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HomeMy WebLinkAbout140807PREVISED: 8/5/14 NOTICE OF THE REGULAR SESSION OF THE FOUNTAIN HILLS TOWN COUNCIL TIME: 6:30 P.M. WHEN: THURSDAY, AUGUST 7, 2014 WHERE: FOUNTAIN HILLS COUNCIL CHAMBERS 16705 E. AVENUE OF THE FOUNTAINS, FOUNTAIN HILLS, AZ Councilmembers of the Town of Fountain Hills will attend either in person or by telephone conference call; a quorum of the Town’s various Commission, Committee or Board members may be in attendance at the Council meeting. Notice is hereby given that pursuant to A.R.S. § 1-602.A.9, subject to certain specified statutory exceptions, parents have a right to consent before the State or any of its political subdivisions make a video or audio recording of a minor child. Meetings of the Town Council are audio and/or video recorded and, as a result, proceedings in which children are present may be subject to such recording. Parents, in order to exercise their rights may either file written consent with the Town Clerk to such recording, or take personal action to ensure that thei r child or children are not present when a recording may be made. If a child is present at the time a recording is made, the Town will assume that the rights afforded parents pursuant to A.R.S. § 1-602.A.9 have been waived. PROCEDURE FOR ADDRESSING THE COUNCIL Anyone wishing to speak before the Council must fill out a speaker’s card and submit it to the Town Clerk prior to Council discussion of that Agenda item. Speaker Cards are located in the Council Chamber Lobby and near the Clerk’s position on the dais. Speakers will be called in the order in which the speaker cards were received either by the Clerk or the Mayor. At that time, speakers should stand and approach the podium. Speakers are asked to state their name and whether or not they reside in Fountain Hills (do not provide a home address) prior to commenting and to direct their comments to the Presiding Officer and not to individual Councilmembers. Speakers’ statements should not be repetitive. If a speaker chooses not to speak when called, the speaker will be deemed to have waived his or her opportunity to speak on the matter. Speakers may not (i) reserve a portion of their time for a later time or (ii) transfer any portion of their time to another speaker. If there is a Public Hearing, please submit the speaker card to speak to that issue during the Public Hearing. Individual speakers will be allowed three contiguous minutes to address the Council. Time limits may be waived by (i) discretion of the Town Manager upon request by the speaker not less than 24 hours prior to a Meeting, (ii) consensus of the Council at Meeting or (iii) the Mayor either prior to or during a Meeting. Please be respectful when making your comments. If you do not comply with these rules, you will be asked to leave. Mayor Linda M. Kavanagh Councilmember Dennis Brown Councilmember Cassie Hansen Councilmember Ginny Dickey Councilmember Henry Leger Councilmember Tait D. Elkie Vice Mayor Cecil A. Yates z:\council packets\2014\r140807\140807a.docx Last printed 7/30/2014 9:20 AM Page 2 of 4  CALL TO ORDER AND PLEDGE OF ALLEGIANCE – Mayor Linda M. Kavanagh  INVOCATION – Julie Orwin, President, Congregation Beth Hagivot  ROLL CALL – Mayor Linda M. Kavanagh  MAYOR’S REPORT i) None.  SCHEDULED PUBLIC APPEARANCES/PRESENTATIONS i) The Mayor may review recent events attended relating to economic development. CALL TO THE PUBLIC Pursuant to A.R.S. §38-431-01(H), public comment is permitted (not required) on matters not listed on the agenda. Any such comment (i) must be within the jurisdiction of the Council and (ii) is subject to reasonable time, place, and manner restrictions. The Council will not discuss or take legal action on matters raised during “Call to the Public” unless the matters are properly noticed for discussion and legal action. At the conclusion of the call to the public, individual Councilmembers may (i) respond to criticism, (ii) ask staff to review a matter or (iii) ask that the matter be placed on a future Council agenda. CONSENT AGENDA ITEMS All items listed on the Consent Agenda are considered to be routine, non-controversial matters and will be enacted by one motion and one roll call vote of the Council. All motions and subsequent approvals of consent items will include all recommended staff stipulations unless otherwise stated. There will be no separate discussion of these items unless a Councilmember or member of the public so requests. If a Councilmember or member of the public wishes to discuss an item on the consent agenda, he/she may request so prior to the motion to accept the Consent Agenda or with notification to the Town Manager or Mayor prior to the date of the meeting for which the item was scheduled. The items will be removed from the Consent Agenda and considered in its normal sequence on the Agenda. 1. CONSIDERATION of approving the TOWN COUNCIL MEETING MINUTES from June 19, 2014. 2. CONSIDERATION of approving seven SPECIAL EVENT LIQUOR LICENSE APPLICATIONS submitted by Jean Linzer, representing the Fountain Hills and Lower Verde Valley Museum and Historical Society, for the purpose of fundraisers. The events are scheduled for (i) Saturday, August 16, 2014 from 3:00-10:00 p.m.; (ii) Wednesday, September 17, 2014 from 5:00-8:00 p.m.; (iii) Wednesday, November 19, 2014 from 5:00- 8:00 p.m.; (iv) Wednesday, January 21, 2015 from 5:00-8:00 p.m.; (v) Wednesday, March 18, 2015 from 5:00-10:00 pm.; (vi) Saturday, March 28, 2015 from 11:00 a.m. to 5:00 p.m.; and (vii) Wednesday, May 20, 2015 from 5:00-8:00 p.m.; all held at the Community Center. REGULAR AGENDA ITEMS 3. CONSIDERATION of APPOINTING five (5) citizens to serve on the McDowell Mountain Preservation Commission for a three (3) year term, beginning August 11, 2014 and ending December 31, 2017. z:\council packets\2014\r140807\140807a.docx Last printed 7/30/2014 9:20 AM Page 3 of 4 4. PRESENTATION by the Residential Utility Consumer Office (RUCO) regarding the Arizona Corporation Commission’s Decision on Chaparral City Water Company’s request for a rate increase WITH POSSIBLE DIRECTION TO STAFF. 5. CONSIDERATION of RESOLUTION 2014-28, consolidating the Parks and Recreation Commission, the Community Center Advisory Commission, and the Senior Services Advisory Commission into a new Community Services Advisory Commission; and adopting bylaws. 6. CONSIDERATION of ORDINANCE 14-04, deleting Article 9-2 of the Fountain Hills Town Code, Parks and Recreation Commission, relating to the consolidation of the Parks and Recreation Commission, the Senior Services Advisory Commission, and the Community Center Advisory Commission into a new Community Services Advisory Commission. 7. CONSIDERATION of RESOLUTION 2014-36, adopting the Town of Fountain Hills Municipal Sponsorship and Naming Rights Policy, amended and restated August 7, 2014. 8. CONSIDERATION of NAMING LEGACY PLAZA in Fountain Park “The Joe and Marge Brown Legacy Plaza” as provided for under the Town of Fountains Hills Municipal Sponsorship and Naming Rights Policy. 9. CONSIDERATION of a request to update the FOUNTAIN HILLS MCDOWELL MOUNTAIN PRESERVE MASTER PLAN and to DESIGNATE the trail connecting with Scottsdale as the Andrews-Kinsey Trail. 10. CONSIDERATION of accepting the BID from Nesbitt Contracting Co., Inc., in the amount of $3,218,591.29, for the construction of the Shea Boulevard Widening project (Invitation For Bids DS2015-101). 11. CONSIDERATION of approving the Professional Services Agreement C2015-109 with HDR Construction Control Corporation, in the amount of $411,878.00, for construction management services related to the Shea Boulevard Widening project. 12. DISCUSSION WITH POSSIBLE DIRECTION TO STAFF regarding CANCELLATION OF August 21, 2014 Council meeting due to the 2014 Arizona League of Cities and Town’s Annual Conference being held the same week. 13. CONSIDERATION of a LEASE AGREEMENT with Rural Metro Corporation for ambulance staging at Fire Station 1. 14. SEMI-ANNUAL REPORT by Town Manager Ken Buchanan on the PROGRESS OF IMPLEMENTING the Council’s Strategic Plan Goals and Operational Priorities for FY2013-14. 15. COUNCIL DISCUSSION/DIRECTION to the Town Manager. Items listed below are related only to the propriety of (i) placing such items on a future agenda for action or (ii) directing staff to conduct further research and report back to the Council: NONE. z:\council packets\2014\r140807\140807a.docx Last printed 7/30/2014 9:20 AM Page 4 of 4 16. SUMMARY OF COUNCIL REQUESTS and REPORT ON RECENT ACTIVITIES by the Mayor, Individual Councilmembers, and the Town Manager. 17. ADJOURNMENT. DATED this 31st day of July, 2014. Bevelyn J. Bender, Town Clerk The Town of Fountain Hills endeavors to make all public meetings accessible to persons with disabilities. Please call 480 -816-5100 (voice) or 1-800-367-8939 (TDD) 48 hours prior to the meeting to request a reasonable accommodation to participate in this meeting or to obtain agenda information in large print format. Supporting documentation and staff reports furnished the Council with this agenda are available for review in the Clerk’s office. REVISED: 8/5/14 NOTICE OF THE REGULAR SESSION OF THE FOUNTAIN HILLS TOWN COUNCIL TIME: 6:30 P.M. WHEN: THURSDAY, AUGUST 7, 2014 WHERE: FOUNTAIN HILLS COUNCIL CHAMBERS 16705 E. AVENUE OF THE FOUNTAINS, FOUNTAIN HILLS, AZ Councilmembers of the Town of Fountain Hills will attend either in person or by telephone conference call; a quorum of the Town’s various Commission, Committee or Board members may be in attendance at the Council meeting. Notice is hereby given that pursuant to A.R.S. § 1-602.A.9, subject to certain specified statutory exceptions, parents have a right to consent before the State or any of its political subdivisions make a video or audio recording of a minor child. Meetings of the Town Council are audio and/or video recorded and, as a result, proceedings in which children are present may be subject to such recording. Parents, in order to exercise their rights may either file written consent with the Town Clerk to such recording, or take personal action to ensure that their child or children are not present when a recording may be made. If a child is present at the time a recording is made, the Town will assume that the rights afforded parents pursuant to A.R.S. § 1-602.A.9 have been waived. PROCEDURE FOR ADDRESSING THE COUNCIL Anyone wishing to speak before the Council must fill out a speaker’s card and submit it to the Town Clerk prior to Council discussion of that Agenda item. Speaker Cards are located in the Council Chamber Lobby and near the Clerk’s position on the dais. Speakers will be called in the order in which the speaker cards were received either by the Clerk or the Mayor. At that time, speakers should stand and approach the podium. Speakers are asked to state their name and whether or not they reside in Fountain Hills (do not provide a home address) prior to commenting and to direct their comments to the Presiding Officer and not to individual Councilmembers. Speakers’ statements should not be repetitive. If a speaker chooses not to speak when called, the speaker will be deemed to have waived his or her opportunity to speak on the matter. Speakers may not (i) reserve a portion of their time for a later time or (ii) transfer any portion of their time to another speaker. If there is a Public Hearing, please submit the speaker card to speak to that issue during the Public Hearing. Individual speakers will be allowed three contiguous minutes to address the Council. Time limits may be waived by (i) discretion of the Town Manager upon request by the speaker not less than 24 hours prior to a Meeting, (ii) consensus of the Council at Meeting or (iii) the Mayor either prior to or during a Meeting. Please be respectful when making your comments. If you do not comply with these rules, you will be asked to leave. Mayor Linda M. Kavanagh Councilmember Dennis Brown Councilmember Cassie Hansen Councilmember Ginny Dickey Councilmember Henry Leger Councilmember Tait D. Elkie Vice Mayor Cecil A. Yates z:\council packets\2014\r140807\140807a.docx Last printed 7/30/2014 9:20 AM Page 2 of 4  CALL TO ORDER AND PLEDGE OF ALLEGIANCE – Mayor Linda M. Kavanagh  INVOCATION – Julie Orwin, President, Congregation Beth Hagivot  ROLL CALL – Mayor Linda M. Kavanagh  MAYOR’S REPORT i) None.  SCHEDULED PUBLIC APPEARANCES/PRESENTATIONS i) The Mayor may review recent events attended relating to economic development. CALL TO THE PUBLIC Pursuant to A.R.S. §38-431-01(H), public comment is permitted (not required) on matters not listed on the agenda. Any such comment (i) must be within the jurisdiction of the Council and (ii) is subject to reasonable time, place, and manner restrictions. The Council will not discuss or take legal action on matters raised during “Call to the Public” unless the matters are properly noticed for discussion and legal action. At the conclusion of the call to the public, individual Councilmembers may (i) respond to criticism, (ii) ask staff to review a matter or (iii) ask that the matter be placed on a future Council agenda. CONSENT AGENDA ITEMS All items listed on the Consent Agenda are considered to be routine, non-controversial matters and will be enacted by one motion and one roll call vote of the Council. All motions and subsequent approvals of consent items will include all recommended staff stipulations unless otherwise stated. There will be no separate discussion of these items unless a Councilmember or member of the public so requests. If a Councilmember or member of the public wishes to discuss an item on the consent agenda, he/she may request so prior to the motion to accept the Consent Agenda or with notification to the Town Manager or Mayor prior to the date of the meeting for which the item was scheduled. The items will be removed from the Consent Agenda and considered in its normal sequence on the Agenda. 1. CONSIDERATION of approving the TOWN COUNCIL MEETING MINUTES from June 19, 2014. 2. CONSIDERATION of approving seven SPECIAL EVENT LIQUOR LICENSE APPLICATIONS submitted by Jean Linzer, representing the Fountain Hills and Lower Verde Valley Museum and Historical Society, for the purpose of fundraisers. The events are scheduled for (i) Saturday, August 16, 2014 from 3:00-10:00 p.m.; (ii) Wednesday, September 17, 2014 from 5:00-8:00 p.m.; (iii) Wednesday, November 19, 2014 from 5:00- 8:00 p.m.; (iv) Wednesday, January 21, 2015 from 5:00-8:00 p.m.; (v) Wednesday, March 18, 2015 from 5:00-10:00 pm.; (vi) Saturday, March 28, 2015 from 11:00 a.m. to 5:00 p.m.; and (vii) Wednesday, May 20, 2015 from 5:00-8:00 p.m.; all held at the Community Center. REGULAR AGENDA ITEMS 3. CONSIDERATION of APPOINTING five (5) citizens to serve on the McDowell Mountain Preservation Commission for a three (3) year term, beginning August 11, 2014 and ending December 31, 2017. z:\council packets\2014\r140807\140807a.docx Last printed 7/30/2014 9:20 AM Page 3 of 4 4. PRESENTATION by the Residential Utility Consumer Office (RUCO) regarding the Arizona Corporation Commission’s Decision on Chaparral City Water Company’s request for a rate increase WITH POSSIBLE DIRECTION TO STAFF. 5. CONSIDERATION of RESOLUTION 2014-28, consolidating the Parks and Recreation Commission, the Community Center Advisory Commission, and the Senior Services Advisory Commission into a new Community Services Advisory Commission; and adopting bylaws. 6. CONSIDERATION of ORDINANCE 14-04, deleting Article 9-2 of the Fountain Hills Town Code, Parks and Recreation Commission, relating to the consolidation of the Parks and Recreation Commission, the Senior Services Advisory Commission, and the Community Center Advisory Commission into a new Community Services Advisory Commission. 7. CONSIDERATION of RESOLUTION 2014-36, adopting the Town of Fountain Hills Municipal Sponsorship and Naming Rights Policy, amended and restated August 7, 2014. 8. CONSIDERATION of NAMING LEGACY PLAZA in Fountain Park “The Joe and Marge Brown Legacy Plaza” as provided for under the Town of Fountains Hills Municipal Sponsorship and Naming Rights Policy. 9. CONSIDERATION of a request to update the FOUNTAIN HILLS MCDOWELL MOUNTAIN PRESERVE MASTER PLAN and to DESIGNATE the trail connecting with Scottsdale as the Andrews-Kinsey Trail. 10. CONSIDERATION of accepting the BID from Nesbitt Contracting Co., Inc., in the amount of $3,218,591.29, for the construction of the Shea Boulevard Widening project (Invitation For Bids DS2015-101). 11. CONSIDERATION of approving the Professional Services Agreement C2015-109 with HDR Construction Control Corporation, in the amount of $411,878.00, for construction management services related to the Shea Boulevard Widening project. 12. DISCUSSION WITH POSSIBLE DIRECTION TO STAFF regarding CANCELLATION OF August 21, 2014 Council meeting due to the 2014 Arizona League of Cities and Town’s Annual Conference being held the same week. 13. CONSIDERATION of a LEASE AGREEMENT with Rural Metro Corporation for ambulance staging at Fire Station 1. 14. SEMI-ANNUAL REPORT by Town Manager Ken Buchanan on the PROGRESS OF IMPLEMENTING the Council’s Strategic Plan Goals and Operational Priorities for FY2013-14. 15. COUNCIL DISCUSSION/DIRECTION to the Town Manager. Items listed below are related only to the propriety of (i) placing such items on a future agenda for action or (ii) directing staff to conduct further research and report back to the Council: NONE. z:\council packets\2014\r140807\140807a.docx Last printed 7/30/2014 9:20 AM Page 4 of 4 16. SUMMARY OF COUNCIL REQUESTS and REPORT ON RECENT ACTIVITIES by the Mayor, Individual Councilmembers, and the Town Manager. 17. ADJOURNMENT. DATED this 31st day of July, 2014. Bevelyn J. Bender, Town Clerk The Town of Fountain Hills endeavors to make all public meetings accessible to persons with disabilities. Please call 480-816-5100 (voice) or 1-800-367-8939 (TDD) 48 hours prior to the meeting to request a reasonable accommodation to participate in this meeting or to obtain agenda information in large print format. Supporting documentation and staff reports furnished the Council with this agenda are available for review in the Clerk’s office. TOWN OF FOUNTAIN HILLS TOWN COUNCIL AGENDA ACTION FORM Meeting Date:8/7/2014 Meeting Type:Regular Session Agenda Type:Consent Submitting Department:Administration Staff Contact Information:Bevelyn J.Bender,Town Clerk;480-816-5115;bbender@fh.az.gov Council Goal: Strategic Values:Civic Responsibility C3 Solicit feedback in decision-making REQUEST TO COUNCIL (Agenda Language):CONSIDERATION of approving the TOWN COUNCIL MEETING MINUTES from June 19,2014. Applicant:NA Applicant Contact Information: Property Location: Related Ordinance,Policy or Guiding Principle:A.R.S.§38-431.01 Staff Summary (background):The intent of approving previous meeting minutes is to ensure an accurate account of the discussion and action that took place at that meeting for archival purposes.Approved minutes are placed on the Town's website in compliance with state law. Risk Analysis (options or alternatives with implications): Fiscal Impact (initial and ongoing costs;budget status): Budget Reference (page number): Funding Source:NA If Multiple Funds utilized,list here: Budgeted;if No,attach Budget Adjustment Form:NA Recommendation(s)by Board(s)or Commission(s): Staff Recommendation(s):Approve List Attachment(s):None SUGGESTED MOTION (for council use):Move to approve the consent agenda as listed Prepared by:Approved: Rpv/Plvn RpndP.r Tnwn Clerk 7/28/2014 Ken Buchanan,Town ManagerBevelynBender,Town Clerk 7/28/2014 Ken Buchanan,Town Manager 7/29/2014 Page 1 of 1 TOWN OF FOUNTAIN HILLS TOWN COUNCIL AGENDA ACTION FORM Meeting Date:8/7/2014 Meeting Type:Regular Session Agenda Type:Consent Submitting Department:Community Services Staff Contact Information:Mark Mayer 480.816.5190 mmayer@fh.az.gov Council Goal: Strategic Values:Not Applicable (NA)Not Applicable (NA) REQUEST TO COUNCIL (Agenda Language):CONSIDERATION of approving the SPECIAL EVENT LIQUOR LICENSE APPLICATIONS submitted by Jean Lmzer,representing the Fountain Hills and Lower Verde Valley Museum and Historical Society, for the purpose of fundraisers. The events are scheduled for Saturday, August 16,2014 from 3:00- 10:00 p.m., Wednesday,September 17, 2014 from 5:00-8:00 p.m., Wednesday,November 19, 2014 from 5:00-8:00 p.m., Wednesday, January 21, 2015 from 5:00-8:00 p.m., Wednesday, March 18, 2015 from 5:00-10:00 pm., Saturday, March 28, 2015 from 11:00a.m. to 5:00 p.m., and Wednesday, May 20, 2015 from 5:00-8:00 p.m., all held at the Community Center. Applicant:Jean Linzer Applicant Contact Information:(480) Property Location:Community Center,13001 N. La Montana Dr. Related Ordinance,Policy or Guiding Principle:A.R.S.§4-203.02;4-244;4-261 and R19-1-228,R19-1- 235,and R19-1 -309 Staff Summary (background):The purpose of this item is to obtain Council's recommendation regarding the special event liquor license applications submitted by Jean Linzer representing the Fountain Hills and Lower Verde Valley Museum and Historical Society,for submission to the Arizona Department of Liquor.The special event liquor license applications were reviewed by staff for compliance with Town ordinances and staff unanimously recommends approval of these special event liquor license applications as submitted. Risk Analysis (options or alternatives with implications):N/A Fiscal Impact (initial and ongoing costs;budget status):N/A Budget Reference (page number):N/A Funding Source:NA If Multiple Funds utilized,list here: N/A Budgeted;if No,attach Budget Adjustment Form:na Recommendation(s)by Board(s)or Commission(s):N/A Staff Recommendation(s):Approve List Attachment(s):Applications (front pages);Staffs Recommendation Page 1 of 2 SUGGESTED MOTION (for council use):Move to approve the Special Event Liquor Licenses as presented. Mark Approved: i imunity Srvcs Exec Asst 6/3/2014 Director's Approval: lark Mayer,Community Services Director X 6/3/2014 Ken Buchanan,Town Manager 7/29/2014 Paec2of2 \ TOWN OF FOUNTAIN HILLS COMMUNITY SERVICES DEPARTMENT INTER OFFICE MEMO TO:(as applicable) 1.Streets Division 2.Fire Department 3.Building Division 4.Community Services 5.Development Services 6.Law Enforcement 7.Licensing DATE:June 3,2014 FR:Mark Mayer,Director RE:Special Event Liquor License Application Attached is a Special Event Liquor License Application for staff review. Review the application,then sign,indicating staff's recommendation for approval (with or without stipulations)or denial. If staff's recommendation is to deny and/or there are stipulations for approval,please attach a memo that specifies the reasoning and the memo will be forwarded on to the Town Council for their consideration of this application. Name of Organization:Fountain Hills and Lower Verde Valley Museum and Historical Society Applicant:Jean Linzer Date(s)of Event:8.16.14,9.17.14,11.19.14,1.21.15,3.18.15,3.28.15,5.20.15 Date Application Received:June 3,2014 Town Council Agenda Date:August 7,2014 STAFF REVIEW AND RECOMMENDATION: Department/Division Staff Member Approved Denied N/A Building Safety -^3^S>^v>A Mo_r^>1 •• Community Services •V-^-Jiy1 \C i .\V-»^w #•• Development Services J^y\^/-\&•• Fire Department Wit/*/¥•• Law Enforcement U*.">U /~j£-/*?Z*s-•• Licensing ^&^ti>iu^••& Street Department 4&d(fj*.R&*—B-•• / Engineering ••A Attach report for denial or any recommendation requiring stipulations. 6-03-14Ai:-:45 ?, ARIZONA DEPARTMENT OF LIQUOR LICENSES &CONTROL 800 W Washington 5th Floor Phoenix,Arizona 85007-2934 (602)542-5141 APPLICATION FOR SPECIAL EVENT LICENSE Fee =$25.00 per dayfor1-10day events only A service fee of $25,00 will bechargedfor all dishonored checks (A.R.S.§44-6852) NOTE:THIS DOCUMENT MUST BE FULLY COMPLETED OR IT WILL BE RETURNED. PLEASE ALLOW 10 BUSINESS DAYSFOR PROCESSING. "Application must be approved by local government before submission to Department of Liquor Licensesand Control.(Section #20) DLLC USE ONLY LICENSE # 1. Name of Organization:fountain hills and lower verde valley museum and historical society 2.Non-Profit/I.R.S.Tax Exempt Number:86-067064o 3. The organization isa: (checkone box only) 0 Charitable •Fraternal (must have regular membership and in existence for over 5years) •Civic f-j Religious •Political Party,Ballot Measure,or Campaign Committee 4.What is the purpose of this event?0 on-site consumption •off-site consumption (auction)•both ITALIAN DINNER FUNDRAISER FOR THE BENEFIT OF THE MUSEUM &HISTORICAL SOCIETY 5.Location ofthe event 13Q01 n.la Montana blvd. Address ofphysical location (Not P.O.Box)City County Zip Applicant mustbea memberofthe Qualifying organization and authorized bvan Officer.Director or Chairoerson of the Organization named In Question #1.(Signature required in section #18) 6.Applicant:L(NZER JEAN FOUNTAIN HILLS Last 7. Applicant's Mailing Address: First !E.GLENPOINT DRIVE Middle fountain hills 8.Phone Numbers:(*«>)816-S200 Site Owner # Strccl City Applicant's Business # 9.Date(s)&Hours of Event:(see A.R.S.4-244(15)and (17)for legal hours ofservice) Date Day of Week Hours from A.M./P.M. Day 1:AUGUST 16,2014 SATURDAY 3:00 P.M Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Day 8 Day 9 Day 10: MARICOPA 85268 Date of Birth ARIZONA 85268 Slate Zip 1 Applicant's Home # TOA.M./P.M. 10:00 P.M. r *.u -.«,.,*Disabled individuals requiring special accommodations,please call (602) 542-9027beptember2011 10.Has the applicant been convictedofa felonyinthe past fiveyears, or had a liquorlicense revoked? •YES El NO (attach explanation if ves) 11.This organization has been issued a special event licensefor seven days this year,including thisevent (not to exceed 10 days per year). 12.Is the organization using the services ofa promoter or other person to manage the event?~|YES El NO Ifyes,attach a copy of the agreement. 13.List allpeople and organizationswho will receive the proceeds. Accountfor 100%ofthe proceeds. THE ORGANIZATION APPLYING MUST RECEIVE 25%OF THE GROSS REVENUES OF THE SPECIAL EVENT LIQUOR SALES. Name fountain hills and lower verde valley museum and historical society 100% Percentage ArtHrpgc P.O.BOX 17445,FOUNTAIN HILLS,AZ 85269 Name Percentage Address (Attachadditional sheet if necessary) 14.Knowledge of Arizona State Liquor Laws Title 4 is important to prevent liquor law violations.If you have any questions regarding the laworthis application,please contact the Arizona State Departmentof Liquor Licenses and Control for assistance. NOTE:ALL ALCOHOLICBEVERAGE SALES MUST BE FOR CONSUMPTION ATTHE EVENT SITE ONLY. "NO ALCOHOLIC BEVERAGES SHALL LEAVE SPECIAL EVENT PREMISES." 15.Whatsecurityand control measures will youtake to prevent violations ofstate liquor lawsat thisevent? (List typeand numberof security/police personneland typeof fencing or control barriers if applicable) - #Police ~]Fencing #Security personnel ~|Barriers SECURITY WILL BE PROVIDED BY AN OFF DUTY POLICE OFFICER 16.Is there an existing liquor license atthe location where the special event is being held?~|YES El NO Ifyes,does the existing business agree to suspend their liquorlicense duringthe time period,and in thearea in which the special event license will be in use?~|YES ~|NO (ATTACH COPY OF AGREEMENT) ( ) Name of Business Phone Number 17.Your licensedpremises is that area in which you are authorized to sell, dispense, or serve spirituous liquors under the provisionsof your license. The following page is to be used to prepare a diagram of your special event licensed premises.Please show dimensions,serving areas,fencing,barricades or other control measures and security positions. SPECIAL EVENT LICENSED PREMISES DIAGRAM (This diagram must be completed with this application) Special Event Diagram:(Show dimensions,serving areas,and label type of enclosure and security positions NOTE:Show nearest cross streets,highway,or road if location doesn't have an address. »4 "VI... North ScnlorNet p-JVl-V Sift &)••»!Portng Ana '.'» y r Cotcd Parting -\ Nsi-ajo Weeing F.ecm ? HOPl UecUng Reom Art Room -\J...... 3C £StorcgtRoom fe Cm*Stwo^c T Table Storage Rvi i Q k-rvi».i__L.r\H .LsCfiW.Pi 1/71 '«--\j PiVtt Utrt.-rvj Rccm •Ycvcpci Mettjig Room F tf __ I ConferenceJRoom lila '^3 •«3rTo LAJ Uoin Cntrcnee I Cen'.ef CcvlycrC Area rrvp ^ Senior Senr.ee:._«**__ • -» c—**L n ""°" Restrocma end Pay Phone 03^0""*"O^'^Cf ^^ ~*y Lounoe 3 I SI I «E2Cj«•___« Lobby U"\i South Bcflroom 2 Bsfiroom 3 Ballroom 1 iXj***^*******^' COUMUMtTY CENTER HOOR PLAN ^ Fountain Hills Community Center,13001 N.LaMontana,Fountain Hills,AZ.Liquor service will be in Ballroom 1,2,3,or 4as designated by the Community Center staff.Security will be posted in the lobby ofthe Community Center. X THIS SECTION TO BE COMPLETED ONLY BY AN OFFICER.DIRECTOR OR CHAIRPERSON OF THE ORGANIZATION NAMED IN QUESTION #1 Deborah H.Skehen , . ,..._._,_,,_..——declare that Iam an Officer/Director/Chairperson appointing the (Print full name) applicant listed in Question 6,to apply on behalf ofthe foregoing organization for a Special Event Liquor License. £/32014VU2I iSJaoaiULe. Colin Horninrptateof Notary Public Maricopa County,Arizona My Gomm.Expires 01-19-2015 President (Title/Position)(Date)(Phoned) '___county of Aj£jg The foregoing instrument was acknowledged before me this 3 7^<l 2^/y Day onth Year My i 3uhiiHibsiui-i-wAuiuBs^jii^~ (Date)igna^re^of^j(Sign OTARY PUBLIC) THIS SECTION TO BE COMPLETED ONLY BY THE APPLICANT NAMED IN QUESTION #6 Jean Linzer19.I declare that Iam the APPLICANT filing this applicationas (Print full name) listed in Question 6. I have/read the application andthe contents and all statementsare true,correct and complete. 1__^_^ gnature), ColinHorning Notary Public Marjoopa County,ArizonaWWr^.^plr6tinM9-2Qi5 (Date) State of /fr'gg__County of /l^&fZH The foregoing instrument was acknowledged before me this J ___2*!Y Day Month Year (Signatureot^t-IARY'PUBLIC) You must obtain local qovemment approval.City or County MUST recommend event and complete item #20. The local governing body may require additional applications to be completed and submitted 60 days in advance of the event.Additional licensing fees may also be required before approval may be granted. LOCAL GOVERNING BODY APPROVAL SECTION 20.hereby recommend this spe cial event application (Government Official)(Title) on behalf of (City,Town or County)(Signature of OFFICIAL)(Date) FOR DLLC DEPARTMENT USE ONLY Department Comment Section: (Employee)(Date) G APPROVED •DISAPPROVED -BY (Title)(Date) 06-03-14A1 0:45 RCYD ARIZONA DEPARTMENT OF LIQUOR LICENSES &CONTROL 800 WWashington 5th Floor Phoenix,Arizona 85007-2934 (602)542-5141 APPLICATION FOR SPECIAL EVENT LICENSE Fee =$25.00 per day for 1-10 day events only Aservice fee of $25.00 will be charged for all dishonored checks (A.R.S.§44-6852) NOTE:THIS DOCUMENT MUST BE FULLY COMPLETED OR IT WILL BE RETURNED. PLEASE ALLOW 10 BUSINESS DAYS FOR PROCESSING. "Application must be approved by local government before submission to Department of Liquor Licenses and Control.(Section #20) DLLC USE ONLY LICENSE # 1.Name of Organization:fountain hills and lower verde valley museum and historical society 2.Non-Profit/I.R.S.Tax Exempt Number:86-°670640 3. The organization is a:(check one box only) 0 Charitable •Fraternal (musthave regular membership and in existenceforover5 years) •Civic [J Religious •Political Party,Ballot Measure,or Campaign Committee 4.What is the purpose of this event?0 on-site consumption •off-site consumption (auction)•both Historical Society Dinner Meeting 5.Location of the event:13001 n.la Montana blvd.FOUNTAIN HILLS MARICOPA 85268 Address of physical location (Not P.O. Box)City County Zip Applicant must be a member of the qualifying organization and authorized by an Officer,Director or Chairperson of the Organization named in Question #1.(Signature reguired in section #18) 6.Applicant:LINZER Last 7.Applicant's Mailing Address: JEAN First :.GLENPOINT DRIVE Street 8.Phone Numbers:(48Q )si6-5200 Site Owner #Applicant"s Business # 9.Date(s)&Hours OfEvent: (seeAR.S.4-244(15)and (17)for legal hours of service) Date Day of Week Hours from A.M./P.I September17,2014 Wednesday 5:00 P.M. Middle FOUNTAIN HILLS City Date of Birth ARIZONA 85268 State Zip Applicant's Home # /I.To A.M./P.M. 8:00 P.M.Day 1: Day 2: Day 3: Day 4: Day 5: Day 6: Day 7: Day 8: Day 9: Day 10- September 2011 "Disabled individuals requiring special accommodations,please call (602) 542-9027 10.Has the applicant been convicted of a felony inthe past five years,or had a liquor license revoked? •YES 0NO (attach explanation if yes) 11.This organization has been issued a special event license for____days this year,including this event (not to exceed 10 days per year). 12.Is the organization using the services ofa promoter or other person to manage the event?Q YES [•]NO If yes,attach a copy of the agreement. 13.Listall people and organizations who will receive the proceeds.Account for 100% of the proceeds. THE ORGANIZATION APPLYING MUST RECEIVE 25%OF THE GROSS REVENUES OF THE SPECIAL EVENT LIQUOR SALES. Name fountain hills and lower verde valley museum and historical society ioo% Percentage AHHrocc P.O.BOX 17445,FOUNTAIN HILLS,AZ 85269 Name Percentage Address (Attach additional sheet if necessary) 14.Knowledge of Arizona State Liquor Laws Title 4 is important to prevent liquor law violations. Ifyou have any questions regarding the law or this application,please contact the Arizona State Department of Liquor Licenses and Control for assistance. NOTE:ALL ALCOHOLIC BEVERAGE SALES MUST BE FOR CONSUMPTION AT THE EVENT SITE ONLY. "NO ALCOHOLIC BEVERAGES SHALL LEAVE SPECIAL EVENT PREMISES." 15.What security and control measures will you take to prevent violations of state liquor laws at this event? (List type and number of security/police personnel and type of fencing or control barriers if applicable) #Police Q Fencing -#Security personnel •Barriers SECURITY WILL BE PROVIDED BY A RETIRED POLICE OFFICER 16.Is there an existing liquor license atthe location where the special eventis being held?•YES 0 NO If yes,does the existing business agree to suspend their liquor license during the time period,and in thearea in which the special event license will be in use?Q YES •NO (ATTACH COPY OF AGREEMENT) ( ) Name of Business Phone Number 17. Your licensed premises is that area in which you are authorized to sell,dispense,or serve spirituous liquors under the provisions of your license. The following page is to be used to prepare a diagram of your special event licensed premises.Please show dimensions,serving areas,fencing,barricades or other control measures and security positions. SPECIAL EVENT LICENSED PREMISES DIAGRAM (This diagram must be completed with this application) Special Event Diagram:(Show dimensions,serving areas,and label type of enclosure and security positions NOTE:Show nearest cross streets,highway,or road if location doesn't have an address. Uoin Entrance Center Ccvlysrc Area South North COWMUMlTY CENTER rt.OQR PLAN —«*••'-'*& Fountain Hills Community Center,13001 N.LaMontana,Fountain Hills,AZ.Liquor service will be in Ballroom 1,2,3,or 4as designated by the Community Center staff.Security will bepostedinthelobbyoftheCommunityCenter.'*<«..«! THIS SECTION TO BE COMPLETED ONLY BY AN OFFICER.DIRECTOR OR CHAIRPERSON OF THE ORGANIZATION NAMED IN QUESTION #1 -10 I Deborah H.Skehen . , '-declare that Iam an Officer/Director/Chairperson appointinq the (Print full name) applicantlisted in Question 6,to apply on behalf of the foregoing organization for a Special Event Liquor License. Colin HornlnSgtate0f Notary Public Maricopa County,ArizonaMyGomiT).Expires 01-19-2015 President (Title/Position}(Date)(Phone #) ^k County of _^feiL^a ^"/^/^OM The foregoing instrumentwas acknowledged beforemethis 3 T^ti >/<y Day with Year (SignatywT5T^JOJ^RY PUBLIC) THISSECTION TO BE COMPLETED ONLY BY THE APPLICANT NAMED IN QUESTION #6 Jean Linzer declarethat Iamthe APPLICANT filing this application as19.I My ci (Print full name) listed in Question 6.Ihave reao!the application and the contents and all statements are true,correct and complete. State of gnoture)- County of /ft r*.jp/fL The foregoing instrumentwas acknowledged beforemethis 3 jjgj t MyColin Horning Notary Public pirfflfrroftjift County.Arizona MVr^m.Eyft«BaiBM9-2015 /ypff Day Month ? (Signature of NOS&rfmJBLIC) Year You r*t3bz>bUltt-\tiLd\uovemmerit approval. City or County MUST recommend event and complete item #20. The local governing body may require additional applications to be completed and submitted 60 days in advance of the event.Additional licensing fees mayalso be required before approval maybe granted. 20.I, LOCAL GOVERNING BODY APPROVAL SECTION hereby recommend thisspecial event application (Government Official)(Title) on behalf of (City,Town or County)(Signature of OFFICIAL)(Date) Department Comment Section: FOR DLLC DEPARTMENT USE ONLY (Employee)(Date) •APPROVED G DISAPPROVED BY: (Title)(Date) C6-03-14A 10:45 RCV) ARIZONA DEPARTMENT OF LIQUOR LICENSES &CONTROL 800 W Washington 5th Floor Phoenix,Arizona 85007-2934 (602)542-5141 APPLICATION FOR SPECIAL EVENT LICENSE Fee = $25.00 per day for 1-10 day events only Aservicefee of$25.00 will be charged for all dishonored checks (A.R.S.§44-6852) NOTE: THIS DOCUMENT MUST BE FULLY COMPLETED OR ITWILL BE RETURNED. PLEASE ALLOW 10 BUSINESS DAYS FOR PROCESSING. **Application must be approved by local government before submission to Departmentof LiquorLicenses and Control. (Section#20) 1.Name of Organization:fountain hills and lower verde valley museum and historical society 2.Non-Profit/I.R.S.Tax Exempt Number:86-0670640 DLLC USE ONLY LICENSE # 3. The organization isa: (check one box only) 0 Charitable •Fraternal (must have regular membership and in existence for over 5 years) •Civic rj Religious •Political Party,Ballot Measure,or Campaign Committee 4.What is the purpose of this event?0 on-site consumption •off-site consumption (auction)•both Historical Society Dinner Meeting 5.Location ofthe event:13001 n.la Montana blvd.fountain hills maricopa 85268 Address of physical location (Not P.O.Box)City County Zip Applicantmust be a member ofthe qualifyingorganization and authorized bvan Officer.Directoror Chairperson of the Organization named in Question #1.(Signature required in section #18) 6.Applicant:L|NZER jean Last First Middle Date of Birth 7.Applicant's Mailing Address:e.glenpoint drive fountain hills Arizona 85268 Street City State Zip 8.Phone Numbers:(48°)816-5200 Site Owner #Applicants Business #Applicant's Home # 9.Date(s)&Hours Of Event:(see A.R.S.4-244(15)and (17)for legal hours of service) Date Day of Week Hours from A.M./P.M.T0A.M./P.M. Day 1:November 19,2014 Wednesday 5:00 P.M.8:00 P.M. Day 2: Day 3: Day 4: Day 5: Day 6: Day 7: Day 8: Day 9: Day 10: c h 9011 *D'saWed individuals requiring special accommodations,please call (602)542-9027 10.Hasthe applicant been convicted ofa felony inthe past five years, or had a liquor licenserevoked? •YES 0NO (attach explanation ifves) 11.This organization has been issueda specialeventlicense for_2!2f days thisyear,including thisevent (not to exceed 10 days per year). 12.Is the organization using the services ofa promoter or other person to manage the event?•YES [•]NO Ifyes,attach a copy of the agreement. 13.List all peopleand organizationswho will receivethe proceeds. Accountfor 100%ofthe proceeds. THE ORGANIZATION APPLYING MUST RECEIVE 25%OF THE GROSS REVENUES OF THE SPECIAL EVENT LIQUOR SALES. Name fountain hills and lower verde valley museum and historical society 1oo% Percentage AHHrocc P.O.BOX 17445,FOUNTAIN HILLS,AZ 85269 Name _^ Percentage Address— (Attach additional sheet if necessary) 14.Knowledge of Arizona State Liquor Laws Title 4 is important to prevent liquor law violations.If youhave any questions regarding the laworthis application,please contactthe Arizona State Departmentof Liquor Licenses and Control for assistance. NOTE: ALL ALCOHOLIC BEVERAGE SALES MUST BE FOR CONSUMPTION AT THE EVENT SITE ONLY. "NO ALCOHOLIC BEVERAGES SHALL LEAVE SPECIAL EVENT PREMISES." 15.Whatsecurityand control measures will you take to prevent violationsof state liquorlaws at this event? (List typeand numberof security/police personnel and typeof fencing or control barriersif applicable) #Police Q Fencing #Security personnel Q Barriers SECURITY WILL BE PROVIDED BY A RETIRED POLICE OFFICER 16.Is therean existing liquor license atthe location where the special eventis being held?[]YES 0 NO If yes,does the existing business agree to suspend their liquor license during the time period,and in thearea in which the special event license will be in use?•YES •NO (ATTACH COPY OF AGREEMENT) ( ) Name of Business Phone Number 17. Your licensed premises is that area in which you are authorized to sell,dispense,or serve spirituous liquors under the provisions of your license.The following page is to be used to prepare a diagram of your special event licensed premises.Please show dimensions,serving areas,fencing,barricades or other control measures and security positions. SPECIAL EVENT LICENSED PREMISES DIAGRAM (This diagram must be completed with this application) Special Event Diagram:(Show dimensions,serving areas,and label type of enclosure and security positions NOTE:Show nearest cross streets,highway,or road if location doesn't have an address. —S Vi North ScniotNet Z?y • • 3C "\ Kc.-ojo Ueetir.9 F.tctn "'"? I H0P1 Meeting Room KVtt Utet-ng Rccm C Art Room -\J Stcrc$e.Room Ycvopci Meeting Room C rrru ^ -)r-•O E ',Lorge Ho9 :;ChcV Stereo* a Gated Porting Area rvu I/?u r-M Bcflroom 2 \J "®Wi* Bsfireom 3 "IS Senior Services Office C a .•«»:.q 1 .«1 a j '^ws—•^v^gt1 "l ConferenceJRoorn I'•a '<#£? Uo'm Entrance •I Cen'.cf Cevtysre Ares *Restrocma end Pcy Phene I Mil »CO»•OQe ft lobby \S South S> Soltroom 1 Bafiroorn 4 Ctoa Ho* COMMUNITY CENTER rtOQR PLAN -»-»-"-r '£P Fountain Hills Community Center,13001 N.LaMontana,Fountain Hills,AZ.Liquor service will be in Ballroom 1,2,3,or 4as designated by the Community Center staff.Security will be posted in the lobby ofthe Community Center. THIS SECTION TO BE COMPLETED ONLY BY AN OFFICER,DIRECTOR OR CHAIRPERSON OF THE ORGANIZATION NAMED IN QUESTION #1 18.L Deborah H.Skehen declare that Iam an Officer/Director/Chairperson appointing the X (Print full name) arjpljcant listec!inQuestion 6, to apply on behalf of the foregoing organization for a Special Event LiquorLicense. )$j<aJjUn <j President £jJj2QM ••(Signature'(Title/Position) Colin HornStgrte of f\ NotaryPublic Maricopa County,Arizona My Cornm.Expires 01-19-2015 'Y~Lotf*x (Date)(Phone #) .County of The foregoing instrument was acknowledged before me this 3 J^e 2p/% My Commission explies un.l/ft/^'fS Day (Date) Month Year ^=(Signaitrf^oTNQJ-ARY PUBLIC) THIS SECTION TO BE COMPLETED ONLY BY THE APPLICANT NAMED IN QUESTION #6 19.L,_declarethat Iam the APPLICANT filing this application as (Print full name) listed in Question6. Ihave read'the application and the contents and all statements are true,correctand complete. YcLuBtfyrrrjDTain local government approval.City or County MUST recommend event and complete item #20. The local governing bodv may require additional applications to be completed and submitted 60 days in advance of the event.Additional licensing fees may also be required before approval may be granted. State of //A'-g"h.County of /%-'CW^ The foregoing instrument was acknowledged before me this 3 J^e 2*/V Day Year (Signature of rjOTARY PUBLIC) LOCAL GOVERNING BODY APPROVAL SECTION 20.hereby recommend this special event application (Government Official)(Title) on behalf of (City,Town or County)(Signature of OFFICIAL)(Date) FOR DLLC DEPARTMENT USE ONLY Department Comment Section: (Employee)(Date) G APPROVED •DISAPPROVED -wr (Title)(Date) 06-03-14A 10:45 RCVD ARIZONA DEPARTMENT OF LIQUOR LICENSES &CONTROL 800 W Washington 5th Floor Phoenix,Arizona 85007-2934 (602)542-5141 APPLICATION FOR SPECIAL EVENT LICENSE Fee =$25.00 per day for 1-10 day events only A service fee of $25.00 will be charged for all dishonored checks (A.R.S.§44-6852) NOTE:THIS DOCUMENT MUST BE FULLY COMPLETED OR IT WILL BE RETURNED. PLEASE ALLOW10 BUSINESS DAYS FOR PROCESSING. **Application must be approved by local government before submission to Department of Liquor Licenses and Control.(Section #20) DLLC USE ONLY LICENSE # 1.Name of Organization:fountain hills and lower verge valley museum and historical society 2.Non-Profit/I.R.S.Tax Exempt Number:86-°670640 3.The organization is a:(check one box only) 0 Charitable •Fraternal (musthave regular membership and in existence for over5 years) •Civic |~~]Religious •Political Party,Ballot Measure,or Campaign Committee 4.What isthe purpose of this event?0 on-site consumption •off-site consumption (auction)•both Historical Society Dinner Meeting 5.Location of the event:13001 n.la Montana blvd.fountain hills maricopa 85268 Address of physical location (Not P.O. Box)City County Zip Applicant must be a member of the qualifying organization and authorized by an Officer.Director or Chairperson of the Organization named in Question #1.(Signature required in section #18) 6.Applicant:LINZER ^ Last First Middle Date of Birth 7.Applicant's Mailing Address:2E.glenpoint drive fountain hills Arizona 85268 Street City State Zip 8.Phone Numbers:(480 )816-5200 Day 1: Day 2: Day 3: Day 4: Day 5: Day 6: Day 7: Day 8: Day 9: Day 10: September 2011 Site Owner*Applicant's Business #Applicant's Home # 9.Date(s)&Hours Of Event:(see A.R.S.4-244(15)and (17)for legal hours of service) Date Day of Week Hours from A.M./P.M.T0A.M./P.M. January 21,2015 Wednesday 5:00 p.m.8:00 p.m. *Disabled individuals requiring special accommodations,please call (602)542-9027 10.Has the applicant been convicted of a felony inthe past five years,or had a liquor license revoked? •YES 0NO (attach explanation ifyes) 11.This organization has been issued a special event license for_22f days this year, includingthis event (not to exceed 10 days per year). 12.Is the organization using the services ofa promoter or other person to manage the event?Q YES [•]NO If yes,attach a copy of the agreement. 13.Listall people and organizations who will receive the proceeds.Account for 100%of the proceeds. THE ORGANIZATION APPLYING MUST RECEIVE 25%OF THE GROSS REVENUES OF THE SPECIAL EVENT LIQUOR SALES. Name fountain hills and lower verde valley museum and historical society ioo% Percentage AHHi-pcq P.Q-BOX 17445,FOUNTAIN HILLS,AZ85269 Name Percentage Address (Attach additional sheet if necessary) 14.Knowledge ofArizona State LiquorLaws Title4 is important to prevent liquorlaw violations. Ifyou have any questions regarding the law or this application,please contact the Arizona State Department of Liquor Licenses and Control for assistance. NOTE:ALL ALCOHOLIC BEVERAGE SALES MUST BE FOR CONSUMPTION AT THE EVENT SITE ONLY. "NO ALCOHOLIC BEVERAGES SHALL LEAVE SPECIAL EVENT PREMISES." 15.What security and control measures will you take to prevent violations of state liquor laws at this event? (List type and number of security/police personnel and type of fencing or control barriers if applicable) #Police Q Fencing #Security personnel •Barriers SECURITY WILL BE PROVIDED BY A RETIRED POLICE OFFICER 16.Is there an existing liquor license atthe location where the special eventis being held?Q YES 0 NO If yes,does the existing business agree to suspend their liquor license during the time period,and in thearea in which the special event license will be in use?Q]YES •NO (ATTACH COPY OF AGREEMENT) ( ) Name of Business Phone Number 17. Your licensed premises is that area in which you are authorized to sell,dispense,or serve spirituous liquors under the provisions of your license.The following page is to be used to prepare a diagram of your special event licensed premises.Please show dimensions,serving areas,fencing,barricades or other control measures and security positions. SPECIAL EVENT LICENSED PREMISES DIAGRAM (This diagram must be completed with this application) Special Event Diagram:(Show dimensions,serving areas,and label type of enclosure and security positions NOTE:Show nearest cross streets,highway,or road if location doesn't have an address. =avi. VI. North 5«n Ce«r»l Pgrtag tno ScneiNct frTLfl:*'y *\ Ns.-ojo UettL-.g Recm Ceded Parking A/eo rvit1 /- fflfffffl IV. o ? ft Art Room 3C 1 Sloro^e.Room ;Choir Storey TotfeStorcoJg ^ ~r-f DDTJ I HOPI Ucetirq Reem kit Yevepei Uettlng Room C r:r:.r o ^ *-?r-• o 1/7 U F BeOroom 2 Boflroom J c Senior Service: CHice C •",Lor^r Ho3 \ 3 .a ~•••9 "•ConferenceJRoom «•;'—J I^C ^*Restrooms end ..Poy Phone r-n ^- t HI I •»••#»CE2e Uoin Entrcnee J>! hi Lobby Cen'.cr CcvtvcrC Ares L/" South Ballroom 1 Cton Hal CC^MUWITY CENTER noon PLAN 9 Fountain Hills Community Center,13001 N.LaMontana,Fountain Hills,AZ.Liquor servicew"'^'n Ballroom 1,23,or4as designated by the Community Center staff.Secur^wiHbepostedinthelobbyoftheCommunityCenter.««<niy wince 19. THIS SECTION TO BE COMPLETED ONLY BY AN OFFICER,DIRECTOR OR CHAIRPERSON OF THE ORGANIZATION NAMED IN QUESTION #1 Deborah H.Skehen declare that I am an Officer/Director/Chairperson appointing the (Print full name) pplicant listed in Question 6, to apply on behalf of the foregoing organization for a Special Event Liquor License. ^fclfcr (Sjgnatum Colin Hornin^tate of NotaryPublic Maricopa County,Arizona 'My Comm.Expires 01-19-2015 President £/32014 (Title/Position)(Date)(Phone #) /f^'^rV County of /^'^ The foregoing instrument was acknowledged before me this 3 &jn /W£ M-eAuiiesuii-.' (Date) Day (Signature of NO DBLIC) THIS SECTION TO BE COMPLETED ONLY BY THE APPLICANT NAMED IN QUESTION #6 I Jean Linzer declare that Iam the APPLICANT filing this application as (Print full name) listed in Question 6. I have read the application and the contents and all statements are true,correct and complete. Colin Horning Notary Public eflEteftpnCountv.Arizona t4y P,nmffl,KXftlrfta(Bfefia-2015 State of 'TO'tKy County of ^f^'^fL j/fiffi The foregoing instrument was acknowledged before me this 3 jjjg 2^/y Month (SiqnatugrofNOTARY PUBLIC) = Yo j-magt-^btain local gbvernmerit approval.City or County MUST recommend event and complete item #20. The local governing body may require additional applications to be completed and submitted 60 days in advance of the event.Additional licensing fees may also be required before approval may be granted. LOCAL GOVERNING BODY APPROVAL SECTION 20.1.hereby recommend this special event application (Government Official)(Title) on behalf of (City, Town or County)(Signature of OFFICIAL)(Date) FOR DLLC DEPARTMENT USE ONLY Department Comment Section: (Employee)(Date) D APPROVED •DISAPPROVED BY: (Title)(Pate) 06-03-14A 10:46 RCVD ARIZONA DEPARTMENT OF LIQUOR LICENSES &CONTROL 800 W Washington 5th Floor Phoenix,Arizona 85007-2934 (602)542-5141 APPLICATION FOR SPECIAL EVENT LICENSE Fee =$25.00 per day for 1-10 day events only Aservice fee of$25.00 will be charged for all dishonored checks (A.R.S.§ 44-6852) NOTE: THIS DOCUMENT MUST BE FULLY COMPLETED OR IT WILL BE RETURNED. PLEASE ALLOW 10 BUSINESS DAYS FOR PROCESSING. **Application must be approved by local government before submission to Department of Liquor Licenses and Control. (Section #20) DLLC USE ONLY LICENSE # 1.Name of Organization:fountain hills and lower verde valley museum and historical society 2.Non-Profit/I.R.S.Tax Exempt Number:86-o670640 3. The organization is a:(check one box only) 0 Charitable •Fraternal (must have regular membership and in existence for over 5 years) •Civic •Religious •Political Party,Ballot Measure,or Campaign Committee 4.What is the purpose of this event?0 on-site consumption •off-site consumption (auction)•both Annual Hall of Fame Induction Dinner 5.Location ofthe event:130Q1 n.la Montana blvd.fountain hills maricqpa 85268 Address of physical location (Not P.O.Box)City County Zip Applicant must be a member of the qualifying organization and authorized bv an Officer.Director or Chairperson of the Organization named in Question #1.fSignature required in section #18) 6.Applicant:LINZER jean Last First Middle Date of Birth 7.Applicant's Mailing Address:E.glenpoint drive fountain hills Arizona 85268 Street City State Zip 8. Phone Numbers:(48°)816-5200 Site Owner*Applicant'sBusiness #Applicant's Home# 9. Date(s) &Hours Of Event: (see A.R.S.4-244(15)and (17)for legal hours of service) Date Day of Week Hours from A.M./P.M. To A.M./P.M. Day 1:March 18,2015 Wednesday 5:00 P.M.10:00 P.M. Day 2: Day 3: Day 4: Day 5: Day 6: Day 7: Day 8: Day 9: Day 10: Q «•k ->m 1 "Disabled individuals requiring special accommodations,please call (602)542-9027 10.Has the applicant been convicted of a felony in the past five years,or had a liquor license revoked? •YES 0NO (attach explanation if ves) 11.This organization has been issued a specialeventlicensefor JtlLff—days thisyear,including thisevent (not to exceed 10 days per year). 12.Is the organization using the services ofa promoter or other person to manage the event?Q YES [•]NO If yes,attach a copy of the agreement. 13.Listall people and organizations who will receive the proceeds.Account for 100%of the proceeds. THE ORGANIZATION APPLYING MUST RECEIVE 25%OF THE GROSS REVENUES OF THE SPECIAL EVENT LIQUOR SALES. Name fountain hills and lower verde valley museum and historical society ioo% Percentage AHrlrPgQ po B0X 17445,FOUNTAIN HILLS,AZ 85269 Name Percentage Address (Attach additional sheet if necessary) 14.KnowledgeofArizona State LiquorLaws Title4 is importantto prevent liquorlawviolations. Ifyou have any questions regarding the law or this application,please contact the Arizona State Department of Liquor Licenses and Control for assistance. NOTE:ALL ALCOHOLIC BEVERAGE SALES MUST BE FOR CONSUMPTION AT THE EVENT SITE ONLY. "NO ALCOHOLIC BEVERAGES SHALL LEAVE SPECIAL EVENT PREMISES." 15.What security and control measures will you take to prevent violations of state liquor laws at this event? (Listtype and number of security/police personnel and type of fencing or control barriers if applicable) .#Police Q]Fencing #Security personnel []Barriers SECURITY WILL BE PROVIDED BY AN OFF DUTY POLICE OFFICER 16.Is there an existing liquor license atthe location where the special event is being held?Q YES 0 NO If yes,does the existing business agree to suspend their liquor license during the time period,and in thearea in which the special event license will be in use?[]YES •NO (ATTACH COPY OF AGREEMENT) ( ) Name of Business Phone Number 17. Your licensed premises is that area in which you are authorized to sell,dispense,or serve spirituous liquors under the provisions of your license.The following page is to be used to prepare a diagram of your special event licensed premises.Please show dimensions,serving areas,fencing,barricades or other control measures and security positions. SPECIAL EVENT LICENSED PREMISES DIAGRAM (This diagram must be completed with this application) Special Event Diagram:(Show dimensions,serving areas,and label type of enclosure and security positions NOTE:Show nearest cross streets,highway,or road if location doesn't have an address. «*r "*,!