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Resolution No. 79311 2 3 4 5 6 7 MIE X 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ave 27 RESOLUTION NO. 7931 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND AUTHORIZING THE EXECUTION OF AN AGREEMENT FOR PROFESSIONAL CONSULTING SERVICES BY AND BETWEEN THE CITY OF VERNON AND NAVIGANT CONSULTING, INC. FOR THE MALBURG GENERATING STATION PROJECT WHEREAS, the City is in the process of financing the development of a 134 MW Combined Power Cycle Power Plant officially named the Malburg Generating Station (the "Project") for the purpose of installing additional generating capacity that will yield an efficient, cost-effective, and reliable source of electric generation to the City; and WHEREAS, staff sought proposals from qualified consultants to prepare an Independent Engineers Report (the "Report") for submission to the financial community, which includes rating agencies and bond insurance companies, to assist in the bond financing for the Project; and WHEREAS, the Utilities Department advises that Navigant Consulting, Inc. ("Navigant") is the most qualified engineering consultant meeting the Department's specifications and requirements; and WHEREAS, on March 11, 2002, the Finance Committee recommended that the City Council approve the recommendation of Bruce V. Malkenhorst, the Director of Finance, dated March 7, 2002, that the services of Navigant be retained to provide engineering services for the preparation of the Report and that an agreement with Navigant be approved and executed; and 28 11 WHEREAS, the City Council of the City of Vernon has 1 determined that, pursuant to the provisions of Subsection (a) of 2 Section 2.27 of the Vernon City Code, it is in the public interest and 3 necessity to enter into an agreement with Navigant for the preparation 4 of the Report to assist in the bond financing for the Project. 5 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE 6 CITY OF VERNON AS FOLLOWS: 7 SECTION 1: The City Council of the City of Vernon hereby 8 finds and determines that the recitals contained hereinabove are true 9 and correct. 10 SECTION 2: The City Council of the City of Vernon hereby 11 approves the Professional Services Agreement for the Malburg 12 Generating Project with Navigant, a copy of which is attached hereto 13 as Exhibit "A" and made a part hereof. 14 SECTION 3: The City Council of the City of Vernon hereby 15 authorizes the Mayor and the City Clerk to execute said Agreement for, 16 and on behalf of, the City of Vernon. 17 SECTION 4: The City Council of the City of Vernon hereby 18 directs the City Clerk, or his designee, to send one fully executed 19 Agreement to: 20 Navigant Consulting, Inc. Attn. Paul Maxwell 21 3100 S. Zinfandel Drive, Suite 600 22 Rancho Cordova, CA 95670 23 24 25 26 27 28 2 _ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SECTION 5: The City Clerk of the City of Vernon shall certify to the passage of this resolution, and thereupon and thereafter the same shall be in full force and effect. APPROVED AND ADOPTED this 3rd day of April, 2002. ATTEST: ZL--, z x�� xe��� BRUCE V. MALKENHORST, City Clerk LEONIS C. MALBtJRG, Mayor - 3 - 1'' 21 3, 4' 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I, BRUCE V. MALKENHORST, City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 7931, was duly adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Wednesday, April 3, 2002, and thereafter was duly signed by the Mayor of the City of Vernon. (SEAL) 1r-- 'e'll BRUCE V. MALKENHORST, City Clerk - 4 - EXHIBIT &I- APR-03-2002 WED 12:10 PM OLIVO & PLASCENCIA FAX NO. 562 869 1883 P. 02 001/2002iED 11, 58 FAX 916 852 1073 NAVICANT CONSULTING'INC 1 002htl , " PROFESSIONAL SERVICES AGREEMENT FOR THE IVIALBURG GENERATING PROJECT BETWEEN THE CITY OF VERNON and NAVIGANT CONSULTING, INC. This PROFESSIONAL SMVICE-S AGR13E 'NI' ("Agreement") is dated April 2, 2002 by and between Navigant Consulting, Inc., ("Consultant"), created pursuatrt to the laws of the State of Delaware with ofiicos at 3100 South Zinfandel Drive, Suite 000, Rancho Cordova, California 9S670, and the City of Vernon, California ("City"), with offices at 4305 Santa Fe Avenue, Vernon, California 90058. City and Consultant are also referred to as Parties. WHEREAS, the City is developing the Msaiburg Generating Station ("Fmjece,), a nominal 130 megawatt power plant to be located at a site within the City limits; and W14FRF,AS, the City needs Consulting services to assist in the financing of the Project; and WHEREAS, Navigant Consulting, Inc. has many years of experience in financing of power plants in the electric industry; NOW, THEREPOkE, in consideration of the promises herein and for other good and valuable consideration, the parties agree as follows: 1. Services to be Provided: the City engages the Consultant to perform consulting and related scrviees (the; "Services") as described in Exhibit A (the "Scope of Services" or `°Scope) for use in financing the Project. Detailed procedures and practices followed wWlo performing the Services, including acceptance of the Sezvicrs, shall be as set forth in the Scope of Services or a work order issued thereunder. Consultant will perform the services at the direction of and on behalf of the City. 2- Ilmdepeadent Coatractor; (a) Consultant is an irtdcpendent contractor