $ 227.00 $ 454,000.00 1 2000 HR Foreman/ Crew Leader (12 kV rubber glove certification required) $ 260.63 $ 521,260.00 2 4000 HR Line Person/ Journeyman (12 kV rubber glove certification required) $ 223.00 $ 892,000.00 2 4000 HR Line Person/ Journeyman (12 kV rubber glove certification required) $ 213.50 $ 854,000.00 2 4000 HR Line Person/ Journeyman (12 kV rubber glove certification required) $ 225.23 $ 900,920.00 3 2000 HR Line Person/Journeyman Apprentice (12 kV rubber glove certification required) $ 197.00 $ 394,000.00 3 2000 HR Line Person/Journeyman Apprentice (12 kV rubber glove certification required) $ 186.50 $ 373,000.00 3 2000 HR Line Person/Journeyman Apprentice (12 kV rubber glove certification required) $ 198.52 $ 397,040.00 4 2000 HR Truck Driver/ Ground Person (12 kV rubber glove certification required) $ 157.00 $ 314,000.00 4 2000 HR Truck Driver/ Ground Person (12 kV rubber glove certification required) $ 158.50 $ 317,000.00 4 2000 HR Truck Driver/ Ground Person (12 kV rubber glove certification required) $ 158.56 $ 317,120.00 5 1000 HR Overtime Foreman/ Crew Leader (12 kV rubber glove certification required) $ 293.00 $ 293,000.00 5 1000 HR Overtime Foreman/ Crew Leader (12 kV rubber glove certification required) $ 305.00 $ 305,000.00 5 1000 HR Overtime Foreman/ Crew Leader (12 kV rubber glove certification required) $ 292.90 $ 292,900.00 6 1000 HR Overtime Line Person/ Journeyman (12 kV rubber glove certification $ 247.00 $ 247,000.00 6 1000 HR Overtime Line Person/ Journeyman (12 kV rubber glove certification $ 285.00 $ 285,000.00 6 1000 HR Overtime Line Person/ Journeyman (12 kV rubber glove certification $ 248.01 $ 248,010.00 7 1000 HR Overtime Line Person/ Journeyman Apprentice (12 kV rubber glove certification required) $ 214.00 $ 214,000.00 7 1000 HR Overtime Line Person/ Journeyman Apprentice (12 kV rubber glove certification required) $ 243.00 $ 243,000.00 7 1000 HR Overtime Line Person/ Journeyman Apprentice (12 kV rubber glove certification required) $ 214.20 $ 214,200.00 8 1000 HR Overtime Truck Driver/ Ground Person (12 kV rubber glove certification required) $ 162.00 $ 162,000.00 8 1000 HR Overtime Truck Driver/ Ground Person (12 kV rubber glove certification required) $ 200.50 $ 200,500.00 8 1000 HR Overtime Truck Driver/ Ground Person (12 kV rubber glove certification required) $ 162.39 $ 162,390.00 9 2000 HR Line Truck Capable of setting and removing poles up to 70’ $ 96.00 $ 192,000.00 9 2000 HR Line Truck Capable of setting and removing poles up to 70’ $ 60.00 $ 120,000.00 9 2000 HR Line Truck Capable of setting and removing poles up to 70’ $ 102.54 $ 205,080.00 10 2000 HR Line Truck Capable of setting and removing poles up to 80’ $ 45.00 $ 90,000.00 10 2000 HR Line Truck Capable of setting and removing poles up to 80’ $ 75.00 $ 150,000.00 10 2000 HR Line Truck Capable of setting and removing poles up to 80’ $ 102.54 $ 205,080.00 11 2000 HR Material Handler/ Bucket Truck capable of facilitating live line work at 55’ $ 96.00 $ 192,000.00 11 2000 HR Material Handler/ Bucket Truck capable of facilitating live line work at 55’ $ 50.00 $ 100,000.00 11 2000 HR Material Handler/ Bucket Truck capable of facilitating live line work at 55’ $ 67.29 $ 134,580.00 12 2000 HR Material Handler/ Bucket Truck capable of facilitating live line work at 70’ $ 50.00 $ 100,000.00 12 2000 HR Material Handler/ Bucket Truck capable of facilitating live line work at 70’ $ 110.00 $ 220,000.00 12 2000 HR Material Handler/ Bucket Truck capable of facilitating live line work at 70’ $ 102.54 $ 205,080.00 13 2000 HR Cargo Trailer capable of hauling material including poles up to 80’ $ 10.00 $ 20,000.00 13 2000 HR Cargo Trailer capable of hauling material including poles up to 80’ $ 7.00 $ 14,000.00 13 2000 HR Cargo Trailer capable of hauling material including poles up to 80’ $ 20.29 $ 40,580.00 14 2000 HR Bucket Truck capable of working on electric secondary level (35’) $ 35.00 $ 70,000.00 14 2000 HR Bucket Truck capable of working on electric secondary level (35’) $ 35.00 $ 70,000.00 14 2000 HR Bucket Truck capable of working on electric secondary level (35’) $ 51.27 $ 102,540.00 15 2000 HR 18k LB Boom Truck (e.g. Small Crane) $ 35.00 $ 70,000.00 15 2000 HR 18k LB Boom Truck (e.g. Small Crane) $ 65.00 $ 130,000.00 15 2000 HR 18k LB Boom Truck (e.g. Small Crane) $ 48.00 $ 96,000.00 16 2000 HR Single Reel Dolly Trailer $ 10.00 $ 20,000.00 16 2000 HR Single Reel Dolly Trailer $ 6.75 $ 13,500.00 16 2000 HR Single Reel Dolly Trailer $ 9.00 $ 18,000.00 17 2000 HR 3 Reel Dolly/Trailer or Truck $ 10.00 $ 20,000.00 17 2000 HR 3 Reel Dolly/Trailer or Truck $ 13.75 $ 27,500.00 17 2000 HR 3 Reel Dolly/Trailer or Truck $ 44.25 $ 88,500.00 18 2000 HR 40k LB Take up Dolly (e.g. 4k Hogg Davis Cable Puller) $ 35.00 $ 70,000.00 18 2000 HR 40k LB Take up Dolly (e.g. 4k Hogg Davis Cable Puller) $ 47.00 $ 94,000.00 18 2000 HR 40k LB Take up Dolly (e.g. 4k Hogg Davis Cable Puller) $ 62.00 $ 124,000.00 19 2000 HR Underground Splicing Van $ 35.00 $ 70,000.00 19 2000 HR Underground Splicing Van $ 28.00 $ 56,000.00 19 2000 HR Underground Splicing Van $ 77.03 $ 154,060.00 20 1000 HR Traffic Control Services $ 247.00 $ 247,000.00 20 1000 HR Traffic Control Services $ 271.88 $ 271,880.00 20 1000 HR Traffic Control Services $ 198.23 $ 198,230.00 Section A ‐ Base Bid Total (items 001 through 020, with all applicable taxes included)4,191,000.00$ Section A ‐ Base Bid Total (items 001 through 020, with all applicable taxes included)4,298,380.00$ Section A ‐ Base Bid Total (items 001 through 020, with all applicable taxes included)4,625,570.00$ $4,354,449.00 $4,427,331.40 $4,829,095.08 $4,515,563.61 $4,560,151.34 $5,031,917.07 $4,673,608.34 $4,696,955.88 $5,192,938.42 $4,827,837.41 $4,837,864.56 $5,359,112.45 Year Two (4.4% increase) Year Three (4.2% increase) Year Four (3.2% increase) Year Five (3.2% increase) Annual incremental percentage increases in bid prices shall be listed for each additional year of the contract. BID FORM City Council/City Manager VIP Powerline Palo Alto, California City of Palo Alto Annual incremental percentage increases in bid prices shall be listed for each additional year of the contract. Year Two (3.9% increase) Year Three (3.7% increase) Year Four (3.5% increase) Year Five (3.3% increase) BID FORM City Council/City Manager Ferreira Power West, LLC City of Palo Alto Palo Alto, California Annual incremental percentage increases in bid prices shall be listed for each additional year of the contract. Year Two (3% increase) Year Three (3% increase) Year Four (3% increase) Year Five (3% increase) BID FORM City Council/City Manager Hot Line Construction Inc. City of Palo Alto Palo Alto, California Attachment B ‐ Bid Summary IFB 185980 Page 1 of 1