\fl North 3rfl Omul tang )no ScnfeiNet y :J\S\'&y Cated Parking ^j^n.._-,...JV *vllrfflH§ Kff.-ojo UeetL-9 R«m '? I HOPI Utetinq Room • Art Room -\J...... Slorecc.Room is? Ycvapci U«tlft9 Room i ? Choir Storey <J Vl Table Storage Scrvict Hoa VJ LtXJ Bodroom 2 Bo&rootn 3 < Senior Service: £ Conference Room LU3 £ I c c Uc'm Enlrcnee Cen'.rr CevlyCfC Area V B .•?!Si *»9 3> *Rcstrocms end Po/Phone °LAJ •1"•"LAJIAI Lounge looby South T~:~va^^ Ballroom 1 BaSfoarn 4 C.doss Hal COMMUNITY CENTER rtOQR PLAN 9 Fountain Hills Community Center,13001 N.LaMontana,Fountain Hills,AZ.Liquor service will be in Ballroom 1,2,3,or 4as designated by the Community Center staff.Security will be posted in the lobby ofthe Community Center. THIS SECTION TO BE COMPLETED ONLY BY AN OFFICER,DIRECTOR OR CHAIRPERSON OF THE ORGANIZATION NAMED IN QUESTION #1 18.I Deborah H.Skehen declare that Iam an Officer/Director/Chairperson appointing the (Print full name) applicant listed in Question 6, to apply onbehalfofthe foregoing organization fora Special Event Liquor License. My k,~J>President (Title/Position) £j3l20"l4 (Date)(Phone ft) .County of ^BflfS£LColinHornlngStateof Notary Public Maricopa County,Arizona My Comm.Expires 01-19-2015 The foregoing instrument was acknowledged before me this ;uiiiimission uxprfefrAflJ (Date)' l/v/H onth Year (Signa4ajofiJ°^ARY PUBLIC) 19. THIS SECTION TO BE COMPLETED ONLY BY THE APPLICANT NAMED IN QUESTION #6 ' ''!'' !'declare that I am the APPLICANT filing this application as (Print full name) listed in Question 6. Ihave read the application and the contents and all statements are true,correctand complete. ignature) Colin Homing Notary Public eMMtefePflrCounty.Arizona My Comm.Expires gSB^t^pms You must obtain local government api State of '1r"1<*rL .County of /i^Q ic/The foregoing instrument was acknowledged before me this' 3 ^fvt !?iy WWS Day Year (Signature of NOTARY PJJBLIC) roval.City or County MUST recommend event and complete item #20. The local governing bodv may reguire additional applications to be completed and submitted 60 days in advance of the event.Additional licensing fees may also be reguired before approval may be granted. LOCAL GOVERNING BODY APPROVAL SECTION 20.hereby recommend this spe cial event application (Government Official)(Title) on behalf of (City,Town or County)(Signature of OFFICIAL)(Date) FOR DLLC DEPARTMENT USE ONLY Department Comment Section: (Employee)(Date) G APPROVED Q DISAPPROVED BY: (Title)(Date) 06-03-14 A 10:51 RCVD ARIZONA DEPARTMENT OF LIQUOR LICENSES &CONTROL 800 W Washington 5th Floor Phoenix,Arizona 85007-2934 (602)542-5141 APPLICATION FOR SPECIAL EVENT LICENSE Fee =$25.00 per day for 1-10 day events only A service fee of$25.00 will be charged forall dishonored checks (A.R.S.§44-6852) NOTE:THIS DOCUMENT MUST BE FULLY COMPLETED OR IT WILL BE RETURNED. PLEASE ALLOW 10 BUSINESS DAYS FOR PROCESSING. **Application must be approved by local government before submission to Department of Liquor Licenses and Control.(Section #20) DLLC USE ONLY LICENSE # 1.Name of Organization:fountain hills and lower verde valley museum and historical society 2. Non-Profit/I.R.S. Tax Exempt Number:86-0670640 3. The organization is a:(check one box only) 0 Charitable •Fraternal (must have regular membership and in existence for over 5 years) •Civic rj Religious •Political Party,Ballot Measure,or Campaign Committee 4.What is the purpose of this event?0 on-site consumption •off-site consumption (auction)•both WISCONSIN FEST FUNDRAISER FOR THE BENEFIT OF THE MUSEUM &HISTORICAL SOCIETY 5.Location ofthe event:130Q1 n.la Montana blvd.fountain hills maricqpa 85268 Addressof physical location (NotP.O.Box)City County Zip Applicant must be a member of the qualifying organization and authorized bv an Officer.Director or Chairperson of the Organization named in Question #1.(Signature required in section #18) 6.Applicant:LINZER JEAN Last First Middle Date of Birth 7.Applicant's Mailing Address:E.glenpoint drive fountain hills Arizona 85268 Street City State Zip 8. Phone Numbers:(*8o )816-5200 Site Owner#Applicant's Business #Applicant'sHome# 9. Date(s) &Hours OfEvent:(see A.R.S.4-244(15)and (17)for legal hours ofservice) Date Day of Week Hours from A.M./P.M.T0A.M./P.M. Day 1:MARCH 28,2015 SATURDAY 11:00 A.M.5:00 P.M. Day 2: Day 3: Day 4: Day 5: Day 6: Day 7: Day 8: Day 9. Day 10: - , on 11 disabled individuals requiring special accommodations,please caU (602)542-9027 10.Hasthe applicant been convicted ofa felony inthe past five years, or had a liquor licenserevoked? •YES 0NO (attach explanation if ves) 11.This organization has beenissueda special event license forJ!^days this year,including this event (not to exceed 10 days per year). 12.Is the organization using the services of a promoter or other person to manage the event?•YES [•]NO Ifyes,attach a copy of the agreement. 13.List all people and organizations who will receive the proceeds.Account for 100%ofthe proceeds. THE ORGANIZATION APPLYING MUST RECEIVE 25% OF THE GROSS REVENUES OF THE SPECIAL EVENT LIQUOR SALES. Name fountain hills and lower verde valley museum and historical society 1oo% Percentage Aririrpgg PO-BOX 17445,FOUNTAIN HILLS,AZ 85269 Name Percentage Address (Attach additional sheet if necessary) 14.Knowledge of Arizona State Liquor Laws Title 4 is important to prevent liquor law violations.If you have anyquestions regarding the laworthis application,please contactthe Arizona State Department of Liquor Licenses and Control for assistance. NOTE:ALL ALCOHOLIC BEVERAGESALES MUSTBE FOR CONSUMPTIONATTHE EVENTSITE ONLY. "NO ALCOHOLIC BEVERAGES SHALL LEAVE SPECIAL EVENT PREMISES." 15.What security and control measures will youtake to prevent violations ofstate liquor lawsat thisevent? (List typeand number of security/police personnelandtypeof fencing or control barriers ifapplicable) J #Police Q Fencing #Security personnel •Barriers SECURITY WILL BE PROVIDED BY AN OFF DUTY POLICE OFFICER 16.Is there an existing liquor license atthe location where the special event is being held?Q]YES 0 NO Ifyes,does the existing business agree to suspend their liquorlicense duringthe time period,and in thearea in which the special event license will be in use?Q YES •NO (ATTACH COPY OF AGREEMENT) ( ) Name of Business Phone Number 17.Your licensed premises is that area in which you are authorizedto sell, dispense, or serve spirituous liquors under the provisions of your license. The following page is to be used to prepare a diagram of yourspecial event licensed premises.Please show dimensions,serving areas,fencing,barricades or other control measures and security positions. SPECIALEVENTLICENSEDPREMISESDIAGRAM(Thisdiagrammustbecompletedwiththisapplication)SpecialEventDiagram:(Showdimensions,servingareas,andlabeltypeofenclosureandsecuritypositionsNOTE:Shownearestcrossstreets,highway,orroadiflocationdoesn'thaveanaddress.«*'t:ScnioiNetyKSrtjoUcet?--?F.ecrnNorth9<ACo»t»IPgrtrqJnoyPXJ/**CdcdPortingAreq^/•3ZE0ESS53•?ftArtRoom-\J......Stwcge.RoomCho>StoreyHOPtUectingRoomF>,UAUtcingRccmYcvcpciUcttingRoom ii/TF<J^'TobleStoopServiceHoaA.iDtraKitchen^BeUroom2BsSrootn3<k*yc^cSeniorServicesOffice7Srf^-.'-J^Ws-A^|'P—BidDiIConferenceRoom<r8.•*•9°/i.""_.r\ReslroomaendPcyPhcne0I'M••"LAJLAJ^^J?HUlO^tfO^^O»*=)^^i.-IR*OQ»•EE2*PiUc'mEnlrcncelobbyVCen'ftCcvtycreArcsSouth8oltroom1BoBroont4«>r_lCtaotiedCOMMUNITY CENTERROOKPLAN®FountainHillsCommunityCenter,13001N.LaMontana,FountainHills,AZ.LiquorservicewillbeinBallroom1,2,3,or4asdesignatedbytheCommunityCenterstaff.SecuritywillbepostedinthelobbyoftheCommunityCenter. THIS SECTION TO BE COMPLETED ONLY BY AN OFFICER.DIRECTOR OR CHAIRPERSON OF THE ORGANIZATION NAMED IN QUESTION #1 io i Deborah H.Skehen , . ,..._„,„.,„.I0-u—declare that Iam an Officer/Director/Chairperson appointing the (Print full name) applicant listed in Question 6,to apply on behalf ofthe foregoing organization for a Special Event Liquor License.applicant listed in Question 6, to appl X (Signature State of Colin Horning Notary Public Maricopa County,Arizona My Comm.Expires 01-19-2015 President /JP/2014 (Title/PositionL (Date) /tyc (Phone #) County of C W-'^tTi The foregoing instrument was acknowledged before me this 3 -7^11 2<*/u Month My Cc nmissinn PYpirps nn; (Date) f-frift 19. THIS SECTION TO BE COMPLETED ONLY BY THE APPLICANT NAMED IN QUESTION #6 L,_declare that Iamthe APPLICANT filing this application as (Print full name) listed in Question 6. Ihavereadthe application andthe contents and all statementsare true,correct and complete. Colin Horning Notary Public 1Arizona State of /felJg£L County of /fftj r£&gj The foregoing instrument was acknowledged before me this Month My con W COtom.bffifngtfl.^8^)01-19-2015 (Signature of NOTARY PUBto You must obtain local government approva .City or County MUST recommend event and complete item #20. The local governing bodv may require additional applications to be completed and submitted 60 days in advance of the event.Additional licensing fees may also be required before approval may be granted. LOCAL GOVERNING BODY APPROVAL SECTION 20.,hereby recommend this special event application (Government Official)(Title) on behalf of (City,Town or County)(Signature of OFFICIAL)(Date) Department Comment Section: FOR DLLC DEPARTMENT USE ONLY (Employee)(Date) •APPROVED •DISAPPROVED BY: (Title)(Date) ARIZONA DEPARTMENT OF LIQUO^l?lfc^1ES5&<2©flTROL 800 WWashington 5th Floor Phoenix,Arizona 85007-2934 (602)542-5141 APPLICATION FOR SPECIAL EVENT LICENSE Fee =$25.00 per day for 1-10 day events only A service fee of $25.00 will be charged for all dishonored checks (A.R.S.§44-6852) NOTE:THIS DOCUMENT MUST BE FULLY COMPLETED OR IT WILL BE RETURNED. PLEASE ALLOW 10 BUSINESS DAYS FOR PROCESSING. **Application must be approved by local government before submission to Department of Liquor Licenses and Control.(Section #20) DLLC USE ONLY LICENSE # 1.Name of Organization:fountain hills and lower verde valley museum and historical society 2.Non-Profit/I.R.S.Tax Exempt Number:86-°670640 3.The organization is a:(check one box only) 0 Charitable •Fraternal (musthave regular membership and in existence for over5 years) •Civic f-]Religious •Political Party,Ballot Measure,or Campaign Committee 4.What isthe purpose of this event?0 on-site consumption •off-site consumption (auction)•both Historical Society Dinner Meeting 5.Location of the event:13001N.la Montana blvd.fountain hills maricopa 85268 Address of physical location (Not P.O. Box)City County Zip Applicant must be a member of the qualifying organization and authorized bv an Officer.Director or Chairperson of the Organization named in Question #1.(Signature required in section #18) 6.Applicant:LINZER f^ Last First Middle Date of Birth 7.Applicant's Mailing Address:E.glenpoint drive fountain hills Arizona 85268 Street City State Zip 8.Phone Numbers:(^)si6-5200 Site Owner #Applicant's Business #Applicant's Home # 9.Date(s)&Hours Of Event: (see A.R.S.4-244(15)and (17)for legal hours of service) Date Day of Week Hours from A.M./P.M.T0A.M./P.M. May 20,2015 Wednesday 5:00 p.m.8:00 p.m.Day 1: Day 2: Day 3: Day 4: Day 5: Day 6: Day 7: Day 8: Day 9: Day 10 September 2011 'Disabled individuals requiring special accommodations,please call (602) 542-9027 10.Has the applicant been convicted of a felony in the past five years,or had a liquor license revoked? •YES 0NO (attach explanation ifves) 11.This organization has been issued a special event license for —days this year,including this event (not to exceed 10 days per year). 12.Is the organization using the services ofa promoter or other person to manage the event?Q YES [•]NO If yes,attach a copy of the agreement. 13.Listall people and organizations who will receive the proceeds.Account for 100%of the proceeds. THE ORGANIZATION APPLYING MUST RECEIVE 25%OF THE GROSS REVENUES OF THE SPECIAL EVENT LIQUOR SALES. Name fountain hills and lower verde valley museum and historical society ioo% Percentage AHHrocc P.O.BOX 17445,FOUNTAIN HILLS,AZ 85269 Name Percentage Address (Attach additional sheet if necessary) 14.Knowledge of Arizona State Liquor Laws Title 4 is important to prevent liquor law violations. Ifyou have any questions regarding the law or this application,please contact the Arizona State Department of Liquor Licenses and Control for assistance. NOTE:ALL ALCOHOLIC BEVERAGE SALES MUST BE FOR CONSUMPTION AT THE EVENT SITE ONLY. "NO ALCOHOLIC BEVERAGES SHALL LEAVE SPECIAL EVENT PREMISES." 15.What security and control measures will you take to prevent violations of state liquor laws at this event? (List type and number of security/police personnel and type of fencing or control barriers if applicable) #Police Q Fencing -!#Security personnel Q Barriers SECURITY WILL BE PROVIDED BY A RETIRED POLICE OFFICER 16.Is there an existing liquor license atthe location wherethe special eventis being held?Q YES 0 NO If yes,does the existing business agree to suspend their liquor license during the time period,and in thearea in which the special event license will be in use?•YES •NO (ATTACH COPY OF AGREEMENT) ( ) Name of Business Phone Number 17. Your licensed premises is that area in which you are authorized to sell,dispense,or serve spirituous liquors under the provisions of your license. The following page is to be used to prepare a diagram of your special event licensed premises.Please show dimensions, serving areas,fencing, barricades or other control measures and security positions. SPECIAL EVENT LICENSED PREMISES DIAGRAM (This diagram must be completed with this application) Special Event Diagram:(Show dimensions,serving areas,and label type of enclosure and security positions. NOTE:Show nearest cross streets,highway,or road if location doesn't have an address. ksg4 vi Uoin Entrance Center Ccvlycrtf Ares South North COMMUNITY CENTER riOOR PLAN 9 Fountain Hills Community Center,13001 N.LaMontana,Fountain Hills,AZ.Liquor service will be in Ballroom 1,2,3,or 4 as designated by the Community Center staff.Security will be postedinthe lobby ofthe Community Center. THIS SECTION TO BE COMPLETED ONLY BY AN OFFICER,DIRECTOR OR CHAIRPERSON OF THE ORGANIZATION NAMED IN QUESTION #1 18.L Deborah H.Skehen declare that Iam an Officer/Director/Chairperson appointing the (Print full name) applicanUffcted in Question 6,to aoply on behalf ofthe foregoing organization for a Special Event Liquor License. President 014 86 (Signature Colin Homlraateof NotaryPublic Maricopa County,Arizona My Comm.Expires 01-19-2015 'SMyCommissionexpireson:7 / H /t^ (Date) (Title/Position)(Date)(Phone #) All^DEl County of ^^2^3 The foregoing instrument was acknowledged before me this 1 0^-C o2~/y Month THIS SECTION TO BE COMPLETED ONLY BY THE APPLICANT NAMED IN QUESTION #6 19.I,JeanLinzer declare that Iam the APPLICANT filing this application as (Print full name) listed in Question 6. I have read the application and the contents and all statements are true,correct and complete. LJ£l22^L.County of /l&*-'C£'/0:\ in advance of the event.Additional licensing fees may also be required before approval may be granted. Signatun Cottn Homing .^^M^\ml>K tairUogaHiPVeTffment approval.City or County MUST recommend event and complete item #20. roverninq bodv may require additional applications to be completed and submitted 60 days -..pirpJDate?- State of The foregoing instrument was acknowledged before me this 3 Ju?e ^ Day Month Year (Siqnature of NOTAfJY--PfJBLIC) LOCAL GOVERNING BODY APPROVAL SECTION 20 I,hereby recommend this special event application (Government Official)(Title) on behalf of (City, Town or County)(Signature of OFFICIAL)(Date) FOR DLLC DEPARTMENT USE ONLY Department Comment Section: (Employee)(Date) G APPROVED G DISAPPROVED BY: (Title)(Data) TOWN OF FOUNTAIN HILLS TOWN COUNCIL AGENDA ACTION FORM Meeting Date: 8/7/2014 Meeting Type:Regular Session Agenda Type:Regular Submitting Department:Community Services Staff Contact Information:Mark Mayer 480.816.5190 mmayer@fh.az.gov Council Goal: Strategic Values:Civic Responsibility CR2/CR3 Use citizen talent and foster volunteerism REQUEST TO COUNCIL (Agenda Language):CONSIDERATION of APPOINTING five (5) citizens to serve on the McDowell Mountain Preservation Commission fora three(3)yeartermbeginningAugust 11,2014andending December 31,2017. Applicant: Applicant Contact Information: Property Location: Related Ordinance,Policy or Guiding Principle:Town Council Rules of Procedure 2014-09,Resolution 2005-53 MMPC By-laws. Staff Summary (background):The terms of four (4)members of the McDowell Mountain Preservation Commision expired on December 31,2013.Another vacancy was created due to the resignation of Chair Myers. Risk Analysis (options or alternatives with implications): Fiscal Impact (initial and ongoing costs;budget status): Budget Reference (page number): Funding Source:NA If Multiple Funds utilized,list here: Budgeted;if No,attach Budget Adjustment Form:NA Recommendation(s)by Board(s)or Commission(s):NA Staff Recommendation(s):Staff recommends that the Mayor and Town Council appoint the five (5) applicants interviewed on July 1,2014 to serve on the McDowell Mountain Preservation Commision. List Attachment(s): SUGGESTED MOTION (for Council use):Move to appointment ,,, and to serve on the McDowell Mountain Preservation Commision for a three (3)year term ending December 31,2017. Page 1 of 2 7/2/2014 Director's Approval: Mark Mayer,Community Services Director v 7/2/2014 Approved:pproved:^-^ Ken"Buchanan,Town Manager 7/29/2014 Page 2 of2 CHAPARRALRATECASEDISCUSSIONOFRECENTRATECASEANDEFFECTONRATEPAYERS REVENUE REQUIREMENTS COMPARISON PROPOSED BY Company - EPCOR $2,121,122 Commission - APPROVED - YR 1 $2,054,093 ROO/Adm.Law Judge $1,625,544 ACC Staff Analysts $1,304,325 RUCO $754,940 Commission Decision and the Effects on Ratepayers Commission Approved Revenue Increase Administrative Law Judge (AU's) Additional Costs to Ratepayers - Year 1 $2,054,093 $1,625,544 $428,549 The additional revenues of $428,549,approved by the Commission, represents a 26.4%increase over and above what the Administrative Law Judge recommended.The additional increase was approved by the Commissioners and not one asked the effect the additional increase would have on the ratepayers. BUT IT'S GOING TO GET WORSE SYSTEM IMPROVEMENT BENEFIT CHARGE INCREASE INCREASE YEAR PER YEAR PER MONTH PERCENTAGE 2015 $308,618 $1.76 3.87 % 2016 $296,752 $1.69 3.72 % 2017 $302,579 $1.73 3.79 % 2018 $303,159 $1.73 3.80 % 2019 $291,406 $1.67 3.67 % TOTALS $1,502,514 $8.58 19.23 % The System Improvement Benefit ("SIB")projects have already been approved by the Commission.Once the expenditures are made in the respective years the above rates will go into effect when submitted to the ACC Staff for review. No additional rate case is required to implement the addition to rates. BUT IT'S GOING TO GET WORSE -SLIDE 2 INITIAL SIB CURRENT INCREASE INCREASE ADJUSTED YEAR RATE PER MONTH PERCENTAGE RATES 2014 $37.85 $7.68 -0-$45.53 2015 $45.53 $1.76 3.87%$47.29 2016 $47.29 $1.69 3.72 %$48.99 2017 $48.99 $1.73 3.79 %$50.71 2018 $50.71 $1.73 3.80 %$52.45 2019 $52.45 $1.67 3.65%$54.11 The Order as approved by the Commission states that the rate increase on the average residential ratepayer is $7.68 per month or 20.3%.In reality,the rates increase each year and at the end of year five the rate has increased to $54.11, a percentage increase of 43.0%. WE'RE NOT FINISHED YET COMMISSIONERS APPROVAL vs.AU •Additional Depreciation Expense Additional Depreciation Expense through the use of the Group Depreciation Method as opposed to the modified Vintage method, and the continuation of over-depreciating Utility Plant Assets. •Changing the Rate of Return on Rate Base from 8.06 percent to 8.95 percent. ADDITIONAL APPROVALS Declining Usage Tank Maintenance Expense (18years) Additional Post Test Year Plant over what RUCO recommended System Improvement Benefit $22,174 $202,184 $2,278,882 $1,502,514 FOUNTAIN HILLS BACKGROUND On April 26,2013 Chaparral City Water Company (CCWC)a wholly-owned subsidiary of EPCOR Utilities (EPCOR)filed an application to increase its rates and charges on approximately 13,567 customers residing in City of Fountain Hills and a small section of Scottsdale . •CCWC proposed a revenue requirement of $11,742,107,which is a revenue increase of $2,727,122 - or 30.25 percent.This would result in a $13.18 increase for the average rate for residential customers. •The staff of the Arizona Corporation Commission (ACC)proposed a revenue increase of $1,304,325 or 14.47 percent.The Residential Utility Consumer Office (RUCO)proposed a far lower revenue increase of $754,090 or 8.31 percent. • Five days of hearings began on February 18,2013.Interveners presented their evidence and case before the Administrative Law Judge (ALJ)Teena Jibilian.On May 28,2014, Judge Jibilian filed her Recommended Opinion and Order.She recommended an increase of $1,625,544 or 16.28 percent. In the June 10,2014 Open Meeting the ACC considered the CCWC case and voted to give the Company an increase of $2,054,093 or 22.79 percent.The ACC ignored the recommendations of Judge Jibilian,the ACC staff and RUCO and,instead,increased its Return on Equity (ROE) from 8.65 percent to 9.6 percent.Judge Jibilian tried to explain to the Commissioners they were misapplying the 9.6 percent ROE,but to no avail.The ACC then went on to adopt the Company's position on depreciation expense.The depreciation expense decision increased revenues substantially --even though the ALJ said there was no evidence on the record to support the Company's position. This additional revenue increase of over $429,000 including related impacts represents a 26.4 percent increase over and above what Judge Jibilian recommended.Incredibly, this additional increase was approved without the Commission asking a single question about the impact on residential customers'rates or even how much the revenues were going to increase for the Company. Because RUCO was created by the Legislature in 1983 to be a watchdog on behalf of all Arizona utility ratepayers,it is rising in this case to vigorously defend the interests of Fountain Hills and Scottsdale ratepayers. This also includes RUCO's deep concern over the ACC's approval of a System Improvement Benefit Charge (SIB). This is a mechanism that allows the Company to replace infrastructure - and charge ratepayers to cover those costs -between rate cases.The price increase over the five-year plan is approximately $8.58 for the average residential ratepayer.That amount when added to the rate case increase of $7.68 takes the current rates from $37.85 to $54.11 a 43.0 percent increase. This is far from the 20.3 percent increase that is characterized by the ACC order. But,that's not all.The ACC approved several new adjustments that contributed to other revenue increases for the Company.One of the most egregious adjustments is the so-called Tank Maintenance expense which will increase Company revenues by over $200,000,based on an estimate of costs over the next 18 years.There is no guarantee that tank maintenance will ever be done. In addition to all of this,the ACC also allowed the Company other adjustments that will boost the Company's revenues. In sum,the ACC has ignored recommendations of its own staff,a judge,and RUCO and,in so doing,has increased the cost to ratepayers by 26.1 percent before the SIB goes into effect. Including the SIB revenues,over the next five years the increase is actually an astounding 94 percent. Make no mistake.RUCO is no enemy of Arizona utilities,and neither is it an adversary of the ACC.It understands and appreciates the challenges that utilities -including Chaparral City Water Company —face. But RUCO knows when ratepayers are getting a bad deal,and that's what's happening now to Fountain Hills and some Scottsdale ratepayers. CHAPARRAL RATE CASE DISCUSSION OF RECENT RATE CASE AND EFFECT ON RATEPAYERS REVENUE REQUIREMENTS COMPARISON PROPOSED BY Company - EPCOR $ 2,727,122 Commission – APPROVED – YR 1 $ 2,054,093 ROO / Adm. Law Judge $ 1,625,544 ACC Staff Analysts $ 1,304,325 RUCO $ 754,940 Commission Decision and the Effects on Ratepayers Commission Approved Revenue Increase $ 2,054,093 Administrative Law Judge (ALJ’s) $ 1,625,544 Additional Costs to Ratepayers – Year 1 $ 428,549 The additional revenues of $428,549, approved by the Commission, represents a 26.4% increase over and above what the Administrative Law Judge recommended. The additional increase was approved by the Commissioners and not one asked the effect the additional increase would have on the ratepayers. BUT IT’S GOING TO GET WORSE SYSTEM IMPROVEMENT BENEFIT CHARGE INCREASE INCREASE YEAR PER YEAR PER MONTH PERCENTAGE 2015 $ 308,618 $ 1.76 3.87 % 2016 $ 296,752 $ 1.69 3.72 % 2017 $ 302,579 $ 1.73 3.79 % 2018 $ 303,159 $ 1.73 3.80 % 2019 $ 291,406 $ 1.67 3.67 % TOTALS $1,502,514 $ 8.58 19.23 % The System Improvement Benefit (“SIB”) projects have already been approved by the Commission. Once the expenditures are made in the respective years the above rates will go into effect when submitted to the ACC Staff for review. No additional rate case is required to implement the addition to rates. BUT IT’S GOING TO GET WORSE –SLIDE 2 INITIAL SIB CURRENT INCREASE INCREASE ADJUSTED YEAR RATE PER MONTH PERCENTAGE RATES 2014 $ 37.85 $ 7.68 -0- $ 45.53 2015 $ 45.53 $ 1.76 3.87 % $ 47.29 2016 $ 47.29 $ 1.69 3.72 % $ 48.99 2017 $ 48.99 $ 1.73 3.79 % $ 50.71 2018 $ 50.71 $ 1.73 3.80 % $ 52.45 2019 $ 52.45 $ 1.67 3.65 % $ 54.11 The Order as approved by the Commission states that the rate increase on the average residential ratepayer is $7.68 per month or 20.3%. In reality, the rates increase each year and at the end of year five the rate has increased to $54.11, a percentage increase of 43.0%. WE’RE NOT FINISHED YET COMMISSIONERS APPROVAL vs. ALJ Additional Depreciation Expense $ 214,063 Rate of Return (From 8.06% to 8.95%) $ 192,312 SUB TOTAL $ 406,375 Declining Usage $ 22,174 TOTAL $ 428,549 ADDITIONAL APPROVALS Tank Maintenance Expense (18years) $ 202,184 Post Test Year Plant (estimated) $ 275,000 Working Capital $ 67,064 Additional Income Taxes $ 326,356 GRAND TOTAL $ 1,299,153 Guct r.o0enfeld P.LC. To:Kenneth W.Buchanan From:Landon W.Loveland File No.014414-80 Date:June 25,2014 Re:Arizona Corporation Commission's Decision in CCWC Rate Case The ACC recently issued its final decision in the CCWC rate case. The decision is 138 pages in length,including exhibits.Below is a summary of the items the Town is concerned with, according to my understanding. As always,if you need any further information or clarification,do not hesitate to contact me. Rate Increase CCWC's final rate increase request was 34.83%. RUCO proposed a 7.87% increase and ACC Staff recommended an 11.23%increase. After the hearing and review of the parties'briefs, the ALJ recommended an increase in rates of $6.16 per month for the average residential customer with a 3A inch meter,from $37.85 to $44.01,or an approximate 16.28%increase.Ultimately,the ACC granted a rate increase of $6.74 for the average residential customer from $37.85 to $44.59 or 17.81%. Capital Structure CCWC's current capital structure is 14.45%debt and 85.55%equity.CCWC proposed to maintain its current capital structure.ACC Staff and RUCO both recommended imposing a "hypothetical"60%equity,40%debt capital structure.This is an important issue because CCWC cannot count its debt as rate base,but its equity is included in the rate base. The rate base is then multiplied by the rate of return to determine the rate allotted to CCWC.Staff and RUCO argued that CCWC's equity rich capital structure results "inan unreasonable increase in costs to ratepayers." The ACC did not order a hypothetical capital structure, instead, it ordered CCWC to file a plan within 120 days analyzing how it might achieve "a more balanced, reasonable,and appropriatecapital structure." Finally, CCWC was advisedthat in future rate proceedings a hypothetical capital structure would be considered. CAP Surcharge CCWC purchases CAP water from the Central Arizona Water Conservation District ("CAWCD").CAWCD raises the rates that CCWC pays for CAP water annually to recoup increasing costs and revenue shortfalls.CCWC proposed a CAP Surcharge to recover future expense increases related to CAP water.CCWC proposed filing an annual tariff for the surcharge that would include a calculation of its annual purchased water costs and its projected annual purchased water costs for the following year.RUCO opposed the surcharge arguing that the CAP charges be projected and included in the rates and that any over or under charge be deferred until CCWC's next rate case. The ACC found that the CAP Surcharge was reasonable and granted the CAP surcharge. SIB Surcharge CCWC requested a System Improvement Benefits ("SIB")surcharge.Generally, the SIB is designed to allow CCWC to recover,between rate cases,via surcharge,the pre-tax return on investment and depreciation expenses associated with the water infrastructure improvement projects and plant retirements submitted for review in this rateproceedingand which CCWCplans to completeand place in serviceprior to its next rate case. RUCO opposed the SIB,whereas ACC Staff argued that CCWC should be awardeda SIB. The ACC granted CCWC's request for a SIB surcharge. The proposed SIB projects are subject to a "usefulness and prudency review" in CCWC's next rate case and are subject to a true-up and refund.The ACC ordered CCWC to file its next rate case before June 1,2018. The generic categories of water infrastructure for which CCWC may recover via surcharge are: 1) Supply Mains 2)Mains 3)Services 4)Meters and Meter Installations;and 5)Hydrants. The key terms of the SIB surcharge are: • All SIB projects must be reviewed by ACC Staff and approved by the Commission prior to inclusion in the SIB surcharge. • SIB projects must be complete and placed in service prior to inclusion in the SIB surcharge. • Surcharge Cap - limits annual SIB surcharge to 5%of the revenue requirement authorized in the ACC's decision. • CCWC may not request an SIB surcharge until 12 months from the ACC's Decision. • CCWC may only submit 1 SIB surcharge every 12 months. • CCWC must file a rate case with a test year ending no later than December 31, 2017 (of course CCWC could file one sooner) at which time any SIB surcharge then in effect will be reviewed for inclusion in base rates in that proceeding and the SIB surcharge reset to zero. I 1 I I 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 I 21 22 I I [N THE MATTER OF THE APPLICATION OF CHAPARRAL CITY WATER COMPANY FOR A VALUE OF ITS UTILITY PLANT AND DETERMINATION OF THE CURRENT FAIR 23 24 25 26 27 28 DOCKET NO. W-02113A-13-0118 DECISION NO. 74568 BEFORE THE ARIZONA CORPORATION ~vivuvaxuumv~ 7 PROPERTY AND FOR INCREASE IN ITS RATES 4ND CHARGES BASED THEREON. ClOMMISSIONERS 30B STUMP - Chairman 3ARY PIERCE 3RENDA BURNS 30B BURNS SUSAN BITTER SMITH OPINION AND ORDER Arizona Corporation Commission 0 c !%a;3, I JUN 2 ti 2014 f cr””””^ IATES OF HEARING: ’LACE OF HEARING: 4DMINISTRATIVE LAW JUDGE: 4PPEARANCES: S:\TJibilian\CCWC\CCWC 13\0301180&O.doc February 18, 19,20,21, and 28,2014 Phoenix, Arizona Teena Jibilian Mr. Michael Hallam, LEWIS ROCA ROTHGERBER, LLP, on behalf of Applicant; Mr. Greg Patterson, on behalf of the Water Utility Association of Arizona; Mr. Daniel Pozefsky, Chief Counsel, on behalf of the Residential Utility Consumer Office; and Ms. Bridget Humphrey and Mr. Matthew Laudone, Staff Attorneys, Legal Division, on behalf of the Utilities Division of the Arizona Corporation Commission. 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 I 21 22 23 24 25 26 27 28 I . I1 . V . V . VI . DOCKET NO . W-02113A-13-0118 TABLE OF CONTENTS INTRODUCTION AND PROCEDURAL HISTORY ........................................ 2 APPLICATION ...................................................................................................... 3 Parties’ Rate Base Recommendations ....................................................... 4 Plant in Service ............................................................................................ 5 Asset Retirement Obligation ...................................................................... 6 Deferred CAP M&I .................................................................................... 7 24-Month AFUDC and Depreciation Deferral Mechanism .................... 9 Cash Working Capital ................................................................................ 12 Cash Working Capital - Interest Expense ................................... 13 Cash Working Capital - Regulatory Expense .............................. 13 Cash Working Capital - Bad Debt Expense ................................. 13 4 . Conclusion ....................................................................................... 14 H . Fair Value Rate Base Summary ................................................................ 14 OPERATING INCOME ........................................................................................ 14 A . Test Year Revenues - Declining Usage Adjustment ................................ 14 B Test Year Operating Expenses 16 Depreciation Expense Methodology .............................................. 16 a . CCWC’s Position ................................................................ 17 b . WUAA’s Position ................................................................ 18 RUCO’s Position ................................................................. 19 d . Staff% Position ..................................................................... 20 e . Conclusion ........................................................................... 23 RATE BASE ........................................................................................................... 4 A . B . C . D . E . F . G . Post Test Year Plant ................................................................................... 5 1 . 2 . 3 . . .................................................................. 1 . C . 2 . 3 . 4 . 5 . 6 . Corporate Allocation Expense/Incentive Pay ............................... 24 Purchased Water Expense ............................................................. 25 Water Loss Adjustment .................................................................. 26 Property Tax Expense .................................................................... 27 Tank Maintenance Expense ........................................................... 27 Operating Income Summary ..................................................................... 29 COST OF CAPITAL .............................................................................................. 29 Capital Structure ........................................................................................ 29 Actual Capital Structure ................................................................ 29 Hypothetical Capital Structure ..................................................... 29 3 . Conclusion ....................................................................................... 34 Cost of Debt ................................................................................................. 35 C . A . 1 . 2 . B . C . Cost of Equity .............................................................................................. 35 1 . Parties’ Cost of Capital Analysis Results ...................................... 37 2 . Parties’ Arguments ......................................................................... 39 Cost of Capital Summary ........................................................................... 39 3 . Conclusion ....................................................................................... 39 REVENUE REQUIREMENT ............................................................................... 39 D . i DECISION NO . 74568 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 28 111. 7111. DOCKET NO. W-02113A-13-0118 RATE DESIGN ....................................................................................................... 40 A. Cost of Service Study .................................................................................. 40 B. Low Income Program ................................................................................. 40 C. Rate Structure ............................................................................................. 40 D. Miscellaneous Service Charges .................................................................. 41 OTHER ISSUES ..................................................................................................... 42 A. Rate Case Expense Surcharge ................................................................... 42 B. CAP Surcharge ............................................................................................ 43 C. Best Management Practices ....................................................................... 45 D. SIB ........................................................................................................... 46 ?INDINGS OF FACT ......................................................................................................... 54 ZONCLUSIONS OF LAW ................................................................................................ 59 IRDER ................................................................................................................................ 60 .. 11 DECISION NO. 74568 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 I 26 27 28 , ~ I DOCKET NO. W-02113A-13-0118 BY THE COMMISSION: I. INTRODUCTION AND PROCEDURAL HISTORY On April 26, 2013, Chaparral City Water Company (“CCWC” or “Company”) filed the above-captioned rate application with the Arizona Corporation Commission (“Commission”). On May 28, 2013, the Commission’s Utilities Division (“Staff’) filed a Letter of Sufficiency indicating that CCWC’s application met the sufficiency requirements of Arizona Administrative Code (“A.A.C.”) R14-2-103, and classifying CCWC as a Class A Utility. A Rate Case Procedural Order was issued setting a hearing date and associated procedural deadlines. Intervention in this matter was granted to the Town of Fountain Hills (“Fountain Hills”), the Residential Utility Consumer Office (“RUCO”), Lina Bellenir, Gale Evans, Patricia Huffman, Leigh M. Oberfeld-Berger, Tracey Holland, Leonora M. Hebenstreit, and the Water Utility Association of Arizona (“WUAA”). On August 22, 2013, CCWC filed a supplement to the application to which was attached 10 draft BMP Tariffs, for which it requested approval as part of an order authorizing CCWC to implement a system improvement benefits (“SIB”) surcharge mechanism. On August 23, 2013, CCWC filed a supplement to the application to which was attached a SIB eligibility report dated August 7,2013, a SIB Table I dated August 21,2013, and a SIB Table I1 dated August 2 1,20 13. On December 6, 2013, CCWC filed a supplement to its application to which was attached a SIB Table I1 dated December 6,201 3. On February 18, 2014, the hearing commenced as scheduled. CCWC, WUAA, RUCO, and Staff appeared through counsel. Intervenor Lina Bellenir appeared on her own behalf and stated that she did not wish to cross examine witnesses or provide sworn testimony, but wished to provide public comment instead.2 WUAA appeared through counsel and requested authority to intervene pursuant to the Application for Leave to Intervene filed on February 14,2014. Due to the lateness of the request, WUAA was not granted leave to introduce evidence, but was granted intervention limited ‘ Because WUAA’s intervention request was not filed until February 14, 2014, the day following the pre-hearing conference for the hearing, which commenced on February 18, 2014, WUAA’s intervention was limited to cross- examining witnesses and filing legal briefs. Hearing Transcript (“Tr.”) at 7-8. 2 74568 DECISION NO. 1 2 3 4 5 6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCKET NO. W-02113A-13-0118 to cross examination of witnesses and providing legal argument. No other intervenors made appearances at the hearing3 Ms. Bellenir and one other member of the public provided public comment for the record. CCWC, RUCO and Staff presented evidence and cross examined witnesses. WUAA cross examined witnesses. During the hearing on February 21, 2014, Staff requested a continuance of the hearing in order to have time to prepare and file Amended Surrebuttal Testimony based on information that CCWC provided on February 18, 2013, in response to Staffs request made in its Surrebuttal Testimony. With no objection from any party, the hearing was continued to February 28, 2014, the first date on which facilities were a~ailable.~ On February 26 and 27, 2014, Staff filed Amended Surrebuttal Testimony of its witness Gerald W. Becker, and the hearing concluded on February 28,2014. Following the filing of Final Post-Hearing Schedules, Initial Closing Briefs, and Reply Closing Briefs according to the schedule agreed to by the parties, the matter was taken under advisement. I. APPLICATION CCWC is a C Corporation and a Class “A” Arizona public service corporation authorized by the Commission to provide public water utility service to approximately 13,567 metered customers located in the Town of Fountain Hills, and in a small portion of the City of Scottsdale, all in Maricopa County, Arizona. CCWC is a wholly-owned subsidiary of EPCOR Utilities, Inc. (“EPCOR”).’ EPCOR Water (USA) Inc. (“EPCOR USA”), a subsidiary of EPCOR, assumed direct ownership of CCWC on May 1 1 , 201 1. Prior to that date, CCWC had been owned by American States Water Company.6 Fountain Hills made no appearance and did not participate in the proceeding. The prefiled testimony of Kenneth Buchanan docketed on December 23,2013, was not offered and not admitted as evidence. Due to the delay in concluding the hearing caused by the requested continuance of the hearing to allow time for Staff to prepare and file Amended Surrebuttal Testimony, based on the information provided by CCWC on February 18,20 13, the timeclock in this matter should be extended to June 17, 2014, pursuant to A.A.C. R14-2-103(b)(ll)(ii). At the time the continuance was discussed, the Company expressed an understanding that a continuance of the hearing would require an accompanying extension of the Commission’s timeclock rules. EPCOR is wholly owned by the City of Edmonton, Alberta, Canada. Decision No. 72259 (April 7, 201 1) authorized the reorganization by which EPCOR USA acquired all the outstanding and issued shares of CCWC’s common stock from American States Water Company. 3 DECISION NO. 74568 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 ~ DOCKET NO. W-02113A-13-0118 The Company’s current rates were approved in Decision No. 71308 (October 21, 2009),7 using a test year ending December 3 1,2006. The application is based on a test year ended December 31, 2012. The Commission recently issued Decision No. 74388 (March 19, 2014) in Docket No. W- 02 1 13A- 13-0047, approving CCWC’s request to refinance its existing debt with a portion of the debt proceeds obtained from a recent Canadian bond issuance by EPCOR. CCWC proposes a revenue requirement of $1 1,742,107, which is an increase of $2,727,122, or 30.25 percent, over its adjusted test year revenues of $9,014,985.8 CCWC’s recommendation would result in an approximate $13.18 increase for the average usage (7,870 gallons per month) 3/4 inch water meter residential customer, from $37.85 per month to $51.03 per month, or approximately 34.82 percent. RUCO proposes a revenue requirement of $9,835,885, which is an increase of $754,940, or 8.3 1 percent, over its adjusted test year revenues of $9,080,945.9 RUCO’s recommendation would result in an approximate $2.98 increase for the average usage (7,870 gallons per month) 3/4 inch water meter residential customer, from $37.85 per month to $40.83 per month, or approximately 7.87 percent. Staff proposes a revenue requirement of $10,319,310, which is an increase of $1,304,325, or 14.47 percent, over its adjusted test year revenues of $9,014,985.’’ Staffs recommendation would result in an approximate $4.25 increase for the average usage (7,870 gallons per month) 3/4 inch water meter residential customer, from $37.85 per month to $42.10 per month, or approximately 1 1.23 percent. 111. RATEBASE A. Parties’ Rate Base Recommendations CCWC did not prepare schedules showing the elements of Reconstruction Cost New Rate Base (“RCND”), and instead requests that its Original Cost Rate Base (“OCRB”) be treated as its Fair ’ As corrected nuncpvo tunc by Decision No. 71424 (December 8,2009), and as amended by Decision No. 72258 (April 7,201 1). CCWC Final Schedule C-1, page 1. RUCO Final Schedule JMM-1. lo Staff Final Schedule GWB-1. 4 DECISION NO. 74568 1 2 I 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 I DOCKET NO. W-02113A-13-0118 Value Rate Base (“FVRB”). l1 The parties recommend the following FVRB in their final schedules: Company $ 27,295,481 RUCO 24,443,178 Staff 26,782,933 B. Plant in Service The Company and Staff are in agreement on gross utility plant in service o 70,09 58, and on an accumulated depreciation balance of $25,320,747, but still have disagreements on working capital and deferred debits.’* RUCO disagrees with the inclusion of post-test year plant placed in service in the second half of 2013,13 and proposes gross utility plant in service of $67,726,056, and an accumulated depreciation balance of $25,200,657. l4 C. Post Test Year Plant The Company is seeking to include in rate base post test year plant for the period ending one year after the test year.15 In Direct Testimony, Staff agreed that post test year plant placed in service through July 31, 2013, with one exception, is used and useful and should be included in rate base.I6 In Surrebuttal Testimony, Staff agreed that additional post test year plant placed in service by December 3 1 , 201 3 is used and useful and should be included in rate base. l7 RUCO recommends disallowance of $1,693,408 of post test year plant placed in service after July 3 1, 2013.18 RUCO states that it relied on Staffs engineering analysis for a determination of whether plant in service is used and useful in this case, and because Staff did not conduct an additional onsite engineering inspection of plant in service following its August 201 3 inspection, RUCO disagrees with inclusion in rate base of post test year plant placed into service after July 3 1, 201 3 .I9 Direct Testimony of CCWC witness Sheryl L. Hubbard, Hearing Exhibit (“Exh.”) A-4 at 7. Staff Initial Closing Brief (“Br.”) at 2; Company Br. at 12. 12 l3 RUCO Br. at 3. l4 RUCO Final Schedule JMM-3. l5 Rebuttal Testimony of Jeffrey W. Stuck, Exh. A-19 at 6-9. l6 Direct Testimony of Staff witness Gerald Becker, Exh. S-8 at 9-12 and Schedules GWB 4 and 6. Staff recommended disallowance of half the cost of a planning study related to certain items of plant, and the Company agreed. l7 Surrebuttal Testimony of Staff witness Gerald Becker, Exh. S-10 at 3 and Surrebuttal Schedules GWB 4 and 6. l9 RUCO Br. at 4, citing to Tr. at 689. RUCO Final Schedule JMM-4. 5 DECISION NO. 74568 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 DOCKET NO. W-02 13A-13-0118 Staff disagrees with RUCO’s implication that Staff failed to perform its due diligence in determining whether the post test year plant is used and useful.20 Staff contends that it was completely reasonable for Staffs engineering witness to make a determination that the post test year plant is used and useful based on the Company’s testimony and data request responses, as her prior examination had indicated that the Company had reported plant accurately and fully, and she could use her expertise to determine whether an additional plant inspection would be necessary.21 CCWC argues that all post test year plant for which Staff proposes allowance is used and useful and providing benefits to customers, and characterizes RUCO’s July 31, 2013 cutoff as an arbitrary distinction.22 Staffs engineering witness made an onsite inspection of the utility, reviewed the Company’s schedules showing the amount of the plant additions, and determined that the costs are reasonable and appr~priate.~~ The Company’s witness Mr. Stuck testified that all of the requested post test year plant is in service.24 No controverting evidence was presented regarding whether the post test year plant in this case is in service and used and useful. Staff has analyzed the costs of the post test year plant and found them reasonable and appropriate. Inclusion of the post test year plant as recommended by Staff is reasonable and will be allowed. D. Asset Retirement Obligation RUCO argues that the Company should have removed a portion of a well which it received in a settlement from the Fountain Hills Sanitary District, and recommends removal of $5,252 from account 305, collecting and impounding reservoirs, and $4,364 in associated accumulated depre~iation.~~ RUCO’s witness asserts that the Company failed to remove this portion of the asset retirement obligation associated with the Fountain Hills Sanitary District settlement, pursuant to which CCWC agreed to permanently remove a well from service in exchange for a $1.52 million 2o Staff Reply Brief (“Reply Br.”) at 8-9. 21 Id. 22 Co. Br. at 13. 23 Tr. at 583. 24 Rebuttal Testimony of Jeffrey W. Stuck, Exh. A-19 at 6-9; Tr. at 463-464. 25 RUCO Br. at 5, citing to Surrebuttal Testimony of RUCO witness Jeffrey M. Michlik, Exh. R-15 at 4-5 and Schedule JMM-7. 6 DECISION NO. 74568 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCKET NO. W-02 1 13A- 13-0 1 1 8 settlement.26 Neither the Company nor Staff responded to RUCO’s proposed adjustments either in rejoinder testimony or on brief. RUCO’s proposed adjustments are reasonable and will be adopted. E. Deferred CAP M&I CCWC relies on a Central Arizona Project (“CAP”) allocation for the bulk of its water supply. In CCWC’s prior ratesetting decision, Decision No. 71308, CCWC had a CAP allocation of 6,978 acre-feet of Colorado River Water,27 and was allowed to include in rate base the $1.28 million acquisition cost of an additional CAP allocation of 1,93 1 acre-feet.28 The allowance was based on the finding that CC WC had acted prudently under the circumstances when it purchased the additional allocation in December, 2007, for which it had become eligible based on a recommendation by the Arizona Department of Water Resources (“ADWR’).29 The Municipal and Industrial (“M&I”) pool of CAP water is now fully allocated and contracted for, such that CCWC will have no further opportunity to obtain additional CAP allocation^.^^ As with its first CAP allocation, CCWC’s contract for the additional 1,931 acre-feet allocation requires CCWC to pay annual CAP M&I charges based on the size of the additional allocation, and to pay purchased water charges based on annual water use.31 In addition to the $1.28 million acquisition cost, Decision No. 71308 allowed CCWC recovery of 50 percent of the CAP M&I charges related to the CAP allocation, or $20,306, as an operating expense.32 Decision No. 71308 ordered that CCWC could defer for 48 months from January 1, 2008, for possible later recovery through rates, the remaining 50 percent of costs incurred for the annual CAP M&I charges, excluding any interest or other carrying charges.33 Decision No. 71308 further stated that if CCWC had a rate case pending at the end of the 48 month period, that the costs could continue to be deferred until the conclusion of such rate case, and that any additional properly deferred amounts recorded after that time could be considered in subsequent rate cases.34 In ~ 26 Surrebuttal Testimony of RUCO witness Jeffrey M. Michlik, Exh. R-15 at 4. 27 DecisionNo. 71308 at 9. **Id. at 9-17, 67-68,74-75. 29 DecisionNo. 71308 at 16-17, 67. 30 Direct Testimony of CCWC witness Jake Lenderking, Exh. A-25 at 6. 3’ Decision No. 71308 at 9. See also Direct Testimony of CCWC witness Jake Lenderking, Exh. A-25 at 3. 32 DecisionNo. 71308 at 74. 33 Id. 34 DecisionNo. 71308 at 74-75. 7 DECISION NO. 74568 ~ 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 DOCKET NO. W-02113A-13-0118 his proceeding, CCWC is requesting recovery of $78,205.50,35 the remaining 50 percent of its leferred CAP M&I costs, over 60 months, excluding any interest or other carrying charges, unortized over five years at $15,641.36 The Company argues that it was prudent for CCWC to have mrchased the additional CAP allocation as determined in Decision No. 71308, and it is also prudent md sound public policy for the Commission to include the properly deferred costs associated with it n rate base.37 Staff has included the requested CAP M&I deferred costs in its schedules. RUCO has not. RUCO does not dispute the calculation of the costs, stating that CCWC is properly deferring them.38 Rather RUCO argues, as it did in the rate proceeding leading to Decision No. 71308, that the zdditional 1,93 1 acre-feet CAP allocation was not used and useful.39 RUCO argues that the evidence m this case has shown that the additional CAP allocation is not even 50 percent used and useful at :his time,40 and that actual usage has declined in the last two years.41 RUCO contends that inclusion 3f the CAP acquisition costs in the last rate case has resulted in generational inequities, such that xrrent ratepayers are paying for future ratepayer^.^^ RUCO recommends that the CAP M&I costs :ontinue to be deferred, with no carrying costs, until at least 50 percent of the additional allocation is Jsed and In response to RUCO’s arguments that CCWC’s request is untimely because it was not filed with 48 months and a rate case was not pending, CCWC explains that after EPCOR purchased CCWC, it waited to file a rate case in order to gain a year of operational and ownership e~perience.~~ CCWC contends that whether the additional CAP allocation is used and useful is not in dispute, as the Commission has already determined that the purchase was prudent.45 CCWC also argues that customer demand is variable, and it is not prudent for a water utility to have only enough water 35 Direct Testimony of CCWC witness Jake Lenderking, Exh. A-25 at 4-5. 36 CCWC Final Schedule C-2 page 6. 37 CCWC Br. at 17; CCWC Reply Br. at 14. 38 RUCO Br. at 6. 39 RUCO Br. at 5-6; RUCO Reply Br. at 10-12. 40 RUCO Br. at 5. 42 RUCO Br. at 6, citing to Direct Testimony of RUCO witness Jeffrey M. Michlik, Exh. R-13 at 12. RUCO Reply Br. at 11, citing to Surrebuttal Testimony of RUCO witness Jeffrey M. Michlik, Exh. R-15 at 6. RUCO Reply Br. at 11, citing to Surrebuttal Testimony of RUCO witness Jeffrey M. Michlik, Exh. R-15 at 6. CCWC Reply Br. at 14, h. 82, citing to Direct Testimony of CCWC witness Thomas M. Broderick, Exh. A-3 at 2. 