and is not an employee of the City. Services performed by the Consultant under this agreement are solely for the benefit of the City unless specified otherwise. (b) Consultant is not required to perform the services during; a fixed hourly or daily time, and if the survicts axo pc4ormed at the City's premises, then Consultant's time spent at the prea rises is to be at the di3crctiort of Comultant; subject to City's normal business hours and security requirernewts. ) xcept as provided in the Scope, the City will not be required to furnish or APR-03-2002 WED 12:10 PM OLIVO & PLASCENCIA FAX NO. 562 869 1883 P. 03 04/03/2002' ED 11:59 FAX M 852 1073 NAVIGANT CONSULTING' INC provide any training to enable the Consultant to perform the Services. The order or sequence in which the Services are: to bo performed shall be agreed'upon by the Consultant and the City. Except to the extent that Consultant's work must be performed on or with City's computers or existing software, all materials used in providing the Services shall bo providers by the Consultant. 3. Siar sad of Care: The Consultant will pzform Services under this Agreement with the degree of skill and diligence normally practiced within the industry by consultants performing the same or similar services. 4. Changes/Amendments, This Agreement may not be changed except by written amendment signed by both parties. Services not expressly set forth in this Agreement are excluded. Consultant shall promptly notify the City if changes to the Scope of Services affect the schedule, level of effort or payment to C:onsalt int. If Consultant determines that changes should be made to Mbibit A or Bg-jf*f the Consultant will notify the City of such proposed changes in writing, including the affcets on the schedule., level of effort and payment for such changes. Thereafter, Consultant and the City shall agree in writing on which changes, if any, shall be included in an amendment to eitheT F? ft1bjt A or 13xhibit B. If Consultant is delayed in performing the Services by any act of wax, force rnajcure or other circumstance beyond its control, then Consultant shall not be considered to be in default of the performance of its obligations under this Agreement. S. Payment.- The City agrees to pay Consultant for services in accordance with the terms and sehedula contahied in Exhibit B. The City shall pay invoiced amounts not more than thirty (30) days after delivery of an invoice. G. Taxes: Any and all taxes imposed on Consultant's income, imposed or assessed by reason of this aryzentent or its performance shall by paid by Consultant. Consultant shall be responsible for any taxes or penalties assessed by reason of any claims that Consultant is an employee of the City, and the City and Consultant specifically agree that Consultant is not an employee or agent of the City, 7. Indemnity by City: To the extent peroj"ed by Iaw, the City shall indemnify .and hold harmless Consultant, its directors, officers, agents and employ= from and against any and all liability, claims, demands, damages. losses and expenses, including, but not limited to, attorney's fees, for which the City is determined to be legally liable resulting from negligent acts, errors or omissions by the City, its directors, officers, partners, agents and employees.) lability. claims, demands, datrtagoa, losses or expenses resulting from the negligent acts, errors or omissions, whether active or passive, by Consultant, its directors, officers, agents, employees or by others am excluded from the City's obligations pursuant to this paragraph. Any payments required to be made by the City pursuant to this paragraph shall be payable solely from the Electric Utility Fund and there shall be no recourse against the City or its general funds or other assets, or against any of the City's officials or employees, for any liabilities hereunder, other than from any moneys available for such payment from the Electric Utility Fund. 8, fRrdet bity by Consultant: Consultant shall indemnify and hold harmlm the City, the Trustee. the ilndetwriter and their directors, officers, partners, agents, and employees from and against any and all liability, claims, demands, damages, losses, and expenses, including but not limited to attorneys fees, for which Consultant is determined to be legally liable resulting from negligent acts, errors, or omissions by Consultant, its directors, officers, agents, and employees in APR-03-2002' WED 12:11 PM OLIVO & PLASCENCIA FAX NO. 562 869 1883 P. 04 04/U3'/2002' 0 11;59 FA 916 852 1073 NAVIGANT CONSULTINGINC Nil,011 pciftYrnmance of services required by this Agreement. Liability, claims, demands, damages, tosses, or expenses resulting from the negligent acts, errors or omissions, whether active or passive, by the City, the Trustee and their directors, officers, partners, agents, employees, or by others are excluded from Consultant's indemnification pursuant to this paragraph. Consultant's obligations to indemnify and hold the City and the Trustee harmless shall be expressly limited to the proceeds of its applicable insurance coverage. IN NO EVENT ,AND UNDER NO CIRCUMSTANCES SHALL CONSULTANT BE LIABLE TO THE CITY FOR ANY INTEREST, LOSS Or ANTICIPATED RMNUES, EARNINQS, PROFITS, INCRESED EXPENSES OF OPERATIONS, LOSS BY REASON OF SHM I)OWN OR NON -OPERATIONS DUE TO LATE CONPLETION OR FOR ANY CONSEQUENTIAL, PUNX'IC'IVE, INDIRECT OR SPECIAL DAMAGES. 