41 43 44 45 CCWC Reply Br. at 13. 8 DECISION NO. 74568 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 I 28 DOCKET NO. W-02113A-13-0118 ;upply to meet the needs of its customers in only a single year.46 RUCO’s generational inequity argument demonstrates a misunderstanding of the purpose of iur original decision to allow the additional CAP allocation in rate base. The acquisition costs were dlowed because the acquisition was a prudent means for CCWC to guarantee continued access to idequate renewable water supplies, providing an assurance that benefits both current and future -atepayers. As set forth in Decision No. 71308, at the time that the additional CAP allocation was iffered to CCWC, it was made clear that the allocation would not likely be available again. Also, XWC was not provided an option to purchase any amount of additional CAP allocation it wished; :he size of the additional allocation available to CCWC was a set amount of 1,93 1 acre-feet. RUCO states that it is raising the issue of used and usefulness only as it pertains to the deferred CAP M&I :harges, and not to the acquisition costs that are already in rate base.47 However, the two issues are ntertwined. With its purchase of the allocation, CCWC has no choice but to pay the annual CAP LI&I costs; these costs comprise a part of the additional CAP allocation costs. Contrary to RUCO’s ~rgument,~~ Decision No. 71308 did not find a need for, and did not order, an additional used and iseful determination of the CAP M&I costs it authorized to be deferred.49 CCWC has paid and properly deferred the CAP M&I costs, and nothing in the record of this proceeding has demonstrated any imprudence, error or inappropriate application of the requirements af Decision No. 71308. It was reasonable for CCWC to wait to file a rate case for a year following the purchase of CCWC by EPCOR, and we will therefore extend the deferral period authorized in Decision No. 71308 from 48 months to 60 months. The five year annualization of $15,641 of the 60 months of deferred CAP M&I costs of $78,205.50, which excludes any interest or other carrying charges, will therefore be allowed. This annualization will be subject to true-up in a future rate case if it results in an over- or under-collection of the $78,205.50 deferral amount. F. 24-Month AFUDC and Depreciation Deferral Mechanism CCWC requests approval of a new deferral mechanism that would allow the deferral of 46 CCWC Br. at 17 and CCWC Reply Br. at 13, citing to Direct Testimony of CCWC witness Jake Lenderking, Exh. A- 25 at 2-9 and Rebuttal Testimony of CCWC witness Jake Lenderlung, Exh. A-26 at 1-2. . 17 RUCO Reply Br. at 10. ‘’ RUCO Reply Br. at 11,lI. 1-9. 49 DecisionNo. 71308 at 67-69, 74-75. 9 DECISION NO. 74568 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 , I I ~ DOCKET NO. W-02113A-13-0118 AFUDC (allowance for funds used during construction) costs and depreciation costs beginning on the first day of the test year, continuing throughout the test year for any plant placed in service in the test year, and for the following twelve months.50 For this case, the deferral request would cover plant additions from January 1,2012, through December 31, 2013, and the amount requested is $473,463, with an annualized deferred debit of $18,276? CCWC states that its request does not seek to recover amounts that would be recovered under the SIB mechanism, for which it also requests approval in this proceeding, and that it is not difficult to segregate plant included in a SIB request.52 CCWC states that the intent of the proposed 24-Month AFUDC and Depreciation Deferral Mechanism is to allow the Company to recover a return on and of assets from the day they are placed in service during the 24 month period beginning on the first day of the test year, through the 24-month period that ends with the Commission’s issuance of the ratesetting decision.53 CCWC bases its request on a Staff Report recommendation issued in Docket No. SW-20445A-09-0077 et al. which resulted from a series of workshops held in Docket No. W-00000C-06-0149.54 CCWC contends that its request is an appropriate means of addressing regulatory lag, and that Staff and RUCO provide no principled basis for rejection of the deferral.55 RUCO and Staff disagree. RUCO’s witness testified that utilities are already allowed to earn a return, including the associated financing cost, as part of plant that will be put in rate base in a future rate case through AFUDC, when plant items are included in a construction work in progress (“CWIP”) account.56 RUCO is concerned that approval of this request would allow the Company to include, as a deferred regulatory asset, an additional return of AFUDC on its plant that is in service but has not yet been put in rate base in a rate case, along with the associated depreciation expense.57 RUCO recommends disallowance of the deferral amount and the amortization of the deferred debits. 50 CCWC Br. at 14-15. The 24-Month AFUDC and Depreciation Deferral Mechanism is described by CCWC witness Sheryl L. Hubbard in her Rebuttal Testimony, Exh. A-6 at 13-15. CCWC Br. at 16; CCWC Reply Br. at 12; Rebuttal Testimony of CCWC witness Sheryl L. Hubbard, Exh. A-6 at 15, Rebuttal Schedule C-2 pages 1 and 6, and Final Schedule C-2 page 6. While not explained in CCWC’s testimony, this appears to be an annualization of the $473,463 requested in this rate case over approximately 26 years. 52 CCWC Br. at 15; CCWC Reply Br. at 12. 53 CCWC Br. at 15-16. 54 CCWC Br. at 14-15. A copy of the Staff Report in that docket was admitted in this proceeding as Exh. A-33. 55 CCWC Br. at 15. 56 Direct Testimony of RUCO witness Jeffrey M. Michlik, Exh. R-13 at 20. Id. at 19. 10 DECISION NO. 74568 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 DOCKET NO. W-02113A-13-0118 Staff also opposes the proposed deferral, and recommends that it be rejected.58 Staff explains ,hat the Staff Report on which the Company relies for its proposal was authored by Mr. Becker, Staffs rate analyst witness for this proceeding, after a series of workshops conducted in 2010 and 2011 for the purpose of addressing alternative methods of financing to help achieve the :ommission’s objectives of encouraging the acquisition of troubled water companies and developing z regional infra~tructure.~~ Staff states that the 24-month deferral mechanism was recommended by Staff at the time as an alternative to a distribution system improvement charges (“DSIC”) mechanism :hat was then being considered, and that the Commission has subsequently adopted the SIB in lieu of z DSIC, in subsequent cases.6o Because Staff had recommended the 24-month deferral mechanism in ,he place of, and not in addition to, a DISC-type of mechanism, and the Commission ultimately zdopted a SIB, Staff is opposed to the adoption of the 24-month deferral mechanism.61 Staff :ontends that even though the two mechanisms would address different plant items, it would be inappropriate to allow utilities to use both mechanisms.62 CCWC’s presentation of the deferral it requests lacks any definition and explanation regarding how the mechanism would function either in this case, or more importantly, following this rate case. Neither the record in this case, nor the Staff Report issued in Docket No. SW-20445A-09- 3077 et al. and admitted in this proceeding as Hearing Exhibit A-33, provide sufficient detail to permit adoption of the requested deferral at this time. The manner in which the proposed deferral mechanism would be implemented has not been fully vetted. Though there was ample opportunity to do so, the Company failed to explain what effect the proposed deferral treatment would have on rate base in future proceedings, and what its actual eventual cost would be. The deferred debit appearing on the Company’s schedules was not mentioned or explained in witness testimony, and was not explained on brief. CCWC’s argument on brief that “Staffs Report discussed the recommendation in detail,” is not supported by the evidence, as the Staff Report lacked detail regarding implementation of the mechanism. While the Staff Report included discussion of what a utility would be allowed to ’* Staff Br. at 5. 59 Staff Br. at 5, citing to Exh. A-33. The workshops were ordered by Decision No. 71878. 6o Staff Br. at 5. 62 Id. Staff Br. at 5-6. 11 74568 DECISION NO. 1 2 3 i 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 I 27 28 ~ I I DOCKET NO. W-02113A-13-0118 request recovery of, the mechanism described in the Staff Report comments is not a fully-considered mechanism, but only an outline offered for Commission review. While the Staff comments state that “deferral of AFUDC and depreciation would allow a Company to request recovery of both amounts, which it would not normally be allowed to do absent an approved deferral,” the Staff comments go on to state: “[tlhe precise entries to effect this would need to be determined.”63 Because CCWC’s proposal for a 24-Month AFUDC and Depreciation Deferral Mechanism lacks sufficient detail to be fully considered in this proceeding, it is not reasonable or appropriate to approve it. G. Cash Working Capital CCWC proposes a Working Capital allowance in the amount of $161,335.64 RUCO proposes $1 11,842,65 and Staff proposes $122,251.66 Cash Working Capital is a component of the Working Capital allowance included in rate base, and represents the average amount of capital provided by investors, over and above the investment in plant and other rate base items, to finance cost of service during the time lag before revenues are ~ollected.~~ CCWC performed a lead-lag study upon which it bases its Cash Working Capital calculation.68 Three items in the Cash Working Capital calculation are in dispute: interest expense, regulatory (rate case) expense, and bad debt expense.69 CCWC’s proposed amount of interest expense is based on the Company’s reported interest expense, while Staff and RUCO’s recommendations call for hypothetical interest expense based on their proposed hypothetical capital structure, as discussed below in the Cost of Capital section. Staff excludes regulatory expense in its cash working capital calc~lation.~~ RUCO excludes regulatory expense and bad debt e~pense.~’ ... 63 Exh. A-33 at page 3. 64 CCWC Final Schedule B-1. 65 RUCO Final Schedule JMM-3. 66 Staff Final Schedule GWB-3. 67 See, e.g., Direct Testimony of CCWC witness Sheryl L. Hubbard, Exh. A-4 at 7-9. Direct Testimony of CCWC witness Sheryl L. Hubbard, Exh. A-4 at 25, referring to Application and Original Schedules, Exh. A-1 at Schedules B-5 and B-6. See also Exh. A-2 at Rebuttal Schedules B-5 and B-6. 69 Following approval of its refinancing request in Decision No. 74388, the Company removed from the worlung capital allowance the amount of the Industrial Development Authority (“IDA”) compensating bank balance requirement, as well as removing the amount that had been included for the annual audit that had been required under its IDA bond financing. CCWC Reply Br. at 15. Staff Br. at 3. 71 RUCO Br. at 7. 70 12 DECISION NO. 74568 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 ~ I 22 23 24 25 26 27 28 DOCKET NO. W-02113A-13-0118 1. Cash Working Capital - Interest Expense In conjunction with their position that a hypothetical capital structure should be employed for ,he determination of CCWC’s cost of capital, RUCO and Staff propose that the resulting hypothetical nterest expense be used in calculating Cash Working Capital. In this proceeding, because CCWC’s 2ctual test year capital structure is used in the cost of capital determination, hypothetical interest :xpense is not appropriate in determining Cash Working Capital. Cash Working Capital will be :alculated using actual expense. 2. Cash Working Capital - Regulatory Expense While CCWC includes regulatory rate case expense in its working capital calculation, RUCO md Staff do not. RUCO contends that it should not be included because it is a one-time, ionrecurring expense, and not a reoccurring cash expense of the type that should be included in a ltility’s cash working capital requirement^.^^ Staffs witness also testified that rate case expense is a ion-recurring expense.73 CCWC argues that rate case expense is a cash expenditure; that it has raditionally been included in the cash working capital calculation for CCWC’s EPCOR Water USA iffiliates in Arizona; that it should be included just as any other recurring expense because it is imortized over a period of years; and that its exclusion would unfairly result in an understatement of :ash working capital.74 We concur with Staff and RUCO. As RUCO’s witness Mr. Michlik testified, rate case expense is an expense properly normalized over a period of years, not amortized, for recovery through rates. It is not appropriate to include rate case expense in the calculation of working capital, and it should be removed. 3. Cash Working Capital - Bad Debt Expense RUCO contends that because there is no actual payment of bad debt expense, or any payment of cash associated with bad debt expense, bad debt expense does not affect CCWC’s cash requirements, and should not therefore be included in the calculation of Cash Working Capital.75 The ~~ J2 Id. at 8. 73 Direct Testimony of Staff witness Gerald Becker, Exh. S-8 at 19. 74 CCWC Br. at 15 and CCWC Reply Br. at 18-19, citing to Rebuttal Testimony of CCWC witness Sheryl L. Hubbard, Exh. A-6 at 19. 75 RUCO Br. at 8, citing to Direct Testimony of RUCO witness Jeffrey M. Michlik, Exh. R13 at 26. 13 DECISION NO. 74568 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCKET NO. W-02 13A-13-0118 c'ompany and Staff calculated Cash Working Capital to include bad debt expense at a level that ncludes an estimated amount for additional bad debt expense expected to occur with increased -e~enues.~~ Because bad debt expense represents an ongoing loss in revenue that would otherwise be :ollected, t is properly included in the Cash Working Capital calculation. 4. Conclusion Based on the forgoing determinations, we find that Cash Working Capital in the amount of :$75,349) is reasonable and appropriate in this case, for a Total Working Capital Allowance of E 173,135. H. Fair Value Rate Base Summary Based on our determinations on the rate base issues discussed above, we find CCWC's FVRB ;o be $26,832,93 1. [V. OPERATING INCOME A. Test Year Revenues - Declining. Usape Adiustment The Company and Staff are in agreement on adjusted test year revenues of $9,014,985. RUCO proposes adjusted test year revenues of $9,080,945. The test year revenues proposed by the c'ompany and Staff include a reduction of $65,960 in order to compensate for the impact of declining residential usage per customer.77 RUCO opposes the declining usage adjustment. CCWC calculated a 12-month moving average of residential usage per customer for the three years 2010, 201 1, and 2012, and then computed annualized current rate residential revenues to break mt the proportion of revenue attributable to fixed charges and commodity charges, in order to quantify the proportion of residential revenue attributable to consumption charges.78 The declining residential usage percentage was multiplied by the length of time before the rates will become effective, and the product was applied to the consumption revenue to arrive at the residential revenue adj~stment.~~ In addition to the reduction to test year revenues, the Company proposes corresponding adjustments reducing purchased water expense by $13,196, fuel and power expense by $7,501, and 76 Rebuttal Testimony of CCWC witness Sheryl L. Hubbard, Exh. A-6 at 31; Surrebuttal Testimony of Staff witness Gerald Becker, Exh. S-10 at 4. 77 Direct Testimony of CCWC witness Sheryl L. Hubbard, Exh. A-4 at 17. 78 Id.; Direct Testimony of RUCO witness Jeffrey M. Michlik, Exh. R-13 at 28. 79 Direct Testimony of CCWC witness Sheryl L. Hubbard, Exh. A-4 at 17. 14 DECISION NO. 74568 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 DOCKET NO. W-02 :hemicals by $1,476, with a net effect of reducing operating income by $43,786.80 13A-13-0118 RUCO disagrees with the Company’s methodology in calculating the moving average of 1.053 1 percent, asserting that the calculation methodology allows for data manipulation.81 RUCO’s witness claims that if a 13 month moving average is used, the declining average is reduced from 1.0531 percent to 0.6832 percent.82 RUCO recommends that if the declining usage adjustment is dopted, CCWC should be required to annually file a report by March 30 detailing the actual increase )r decrease in water usage by customer class for both residential and commercial customers, using a :alendar year starting with the 201 3 inf~rmation.~~ Staff agrees that a declining usage adjustment is appropriate in this case, but not for the same seasons as the Company.84 Staffs agreement is based not on the Company’s analysis of the three years prior to the test year, but on data provided to Staff by the Company which showed that :onsumption patterns continued to change during the post test year period.85 Staff states that its -ecommendation to adopt the declining usage adjustment is based on a known and measurable change .o the test year usage levels, and not on events that predate and are already reflected in test year -esults.86 For the reasons provided by Staff, the declining usage adjustments proposed by the Company ire reasonable and will be adopted. Accordingly, adjusted test year revenues for purposes of this x-oceeding are $9,014,985. The annual reporting recommended by RUCO is reasonable, and we will direct the Company :o file reports as a compliance item in this proceeding. While CCWC contends that only residential zustomer usage should be included in the rep~rting,’~ we agree with RUCO that it will be more helpful in designing rates in CCWC’s next rate case to examine the usage of all customer classes, and not just residential customers, in order to determine whether any declining usage is isolated to ’O Direct Testimony of RUCO witness Jeffrey M. Michlik, Exh. R-13 at 27-28. ” Id. ” Direct Testimony of RUCO witness Jeffrey M. Michlik, Exh. R-13 at 28. ’’ Id.; Surrebuttal Testimony of RUCO witness Jeffrey M. Michlik, Exh. R-15 at 10-1 1. ’‘ Staff Br. at 15. ” Direct Testimony of Staff witness Gerald Becker, Exh. S-8 at 26. “Id. ” Rebuttal Testimony of CCWC witness Sheryl L. Hubbard at 22. 15 DECISION NO. 74568 I 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 i I , I I 27 28 DOCKET NO. W-02113A-13-0118 residential customers, or whether it is spread across other classes as well. We will therefore require the Company to file within 90 days in this docket, a report that details the monthly usage of each meter size and customer class for the January-December 2013 calendar year, and to annually file in this docket, commencing on or before March 30, 2015, and until the filing of its next rate case, a report that details the monthly usage of each meter size and customer class for the prior January- December calendar year. We will also direct Staff to analyze the data, and to provide a recommendation to the Commission if Staff believes Commission action should be taken based on the filed reports. B. Test Year Operating Expenses 1. Depreciation Expense Methodology In its review of the Company’s filing, Staff identified two plant accounts, Account 341- Transportation Equipment and Account 3 1 1 -Pumping Equipment, which included components that had been fully depreciated.** Their costs had been fully recovered through rates via depreciation expense, but under the depreciation method used by the Company, they had continued to accrue depreciation expense.89 Staff recommends that no further depreciation be calculated on the fully depreciated plant in the Transportation Equipment account and the Pumping Equipment acc~unt;’~ adoption of its adjustments reducing the amount of plant subject to depreciation in the Transportation Equipment account by $1,539,667 and reducing the amount of plant subject to depreciation from the Pumping Equipment account by $400,253 ,91 thereby reducing depreciation expense by $272,509; and that the Company be required to employ the vintage year group method of depreciation developed by Staff several years ago (“Staffs vintage year method”) and adopted in Decision No. 74294 (January 29, 2014) (New River Utility Company).92 RUCO agrees with Staffs recommendation, stating that unlike the group method approach to depreciation currently used by the Company, which may cause 88 Direct Testimony of Staff witness Gerald Becker, Exh. S-8 at 15-17. Staff found three such accounts, but based on its accumulated depreciation calculation, determined that one of the accounts, Account 340 - Office Furniture does not include any plant that would be considered to be fully depreciated based on a vintage year approach. Surrebuttal Testimony of Staff witness Gerald Becker, Exh. S-10 at 7. 89 Direct Testimony of Staff witness Gerald Becker, Exh. S-8 at 15-17. 90 Direct Testimony of Staff witness Gerald Becker, Exh. S-8 at 15-17. 91 Staff Final Schedule GWB-16. 92 Staff Br. at 5,9, 11. 16 DECISION NO. 74568 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 DOCKET NO. W-02113A-13-0118 plant assets to be over-depreciated, Staffs vintage year method would prevent the Company from continuing to collect depreciation expense on plant that has been fully de~reciated.~~ CCWC and WUAA are opposed to Staffs recommendations. a. CCWC’s Position CCWC argues that instead of adopting Staffs recommendation to adopt its vintage year depreciation methodology, as we did in Decision No. 74294, the Commission should instead simply revise the depreciation rates for the accounts where Staff identified over-appreciated assets.94 CCWC’s final schedules show adjustments removing depreciation expense of $41,734 from the Transportation Equipment account, and $186,780 from the Pumping Equipment account, for a total reduction in its requested depreciation expense of $228,5 14.95 CCWC states that these adjustments are based on CCWC’s proposed revisions to the depreciation rates for the Transportation Equipment account from 20 percent (5 years) to 10 percent (ten years), and for the Pumping Equipment account from 12.50 (8 years) percent to 8 percent (12.5 years).96 CCWC contends that its witness’ cross- examination testimony at the hearing supports these changes to depreciation rates and the corresponding adjustments in its final schedules.97 CCWC asserts that its proffered solution would provide a less costly and time consuming change than would adoption of Staffs vintage year method, and argues that Staff conceded on cross-examination at the hearing that lowering depreciation rates “effectively does the same thing, more or less.”98 CCWC’s witness testified that if CCWC is required to adopt Staffs vintage year method, CCWC’s sister utilities would also be required to change their methodology, and estimated the total cost at approximately $500,000 for all the systems.99 Repeating a concern raised by WUAA on brief, CCWC contends that a change to its depreciation methodology should be adopted only with extensive analysis and input from all interested and affected parties. loo 93 RUCO Br. at 19, citing to Surrebuttal Testimony of RUCO witness Jeffrey M. Michlik, Exh. R-15 at 41 ; RUCO Reply Br. at 5. 94 CCWC Br. at 20,22-23; CCWC Reply Br. at 17-18. 95 CCWC Final Schedule C-2 page 2. 96 CCWC Br. at 23. 97 Id., citing to Tr. at 853-54. 98 CCWC Br. at 23, citing to Tr. at 950; CCWC Reply Br. at 17. 99 Tr. at 75, 759-60, 790-92. loo CCWC Reply Br. at 18. 17 DECISION NO. 74568 8 9 10 11 12 13 14 15 16 17 18 19 20 21 ~ 22 23 24 i 25 26 27 28 DOCKET NO. W-02113A-13-0118 CCWC also argues that Staffs recommended vintage year method is not the Vintage Method Found in the National Association of Regulatory Utility Commissioners (“NARUC”) August 1996 mblication Public Utility Depreciation Practices (“PUDP”); lo’ that Staffs vintage year method uses ;he group depreciation rates set by Staff more than 10 years ago;lo2 that the issues Staffs vintage year nethod addresses would continue to exist if the Vintage Method appearing in the NARUC PUDP were appropriately applied;lo3 that there is no claim in this case that CCWC improperly depreciated ~ccounts;’~~ and that Staff did not analyze whether the costs of implementation would outweigh its yenefits. lo5 b. WUAA’s Position WUAA characterizes Staffs recommendation as a policy change, and disagrees with the proposed change in depreciation methodology in this rate case, because other utilities might be 3ffected.’O6 WUAA contends that the group depreciation methodology used by CCWC is simple and =ffective, and argues that Staffs proposed methodology is complex, unwieldy, expensive to design md maintain, and provides little if any additional accuracy over the group methodology. 107 Claiming that the problem of over-depreciated assets is already automatically addressed in the group depreciation method, WUAA criticizes Staffs analysis for failing to look for “under- depreciated” assets.”’ WUAA states that the size of EPCOR’s capital investment plans of $5 million €or 2014 and 2015 is larger than the value of the assets that Staff found to be over-recovered in this case.”’ WUAA argues that the recommendations of Staff and RUCO fail to take into account that the extra depreciation utilities collect from fully depreciated plant can offset lost revenue from regulatory lag.’ lo Io’ The August 1996 NARUC PUDP was compiled and edited by Staff Subcommittee on Depreciation of the NARUC Finance and Technology Committee. An excerpt of the NARUC PUDP was admitted as Hearing Exhibit A-32. Judicial notice was taken at the hearing of the entire document, so that the parties could cite to it on brief if desired. lo’ CCWC ReplyBr. at 16-17. lo3 CCWC Reply Br. at 17, citing to NARUC PUDP at 43 and 195. IO4 CCWC Br. at 20, citing to Tr. at 932-34 and 643-444, to RUCO’s and Staffs Schedules, and to Amended Surrebuttal Testimony of Gerald Becker, Exh. S-11 at 6-1 1; CCWC Reply Br. at 17, citing to Staff Br. at 11. IO5 CCWC Reply Br. at 17. lo6 WUAA Br. at 9; WUAA Reply Br. at 1. IO7 WUAA Br. at 5-6,9. lo’ Id. at 5-6. lo9 WUAA Br. at 5. ‘lo ~d. at 4-5. 18 DECISION NO. 74568 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCKET NO. W-02 13A-13-0118 WUAA contends that under the Company's methodology, depreciation expense is not really wer-collected because each year's depreciation expense increases the accumulated depreciation iccount, which is then used to decrease the balance of future asset purchases."' WUAA claims that fan asset is in service longer than its book life, the depreciation a utility collects beyond the book Jalue will decrease the value of the asset that eventually replaces it, and that this mechanism already solves the problem Staff brought to the Commission's attention in this case.' l2 WUAA also argues :hat Staffs methodology is too complex for utilities to administer,'13 and that vintage depreciation nformation is not readily available to utilities for capitalized labor costs or major repairs associated with major asset^."^ WUAA further posits that as products improve, certain asset lives could change 3ver time, which could lead to absurd results with a vintage year methodology. '15 c. RUCO's Position RUCO supports Staffs recommendation because it will eliminate negative depreciation Jalances and assure that CCWC's ratepayers will be charged the correct amount of depreciation sxpense by not paying for plant that is fully depreciated.'16 RUCO notes that Staffs vintage year lepreciation method only eliminates over-depreciation of assets, and does not deprive the Company's shareholders of any authorized reven~es."~ RUCO states that adoption of Staffs vintage year iepreciation method would not constitute a deviation from Commission policy as alleged by WUAA, BS it was approved by the Commission in Decision No. 74294, and there is no stated Commission policy that specifically addresses which depreciation methodology must be used.' l8 RUCO asserts that the Company's arguments that Staffs vintage year depreciation method does not measure up to NARUC PUDP guidelines is misguided, and that the Company does not argue that Staffs proposal offends any Commission rules."' RUCO takes issue with WUAA's argument that "depreciation expense is not really over- "' WUAA Br. at 6. 'I2 Id. at 6-7. 'I3 WUAA Br. at 7-8,9. 'I4 Id. at 8. 'I5 Id. 'I6 RUCO Reply Br. at 5, 8. 'I7 RUCO Br. at 19; RUCO Reply Br. at 6. 'I8 RUCO Reply Br. at 4,8. 'I9 Id. at 6. 19 DECISION NO. 74568 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 DOCKET NO. W-02113A-13-0118 collected” because it is recorded in the utility’s accumulated depreciation account. 120 RUCO explains that elimination of over-depreciation is important because while depreciation expense is passed through to the ratepayer and benefits a utility on a dollar-for-dollar basis, the accumulation of depreciation expense in the accumulated depreciation account benefits the ratepayer only to the extent that the utility does not earn a return on collected depreciation expense.’2’ RUCO asserts that the Company has the information necessary to stop over-depreciating assets, and that the costs of changing the way the Company keeps its records should not be a barrier to implementation of the proposed vintage year depreciation method. RUCO points out that there are also costs involved to implement the many surcharge mechanisms the Company proposes in this case which benefit the Company by reducing regulatory lag.122 RUCO argues that it is only fair that CCWC’s ratepayers benefit from Staffs proposed accounting methodology by not continuing to pay depreciation expense on plant that is fully depreciated. 123 d. Staffs Position Staff states that the fundamental problem with the group depreciation method used by the Company is that it allows plant to be depreciated beyond its original cost, and the basic question on this issue is whether the Commission should continue to allow over-recovery that has been identified. 124 Staff states that its vintage year method more accurately reflects actual and appropriate depreciation balances, and is more appropriate than the Company’s group method, because it allows the Company to recover the original cost of an asset, while preventing customers fi-om over-paying recovery of the Company’s investment. 125 Staff contends that because the group method calculates depreciation expense on a group of assets regardless of when they were placed in service, and calculates depreciation expense on the assets in the group as long as they are in service, regardless of whether the assets are fully recovered, it is inconsistent with the widely accepted ratemaking principle of recovering only the cost of the asset through rates. 126 ~ ~~ 120 RUCO Reply Br. at 8, citing to WUAA Br. at 5-7. 12’ RUCO Br. at 19; RUCO Reply Br. at 5. 122 RUCO Br. at 19; RUCO Reply Br. at 6. 123 RUCO Br. at 19. Staff Br. at 9, 11. Id. at 13, 14. 126 Staff Br. at 10. 124 125 20 DECISION NO. 74568 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 DOCKET NO. W-02 13A-13-0118 Staff disagrees with the Company's assertion that it should be allowed to collect depreciation :xpense on plant as long as it remains in service, regardless of any over-collection of the original :~st.'~' Staff states that no evidence was presented of any instances of under-recovery in this case, md it therefore disagrees with the Company's assertion that the Company's methodology assumes hat while some plant will outlast its expected life and continue to accrue depreciation, some plant vi11 be retired prior to the end of its useful life, and the resulting over- and under-recoveries of lepreciation expense will balance out. 12' Staff contends that its vintage year method, which was discussed and adopted in Decision No. 74294, is superior to the methodology used by the Company in this case because it more accurately natches the recovery of assets through depreciation expense to the original cost of the asset, thus Iroviding for more appropriate recovery. 129 In response to the Company's criticisms that Staffs ,ecommended vintage year method is not the Vintage Method found in the NARUC PUDP, Staff ;tates that it did not base its methodology on that described in the NARUC PUDP, and has not uggested that the Vintage Method found in the NARUC PUDP be used here.'30 Staff points out that t created its vintage year methodology independently years ago, and that the Commission recognized n Decision No. 74294 that Staffs vintage year method meets NARUC and Commission -equirements.13' Staff argues that the Company has acknowledged the risk of over-collection, by its adjustment .o depreciation rates in its final schedules for the over-depreciated accounts.132 Staff states that while the Company's adjustment could mitigate the risk of over-collection in this case, it was a last minute, not well thought-out proposal, and it does not adequately eliminate the future risk of over- ;~llection.'~~ Staff contends that the best means of preventing over-collection is to require the Company to cease depreciation on fully depreciated plant. 134 Staff expressed concerns regarding the 127 Staff Br. at 9, citing to Tr. at 75. 12* Staff Br. at 9, citing to Tr. at 818. 129 Staff Br. at 10. 130 M. at 11. 13' Staff Br. at 12; Staff Reply Br. at 5. 132 Staff Br. at 12; citing to Tr. at 776-77 and 853-54 and CCWC Final Schedule C-2. 133 Staff Br. at 12; Staff Reply Br. at 6. 134 Staff Br. at 12. 21 DECISION NO. 74568 I 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 DOCKET NO. W-02113A-13-0118 accuracy of the adjustments in CCWC’s final schedules, which were made only after the conclusion of the hearing, and which are not adequately delineated by component in the supporting ~chedu1es.l~~ Based on these concerns, Staff contends that its recommended depreciation expense amount is calculated more accurately than the Company’s. Staff disagrees that changing its depreciation methodology to the vintage year method would be overly burdensome to CCWC, stating that CCWC conceded that it currently maintains the data necessary to apply the vintage year method, and that insufficient evidence was provided that all of EPCOR would need to change its methodology. Staff questioned the estimate of CCWC’s witness that the cost of such a change would be $500,000, but points out that if all the affiliates were to change their methodology, the cost would be allocated among all of the EPCOR entities, significantly reducing any portion attributable to CCWC.136 Staff states that given the annual savings in this case from disallowing the over-depreciation, a net savings to ratepayers would likely result if the estimated $500,000 were allocated over 10 systems.’37 Staff points out that while CCWC and WUAA express concern with the cost of implementing the vintage year method, they do not address the potential cost to conduct the workshops they recommend instead. 138 Staff contends that WUAA’s arguments fail to address any means of mitigating the over- collection of depreciation expense in this case. Staff disagrees with WUAA’s contention that Staff s proposed vintage year methodology is a “new policy,” stating that it is neither new nor a policy, explaining that Staffs methodology has been under consideration for at least four years, and that Staff has previously proposed, and the Commission has previously adopted, its vintage year methodology. 139 Like RUCO, Staff takes issue with WUAA’s argument that “depreciation expense is not really over-collected” because it is recorded in the utility’s accumulated depreciation account. 140 Staff confirms RUCO’s point that the reduction in rate base stemming from accumulated depreciation 135 Id. at 14. 13‘ StaffBr. at 12-13. 137 Staff Br. at 13. 13* Staff Reply Br. at 6-7. 139 Id. I4O Staff Reply Br. at 7, citing to WUAA Br. at 5-7. 22 DECISION NO. 74568 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 DOCKET NO. W-02 13A-13-0118 loes not provide a dollar-for-dollar benefit to ratepayers, but benefits them only at a rate of ipproximately $0.1 1 per depreciation dollar. 14' Staff adds that the plant in service balance, on which lepreciation expense is calculated, is not reduced when replacement plant is placed in service.'42 Staff explains that, contrary to WUAA's argument that the replacement plant's reduction in book Jalue by the accumulated depreciation balance solves the problem of depreciation expense over- -ecovery, the reduction to the book value of replacement plant does not affect the collection of lepreciation expense on the replacement plant, because the utility will collect depreciation expense in the purchase price of the replacement plant. 143 Staff states that no evidence was presented to support WUAA's assertion that Staffs x-oposed methodology is complex and unwieldy, and that WUAA also referred to CCWC's lepreciation system as c0mp1ex.l~~ Staff describes its method as simple, stating that the Company nust merely maintain records of when plant is added on an annual basis, and when the plant reaches :he end of its expected life and is llly depreciated, the Company must cease the collection of lepreciation expense. 145 e. Conclusion The Commission's rules do not mandate a specific depreciation methodology, but require that [he cost of depreciable plant adjusted for net salvage be distributed in a rational and systematic manner over the estimated service life of the plant. Although we have previously adopted in Decision No. 74294 Staffs vintage year depreciation method, we have rejected this approach in other matters. The disputes raised by the parties to this case highlight the need to further examine this issue to avoid unintended consequences. As Staffs witness testified, adjusting the depreciation rates in this case as proposed by CCWC will properly address depreciation expense in this case. We are also aware of Staffs claim that this adjustment will not address Staffs long-term concern that CCWC will continue to recover depreciation expense on assets that have been fully depreciated. Because there is no depreciation 14' Staff Reply Br. at 7-8, citing to Tr. at 820-22. '43 Id. at 8. 144 Id., citing to WUAA Br. at 7. Staff Reply Br. at 7-8. 142 Staff Reply Br. at 8. 145 23 DECISION NO. 74568 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 , , i 22 23 24 25 , I I 26 27 28 ~ I DOCKET NO. W-02113A-13-0118 study in evidence in this case, we will require CCWC to submit a depreciation study to further support any depreciation rates that do not align with Staffs recommended rates in its next rate case (including the rates adjusted in this case), which we not must be filed by June 30, 2018. CCWC's proposed adjustments to its depreciation rates in the Transportation Equipment and Pumping Equipment accounts are reasonable and will be adopted. 2. Corporate Allocation Expense/Incentive Pay In its application, CCWC requested recovery of $500,330 in corporate allocation expense. 146 After accepting several adjustments proposed by Staff and RUCO, the Company proposes total corporate allocation expense of $442,409.'47 RUCO proposes total corporate allocation expense of $359,073, and Staff proposes $352,892.'48 Staffs recommended corporate expense allocation removes 100 percent of CCWC's requested incentive pay. Staff argues that CCWC failed to properly quantify or justify its calculations of amounts paid under the incentive payment plan. 149 RUCO proposes that incentive pay expenses be shared 50/50 between ratepayers and shareholders, as RUCO states the Commission has done in recent Decisions where the issue was litigated.15' In addition to removing 50 percent of CCWC's proposed incentive pay, RUCO's proposal also removes 100 percent of at-risk cost pool expenses, which it states fund incentive programs at the EPCOR corporate level which are allocated to EPCOR's ~ti1ities.I~' RUCO contends that the at-risk cost pool has nothing to do with CCWC's day-to-day operation^.'^^ The Company contends that 100 percent of its incentive pay/at-risk compensation package should be treated as a cost of service no different from labor expense, because it provides a means to motivate employees to deliver results in line with EPCOR's corporate culture, which stresses the importance of working safely and responsibly, and the importance of quality customer service in 146 CCWC Application Schedules, Exh. A-1 at Schedule C-1, page 1. 147 CCWC Final Schedule C-2, page 1. 14' RUCO Final Schedule JMM-13, and Staff Final Schedule GWB-11. 149 Staff Br. at 7-8. 27, 2008) (UNS Electric, Inc.); and Decision No. 68487 (February 23,2006) (Southwest Gas Corporation). Is' Direct Testimony of Jeffrey M. Michlik, Exh. R-13 at 33. lS2 RUCO Br. at 12. RUCO Br. at 10, citing to Decision No. 7001 1 (November 27,2007) (UNS Gas, Inc.) at 27, Decision No. 70360 (May DECISION NO. 74568 24 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 DOCKET NO. W-02113A-13-0118 customer communication and billing.’53 The Company argues that all of its incentive pay should be allowed, because only 10 percent of its incentive compensation is based on the Company’s financial performance, with the other 90 percent based on specific activities of the individual business unit or department, and that the intention of designating a portion of the employee’s compensation as at-risk subject to performance is to drive employees’ performance and to focus them on improving their business unit.’54 Staff disagrees with the Company’s argument, stating that the 10 percent policy reflects the criteria on which the Company might possibly pay incentive payments as a result of Company financial performance. 155 Staff states that records of the calculations would be required to determine the basis for the actual payments and to allocate the benefit between shareholders and customers. Staff bases its disallowance on the Company’s failure to provide data necessary to support the breakdowns of operational versus financial goals used in calculating the amounts paid.’56 Staff states that although requested from CCWC, such records were not produced. 157 We agree with Staff that the Company failed to quantify or justify its proposed recovery of incentive pay, and disagree with RUCO that half of the incentive pay request should be allowed. RUCO’s reasoning in advocating allowing half of the proposed incentive pay, but none of the at-risk compensation at the corporate level, was not clear. Considering all the evidence in this case, we find Staffs proposed corporate allocation allowance to be reasonable and will adopt it, for total corporate allocation expense of $352,892. 3. Purchased Water Expense In conjunction with its opposition to the Company’s proposed CAP surcharge, discussed further below, RUCO recommends, in lieu of approval of the CAP surcharge, an adjustment of the Company’s purchased water expense upward by $87,678 for CAP M&I charges and capital charges. RUCO’s recommendation is based on a five year average of CAP charges from 2013-2018, using the Company’s original CAP allocation of 6,978 acre-feet, and one half of the additional CAP allocation 153 CCWC Br. at 20-21; CCWC Reply Br. at 25-26. CCWC Br. at 20; CCWC Reply Br. at 25. ”’ Staff Br. at 7. Id. at 7-8. Staff Br. at 8. 25 DECISION NO. 74568 r- ~ I I I I 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 I I , DOCKET NO. W-02113A-13-0118 of 1,93 1 acre-feet approved in Decision No. 71308.15* Because we authorize the CAP Surcharge, as discussed further below, and the CAP Surcharge will only account for changes in CAP-associated costs above or below the adjusted test year expense, RUCO's proposed adjustment is unnecessary and will not be adopted. 4. Water Loss Adjustment CCWC experienced a water loss of 13.9 percent during the test year.159 In addition to recommending that CCWC ensure the accuracy of its meters, repair any leak as soon as it is discovered, continue to record and monitor monthly water losses, and implement a deteriorating infrastructure replacement plan under the SIB discussed later in this Decision, Staff proposes an adjustment that eliminates test year expenses related to water loss in excess of 10 percent. 160 CCWC agrees with Staff that water loss is an issue that must be addressed.I6' CCWC argues, however, that Staffs proposed reductions to expenses associated with lost water are punitive, and that it would prefer instead to file a plan addressing the water loss.162 Staffs adjustment reduces purchased CAP water expense by $39,598, fuel and power expenses by $20,746, and chemical costs by $4,084. Staff states that the ability to control water loss rests solely with the Company, and because these expense amounts provide no benefit to customers, it would be fundamentally unfair to include them in rates.163 Staff notes that the Company does not oppose Staffs adjustment to increase purchased water expense to reflect the increase in CAP rates since the test year, and asserts that it is fair to both CCWC and its ratepayers to recognize both adjustments in rates.164 We do not accept CCWC's assertion that Staffs proposed adjustment is punitive. For the reasons outlined by Staff, the water loss adjustment proposed by Staff is reasonable and will be adopted. 158 RUCO Br. at 1 1. 159 Direct Testimony of Staff witness Katrin Stukov, Exh. S-6 at Exhibit KS at 9-10; Tr. at 567. 160 Direct Testimony of Staff witness Gerald Becker, Exh. S-8 at 20. CCWC Br. at 27; CCWC Reply Br. at 22. Id. Staff Br. at 7. 163 Direct Testimony of Staff witness Gerald Becker, Exh. S-8 at 20; Staff Br. at 6. 26 DECISION NO. 74568 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 DOCKET NO. W-02113A-13-0118 5. Property Tax Expense The Company proposes to use the 2014 assessment ratio of 19 percent in calculating property tax expense.165 Staff recommends that an 18.5 percent assessment ratio be used in the calculation of Property Tax expense, which results in a decrease of $18,828, from $251,038 to $232,210.166 Staffs proposed 18.5 percent rate reflects the three year average of the current rate of 19 percent, the 2015 rate of 18.5 percent, and the 2016 rate of 18 percent.167 RUCO agrees with Staffs adjustrnent.l6' CCWC argues that relying on the current assessment ratio is appropriate to determine an appropriate property tax expense in this case, despite the fact that assessment ratios are scheduled to drop, because property taxes on the whole will continue to rise as property values rise.'69 Staff contends that its adjustment is based on known and measurable tax rates, and that applying the current higher rate, which will be in effect only until the end of 2014, would be unfair to ratepayers. 170 Setting a level of property tax expense requires an estimate of the amount of expense the Company will incur during the period when rates will be in effect. Staffs adjustment to property tax expense more appropriately recognizes the known and measureable tax rates that will be in effect when the rates approved in this proceeding will be in effect than does the Company's proposal. Staffs adjustment will therefore be adopted. 6. Tank Maintenance Expense The Company proposes a tank maintenance plan spanning 18 years at a total cost of $3,639,307, to be recovered as an annual expense spread over the 18 year timeframe at $202,184.17' The Company's witness Mr. Stuck testified that the Company anticipates review and adjustment of this estimated expense as necessary in subsequent rate cases filed by the C0m~any.l~~ Staff accepted the expense.173 RUCO opposes the proposed expense, arguing that its treatment is different from 165 CCWC Br. at 28. 166 Direct Testimony of Staff witness Gerald Becker, Exh. S-8 at 24. 167 Staff Br. at 15. 169 CCWC Br. at 28, CCWC Reply Br. at 22-23. 170 Staff Br. at 15. 17' Direct Testimony of CCWC witness Jeffrey W. Stuck, Exh. A-18 at 6-7; Exh. A-1 at Schedule C-2 page 2, column R. 17* Direct Testimony of CCWC witness Jeffrey W. Stuck, Exh. A-18 at 7. 173 Staff Final Schedule at GWB-11. RUCO Br. at 15. 27 DECISION NO. 74568 4 I 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I I DOCKET NO. W-02113A-13-0118 tank maintenance expenses allowed in other proceedings. 174 RUCO advocates against allowance of the proposed amount of expense because it is based on cost estimates, and because it is not known at this time whether the actual tank maintenance will follow the Company’s estimated s~hedu1e.l~~ RUCO instead proposes that the Company be allowed to defer the costs for future recovery once the Company has performed the maintenance and the actual costs are known. 176 The Company’s witness testified that the request is based on the number of tanks in the CCWC service territory, the age of the tanks, and their construction material, and that the overall plan cost estimate was derived from data collected from a certified inspection of one of the Company’s nine reservoirs by Riley Industrial Services.177 Mr. Stuck testified that the estimate reflects costs associated with stripping, treating, and coating tanks that will be required for all the storage tanks, which have in-service dates ranging from 1972 to 2005.17* He testified that the condition of the tanks in CCWC’s service territory are similar to those in the EPCOR company Sun City Water’s service territory, and that a tank maintenance plan has proved to be an effective means of addressing the tank maintenance issues in that district. 179 RUCO does not disagree with the reasonableness of the Company’s cost estimates.’*’ RUCO’s disagreement lies with the means of cost recovery. While we appreciate RUCO’s concern with assuring that the Company does not over-recover the ongoing expense of tank maintenance, we agree with Staff that the $202,184 expense is reasonable in this case, and we are satisfied that over the 18-year life of the Company’s maintenance plan, the actual costs will be subject to further Commission review in future rate cases, including the rate case it will file using a 2017 test year pursuant to the SIB surcharge mechanism authorized below. The $202,184 level of expense is reasonable based on the evidence in this proceeding and will be adopted. We make no finding in this case whether this level of expense should reasonably be included in test year operating expenses in 174 RUCO Br. at 12-15; RUCO Reply Br. at 8-10. 17’ RUCO Br. at 12. 17‘ RUCO Reply Br. at 10. 177 Direct Testimony of CCWC witness Jeffrey W. Stuck, Exh. A-18 at 6-7. Reports on the inspection of Reservoir #2 were attached as Exhibits ICC-4 and ICC-5 to the Direct Testimony of CCWC witness Ian C. Crooks, P.E., Hearing Exhibit A-1 7. 17’ Direct Testimony of CCWC witness Jeffrey W. Stuck, Exh. A-18 at 6-7. 179 Rejoinder Testimony of CCWC witness Jeffiey W. Stuck, Exh. A-20 at 1-3. I8O RUCO Br. at 15. 28 DECISION NO. 74568 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 I 28 I ~ Cost Cost of Capital Structure Weighted Weighted of Equity (DebtlEquity) Cost of Cost of Debt Debt Equity Company 5.97% 10.50% 14.45% 185.55% 0.86% 8.98% RUCO 5.92% 9.35% 40% 160% 2.37% 5.61% DOCKET NO. W-02113A-13-0118 WACC 9.84% 7.98% future rate proceedings. 5.20% C. Operating; Income Summary With adjusted test year revenues of $9,014,985, and adjusted test year operating expenses of 9.60% 40% I 60% 2.10% 5.80% 7.90% $7,585,949 including the adjustments discussed above, we find test year adjusted operating income to be $1,156,036. V. COST OF CAPITAL The parties’ rate of return recommendations based on their proposed weighted average cost of capital (“WACC”) are as follows: Staff A. Capital Structure 1. Actual Capital Structure CCWC’s capital structure at the end of the test year consisted of 14.45 percent debt and 85.55 percent equity.’” The Company proposes to use its actual capital structure to determine its cost of capital, and WUAA supports the Company’s position. Staff and RUCO both recommend that a hypothetical capital structure of 60 percent equity and 40 percent debt be employed to determine the cost of capital. 2. Hypothetical Capital Structure Staff states that the purpose of its recommended hypothetical capital structure is to give recognition to CCWC’s reduced exposure to financial risk relative to the risk of the proxy group Staff used to estimate CCWC’s cost of equity, and to encourage CCWC to move toward a more balanced ’*’ CCWC recently obtained authority, in Decision No. 74388, to refinance its outstanding debt, which was in the form of IDA bonds issued through the IDA of Maricopa County. The source of the approved refinancing was a portion of the debt proceeds obtained from a recent Canadian bond issuance by EPCOR. DECISION NO. 74568 29 , I 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 , DOCKET NO. W-02113A-13-0118 Sapital structure in the RUCO asserts that it is not appropriate to use an actual capital Structure in the determination of cost of capital where the equity ratio is so high, and the Company has been on notice since its last rate case that a hypothetical capital structure might be irnpo~ed.''~ RUCO and Staff both argue that a hypothetical capital structure would best balance the interests of CCWC's ratepayers and shareholders, and is warranted because CCWC's capital structure is not balanced and is out of line with most other Arizona utilities, water industry averages, and CCWC's parent and sister ~ompanies.''~ Staff states that all of the other affiliates operating under CCWC's holding company have more balanced capital structures that are more aligned with what Staff typically deems appropriate, and that CCWC's capital structure, which is heavily skewed toward equity, results in an unreasonable increase in costs to ratepa~ers.''~ Both RUCO and Staff argue that use of a hypothetical capital structure would lead to a more appropriate level of income tax expense than CCWC's proposed capital structure, due to the resulting lower weighted average cost of debt and lower synchronized interest expense.lS6 Staff contends that the higher income tax burden caused by use of CCWC's equity-rich capital structure would be unfair to CCWC's ratepayers, pointing out that CCWC's parent company, with its balanced capital structure, enjoys the benefit of tax savings associated with higher interest expense deductions. CCWC argues that the practical effect of the proposed hypothetical capital structure constitutes an effective return on equity recommendation of 7.67 percent."' CCWC contends that the proposed hypothetical capital structure for purposes of addressing cost of capital runs contrary to Staffs use of actual capital structures in recent cases with similar capital structures or 100 percent equity capital struct~res,''~ and that in three recent CCWC proceedings: CCWC's prior rate case; the ~ ~~ Staff Br. at 25. RUCO Br. at 21; RUCO Reply Br. at 3,7; Staff Br. at 4. Staff Br. at 4; Staff Reply Br. at 4. Staff Br. at 4-5; RUCO Br. at 22-23. Staff Br. at 4-5. CCWC Br. at 4 and CCWC Reply Br. at 3, citing to Rejoinder Testimony of CCWC witness Pauline Ahern, Exh. A-12 at 10. CCWC Br. at 4, citing to Decision No. 74294 (January 29, 2014)(New River Utility Company)(adopting Staff's recommendation to apply New River Utility Company's actual capital structure of 100 percent equity in calculating the cost of capital, while noting that the utility should consider adding low-cost debt to its capital structure when it next determines that capital improvements are needed) and Decision No. 73996 (July 30, 2013)(Rio Rico Utilities, Inc.)