9. Insurance: Consultant shall, at his own cost and expense, procure and maintain during the entire term of this Agreement, public liability insurance and property damage insurance (issued by an insttr:ance company admitted in the State of California to issue such insurance) naming the City as an additional insured against loss or liability caused by or connected with Consultant's use of an automobile in the performance of this Agreement for not less than: (a) $100,000 for injury to or death to one person, or of not less thms $300,000 for injury to or death to two or moo: persons as a result of any one accident or incident; And (b) $50,000 For datn.age to or destruction of ally Property of the City or others. The insurance policy shall contain the following claims: 1t is agreed that any insurance maintained by the City shall apply is excess of and not contribute with insurance provided by this policy." "The City, its officers and employees arc added as additional insureds with respect to the activities done pursuant to this ag7reernent on behalf of the named insured on behalf of the named insured," This insurance shall not be cancelled, limited in scope or coverage or non -renew until after thirty (30) days written notice has been given to the City, 10. Terms and Termination: The term of this A.grccment shall be one year from the date hereof, at which time, it shall either terminate or be extended by written agreement between the City and the Consultant, unlcsR soonier terminated in accordance with this section. Either parry may terminate this Agmta rent upon thirty (30) days written notice to the other party. The City shall pay Consultant for all services rendered to the date of termination plus reasonable expenses for winding down the services. 11. Use and Ownersldp of Work Products:. (a) Work Product. As used in this agreement, the term "Work Product" ratans any and all materials fixed in a tangible medium of expressions, including software coder, written or procedures, written docuMMS, ;abstracts and summaries thereof, or any portions or components of the foregoing muted, written, developed, conceived, petfected or designed in connections with the Services provided under this Agreement_ APR-03-2002 WED 12:11 PIS OLIVO & PLASCENCIA FAX NO, 562 869 1883 01/03/200 WTI 12:00 FAX 916 852 1073 NAVIGANT C&SULT]k INC P. 05 �ao5io11 • . (b) The City shall retain all right, title and interest in and to the 'Work product, including all intellectual property rights therein and any and all enhancements, improvements and derivative works thereof, and Consultant obtains no rights therein. 12. Information Provided by Others: City shall provide to the Consultant in a timely manner any information indicated by Consultant as necdcd to perform the services huxuandcr. Consultant may rely on the accuracy of iuforination provided by the City and its representatives. 13. Confidential Wormation: (a) AMOS to Confidential Information. The City may provide Consultant with, or allow Consultant access to, certain infomtation not available to the public concerning, but not limited to the City, or businesses located in the City. Tha information may include, but is not limited to, company information, tastes, sales, value of assets, utility usage, the policy, or other such information. All such information shall be known as "Confidential Tnformation" and may not be used to ciroumvent the respom1bility of either party to this Agreement. (b) No Discloswe. Except as expressly permitted, Consultant shall not disclose, permit the disclosure of, r0case, disseminate, or transfer, whether orally or by any other means, any part of such Confidential Information to any other person or entity, whether corporate, governmental, or individual, without the express prior written consent of an authorized representative of the City. Consultant shalt return any written Confidential Information, and all copies m:adc of such items, to the City upon the City's written request, but in any event not later than the date that Consultant has pt rformed all services to be performed pursuant to this Agreement. Consultant hereby agrees that Consultant may use such Confidential Infonnation and any documents provided only m authorized by the City, Consultant shall take reasonable meatstn-es to avoid any disclosure of any such Confidential Information to any unauthorized lxmrson. (c) Court Ordered Disclosure. Consultant steal I immediately notify the City of any court order or subpoena, requiting disclosum of Confidential Information, and shall cooperate with legal counsel in the appeal or challenge of any such order or subpoena. Recipient may only disclose Con£id(mdal Information mquirdd to be disclosed pursuant to court order or subpoena after legal counsel has exhausted any lawful and timely approval or challenge. (d) Remedies_ In additioh to arty other remedies that it tray have at law or in equity, the City shall be entitled to a temporary and permanent injunction by a court of eompemn jurisdiction against any breach or threatened breach of the Confidential Information provisions of this Agi=ment. Consultant acknowledges that in case of such broach or threatened breach of said provisions, the City would have no adequate remedy at law. 4 APR-03-2002.WED 12:11 PH OLIVO & PLASCENCIA FAX NO. 562 869 1883 P. 06 01/03/2002' 11M 12:00 FAI 816 852 1073 NAVIGANT CONSULTING INC f 406/011 14. Dispute Resolution: Consultant and the City shall attempt to resolve conflict., or dispuw under this Agreement in a fair and reasonable manner and agree that if resolution cannot be made to attempt to mediate the conflict by a professional mcdiator. 15. Miscellaneous: (a) This Agreement is Binding upon and will inure to the benGGt of the City and Consultant and their respMive successors .tad assigns. Neither party may assign its rights or obligations hereunder widtout the prior written consent of the other party; provided, however, that either party may assign this Agreement to a successor of the party's entire business relating to this Agreement. (b) If any provision of this Agreement is invalid or unenforceable, the remainder of this Agreemmt shall continue in full force and effect and the provistion declared invalid or unenforceable shall continue in full forge shall continue as to other circumstances in accordance with, the laws of the State of California. (e) This Agreement shall be governed by, and construed in accordance with, the laws of the State of California. (d) In any action to enforce or interpret this Agreement, the prevailing patty shall be entitled to recover, as part of its jadgment, reasonable attorneys' fees and costs from the other party. IN WTTN&gS WHEREOF, the parties have signed this Agreement the date lust written above. CITY O F VERNON Title+: NAVIGANT CONSULTING, INC. By -� Title: _-r�vta t7n�w►��) r V�rL. APR-03-2002,WED 12:12 PM OLIVO & PLASCENCIA FAX NO. 562 869 1883 P. 07 04/03/2002 WED 12:00 FAX 916 852 1073 NAVIGANT CONSULTING INC �007l411 EXHMff A. SCOPE OF SERVICES 6 APR-03-2002.WED 12:12 HI OLIVO & PLASCENCIA FAX NO. 562 869 1883 04/03/2002 WED 12:00 FAX 916 852 1073 NAVIGANT COSULTING INC { 008 01I SCOPE OF WORK Navigant Consulting, Inc. (NCI) is pleased to present this proposed work scope to the City of Vernon Utilities Department (Vernost) for preparing an Irulepmdent Consultant's Report in support of the financing of the Malburg Generating Station (MGS). Task 1-- Project Uata Acquisition Preparation of the Independent Consultant's. Report will require timely receipt of specific, detailed information about the MGS and its proposed hnvuing. Much of this, information is likely to be readily available in the Application for Certification (AFC) for the MGS. Other project information needed includes the following: Project Agrmnent(s) - covering topics such a9 engineering/procurement/construction, fuel supply, major equipment supply, and O & M services, if applicable. Project Pei-mits — AFC, air emissions, water supply and discharge permits, mitigation agreements, etc. Task 2 — Construction Cost and Schedule Review The cost of construction of the MGS will be reviewed with two factors in mind. First, an assessn itt of the reasonableness of the costs will be undertaken where the construction cost of the MGS will be benchmarked against the costa of similar projects with comparable markets, or if this information is not available, with published industry data and NCI's independent projections and forecasts. This information will be presented on a $/kw basis for the major cost categories. Task 3 Technology Assessment NCI will review the plant design and technology proposed for the MGS in order to determine if state of the art equipment and design pararneters are being employed. Based upon this review, NCI will be aide to determine if the availability and reliability levels forecast by 2-a APR-03-2002.WED 12:12 PM OLIVO & PLASCENCIA FAX NO. 562 869 1883 P, 09 04/03/2002 WED 12:01 FAX 916 852 1073 NAVIGANT CO3SULTINC INC 1009 011 w WORK SCOPE Vernon ore reasonable, as well as if the projected production costs are reasonable when compared with similar generating units in the West. Task 4— Operating and Fuel Assessment By reviewing Vernon's plan for the operation and maintenance of the MGS, NCI will deterndne if the proposed staffing will be able to provide the technical expertise, experience, training, and capabilities to perform required O & M activities, including fuel (natural gas) procurement, consistent with industry standards. In addition, any Construction, Maintenance and Operation Agreements will be reviewed in order to assess provisions for other O&M work associated with the facility over the term of the fhuncing. Task 5 -- Natural Gas Market Assessment Forecasts of natural gas purchase prices will be an important elenimt for the development of financial pro -forma operating projections for the MGS. It is NCI's experience that the Independent Consultant will be required by investors and rating agencies to provide conchx:duns or opinions as to the reasonableness of those forecasts in support of the Independent Consultants Report. Under this task, NCI fuel specialists will review natural gas price forecasts prepared by Vernon or their fuel consultant, including information available as to the basis for the estimates and supporting assumptions, and provide an assessment of the reasonableness of the forecasts in its Independent Consultant's Report. Task 6 Review of Appropriate Permits and Licenses NCI will review status of the permitting for the MGS to assess if all necessary permits are In order and regulatory reviews have been