(declining to adopt Staffs recommendation to use Rio Rico Utilities, Inc.'s actual capital structure of 100 percent lX3 RUCO Reply Br. at 4. DECISION NO. 74568 30 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCKET NO. W-02113A-13-0118 case which approved CCWC’s acquisition by EPCOR; and CCWC’s recent financing application; the Commission has given no indication prior to this proceeding that CCWC should move to a different capital structure.’90 WUAA joins in CCWC’s argument that CCWC had no notice that a hypothetical capital structure might be imposed in this proceeding.’” CCWC and WUAA point out that in CCWC’s recent refinancing proceeding, Staff rejected a proposal to issue non-amortizing, interest- only debt that would have had the effect of maintaining debt to equity percentages, and instead recommended standard amortizing debt, which is more likely to increase the amount of CCWC’s equity ratio.’92 CCWC states that if the Commission wishes the Company to move toward a more balanced capital structure, CCWC would require time to do so, and that the Commission has, in other cases involving other utilities, required the utility to put forth a plan to do so, or to do so prior to its next rate case filing.’93 WUAA argues that a regulated utility can only alter its capital structure by increasing dividends to remove equity, or by taking on debt.’94 CCWC also states that the only means for it to adjust its capital structure are for it to issue dividends or issue more debt or both, that neither RUCO nor Staff analyzed how CCWC could or should move to a different capital structure, and that adopting Staffs proposal would not provide the Company time to implement any plan by which it can move to a different capital ~tructure.’~~ CCWC contends that it is not practical or sensible for a utility to change its structure overnight. 196 WUAA argues that the recommended hypothetical capital structure is “a policy change in the guise of an adjustment,” that is impossible to achieve and is unsupported by evidence.’97 Staff disagrees with WUAA that its hypothetical capital structure recommendation in this case represents a policy change, pointing to several Commission Decisions where a hypothetical capital structure has ~~ equity, and instead employing the 20 percent debt/80 percent equity hypothetical capital structure the utility had initially proposed, and which had been used in the utility’s previous rate Decision); CCWC Reply Br. at 3, 4, citing to Decision No. 74097 (September 23, 2013) (Far West Water and Sewer, Inc.) (adopting a capital structure comprised of 20.8 percent equity and 79.2 percent debt, as agreed upon by the parties). 190 CCWC Reply Br. at 2,4, citing to Decision Nos. 71308, 72259, and 74388. 19’ WUAA Br. at 4. 192 CCWC Br. at 5; CCWC Reply Br. at 4; WUAA Br. at 4. 193 CCWC Br. at 5-6; CCWC Reply Br. at 5. 194 WUAA Br. at 4. 195 CCWC Br. at 6. 196 CCWC Reply Br. at 5. 197 WUAA Br. at 2-4. 31 DECISION NO. 74568 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 DOCKET NO. W-02113A-13-0118 been employed.’98 RUCO also cites to cases in which the Commission has approved hypothetical capital structures. 199 RUCO and Staff disagree with CCWC’s claim that it has had inadequate notice of the possibility of a hypothetical capital structure being used in this case. Both contend that CCWC has been on notice for some time that its capital structure could be at issue in this case. Staffs testimony raised the issue in CCWC’s previous rate case. Staffs Surrebuttal witness in that case, Mr. Parcell, testified in that proceeding that the Company’s approximately 75 percent common equity ratio was high in comparison to the proxy group of publicly traded utilities used in his cost of capital analysis,2” and that a case could be made for adopting the more balanced capital structure of CCWC’s parent at the time, American States Water Company.201 Staff states that the Commission is not bound to use a utility’s actual capital structure, and that a Commission determination to employ a hypothetical capital structure to determine cost of capital does not require the Company to change its capital structure.202 Staff argues that use of its recommended hypothetical capital structure would equalize the benefits and burdens of the equity ratio between the Company and its ratepayers, who have no control over what that equity ratio is.203 In this proceeding, Mr. Parcell, as RUCO’s witness, testified that with CCWC’s current capital structure having now grown to almost 86 percent, while its parent and affiliates have balanced capital structures, the case for a hypothetical capital structure is 198 Staff Br. at 2-3, citing to Decision No. 68487 (February 23, 2006) (Southwest Gas Corporation)(employing a hypothetical capital structure to address high level of debt, as proposed by all parties); Decision No. 59594 (March 29, 1996) (Tucson Electric Power Company) (employing a hypothetical capital structure to address issue of 100 percent debt); and Decision No. 71878 (September 15, 2010)(Global Water - Palo Verde Utilities Company et al.)(all parties proposed hypothetical capital structures for all six equity-heavy Global water systems in the case). 199 RUCO Reply Br. at 7, citing to Decision No. 70662 (December 23, 2008) (Gold Canyon Sewer Company; Decision No. 73996 (July 30,2013) (Rio Rico Utilities, Inc.); and Decision No. 70628 (December 1,2008) (Tucson Electric Power Company). *O0 RUCO Br. at 22 and Staff Br. at 25-26, citing to Hearing Exh. R-9, which is an excerpt of pages 12-13 the Surrebuttal Testimony of Staff witness David C. Parcell in Docket No. W-02113A-07-0551, and Tr. at 283; RUCO Reply Br. at 4. 201 Hearing Exh. R-9. In that case, neither Staff nor RUCO proposed or recommended a hypothetical capital structure, and Decision No. 71308 adopted the Company’s actual capital structure for purposes of a cost of capital determination. Decision No. 71308 at 29. The capital structure agreed to by the parties and adopted by the Commission in that case was 76 percent equity and 24 percent debt. Mr. Parcell adopted the testimony of the Staff witness who had prepared Direct Testimony on cost of capital, and stated in his Surrebuttal Testimony that the significant difference in CCWC’s common equity ratio compared to the proxy group reflected “a risk differential between Chaparral and the proxy group - a risk differential that should be recognized in the cost of equity for the Company.” 202 Staff Br. at 4. 203 Id. 32 74568 DECISION NO. 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 DOCKET NO. W-02113A-13-0118 stronger now than in CCWC’s prior rate case.2o4 RUCO changed its position in Surrebuttal Testimony in this case to support Staffs recommendation in its direct case for a hypothetical capital structure.205 RUCO’s witness Mr. Parcell testified that his changed recommendation came from new information showing how widely CCWC’s capital structure varies from that of its parent and affiliate companies.206 CCWC points out that RUCO’s witness Mr. Parcell, as a witness for Staff in the Company’s prior rate case, recommended use of CCWC’s actual capital structure, as he initially proposed in this case.2o7 The Company urges that RUCO’s revised capital structure recommendation, which caused its overall cost Df capital recommendation to drop from 8.7 percent to 7.98 percent, be rejected as results-driven.208 In Surrebuttal Testimony, Staff raised the issue of “double leveraging,” or the possibility that CCWC’s equity may actually be financed with debt at its parent level. Staff states that the existence Df double leveraging is not a requirement for using a hypothetical capital structure.209 Staff admits that it is very difficult to prove the existence of double leveraging, but asserts that the potential exists in this case for double leveraging, and that the potential alone provides support for the use of a hypothetical capital structure.210 RUCO asserts that if in fact CCWC is double leveraged, use of a hypothetical capital structure would be the appropriate solution in this case.21 The Company and WUAA contend that the double leveraging concept should not be accepted as support for the use of a hypothetical capital structure. The Company argues that the issue has no basis or relevance, and denies that CCWC is double leveraged.212 WUAA argues that because EPCOR has made no capital infusion into CCWC, CCWC’s capital structure cannot be double leveraged.213 WUAA also contends that because Staff only raised the issue of double leverage post 204 RUCO Br. at 22, citing to Tr. at 283. *05 RUCO Br. at 2. 206 Surrebuttal Testimony of RUCO witness David C. Parcell, Exh. R-8 at 18-19. 207 CCWC Reply Br. at 6. As RUCO points out on brief, in its Direct Testimony, RUCO’s witness performed a cost of capital analysis based on the Company’s actual test year capital structure of 8 1.83 percent equity, 17.68 percent long-term debt and 0.48 percent short-term debt. Direct Testimony of RUCO witness David C. Parcell, Exh. R-7 at 13-16 and Exhibit DCP-1, Schedule 1. 208 CCWC Reply Br. at 6. 209 Staff Br. at 4. 210 Id. 211 RUCO Br. at 22. 212 CCWC Reply Br. at 5-6, citing to Rejoinder Testimony of CCWC witness Pauline M. Ahern, Exh. A-12 at 5-6. 213 WUAA Br. at 3, citing to Tr. at 208-209. 33 DECISION NO. 74568 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 EPCOR Water (West) Inc. DOCKET NO. W-02113A-13-0118 35% 1 7% I -1% I 29% I 28% I hoc, only after making its recommendation for use of a hypothetical capital structure, any argument that double leverage supports a hypothetical capital structure should be disregarded.214 3. Conclusion We share the concerns raised by RUCO and Staff in regard to the common equity ratio of CCWC in comparison to those of its parent companies EPCOR and EPCOR Water Arizona over the five year period leading to and including the test year. The comparison as set forth in the testimony Df RUCO’s witness shows a very sharp contrast in equity ratios.215 We are cognizant, however, that as CCWC and WUAA point out, in the last three CCWC proceedings before us, we have not ordered CCWC to take action to address the issue of its unbalanced capital structure, or indicated an intent to consider employing a hypothetical capital structure in future proceedings. On a going forward basis, however, CCWC should consider making plans to rectify the imbalance in its capital structure relative to the capital structures of its parent companies. We will order CCWC to file in this docket, within 120 days, a plan including analysis on how it might achieve a more balanced, reasonable, and appropriate capital structure. In future ratesetting proceedings, regardless of whether CCWC has chosen to rebalance its capital structure, CCWC can expect that a hypothetical capital structure will be considered. We make no finding with respect to the double leverage issue raised in this proceeding. However, we agree with Staff that the existence of double leveraging is not a prerequisite for 34 DECISION NO. 74568 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 DOCKET NO. W-02113A-13-0118 Zmploying a hypothetical capital structure in a cost of capital determination. Further, we note that a nypothetical capital structure, as the name indicates, does not require a utility to actually change its Zapital structure, as CCWC and WUAA seem to imply. B. Cost of Debt In this proceeding, CCWC proposed a cost of debt of 5.97 percent,216 RUCO recommended a Zest of debt of 5.92 percent based on actual test year debt and Staff recommended a 5.2 percent cost of Decision No. 74388 authorized the Company to refinance all of its existing iebt, and ordered the Company to file, as a compliance item in Docket No. W-02113A-13-0047, a ~opy of the loan documents. On May 15, 2014, CCWC filed in that docket a copy of a promissory note dated April 15, 2014, which shows an interest rate of 4.565 percent per annum. In Decision No. 74388 we authorized a maximum effective interest rate on CCWC’s refinanced debt of 5.152 percent per annum. That effective cost of debt was based on the total of the following: annual interest Zxpense of 4.565 percent, the 0.537 percent interest rate equivalent of the continuing $26,501 amortization of the issuance costs of CCWC’s then-existing IDA bond debt and new debt issuance Zosts at a 0.05 percent interest rate. Accordingly, a 5.152 percent of cost of debt will be adopted in this proceeding. C. Cost of Equitv While CCWC’s cost of debt is known, its cost of equity must be estimated, because the stock Df CCWC is not publicly traded. To that end, expert witnesses for CCWC, RUCO and Staff each performed cost of capital analyses to reach their cost of equity recommendations. The Company proposes a cost of equity of 10.50 percent?l9 RUCO recommends 9.35 and Staff recommends 9.60 percent.22’ ... ... CCWC Final Schedules at Schedule D-1 . 216 217 Direct Testimony of RUCO witness David C. Parcell, Exh. R-7 at 3; Surrebuttal Testimony of RUCO witness David C. Parcell, Exh. R-8 at 19. 218 Surrebuttal Testimony of Staff witness John A. Cassidy, Exh. S-3 at 6. CCWC Final Schedules at Schedule D-1. 220 Surrebuttal Testimony of RUCO witness David C. Parcell, Exh. R-8 at 19. Surrebuttal Testimony of Staff witness John A. Cassidy, Exh. S-3 at 6. 219 22 1 35 74568 DECISION NO. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCKET NO. W-02113A-13-0118 1. Parties’ Cost of Capital Analysis Results To estimate CCWC’s cost of equity, the expert witnesses for CCWC, RUCO and Staff, using financial models, assessed financial market data from a proxy group of publicly-traded utilities similar to CCWC to determine their cost of equity. CCWC’s witness Ms. Ahern applied three models to the market data of the nine publicly traded water utilities in her proxy group: a constant- growth Discounted Cash Flow (“DCF”) model; two Risk Premium Models (“RPM’), the Predictive RPM and an RPM using an adjusted total market approach; and two Capital Asset Pricing Models [“CAPM”), the traditional CAPM and the empirical CAPM. RUCO’s witness Mr. Parcell selected the same proxy group of nine water companies as Ms. Ahern, to which he applied a constant-growth DCF analysis, a CAPM analysis, and a comparable earnings (“CE”) analysis.222 Staffs witness Mr. Cassidy applied a constant-growth DCF model and a multi-stage DCF model to a proxy group :onsisting of seven of the same nine water utilities selected by Ms. Ahern and Mr. Parcell. Ms. Ahern’s DCF analysis produced an estimated 8.24 percent cost of equity; her RPM analysis yielded 11.44 percent; and her CAPM analysis produced a 9.77 percent cost of equity. She averaged the results to arrive at 9.80 percent as her unadjusted indicated equity cost rate; then she added a credit risk adjustment of 0.32 percent and a business risk adjustment of 0.40 percent, to arrive at an indicated cost of common equity of 10.52 percent, which she rounded down to 10.50 percent. Mr. Parcell’s estimation result from his DCF analysis was an 8.7 percent cost of equity (upper portion of 7.4-8.7 percent range); from his CAPM analysis, 7.25 percent (mid-point of 7.2-7.3 percent range), and fiom his CE analysis, 9.5 percent (midpoint of 9.0-10.0 percent range). From this, Mr. Parcell recommends a cost of equity range of 8.7 percent to 10.0 percent, and proposes the 9.35 percent average of that range as his recommended cost of equity. Mr. Cassidy’s estimation result from his DCF analysis was a 9.0 percent cost of equity (average of 8.6 percent constant-growth result and 9.4 percent multi-stage result). To this estimate he added a 0.6 percent economic assessment adjustment, and proposes a 9.6 percent cost of equity. 222 For his CE analysis, Mr. Parcell also examined, in addition to his proxy group, the Standard & Poor’s 500 Composite group (“S&P 500”). 36 DECISION NO. 74568 I 1 2 I 3 I 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 ~ 23 24 25 I 26 ~ 27 I 28 DOCKET NO. W-02113A-13-0118 2. Parties’ Arguments The Company is critical of the cost of equity analysis performed by Staffs witness, because it lid not include a CAPM analysis, and because it did not include the credit risk adjustment and the msiness risk adjustment that CCWC’s witness Ms. Ahern applied to her cost of equity estimate.223 XWC argues that with the addition of a CAPM analysis and recalculation adjustments to Mr. Cassidy’s DCF analysis advocated by Ms. Ahern, and with the addition of her credit risk adjustment 3f 0.32 percent and business risk adjustment of 0.40 percent, Staffs common equity cost rate recommendation of 9.6 percent would increase to 10.42 percent, which is only slightly lower than Ms. Ahern’s proposed 10.50 percent cost of CCWC criticizes RUCO’s witness’s decision not to update his cost of equity recommendation in his Surrebuttal Testimony.225 CCWC argues that Mr. Parcell’s CAPM analysis is flawed because it relies on a historical risk-free rate, and fails to employ a prospective or forward-looking equity risk CCWC also criticizes Mr. Parcell’s calculation of his market equity risk premium because it relies on achieved rates of return on book common equity for the S&P 500, a geometric mean historical market equity risk premium, and the historical total return on U.S. Treasury securities.227 CCWC also faults Mr. Parcel1 for failing to use upward credit risk or business risk adjustments.228 CCWC contends that with the recalculation adjustments to Mr. Parcell’s CAPM analysis advocated by Ms. Ahern, and with the addition of her credit risk adjustment of 0.32 percent and business risk adjustment of 0.40 percent, RUCO’s common equity cost rate recommendation of 9.35 percent would increase to 10.59 percent, higher than CCWC’s proposed 10.50 percent.229 RUCO defends the equity risk premium Mr. Parcel1 used in his CAPM analysis, arguing that it is appropriate to consider both geometric and arithmetic mean returns in the CAPM, because mutual fund investors regularly receive reports on their own funds as well as prospective funds, 223 CCWC Br. at 10-1 1. 224 CCWC Br. at 11, citing to Rebuttal Testimony of CCWC witness Pauline M. Ahern, Exh. A-1 1 at 14-35. 225 CCWC Br. at 10-1 1. 226 CCWC Br. at 12, citing to Rebuttal Testimony of CCWC witness Pauline M. Ahern, Exh. A-1 1 at 39-40 and 46. 227 CCWC Br. at 12, citing to Rebuttal Testimony of CCWC witness Pauline M. Ahern, Exh. A-1 1 at 40-46. 228 CCWC Br. at 8-9, citing to Rebuttal Testimony of CCWC witness Pauline M. Ahern, Exh. A-1 1 at 60-61. 229 CCWC Br. at 12, citing to Rebuttal Testimony of CCWC witness Pauline M. Ahern, Exh. A-1 1 at 50,60-62. DECISION NO. 74568 37 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 DOCKET NO. W-02 13A-13-0118 which show only geometric means.23o Mr. Parcell stated that his use of returns on U.S. Treasury securities in his CAPM model uses the most recent three-month average yields, which he states are nore properly described as current yields rather than historic yields.z31 Mr. Parcell also stated that it s appropriate to consider the level of return on book equity because the rates of public utilities are set 3ased on book values of rate base, capital structures, revenues, and expenses.232 RUCO takes issue with CCWC’s witness Ms. Ahern’s claim that risk premiums are Increasing, noting that Ms. Ahern’s analysis on this point is based on a selective use of the period From 2009 to present, when the ending of 2009 was in the midst of the Great Recession.233 4ccording to Mr. Parcell’s analysis of Morningstar (Ibbotson) data, risk premiums have actually ieclined from prevailing levels in the years prior to 2009 and from years since 2009 as CCWC responds that Ms. Ahern chose the 2009 starting date for her analysis not because of the freat Recession, but because Decision No. 71308 was issued at the end of that year, and determined 2 cost of equity of 9.90 percent for CCWC.235 CCWC argues that risk premiums are trending upward since that time, such that a cost of equity lower than 9.90 percent would not be appr~priate.’~~ In regard to CCWC’s criticism that RUCO’s witness failed to add a credit risk adjustment and 3 business risk adjustment, RUCO responds that neither CCWC’s upward business risk adjustment nor Staffs economic assessment adjustment are warranted, pointing out that CCWC does not raise its own In regard to Ms. Ahern’s financial risk adjustment, Mr. Parcell testified that a financial risk adjustment is not justified in light of the high common equity ratio the Company is req~esting.~~ Staff also opposes CCWC’s proposed small firm business risk adjustment because CCWC is a subsidiary of EPCOR, a much larger parent corporation, and is not an unassociated small 230 RUCO Br. at 24, citing to Surrebuttal Testimony of RUCO witness David C. Parcell, Exh. R-8 at 6-8. 231 Surrebuttal Testimony of RUCO witness David C. Parcell, Exh. R-8 at 8. 232 Id. 233 RUCO Br. at 24, citing to Surrebuttal Testimony of RUCO witness David C. Parcell, Exh. R-8 at 9. 234 Id. 235 CCWC Br. at 9-10, citing to Rebuttal Testimony of CCWC witness Pauline M. Ahern, Exh. A-11 at 50-51. 236 Id. 237 RUCO Br. at 24, citing to Direct Testimony of RUCO witness David C. Parcell, Exh. R-7 at 3 1. 238 Direct Testimony of RUCO witness David C. Parcell, Exh. R-7 at 3 1. 239 Staff Br. at 26. 38 DECISION NO. 74568 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Capital Item Percent Debt 14.45% Equity 85.55% 24 25 26 27 28 ~ Cost Weighted Cost 5.152% 0.74% 9.60% 8.21% DOCKET NO. W-02113A-13-0118 Staff argues that the Commission has consistently rejected risk adjustments for small firm size, and recommends that it be rejected in this case.24o Staff states that any risk associated with the size of a company is a unique, firm-specific risk, with which investors are not concerned because such risk can be eliminated by portfolio diver~ification.~~~ Staff also explains that any risk that would be reflected in CCWC’s beta as a result of its size is dissipated by CCWC’s status as an EPCOR subsidiary, which allows it wider access to resources and capital markets than would be afforded to an unaffiliated smaller company.242 3. Conclusion As noted in the discussion of CCWC’s capital structure above, our determination of an appropriate cost of equity in this proceeding will be based on CCWC’s capital structure at the end of the test year, as it was in our last ratesetting decision for CCWC. After considering all the testimony and evidence presented by the parties, we find that a cost of equity of 9.6 percent should be approved. D. Cost of Capital Summary Total Cost of Capital I I I 8.95% VI. REVENUE REQUIREMENT The revenue requirement approved herein is $1 1,069,078, which is an increase of $2,054,093, or 22.79 percent, over adjusted test year revenues of $9,014,9~.~~~ The rates adopted herein result in an approximate $6.74 increase for the average usage (7,870 gallons per month) 3/4 inch water meter residential customer, from $37.85 per month to $44.59 per month, or approximately1 7.8 1 percent. ... 240 Id. at 27. 241 Id., citing to Direct Testimony of Staff witness John A. Cassidy, Exh. S-2 at 41. 242 Staff Br. at 26. 243 To reach the appropriate revenue requirement, a Gross Revenue Conversion Factor (“GRCF”) of 1.649 197 was used. 39 DECISION NO. 74568 6 7 8 9 10 11 12 13 14 15 16 17 18 19 I 20 21 22 23 24 25 26 27 28 DOCKET NO. W-02113A-13-0118 VII. RATE DESIGN A. Cost of Service Study CCWC conducted a cost of service study, and Staff found the results acceptable.244 The cost of service study serves as a reasonable guide for the rate design we adopt in this proceeding. B. Low Income Program All parties recommend adoption of a low income rate for residential customers with 3/4-inch or 1-inch meters. Such customers who qual@ as low income would qualify for a discount of $7.50 per month from the monthly minimum charge.245 The Company’s rate design allows for this discount to be provided to up to 250 customers at a total cost of $22,500.246 The Company proposes to spread this cost over the highest block consumption of residential and commercial customers, stating that this same approach has been used in other EPCOR districts in which a low income program has been implemented. CCWC’s proposed low income recovery mechanism is reasonable and will be adopted. The Company has agreed to file a Plan of Administration (“POA”) for the proposed Low Income Program, and we will direct it to do so as a compliance item in this matter. C. Rate Structure All parties proposed similar inverted tier rate designs. The primary difference between the rate designs proposed by the parties is in the amount of the commodity charge for the first tier of usage. The rate designs proposed by RUCO and CCWC include a first tier rate that is nearly the same, proportionally, as CCWC’s current rate design. Staff, however, proposes a discounted first tier, and states that its purpose is to increase the affordability of non-discretionary usage.247 CCWC opposes Staffs reduction in the first tier rate, arguing that such a reduction would send customers inappropriate pricing signals, and that it would make it difficult for CCWC to achieve its authorized revenue requirement.248 CCWC argues that the cost of providing water service is ~~ 244 Staff Br. at 22, citing to Tr. at 587-588. 245 CCWC Final Schedule H-3; RUCO Final Schedule JMM-24; Staff Final Schedule GWB-1. 246 CCWC Reply Br. at 28. 247 Staff Br. at 23, citing to Staff Final Schedule GWB-1. 248 CCWC Br. at 32; CCWC Reply Br. at 26-27. 40 DECISION NO. 74568 1 2 3 I , I 4 I 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 : 24 25 26 27 28 DOCKET NO. W-02113A-13-0118 increasing, and the increasing costs should be reflected in customer^' rates.249 CCWC requests that the Commission adopt its rate design. While we appreciate Staffs effort to make non-discretionary water usage more affordable, we find that such a change should be approached more gradually, and the rate design we adopt herein includes a first tier rate that lies proportionately between that proposed by CCWC and RUCO and that proposed by Staff. As shown in Exhibit C, attached hereto and incorporated herein by reference, for 3/4-inch meter customers, we adopt a monthly minimum charge of $20 per month and a first tier commodity rate from 0-3,000 gallons of $2.40 per thousand gallons. The second tier rate, for usage from 3,001 gallons to 9,000 gallons, is $3.57 per thousand gallons, and the third tier rate, for all usage over 9,000 gallons, is $4.42 per thousand gallons. In addition, we note that, as discussed above, the Low Income Program we adopt today will also make water utility service more affordable by discounting the monthly usage charge by $7.50 per month for qualifying residential customers of limited means. We intend the authorized rate design to strike a balance between providing affordable non-discretionary water use, incorporating the concept of gradualism, providing rate stability, and promoting water conservation. D. Miscellaneous Service Charges CCWC proposes to increase its establishment of service charge from $25.00 to $60.00, and its reconnection (delinquent) charge from $35.00 to $60.00.250 Staff proposes an increase to the establishment of service charge from $25.00 to $30.00, and that the reconnection (delinquent) charge remain at $35.00. CCWC also proposes to increase its after-hours establishment of service fee from $35.00 to $90.00. Staff proposes instead an after-hours service charge of $35.00 to be charged in addition to the tariffed establishment of service charge and reconnection (delinquent) charge as a fee for service provided after normal business hours when the after-hours service is at the customer’s request. Under Staffs proposal, the fee for an after-hours establishment of service at the customer’s request would total $65.00, and the fee for an after-hours reconnection (delinquent) at the customer’s request 249 CCWC Reply Br. at 27. Rebuttal Testimony of CCWC witness Sheryl L. Hubbard, Exh. A-6 at 29. 41 DECISION NO. 74568 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 DOCKET NO. W-02113A-13-0118 would total $70.00. CCWC proposes to decrease the meter test fee fiom $35.00 to $30.00, and Staff recommends ,hat the fee remain at $35.00. CCWC argues that service charges for items such as after-hours and regular hours :stablishment of service should be directly related to the costs to provide such service, and that Staffs proposed miscellaneous charges reflect lower rates not tied to actual CCWC’s witness asserted that its proposed increases are based upon actual costs, and relate directly to the :osts incurred by the Company for those services.252 Staff states that its recommended fees are within the range of other EPCOR Arizona companies with more current rates, and contends that while CCWC’s witness asserted that its proposed charges represent the actual costs, the Company did rot provide sufficient information to support its position.253 We agree with Staff that imposition of a $60.00 service establishment charge is not wfficiently supported by evidence in this proceeding. We agree with Staffs proposed Miscellaneous Service Charges, except that instead of a flat after-hours service charge of $35.00, we will approve an after-hours service charge of $50.00, which will apply only to work performed on the customer’s property after hours, at the customer’s request, and in addition to the charge for any utility service provided. VIII. OTHER ISSUES A. Rate Case Expense Surcharge The Company is requesting $275,000 in rate case expense for this proceeding, normalized Staffs schedules reflect the Company’s There was no dispute in this proceeding regarding the level of rate case expense requested. However, RUCO proposes that in lieu of recovery of this expense in rates as proposed by the Company and Staff, a surcharge be placed on customers’ bills for either a period of 36 months, or over three years, for an expense level of $91,668.254 251 CCWC Br. at 34; CCWC Reply Br. at 28. Rebuttal Testimony of CCWC witness Sheryl L. Hubbard at 28-29. 253 Staff Br. at 23-24. 254 CCWC Final Schedule C-2, page 1; Staff Final Schedule GWB-11. 255 Staff Final Schedule GWB-11. 42 DECISION NO. 74568 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 DOCKET NO. W-02 13A-13-0118 inti1 CCWC has collected $275,000 in rate case expense recovery, whichever comes first.256 RUCO s concerned that if CCWC does not file a rate case prior to June 30, 2018, as will be required by the :erms of the proposed SIB, discussed below, it will over-recover the rate case expense authorized in ,his proceeding.257 As support for its proposal, RUCO notes that the Commission authorized a rate :ase expense recovery surcharge in Decision No. 73573 (November 21, 2012) (Pima Utility clompany). Neither the Company nor Staff addressed this issue on brief. In the case leading to Decision No. 73573, Pima Utility Company (“Pima”) had not filed a -ate case for 18 years. Staff recommended a normalization period for rate case expense of five years m that case, and RUCO recommended four years (in addition to several alternative recommendations For recovery). Pima proposed that the Commission authorize a rate case expense surcharge instead, which was based on an alternative position that had been described in RUCO’s testimony.258 In the Pima case, the utility was not under a Commission mandate to file its next rate case by a certain date, 2s CCWC will be pursuant to the SIB POA. In this case, depending on many other factors, the mcontested amount of rate case expense could possibly be recovered in rates by August 201 7, which Falls in the third quarter of the Company’s next test year as required by the SIB surcharge. Under the ircumstances of this case, we find that a three year normalization of rate case expense is reasonable md appropriate, and it is unnecessary to authorize a rate case expense recovery surcharge. B. CAP Surcharge The Company purchases CAP water fiom the Central Arizona Water Conservation District (“CAWCD”). CAWCD has had rapidly increasing costs and revenue shortfalls, and raises the rates the Company pays for CAP water on an annual basis to recoup its CCWC is proposing a CAP Surcharge to recover future expense increases related to CAP water, including charges for CAP water purchased from the CAWCD, and charges or credits related to water storage with the Central Arizona Groundwater Replenishment District (“CAGRD”) and the Maricopa Water District 256 RUCO Br. at 20-2 1. 257 Id. at 20. 258 Decision No. 73573 at 14-17. Direct Testimony of CCWC witness Jake Lenderking, Exh. A-25 at 10, 14. 259 43 DECISION NO. 74568 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 DOCKET NO. W-02113A-13-0118 Groundwater Savings Facility (“MWD GSF”).260 CCWC’s witness testified that water storage, water replenishment and CAP water are all inter-related and CCWC manages them together.261 CCWC proposes to prepare an annual tariff filing for the surcharge that would include a calculation of its annual purchased water costs and its projected annual purchased water costs for the following year.262 The filing would also contain the prior year’s balance, and the prior year’s water deliveries, and calculate the “rate” that should be assigned based on the actual historical Under the Company’s proposal, the CAP Surcharge would not be assessed until approximately one year following the implementation of rates authorized by this Decision, and in subsequent years, a tariff filing would be due on approximately the anniversary of the CAP Surcharge implementati~n.~~~ The Company proposes that the first CAP Surcharge tariff filing would be based on the adjusted 2012 purchased water expense and water deliveries of 1,784,344 gallons in the 2012 test year.265 In its Direct Testimony, Staff noted that in essence, CCWC is proposing a purchased water adjustor, and recommended that the Company file a detailed POA describing its proposed administration.266 The Company subsequently filed a POA, which is attached hereto and incorporated herein as Exhibit A.267 RUCO is opposed to the CAP Surcharge. RUCO recommends instead that the CAP M&I charges and capital costs (excluding the 1,93 1 acre-feet additional CAP allocation CCWC obtained in 2007), be projected in this case, and that any over- or under-collection be deferred until CCWC’s next rate case. RUCO also proposes that if the Commission approves the CAP Surcharge, that the surcharge include a component for revenue generated from customer growth to help offset the CAP M&I expenses. In addition, RUCO contends that a reduction to the Company’s return on equity should also be considered to recognize that the CAP Surcharge mechanism cuts the regulatory lag 260 Id. at 9-15. CCWC originally called this proposed surcharge a Sustainable Water Surcharge, but changed its name to CAP Surcharge at Staffs request. Tr. at 538-39. 261 Direct Testimony of CCWC witness Jake Lenderking, Exh. A-25 at 12. 262 Id. at 11. 263 Id. 264 Id. 265 Id. 266 Direct Testimony of Staff witness Gerald Becker, Exh. S-8 at 25-26. 267 Rebuttal Testimony of CCWC witness Jake Lenderking, Exh. A-26 at Exhibit JCL-2. 44 DECISION NO. 74568 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 I ~ 27 28 i DOCKET NO. W-02113A-13-0118 3etween rate cases, and thereby lowers the Company’s risk.268 The Company contends that because CAWCD faces many issues which could lead to substantial increases in the cost of CAP water, the proposed CAP Surcharge is necessary to allow Zxact recovery of known and measurable expense a year following the Company’s incurred ~xpense.~~~ CCWC asserts that it is unlikely that RUCO’s projections will match the Company’s sctual expenditures, but states that if RUCO’s projection is correct, then there would be no issue, 3ecause no surcharge, or a very minimal surcharge, would be implemented.270 CCWC further asserts that the design of the surcharge adequately addresses changes in customer growth as part of its ;al~ulation.~~’ The Company argues that EPCOR has several other water districts that use CAP water and already have pass-through mechanisms for CAP-related expense, and that the Company’s proposed POA was modeled after the surcharge mechanisms already used in EPCOR’s Sun City and Sun City West water The proposed CAP Surcharge is reasonable and appropriate and should be authorized. RUCO did not demonstrate a need to add a customer growth component to the surcharge calculation, and we do not find RUCO’s proposal to adjust CCWC’s return downward appropriate based on approval of this surcharge. We will direct CCWC to file a CAP Surcharge POA that conforms to the draft POA attached hereto as Exhibit A, for Commission review and approval. C. Best Management Practices On August 22, 2013, the Company filed in this docket ten water conservation BMPs in conjunction with its request for implementation of a SIB mechanism, and requests that they be approved. With its Rebuttal Testimony, CCWC filed tariffs in conformance with a change to BMP 4.2 proposed in Staffs Direct Testimony.273 Staff recommends approval of the BMP tariffs, with the change to BMP 4.2.274 Staff further RUCO Br. at 11-12, citing to Surrebuttal Testimony of RUCO witness Jeffrey M. Michlik, Exh. R-15 at 32-33. 269 CCWC Br. at 30; CCWC Reply Br. at 24. 270 CCWC Reply Br. at 24. 271 CCWC Br. at 30. 272 Id. at 3 1 273 Rebuttal Testimony of CCWC witness Jake Lenderking, Exh. A-26 at Exhibit JCL-3; Direct Testimony of Staff witness Katrin Stukov, Exh. S-6 at Exhibit KS, page 15 and Attachment A. 274 Direct Testimony of Staff witness Katrin Stukov, Exh. S-6 at Exhibit KS, page 15. 45 DECISION NO. 74568 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 DOCKET NO. W-02113A-13-0118 recommends that CCWC be required to notify its customers, in a form acceptable to Staff, of the BMP tariffs authorized in this proceeding and their effective date by means of either an insert in the next regularly scheduled billing or by a separate mailing, and to provide copies of the BMP tariffs to any customer upon request. Staff also recommends that CCWC be authorized to request recovery of actual expenses associated with the implemented BMPs in its next general rate application. Staffs recommendations in regard to the BMP tariffs are reasonable and will be adopted. D. SIB CCWC is requesting authority to implement a SIB surcharge mechanism that is materially the same as the SIB mechanism approved in Decision No. 73938 (June 27, 2013), and requests that the SIB be governed by all the conditions and requirements set forth for the SIB approved in Decision No. 73938. During preparation for the hearing on its application, CCWC prepared and submitted a SIB Eligibility Report supporting in detail the need for the SIB mechanism within its service territ01-y.~~~ The SIB Eligibility Report included a SIB Plant Table I of planned SIB-eligible projects and related costs, as well as an example of SIB Plant Table II.276 The Commission’s Engineering Staff reviewed CCWC’s filings in relation to the proposed SIB, and testified that the SIB Eligibility Report identifies the most critical infrastructure areas, estimates the quantity of service lines, meters, hydrants and valves that need to be replaced, and estimates the associated replacement CCWC’s five year plan includes infrastructure additions in four NARUC plant accounts: Services, Meters, Hydrants, and Valves.278 After reviewing CCWC’s SIB Eligibility Report and the proposed 5-year infrastructure replacement plan at a cost of $8,85 1,392, Engineering Staff found the proposal reasonable and appr~priate.~~’ Engineering Staff stated, however, that it made no “used and useful” determination of the proposed plant items, and that no conclusions should be inferred for rate making or rate base purposes in the future.280 The POA for the proposed SIB, CCWC’s SIB Plant Table I, a template for CCWC’s SIB 27s Id., pages 15-16. 276 Id. 271 Id. 278 Direct Testimony of Staff witness Katrin Stukov, Exh. S-6 at Exhibit KS, page 16. 219 Id. 280 Id. 74568 46 DECISION NO. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 I 22 23 24 25 26 27 28 DOCKET NO. W-02113A-13-0118 ’lant Table 11, along with sample SIB Schedules A through D, are included in Exhibit B, which is tttached hereto and included herein by reference.281 Engineering Staff recommends that if the :ommission approves CCWC’s proposed SIB, CCWC be required to file with Docket Control within !O days, as a compliance item in this docket, a POA for the SIB mechanism consistent with that ippearing in Exhibit B. The proposed SIB mechanism is designed to allow the Commission to authorize CCWC to ’ecover between rate cases, through a surcharge, the pre-tax return on investment and depreciation :xpense associated with the specific water infrastructure projects, net of associated plant retirements, which have been submitted for review in this rate proceeding and which CCWC plans to complete tnd place in service, to serve existing connections, prior to CCWC’s next rate case filing (no later han June 1, 201 8). Under the proposed SIB mechanism, the projects will be subject to a usefulness md prudency review in CCWC’s next rate case, and any approved surcharges will be subject to true- xp and refund. The key provisions of CCWC’s proposed SIB, as detailed in the proposed POA appearing in Zxhibit B, are as follows: . Approval of SIB-Eligible Proiects - All SIB-eligible projects must be reviewed by Staff and approved by the Commission prior to being included in the SIB surcharge. All of the projects must be completed and placed into service prior to being included in the SIB surcharge. CCWC must file a report with the Commission every six months summarizing the status of all SIB-eligible projects. Costs Eligible for SIB Recovery - Cost recovery under the SIB mechanism is allowed for the pre-tax return on investment and depreciation expense associated with SIB projects, net of associated plant retirements. The rate of return, depreciation rates, and GRCF/tax multiplier are to be the same as established in this Decision. The documents in Exhibit B were included as Attachment C to the Direct Testimony of Staff witness Katrin Stukov, Zxh. S-6 at Exhibit KS. 47 74568 DECISION NO. 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 DOCKET NO. W-02113A-13-0118 . Efficiency Credit - The SIB surcharge will include an efficiency credit equal to five percent of the SIB revenue requirement. . Surcharge Cap - The amount that can be collected annually by each SIB surcharge filing is limited to five percent of the revenue requirement authorized in this Decision. . Timing and Requirements of SIB Surcharge - Filings - - CCWC may file up to five SIB surcharge requests between rate case decisions; may make no more than one SIB surcharge every 12 months; may not make an initial SIB surcharge filing prior to 12 months after this Decision; must make an annual SIB surcharge filing to true-up its surcharge collections; and must file a new rate case application no later than June 30, 2018, with a test year ending no later than December 31, 2017, at which time any SIB surcharge then in effect will be reviewed for inclusion in base rates in that proceeding, and the surcharge will be reset to zero. . SIB Rate Desim - The SIB surcharge will consist of a fixed monthly charge on customers’ bills, with the surcharge and the efficiency credit listed as separate line items. The surcharge will increase proportionately based on customer meter size. . Commission Approval of SIB Surcharge - Each SIB surcharge must be approved by the Commission prior to implementation. Upon filing of the SIB surcharge application, Staff and RUCO will have 30 days to review the filing and dispute it or file a request for the Commission to alter the surcharge or true-up surcharge/credit . Public Notice - At least 30 days prior to a SIB surcharge becoming effective, CCWC is required to provide public notice to customers in the form of a bill insert or customer letter. The notice must include the individual surcharge amount by meter size; the individual efficiency credit by meter size; the individual true-up 48 DECISION NO. 74%8 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 DOCKET NO. W-02113A-13-0118 surcharge/credit by meter size; and a summary of the project(s) included in the current surcharge filing, including a description of each project and its cost. = SIB Surcharge Request Filing Requirements - In order to allow the Commission to conduct a fair value analysis, all SIB surcharge requests must include CCWC’s most current balance sheet at the time of the filing; its most current income statement; an earnings test schedule; a rate review schedule (including the incremental pro forma effects of the proposed increase); a revenue requirement calculation; a surcharge calculation; an adjusted rate base schedule; a CWIP ledger (for each project showing accumulation of charges by month and paid vendor invoices); Excel schedules with formulae intact supporting the revenue requirements approved in this Decision and the same Excel schedules incorporating the effects of SIB-eligible plant for the current SIB surcharge request and any previously approved surcharge and tme-up requests; and a typical residential bill analysis showing the effect of the SIB surcharge. CCWC should also provide current bill determinants. . Reconciliation and True-Ups - Any under- or over-collected SIB authorized revenues will be recovered or refunded, without interest, over a 12-month period by means of a SIB true-up surcharge or true-up credit. . Earnings Test - To allow the Commission to ensure that rates are just and reasonable, CCWC must perform an earnings test calculation for each initial SIB filing and SIB annual report filing. The purpose of the earnings test filing is to determine whether the actual rate of return reflected by operating income for the relevant 12-month period exceeded the most recently authorized fair value rate of return. The earnings test must be based on the most recent available operating income, adjusted for any operating revenue and expense adjustments adopted in CCWC’s most recent general rate case; on the rate base adopted in CCWC’s most 49 DECISION NO. 74568 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 I 24 25 , 26 27 28 I DOCKET NO. W-02 1 13A- 13-01 18 recent general rate case, updated to recognize changes in plant, accumulated depreciation, contributions in aid of construction (“CIAC”), advances in aid of construction (“AIAC”), and accumulated deferred income taxes through the most recent available financial statement (quarterly or longer). If the earnings test calculation shows that CCWC will not exceed its authorized rate of return with the SIB surcharge, the surcharge may go into effect once approved by the Commission. If the earnings test calculation shows that CCWC will exceed its authorized rate of return with the implementation of the surcharge, the surcharge may not go into effect. However, if the earnings test shows that CCWC will exceed its authorized rate of return with the implementation of the full surcharge, but a portion of the surcharge may be implemented without CCWC exceeding the authorized rate of return, then the surcharge may be authorized up to that amount, once approved by the Commission. Emergency Circumstances - Under the proposed POA, projects may be not be added to SIB Plant Table I subsequent to this Decision, except in the event of emergency circumstances, which are specifically defined in Section V of the POA. Such emergency additions must be approved by the Commission. As it argued in the case leading up to Decision No. 73938, RUCO argues that the SIB should not be approved. RUCO does not agree with CCWC that the SIB is in the public interest, and does not support its approval. RUCO believes that the SIB is bad public policy, is illegal and mechanically flawed. RUCO claims that the SIB shifts risk fi-om CCWC to the ratepayer without adequate financial consideration to the ratepayer; that the SIB is not a true adjustor mechanism because it is used to include plant costs, not fluctuating operating expenses; that the SIB would result in interim rates, which CCWC has not requested; that the SIB will increase CCWC’s FVRB without any meaningful determination of fair value, and therefore the SIB constitutes single issue ratemaking, and the earnings test required by the SIB POA does not ensure that the Commission will make a fair value finding because it is an after-the-fact indicator of whether the Company’s actual rate of return 50 DECISION NO. 74568 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 I I ~ 23 24 25 26 27 28 DOCKET NO. W-02113A-13-0118 exceeded its authorized rate of return; that Scates v. Arizona Corp. Comm ’n, 1 18 Ariz. 53 1, P.2d 612 (App. 1978) does not provide for an exception that would allow the SIB; that CCWC and Staff did not make a case to support Commission approval of the SIB; and that the SIB is not in the public interest because it eliminates regulatory lag to the benefit of the utility, at the risk of reducing pressure to operate prudently and efficiently, to the detriment of the ratepayer. RUCO contends that CCWC should not be awarded a SIB under the facts and circumstances of this case, due to the maintenance practices of the owner of CCWC’s system prior to EPCOR’s acquisition of the system in 201 1 .282 RUCO argues that CCWC knew the condition of the system when it acquired it, and that the costs associated with improving the system should not become the burden of the ratepayer through a SIB mechanism. RUCO states that a SIB is not needed because a witness for CCWC testified that it would be possible for CCWC to make its planned repairs without a SIB and request recovery in its next rate proceeding,283 and that CCWC does not need a SIB due to its equity-rich capital structure and cash reserves.284 RUCO also recommends that the Commission order CCWC to set aside depreciation expense associated with the SIB to be used to pay for improvements and replacement of plant.285 Regarding RUCO’s arguments about the necessity for a SIB under the circumstances of this case, CCWC states that it certainly could, and will, maintain the system with or without a SIB. CCWC contends, however, that without the requested SIB, it will under-earn its authorized rate of return.286 CCWC states that it is uncontroverted that its system is in need of additional repairs and replacements, including replacements for SIB-eligible repairs. CCWC adds that, as evidenced by the multiple revisions to certain SIB information Staff required in the course of this proceeding, Staff carefully reviewed the information CCWC provided in support of its requested SIB. Staff contends that CCWC should be awarded a SIB under the facts of this case, that CCWC demonstrated its need for the requested SIB through testimony and extensive engineering reports, all of which was reviewed by Staff, and that RUCO has not provided a valid justification for its 282 RUCO Br. at 26, citing to Direct Testimony of Ian C. Crooks, P.E., Exh. A-17 at 13-14. 283 RUCO Br. at 28. 284 RUCO Reply Br. at 12. 285 RUCO Br. at 37. CCWC Reply Br. at 25. 51 74568 DECISION NO. 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 DOCKET NO. W-02113A-13-0118 rejection.287 Staff asserts that RUCO presented no controverting evidence through its own witness, and presented no independent analysis of the engineering information CCWC provided to support its request. Staff argues that the depreciation expense set-aside proposed by RUCO is unnecessary for a utility that is committed to making system improvements, and no evidence was presented that the xrrent owner of CCWC has not made maintenance of the system a priority.288 Staff disagrees with RUCO’s contention that the SIB shifts costs to ratepayers without adequate financial consideration, pointing out that it includes an efficiency credit that reduces the rate Df return on SIB-related plant by five percent compared to non SIB -related plant additions. Staff also disagrees with RUCO’s implication that a SIB mechanism will provide CCWC no incentive to control its costs, because RUCO and Staff both will have an opportunity to address this issue each time CCWC makes a surcharge filing, as well as in the follow-up rate case required by the SIB POA.~~~ Staff states that the approval process for a SIB is an extensive and rigorous one, and that the Commission must review and approve each request, and has the authority to deny a surcharge request or cancel the SIB at any time. The SIB POA requires CCWC to provide information with each SIB filing that will allow a determination of the impact of the new plant on its FVRB and consider the resulting impact on its rate of return. Staff disputes RUCO’s argument that the earnings test required by the SIB POA does not ensure that the Commission will make a fair value finding, because it is an after-the-fact indicator of whether the Company’s actual rate of return exceeded its authorized rate of return. RUCO’s witness stated at the hearing that the earnings test does not include an examination of expense items, but Staff argues that the earnings test does take expense levels into account, and that it is used to determine whether all or part of a SIB surcharge request should be authorized. Staff states that should extra time be required to perform any part of a SIB filing review, then Staff or RUCO will have an opportunity to request an extension of time.290 Staff disagrees with RUCO’s contention that the SIB is not a true adjustor mechanism. Staff ____ ~ 287 Staff Reply Br. at 9-10. 288 Id. at 12. 289 Staff Reply Br. at 10. 290 Id. at 12. 