completed or scheduled. Task 7—Pro-forma Operating Results Based upon its review of project agremients, permiLs, fuel studies, and other data, NCI will develop pro -forma operating results for the MGS for a period beginnizig with the plarmcd commercial operating date. The pro -forma operating results are expected to include, (i) estimates of the costs for the power output of the MGS; (ii) estimates of the 2-2 APR- I03-�,002-WED 12:12 PM OLIVO & PLASCENCIA FAX NO, 562 869 1883 04/03/2002 WED 12:01 FAX 916 852 1073 NAVIGANT CASHING INC P. 10 z01w/Oil " wotuc sCOM routine operating and maintenance expenses, including fuel costs; P) an allowance for routine capital improvements, (M. an allowance for debt coverage requirements; and (v) other costs, if applicable. For this task it will be necessary for Vernon to provide projections of its expected dispaidi of MGS output. Task 8 - Independent Consultant's Report Concurrent with its development of the pro -forma operating results, NO will develop preliminary results and conclusions concerning the MGS along with a preliminary draft of the Independent Consultant's Report. NCI will make itself available to Vernon and its financial advitiers to review its findings and the assumptions and other considerations that support its preliminary conclusions. NCI's budget will include an allowance for up to four face to face working sessions with Vemon's financial consultants in the southem California area. NO will perform additional analyses and incorporate comrr►ents from Ver im, as necessary to support development of the final Independent Cknsultant's Report. Optional Additional Work Seontg The following tasks are not included in the ptoposed scope of work for NCI, but can be performed by NCI as requested by Vernon at additional cost. * Forecasts of future delivered natural gas fuel prices • Forecasts of future wholesale power market paces and MGS dispatch lcv6L • Presentations to City Council, regulatory or other public stakeholder groups • Meetings or conference calls with outside parties (rating agencies, insurance companies, investor groups, etc_) 2-3 APR-03-2002 WED 12:13 PPS OLIVO & PLASCENCIA FAX NO, 562 869 1883 003/Wg ITS 12:01 FAX 916 852 1073 NAVICANT 6AI1 T60 INC P. 11 �011'I'�11 Mmr lT B Prof©znional and support services, e�ecapt for testimony, shall be billed at the following rates: Exocutive Managing Director Senior Managing Director Managing Diroctor Vi roctor Principal Senior Engagcament Manager Senior consultant Cons u xtant AgenczAte Alaalys t office Sol -vices 5 325 per hour $295 per hour $245 pmr hour $230 per hour $210 per hour $195 per hour $180 per hour $155 per hour $133 per hour $110 per hour $ SS per hour The above rates shall be adjusted each year, commencing January 1, 2003, to reflect the change in rREes officially established by NAvigant Consulting. Tcstiawzzy shall be billed at not zass than eight (9) hours per day. All travel, food lodsing, and miscellaneous expenses, except automobile mileage, associated with the provision of Sorvices hersunder shall be billed at cost pluw ton (10) percent. Automobilo mileage will be billed at the rate approved by the Intwznal Revenue Service. Client uhall reimburse Mavigant consulting for any applicable sale* tax ircmQsod an services rendarQd by Navigant Consulting to Client- 7 SUPPORTING DOCUMENTS CITY COUNCIL LEONISeC. MALBURG Mayor THOMAS A. YBARRA Mayor Pro -Tern WM. `BILL" DAVIS Councilman H. "LARRY" GONZALES Councilman W. MICHAEL MCCORMICK Councilman BRUCE V. MALKENHORST City Administrator/City Clerk . FAX (323) 826-1438 CITY HALL 4W5 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 TELEPHONE (323) 583-8811 April 16, 2002 Navigant Consulting, Inc. Attn: Paul Maxwell 3100 S. Zinfandel Drive, Suite 600 Rancho Cordova, CA 95670 Re: Professional Service Agreement Dear Mr. Maxwell: EDUARDO OLIVO City Attorney FAX: (562) 869-1883 KEVIN WILSON Director of Community Services & Water FAX: (323) 826-1435 KENNETH J. DeDARIO Director of Municipal Utilities FAX: (323) 826-1425 STEVEN E. PARKER Fire Chief FAX: (323) 826-1407 BRUCE W. OLSON Police Chief FAX (323) 826-1481 Transmitted herewith is a duplicate original copy of the above referenced approved by the Vernon City Council on April 3, 2002. If you have any questions regarding this matter, please call Mr. Kenneth DeDario at (323) 583-8811 ext. 211. Very truly yours, Nelly Gir Assistant Chief Deputy City Clerk NG:mt CC: Kenneth DeDario Dolores Fonseca Agreement File #02-020 Resolution No. 7931 PROFESSIONAL SERVICES AGREEMENT FOR THE MALBURG GENERATING PROJECT BETWEEN THE CITY OF VERNON and NAVIGANT CONSULTING, INC. This PROFESSIONAL SERVICES AGREEMENT ("Agreement") is dated April 2, 2002 by and between Navigant Consulting, Inc., ("Consultant"), created pursuant to the laws of the State of Delaware with offices at 3100 South Zinfandel Drive, Suite 600, Rancho Cordova, California 95670, and the City of Vernon, California ("City"), with offices at 4305 Santa Fe Avenue, Vernon, California 90058. City and Consultant are also referred to as Parties. . WHEREAS, the City is developing the Malburg Generating Station ("Project"), a nominal 130 megawatt power plant to be located at a site within the City limits; and WHEREAS, the City needs Consulting services to assist in the financing of the Project; and WHEREAS, Navigant Consulting, Inc. has many years of experience in financing of power plants in the electric industry; NOW, THEREFORE, in consideration of the promises herein and for other good and valuable consideration, the parties agree as follows: Services to be Provided: the City engages the Consultant to perform consulting and related services (the "Services") as described in Exhibit A (the "Scope of Services" or "Scope") for use in financing the Project. Detailed procedures and practices followed while performing the Services, including acceptance of the Services, shall be as set forth in the Scope of Services or a work order issued thereunder. Consultant will perform the services at the direction of and on behalf of the City. 2. Independent Contractor: (a) Consultant is an independent contractor and is not an employee of the City. Services performed by the Consultant under this agreement are solely for the benefit of the City unless specified otherwise. (b) Consultant is not required to perform the services during a fixed hourly or daily time, and if the services are performed at the City's premises, then Consultant's time spent at the premises is to be at the discretion of Consultant; subject to City's normal business hours and security requirements. Except as provided in the Scope, the City will not be required to furnish or provide any training to enable the Consultant to perform the Services. The order or sequence in which the Services are to be performed shall be agreed upon by the Consultant and the City. Except to the extent that Consultant's work must be performed on or with City's computers or existing software, all materials used in providing the Services shall be provided by the Consultant. 3. Standard of Care: The Consultant will perform Services under this Agreement with the degree of skill and diligence normally practiced within the industry by consultants performing the same or similar services. 4. Changes/Amendments: This Agreement may not be changed except by written amendment signed by both parties. Services not expressly set forth in this Agreement are excluded. Consultant shall promptly notify the City if changes to the Scope of Services affect the schedule, level of effort or payment to Consultant. If Consultant determines that changes should be made to Exhibit A or Exhibit B. the Consultant will notify the City of such proposed changes in writing, including the affects on the schedule, level of effort and payment for such changes. Thereafter, Consultant and the City shall agree in writing on which changes, if any, shall be included in an amendment to either Exhibit A or Exhibit B. If Consultant is delayed in performing the Services by any act of war, force majeure or other circumstance beyond its control, then Consultant shall not be considered to be in default of the performance of its obligations under this Agreement. 5. Payment: The City agrees to pay Consultant for services in accordance with the terms and schedule contained in Exhibit B. The City shall pay invoiced amounts not more than thirty (30) days after delivery of an invoice. 6. Taxes: Any and all taxes imposed on Consultant's income, imposed or assessed by reason of this agreement or its performance shall by paid by Consultant. Consultant shall be responsible for any taxes or penalties assessed by reason of any claims that Consultant is an employee of the City, and the City and Consultant specifically agree that Consultant is not an employee or agent of the City. 7. Indemnity by City: To the extent permitted by law, the City shall indemnify and hold harmless Consultant, its directors, officers, agents and employees from and against any and all liability, claims, demands, damages, losses and expenses, including, but not limited to, attorney's fees, for which the City is determined to be legally liable resulting from negligent acts, errors or omissions by the City, its directors, officers, partners, agents and employees. Liability, claims, demands, damages, losses or expenses resulting from the negligent acts, errors or omissions, whether active or passive, by Consultant, its directors, officers, agents, employees or by others are excluded from the City's obligations pursuant to this paragraph. Any payments required to be made by the City pursuant to this paragraph shall be payable solely from the Electric Utility Fund and there shall be no recourse against the City or its general funds or other assets, or against any of the City's officials or employees, for any liabilities hereunder, other than from any moneys available for such payment from the Electric Utility Fund. 8. Indemnity by Consultant: Consultant shall indemnify and hold harmless the City, the Trustee, the Underwriter and their directors, officers, partners, agents, and employees from and against any and all liability, claims, demands, damages, losses, and expenses, including but not limited to attorney's fees, for which Consultant is determined to be legally liable resulting from negligent acts, errors, or omissions by Consultant, its directors, officers, agents, and employees in performance of services required by this Agreement. Liability, claims, demands, damages, losses, or expenses resulting from the negligent acts, errors or omissions, whether active or passive, by the City, the Trustee and their directors, officers, partners, agents, employees, or by others are excluded from Consultant's indemnification pursuant to this paragraph. Consultant's obligations to indemnify and hold the City and the Trustee harniless shall be expressly limited to the proceeds of its applicable insurance coverage. IN NO EVENT AND UNDER NO CIRCUMSTANCES SHALL CONSULTANT BE LIABLE TO THE CITY FOR ANY INTEREST, LOSS OF ANTICIPATED REVENUES, EARNINGS, PROFITS, INCRESED EXPENSES OF OPERATIONS, LOSS BY REASON OF SHUTDOWN OR NON -OPERATIONS DUE TO LATE COMPLETION OR FOR ANY CONSEQUENTIAL, PUNITIVE, INDIRECT OR SPECIAL DAMAGES. 