52 DECISION NO. 74568 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 I 24 25 26 27 28 I DOCKET NO. W-02113A-13-0118 ;tates that the SIB provides a mechanism to recover capital costs which can be estimated during the -ate case but which will change after the rate case has concluded, and that the Commission currently itilizes many such mechanisms.291 Staff points out that even if the SIB were somehow found not to )e an adjustor mechanism, such a determination would not cause the SIB to be illegal or mconstitutional, due to the many safeguards and protections included in its design. CCWC and Staff argue that the proposed SIB is within the Commission’s legal authority, :omplies with the fair value requirement of the Arizona Constitution, is a lawful adjustor mechanism mder Arizona law, and complies with all requirements for adjustor mechanisms under Arizona law. As Staff describes, the SIB proposed by CCWC and supported by Staff has been developed in ,he context of a full rate case in which we have determined CCWC’s FVRB and after review, ipproved specific plant projects to be included in the SIB. SIB projects are limited to those that replace plant used to serve existing connections, and the SIB provides for the retirement of replaced dant, such that new SIB plant will not generate a new revenue stream.292 The cap on the SIB surcharge, the requirement for true-up filings, and the requirement that CCWC file a full rate case by June 30, 2018, with a test year ending no later than December 31, 2017, all serve to ensure that resulting rates will be just and reasonable. We have comprehensively addressed, in our Opinion and Order set forth in Decision No. 73938, the arguments RUCO again raises in this case in opposition to CCWC’s proposed SIB surcharge mechanisms. In Decision No. 73938, we found the SIB mechanism approved therein, upon which CCWC’s proposed SIB mechanism is based, to be compliant with the Commission’s constitutional requirements, as well as with the case law interpreting the Commission’s authority and discretion in setting rates.293 We find CCWC’s proposed SIB mechanism in this case, which is virtually identical to that approved in Decision No. 73938, to also be compliant with the Commission’s constitutional requirements and duties, and with the case law interpreting those requirements and duties. The legal analysis set forth in Decision No. 73938 is incorporated in our Decision today. For the reasons stated hereinabove, and with those stated in Decision No. 73938, we 291 Staff Reply Br. at 1 1. 292 Staff Br. at 20. 293 Decision No. 73938 at 42-54. 53 DECISION NO. 74568 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 DOCKET NO. W-02113A-13-0118 hnd that implementation of CCWC’s proposed SIB surcharge mechanism, pursuant to the proposed POA in Exhibit B, and limited to the infrastructure replacement plan set forth in SIB Table I in Exhibit B, is in the public interest, and will therefore approve it. * * * * * * * * * * Having considered the entire record herein and being fully advised in the premises, the Zommission finds, concludes, and orders that: FINDINGS OF FACT 1. On April 26, 2013, CCWC filed the above-captioned rate application with the Clommission. With the application, CCWC filed the Direct Testimony of its witnesses Thomas M. Broderick, Ian C. Crooks, Jeffrey W. Stuck, Jake Lenderking, Sandy L. Murrey, Sheryl L. Hubbard, Tom Bourassa, and Pauline M. Ahern. 2. 3. On May 2,2013, CCWC filed a Notice of Errata. On May 24, 2013, CCWC filed a letter to confirm its intention to support and adopt a BMP tariff to address meter repair and replacement. 4. On May 28, 2013, Staff filed a Letter of Sufficiency indicating that CCWC’s 2pplication met the sufficiency requirements of A.A.C. R14-2-103, and classifying CCWC as a Class 4 Utility. 5. On June 17, 2013, a Rate Case Procedural Order was issued setting a hearing date for the application and associated procedural deadlines. 6. On June 18, 2013, a Procedural Order was issued correcting the hearing date from February 17,2014 to February 18,2014. 7. On July 10, 2013, CCWC filed a supplement to its application requesting approval of an attached meter BMP tariff. 8. On August 7, 2013, CCWC filed an Affidavit of Publication indicating that notice of the application and hearing, in accordance with the requirements of the Rate Case Procedural Order, was published in the Fountain Hills Times on July 3 1,201 3. 9. Intervention in this matter was granted to Fountain Hills, RUCO, Lina Bellenir, Gale Evans, Patricia Huffman, Leigh M. Oberfeld-Berger, Tracey Holland, Leonora M. Hebenstreit, and 54 DECISION NO. 74568 r 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 I 25 26 27 28 ~ DOCKET NO. W-02113A-13-0118 WUAA. 10. On August 22, 2013, CCWC filed a supplement to the application to which was attached 10 draft BMP Tariffs, for which it requested approval as part of an order authorizing CCWC to implement a SIB surcharge mechanism. 11. On August 23, 2013, CCWC filed a supplement to the application to which was attached a SIB eligibility report dated August 7, 2013, a SIB Table I dated August 21, 2013, and a SIB Table I1 dated August 21,2013. 12. On August 7, 2013, CCWC filed an Affidavit of Mailing indicating that notice of the application and hearing was mailed via U.S. Mail to its customers in accordance with the requirements of the Rate Case Procedural Order. 13. On November 20, 2013, a Procedural Order was issued modifying the procedural schedule for filing testimony in response to RUCO’s November 15, 2013 Motion for Extension of Time to File Testimony. 14. On December 6, 2013, CCWC filed a supplement to its application to which was attached a SIB Table I1 dated December 6,201 3. 15. On December 1 1 , 2013, a Procedural Order was issued modifying the procedural schedule in this matter in response to Staffs request for an extension of time to file its testimony. 16. On December 18, 2013, Staff filed the Direct Testimony of its witnesses Gerald W. Becker, Katrin Stukov, and John A. Cassidy. 17. On December 19, 2013, RUCO filed the Direct Testimony of its witnesses Jeffrey M. Michlik and David Parcell. 18. On December 20,2013, Staff filed Direct Testimony on cost of service and rate design of its witnesses Katrin Stukov and Gerald W. Becker. 19. Buchanan . 20. On December 23, 2013, Fountain Hills filed Direct Testimony of Kenneth W. On January 14, 2014, a Procedural Order was issued modifying the deadline for the filing of Rebuttal Testimony as requested by the Company. 21. On January 21, 2014, CCWC filed the Rebuttal Testimony of its witnesses Sheryl L. 55 DECISION NO. 74568 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 DOCKET NO. W-02113A-13-0118 jubbard, Jeffrey W. Stuck, Jake Lenderking, Sandra L. Murrey, Thomas J. Bourassa, Pauline M. 4hern, and Candace Coleman. 22. 23. On January 3 1,2014, Staff filed a Notice of Settlement Discussions. On February 7, 2014, Staff filed the Surrebuttal Testimony of its witnesses Gerald W. Becker and John A. Cassidy. 24. On February 7, 2014, RUCO filed the Surrebuttal Testimony of its witnesses Jeffrey M. Michlik and David Parcell. 25. 26. On February 7,2014, CCWC filed Notice Regarding Adoption of Testimony/Exhibits. On February 12, 2014, CCWC filed the Rejoinder Testimony of its witnesses Sheryl L. Hubbard, Jeffrey W. Stuck, and Pauline M. Ahern. 27. 28. On February 13,2014, CCWC filed testimony summaries of its witnesses. On February 13, 2014, RUCO filed a Notice of Errata with corrected schedules to the surrebuttal Testimony of its witness Jeffrey M. Michlik. 29. On February 13, 2014, the prehearing conference convened as scheduled. CCWC, RUCO and Staff appeared through counsel. Procedural matters were discussed and an order of witnesses was established. 30. 3 1. 32. 33. 34. On February 14,2014, Staff filed testimony summaries of its witnesses. On February 14,2014, Staff filed Notice of Amended Surrebuttal Testimony. On February 14,2014, WUAA filed an Application for Leave to Intervene. On February 14,2014, RUCO filed testimony summaries of its witnesses. On February 18, 2014, the hearing commenced as scheduled. CCWC, WUAA, RUCO, and Staff appeared through counsel. Intervenor Lina Bellenir appeared on her own behalf and stated that she did not wish to cross examine witnesses or provide sworn testimony, but wished to provide public comment instead.294 WUAA appeared through counsel and requested authority to intervene pursuant to the Application for Leave to Intervene filed on February 14, 2014. Due to the lateness of the request, WUAA was not granted leave to introduce evidence, but was granted ~ ~ 294 Hearing Transcript (“Tr.”) at 7-8. 56 DECISION NO. 74568 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 DOCKET NO. W-02113A-13-0118 intervention limited to cross examination of witnesses and providing legal argument. No other intervenors made appearances at the hearing.295 Ms. Bellenir and one other member of the public provided public comment for the record. CCWC, RUCO and Staff presented evidence and cross zxamined witnesses. WUAA cross examined witnesses. 35. During the fourth day of hearing, on February 21, 2014, Staff requested a continuance 3f the hearing in order to have time to prepare and file Amended Surrebuttal Testimony based on information provided by CCWC on February 18, 2013, pursuant to Staffs request made in Staffs Surrebuttal Testimony. With no objection from any party, the hearing was continued to February 28, 2014, the first date on which facilities were available for the requested continuation. 36. On February 26 and 27, 2014, Staff filed Amended Surrebuttal Testimony of its witness Gerald W. Becker. 37. 38. 39. 40. The hearing concluded on February 28,2014. On March 7,2014, CCWC, RUCO, and Staff filed their Final Post-Hearing Schedules. On April 4,2014, CCWC, WUAA, RUCO, and Staff filed Initial Closing Briefs. On April 25,2014, CCWC, WUAA, RUCO, and Staff filed Reply Closing Briefs, and the matter was taken under advisement. 41. Because CCWC’s proposal for a 24-Month AFUDC and Depreciation Deferral Mechanism is lacking in sufficient detail to be fully considered in this proceeding, it is not reasonable 3r appropriate to approve it. 42. It is reasonable and in the public interest to allow the five year annualization of $15,641 of the 60 months of deferred CAP M&I costs of $78,205.50, which costs include no interest Dr other carrying charges. This annualization should be subject to true-up in a fbture rate case if it results in an over- or under-collection of the $78,205.50 deferral amount. 43. CCWC’sFVRB is $26,832,931. 44. 45. A rate of return of 8.95 percent is just and reasonable in this case. Under the rates we authorize herein, shown in Exhibit C, an average usage (7,870 295 Fountain Hills made no appearance. Its December 23,2013, prefiled testimony will be considered as public comment. 57 DECISION NO. 74568 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 DOCKET NO. W-02113A-13-0118 zallons per month) residential customer with a 3/4 inch meter will experience an increase in rates of b6.74, from $37.85 to $44.59, or 17.81 percent. 46. CCWC should be required to file in this docket, within 120 days, a plan including malysis on how it might achieve a more balanced, reasonable, and appropriate capital structure. In hture ratesetting proceedings, regardless of whether CCWC has chosen to rebalance its capital structure, CCWC can expect that a hypothetical capital structure will be considered. 47. It is reasonable to require CCWC to file a POA for the proposed Low Income Program, within 60 days of this Decision. 48. The rates authorized herein include a declining usage adjustment proposed by the Company. It is reasonable to require the Company to file in this docket, within 90 days of this Decision, a report that details the monthly usage of each meter size and customer class for the January-December 2013 calendar year, and to annually file in this docket, commencing on or before March 30, 2015, and until the filing of its next rate case, a report that details the monthly usage of each meter size and customer class for the prior January-December calendar year. It is reasonable to require Staff to analyze the data, and to provide a recommendation to the Commission if Staff believes that Commission action should be taken based on the filed reports. 49. It is reasonable to authorize CCWC to implement a CAP Surcharge, and to require CCWC to file, within 30 days of this Decision, a CAP Surcharge Plan of Administration that substantially conforms to the CAP Surcharge (labeled as Sustainable Water Surcharge) Plan of Administration attached hereto as Exhibit A, for Commission review and approval. 50. It is reasonable to approve BMP tariffs as they appear in Hearing Exhibit A-26, the Rebuttal Testimony of CCWC witness Jake Lenderking, and to require CCWC to notify its customers about the BMP tariffs and their effective date, in a form acceptable to Staff, by means of either an insert in the next regularly scheduled billing or by a separate mailing, and to provide copies of the BMP tariffs to any customer upon request. It is reasonable to authorize CCWC to request recovery of actual expenses associated with the implemented BMPs in its next general rate application. 51. It is reasonable to authorize CCWC to implement a SIB surcharge pursuant to the requirements and conditions set forth in Exhibit B, and should be required to file with Docket Control 58 DECISION NO. 74568 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 I 22 23 24 25 26 27 28 DOCKET NO. W-02113A-13-0118 within 30 days, as a compliance item in this docket, a POA for the SIB mechanism consistent with ,hat appearing in Exhibit B. 52. CCWC should be authorized to request, pursuant to the requirements and conditions ;et forth in the POA in Exhibit B, SIB surcharge mechanism treatment for the specific projects listed n SIB Table I in Exhibit B. 53. CCWC should be required to continue using its existing depreciation rates, which are ;et forth in Hearing Exhibit S-6, Exhibit KS at Table A, except for the depreciation rates for the hnsportation Equipment Account and the Pumping Equipment Account which shall be as proposed 3yccwc. 54. CCWC shall adjust its depreciation rates for the Transportation Equipment Account 2nd the Pumping Equipment Account as proposed by CCWC. CCWC shall further file a depreciation study with its next rate case to support any depreciation rates that do not align with Staffs standard rates. 55. The Company’s water system is currently delivering water that meets water quality standards required by Arizona and Federal law. 56. 57. CCWC’s water system is located in the Phoenix Active Management Area. ADWR has determined that CCWC’s water system is currently in compliance with ADWR requirements governing water providers and community water systems. 58. CCWC has an approved curtailment plan tariff and an approved backflow prevention tariff on file with the Commission. 59. CCWC is in compliance with Commission requirements. CONCLUSIONS OF LAW 1. CCWC is a public service corporation within the meaning of Article XV of the Arizona Constitution and A.R.S. Title 40. 2. The Commission has jurisdiction over CCWC and the subject matter of this proceeding. 3. 4. CCWC’s FVRB is $26,832,931. Notice of the application was provided in accordance with the law. 59 74568 DECISION NO. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCKET NO. W-02113A-13-0118 5. 6. A rate of return of 8.95 percent is just and reasonable in this case. The rates and charges and terms and conditions of service established herein are just and reasonable and in the public interest. 7. It is reasonable and in the public interest to require CCWC to make a filing in this docket within 120 days of this Decision setting forth its consideration of plans to rectify the imbalance in its capital structure relative to the capital structures of its parent companies, and to put CCWC on notice that in future ratesetting proceedings, regardless of whether CCWC has chosen to rebalance its capital structure, CCWC can expect that a hypothetical capital structure will be considered. ORDER IT IS THEREFORE ORDERED that Chaparral City Water Company is hereby authorized and directed to file with the Commission, on or before June 30, 2014, revised schedules of rates and charges consistent with Exhibit C attached hereto. IT IS FURTHER ORDERED that the revised schedules of rates and charges shall be effective for all service rendered on and after July 1,20 14. IT IS FURTHER ORDERED that Chaparral City Water Company shall provide notice to its customers of the revised rates and charges, in a form acceptable to the Commission’s Utilities Division Staff, in its next regularly scheduled billing. IT IS FURTHER ORDERED that Chaparral City Water Company shall file, within 120 days, as a compliance filing in this docket, a plan including analysis on how it might achieve a more balanced, reasonable, and appropriate capital structure. IT IS FURTHER ORDERED that the rates approved herein include Chaparral City Water Company’s requested five year annualization of the 60 months of deferred Central Arizona Project Municipal and Industrial charges associated with the additional 1,93 1 acre-feet Central Arizona Project allocation approved in Decision No. 71 308, which annualization excludes any interest or other carrying charges. This annualization shall be subject to true-up in a future rate case if it results in an over- or under-collection of the authorized deferral amount. IT IS FURTHER ORDERED that the Low Income Program as proposed by Chaparral City 60 DECISION NO. 74568 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCKET NO. W-02113A-13-0118 Water Company in this proceeding is hereby approved. IT IS FURTHER ORDERED that Chaparral City Water Company shall file, within 60 days, a Plan of Administration for the Low Income Program approved herein for Commission review and approval. IT IS FURTHER ORDERED that Chaparral City Water Company shall file within 90 days in this docket, a report that details the monthly usage of each meter size and customer class for the January-December 2013 calendar year, and shall annually file in this docket, commencing on or before March 30, 2015, and until the filing of its next rate case, a report that details the monthly usage of each meter size and customer class for the prior January-December calendar year. Staff shall analyze the data, and if Staff believes that Commission action should be taken, shall provide a recommendation to the Commission. IT IS FURTHER ORDERED that Chaparral City Water Company is hereby authorized to implement a CAP Surcharge, and shall file, within 30 days, a CAP Surcharge Plan of Administration that substantially conforms to the CAP Surcharge Plan of Administration (currently labeled as Sustainable Water Surcharge Plan of Administration) attached hereto as Exhibit A, for Commission review and approval. IT IS FURTHER ORDERED that the BMP tariffs proposed by Chaparral City Water Company are hereby approved, and Chaparral City Water Company shall file tariffs conforming to those appearing in Hearing Exhibit A-26 at the time it files the new rate schedules authorized herein. IT IS FURTHER ORDERED that Chaparral City Water Company shall notify its customers, in a form acceptable to Staff, of the Best Management Practices tariffs authorized in this proceeding and their effective date by means of either an insert in the next regularly scheduled billing or by a separate mailing, and shall provide copies of the Best Management Practices tariffs to any customer upon request. IT IS FURTHER ORDERED that Chaparral City Water Company is hereby authorized to request recovery of actual expenses associated with the implemented Best Management Practices tariffs in its next general rate application. IT IS FURTHER ORDERED that Chaparral City Water Company is hereby authorized to 61 DECISION NO. 74568 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 ~ 21 22 23 24 25 26 27 28 DOCKET NO. W-02113A-13-0118 implement a System Improvement Benefit surcharge mechanism pursuant to the requirements and conditions set forth in Exhibit B. IT IS FURTHER ORDERED that Chaparral City Water Company shall file with Docket Control within 30 days, as a compliance item in this docket, a Plan of Administration for the System Improvement Benefit surcharge mechanism consistent with that appearing in Exhibit B for Commission review and approval. IT IS FURTHER ORDERED that Chaparral City Water Company is hereby authorized to request, pursuant to the requirements and conditions set forth in the Plan of Administration appearing in Exhibit B, System Improvement Benefit mechanism treatment only for the specific projects listed in SIB Table I of Exhibit B. IT IS FURTHER ORDERED that Chaparral City Water Company shall continue using its existing depreciation rates, which are set forth in Hearing Exhibit S-6, Exhibit KS at Table A, except for the depreciation rates for the Transportation Equipment Account and the Pumping Account which shall be as proposed by Chaparral City Water Company. IT IS FURTHER ORDERED that Chaparral City Water Company shall file a depreciation study in its next rate case to support any depreciation rates that do not align with Staffs standard rates. ... ... ... .., ... ... ... ... 62 DECISION NO. 74568 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 DOCKET NO. W-02113A-13-0118 IT IS FURTHER ORDERED that Chaparral City Water Company is hereby put on notice that t may be required to use Staffs vintage year depreciation methodology in its next rate case. IT IS FURTHER ORDERED that the timeclock in this matter is hereby extended to June 17, !014, pursuant to A.A.C. R14-2-103(b)(l l)(ii). IT IS FURTHER ORDERED that this Decision shall become effective immediately. BY ORDER OF THE ARIZONA CORPORATION COMMISSION. IN WITNESS WHEREOF, I, JODI JERICH, Executive Director of the Arizona Corporation Commission, have hereunto set my hand and caused the official seal of the Commission to be affixed at the Capitol, in the City of Phoenix, this 20-h dayof ne. 20 14. - DISSENT DISSENT 63 DECISION NO. 74568 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 I 19 20 21 22 23 24 25 26 27 28 SERVICE LIST FOR: IOCKET NO.: DOCKET NO. W-02113A-13-0118 CHAPARRAL CITY WATER COMPANY W-02113A-13-0118 rhomas H. Campbell vlichael T. Hallam ,EWIS ROCA ROTHGERBER, LLP !01 East Washington Street, Suite 1200 'hoenix, AZ 85004 9ttorneys for Chaparral City Water Company 4ndrew J. McGuire ]avid A. Pennartz ,andon W. Loveland XJSTROSENFELDPLC 3ne East Washington, Suite 1600 'hoenix, AZ 85004 4ttorneys for the Town of Fountain Hills 3aniel W. Pozefsky, Chief Counsel RUCO L 110 W. Washington, Ste. 220 ?hoenix, AZ 85007 Lina Bellenir 16301 East Jacklin Drive Fountain Hills, AZ 85268 Sale Evans Patricia Huffinan 162 18 E. Palisades Blvd. Fountain Hills, AZ 85268 Leigh M. Oberfeld-Berger 16623 E. Ashbrook Drive, Unit #2 Fountain Hills, AZ 85268 Tracey Holland 16224 E. Palisades Blvd. Fountain Hills, AZ 85268 Leonora M. Hebenstreit 16632 E. Ashbrook Drive, Unit A Fountain Hills, AZ 85268 Greg Patterson 916 West Adams, Suite 3 Phoenix, AZ 85007 Attorney for WUAA 64 DECISION NO. 74568 4 , 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 I 23 24 25 26 27 28 DOCKET NO. W-02113A-13-0118 lanice Alward, Chief Counsel 3ridget Humphrey, Staff Attorney flatthew Laudone, Staff Attorney ,egal Division iRIZONA CORPORATION COMMISSION 1200 West Washington Street 'hoenix, AZ 85007 Steven M. Olea, Director Jtilities Division 9RIZONA CORPORATION COMMISSION 1200 W. Washington St. 'hoenix, AZ 85007 65 DECISION NO. 74568 I DOCKET NO. W-02 1 13A- 13-0 1 18 Arizona Corporation Commission Docket No. W-02113A-13-0118 Proposed Plan of Administration Sustainable Water Surcharge (SWS) Mechanism Sustainable Water Surcharge Mechanism PIan of Administration This Plan of Administration (“Plan”) relates to the administration of Chaparral City Water Company’s (“CCWC” or the “Company”) Central Arizona Project (“CAP’) water Surcharge known as the Sustainable Water Surcharge (“SWS”). The purpose of the Plan is to describe how CCWC wiII administer the SWS if approved by the Arizona Corporation Commission in Docket NO. W-02113A-13-0118. I EXHIBIT A DECISION NO. Arizona Corporation Commission DOCKETNO. W-02113A-13-0118 Proposed Plan of Administration Docket NO. W-02113A-13-0118 Sustainable Water Surcharge (S WS) Mechanism I. Overview CCWC is a public service corporation providing water utility service in Maricopa County, Arizona pursuant to a Certificate of Convenience and Necessity granted by the Arizona Corporation Commission. CCWC is dependent on CAP water to deliver to its customers. The S WS mechanism has been closely modeled after two other current surcharge mechanisms known as Groundwater Saving Fee mechanisms which EPCOR successfully implements for its Sun City Water and Sun City Water districts. 11. General Description - Surcharge The purpose of the SWS mechanism is to recover the difference in costs of CAP water and the costs or credits associated with underground storage and recovery ofCAP water from the adjusted 2012 test year costs as approved in this case, Docket No. W-02113A-13-0118. Under the Company’s proposed SWS mechanism, the Company will make annual filings (by January 3 1 each year) to adjust the SWS rate. The SWS rate will be billed on a per thousand gallons sold basis similar to a commodity rate for all customers. The SWS will appear on customers’ bills as a separate line item labeled “Sustainable Water Surcharge.” This rate will be adjusted annually (effective March 1) to true up the previous year’s activity and reflect the current year’s costs. 111. Components of the SWS Mechanism The S WS Mechanism will include the following: 0 Section 1 - Prior Year UnderNOver) Recovery - This section accounts for the under/(over) recovery of the prior year’s costs through the surcharge. It encompasses I ait of the previous year’s revenues and expense and shows the calculation of the under/(over) collection as well as the calculation to either (credit) or charge customers for the (over)/under collection in the previous year, It is supported by a sheet 2 DECISION NO. 74568 DOCKET NO. W-02113A-13-0118 Arizona Corporation Commission Docket No. W-02113A-13-0118 Proposed Plan of Administration Sustainable Water Surcharge (S WS) Mechanism showing monthly revenue/expense calculations and a sheet outlining the previous year’s customer consumption by month. The end result of the calculations in Section 1 is a per thousand gallons rate which reflects (over)/under recovery of the previous year’s actual expense. 0 Section 2 - Estimated PavmentsExDense for the Apdicabie Year - This section estimates the payments and credits that will occur in the applicable year. It includes the cost of the CAP water associated with the expected delivery of the scheduled amount of CAP water in that year, the capital charge for the entire allocation of 8,909 acre feet as required by the CAP Subcontract, and the cost or (credit) associated with storing CAP water underground. 0 Section 3 - Total Estimated Increased Expense - This section uses the total from Section 2 and removes the amount of CAP expense approved in this rate case to arrive at a total estimated increased expense. 0 Section’4 - Current Year Per Kgal Calculation - This section uses the total from Section 3 and divides it across the projected consumption (to be the test year consumption of 1,784,344 kgals in the first year of the SWS) to arrive at a per thousand gallons rate for the current year’s expenses. Section 5 - TotaI Monthlv Surcharge Per KPal - This section sums the two components of the SWS, the previously (over)/under collected amount per kgal rate and the current year per kgaf rate - it sums Sections 1 and 4. V. Reporting The Company shall file its first surcharge request by January 3 1,2015 to be effective on March 1 2015. On or before January 31 of each year thereafter CCWC will submit to the Commission as a compliance item a report showing its collections under the S WS that includes a calculation of 3 DECISION NO. 74568 DOCKET NO. W-02113A-13-0118 Arizona Corporation Commission Docket No. W-02 1 13A- 13-0 1 1 8 Proposed Plan of Administration Sustainable Water Surcharge (S WS) Mechanism any under/(over) recovery with detail showing each component’s contribution to the change in balance from the prior year. This will be in a form similar to the attached exhibit. 4 DECISION NO. 74568 DOCKET NO. W-02113A-13-0118 Chaparral City Water Company SUSTAINABLE WATER SURCHARGE UPDATE I 2015 Proposed Rates Total Monthlv Sustainable Water Surcharge: Chaparral City Water Company - per 1,000 gallons $ 0.0473 DECISION NO. 74568 Chaparral City Water Company Sustainable Water Surcharge Update DOCKET NO. W-02113A-13-0118 Recovery Target and Tariff Calculations Data as of 12[3l/14 1 - Underl(0ver) Recovery 2014 Annual Costs 2014 Surcharge Revenues CAP Expense In Base Rates 2014 (Over) Under Collected Projected Consumption (kgals) Monthly Rate per 1,000 gal. - Previous Years c Chaparral City Water Co. $ 1,165,214 $ - $ (1,165,214) $ 1,784,344 $ I 2 - Estimated PaymentslExpense for 201 5 - 201 5 I Acre Feet CAP Pavments - Rates M&l Delivery Rate $ 157 Capital Charge Rate $ 21 Storage (Credit) or Expense $ (16) Total 3 - Total Estimated Increased Expense Projected 201 5 Expense Recovery Total CAP Expense In Base Rates Difference Allocation 6,861 b $ 1,077,177 917 d $ (14,672) $ 1,249,594 8,909 c $ 187,089 $ 1,249,594 $ (1,165,214) $ 84,380 4 - Current Year Per Kaal Calcutation Total 201 5 Recovery Target Projected Consumption (kgals) Monthly Rate per 1,000 gal. - Current $ 84,380 I ,784,344 $ 0.0473 $ 0.0473 I a 2012 test year deliveries. b c Total allocation. d Total acre feet ordered for 201 5. All 600 acre feet are scheduled to be stored at the MWD GSF and earn a credit of $16 per acre foot. I DECISION NO. 74568 h c m p. E 0 0 i W m DOCKET NO. W-02113A-13-0118 DECISION NO. 74568 L (I) n E 8 (I) 0 ~~ ~~ DOCKET NO. W-02113A-13-0118 DECISION NO. 74568 DOCKETNO . W-02113A-13-0118 Chaparral City Water Company Docket No . W-02113A-13-0118 Plan of Administration System Improvement Benefit Mechanism (“SIB”) TABLE OF CONTENTS L GENERAL DESCRIPTION ................................................................................................................. 2 a . DEFJNITIONS ...................................................................................................................................... 2 m . SIB RELATED FILINGS ..................................................................................................................... 3 N . SURCHAR(SE CficuLkTJoNs ....................................................................................................... 6 v . ADDING PROJECTS TO SIB TABLE I UNDER EMERGENCY CIRCUMSTANCES .................. 7 . UTE DESIGN ..................................................................................................................................... 8 . SURCHARGE wIpLEh4ENTATION ....................................................... .,. ......................................... 9 EXHIBITS SIB pL;m TABLE I ........................................................... ................................................................................... miit 1 s@ PLANT TABLE II .............................................................................................................................................. &%it 2 SIB SCHEDULE A - CALCULATION OF OVERALL SIB REVENUE REQUIREMENTS AND EF.FICIENCy CREDIT ..................................................................................................................................................................... Ehiit 3 SIB SCHEDULE B . CALCULATION OF SIB TRUE-UP RFNENUE REQUIREMENTS ADJUSTMENT ....... Exhibit 4 SIB SCmDULE C . rYP1CA.L BILLS ANALys Is... .............. ................................................. . ........................... Exhibit 5 SIB SCHEDULE D - SUMMARY OF REVENUE AND RATE BASE IMPACTS INCLUDING .. EQRNINGS TEST ................................................................................... .. ............-.................................................. Exhibit 6 1 EXHIBIT B DECISION NO . 74568 DOCKET NO. W-02113A-13-0118 Chaparral City Water Company Docket No. W-02113A-13-0118 Plan of Administration System Jmprovement Benefit Mechanism (“SII3”) I. GENERAL DESCRIPTION This document is the Plan of Administration (“POA”) for the System Improvement Benefits (“SIB”) Mechanism approved for Chaparral City Water Company (“CCWC” or “Company”) by the Arizona Corporation Commission (“ACC” or “Commission”) in Decision No. on . The SIB provides for recovery of the capital costs (return on investment, income taxes and depreciation expense) associated with distribution system improvement projects listed in SIB plant Table I that have been verified to be completed,’ net of associated retirements and placed in service per SIB Plant Table 11 and where costs have not been included in rate base for recovery in Decision No. . Any expenditures offset by contributions in aid of construction or advances in aid of construction are not eligible for inclusion in the SIB. II. DEFINITIONS 0 NARUC - National Association of Regulatory Utility Commissioners o SIB - System Improvement Benefit mechanism to be implemented between rate proceedings to support investment in plant recorded in SIB Eligible NARUC accounts. o SIB Eligible Plant - Investments in plant recorded in SIB Eligible NARUC accounts. o SIB Eligi’ole NARUC accounts: . NARUC Account NO. 309 - Supply Mains . NARUC Account No. 331 -Mains . NARUC Account No. 333 - Services . NARUC Account No. 334 - Meters and Meter Installations; . NARUC Account NO. 335 -Hydrants o SIB Plant Table I (Excerpt attached as Exhibit 1)2 - The schedule of planned SIB I eligible projects approved in the Company’s most recent rate case decision. Acceptable form of verifications my include the Maricopa county Environmental Services Depmat Approval See Company filing of August 22,2013. of Construction, Professional Engineer’s Certificate of Completion, etc. 2 DECISION NO. 74568 DOCKET NO. W-02113A-13-0118 Chaparral City Water Company Docket No. W-02113A-13-0118 Plan of Administration System Improvement Benefit Mechanism (“SIB”) 0 0 SIB Plant Table II (Sample attached as Exhibit 2) - The schedule of completed and verified SIB eligible projects from SIB Plant Table I and associated retirements. Total Revenue Requirement - The revenue requirement approved in Decision No. , plus the SIB Revenue Requirement. SIB Revenue Requirement - The revenue requirement equal to the return on investment, income taxes and depreciation expense necessary to support the SIB Plant Table 11 amounts. SIB Revenue Requirement Efficiency Credit - An amount equal to 5 percent of the SIB Revenue Requirement. SIB Authorized Revenue - Amount equal to the SIB Revenue Requirement less the SIB Revenue Requirement Efficiency Credit plus any SIB True up Adjustment. Gross SIB Surcharge - Amount to be shown on customers’ bills based on meter sizes without consideration to the SIB Surcharge Efficiency Credit. SIB Surcharge Efficiency Credit - An amount equal to 5 percent of the Gross SIB Surcharge to be shown on customers’ bills. SIB Surcharge - The amount equal to the Gross SIB Surcharge less the SIB Surcharge Efficiency Credit to be charged based on meter size, calculated to recover the SIB Authorized Revenue, to be shown on the customers’ bills. SIB True-up Adjustment - An amount to adjust for over or under collection of the SIB Authorized Revenues as compared with the total SIB Surcharges collected for the preceding 12 month period. Each true-up shall also analyze the cumulative over or under collections to include a comparison of all past SIB Authorized Revenues, total SIB Surcharge collections, and prior he-ups to be used in calculation of the SIB true-up surcharge or credit. I , Ill. SIB RELATED FILINGS A. Progress Reports - Once a SIB is approved in a decision, the Company must file with Docket Control semi-annual status reports delineating the status of all SIB Eligible Plant, on a project by project basis as listed in SIB Plant Table I, starting 6 months after the decision and every 6 months thereafter. B. Reconciliation and True Up - Once a SIB Surcharge is implemented, the Company must file annually to true up its SIB Surcharge collections over the 3 DECISION NO. 74568 DOCKET NO. W-02 1 13A- 13-0 1 1 8 Chaparral City Water Company Docket No. W-02113A-13-0118 Plan of Administration System Improvement Benefit Mechanism (“SIB”) preceding twelve months With the SIB Authorized Revenue for that period and I establish a surcharge or credit to true up over or under collections, regardless of , .. - . - -1. C. . whether it seem a new surcnarge. ine rimg aates lor these annual true-ups shalt be as established in the Commission’s Decision approving the SIB Surcharge. C. SIB Surcharge Requests - To obtain its SIB Surcharge the Company must file the following: 1. SIB Plant Table II (with supporting information and documentation), showing the SIB eligible projects completed for which the Company seeks cost recovery. Such projects must a) be projects listed in the Company’s initial SIB Plant Table I, approved in Decision No. , or have been added to said SIB Plant Table I pursuant to Section V of this POA; b) have been completed by the Company; c) have been verified; and d) be actually serving customers. A rn rrm .. .. * .. .. .. L. A summary or Lomssion approvea sLtr-engme projects contemplated for the next twelve (12)-month SIB surcharge period from SIB Plant Table I. 3. SIB Schedule A (sample attached as 3), showing a calculation of the SIB Revenue Requirement and S nue Requirement Efficiency Credit, SIB Authorized Revenue, Gross SIB Surcharge, SIB Surcharge Efficiency Credit, and the SIB Surcharge. Schedule A shall be supported by revenue requirements schedules supporting the revenue requirements in Decision No. and the pro-forma revenue requirements including the effects of SIB Eligible Plant. 4. Schedule B (sample attached as Exhibit 4) showing the overall SIB True- up Adjustment calculation for the prior twelve-month SIB Surcharge period, as well as the individual SIB True-up Adjustment for each meter size. 5. SIB Schedule C (sample attached as Exhibit 5) showing the effect of the SB Surcharge on a typical residential customer bill for both median and average usage. 4 nwisinN NO 74568 ~ DOCKET NO. W-02 1 13A- 13-0 1 1 8 Chaparral City Water Company Docket No. W-02113A-13-0118 Plan of Administration System Improvement Benefit Mechanism (“SB”) 6. SIB Schedule D (sample attached as Exhibit 6) which shall include an analysis of the impact of the SIB Eligible Plant on the fair value rate base, revenue, and the fair value rate of return. The Company shall also file the following: a) the most current balance sheet at the time of the filing; b) the most current income statement; c) an earnings test schedule; D. E. F. G. H. I. d) a rate review schedule (including the incremental and pro forma effects of the proposed increase); e) an djusted rate base schedule; and f) a Construction Work in Progress ledger (for each project showing accumulation of charges by month and paid vendor invoices). The Company will maintain and provide Excel schedules with formulae intact supporting the revenue requirements approved in the rate decision that approved the SIB and provide same Excel schedules to incorporate the effects of SIB Eligible Plant for the current SIB Surcharge Request and any previously approved Surcharge and True-up requests. The Company may make its hitia€ SIB Surcharge Request through Docket Control no earlier than twelve months after the entry of Decision No. The Company may make no more than one SIB Surcharge Request every twelve months with no more than five SIB Surcharge Requests between rate case decisions. A True-up must be filed with each Surcharge Request, except the first. Unless otherwise authorized by the Commission, the Company shall be required to file its next general rate case no later than June 30, 2018, with a test year ending no later than December 3 1,2017. Any SIB Surcharges that are in effect shall be reset to zero upon the date new rates become effective in the Company’s next general rate case. The Company may request to add Plant to SIB Table I only under emergency circumstances. Any additions or modifications to SIB Plant Table I must be approved by the Commission. 5 DECISION NO. 74568 DOCKET NO. W-02113A-13-0118 Chaparral City Water Company Docket No. W-02113A-13-0118 Plan of Administration System Improvement Benefit Mechanism (“SIB”) IV. SURCHARGE CALCULATIONS A. Calculations of Amounts to Be Collected By the SIB Surcharge 1. The amount to be collected by the SIB Authorized Revenue shall be equal to the SIB Revenue Requirement minus the SIB Revenue Requirements Efficiency Credit plus any SIB True up Adjustment. For purposes of calculating the SIB Revenue Requirement: a. The required rate of return is equal to the overall rate of return authorized in Decision No. b. The gross revenue conversion factor/tax multiplier is equal to the gross revenue conversion factor/tax multiplier approved in Decision No. ; and c. The applicable depreciation rate@) is equal to the depreciation rate(s) approved in Decision No. . 2. The project cost to be used in calculating the SIB Revenue Requirement shall be the lesser of the actual project cost listed in SIB Plant Table II or 110 percent of the estimated cost listed in SIB Plant Table I as approved in Decision No. . Unit costs shall be used if actual units constructed are less than estimated in SIB Plant Table 1. 3. The amount to be collected by each SIB Surcharge Request shall be capped annually at five percent of the revenue requirement authorized in Decision No. B. Reconciliation And True-Ups 1. The revenue collected by the total SIB Surcharges over the preceding twelve months shall be trued-up and reconciled with the SIB Authorized Revenue for that period. 2. A new SIB Surcharge shall be combined with an existing SIB Surcharge such that a single SIB surcharge and SIB Efficiency Credit are shown on a customer’s bill. For each twelve (12) month period that a SIB surcharge is in effect, the Company shall reconcile the amounts collected by the SIB Surcharge with the SIB Authorized Revenue, for that twelve (12)-month period, consistent with Schedule B, attached hereto as Exhibit B. 3. 6 DECISION NO. 74568 ~~ ~ DOCKET NO. W-02113A-13-0118 Chaparral City Water Company Docket No. W-02113A-13-0118 Plan of Administration System Improvement Benefit Mechanism (“SIB”) C. 4. Any under- or over-collected SIB Authorized Revenues shall be recovered or refunded, without interest, over a twelve-month period by means of a SIB True-up Surcharge or Credit. 5. Starting with the second annual SIB Surcharge, where there are over or under-collected balances, such over or undercollected balances shall be canied over to the next year, and considered in the calcdation of the new SIB True-up Surcharge or Credit. E, after the five-year period there remains an over or undercollected balance, such balance shall be reset to zero, and addressed in the next rate case. Earnings Test 1. Once a SIB Surcharge is in effect, the Company shall be required to perform an annual earnings test calculation for each SIB Surcharge Request to determine whether the actual rate of return reflected by the operating income for the affected system or division for the relevant 12- month period exceeded the most recently authorized fair value rate of return for the affected system or division. 2. The earnings test shall be: a) based on the most recent available operating income, b) adjusted for any operating revenue and expense adjustments adopted in the most recent general rate case; and c) based on the rate base adopted in the most recent general rate case, updated to recognize changes in plant, accumulated depreciation, contributions in aid of construction, advances in aid of construction, and accumulated deferred income taxes through the most recent available financial statement (quarterly or longer). V. ADDING PROJECTS TO SIB TABLE I UNDER EMERGENCY CIRCUMSTANCES A. The Company can seek Cornmission approval to add projects in SIB Plant Table I only in the event of emergency circumstances. No such changes may be made without Commission approval. B. Any addition to SIB Plant Table I must be plant investment that maintains or improves existing customer service, system reliability, integrity and safety. Eligible plant additions are limited to plant replacement projects. The costs of 7 DECISION NO. 74568 ~ ~~ ~ - DOCKETNO. W-02113A-13-0118 I Chaparral City Water Company Plan of Administration ~ Docket No. W-02113A-13-0118 System Improvement Benefit Mechanism (“SIB”) extending facilities or capacity to serve new customers are not recoverable through the SIB mechanism. C. To be eligiile for SIB treatment, a project must be SIB Eligible Plant. D. SIB Eligible Plant must satisfy at least one of the following criteria: 1. Water loss for the system exceeds ten (10) percent, as calculated by the following formula: ((Volume of Water Produced and or Purchased) - (Volume of Water Sold 3- Volume of Water Put to Beneficial Use)) divided by (Volume of Water Produced and/or Purchased). If the Volume of Water Put to Beneficial Use is not metered, it shall be established in a reliable, verifiable manner. 2. Plant assets that have remained in service beyond their useful service lives (based on the Company’s system’s authorized utility plant depreciation rates) and are in need of replacement due to being worn out or in a deteriorating condition through no fault of the Company; 3. Any other engineering, operational or financial justification supporting the need for a plant asset replacement, other than the Company’s negligence or improper maintenance, including, but not limited to: a. A documented increasing level of repairs to, or failures of, a plant asset jwtifylng its replacement prior to reaching the end of its useful service life (e.g. black poly pipe); b. Assets that are required to be moved, replaced or abandoned by a govemmental agency or political subdivision if the Company can show that it has made a good faith effort to seek reimbursement for all or part of the costs incurred. VI. RATEDESIGN A. The SIB Surcharge rate design shall be calculated as follows: 1) The SIB Surcharge shall be a fixed monthly surcharge containing a Gross SIB Surcharge and the SIB Surcharge Efficiency Credit as its two components. 2) The SIB Surcharge shall be calculated by dividing the SIB Authorized Revenue by the number of equivalent active 5/8-inch meters at the end of the most recent twelve (12) month period, and shall increase with meter size based on the following meter capacity multipliers: 8 DECISION NO. 74568 DOCKET NO. W-02113A-13-0118 Chaparral City Water Company Docket No. W-02113A-13-0118 Plan of Administration System Improvement Benefit Mechanism (“SJB”) 5I8-inch x %-inch %-inch 1 -inch I%-inch , 2-inch 3-inch 4-in~h 6-inch &inch 10-inch & above 1.0 times 1.5 times 2.5 times 5 times 8 times 16 times 25 times 50 times 80 times 1 15 times B. The SIB Surcharge shall apply to all of the Company’s metered customers, including private fire service customers. VII. SURCHARGE IMPLEMENTATION A. B. SIB surcharges shall not become effective Until approved by the Commission. At least 30 days prior to the Sb surcharge becoming effective, the Company shall provide public notice in the form of a billing insert or customer letter in a form acceptable to Staff. Such notice shall include the following information: 1. The individual Gross SIB Surcharge, by meter size; 2. The individual SIB Surcharge Efficiency Credit, by meter size; 3. SIB Surcharge, by meter size; and 4. Directions where the customer may obtain a summary of the projects included in the current SIB Surcharge Request, including a description of each project and its cost. 9 DECISION NO. 74568 ~- DOCKET NO. W-02113A-13-0118 EXHIBIT 1 SIB Table I (Exhi bit CC-2) EPCOR Water (USA) Inc. Chaparral City Water Company/Fountain Hills PWS ID NO. 07-017 August 21,2013 DECISION NO. 74568 I ~ DOCKET NO. 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W-02113A-13-0118 P Y .p 0 la 2 P P h) W 69 :- % N W w 2 00 d v) rn m v) rn 0 DECISION NO. 74568 DOCKET NO. W-02 1 13A- 1 3-0 1 1 8 0 N 49 3 L N v) m m 74568 DECISION NO. DOCKET NO. W-02 1 13A-13-0 1 18 3 0 3 5 H d m m DECISION NO. 74568 ~ ~ DOCKET NO. W-02113A-13-0118 I 1 S .- e n .- u 8 t? B B - .p 0 lEZ I I I DECISION NO. 74568 s 4 I- O 0 z I I DOCKET NO. W-02113A-13-0118 I I I I I I E 3.2 H I I I I .d 3 E .p 0 EZ a DECISION NO. 74568 DOCKET NO. W-02113A-13-0118 ai I I N h s s 00 00 Y - I I e 91 H 1 U .- .g 0 ItZ P E DECISION NO. 74568 .I V I ~ ~~ ~ DOCKET NO. W-02113A-13-0118 DECISION NO. 74568 EXHIBIT 2 DOCKETNO. W-02113A-13-0118 SIB Table II Template (Exhibit CC-3) EPCOR Water (USA) Inc. Chaparral City Water Company/Fountain Hills PWS ID NO. 07-017 December 6,2013 EXHIBIT B DECISION NO. 74568 I ~- ~~ ~ DOCKETNO. W-02113A-13-0118 I 74568 DECISION NO. DOCKET NO. W-02113A-13-0118 I . .- l- DECISION NO. 74568 EXHIBIT 3 DOCKET NO. W-02113A-13-0118 Chapanal City Water CWnpanv Docket No. W42113A-w-0118 Test Year Ended December 31,2012 UNE NO. CALCULATION OF WER4KSIB REVENUE REQUIREMENT AND EFFICIENCY CREDIT 1 2 3 4 5 6 7 8 9 10 11 Total Authorked Revenue Requirement, Per Dedrion mcp; See Attached Schedules SIB Revenue CAP percentage SI8 Revenue CAP SIB fllgibk plant - Per SlBTable II, net of retirements Total Revenue Requirement, (with pro forma SIB invenments). See attached revenue requirements schedules as pmvided by Company. SIB Revenue Requirement (line 5 minus line I) SIB RMnue Requirement Efficiency Gedlt SIBTme-UpAdjUStnWlt SIB Scheduk 8) SIB Authorized Revenue (line 6 pius line 7 plus line 8) Number of Equhnknt Meters, below z. . SIBSchedule A' .TBD 5% PerYear TBD TBD TBD TBD 5% TBD TBD TBD TBD N0.d MultiKeK 5/8x3/4hch Annual Customers at Equivrlent Fmed RNby YearEnd Metm Surcharge Meter Sic TBD TBD TBD 3/4-i& TBD L5 TBD TBD TBD TBD TBD l-i& TBD 25 TBD TBD TBD TBD 1U2inch TBD 5 TBD TBD TBD 2-in& TBD 8 3-inch TBD 16 TBD TBD TBD &inch TBD 2s TBD TBD TBD TBD TBD 6 inch TBD 50 TBD TBD TBD 8 -inch TBD 80 TBD Tots* TBD TBD TBD S/Bx3/4-inch TBD 1 Tm 115 Ea! TBD .. DECISION NO. 74568 EXHIBIT 4 DOCKET NO. W-02113A-13-0118 Chaparral City Water Company Docket No. W-02113A-13-0118 Test Year Ended December 31,2012 SIB Schedule B YEARS CALCULATION OF SIB TRUE-UP REVENUE REQUIREMENTS ADJUSTMENT 1 2 3 4 5 SIB Authorized Revenue, Per SIB Schedule A Total SIB Surcharges collections for Period SIB TmeUp Adjustment TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD Note: The Company shall also provide an analysis of cumulative over or under collections and a net amount to be included in the SIB True-up Adjustment _" t DECISIONNO. 74568 ' DOCKET NO. W-02113A-13-0118 U u v) a m c X VI w - t n - I 'x m DECISION NO. 74568 I DOCKET NO. W-02113A-13-0118 VI P w x m v) d P Q) x m v) m x m -P aJ .v) N P W 3; m v) nnnnnc3 2 mmmmmm 2 222 I- I-I-I-I-I-+ I- I-I-+ nnnnnn n nnn mmm 2 mmmmmm I- l-I-I-I-++ e +I-+ n nnnnnn 2 nnn mmm m mmmmmm !- I-I-I-l-+l- I- I-I-+ nnnnnn n nnn mmm $ mmmmmm I- I-I-I-I-++ e CI-I- nnnnnn nnn E mmmmmm 2 'mmm I-I-I-+I-+ I- I-I-I- .. * DECISION NO. 74568 DOCKET NO. W-02113A-13-0118 MONTHLY MINIMUM CHARGE (All Classes]: 3/4” Meter 3/4” Meter Residential Low Income 1” Meter 1” Meter Residential Low Income 1 1/2” Meter 2” Meter 3” Meter 4” Meter 6” Meter 8” Meter 10” Meter 12” Meter $ 20.00 12.50 33.25 25.75 67.00 107.00 213.00 333.00 667.00 1,067.00 1,533.00 2,867.00 * Fire Sprinkler Service - All Meter and Valve Sizes * 2.00 percent of monthly minimum for a comparable size meter connection, but no less than $10.00 per month. The service charge for fire sprinklers is only applicable for service lines separate and distinct from the primary water service line. COMMODITY CHARGE - Per 1,000 Gallons: 3/4-Inch Meter - All Classes 0 gallons to 3,000 gallons 3,001 gallons to 9,000 gallons Over 9,000 gallons 1-Inch Meter - All Classes 0 gallons to 24,000 gallons Over 24,000 gallons 1 1/2-Inch Meter - All Classes 0 gallons to 60,000 gallons Over 60,000 gallons 2-Inch Meter - All Classes 0 gallons to 100,000 gallons Over 100,000 gallons 3-Inch Meter - All Classes 0 gallons to 225,000 gallons Over 225,000 gallons 4-Inch Meter - All Classes 0 gallons to 350,000 gallons Over 350,000 gallons EXHIBIT C $ 2.40 3.57 4.42 $ 3.57 4.42 $ 3.57 4.42 $ 3.57 4.42 $ 3.57 4.42 $ 3.57 4.42 DECISION NO. 74568 DOCKET NO. W-02113A-13-0118 6-Inch Meter - All Classes 0 gallons to 725,000 gallons Over 725,000 gallons 8-Inch Meter - All Classes 0 gallons to 1,125,000 gallons Over 1,125,000 gallons 10-Inch Meter - All Classes 0 gallons to 1,500,000 gallons Over 1,500,000 gallons 12-Inch Meter - All Classes 0 gallons to 2,250,000 gallons Over 2,250,000 gallons Irrigation and Hvdrants - All Meter Sizes All usage SERVICE LINE AND METER INSTALLATION CHARGES: (Refundable Pursuant to A.A.C. R14-2-405) Service Line Meter Installation 518’’ x 314” Meter $385.00 $135 .OO 3/4” Meter 385.00 195.00 1 ” Meter 43 5 .OO 234.00 1 112” Meter 570.00 367.00 2” Turbine Meter At Cost At Cost 2” Compound Meter At Cost At Cost 3” Turbine Meter At Cost At Cost At Cost 3” Compound Meter At Cost 4” Turbine Meter At Cost At Cost 4” Compound Meter At Cost At Cost 6” Turbine Meter At Cost At Cost 6” Compound Meter At Cost At Cost 8” & Larger Meters At Cost At Cost Fire Sprinkler Service - All Meter and Valve Sizes $ $ $ $ 3.57 4.42 3.57 4.42 3.57 4.42 3.57 4.42 3.57 Total $520.00 580.00 669.00 837.00 At Cost At Cost At Cost At Cost At Cost At Cost At Cost At Cost At Cost At Cost EXHIBIT C DECISION NO. 7456R DOCKET NO. W-02113A-13-0118 MISCELLANEOUS SERVICE CHARGES: Establishment Re-Establishment (Within 12 Months) Reconnection (Delinquent) Meter Test (if correct) Meter Re-read (if correct) Moving Meter at Customer Request Deposit Deposit Interest NSF Check Late Payment Penalty, Per Month Deferred Payment, Per Month After Hours Service Charge* $ 30.00 $ 35.00 35.00 10.00 At Cost (b) 6.00% (a) $ 25.00 1.50% 1.50% $ 50.00 (a) Number of full months off the system times the monthly minimum, per A.A.C. R14-2-403(D). (b) Per A.A.C. R14-2-403(B). two and one half times the average monthly bill. * For work performed on the customer’s property after hours, at customer’s request. In addition to the charge for any utility service provided. IN ADDITION TO THE COLLECTION OF REGULAR RATES, THE UTILITY WILL COLLECT FROM ITS CUSTOMERS A PROPORTIONATE SHARE OF 409(D)(5). Residential - two times the average monthly bill. Non-residential - ANY PRIVILEGE, SALES, USE, AND FRANCHISE TAX, PER A.A.C. R14-2- EXHIBIT C DECISION NO. 74568 TOWN OF FOUNTAIN HILLS TOWN COUNCIL AGENDA ACTION FORM Meeting Date:8/7/2014 Meeting Type:Regular Session Agenda Type:Regular Submitting Department:Community Services Staff Contact Information:Mark Mayer mmayer@fh.az.gov 480.816.5190 Council Goal: Strategic Values:CivicResponsibility CR2/CR3 Use citizen talent and foster volunteerism REQUEST TO COUNCIL (Agenda Language):CONSIDERATION of ORDINANCE 14-04,amending Town Code Chapter 9, Article9-2, Parksand Recreation Commission andcreatingthe Community Services Advisory Commission. CONSIDERATION of RESOLUTION 2014-28,establishing by-laws for the Community Services Advisory Commission. Applicant:NA Applicant Contact Information:NA Property Location:NA Related Ordinance,Policy or Guiding Principle: Staff Summary (background): Staff met with the Chairs ofthe Community Center, Senior Services, Parks and Recreation,and the McDowell Mountain Preservation Commissions,at the direction of Council, to discuss the consolidation process.The proposal was then brought to each Commission and each voted unanimously to consolidate the Commissions as presented.Staff received direction at the May 1,2014 Council meeting to prepare the necessary ordinance to combine commissions and to prepare by-laws,both of which are attached. Risk Analysis (options or alternatives with implications):NA Fiscal Impact (initial and ongoing costs;budget status):NA Budget Reference (page number):NA Funding Source:NA If Multiple Funds utilized,list here: NA Budgeted;if No,attach Budget Adjustment Form:NA Recommendation(s)by Board(s) or Commission(s):Recommend to consolidate the Commissions, amend the Town Code,and establish by-laws for the Community Services Advisory Commission Staff Recommendation(s):Recommend to consolidate the Commissions, amend the Town Code, and establish by-laws for the Community Services Advisory Commission List Attachment(s):Ordinance 14-04 and Resolution 2014-28 Page 1 of 2 SUGGESTED MOTION (for Council use):MOVE to APPROVE Ordinance14-04,amending Town Code Chapter 9, Article 9-2,Parks and Recreation Commission and create the Community Services Advisory Commission. MOVE to APPROVE RESOLUTION 2014-28,establishing by-laws for the Community Services Advisory Commission. Vlark Mayer,Community Services DirectY 7/10/2014 Approved:jpraved:^^^_ ?n Buchanan,Town Manage Ol^sQl Ken Buchanan,Town Manager 7/29/2014 Page 2 of 2 2171393.3 RESOLUTION NO. 2014-28 A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, CONSOLIDATING THE PARKS AND RECREATION COMMISSION, THE COMMUNITY CENTER ADVISORY COMMISSION AND THE SENIOR SERVICES ADVISORY COMMISSION INTO A NEW COMMUNITY SERVICES ADVISORY COMMISSION; AND ADOPTING BYLAWS. WHEREAS, the Mayor and Council of the Town of Fountain Hills (the “Town Council”) previously created (i) the Parks and Recreation Commission pursuant to Article 9-2 of the Town of Fountain Hills Town Code, (ii) the Community Center Advisory Commission pursuant to Resolution No. 2000-49 and (iii) the Senior Services Advisory Commission pursuant to Resolution No. 2005-54; and WHEREAS, based on the common interests of the Parks and Recreation Commission, the Senior Services Advisory Commission and the Community Center Advisory Commission (the “Existing Commissions”), the Town Council desires to consolidate the Existing Commissions and to create the Town of Fountain Hills Community Services Advisory Commission (the “Community Services Advisory Commission”) to act in an advisory capacity in support of the Town of Fountain Hills (the “Town”) Community Services Department; and WHEREAS, the Town Council desires to adopt bylaws to accommodate the transition of the consolidation of the three Existing Commissions and govern the operation of the Community Services Advisory Commission. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS as follows: SECTION 1. The recitals above are hereby incorporated as if fully set forth herein. SECTION 2. The Existing Commissions are hereby consolidated into a new Community Services Advisory Commission, and references to the Existing Commissions in Town documents shall be replaced with a reference to the Community Services Advisory Commission. SECTION 3. The Bylaws for the Community Services Advisory Commission are hereby adopted substantially in the form attached hereto in Exhibit A, and incorporated herein by reference. SECTION 4. The Mayor, the Town Manager, the Town Clerk and the Town Attorney are hereby authorized and directed to take all steps necessary to carry out the purpose and intent of this Resolution. 2171393.3 2 PASSED AND ADOPTED by the Mayor and Council of the Town of Fountain Hills, August 7, 2014. FOR THE TOWN OF FOUNTAIN HILLS: ATTESTED TO: Linda M. Kavanagh, Mayor Bevelyn J. Bender, Town Clerk REVIEWED BY: APPROVED AS TO FORM: Kenneth W. Buchanan, Town Manager Andrew J. McGuire, Town Attorney 2171393.3 EXHIBIT A TO RESOLUTION NO. 2014-28 [Bylaws for the Community Services Advisory Commission] See following pages. 2170815.4 BYLAWS COMMUNITY SERVICES ADVISORY COMMISSION TOWN OF FOUNTAIN HILLS, ARIZONA 1. Creation; Purpose. A. Creation. There is hereby created, constituted and established a Community Services Advisory Commission (the “Commission”), which shall subsume and replace existing Senior Services Advisory Commission, Community Center Advisory Commission and Parks and Recreation Advisory Commission (collectively, the “Existing Commissions”). B. Purpose and Duty of the Commission. The Commission is formed to act in an advisory capacity in support of the Town of Fountain Hills (the “Town”) Community Service Department’s quest to provide exceptional customer service to enhance the quality of life by providing and maintaining safe, available and accessible parks and facilities, recreation programs, events, and services that will meet the intellectual, social, cultural and leisure needs of Town residents of all ages. C. Intention of the Bylaws. These Bylaws are intended to accommodate the transition of a consolidation of three Existing Commissions as well as serve as the Bylaws governing the Commission. 2. Transition Process; Membership. A. Transition Period. The consolidation transition is intended to span the period from the initial consolidated Commission meeting in September 2014 through December 31, 2017. B. Eligibility for Initial Appointment. All current members of the Existing Commissions shall be eligible for appointment to the Commission. All interested Existing Commission members shall notify the Community Services Director of their interest not later than June 30, 2014. If the number of interested Existing Commission members is less than nine, the Director shall (i) initiate the process for soliciting new Commission members and (ii) conduct a process for fairly assigning the on-going members to staggered terms to carry out the intent of Section 3 below. If the number of continuing adult members is greater than eight, the Director shall establish the initial Commission membership as set forth in subsection 2(C) below. C. Member Selection and Terms. In order to fairly and impartially accommodate the members of the three combined Existing Commissions, a random, blind draw of names from the members of the Existing Commissions who have expressed interest pursuant to subsection 2(B) above will be conducted such that each will 2170815.4 2 be assigned to a term of one, two or three years. It is recognized that there could be as many as 18 total members available to serve on the Commission during the transition period. The random, blind draw will be conducted as follows: The first six names drawn will serve through December 31, 2017; The second six names drawn will serve through December 31, 2016; and Any remaining names will serve through December 31, 2015. The terms will commence at the first meeting of the consolidated Commission, targeted for September 2014. The term of each member from one of the Existing Commissions serving on the consolidated Commission will be extended through the date determined by the blind draw. D. Voting. All members will be considered voting Commission members. In the event of a tie vote during the transition period, the Town Council shall be informed of the lack of consensus and the matter shall be forwarded to the Town Council for review. E. Postponed Replacement. If a transition period Commission member leaves office prior to expiration of his or her appointment period (as set forth in subsection 2(C) above), the vacancy created will not be filled. F. Transition Period Conclusion. At the conclusion of the transition appointment periods established in subsection 2(C) above, Commission members shall be appointed as follows: i. Two Commission members shall be appointed for a three-year term beginning on January 1, 2016 and ending December 31, 2018. ii. Three Commission members shall be appointed for a two-year term beginning on January 1, 2017 and ending December 31, 2018. iii. Four Commission members shall be appointed for a three-year term beginning on January 1, 2018 and ending December 31, 2020. G. Attendance of McDowell Mountain Preserve Commission Representative. For the time the McDowell Mountain Preserve Commission is in place, a member of the McDowell Mountain Preserve Commission shall be an ex-officio, non-voting member of the Commission. The Commission Chairperson shall request that the McDowell Mountain Preserve Commission annually appoint a representative to attend the Commission meetings. 2170815.4 3 H. Transition Officers. At the first Commission meeting, the Commission shall elect a Chairperson and Vice-Chairperson from among the members. The Chairperson and Vice-Chairperson shall assume responsibilities at the next scheduled meeting. The officers’ terms will expire on December 31, 2015. The duties, vacancy and removal procedure set forth in Section 5 below shall apply to the officers. On the expiration of the initial officers’ terms, officers shall be elected as set forth in subsection 5(A) below. 3. Members & Appointments Following the Transition Period. A. Number of Members. Following the transition periods, the Commission shall be composed of nine members, including one youth member. B. Appointments. Following the transition periods, appointments to the Commission shall be made by the Town Council according to, and from among residents of the Town that meet the minimum qualifications as outlined in, the Town Council Rules of Procedure. Adult appointments shall be for a term of three years. One appointee shall be the youth representation, who shall be a Town resident for one year, shall be a resident high school student, be a member of the Mayor’s Youth Council and serve a one-year term on the Commission beginning with the start of the school year. C. Filling of Vacancies. Any vacancy on the Commission shall remain vacant until a new member is appointed by the Town Council to fill the vacancy. Upon a vacancy occurring, leaving an unexpired portion of a term, any appointment to fill such vacancy shall be for the unexpired portion of said term. In cases of a vacancy due to the expiration of a member’s term, the member shall remain seated until a successor is appointed and qualified. D. Term. Unless appointed to fill a vacancy mid-term, each adult member’s term of office shall be three years, unless the member resigns sooner or is removed from his or her position. E. Attendance. All members are required to attend all Commission meetings unless excused by the Chairperson, with the concurrence of the Commission. Three successive unexcused or unexplained absences from any regular or special meeting shall be deemed a vacancy as outlined in the Town Council Rules of Procedure. F. Removal. Any member may be removed as set forth in the Town Council Rules of Procedure. 2170815.4 4 4. Powers and Duties of the Commission. The Commission shall have the powers and duties to: i. Act in advisory capacity to the Town Council, Town Manager and Community Services Director in matters pertaining to the Community Services Department. ii. Consider provisions of the annual Community Services Department budget during the process of the preparation of the budget and make recommendations with respect thereto to the Community Services Director. iii. Assist in the planning of educational and recreational programs for the residents of the Town; promote and stimulate public interest therein. iv. Perform such other duties not inconsistent with these Bylaws as may be requested by the Town Council, Town Manager or Community Services Director. 5. Commission Officers and Staff. A. Organization. At the first regularly-scheduled Commission meeting of each calendar year, the Commission shall elect a Chairperson and Vice-Chairperson from among the members. The Chairperson and Vice-Chairperson shall assume responsibilities at the next scheduled meeting. The term of the Chairperson and Vice-Chairperson shall be for one year. Any member serving as Chairperson or Vice-Chairperson shall be eligible for re-election; provided, however, that each member may serve no more than two consecutive terms for that specific office. B. Duties of the Chairperson and Vice-Chairperson. The Chairperson shall (i) preside at all Commission meetings, (ii) decide all points of order and procedure, (iii) appoint work groups if necessary and coordinate the work of the work groups, (iv) serve as a representative of the Commission to other governmental units on such matters as have been approved and designated by the Commission and (v) perform any duties as required by law, ordinance or these Bylaws. The Chairperson shall have the right to make motions, second motions and vote on all matters before the Commission. The Vice-Chairperson shall act as an aid to the Chairperson and shall perform the duties of the Chairperson in his or her absence or inability to serve. In the absence of the Chairperson and Vice-Chairperson, the Town Staff Liaison shall call the meeting to order and a simple majority of the members then present shall select an acting Chairperson for the meeting. If the Commission members present are unable to select an acting Chairperson, the meeting shall be automatically adjourned and all agenda items shall be carried over to the next Commission meeting. 2170815.4 5 C. Order of Filling Officer Vacancies. The Vice-Chairperson shall fill a vacancy in the office of the Chairperson. A vacancy in the office of Vice-Chairperson shall be filled by a Commission member by majority vote of the Commission at the next meeting where a quorum of the Commission is present. D. Officer Removal. The Chairperson or Vice-Chairperson may be removed from office at any time at a meeting of the members by an affirmative vote of a three- fourths majority of the total members of the Commission, who must be present to vote. E. Town Staff Liaison. The Community Services Department Director or authorized designee shall serve as the Town Staff Liaison to furnish support to the Commission as requested or as required to advise and furnish professional and technical advice. 6. Commission Meetings. A. Frequency. Commission meetings shall be held monthly at the Town Hall Council Chambers, Fountain Hills, Arizona, unless posted differently at least 24 hours in advance. B. Additional Commission Meetings. Additional Commission meetings may be held on the call of the Chairperson or the request of two or more members by giving notice to all the members by telephone, email or personal delivery or by verbal comment during a regular meeting. All notices shall be given, and posted according to applicable law, at least 24 hours before the meeting. C. Participation by the Public. Commission meetings shall be open to the public. For any matter under consideration, any person may submit written comments and, if attending in person, may fill out a speaker card and speak to the issue upon being recognized by the Chairperson and stating his or her name and, if applicable, the names of any person or organization on whose behalf he or she is appearing. D. Quorum. A Commission meeting where a majority of its members are present shall constitute a quorum. A majority vote of those members present shall be required to take official action. No action shall be taken at any meeting in absence of a quorum, except to adjourn the meeting to a subsequent date. E. Agenda. The agenda shall be prepared by the Town Staff Liaison, reviewed by the Chairperson, and posted no less than 24 hours before the Commission meeting in accordance with the Arizona Open Meeting Law. F. Minutes. Minutes of the proceedings shall be retained and filed with the Town Clerk or authorized designee who will, in turn, file and post the minutes according to applicable law. 2170815.4 6 G. Open Meeting Law. The Commission is subject to the Arizona Open Meeting Law. 7. Special Committees. The Commission may create special committees for specific purposes. Such committees shall be subject to the provisions of the Arizona Open Meeting Law. Any special committee created by the Commission shall automatically dissolve when its work is done and after the Commission has accepted its final report. 8. Amendments. By the affirmative vote of a two-thirds majority of all the members of the Commission, the members may recommend amendments to these Bylaws to the Town Council for its approval. 9. Legal Counsel. The Commission may request through the Town Staff Liaison that the Town Attorney, or authorized designee, provide legal advice and rulings on points of order, procedure or other matters related to the Commission’s duties. TOWN OF FOUNTAIN HILLS TOWN COUNCIL AGENDA ACTION FORM Meeting Date:8/7/2014 Meeting Type:Regular Session Agenda Type:Regular Submitting Department:Community Services Staff Contact Information:Mark Mayer -816-5190 /mmayer@fh.az.gov Council Goal: Strategic Values:Not Applicable (NA)Not Applicable (NA) REQUEST TO COUNCIL (Agenda Language):CONSIDERATION of RESOLUTION 2014-36,AMENDING and RESTATING the Town of Fountain Hills Municipal Sponsorship and Naming Rights Policy •• .•i j •i . Applicant:N/A Applicant Contact Information:N/A Property Location:N/A Related Ordinance,Policy or Guiding Principle: Staff Summary (background):Since the original Sponsorship and Naming Rights Policy was adopted late last year there have been a number of suggestions made to amend the existing policy. Accordingly,possible changes have been made in a number of areas for consideration.The major changes are as follows: a) Nonprofit Organizations are now defined as tax exempt under IRS Section 501(c)(3) b) The limit by which Municipal Sponsorships,Co-Sponsorships,Sole Sponsorships and Marketing Arrangements has been lowered from $30,000 to $10,000 c) The Town Manager will review all Municipal Sponsorships,Co-Sponsorships,Sole Sponsorships and Marketing Arrangements and shall submit them to the Council for approval those with an aggregate value of more than $10,000,those involving contributionof cash or in-kind over $10,000,and those involving the closure of public access for more than one day or and event lasting longer than one week. d)If a nonprofit Organization wishes to have their fees reduced by 50% they must provide a letter from the IRS granting the group tax-exempt status under Section 501(c)(3) Risk Analysis (options or alternatives with implications):N/A Fiscal Impact (initial and ongoing costs;budget status):N/A Budget Reference (page number):N/A Funding Source:NA If Multiple Funds utilized,list here: Page 1 of 2 Budgeted;if No,attach Budget Adjustment Form:NA Recommendation(s)by Board(s)or Commission(s):None Staff Recommendation(s): List Attachment(s):Municipal Sponsorship and Naming Rights Policy- highlighted changes / black copy SUGGESTED MOTION (for council use):Motion to Approve RESOLUTION 2014-36,AMENDING and RESTATING the Town of Fountain Hills Municipal Sponsorship and Naming Rights Policy Prepared by: NA 7/30/2014 Director's Approval: YV^Q^C.(\_~vff- Mark Mayer,Community Services Director "•"•7/29/2014 Appnoved:Approved:•—v Ken Buchanan,Town ManManager 7/30/2014 Page 2 of2 2191429.1 RESOLUTION NO. 2014-36 A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS, ARIZONA, ADOPTING THE TOWN OF FOUNTAIN HILLS MUNICIPAL SPONSORSHIP AND NAMING RIGHTS POLICY, AMENDED AND RESTATED AUGUST 7, 2014. WHEREAS, the Mayor and Council of the Town of Fountain Hills (the “Town Council”) has determined that it is in the best interests of the citizens of Fountain Hills to establish a formal procedure and criteria for the receipt or solicitation of, selection of, and agreements with persons or entities for municipal sponsorships, co-sponsorships, sole sponsorships and marketing arrangements (including facility naming rights); and WHEREAS, the Town Council approved Resolution No. 2013-16 on August 15, 2013, adopting the Town of Fountain Hills Municipal Sponsorship and Naming Rights Policy (the “Existing Naming Policy”); and WHEREAS, the Town Council desires to amend and restate the Existing Naming Policy to amend the procedures for municipal sponsorships. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF FOUNTAIN HILLS as follows: SECTION 1. The recitals above are hereby incorporated as if fully set forth herein. SECTION 2. The Town of Fountain Hills Municipal Sponsorship and Naming Rights Policy, Amended and Restated August 7, 2014, is hereby adopted in substantially the form and substance attached hereto as Exhibit A and incorporated herein by reference. SECTION 3. If any section, subsection, sentence, clause, phrase or portion of this Resolution or any part of the policy adopted herein by reference is for any reason to be held invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions thereof. SECTION 4. The Mayor, the Town Manager, the Town Clerk and the Town Attorney are hereby authorized and directed to take all steps and execute all documents necessary to carry out the purpose and intent of this Resolution. [SIGNATURES ON FOLLOWING PAGE] 2191429.1 PASSED AND ADOPTED by the Mayor and Council of the Town of Fountain Hills, Arizona, August 7, 2014. FOR THE TOWN OF FOUNTAIN HILLS: ATTESTED TO: Linda M. Kavanagh, Mayor Bevelyn J. Bender, Town Clerk REVIEWED BY: APPROVED AS TO FORM: Kenneth W. Buchanan, Town Manager Andrew J. McGuire, Town Attorney 2191429.1 EXHIBIT A TO RESOLUTION NO. 2014-36 [Municipal Sponsorship and Naming Rights Policy, Amended and Restated August 7, 2014] See following pages. 2189798.3 TOWN OF FOUNTAIN HILLS MUNICIPAL SPONSORSHIP AND NAMING RIGHTS POLICY Amended and Restated August 7, 2014 1. Purpose. To establish for the Town of Fountain Hills, Arizona (the “Town”) a formal procedure and criteria for the receipt or solicitation of, selection of, and agreements with, persons or entities for Municipal Sponsorships, Co-Sponsorships, Sole Sponsorships and Marketing Arrangements, (including Facility Naming Rights), the following Municipal Sponsorships and Naming Rights Policy (this “Policy”) is hereby adopted by the Mayor and Council of the Town (the “Town Council”). This Policy is intended to set forth the process for the Town to participate in Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship and Marketing Arrangement programs to give valuable support to important Town programs, facilities and services for public benefit by (i) providing funding for Town events from private businesses and (ii) allowing the Town to partner with activities provided by outside entities. In doing so, the Town must ensure its actions are consistent and appropriate to the Town’s vision, mission and values. This Policy is not intended to apply to Bequests or Donations (each as defined below). This Policy shall: A. Establish Procedures. Establish consistent procedures and practices for receipt or solicitation of Municipal Sponsorships (as defined below), Co-Sponsorships (as defined below), Sole Sponsorships (as defined below) and Marketing Arrangements (as defined below) by Town staff. B. Encourage Sponsorships. Encourage solicitation of Municipal Sponsorship opportunities such as Facility Naming Rights, Sole Sponsorships, Co-Sponsorships, Marketing Arrangements and similar agreements that generate revenue (financial or in-kind) in support of existing and new Town facilities, projects, programs or services. C. Encourage Partnerships. Develop public/private alliances to provide programs, events, venues and services within the Town. D. Encourage Staff Innovation. Empower Town departments to seek Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship and Marketing Arrangement opportunities to provide funds for programs, events, venues or services they might not otherwise be able to provide to Town residents and visitors. E. Safeguard Town Interests and Goals. Ensure that Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship and Marketing Arrangement activities (1) safeguard the Town’s assets and interests, (2) support the Town’s goals of service to the community and (3) remain responsive to the public’s needs and values. F. Establish Naming Framework. Provide a framework within which requests to name public facilities are considered and evaluated. 2189798.3 2 2. Scope. This Policy shall govern all Town departments regarding the solicitation of, and the unsolicited offers/requests from third parties related to, Municipal Sponsorships, Co-Sponsorships, Sole Sponsorships and Marketing Arrangements for Town programs, projects, events, venues, facilities and services. Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship and Marketing Arrangement solicitations shall be in furtherance of the Town’s needs and conducted in accordance with the provisions in this Policy. All Town staff responsible for, or otherwise involved in, Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship and Marketing Arrangement activities on behalf of the Town or their respective departments shall adhere to the policies, procedures and guidelines set forth herein. A. Third Party Solicitation. Subject to the conditions of this Policy, Town staff may solicit or respond to solicitations from third parties for such Municipal Sponsorships, Co-Sponsorships, Sole Sponsorships or Marketing Arrangements for the Town. B. Fair Compensation. At all times, recognition for Municipal Sponsorships or Marketing Arrangements must be evaluated to ensure the Town is receiving fair and competitive compensation and that such recognition is consistent with the scale of each Sponsor or Marketing Arrangement’s contribution. C. Outside the Scope of this Policy. This Policy shall not apply to: (1) Funding obtained through formal grant programs or through intergovernmental agreements with other political subdivisions of the State. (2) Town support of external projects where the Town provides funds to an outside organization (examples include, but are not limited to, grants to Nonprofit Organizations). (3) Gifts, Bequests, or unsolicited Donations to a Town department or the Town where no reciprocal commercial benefit is given or expected and no business relationship exists. 3. Definitions. Bequest. A gift or contribution of cash, goods or services given voluntarily and expressed in writing through a will or other testamentary document. Co-Sponsorship. Participation by the Town (via direct funding, waived fees, staff coordination or technical assistance) in an event that is provided by an outside entity and that is closely aligned with or furthers a core Town program or service. Donation. A gift or contribution of cash, goods or services given voluntarily toward an event, project, program or corporate asset where no reciprocal commercial benefit is given or expected. If reciprocal commercial benefits are given or a business relationship exists with a corporate donor, the contribution will be a Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangement, as applicable, and the principles of this Policy will apply. 2189798.3 3 Facility Naming Rights. The naming of Town-owned and/or operated buildings, structures, natural features and recreational facilities, whether in whole or portions thereof (hereafter referred to individually as a “Facility” or collectively as “Facilities”), and streets, roads or any public rights-of-way (hereafter referred to individually as a “Street” or collectively as the “Streets”) within the corporate limits of the Town. Portions of a Facility may have names other than that of the entire Facility and features may be dedicated to or in honor of a person such as “Smith Beach” or “Jones’ Amphitheater,” subject to the provisions of this Policy. In-Kind Contribution. A contribution received in the form of goods and/or services rather than cash as part of a Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangement. Marketing Arrangement. A mutually beneficial business arrangement between the Town and a third party, wherein the third party provides cash and/or in-kind services to the Town in return for access to the commercial marketing potential associated with the Town. Marketing Arrangements may include Municipal Sponsorship or Sole Sponsorship of one or more of the Town’s programs, projects, events, Facilities or activities. Municipal Sponsorship. A business relationship in which the Town and another entity exchange things of value, including a public display of support. This value can be financial, in- kind or benefits related to visibility/exposures, publicity or market reach. It should not be confused with Donations (as defined above), the sale of advertising or innovative approaches to purchasing goods or services. Municipal Sponsorships include funds, products or services provided by a company or individual to the Town, in consideration of the opportunity for the company or individual to promote its name, product or service in conjunction with a Town program, project, event, venue or activity. Nonprofit Organizations. Organizations designated as tax-exempt under the Federal Tax Code. Sister Agency. Local government entities that are traditional partners with the Town (i.e. Fountain Hills Unified School District and Fountain Hills Sanitary District). Request for Proposals (“RFP”). An open and competitive process whereby the Town invites companies, subsidiaries or individuals to express their interest in participating, and submit proposals to participate, in Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangement opportunities with the Town. Sole Sponsorship. A business relationship in which a company, subsidiary or individual has paid to be the only S ponsor of a Town program, project, event, venue or activity. Sponsor. A company or individual that provides the Town with a Municipal Sponsorship and that enters into a Municipal Sponsorship agreement with the Town to promote itself and/or its products or services. 2189798.3 4 Standards of Responsibility. The requisite standards to enter into a Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangement with the Town. Factors to be considered in determining whether the standards have been met include, but are not limited to, whether a prospective Sponsor: (i) has available (or the ability to obtain) the appropriate financial, material, equipment, Facility, personnel resources and expertise necessary to indicate its capability to meet all contractual requirements; (ii) is able to comply with required or proposed delivery or performance scheduling; (iii) has a satisfactory record of performance; (iv) has a satisfactory record of integrity and business ethics; and (v) is qualified legally to contract with the Town. 4. Restrictions. In general, the following industries and products are not eligible for Municipal Sponsorships, Co-Sponsorships, Sole Sponsorships or Marketing Arrangements, including Facility Naming Rights, with the Town, but the Town may elect to enter into Municipal Sponsorships, Co-Sponsorships, Sole Sponsorships or Marketing Arrangements with these restricted industries or products when it is deemed appropriate by the Town Council acting in its sole discretion. A. Prohibited or Restricted Products. A company, subsidiary and association with products or services that are prohibited or restricted by Town Code or other governing laws and policies. B. Adult Products. A company or subsidiary whose business is substantially derived from the sale or manufacture of tobacco products, products prohibited under federal law or sexual/adult-oriented products. C. Alcohol Sponsor at Youth-Related Events. Alcoholic beverages when the intended audience of or participants in the Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangement are youth under the legal drinking age. D. Parties not Deemed Responsible. Parties that are not deemed responsible under the Standards of Responsibility. E. Parties to Litigation. Parties involved in a lawsuit with the Town. F. Separate Contracts. Parties involved in any stage of negotiations for a Town contract unless the contract is directly linked to a Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship, Marketing Arrangement or Facility Naming Rights opportunity. G. Conflicts of Interest. Individuals or commercial enterprises having past, present or pending business agreements or associations with the Town, if a Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangement Agreement would create an appearance of impropriety. H. Pending Land-Use Approval. Parties with an active case for any land-use approval before the Town. 2189798.3 5 I. Religious or Political Entities. Religious or political associations or candidates running for any political office. 5. Roles and Responsibilities. A. Responsibilities of Town Departments. (1) Initiating Town Department. The initiating Town department shall (a) ensure adherence to the principles and guidelines outlined in this Policy, (b) prepare a proposal setting forth the scope of the program or project as provided in Subsection 6(A) below and (c) work with the Town Finance Division to ensure appropriate budgeting of revenues and expenditures and with the Town Attorney’s Office to ensure the integrity of the procurement process and the legal sufficiency of contractual obligations. (2) Finance and Budget. The Finance Division shall provide general guidance, cost/benefit analysis, and direction relating to the appropriate budgeting of revenues and expenditures in a manner that maximizes the benefits of each Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship, Marketing Arrangement or Facility Naming Rights arrangement for the initiating Town department, the Town and the Sponsor. (3) Procurement. When applicable, the Town Manager or authorized designee shall oversee the preparation of the RFP or other competitive solicitation for Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship, Marketing Arrangement and Facility Naming Rights opportunities. (4) Town Attorney. The Town Attorney’s Office shall provide legal review of any RFP or other competitive solicitation for Municipal Sponsorship, Co- Sponsorship, Sole Sponsorship, Marketing Arrangement and Facility Naming Rights opportunities and oversee the preparation of all Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship, Marketing Arrangement and Facility Naming Rights agreements. (5) Town Manager. The Town Manager shall review all Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship and Marketing Arrangement activities, including interim reports provided from time to time by Town departments. The Town Manager also shall be responsible for determining the frequency of reports by Town departments. 6. Procedures. The Town’s participation in Municipal Sponsorship, Co- Sponsorship, Sole Sponsorship, Marketing Arrangement and/or Facility Naming Rights activities shall be according to the procedures set forth below. For Municipal Sponsorships, Co- Sponsorships, Sole Sponsorships, Marketing Arrangements and/or Facility Naming Rights arrangements initiated by the Town, Subsections 6(A) – (G) shall apply; for Municipal Sponsorships, Co-Sponsorships, Sole Sponsorships, Marketing Arrangements and/or Facility Naming Rights arrangements initiated by another person or entity, Subsections 6(B), (D), (E), (F) and (G) shall apply. 2189798.3 6 A. Prepare a Proposal. A Town department considering a potential Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship, Marketing Arrangement or Facility Naming Rights arrangement shall prepare a proposal setting forth the scope of the program or project, including a description of the community benefit, financial goals, means of recognition, potential interested Sponsors, and general marketing strategy if a Marketing Arrangement is involved. The proposal shall be submitted to the Department Director for review and approval. If Facility Naming Rights are involved and will result in a name change to an existing Facility, the history and legacy of the current municipal Facility should be considered and/or incorporated within the new proposed name. All Facility or Street naming shall be in accordance with the additional procedures set forth in Sections 8 and 9 below. B. Estimate Value. If the proposed Municipal Sponsorship or Marketing Arrangement includes Facility Naming Rights or granting Sole Sponsorship, the Department Director shall provide a reasonable basis for determining the value of the Municipal Sponsorship, Marketing Arrangement or Facility Naming Rights opportunity. At the Town Manager’s discretion, a qualified third party may be used to establish value. C. Develop and Implement Solicitation. The applicable Town department, working with the Town Attorney, shall develop an RFP for each Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangement opportunity valued greater than $10,000 and all Facility Naming Rights opportunities and the most beneficial, qualified response shall be submitted to Town Council with a recommendation for approval. Town-originated Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangements valued at $10,000 or below and revenue producing or “no-cost” Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangement opportunities that involve the provision of commodities or services provided either to the Town or the Fountain Hills community in support of Town operations, functions or programs through which the provider will benefit monetarily, must be awarded using a competitive process that is appropriate to the value, complexity and profile of the business opportunity. Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangement proposals forwarded to the Town are not subject to competitive solicitations if the proposed Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship, Marketing Arrangement or Facility Naming Rights opportunity is determined through a good faith effort to be unique and without interested competitors. D. Evaluate Submissions. The applicable Town department shall review and analyze all responsive submittals received and shall provide a recommendation of approval or denial to the Town Manager. The submittals shall be reviewed against selection criteria that may include, but are not limited to: (1) Consistency of the prospective entity’s products, customers and promotional goals with the Town’s character, values and service priorities, including the most recently adopted Town Council goals. (2) The ability for the Town to retain its identity as owner/operator of the Facility or principal provider of the service. 2189798.3 7 (3) The prospective entity’s historical participation and association with community projects, events and continued willingness to participate. (4) The operating and maintenance costs to the Town associated with the proposed sponsorship. (5) Anticipated public perception of the association with the Town and the prospective entity and community support for, or objection to, the prospective entity. (6) The prospective entity’s regard for and demonstrated success in valuing diversity. (7) The prospective entity’s regard for and demonstrated success in environmental stewardship. E. Develop Agreement. In the event a Municipal Sponsorship, Co- Sponsorship, Sole Sponsorship, Marketing Arrangement or Facility Naming Rights proposal is recommended for approval, the Town department will work with the Town Attorney’s Office to prepare an agreement consistent with all applicable Town Codes, policies and ordinances. The agreement shall contain a provision granting the Town the right to suspend or terminate the Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship, Marketing Arrangement or Facility Naming Rights agreement if, in the sole discretion of the Town Manager or the Town Council (whichever approved the agreement), the continued arrangement would no longer satisfy the selection criteria by which the arrangement was initially approved. F. Manager Review; Council Approval. The Town Manager shall review all Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship and Marketing Arrangement proposals and shall submit to the Town Council for approval all Municipal Sponsorship, Co- Sponsorship, Sole Sponsorship or Marketing Arrangement Agreements (1) with an aggregate value greater than $10,000, (2) involving Town contributions, whether in cash or as an In-Kind Contribution greater than $10,000, (3) involving a request to close public access to a Town- owned facility for more than one day, (4) involving events lasting longer than one week (including set-up and take-down) and (5) all agreements involving Facility Naming Rights. Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangement Agreements not identified in clauses (F)(1)-(5) above may be approved by the Town Manager. G. Record Financial Transaction. In the event a Municipal Sponsorship is received as an In-Kind Contribution of goods or services, the Finance Division shall create and retain a record of that donation and any associated revenue or expense to the Town to document the financial transaction to the Town. 7. Co-Sponsorship Requests. The Town actively supports the efforts of Nonprofit Organizations, other governmental agencies and Sister Agencies whose events are (i) held in Town parks and Facilities and (ii) further Town core program goals and services. Such support may include fee waivers, reduced fees, reduced rental charges and Co-Sponsorship. All permit fee waivers and reductions, reduced Facility rentals and Co-Sponsorship agreements must comply with the guidelines and procedures set forth below. 2189798.3 8 A. Fees. The Town charges everyone a fee to permit and have priority use of any park, amenity, stage or recreation Facility. This fee is to cover extra operational expenses associated with the use or event and to guarantee the space for the permittee. Fees are based upon the purpose and size of the event. Additional fees are charged as a damage deposit. Fees may be modified as follows: (1) Any Nonprofit Organization that meets the guidelines set forth below may receive a 50% reduction in fees or rentals. (2) The Town may further reduce or waive an outside organization’s permit or rental fees for an event on Town property that (a) has close association with the Town’s core program goals and services and (b) provides the Town with positive marketing exposure. The determination as to further waivers shall be made by the Town Manager or the Town Council, with the authority for such review determined according to the limitations set forth in Subsection 6(F) above. B. Requirements for Reduced Fees. Any Nonprofit Organization applying for a Town permit or Facility rental may be granted a 50% reduction in fees if the following criteria are met: (1) At the time of the request for reduced fees, the Nonprofit Organization provides a copy of the determination letter from the IRS granting the Nonprofit Organization tax-exempt status. (2) The mission of the Nonprofit Organization does not conflict with the Town’s regulations, mission or policies. (3) No fundraising activities are involved as a part of the program or event. Any exceptions must be approved by the Town Manager or Town Council pursuant to the process set forth in Subsection 7(A)(2) above. (4) The Nonprofit Organization permit-holder must remain responsible for damage fees and other costs, including, but not limited to, general liability insurance, police coverage, player/team fees, electrical fees, lights, overnight security, concessions, toilet/trash service agreements, fencing and any other additional needs and agreements pertaining to the event. Damage deposits are never waived for events conducted by organizations from outside of Fountain Hills. Events at the Desert Vista Skate Park require an additional damage deposit in addition to the regular park permit procedure. (5) Except for Municipal Sponsorship Agreements, any fee reductions for athletic field permits should be limited to youth tournaments and events only. Youth programs must be based in Fountain Hills and primarily serve Fountain Hills residents. The permit-holder is responsible for the damage deposit and any athletic field light fees. 2189798.3 9 C. Requests for Co-Sponsorships of Non-Governmental Entities. The Town has a limited In-Kind Contribution budget each year to actively co-sponsor events. Primarily, the Town can provide limited staff coordination and technical assistance. Organizations still must fund other associated costs, including, but not limited to, the cost of additional dumpsters, portable toilets, lighting, etc. When evaluating proposals from organizations, the following criteria are used: (1) The event/program should promote beneficial use of the park, Facility, or program. (2) The event/program should be open to the public. (3) The event/program should support the Town’s core recreation programs, mission and goals. (4) The event/program should demonstrate community pride and involvement. (5) The event/program should not have a religious or political purpose. (6) Priority should be given to events/programs that support or positively impact youth. (7) The sponsoring organization should clearly recognize the Town as a co-sponsor (including logo) on all materials and announcements associated with the event or program, subject to the Town’s prior, written approval of the use of the Town logo or trademarks. The Town may display its banners at all co-sponsored events. D. Requests for Co-Sponsorship of Other Governments and Sister Agencies. (1) If another governmental entity or Sister Agency (i.e. Fountain Hills Unified School District or Fountain Hills Sanitary District) is only a supporting sponsor for another outside organization, that other outside organization still must apply for Town Co-Sponsorship. (2) If another governmental entity or Sister Agency is the primary organizer for a public program or event, generally the Town will grant a request to be a co-sponsor. Like sponsorship of outside organizations, the governmental entity or Sister Agency still is responsible for all other costs associated with the program or event. (3) The governmental entity or Sister Agency holding the program or event must clearly acknowledge the Town as a co-sponsor on all written materials associated with the event, subject to the Town’s prior, written approval of any use of the Town logo or trademarks. 2189798.3 10 8. Facility Naming General Policies. A. Recommendations to Other Bodies. This Policy should be followed in reviewing or preparing the Town’s official comments or recommendations to State, Federal, and/or intergovernmental boards taking actions regarding geographic names, naming or renaming of Facilities or Streets. B. Town Request; Town Council Consideration. The Mayor, three members of the Town Council, or the Town Manager may request the naming or renaming of a Facility or a Street. Thereafter, the Town Council shall discuss the requested renaming at a public meeting. C. Bond-Financed Facilities or Streets. If a bond-financed Facility or Street is proposed or requested to be named or renamed, bond counsel must review and approve the request or proposal before consideration at a Town Council meeting. D. Public Notice. The Town Council shall provide appropriate public notice of any Street or Facility naming actions in conjunction with other agenda items for regularly- scheduled meetings. E. Changes to Approved Names. Once a name has been officially approved by the Town Council, changes should be strongly resisted. F. Town Council Discretion. In all cases, the Town Council reserves the right to accept or reject any proposal to name or rename a Street or Facility, in its sole discretion. G. Town Manager Duties. The Town Manager, upon approval of the naming or renaming action by the Town Council, shall implement names or name changes of Facilities or Streets. The Town Manager shall notify those who have submitted the suggestion as well as other appropriate offices and agencies. Upon Town Council denial of a name or name change, the Town Manager shall notify those who requested the name change. 9. Facility Naming Criteria. A. For Facilities and Streets Generally. Recognizing that the naming or renaming of a Facility or Street should be approached cautiously with forethought and deliberation, the following criteria are hereby established: (1) To avoid duplication, confusing similarity or inappropriateness, the Town Council, in considering name suggestions, shall review existing Facility and/or Street names, as applicable. (2) In naming Facilities and Streets, consideration shall be given to geographic location, historical or cultural significance and natural or geological features. In the construction of a Facility, the address designation shall be used until the formal naming of the Facility. Whenever possible, naming shall be made prior to the completion of construction of a Facility or Street. 2189798.3 11 (3) Facilities and Streets may be named only for a deceased individual or individuals if (i) the individual or individuals has/have enhanced the quality of life within the Town and (ii) two years or more has elapsed between the consideration for naming and the time of death of the individual or, in the case of related individuals, two years after the death of one of the individuals. The deceased individual shall have performed outstanding service in one or more of the following categories: (a) Maintained involvement in a leadership role in civic organizations that are devoted to community improvement. (b) Provided assistance to the underprivileged, economically disadvantaged or physically and/or mentally handicapped. (c) Actively promoted and directed community events and activities that have clearly added to the enrichment of the quality and quantity of cultural life within the community. (d) Actively promoted and implemented effective programs and activities within the community for the Town’s youth. (e) Actively promoted and implemented effective programs and activities within the community for the Town’s senior citizens. (f) Assumed an active leadership role in developing and implementing programs directed to the improvement of the visual aesthetic appearance of the community at the commercial, public or residential level. (g) Assumed an active leadership role in developing programs and Facilities directed toward the improvement of community social and health needs as well as programs directed toward humanitarian purposes. B. Additional Criteria Applicable to Streets. In considering the renaming or naming of a Street, the Town Council shall consider the following: (1) Street names, plats, specific sites and places and natural features indicated on general usage maps for 50 years or more (age criteria applied by the National Register of Historic Places) should be changed only under exceptional circumstances. Street names shall not be similar in spelling or pronunciation to a presently-existing major collector or arterial road in the Phoenix Metropolitan area. No Street shall be named by number only according to the street numbering grid (i.e. 150th Street) unless the Street follows a straight north-south alignment. (2) Attention should be paid to maintaining sequential, numerical and alphabetical naming patterns when considering any Street name changes or additions. All Streets shall be named and numbered consistently with the County-wide street numbering system and no such name or change of name shall take effect until (a) the affected public safety agencies have been notified and (b) all impacted public safety 2189798.3 12 dispatch maps have been amended. Any extensions of presently-existing Streets within or into the Town shall bear the same name as the existing roadway. No Street name shall contain a homonym. (3) New Streets shall be named according to the following guidelines: (a) In most cases, the Street name will be proposed by the property owner, reviewed by the Town staff and approved by the Town Council as part of its consideration of a final plat for a development within the Town. (b) If an unnamed private Street is dedicated to the Town, the name may be suggested by the property owners thereon, but the Town Council shall make the final determination. (4) No Street shall be renamed unless: (a) The new Street name is not one already well-known in the Phoenix metropolitan area. (b) There are no (or very few) buildings or other addressed Facilities presently existing along the Street. (c) The new Street name will not be confused with other existing Streets in the Town. (d) The new Street name shall not be the same as a specific living person within the Phoenix Metropolitan area. C. Historical Reference. Changes of names for Facilities or Streets should be approved only when they do not violate historical or common usage names. Facilities and Streets may be named after research reveals that the area around the Facility or Street has been commonly, yet unofficially, named by the residents in the area. D. Donor Naming. Facilities and Streets may be permanently named for an individual (alive or deceased), organization, or business if that individual, organization or business has made a donation of money, land or other goods and/or services to the Town equal to at least half the full cost of the Facility or Street, either for purposes of developing a particular Facility or Street or for the Town’s Capital Fund. Such arrangements will be called “Permanent Naming.” Permanent Naming proposals that are not in accordance with Section 4 of this Policy shall not be considered. 