9. Insurance: Consultant shall, at his own cost and expense, procure and maintain during the entire term of this Agreement, public liability insurance and property damage insurance (issued by an insurance company admitted in the State of California to issue such insurance) naming the City as an additional insured against loss or liability caused by or connected with Consultant's use of an automobile in the performance of this Agreement for not less than: (a) $100,000 for injury to or death to one person, or of not less than $300,000 for injury to or death to two or more persons as a result of any one accident or incident; and (b) $50,000 for damage to or destruction of any property of the City or others. The insurance policy shall contain the following claims: "It is agreed that any insurance maintained by the City shall apply in excess of and not contribute with insurance provided by this policy." "The City, its officers and employees are added as additional insureds with respect to the activities done pursuant to this agreement on behalf of the named insured on behalf of the named insured." This insurance shall not be cancelled, limited in scope or coverage or non -renew until after thirty (30) days written notice has been given to the City. 10. Terms and Termination: The term of this Agreement shall be one year from the date hereof, at which time, it shall either terminate or be extended by written agreement between the City and the Consultant, unless sooner terminated in accordance with this section. Either party may terminate this Agreement upon thirty (30) days written notice to the other party. The City shall pay Consultant for all services rendered to the date of termination plus reasonable expenses for winding down the services. 11. Use and Ownership of Work Products: (a) Work Product. As used in this agreement, the term "Work Product" means any and all materials fixed in a tangible medium of expressions, including software code, written or procedures, written documents, abstracts and summaries thereof, or any portions or components of the foregoing created, written, developed, conceived, perfected or designed in connections with the Services provided under this Agreement. 3 14. Dispute Resolution: Consultant and the City shall attempt to resolve conflicts or disputes under this Agreement in a fair and reasonable manner and agree that if resolution cannot be made to attempt to mediate the conflict by a professional mediator. 15. Miscellaneous: (a) This Agreement is binding upon and will inure to the benefit of the City and Consultant and their respective successors and assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party; provided, however, that either party may assign this Agreement to a successor of the party's entire business relating to this Agreement. (b) If any provision of this Agreement is invalid or unenforceable, the remainder of this Agreement shall continue in full force and effect and the provision declared invalid or unenforceable shall continue in full force shall continue as to other circumstances in accordance with, the laws of the State of California. (c) This Agreement shall be governed by, and construed in accordance with, the laws of the State of California. (d) In any action to enforce or interpret this Agreement, the prevailing party shall be entitled to recover, as part of its judgment, reasonable attorneys' fees and costs from the other party. IN WITNESS WHEREOF, the parties have signed this Agreement the date first written above. CITY OF VERNON By: L ONI�C. MALBURG Title: M NAVIGANT CONSULTING, INC. 1;7 By: Title: raf�- 4 ATTEST' f% By: ;��- BRUCE V. MALKENHORST, City Clerk APPROVED AS TO FO By UARD0 OLIVO, City Attorney EXHIBIT A SCOPE OF SERVICES 31 SCOPE OF WORK Navigant Consulting, Inc. (NCI) is pleased to present this proposed work scope to the City of Vernon - Utilities Department (Vernon) for preparing an Independent Consultant's Report in support of the financing of the Malburg Generating Station (MGS). Task 1- Project Data Acquisition Preparation of the Independent Consultant's Report will require timely receipt of specific, detailed information about the MGS and its proposed financing. Much of this information is likely to be readily available in the Application for Certification (AFC) for the MGS. Other project information needed includes the following: • Project Agreement(s) - covering topics such as engineering/procurement/construction, fuel supply, major equipment supply, and O & M services, if applicable. • Project Permits - AFC, air emissions, water supply and discharge permits, mitigation agreements, etc. Task 2 - Construction Cost and Schedule Review The cost of construction of the MGS will be reviewed with two factors in mind. First, an assessment of the reasonableness of the costs will be undertaken where the construction cost of the MGS will be benchmarked against the costs of similar projects with comparable markets, or if this information is not available, with published industry data and NCI's independent projections and forecasts. This information will be presented on a $/kw basis for the major cost categories. Task 3 - Technology Assessment NCI will review the plant design and technology proposed for the MGS in order to determine if state of the art equipment and design parameters are being employed. Based upon this review, NCI will be able to determine if the availability and reliability levels forecast by 2-1 WORK SCOPE Vernon are reasonable, as well as if the projected production costs are reasonable when compared with similar generating units in the West. Task 4— Operating and Fuel Assessment By reviewing Vernon's plan for the operation and maintenance of the MGS, NCI will determine if the proposed staffing will be able to provide the technical expertise, experience, training, and capabilities to perform required O & M activities, including fuel (natural gas) procurement, consistent with industry standards. In addition, any Construction, Maintenance and Operation Agreements will be reviewed in order to assess provisions for other O&M work associated with the facility over the term of the financing. Task 5 — Natural Gas Market Assessment Forecasts of natural gas purchase prices will be an important element for the development of financial pro -forma operating projections for the MGS. It is NCI's experience that the Independent Consultant will be required by investors and rating agencies to provide conclusions or opinions as to the reasonableness of those forecasts in support of the Independent Consultants Report. Under this task, NCI fuel specialists will review natural gas price forecasts prepared by Vernon or their fuel consultant, including information available as to the basis for the estimates and supporting assumptions, and provide an assessment of the reasonableness of the forecasts in its Independent Consultant's Report. Task 6 — Review of Appropriate Permits and Licenses NCI will review status of the permitting for the MGS to assess if all necessary permits are in order and regulatory reviews have been completed or scheduled. Task 7 — Pro -forma Operating Results Based upon its review of project agreements, permits, fuel studies, and other data, NCI will develop pro -forma operating results for the MGS for a period beginning with the planned commercial operating date. The pro -forma operating results are expected to include, (i) estimates of the costs for the power output of the MGS; (ii) estimates of the 2-2 • WORK SCOPE. routine operating and maintenance expenses, including fuel costs; (iii) an allowance for routine capital improvements, (iv) an allowance for debt coverage requirements; and (v) other costs, if applicable. For this task it will be necessary for Vernon to provide projections of its expected dispatch of MGS output. Task 8 — Independent Consultant's Report Concurrent with its development of the pro -forma operating results, NCI will develop preliminary results and conclusions concerning the MGS along with a preliminary draft of the Independent Consultant's Report. NCI will make itself available to Vernon and its financial advisers to review its findings and the assumptions and other considerations that support its preliminary conclusions. NCI's budget will include an allowance for up to four face to face working sessions with Vernon's financial consultants in the southern California area. NCI will perform additional analyses and incorporate comments from Vernon as necessary to support development of the final Independent Consultant's Report. Optional Additional Work Scope Items The following tasks are not included in the proposed scope of work for NCI, but can be performed by NCI as requested by Vernon at additional cost. • Forecasts of future delivered natural gas fuel prices • Forecasts of future wholesale power market prices and MGS dispatch levels • Presentations to City Council, regulatory or other public stakeholder groups • Meetings or conference calls with outside parties (rating agencies, insurance companies, investor groups, etc.) 2-3 EXHIBIT B Professional and support services, except for testimony, shall be billed at the following rates: Executive Managing Director $ 325 per hour Senior Managing Director $295 per hour Managing Director $245 per hour Director $230 per hour Principal $210 per hour Senior Engagement Manager $195 per hour Senior Consultant $180 per hour Consultant $155 per hour Associate $135 per hour Analyst $110 per hour Office Services $ 55 per hour The above rates shall be adjusted each year, commencing January 1, 2003, to reflect the change in rates officially established by Navigant Consulting. Testimony shall be billed at not less than eight (8) hours per day. All travel, food, lodging, and miscellaneous expenses, except automobile mileage, associated with the provision of services hereunder shall be billed at cost plus ten (10) percent. Automobile mileage will be billed at the rate approved by the Internal Revenue Service. Client shall reimburse Navigant Consulting for any applicable sales tax imposed on services rendered by Navigant Consulting to Client. 7