1937832.22189798.2 TOWN OF FOUNTAIN HILLS MUNICIPAL SPONSORSHIP AND NAMING RIGHTS POLICY Amended and Restated August 7, 2014 1. Purpose. To establish for the Town of Fountain Hills, Arizona (the “Town”) a formal procedure and criteria for the receipt or solicitation of, selection of, and agreements with, persons or entities for Municipal Sponsorships, Co-Sponsorships, Sole Sponsorships and Marketing Arrangements, (including Facility Naming Rights), the following Municipal Sponsorships and Naming Rights Policy (this “Policy”) is hereby adopted by the Mayor and Council of the Town (the “Town Council”). This Policy is intended to set forth the process for the Town to participate in Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship and Marketing Arrangement programs to give valuable support to important Town programs, facilities and services for public benefit by (i) providing funding for Town events from private businesses and (ii) allowing the Town to partner with activities provided by outside entities. In doing so, the Town must ensure its actions are consistent and appropriate to the Town’s vision, mission and values. This Policy is not intended to apply to Bequests or Donations (each as defined bel ow). This Policy shall: A. Establish Procedures. Establish consistent procedures and practices for receipt or solicitation of Municipal Sponsorships (as defined below), Co-Sponsorships (as defined below), Sole Sponsorships (as defined below) and Marketing Arrangements (as defined below) by Town staff. B. Encourage Sponsorships. Encourage solicitation of Municipal Sponsorship opportunities such as Facility Naming Rights, Sole Sponsorships, Co-Sponsorships, Marketing Arrangements and similar agreements that generate revenue (financial or in-kind) in support of existing and new Town facilities, projects, programs or services. C. Encourage Partnerships. Develop public/private alliances to provide programs, events, venues and services within the Town. D. Encourage Staff Innovation. Empower Town departments to seek Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship and Marketing Arrangement opportunities to provide funds for programs, events, venues or services they might not otherwise be able to provide to Town residents and visitors. E. Safeguard Town Interests and Goals. Ensure that Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship and Marketing Arrangement activities (1) safeguard the Town’s assets and interests, (2) support the Town’s goals of service to the community and (3) remain responsive to the public’s needs and values. F. Establish Naming Framework. Provide a framework within which requests to name public facilities are considered and evaluated. 1937832.22189798.2 2 2. Scope. This Policy shall govern all Town departments regarding the solicitation of, and the unsolicited offers/requests from third parties related to, Municipal Sponsorships, Co--Sponsorships, Sole Sponsorships and Marketing Arrangements for Town programs, projects, events, venues, facilities and services. Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship and Marketing Arrangement solicitations shall be in furtherance of the Town’s needs and conducted in accordance with the provisions in this Policy. All Town staff responsible for, or otherwise involved in, Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship and Marketing Arrangement activities on behalf of the Town or their respective departments shall adhere to the policies, procedures and guidelines set forth herein. A. Third Party Solicitation. Subject to the conditions of this Policy, Town staff may solicit or respond to solicitations from third parties for such Municipal Sponsorships, Co-Sponsorships, Sole Sponsorships or Marketing Arrangements for the Town. B. Fair Compensation. At all times, recognition for Municipal Sponsorships or Marketing Arrangements must be evaluated to ensure the Town is receiving fair and competitive compensation and that such recognition is consistent with the scale of each Sponsor or Marketing Arrangement’s contribution. C. Outside the Scope of this Policy. This Policy shall not apply to: (1) Funding obtained through formal grant programs or through intergovernmental agreements with other political subdivisions of the State. (2) Town support of external projects where the Town provides funds to an outside organization (examples include, but are not limited to, grants to Nonprofit Organizations). (3) Gifts, Bequests, or unsolicited Donations to a Town department or the Town where no reciprocal commercial benefit is given or expected and no business relationship exists. 3. Definitions. Bequest. A gift or contribution of cash, goods or services given voluntarily and expressed in writing through a will or other testamentary document. Co-Sponsorship. Participation by the Town (via direct funding, waived fees, staff coordination or technical assistance) in an event that is provided by an outside entity and that is closely aligned with or furthers a core Town program or service. Donation. A gift or contribution of cash, goods or services given voluntarily toward an event, project, program or corporate asset where no reciprocal commercial benefit is given or expected. If reciprocal commercial benefits are given or a business relationship exists with a corporate donor, the contribution will be a Municipal Sponsorship, Co--Sponsorship, Sole Sponsorship or Marketing Arrangement, as applicable, and the principles of this Policy will apply. 1937832.22189798.2 3 Facility Naming Rights. The naming of Town-owned and/or operated buildings, structures, natural features and recreational facilities, whether in whole or portions thereof (hereafter referred to individually as a “Facility” or collectively as “Facilities”), and streets, roads or any p ublic rights-of-way (hereafter referred to individually as a “Street” or collectively as the “Streets”) within the corporate limits of the Town. Portions of a Facility may have names other than that of the entire Facility and features may be dedicated to or in honor of a person such as “Smith Beach” or “Jones’ Amphitheater,” subject to the provisions of this Policy. In-Kind Contribution. A contribution received in the form of goods and/or services rather than cash as part of a Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangement. Marketing Arrangement. A mutually beneficial business arrangement between the Town and a third party, wherein the third party provides cash and/or in-kind services to the Town in return for access to the commercial marketing potential associated with the Town. Marketing Arrangements may include Municipal Sponsorship or Sole Sponsorship of one or more of the Town’s programs, projects, events, Facilities or activities. Municipal Sponsorship. A business relationship in which the Town and another entity exchange things of value, including a public display of support. This value can be financial, in-kind or benefits related to visibility/exposures, publicity or market reach. It should not be confused with Donations (as defined above), the sale of advertising or innovative approaches to purchasing goods or services. Municipal Sponsorships include funds, products or services provided by a company or individual to the Town, in consideration of the opportunity for the company or individual to promote its name, product or service in conjunction with a Town program, project, event, venue or activity. Nonprofit Organizations. Organizations designated as tax-exempt under the Federal Tax Code asSection 501(c)(3). Sister Agency. Local government entities that are traditional partners with the Town (i.e. Fountain Hills Unified School District and Fountain Hills Sanitary District). Request for Proposals (“RFP”). An open and competitive process whereby the Town invites companies, subsidiaries or individuals to express their interest in participating, and submit proposals to participate, in Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangement opportunities with the Town. Sole Sponsorship. A business relationship in which a company, subsidiary or individual has paid to be the only Sponsor of a Town program, project, event, venue or activity. Sponsor. A company or individual that provides the Town with a Municipal Sponsorship and that enters into a Municipal Sponsorship agreement with the Town to promote itself and/or its products or services. 1937832.22189798.2 4 Standards of Responsibility. The requisite standards to enter into a Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangement with the Town. Factors to be considered in determining whether the standards have been met include, but are not limited to, whether a prospective sponsorSponsor: (i) has available (or the ability to obtain) the appropriate financial, material, equipment, Facility, personnel resources and expertise necessary to indicate its capability to meet all contractual requirements; (ii) is able to comply with required or proposed delivery or performance scheduling; (iii) has a satisfactory record of performance; (iv) has a satisfactory record of integrity and business ethics; and (v) is qualified legally to contract with the Town. 4. Restrictions. In general, the following industries and products are not eligible for Municipal Sponsorships, Co-Sponsorships, Sole Sponsorships or Marketing Arrangements, including Facility Naming Rights, with the Town, but the Town may elect to enter into Municipal Sponsorships, Co-Sponsorships, Sole Sponsorships or Marketing Arrangements with these restricted industries or products when it is deemed appropriate by the Town Council acting in its sole discretion. A. Prohibited or Restricted Products. A company, subsidiary and association with products or services that are prohibited or restricted by Town Code or other governing laws and policies. B. Adult Products. A company or subsidiary whose business is substantially derived from the sale or manufacture of tobacco products, products prohibited under federal law or sexual/adult-oriented products. C. Alcohol Sponsor at Youth-Related Events. Alcoholic beverages when the intended audience of or participants in the Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangement are youth under the legal drinking age. D. Parties not Deemed Responsible. Parties that are not deemed responsible under the Standards of Responsibility. E. Parties to Litigation. Parties involved in a lawsuit with the Town. F. Separate Contracts. Parties involved in any stage of negotiations for a Town contract unless the contract is directly linked to a Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship, Marketing Arrangement or Facility Naming Rights opportunity. G. Conflicts of Interest. Individuals or commercial enterprises having past, present or pending business agreements or associations with the Town, if a Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangement Agreement would create an appearance of impropriety. H. Pending Land-Use Approval. Parties with an active case for an y land-use approval before the Town. 1937832.22189798.2 5 I. Religious or Political Entities. Religious or political associations or candidates running for any political office. 1937832.22189798.2 6 5. Roles and Responsibilities. A. Responsibilities of Town Departments. (1) Initiating Town Department. The initiating Town department shall (a) ensure adherence to the principles and guidelines outlined in this Policy, (b) prepare a proposal setting forth the scope of the program or project as provided in Subsection 6(A) below and (c) work with the Town Finance Division to ensure appropriate budgeting of revenues and expenditures and with the Town Attorney’s Office to ensure the integrity of the procurement process and the legal sufficiency of contractual obligations. (2) Finance and Budget. The Finance Division shall provide general guidance, cost/benefit analysis, and direction relating to the appropriate budgeting of revenues and expenditures in a manner that maximizes the benefits of each Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship, Marketing Arrangement or Facility Naming Rights arrangement for the initiating Town department, the Town and the Sponsor. (3) Procurement. When applicable, the Town Manager or authorized designee shall oversee the preparation of the RFP or oth er competitive solicitation for Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship, Marketing Arrangement and Facility Naming Rights opportunities. (4) Town Attorney. The Town Attorney’s Office shall provide legal review of any RFP or other competitive solicitation for Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship, Marketing Arrangement and Facility Naming Rights opportunities and oversee the preparation of all Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship, Marketing Arrangement and Facility Naming Rights agreements. (5) Town Manager. The Town Manager shall review all Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship and Marketing Arrangement activities, including interim reports provided from time to time by Town departments. The Town Manager also shall be responsible for determining the frequency of reports by Town departments. 6. Procedures. The Town’s participation in Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship, Marketing Arrangement and/or Facility Naming Rights activities shall be according to the procedures set forth below. For Municipal Sponsorships, Co-Sponsorships, Sole Sponsorships, Marketing Arrangements and/or Facility Naming Rights arrangements initiated by the Town, subsectionsSubsections 6(A) – (G) shall apply; for Municipal Sponsorships, Co-Sponsorships, Sole Sponsorships, Marketing Arrangements and/or Facility Naming Rights arrangements initiated by another person or entity, subsectionsSubsections 6(B), (D), (E), (F) and (G) shall apply. A. Prepare a Proposal. A Town department considering a potential Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship, Marketing Arrangement or Facility Naming Rights arrangement shall prepare a proposal setting forth the scope of the program or project, 1937832.22189798.2 7 including a description of the community benefit, financial goals, means of recognition, potential interested Sponsors, and general marketing strategy if a Marketing Arrangement is involved. The proposal shall be submitted to the Department Director for review and approval. If Facility Naming Rights are involved and will result in a name change to an existing Facility, the history and legacy of the current municipal Facility should be considered and/or incorporated within the new proposed name. All Facility or Street naming shall be in accordance with the additional procedures set forth in Sections 8 and 9 below. B. Estimate Value. If the proposed Municipal Sponsorship or Marketing Arrangement includes Facility Naming Rights or granting Sole Sponsorship, the Department Director shall provide a reasonable basis for determining the value of the Municipal Sponsorship, Marketing Arrangement or Facility Naming Rights opportunity. At the Town Manager’s discretion, a qualified third party may be used to establish value. C. Develop and Implement Solicitation. The applicable Town department, working with the Town Attorney, shall develop an RFP for each Municipal Sponsorship, Co--Sponsorship, Sole Sponsorship or Marketing Arrangement opportunity valued greater than $30,00010,000 and all Facility Naming Rights opportunities and the most beneficial, qualified response shall be submitted to Town Council with a recommendation for approval. Town-originated Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangements valued at $30,00010,000 or below and revenue producing or “no-cost” Municipal Sponsorship, Co--Sponsorship, Sole Sponsorship or Marketing Arrangement opportunities that involve the provision of commodities or services provided either to the Town or the Fountain Hills community in support of Town operations, functions or programs through which the provider will benefit monetarily, must be awarded using a competitive process that is appropriate to the value, complexity and profile of the business opportunity. Municipal Sponsorship, Co--Sponsorship, Sole Sponsorship or Marketing Arrangement proposals forwarded to the Town are not subject to competitive solicitations if the proposed Municipal Sponsorship, Co--Sponsorship, Sole Sponsorship, Marketing Arrangement or Facility Naming Rights opportunity is determined through a good faith effort to be unique and without interested competitors. D. Evaluate Submissions. The applicable Town department shall review and analyze all responsive submittals received and shall provide a recommendation of approval or denial to the Town Manager. The submittals shall be reviewed against selection criteria that may include, but are not limited to: (1) Consistency of the prospective entity’s products, customers and promotional goals with the Town’s character, values and service priorities, including the most recently adopted Town Council goals. (2) The ability for the Town to retain its identity as owner/operator of the Facility or principal provider of the service. (3) The prospective entity’s historical participation and association with community projects, events and continued willingness to participate. 1937832.22189798.2 8 (4) The operating and maintenance costs to the Town associated with the proposed sponsorship. (5) Anticipated public perception of the association with the Town and the prospective entity and community support for, or objection to, the prospective entity. (6) The prospective entity’s regard for and demonstrated success in valuing diversity. (7) The prospective entity’s regard for and demonstrated success in environmental stewardship. E. Develop Agreement. In the event a Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship, Marketing Arrangement or Facility Naming Rights proposal is recommended for approval, the Town department will work with the Town Attorney’s Office to prepare an agreement consistent with all applicable Town Codes, policies and ordinances. The agreement shall contain a provision granting the Town the right to suspend or terminate the Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship, Marketing Arrangement or Facility Naming Rights agreement if, in the sole discretion of the Town Manager or the Town Council (whichever approved the agreement), the continued arrangement would no long er satisfy the selection criteria by which the arrangement was initially approved. F. Manager Review; Council Approval. The Town Manager shall review all Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship and Marketing Arrangement proposals and shall submit to the Town Council for approval all Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangement Agreements (1) with an aggregate value greater than $30,000 and10,000, (2) involving Town contributions, whether in cash or as an In-Kind Contribution greater than $10,000, (3) involving a request to close public access to a Town-owned facility for more than one day, (4) involving events lasting longer than one week (including set-up and take-down) and (5) all agreements involving Facility Naming Rights to the Town Council for final approval. Municipal Sponsorship, Co-Sponsorship, Sole Sponsorship or Marketing Arrangement Agreements with an aggregate value to the Town of $30,000 or lessnot identified in clauses (F)(1)-(5) above may be approved by the Town Manager. G. Record Financial Transaction. In the event a Municipal Sponsorship is received as an “in-kind” donationIn-Kind Contribution of goods or services, the Finance Division shall create and retain a record of that donation and any associated revenue or expense to the Town to document the financial transaction to the Town. 7. Co-Sponsorship Requests. The Town actively supports the efforts of Nonprofit Organizations, other governmental agencies and Sister Agencies whose events are (i) held in Town parks and Facilities and (ii) further Town core program goals and services. Such support may include fee waivers, reduced fees, reduced rental charges and co-sponsorshipCo-Sponsorship. All permit fee waivers and reductions, reduced Facility rentals and Co-Sponsorship agreements must comply with the guidelines and procedures set forth below. 1937832.22189798.2 9 A. Fees. The Town charges everyone a fee to permit and have priority use of any park, amenity, stage or recreation Facility. This fee is to cover extra operational expenses associated with the use or event and to guarantee the space for the permittee. Fees are based upon the purpose and size of the event. Additional fees are charged as a damage deposit. Fees may be modified as follows: (1) Any Nonprofit Organization that meets the guidelines set forth below may receive a 50% reduction in fees or rentals. (2) The Town may further reduce or waive an outside organization’s permit or rental fees for an event on Town property, as determined by the Town Manager or designee, that (a) has close association with the Town’s core program goals and services and (b) provides the Town with positive marketing exposure. The determination as to further waivers shall be made by the Town Manager or the Town Council, with the authority for such review determined according to the limitations set forth in Subsection 6(F) above. B. Requirements for Reduced Fees. Any Nonprofit Organization applying for a Town permit or Facility rental may be granted a 50% reduction in fees if the following criteria are met: (1) At the time of the request for reduced fees, the Nonprofit Organization provides a copy of the determination letter from the IRS granting the Nonprofit Organization tax-exempt status under Section 501(c)(3). (2) The mission of the Nonprofit Organization does not conflict with the Town’s regulations, mission or policies. (23) No fundraising activities are involved as a part of the program or event. Any exceptions must be approved by the Town Manager or designeeTown Council pursuant to the process set forth in Subsection 7(A)(2) above. (34) The Nonprofit Organization permit-holder must remain responsible for damage fees and other costs, including, but not limited to, general liability insurance, police coverage, player/team fees, electrical fees, lights, overnight security, concessions, toilet/trash service agreements, fencing and any other additional needs and agreements pertaining to the event. Damage deposits are never waived for events conducted by organizations from outside of Fountain Hills. Events at the Desert Vista Skate Park require an additional damage deposit in addition to the regular park permit procedure. (45) Except for Municipal Sponsorship Agreements, any fee reductions for athletic field permits should be limited to youth tournaments and events only. Youth programs must be based in Fountain Hills and primarily serve Fountain Hills residents. The permit-holder is responsible for the damage deposit and any athletic field light fees. 1937832.22189798.2 10 C. Requests for Co-Sponsorships of Non-Governmental Entities. The Town has a limited in-kindIn -Kind Contribution budget each year to actively co-sponsor events. Primarily, the Town can provide limited staff coordination and technical assistance. Organizations still must fund other associated costs, including, but not limited to, the cost of additional dumpsters, portable toilets, lighting, etc. When evaluating proposals from organizations, the following criteria are used: (1) The event/program should promote beneficial use of the park, Facility, or program. (2) The event/program should be free and open to the public. (3) The event/program should support the Town’s core recreation programs, mission and goals. (4) The event/program should demonstrate community pride and involvement. (5) The event/program should not have a religious or political purpose. (6) Priority should be given to events/programs that support or positively impact youth. (7) The sponsoring organization should clearly recognize the Town as a co-sponsor (including logo) on all materials and announcements associated with the event or program, subject to the Town’s prior, written approval of the use of the Town logo or trademarks. The Town may display its banners at all co-sponsored events. D. Requests for Co-Sponsorship of Other Governments and Sister Agencies. (1) If another governmental entity or Sister Agency (i.e. Fountain Hills Unified School District or Fountain Hills Sanitary District) is only a supporting sponsor for another outside organization, that other outside organization still must apply for Town co-sponsorshipCo-Sponsorship. (2) If another governmental entity or Sister Agency is the primary organizer for a public program or event, generally the Town will grant a request to be a co-sponsor. Like sponsorship of outside organizations, the governmental entity or Sister Agency still is responsible for all other costs associated with the program or event. (3) The governmental entity or Sister Agency holding the program or event must clearly acknowledge the Town as a co-sponsor on all written materials associated with the event, subject to the Town’s prior, written approval of any use of the Town logo or trademarks. 1937832.22189798.2 11 8. Facility Naming General Policies. A. Recommendations to Other Bodies. This Policy should be followed in reviewing or preparing the Town’s official comments or recommendations to State, Federal, and/or intergovernmental boards taking actions regarding geographic names, naming or renaming of Facilities or Streets. B. Town Request; Town Council Consideration. The Mayor, three members of the Town Council, or the Town Manager may request the naming or renaming of a Facility or a Street. Thereafter, the Town Council shall discuss the requested renaming at a public meeting. C. Bond-Financed Facilities or Streets. If a bond-financed Facility or Street is proposed or requested to be named or renamed, bond counsel must review and approve the request or proposal before consideration at a Town Council meeting. D. Public Notice. The Town Council shall provide appropriate public notice of any Street or Facility naming actions in conjunction with other agenda items for regularly-scheduled meetings. E. Changes to Approved Names. Once a name has been officially approved by the Town Council, changes should be strongly resisted. F. Town Council Discretion. In all cases, the Town Council reserves the right to accept or reject any proposal to name or rename a Street or Facility, in its sole discretion. G. Town Manager Duties. The Town Manager, upon approval of the naming or renaming action by the Town Council, shall implement names or name changes of Facilities or Streets. The Town Manager shall notify those who have submitted the suggestion as well as other appropriate offices and agencies. Upon Town Council denial of a name or name change, the Town Manager shall notify those who requested the name change. 9. Facility Naming Criteria. A. For Facilities and Streets Generally. Recognizing that the naming or renaming of a Facility or Street should be approached cautiously with forethought and deliberation, the following criteria are hereby established: (1) To avoid duplication, confusing similarity or inappropriateness, the Town Council, in considering name suggestions, shall review existing Facility and/or Street names, as applicable. (2) In naming Facilities and Streets, consideration shall be given to geographic location, historical or cultural significance and natural or geological features. In the construction of a Facility, the address designation shall be used until the formal naming of the Facility. Whenever possible, naming shall be made prior to the completion of construction of a Facility or Street. 1937832.22189798.2 12 (3) Facilities and Streets may be named only for a deceased individual or individuals if (i) the individual or individuals has/have enhanced the quality of life within the Town and (ii) two years or more has elapsed between the consideration for naming and the time of death of the individual or, in the case of related individuals, two years after the death of one of the individuals. The deceased individual shall have performed outstanding service in one or more of the following categories: (a) Maintained involvement in a leadership role in civic organizations that are devoted to community improvement. (b) Provided assistance to the underprivileged, economically disadvantaged or physically and/or mentally handicapped. (c) Actively promoted and directed community events and activities that have clearly added to the enrichment of the quality and quantity of cultural life within the community. (d) Actively promoted and implemented effective programs and activities within the community for the Town’s youth. (e) Actively promoted and implemented effective programs and activities within the community for the Town’s senior citizens. (f) Assumed an active leadership role in developing and implementing programs directed to the improvement of the visual aesthetic appearance of the community at the commercial, public or residential level. (g) Assumed an active leadership role in developing programs and Facilities directed toward the improvement of community social and health needs as well as programs directed toward humanitarian purposes. B. Additional Criteria Applicable to Streets. In considering the renaming or naming of a Street, the Town Council shall consider the following: (1) Street names, plats, specific sites and places and natural features indicated on general usage maps for 50 years or more (age criteria applied by the National Register of Historic Places) should be changed only under exceptional circumstances. Street names shall not be similar in spelling or pronunciation to a presently-existing major collector or arterial road in the Phoenix Metropolitan area. No Street shall be named by number only according to the street numbering grid (i.e. 150th Street) unless the Street follows a straight north-south alignment. (2) Attention should be paid to maintaining sequential, numerical and alphabetical naming patterns when considering any Street name changes or additions. All Streets shall be named and numbered consistently with the County-wide street numbering system and no such name or change of name shall take effect until (a) the affected public safety agencies have been notified and (b) all impacted public safety dispatch maps have 1937832.22189798.2 13 been amended. Any extensions of presently-existing Streets within or into the Town shall bear the same name as the existing roadway. No Street name shall contain a homonym. (3) New Streets shall be named according to the following guidelines: (a) In most cases, the Street name will be proposed by the property owner, reviewed by the Town staff and approved by the Town Council as part of its consideration of a final plat for a development within the Town. (b) If an unnamed private Street is dedicated to the Town, the name may be suggested by the property owners thereon, but the Town Council shall make the final determination. (4) No Street shall be renamed unless: (a) The new Street name is not one already well-known in the Phoenix metropolitan area. (b) There are no (or very few) buildings or other addressed Facilities presently existing along the Street. (c) The new Street name will not be confused with other existing Streets in the Town. (d) The new Street name shall not be the same as a specific living person within the Phoenix Metropolitan area. C. Historical Reference. Changes of names for Facilities or Streets should be approved only when they do not violate historical or common usage names. Facilities and Streets may be named after research reveals that the area around the Facility or Street has been commonly, yet unofficially, named by the residents in the area. D. Donor Naming. Facilities and Streets may be permanently named for an individual (alive or deceased), organization, or business if that individual, organization or business has made a donation of money, land or other goods and/or services to the Town equal to at least half the full cost of the Facility or Street, either for purposes of developing a particular Facility or Street or for the Town’s Capital Fund. Such arrangements will be called “Permanent Naming.” Permanent Naming proposals that are not in accordance with Section 4 of this Policy shall not be considered. Document comparison by Workshare Compare on Friday, August 01, 2014 9:34:39 AM Input: Document 1 ID interwovenSite://GRPHX_SQL/Phoenix/1937832/2 Description #1937832v2<Phoenix> - POLICY - Municipal Sponsorship and Naming Rights Policy v2 Document 2 ID interwovenSite://GRPHX_SQL/Phoenix/2189798/2 Description #2189798v2<Phoenix> - POLICY - Municipal Sponsorship and Naming Rights Amended & Restated 8.7.14 v2 (AJM 7.2.14) Rendering set Standard Legend: Insertion Deletion Moved from Moved to Style change Format change Moved deletion Inserted cell Deleted cell Moved cell Split/Merged cell Padding cell Statistics: Count Insertions 35 Deletions 27 Moved from 0 Moved to 0 Style change 0 Format changed 0 Total changes 62 TOWN OF FOUNTAIN HILLS TOWN COUNCIL AGENDA ACTION FORM Meeting Date:8/7/2014 Meeting Type:Regular Session Agenda Type:Regular Submitting Department:Community Services Staff Contact Information:Mark Mayer-mmayer@fh.az.gov /(480)816-5190 Strategic Values:Council Goal: Maintain/Improve Community Infrastructure Not Applicable (NA) REQUEST TO COUNCIL (Agenda Language):Consideration of Naming the Legacy Plaza in Fountain Park as The Joe & Marge Brown Legacy Plaza under Resolution 2014-36 the Town of Fountain Hills Municipal Sponsorship and Naming Rights Policy Applicant:N/A Applicant Contact Information:N/A Property Location:N/A Related Ordinance,Policy or Guiding Principle:Resolution 2014-36 Staff Summary (background): Risk Analysis (options or alternatives with implications):N/A Fiscal Impact (initial and ongoing costs;budget status):Council previously approved the Legacy Plaza concept at the June 5,2014 meeting with the understanding that at a future date a potential donor would be brought forward from an estate. If approved,the Brown Family Trust will be covering the cost to construct the previously approved plan for the Legacy Plaza.This cost is estimated at almost $25,000.Final quotes will need to be obtained for the project. Mr.Bruce Boland is the Executor and Trustee of the Brown Family Trust and will be making a short presentation to the Council.His comments are attached. Budget Reference (page number):N/A Funding Source:NA If Multiple Funds utilized,list here: Budgeted;if No,attach Budget Adjustment Form:NA Recommendation(s)by Board(s)or Commission(s): Staff Recommendation(s):Staff is recommending support for the request List Attachment(s):Mr.Boland's comments /site rendering Page 1 of 2 SUGGESTED MOTION (tor Council use):Motion to Name the Legacy Plaza in Fountain Park as The Joe &Marge Brown Legacy Plaza Prepared by: NA 8/1/2011 Director's Approval: VVw A,i Q..Mark MayerTComrrtunity Services Director y 7/30/2014 Approved: -Neui Ken Buchanan,Town Manager 8/31/2011 ipproved:x—*\ .en Buchanan,Town Manager Page2 of 2 LegacyPlazaFountainParkALEGACYPLAZAlewaParkingAre.NEWCOLUMN-•-Existing\jkPROPOSEDPAVERSPaversDesignProvidedbyFourPeaksLandscapeArchitectureSusanT.Jones,RLA Thank you for allowing me to request your approval to fulfill a gift from the Marge Knudson Brown Estate to the town of Fountain Hills. My name is Bruce Boland and I represent the "Brown Family Trust"as its Executor and Trustee.I've been a personal friend and business partner of Joe and Marge Brown for many years. Joe and Marge LOVED Fountain Hills and were early pioneers of the town.They were here from 1970 through 2013. When Marge died in December of 2013,one of her final wishes was to do a number of things for OTHER people,which is typical of what they did for nearly all their adult lives. Many people have known of their love of Fountain Hills from the time they discovered the town in 1970 until their deaths.Joe died in 1999 and Marge in 2013. One of Marge's final wishes was to do "something"to "give back;or in their case, give more"to the city after their deaths. That "something"was left up to me to discover and implement. During that search for "something,"my wife Terri and I thought about all the times Marge would bring us down to Fountain Park and reminisce about the early difficulties of building the fountain and maintaining the motors,etc.,but most importantly,how beautiful it is.She spoke fondly of the Greening of Fountain Hills and how much effort was constantly being made to make the park better and better over time. In her last years,Marge would have difficulty walking down to see the leaves that were being sold to support the greening project and to look at all the changes with the new plantings.At that time,there wasn't enough seating close by to sit and enjoy the view and reminisce.We thought about anew area for seating by the commemorative columns with the "donation leaves." We spoke with Marge's grandchildren,Stacy Rougemont and David J.King,both of Glendale.We also spoke with her close friends,Lois Ehrsam,Joe and Jamie Brown,as well as Jerry and Kathleen Butler of FH. During this process,Jerry Butler indicated the greening committee was going to make some changes to the current commemorative columns and the surrounding area.We thought because of her love of this area and her enthusiasm for this project,it would make a wonderful location for this legacy memorial to Joe and Marge. Why is this offer being made?To support the "Greening of the Downtown Program" and to enhance the Community Signature Park. Joseph E. and Marjorie Knudson Brown were very effective,early pioneers and quiet advocates for many community causes.They were entrepreneurs,visionaries,risk- takers and true believers of Fountain Hills for the majority of their adult years. We are requesting "permanent naming"approval from the Council to call the area THE JOE &MARGE BROWN LEGACY PLAZA.With the help of many people including Jerry,Kathleen,Jenny and Susan Jones of Four Peaks Landscape Architecture and others,the final concept was determined and approved by the Trust and its heirs to move ahead. Who were Joe and Marge?While preparing both of their eulogies,I readily found support information for this presentation.Their history has always included doing things for other people and for communities,from real estate to technology. I was reminded that Marge's grandfather founded Badger,Iowa.She gifted that city and its church in her estate.In my quest for more information,I met with a former mayor and Federal Judge of Fort Dodge,Iowa,and learned even more things they had done for the enhancement and growth of Fort Dodge,Iowa. Their biggest story,however,is Fountain Hills,and it seems best summed up with an article written by L.Alan Cruikshank,when he said of Joe,"HE ACCOMPLISHED A LOT FOR FOUNTAIN HILLS WITH NO FANFARE."The article is attached for your review.The only thing I would change about that is that it should read,"THEY accomplished a lot for Fountain Hills with no fanfare." Another article attached describes how the first liquor store was established by John and Lois Ehrsam.The formation of the current "Men's Club"began with Joe and Marge Brown and John and Lois Ehrsam at the kitchen table of the Ehrsam's home. Also attached is a promotional article written by Pratt Properties,Int.from the Arizona Republic,dated June of 1978.Joe had teamed up with Pratt to build high risk properties to continue to grow FH in the early days when there was little more than graded roads in the city.Extreme high risk,but Joe and Marge pushed ahead to build the first apartments in FH. He invested and lent money to a number of new start ups in FH,some of which failed because the town was too small to support them at the time.Joe was instrumental in bringing many other business friends from Iowa to join him in helping build businesses in FH. They brought many friends from Fort Dodge,Iowa,Minnesota and Canada to live here.They utilized their banking support from Fort Dodge to invest and grow a young FH. A long time friend,Jeff Mowery,indicated that local banking relationships were difficult to get and sustain during those early times. Jeff said it very well when he said,"Joe and Marge were special to a lot of people." As the Trustee of the Brown Estate,we ask for your vote of "YES" to permit us to complete this final design and allow for construction to establish the JOE AND MARGE BROWN LEGACY PLAZA.This will enable citizens and visitors a pleasant and peaceful place to stop and enjoy the fountain,the park and the activities for years to come. Bruce A.Boland Trustee and Executor Brown Family Trust Chairman of Iowa Growth Investors,Inc. www.iowagrowthinvestors.com Attachments:Other items relative to understanding Marge and Joe. He accomplished a lotfor FH with nofanfare The obituary in The Arizona Re public was short and misleading. It said Joe Brown was a retired real estate construction worker. Joe Brown was a whole lot more than that. He was a developer,bro ker,builder and entrepreneur who had built a successful business in Fort Dodge,Iowa,before getting involved in Fountain Hills. Always the astute business man,Joe and wife Marge were among the first people to visit Fountain Hills.It was in 1970 when they were in the Valley to see their daughter get her degree from ASU that they discovered Fountain Hills. During their visit,they decided to look for possible building sites for apartment complexes.Nothing seemed too appealing. They saw a picture of the foun tain in the lobby of the Safari Hotel in Scottsdale and decided to drive out and see what it was all about. What they found was a trailer at j what is now the MCO Realty build ing site at Saguaro and Shea bou levards.A graded road led back to the Fountain Park area that was still under construction. Jeff Mowry,who now operates ERA-First Equity Real Estate in Fountain Hills,remembers meet ing Joe and Marge when he was working out of that trailer for the town's original developer,McCul- loch Properties,Inc.] "Itold them I'd be happy to show them the property but it would be a year before they could actually buy something,"Mowry recalls. Joe and Marge listened to what Jeff told them about what Fountain Hills might become.At that time,it was being envisioned as a "new city" with an eventual projected population of 78,000 people.To many at that time,it took a lot of imagination for anyone to envision turning a vast amount of desert into a new city. "Joe believed from the begin ning that Fountain Hills would be something special,"said Marge. "He wanted to acquire property as soon as it became available,I was the reluctant one.We were suc cessful in Iowa and I was happy with that." Mowry,who would become good friends with the Browns (Mar ge still sells real estate for his com pany),knew Joe as a man who pursued something if he believed in it. "He had his eye on a piece of property that was an extension of "Hotel Hill"(the leveled off area at the top of the hillside north of the Fountainhead development that was originally planned as a hotel site)to the west of what is now Saguaro Boulevard,"Mowry said. He acquired the property as soon as it became available,io- day, that site is the La Casa Cafe- tal condominiums.They were built as Fountain Hills' first upscale apartment complex,proving attrac tive to winter visitors.The units were later sold as condominiums to many of those same winter ten ants.It still remains an attractive residential project even though it was built more than 25 years ago. He was also an investor in the La Fuenta Apartments (also now con- dos)on Gunsite Drive that were originally used to house visitors with McCulloch's "fly to see before ..you buy"sales program that got Fountain Hills off the ground. In the late 1970s,he built anoth- •er large multi-family development called La Vida Buena off Fountain Hills Boulevard.Before there was McDonald's or Wendy's,he built the first fast food restaurant on Shea Boulevard where the Road- runner Depot is now located.He developed the first multi-pump all- self serve gasoline station in Foun tain Hills on a site where Denny's is now located.He also developed and owned several warehouse operations in Mesa. Aside from his business activi ties,Joe also liked to give back to the community that had been so good to him.He always believed in the mission of the Lions Club - to supply glasses and eye care to the less fortunate.So in 1976,he wrote the charter that established the Fountain Hills Lions Club.He was also very active with the Cath olic Church of the Ascension,, heading up its property committee, and the Knights of Columbus. One person commented that Joe wasn't big on attending meet ings, but if there .was a jobthat had to be done,you could count on him getting ft done. He was also known for his delicious prime rib or pork loin that he would prepare for his friends at The Club, a private men's organization.He was a big reason why The Ciub has its own building today. Yes,he was special to a lot of people in Fountain Hilis.Hewas indeed one of its most effective pioneers,even though he never sought the limelight. But he was most special to his beloved Marge.I would see the two of them many mornings at breakfast.He would usually arrive first to chat with his bud dies. Every time Marge would walkin,Joe would rise and pull the chair out for her. "He always spoiled rne," Marge smiled.'That was the kind of man he was." At his recent funeral service at the Catholic Church of the Ascension,friends,family and business associates more than filled the building.Many people even stood in the lobby. "He was special to a lot of people,"Mowry said. "My wife andIhave traveled all over the U.S.The qualify of living here is the best we've everfound.This is going tobe theplace tolive in Arizona" Strong words. But withover 30 years in real estate development, Fountain Hills resident Joe Brown can certainly be considered something ofan authority. He and wifeMarge have lovedtheir five years inFountain Hills.Many reasons:"Just every place you look out here it's beautiful.We likethe people — justlikea big family,more congenial than people anyplace we've been.We have a better cross-section of people than anyplace in the Valley." Joe says more. So could we. But far better to come see —all the things to fashion the good life from that are Fountain Hills. Come out andsee the manynewhomesgoingupat Fountain Hills now ...beautiful homes in a uarietyof sizes, styles and price ranges.Stop attheSales and information Centerfor information andaguided tour.Ifyou hauen'tseen Fountain Hills lately,you hauen'tseen it'. Inc. For a color brochure call:(602)837-9890 Fountain Hillsis reached via Shea Boulevard, 14 miles eastof Scottsdale Road,orvia Beeline Highway (Arizona 87) 13 miies north of Mesa.Stop at the Salesand Infor mation Cpnrpr Shea AnH Saouarn Rlvd antranre TOWN OF FOUNTAIN HILLS TOWN COUNCIL AGENDA ACTION FORM Meeting Date:8/7/2014 Meeting Type:Regular Session Agenda Type:Regular Submitting Department:Community Services Staff Contact Information:Mark C.Mayer -mmayer@fh.az.gov Strategic Values:Council Goal: Recreational Opportunities Amenities R2 Provide trail and bicycle system *•' REQUEST TO COUNCIL (Agenda Language):CONSIDERATION of request to Update the MASTER PLAN for the FOUNTAIN HILLS MCDOWELL MOUNTAIN PRESERVE and to designate the trail connecting with Scottsdale as the ANDREWS -KINSEY TRAIL Applicant:N/A Applicant Contact Information:N/A Property Location:N/A Related Ordinance,Policy or Guiding Principle:N/A Staff Summary (background):The McDowell Mountain Preservation Commission (MMPC) is requesting that the Master Plan for the McDowell Mountain Preserve be updated to reflect the trails that have been added and those planned for the future since the document was originally adopted in 2004. In additon,the MMPC also is recommending that the trail recently connected to Scottsdale be designated as the ANDREWS - KINSEY TRAIL. This is to recognize the efforts of two individuals that have had a profound influence on each of the community's preserves. Risk Analysis (options or alternatives with implications):N/A Fiscal Impact (initial and ongoing costs;budget status):N/A Budget Reference (page number):N/A Funding Source:NA If Multiple Funds utilized,list here: Budgeted;if No,attach Budget Adjustment Form:NA Recommendation(s)by Board(s)or Commission(s):The McDowell Mountain Preservation Commission is recommending the adoption of the revisions to the trails in the Master Plan for the McDowell Mountain Preserve and the naming of the trail that connects with Scottsdale as the Andrews - Kinsey Trail. Staff Recommendation(s):Staff is recommending approval List Attachment(s):Information on the Andrews - Kinsey Trail from Sonoran Conservancy Co-Chair Steve Fleming and a revised trail map Page 1 of 2 SUGGESTED MOTION (for council use):Motion to APPROVE the Updated Master Plan for the McDowell Mountain Preserve and to designate the trail connecting with Scottsdale as the ANDREWS - KINSEY TRAIL Prepared by: NA 7/9/2014 Director's Approval: fs f,~-SX *C_/~\^N^^V^ Mark Mayer,Community Services Director V 7/22/2014 Approved:Approved:^-^^—. 4^Ljq&3<Q Ken Buchanan,Town Manager 7/30/2014 Page 2 of 2 5-12-2014 To: Mr. G. Bisceglia, Chairman McDowell Mountain Preservation Commission Re: Name style recommendation for new connector trail. Dear Mr. Bisceglia and Commissioners, As most of you know the new connector trail linking Scottsdale’s Sunrise Trail to our Western Loop Trail nears completion. Both our local conservancy and that of Scottsdale’s have sponsored individuals whose names we wish to be used in the trail name. Those persons are, Chet Andrews and Roy Kinsey. The name style presented is “The Andrews-Kinsey Trail”. Scottsdale has accepted this name style and now we the Sonoran Conservancy of Fountain Hills are recommending that you, the McDowell Mountain Preservation Commission do the same. Hopefully you all will find this name acceptable and representative of Fountain Hill’s acknowledgement of one of our preservation leaders. Respectfully submitted, Pam Cissik, Co-chairperson Steve Fleming, Co-chairperson Sonoran Conservancy of Fountain Hills 2004LEGENDCENTRALTRAILHEADFIREDEPT.EMERGENCYACCESSMcdowellmountainpreserveopenspaceconservationwalkingtrailspotentialconnectionfromscottsdalesonoranpreserveandMcdowellmountainparkinterpretivenaturetrailwithaccessforallfiredept.accesspublicaccess FH-MMP Preserve North Entry Connection To Scottsdale Trail System ^T 2014 Dixie Mine Trail Thompson Peak Road TOWN OF FOUNTAIN HILLS TOWN COUNCIL AGENDA ACTION FORM Meeting Date:8/7/2014 Meeting Type:Regular Session Agenda Type:Regular Submitting Department:Development Services Staff Contact Information:Paul Mood,Dev.Services Director,480-816-5129 Strategic Values:Council Goal: Maintain/Improve Community Infrastructure Not Applicable (NA) REQUEST TO COUNCIL (Agenda Language):CONSIDERATION of approval of Invitation For Bids DS2015-101 with Nesbitt Contracting Co., Inc. in the amount of $3,218,591.29 for the construction of the Shea Blvd.Widening project. Applicant:NA Applicant Contact Information:NA Property Location:Shea Blvd. from SR87 to Technology Dr. Related Ordinance,Policy or Guiding Principle:NA Staff Summary (background):The Invitation For Bids for the Shea Blvd.Widening project was advertised in the Fountain Hills Times and Arizona Business Gazette for two consecutive weeks per Arizona State Statute requirements.A mandatory prospective bidder's conference was held on July 8,2014.The project will widen Shea Blvd. to three lanes in each direction from Technology Dr. to State Route 87.The project will also include drainage structures,a new signal at Saguaro Blvd.and pavement replacement on Saguaro Blvd. to a location just north of Trevino Dr. The project is identified as one of the transportation capacity improvement projects in the Maricopa Association of Governments Arterial Life Cycle Program (MAG ALCP).The Proposition 400 half-cent transportation excise tax was approved by voters in 2004 and funds 70% of the project.The Town is responsible for funding the remaining 30% of the project.The work done on the east end of the project within the MCDOT right-of-way between the Town limit and State Route 87 will be paid from a $152,400 special projects grant received from MCDOT and is not included in the MAG ALCP reimbursement calculation. On July 22,2014 the Town received sealed bids from five contractors.The bids included a "base bid",owner's allowance and a bid alternate to upgrade from regular asphalt to rubberized asphalt on Shea Blvd.The bids received were as follows: $3,218,591.29 Nesbitt Contracting $3,247,898.05 Visus,Inc. $3,267,214.07 Markham Contracting $3,301,317.76 Blucor Contracting $3,336,306.17 Low Mountain Construction Page 1 of 2 It was determined that Nesbitt Contracting was the lowest responsive and responsible bidder meeting the requirements of the IFB for the base bid, bid alternate for rubberized asphalt and owner's allowance. Staff anticipates issuing a notice to proceed to the contractor with an effective date of August 25, 2014. The IFB provides for a 270 day construction schedule which results in a final completion date of May22,2015.Itis anticipated that the Saguaro Blvd.Improvements project will start construction in early 2015 so there will be a period where the two project schedules overlap. Risk Analysis (options or alternatives with implications): Fiscal Impact (initial and ongoing costs;budget status):$3,218,591.29 Budget Reference (page number):330 &331 Funding Source:NA if Multiple Funds utilized,list here:Prop 400,CIP Fund,Developer Contributions,Street Dev.Fees &MCDOT Grant Budgeted;if No,attach Budget Adjustment Form:na Recommendation(s)by Board(s)or Commission(s):NA Staff Recommendation(s):Staff recommends approval of IFB DS2015-101 as presented. List Attachment(s):IFB DS2015-101 SUGGESTED MOTION (for council use):MOTION to approve Invitation For Bids DS2015-101 with Nesbitt Contracting Co.,Inc.inthe amount of $3,218,591.29 forthe construction ofthe Shea Blvd.Widening project. Prepared by: NA 7729/2014 Director's Apprqyal: 7/29/2014 ipprcved:£L ft,en Buchanan,Town f\Ken Buchanan,Town Manager 7/29/2014 Pan 2 of 2 2169333.2 TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT INVITATION FOR BIDS SHEA BLVD. WIDENING Town of Fountain Hills 16705 East Avenue of the Fountains Fountain Hills, Arizona 85268 SOLICITATION INFORMATION AND SCHEDULE Solicitation Number: DS2015-101 Release Date: June 18, 2014 Advertisement Dates: June 18 & 25, 2014 – Fountain Hills Times June 19 & 26, 2014 – Arizona Business Gazette Final Date for Inquires July 10, 2014 MANDATORY Prospective Bidder’s Conference: July 8, 2014 10:00 a.m. (local time, Phoenix, Arizona) Fountain Hills Town Hall Council Chambers 16705 East Avenue of the Fountains Fountain Hills, Arizona 85268 Bid Deadline: July 21, 2014 3:00 p.m. (local time, Phoenix, Arizona) Bid Opening: July 21, 2014 3:00 p.m. (local time, Phoenix, Arizona) Town Representatives: Paul Mood, PMood@fh.az.gov In accordance with the Town of Fountain Hills Procurement Code, competitive sealed Bids for the services specified herein will be received by the Town Clerk at the Town Clerk’s Office at the above-referenced location until the date and time referenced above (the “Bid Deadline”). Bids received by the Bid Deadline shall be publicly opened and the Bid Price read. Bids shall be in the actual possession of the Town Clerk on, or prior to, the Bid Deadline date. Late Bids shall not be considered except as provided in the Town Procurement Code. Bids shall be submitted in a sealed envelope with the Solicitation Number and the Bidder’s name and address clearly indicated on the front of the envelope. There is no charge for the Plans and Specifications. Plans and Specifications may be obtained at the Town of Fountain Hills website: http://www.fh.az.gov/available-bids.aspx * The Town of Fountain Hills reserves the right to amend the solicitation schedule as necessary. TOWN OF FOUNTAIN HILLS DEVELOPMENT DEPARTMENT DS2015-101 OFFER The undersigned (the "Bidder")hereby offers this Bid as an offer to contract with the Town under the terms and conditions set forth below and certifies that Bidder has read, understands and agrees to fully comply with, and be contractually bound by, all tenns and conditions as set forth in this Invitation For Bids ("IFB"), the Contract formed hereby (as defined below) and any amendments thereto, together with all Exhibits, Specifications, Plans and other documents included as part of this Contract (the "Contract Documents"). Arizona Transaction (Sales)Privilege Tax License Number:07067062-P Federal Employer Identification Number:86-0174401 Nesbitt Contracting Co.,T.nc Contractor Name 100 S,Price Rd Address Tempe AZ 85281 City State Zip Code For Clarification of this Bid contact: Name:Mike Steg Telephone:480-423-7600 Facsimile:480-423-7680 Ernai 1:mikes@nesbitts.com Liithorized Signature for Contractor Jame's.Ll.Nesbitt Printed Name President Title ACCEPTANCE OF OFFER AND NOTICE OF AWARD (FOR TOWN OF FOUNTAIN HILLS USE ONLY) :^-7-WEffectiveDate .e^ois-io1^Contract No Official File: TOWN OF FOUNTAIN HILLS, an Arizona municipal corporation Kenneth W.Buchanan,Town Manager ATTEST: Bevelyn J.Mnder^Town Clerk 2169333.2 TO FORM Andrew J.McGuire,Town Attorney TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 1 ARTICLE I - DEFINITIONS For purposes of this Invitation for Bids, the following definitions shall apply: “Bid” or “Offer” means a responsive bid or quotation submitted by a Bidder in response to this IFB. “Bid Deadline” means the date and time set forth on the cover of this IFB for the Town Clerk to be in actual possession of the sealed Bids. “Bid Opening” means the date and time set forth on the cover of this IFB for opening of sealed Bids. “Bidder” means any person or firm submitting a competitive Bid in response to this IFB. “Confidential Information” means that portion of a Bid, proposal, Offer, Specification or protest that contains information that the person submitting the information believes should be withheld, provided (i) such person submits a written statement advising the Town of this fact at the time of the submission and (ii) the information is so identified wherever it appears. “Contract” means, collectively, the (i) Offer/Bid, (ii) this IFB, including all exhibits, (iii) the Notice of Award, (iv) the Notice to Proceed or Purchase Order(s), (v) any approved Addendum, Change Order or Amendment, (vi) the Contractor’s Certificates of Insurance and a copy of the Declarations Page(s) of the insurance policies, (vii) the Certificate of Completion and (viii) any Plans, Specifications, Geotechnical Reports or other documents attached, appended or incorporated herein by reference. “Contractor” means the individual, partnership, corporation or limited liability company who has submitted a Bid in response to this IFB and who, as a result of the competitive bidding process, is awarded a contract for Materials or Services by the Town. “Contract Time” means the time paid during which the Contractor must complete all of the Work related to the Project. “Days” means calendar days unless otherwise specified. “Engineer” means the Town Engineer or authorized designee. “Final Completion” shall be defined as set forth in Section 3.16 and shall occur not later than 30 Days from the date of Substantial Completion unless otherwise designated by the Engineer and subject to modification by changes in the Work as provided in Section 3.14 below. “Invitation for Bids” or “IFB” means this request by the Town for participation in the competitive bidding process according to all documents, including those attached or incorporated herein by reference, utilized for soliciting Bids for the Materials and/or Services in compliance with the Town’s Procurement Code. “MAG Specifications” means, collectively, the “Uniform Standard Specifications for Public Works Construction,” current edition as of the date of Contract award and the “Uniform Standard Details for Public Works Construction,” current edition as of the date of Contract award, which are sponsored and distributed by the Maricopa Association of Governments (“MAG”) and any amendments or supplements adopted by the Town. “MAG Supplement” means the most current edition of the Town of Fountain Hills Supplement to the MAG Uniform Standard Specifications and Details for Public Works Construction. “Materials” means any personal property, including equipment, materials, replacements and supplies provided by the Contractor in conjunction with the Contract and shall include, in addition to Materials incorporated in the Project, equipment and other material used and/or consumed in the performance of the Work. TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 2 “Multiple Award” means an award of an indefinite quantity contract for one or more similar products, commodities or Services to more than one Bidder. “Price” means the total expenditure for the defined Project, inclusive of all Materials, commodities or Services. “Procurement Administrator” means a Town employee, as designated on the cover of this IFB, who has specifically been designated to act as a contact person to the Bidders and/or Contractor relating to their IFB. “Procurement Agent” means the Town Manager or authorized designee. “Procurement Code” means the Town of Fountain Hills Procurement Code, as amended from time to time. “Project” means the purpose and Work described as set forth in Section 2.1, in the “Purpose/Scope of Work” of the IFB. “Punch List” means that list of items provided by Town to Contractor at the time of Substantial Completion indicating items to be completed or corrected, including the time for completion or correction by Contractor after Substantial Completion. “Services” means the furnishing of labor, time or effort by a Contractor, not involving the delivery of a specific end product other than reports which are merely incidental to the required performance and as further defined in the Contract. This term does not include “professional and technical services” as defined in the Procurement Code. “Specification” means any description of the physical characteristics, functional characteristics, or the nature of a commodity, product, supply or Services. The term may include a description of any requirements for inspecting, testing, or preparing a supply or service item for delivery. “Subcontractor” means those persons or groups of persons having a direct contract with the Contractor to perform a portion of the Work and those who furnish Materials according to the plans and/or Specifications required by this Contract. “Substantial Completion” shall be defined as set forth in Section 3.15 below and shall occur not later than the date set forth in the Schedule, subject to modification by changes in the Work as provided in Section 3.14 below. “Town” means the Town of Fountain Hills, an Arizona municipal corporation. “Town Representative” means the Town employee who has specifically been designated to act as a contact person to the Town’s Procurement Administrator, and who is responsible for monitoring and overseeing the Contractor’s performance under the Contract and for providing information regarding details pertaining to the Work. “Vendor” means any firms, entities or individuals desiring to prepare a responsive Bid in response to this IFB. “Work” means all labor, Materials and equipment incorporated or to be incorporated in the Project that are necessary to accomplish the construction required by this Contract. TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 3 ARTICLE II – BID PROCESS; BID AWARD 2.1 Purpose/Scope of Work. The Work included in this Project consists of roadway construction, mill and overlay of existing asphalt, sidewalk improvements, traffic signal improvements, traffic signal interconnect, drainage improvements, signage and striping, landscaping and other miscellaneous work as required. The Town is issuing this IFB is to secure a qualified General Contractor to perform the Work and provide Materials as more particularly described in the Specifications attached hereto as Exhibit A, and incorporated herein by reference. Bidders must submit Bids encompassing the entire Project, inclusive of the related Plans and/or Construction Drawings. Failure to do so may result in a determination that the Bid is non- responsive. 2.2 Amendment of IFB. Except as set forth in Section 3.56 below, no alteration may be made to this IFB or the resultant Contract without the express, written approval of the Town in the form of an official IFB addendum or Contract amendment. Any attempt to alter this IFB/Contract without such approval is a violation of this IFB/Contract and the Town Procurement Code. Any such action is subject to the legal and contractual remedies available to the Town including, but not limited to, Contract cancellation and suspension and/or debarment of the Bidder or Contractor. 2.3 Preparation/Submission of Bid. Bidders are invited to participate in the competitive bidding process for the Project specified in this IFB. Bidders shall review their Bid submissions to ensure the following requirements are met. A. Irregular/Non-responsive Bids. The Town will consider as “irregular” or “non- responsive” and shall reject any Bid not prepared and submitted in accordance with the IFB and Specifications, or any Bid lacking sufficient information to enable the Town to make a reasonable determination of compliance with the Specifications. Unauthorized or unreasonable exceptions, conditions, limitations, or provisions shall be cause for rejection. Bids may be deemed non-responsive at any time during the evaluation process if, in the sole opinion of the Procurement Agent, any of the following are true: 1. Bidder does not meet the minimum required skill, experience or requirements to perform the Work or provide the Materials. 2. Bidder has a past record of failing to fully perform or fulfill contractual obligations. 3. Bidder cannot demonstrate financial stability. 4. Bid submission contains false, inaccurate or misleading statements that, in the opinion of the Procurement Agent, are intended to mislead the Town in its evaluation of the Bid. B. Specification Minimums. Bidders are reminded that the Specifications in this IFB are the minimum levels required and that Bids submitted must be for products that meet or exceed the minimum level of all features specifically listed in this IFB. Bids offering less than the minimums specified will be deemed not responsive. It shall be the Bidder’s responsibility to carefully examine each item listed in the Specifications. C. Required Submittal. Bidders shall provide all of the following documents to be considered a responsive Bid: 1. Complete, fully executed original of this IFB, with the Offer signed in ink by a person authorized to bind the Bidder. 2. Price Sheet. 3. Bid Bond. TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 4 4. Licenses; /DBE & MBE Status. 5. References. 6. Federal Requirements, if applicable. 7. Acknowledgment for each Addendum received, if any. D. Bidder Responsibilities. All Bidders shall (1) examine the entire Bid package, (2) seek clarification of any item or requirement that may not be clear, (3) check all responses for accuracy before submitting a Bid and (4) submit the entire, completed Bid package by the official Bid Deadline. Late Bids shall not be considered. Bids not submitted with an original, signed Offer page by a person authorized to bind the Bidder shall be considered non-responsive. Negligence in preparing a Bid shall not be good cause for withdrawal after the Bid Deadline. E. Sealed Bids. All Bids shall be sealed and clearly marked with the IFB title and number on the lower left hand corner of the mailing envelope. A return address must also appear on the outside of the sealed Bid. F. Address. All Bids shall be directed to the following address: Town Clerk, 16705 East Avenue of the Fountains, Fountain Hills, Arizona 85268, or hand-delivered to the Town Clerk’s office. G. Bid Forms. All Bids shall be on the forms provided in this IFB. It is permissible to copy these forms if required. Telegraphic (facsimile), electronic (email) or mailgram Bids will not be considered. H. Modifications. Erasures, interlineations, or other modifications in the Bid shall be initialed in original ink by the authorized person signing the Bid. I. Withdrawal. At any time prior to the specified Bid Opening, a Bidder (or designated representative) may amend or withdraw its Bid. Facsimile, electronic (email) or mailgram Bid amendments or withdrawals will not be considered. No Bid shall be altered, amended or withdrawn after the specified Bid Deadline, unless otherwise permitted pursuant to the Town Procurement Code. 2.4 Inquiries; Interpretation of Plans, Specifications and Drawings. A. Inquiries. Any question related to the IFB, including any part of the Plans, Specifications, Scope of Work or other Contract Documents, shall be directed to the Town Representative and Procurement Administrator whose names appear on the cover page of this IFB. Questions shall be submitted in writing by the date indicated on the cover page of this IFB; the Town will not respond to any inquiries submitted later than the Final Date for Inquiries. The Vendor submitting such inquiry will be responsible for its prompt delivery to the Town. Any correspondence related to the IFB shall refer to the title and number, page and paragraph. However, the Bidder shall not place the IFB number and title on the outside of any envelope containing questions, because such an envelope may be identified as a sealed Bid and may not be opened until the Bid Opening. Any interpretations or corrections of the proposed Contract Documents will be made only by addenda duly approved and issued by the Town. The Town will not be responsible for any other explanations or interpretations of the Contract Documents. B. Addenda. It shall be the Bidder’s responsibility to check for addenda issued to this IFB. Any addendum issued by the Town with respect to this IFB will be available at: Town of Fountain Hills Town Hall, 16705 East Avenue of the Fountains, Fountain Hills, Arizona 85268 Town of Fountain Hills website at: www.fh.az.gov/for-business.aspx TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 5 C. Approval of Substitutions. The Materials, products, and equipment described in this IFB establish a standard or required function, dimension, appearance and quality to be met by any proposed substitution. No substitute will be considered unless written Substitution/Equal Request in the form attached hereto as Exhibit B, has been received by the Town Representative at least ten days prior to the Bid Deadline. Each such request shall include the name of the Material or equipment for which it is to be substituted and a complete description of the proposed substitute, including any drawings, performance and test data and any other information necessary for evaluation of the substitute. If a substitute is approved, the approval shall be by written addendum to the IFB. Bidder shall not rely upon approvals made in any other manner. D. Use of Equals. When the Specifications for materials, articles, products and equipment include the phrase “or equal,” Bidder may bid upon and use materials, articles, products and equipment that will perform equally the requirements imposed by the general design. The Engineer will have the final approval of all materials, articles, products and equipment proposed to be used as an “equal.” No such “equal” shall be purchased or installed without prior, written approval from the Engineer. No “equal” will be considered unless a written Substitution/Equal Request, in the form attached hereto as Exhibit B, has been received by the Town Representative at least ten days prior to the Bid Deadline. The request shall include the name of the material or equipment for which the item is sought to be considered an equal and a complete description of the proposed equal including any drawings, cuts, performance and test data and any other information necessary for evaluation of the equal. All approval of equals shall be issued in the form of written addendum or amendment, as applicable, to this IFB or the Contract. E. Bid Quantities. It is expressly understood and agreed by the parties hereto that the quantities of the various classes of Services and/or Materials to be furnished under this Contract, which have been estimated as stated in the Bidders’ Offer, are only approximate and are to be used solely for the purpose of comparing, on a consistent basis, the Bidders’ Offers presented for the Work under this Contract. The selected Contractor agrees that the Town shall not be held responsible if any of the quantities shall be found to be incorrect and the Contractor will not make any claim for damages or for loss of profits because of a difference between the quantities of the various classes of Services and/or Materials as estimated and the Services and/or Materials actually provided. Contractor is responsible for ensuring that all Materials contained in the Plans for the project are bid on the Price Sheet. Contractor shall bring any potential discrepancy between the Plans and the Price Sheet to the Town’s attention, either at the Prospective Bidders’ Conference or by written inquiry, as set forth in Subsection 2.4(A) above. If any error, omission or misstatement is found to occur, the same shall not (1) invalidate the Contract or the whole or any part of the Scope of Work, (2) excuse Contractor from any of the obligations or liabilities hereunder or (3) entitle Contractor to any damage or compensation except as may be provided in this Contract. 2.5 Prospective Bidders’ Conference. A Prospective Bidders’ Conference may be held. If scheduled, the date and time of the Prospective Bidders’ Conference will be indicated on the cover page of this IFB. The Prospective Bidders’ Conference may be designated as mandatory or non-mandatory on the cover of this IFB. Bids shall not be accepted from Bidders who do not attend a mandatory Prospective Bidders’ Conference. Bidders are strongly encouraged to attend those Prospective Bidder’s Conferences designated as non-mandatory. The purpose of the Prospective Bidders’ Conference will be to clarify the contents of the IFB in order to prevent any misunderstanding of the Town’s requirements. Any doubt as to the requirements of this IFB or any apparent omission or discrepancy should be presented to the Town at the Prospective Bidders’ Conference. The Town will then determine if any action is necessary and may issue a written amendment or addendum to the IFB. Oral statements or instructions will not constitute an amendment or addendum to the IFB. 2.6 New Materials. All Materials to be provided by the Contractor and included in the Bid shall be new, unless otherwise stated in the Specifications. 2.7 Prices. Work shall be performed at the unit prices as set forth in the Price Sheet attached hereto as Exhibit C and incorporated herein by reference. Bid prices shall be submitted on a per unit basis by line item, TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 6 when applicable and include all applicable sales tax. In the event of a disparity between the unit price and extended price, the unit price shall prevail. NOTE: All pricing blanks must be filled in. Empty or unfilled spaces in the Bid Price Sheet shall result in a determination that a Bid is non-responsive. 2.8 Allowances. Allowances, if any, shall be clearly set forth on the Price Sheet. Allowances shall cover the cost to the Contractor (less any applicable trade discount) of the Materials including equipment required by the Allowance, delivered at the site, and all applicable taxes, overhead, profit handling and other general conditions costs, unless unit rates are available in the Price Sheet. Unit rates from the Price Sheet shall be used to determine the cost of a change to be paid from an Allowance, when applicable. Any remaining Allowance amount shall be returned to the Town at the end of the Project by deductive change order. 2.9 Payment; Discounts. Any Bid that requires payment in less than 30 Days shall not be considered. Payment discounts of 30 Days or less will not be deducted from the Bid Price in determining the low Bid. The Town shall be entitled to take advantage of any payment discount offered, provided payment is made within the discount period. Payment discounts shall be indicated on Price Sheet. 2.10 Taxes. The Town is exempt from Federal Excise Tax, including the Federal Transportation Tax. Sales tax, if any, shall be indicated as a percentage and set forth as a separate item. It shall not be considered a lump sum payment item. It is the sole responsibility of the Bidder to determine any applicable State tax rates and calculate the Bid accordingly. When calculating the tax on the Bid, the Bidder should not include tax on any allowances. Failure to accurately tabulate any applicable taxes may result in a determination that a Bid is non-responsive. The Bidder shall not rely on, and shall independently verify, any tax information provided by the Town. 2.11 Federal Funding. It is the responsibility of the Bidder to verify and comply with federal requirements that may apply to the Work (the “Federal Requirements”). It is also the responsibility of the Bidder to incorporate any necessary amounts in the Bid to accommodate for required federal record-keeping, necessary pay structures or other matters related to the Federal Requirements. Federal Requirements, if any, shall be attached hereto as Exhibit D. In addition to any applicable Federal Requirements, this procurement is subject to a number of state and Town regulations. In general, where these rules conflict, the more stringent law or rule applies. 2.12 Cost of Bid/Proposal Preparation. Bids submitted for consideration should be prepared simply and economically, providing adequate information in a straightforward and concise manner. The Town does not reimburse the cost of developing, presenting or providing any response to this solicitation; the Bidder is responsible for all costs incurred in responding to this IFB. All materials and documents submitted in response to this IFB become the property of the Town and will not be returned. 2.13 Public Record. All Bids shall become the property of the Town. After Contract award, Bids shall become public records and shall be available for public inspection in accordance with the Town’s Procurement Code, except that any portion of a Bid that was designated as confidential pursuant to Section 2.14 below shall remain confidential from and after the time of Bid opening to the extent permitted by Arizona law. 2.14 Confidential Information. If a Vendor/Bidder believes that a Bid, Specification, or protest contains information that should be withheld from the public record, a statement advising the Procurement Agent of this fact shall accompany the submission and the information shall be clearly identified. The information identified by the Vendor or Bidder as confidential shall not be disclosed until the Procurement Agent makes a written determination. The Procurement Agent shall review the statement and information with the Town Attorney and shall determine in writing whether the information shall be withheld. If the Town Attorney determines that it is proper to disclose the information, the Procurement Agent shall inform the Vendor or Bidder in writing of such determination. 2.15 Vendor Licensing and Registration. Prior to the award of the Contract, the successful Bidder shall (A) be registered with the Arizona Corporation Commission and authorized to do business in Arizona and (B) have TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 7 a completed Request for Vendor Number on file with the Town Financial Services Department. Bidders shall provide license and certification information with the Bid, attached as Exhibit E and incorporated herein by reference. Upon the Town’s request, corporations, limited liability companies, partnerships or other entities shall provide Certificates of Good Standing from the Arizona Corporation Commission. 2.16 Bidder Qualifications. A. Experience and References. Bidder must demonstrate successful completion of at least three similar projects within the past 60 months, one of which must have a dollar value of at least 75% of the total bid for this Project as set forth in the Price Sheet, attached as Exhibit C. Total bid price does not include any Town allowances identified. For the purpose of this Solicitation, “successful completion” means completion of a project within the established schedule and budget and “similar projects” resemble this Project in size, nature and scope. References for these three projects shall be listed on the sheet attached hereto as Exhibit F and incorporated herein by reference. These references will be checked, and it is Bidder’s responsibility to ensure that all information is accurate and current. Bidder authorizes the Town’s representative to verify all information from these references and releases all those concerned from any liability in connection with the information they provide. B. Investigation. The Town’s representative may conduct any investigation deemed necessary to determine the Bidder’s ability to perform the Work in accordance with the Contract Documents. The three lowest Bidders may be requested to submit the following documentation within 72 hours to assist the Town in its evaluation: 1. Evidence of loss history and underwriting criteria. 2. Bidder’s safety program. 3. CPA-certified audits for the past three fiscal years of operations. 4. Similar documents deemed necessary by the Town. 2.17 Certification. By submitting a Bid, the Bidder certifies: A. No Collusion. The submission of the Bid did not involve collusion or other anti- competitive practices. B. No Discrimination. It shall not discriminate against any employee or applicant for employment in violation of Federal Executive Order 11246. C. No Gratuity. It has not given, offered to give, nor intends to give at any time hereafter, any economic opportunity, future employment, gift, loan, gratuity, special discount, trip favor or service to a Town employee, officer, agent or elected official in connection with the submitted Bid or a resultant Contract. In the event that the resultant Contract is canceled pursuant to this provision, the Town shall be entitled, in addition to any other rights and remedies, to recover and withhold from the Contractor an amount equal to 150% of the gratuity. D. Financial Stability. It is financially stable, solvent and has adequate cash reserves to meet all financial obligations including any potential costs resulting from an award of the Contract. E. No Signature/False Statement. The signature on the Bid is genuine. Failure to sign the Bid, or signing it with a false statement, shall void the submitted Bid and any resulting Contract and the Bidder may be debarred from further bidding in the Town. TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 8 2.18 Bid Bond. All Vendors desiring to prepare a responsive Bid shall submit a non-revocable bid security payable to the Town in the amount of ten percent (10%) of the total Bid Price. This security shall be in the form of a bid bond, certified check or cashier’s check and must be in the possession of the Town Representative by the Bid Deadline. All bid security from Contractor(s) who have been issued a Notice of Award shall be held until the successful execution of all required Contract Documents and bonds. If the Contractor fails to execute the required contractual documents and bonds within the time specified, or ten Days after Notice of Award if no period is specified, the Contractor may be found to be in default and the Contract terminated by the Town. In case of default, the Town reserves all rights inclusive of, but not limited to, the right to purchase material and/or to complete the Work and to recover any actual excess costs associated with such completion from the Contractor. All bid bonds shall be executed in the form attached hereto as Exhibit G, duly executed by the Bidder as Principal and having as Surety thereon a Surety company holding a Certificate of Authority from the Arizona Department of Insurance to transact surety business in the State of Arizona. Individual sureties are unacceptable. All insurers and sureties shall have, at the time of submission of the proposal, an A.M. Best’s Key Rating Guide of “A-” or better as currently listed in the most recent Best Key Guide, published by the A.M. Best Company. As soon as is practicable after the completion of the evaluation, the Town will (A) issue a Notice of Award for those Offers accepted by the Town and (B) return all checks or bonds to those Bidders who have not been issued a Notice of Award. 2.19 Award of Contract. A. Multiple Award. The Town may, at its sole discretion, accept Bidder’s Offer as part of a Multiple Award. B. Evaluation. The evaluation of this Bid will be based on, but not limited to, the following: (1) compliance with Specifications, (2) Price, including alternates, if any and (3) Bidder qualifications to perform the Work. C. Waiver, Rejection, Reissuance. Notwithstanding any other provision of this IFB, the Town expressly reserves the right to: (1) waive any immaterial defect or informality, (2) reject any or all Bids or portions thereof and (3) cancel or reissue an IFB. D. Offer. A Bid is a binding offer to contract with the Town based upon the terms, conditions and Specifications contained in this IFB and the Bidder’s responsive Bid, unless any of the terms, conditions, or Specifications are modified by a written addendum or Contract amendment. Bids become binding Contracts when the Acceptance of Offer and Notice of Award is executed in writing by the Town. Bidder Offers shall be valid and irrevocable for 90 days after the Bid Opening. E. Protests. Any Bidder may protest this IFB, the proposed award of a Contract, or the actual award of a Contract. All protests will be considered in accordance with the process set forth by the Town Manager or qualified designee. ARTICLE III – GENERAL TERMS AND CONDITIONS PART A - GENERAL 3.1 Reference Standards. The Contractor shall perform the Work required in conformance with MAG Specifications and the MAG Supplement, each of which is incorporated herein by reference. In the event of a conflict between the MAG Specifications and the MAG Supplement, the MAG Supplement shall prevail. 3.2 Plans and Specifications to Successful Contractor. The successful Contractor shall print their own Plans and Specifications for this Project. TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 9 3.3 Contract Time. The Contract Time for this Project shall be 270 days from the Notice to Proceed. All Work on the Project shall be completed on or before the expiration of the Contract Time. 3.4 Pre-Construction Conference. Within 30 days of the issuance of the Notice of Award, the Contractor shall attend a pre-construction conference. The Town will contact the Contractor to schedule a specific date, time and location for the pre-construction conference. The purpose of this conference is to outline specific items and procedures and to address items that require special attention on the part of the Contractor. The Contractor may also present proposed variations in procedures that the Contractor believes may (A) improve the Project, (B) reduce cost or (C) reduce inconvenience to the public. Any necessary coordination and procedures for construction inspection and staking will be addressed during the pre-construction conference. The Contractor will be required to provide the following items at, or prior to, the pre-construction conference, each of which is subject to review and approval by the Engineer: A. Key Personnel; Subcontractors. A list of the names and emergency telephone numbers of all proposed Key Personnel, Subcontractors and suppliers that the Contractor intends to utilize on the Project, in the form attached hereto as Exhibit H and incorporated herein by reference. The term “Key Personnel” means individuals who will be directly assigned to this Project and includes, but is not limited to, the owner, principals, project manager, project superintendent, scheduler, construction engineer and supervisory personnel. At least two of the Bidder’s Key Personnel must have a minimum of three years’ experience in similar projects (defined above) and the scheduler must have experience in employing scheduling techniques appropriate for this Project. Resumes of Key Personnel shall be submitted upon request by the Town’s representative. Proposed Subcontractors shall be qualified and have the requisite professional or technical licenses and be licensed to do business in the State of Arizona. The list shall include such information on the professional background of each of the assigned key individuals as may be requested by the Town Representative. Such key personnel and Subcontractors shall be satisfactory to the Engineer and shall not be changed except with the consent of the Engineer. Additionally, the Engineer shall have the right to request that the Contractor personnel and Subcontractors be removed from the Project if, in the Engineer’s sole discretion, such personnel or Subcontractor(s) are detrimental to the Project delivery process. Upon receipt of such request, the Contractor shall remove such personnel or Subcontractor(s) unless the Contractor can provide the Town with sufficient documentation to prove it is commercially impractical to replace the personnel or Subcontractor(s) with substitute personnel possessing similar qualifications. The Engineer’s approval of substituted personnel or Subcontractor(s) shall not be unreasonably withheld. B. Progress Schedule. A construction progress schedule showing the estimated time for start and completion of the major items of Work. C. Payment Schedule. A payment schedule showing the estimated dollar volume of Work for each calendar month during the life of the Project. D. Traffic Control. A written proposal outlining the intended plans for traffic control and for maintaining continuous access to residences and businesses along the construction site. E. Site Security. A written proposal outlining the intended plans to secure the Project site for public safety and security. F. Drawings, Materials & Equipment. An itemized list of all required shop drawings, material and equipment submittals and a schedule indicating the dates each of these items will be transmitted to the Town for review. 3.5 Notice to Proceed. Within 45 days of the issuance of the Notice of Award the Town may issue a written Notice to Proceed. The Notice to Proceed shall stipulate the actual Contract start date, the Contract Time and the dates of Substantial Completion and Final Completion. The time required for the Contractor to obtain permits, licenses and easements shall be included in the Contract Time and shall not be justification for a delay TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 10 claim by the Contractor. The time required for the Contractor to prepare, transmit and obtain approval of applicable submittals shall be included in the Contract Time and shall not be justification for a delay claim by the Contractor. No Work shall be started until after all required permits, licenses, and easements have been obtained. The Contractor shall notify the Engineer, in writing, at least 72 hours before the following events: A. Commencement. The start of construction. B. Services Shut Down. Shutdown of water, sewer, drainage, irrigation and/or traffic control facilities, including the anticipated length of time for each shut down. C. Well or Pump Shut Down. Shutdown of existing water wells and booster pumps. Such shutdown shall not exceed 72 hours of any facility and only one facility may be shutdown at any one time. Shutdowns shall be coordinated with proper utility agency/company. D. Water Lines. All draining and filling of water lines and irrigation laterals and all operations of existing valves or gauges, which shall also be coordinated with the proper utility agency/company. E. Start-up and Testing. Start-up or testing of any water well or booster pump to be connected to any part of the existing water system. This includes operation of existing valves necessary to accommodate the water. 3.6 Laws and Regulations. The Contractor shall keep fully informed of all rules, regulations, ordinances, statutes or laws affecting the Work herein specified, including existing and future (A) Town and County ordinances and regulations, (B) State and Federal laws and (C) Occupational Safety and Health Administration (“OSHA”) standards. 3.7 Rights-of-Way. The Contractor shall obtain a right-of-way permit for any of the Work completed in the public right-of-way. The Contractor will be responsible for any required Maricopa County, ADOT, or other agency permits. The Town will provide any necessary easements for Work specified under this Contract, and the Contractor shall not enter or occupy with workers, tools, equipment or materials any private ground outside the property of the Town without the written consent of the owner thereof. The Contractor, at its own expense, is responsible for the acquisition of any additional easements or rights-of-way. 3.8 Inspection, Safety and Compliance. Each Contractor must inform itself fully of the conditions relating to the construction of the Project and the employment of labor thereon. Failure to do so will not relieve the Contractor of its obligation to furnish all material and labor necessary to carry out the provisions of this Contract. Insofar as possible in carrying out its work, the Contractor must employ such methods or means as will not cause any interruption of or interference with the Work of any other contractor. Contractor affirms that it has inspected the jobsite and has thoroughly reviewed the Contract including, without limitation, the Specifications listed on Exhibit A, as the same may be revised by the Town, and is not relying on any opinions or representations of Town. Contractor agrees to perform and complete such Work in strict accordance with the Contract and under the general direction of the Town. Contractor agrees that any exclusions of any Work must be approved in writing by the Town prior to acceptance of this Contract or same shall not be excluded hereunder. Contractor is responsible for all safety precautions and programs and shall provide all protection and necessary supervision to implement said precautions and programs. Contractor shall take all reasonable precautions for the safety of and provide reasonable protection to prevent damage, injury or loss to: (A) Town personnel and members of the public, (B) employees or others on the Project, (C) the Work and materials and (D) other property at the Project or adjacent thereto. Contractor shall designate a responsible person on the Project whose duty shall be prevention of accidents. Contractor shall provide all competent supervision necessary to execute all Work and any Work incidental thereto in a thorough, first-class, workmanlike manner. It is Contractor’s responsibility that all of the Work and any Work incidental thereto conforms to, and is performed in accordance with, all applicable Federal, State, County and Town laws, codes, ordinances, regulations (including National Pollutant Discharge Elimination System and air pollution standards) and orders of public authorities bearing on performance of the Work. TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 11 3.9 Traffic Regulations. All traffic affected by the Work under this Contract shall be regulated in accordance with the then-current version of the City of Phoenix-Traffic Barricade Manual (the “Barricade Manual”) which is incorporated herein by reference; provided, however, that this Contract shall govern in a conflict with the terms of the Barricade Manual. At the time of the pre-construction conference, the Contractor shall designate an employee who is well qualified and experienced in construction traffic control and safety to be responsible for implementing, monitoring and altering traffic control measures, as necessary. At the same time, the Town will designate a representative who will be responsible to see that all traffic control and any alterations are implemented and monitored to the extent that traffic is carried through the Work area in an effective manner and that motorists, pedestrians, bicyclists and workers are protected from hazard and accidents. A. Major Streets. The following shall be considered major streets: All major parkway, mile (section line), arterial and collector (mid-section line and quarter section line) streets so classified by the Town. B. Traffic Control Devices. All traffic control devices required for the Work under this Contract shall be the responsibility of the Contractor. The Contractor shall place advance warning signs (such as REDUCE SPEED, LOOSE GRAVEL, 25 MPH SPEED LIMIT and DO NOT PASS) in accordance with the Barricade Manual. The Contractor shall provide, erect and maintain all necessary flashing arrow boards, barricades, suitable and sufficient warning lights, signals and signs and shall take all necessary precautions for the protection of the Work and safety of the public. The Contractor shall provide, erect and maintain acceptable and adequate detour signs at all closures and along detour routes. All barricades and obstructions shall be illuminated at night, and all safety lights shall be illuminated from sunset until sunrise. All barricades and signs used by the Contractor shall conform to the standard design generally accepted for such purposes and payment for all such services and materials shall be considered as included in the other pay items of the Contract. C. Existing Signs. The Contractor shall ensure that all existing traffic signs are erect, clean and in full view of the intended traffic at all times. Street name signs at major street intersections shall be maintained erect at all times. If these signs should interfere with construction, the Contractor shall notify the Engineer, in writing, at least 48 hours in advance for Town personnel to temporarily relocate or cover said signs. The Engineer will direct the Contractor as to the correct positions to re-set all traffic and street name signs to permanent locations when notified by the Contractor that the interfering construction is complete. D. Manual Traffic Control. Manual traffic control shall be in conformity with the Barricade Manual, except that the designated liaison officer shall be contacted at the Maricopa County Sheriff’s Office, District 7. When construction activities or traffic hazards at the construction site require the use of flagmen, it shall be the Contractor’s responsibility to provide trained flagmen to direct traffic safely. When traffic hazards at construction sites warrant the use of certified police personnel to direct traffic, arrangements must be made with the liaison officer at the Maricopa County Sheriff’s Office, District 7. E. Contractor Equipment. The assembly and turnarounds of the Contractor’s equipment shall be accomplished using adjacent local streets when possible. Equipment used and/or directed by the Contractor shall travel with traffic at all times. Supply trucks shall travel with traffic except when being spotted. Contractor shall provide a flagman or off-duty, uniformed Sheriff’s Deputy to assist with spotting. F. Traffic Alterations. During construction, it may be necessary to alter traffic control. Any such alterations shall be in accordance with the Barricade Manual. No street within the Project area may be closed to through traffic or to local emergency traffic without prior, written approval of the Engineer. Written approval may be given if sufficient time exists to allow for notification of the public at least 72 hours in advance of such closing. Partial closure of streets within the Project shall be done in strict conformity with the Barricade Manual and the Engineer’s written directions. G. Intersections. Caution should be used when excavating near intersections with traffic signal underground cable. Contractor shall notify the Engineer, in writing, 24 hours in advance of any Work at TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 12 such intersections. The Contractor shall install and maintain temporary overhead traffic signal cable as specified by the Engineer when underground conduit is to be severed by excavations at intersections. The Contractor shall provide an off-duty, uniformed Sheriff’s Deputy to direct traffic while the traffic signal is turned off and the wiring is transferred. All damaged or modified traffic signal overhead and underground items shall be repaired and restored to the Engineer’s satisfaction. Magnetic detector loops shall, under no circumstances, be spliced. H. Adjacent Property Access. The Contractor shall maintain access to all businesses, schools and residences along the Project alignment at all times in accordance with the MAG Supplement, Section 107.7.1 (Access). I. Covered Crossings. Where crossings of existing pavement occurs, no open trenches shall be permitted overnight, but plating may be permitted if conditions allow, as determined by the Engineer in his sole discretion. If plates cannot be used, crossings shall either be back-filled or the Contractor shall provide a detour. 3.10 Indemnification. To the fullest extent permitted by law, the Contractor shall indemnify and hold harmless the Town and each council member, officer, employee or agent thereof (the Town and any such person being herein called an “Indemnified Party”), for, from and against any and all losses, claims, damages, liabilities, costs and expenses (including, but not limited to, reasonable attorneys’ fees, court costs and the costs of appellate proceedings) to which any such Indemnified Party may become subject, under any theory of liability whatsoever (“Claims”) to the extent that such Claims (or actions in respect thereof) are caused by the negligent acts, recklessness or intentional misconduct of the Contractor, its officers, employees, agents, or any tier of subcontractor in connection with Contractor’s work or services in the performance of this Agreement. The amount and type of insurance coverage requirements set forth below will in no way be construed as limiting the scope of the indemnity in this Section. 3.11 Insurance. A. General. 1. Insurer Qualifications. Without limiting any obligations or liabilities of Contractor, Contractor shall purchase and maintain, at its own expense, hereinafter stipulated minimum insurance with insurance companies authorized to do business in the State of Arizona pursuant to ARIZ. REV. STAT. § 20-206, as amended, with an AM Best, Inc. rating of A- or above with policies and forms satisfactory to the Town. Failure to maintain insurance as specified herein may result in termination of this Contract at the Town’s option. 2. No Representation of Coverage Adequacy. By requiring insurance herein, the Town does not represent that coverage and limits will be adequate to protect Contractor. The Town reserves the right to review any and all of the insurance policies and/or endorsements cited in this Contract but has no obligation to do so. Failure to demand such evidence of full compliance with the insurance requirements set forth in this Contract or failure to identify any insurance deficiency shall not relieve Contractor from, nor be construed or deemed a waiver of, its obligation to maintain the required insurance at all times during the performance of this Contract. 3. Additional Insured. All insurance coverage and self-insured retention or deductible portions, except Workers’ Compensation insurance and Professional Liability insurance, if applicable, shall name, to the fullest extent permitted by law for claims arising out of the performance of this Contract, the Town, its agents, representatives, officers, directors, officials and employees as Additional Insured as specified under the respective coverage sections of this Contract. A separate certificate of insurance naming MCO Properties, Inc. as an additional insured shall be required for the work to be competed on its property located at 9617 N. Saguaro Blvd. TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 13 4. Coverage Term. All insurance required herein shall be maintained in full force and effect until all Work or Services required to be performed under the terms of this Contract are satisfactorily performed, completed and formally accepted by the Town, unless specified otherwise in this Contract. 5. Primary Insurance. Contractor’s insurance shall be primary insurance with respect to performance of this Contract and in the protection of the Town as an Additional Insured. 6. Claims Made. In the event any insurance policies required by this Agreement are written on a “claims made” basis, coverage shall extend, either by keeping coverage in force or purchasing an extended reporting option, for three years past completion and acceptance of the services. Such continuing coverage shall be evidenced by submission of annual Certificates of Insurance citing applicable coverage is in force and contains the provisions as required herein for the three-year period. 7. Waiver. All policies, except for Professional Liability, including Workers’ Compensation insurance, shall contain a waiver of rights of recovery (subrogation) against the Town, its agents, representatives, officials, officers and employees for any claims arising out of the Work or Services of Contractor. Contractor shall arrange to have such subrogation waivers incorporated into each policy via formal written endorsement thereto. 8. Policy Deductibles and/or Self-Insured Retentions. The policies set forth in these requirements may provide coverage that contains deductibles or self-insured retention amounts. Such deductibles or self-insured retention shall not be applicable with respect to the policy limits provided to the Town. Contractor shall be solely responsible for any such deductible or self-insured retention amount. 9. Use of Subcontractors. If any Work under this Contract is subcontracted in any way, Contractor shall execute written agreement with its Subcontractors containing the indemnification provisions set forth in this Section and insurance requirements set forth herein protecting the Town and Contractor. Contractor shall be responsible for executing any agreements with its Subcontractor and obtaining certificates of insurance verifying the insurance requirements. 10. Evidence of Insurance. Prior to commencing any Work or Services under this Contract, Contractor will provide the Town with suitable evidence of insurance in the form of certificates of insurance and a copy of the declaration page(s) of the insurance policies as required by this Contract, issued by Contractor’s insurance insurer(s) as evidence that policies are placed with acceptable insurers as specified herein and provide the required coverages, conditions and limits of coverage specified in this Contract and that such coverage and provisions are in full force and effect. Confidential information such as the policy premium may be redacted from the declaration page(s) of each insurance policy, provided that such redactions do not alter any of the information required by this Contract. The Town shall reasonably rely upon the certificates of insurance and declaration page(s) of the insurance policies as evidence of coverage but such acceptance and reliance shall not waive or alter in any way the insurance requirements or obligations of this Contract. If any of the policies required by this Contract expire during the life of this Contract, it shall be Contractor’s responsibility to forward renewal certificates and declaration page(s) to the Town 30 days prior to the expiration date. All certificates of insurance and declarations required by this Contract shall be identified by referencing this Contract. A $25.00 administrative fee shall be assessed for all certificates or declarations received without a reference to this Contract. Additionally, certificates of insurance and declaration page(s) of the insurance policies submitted without referencing this Contract will be subject to rejection and may be returned or discarded. Certificates of insurance and declaration page(s) shall specifically include the following provisions: a. The Town, its agents, representatives, officers, directors, officials and employees are Additional Insureds as follows: TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 14 (i) Commercial General Liability - Under Insurance Services Office, Inc., (“ISO”) Form CG 20 10 03 97 or equivalent. (ii) Auto Liability - Under ISO Form CA 20 48 or equivalent. (iii) Excess Liability - Follow Form to underlying insurance. b. Contractor’s insurance shall be primary insurance with respect to performance of the Contract. c. All policies, except for Professional Liability, including Workers’ Compensation, waive rights of recovery (subrogation) against Town, its agents, representatives, officers, officials and employees for any claims arising out of Work or Services performed by Contractor under this Contract. d. ACORD certificate of insurance form 25 (2014/01) is preferred. If ACORD certificate of insurance form 25 (2001/08) is used, the phrases in the cancellation provision “endeavor to” and “but failure to mail such notice shall impose no obligation or liability of any kind upon the company, its agents or representatives” shall be deleted. Certificate forms other than ACORD form shall have similar restrictive language deleted. B. Required Insurance Coverage. 1. Commercial General Liability. Contractor shall maintain “occurrence” form Commercial General Liability insurance with an unimpaired limit of not less than $1,000,000 for each occurrence, $2,000,000 Products and Completed Operations Annual Aggregate and a $2,000,000 General Aggregate Limit. The policy shall cover liability arising from premises, operations, independent contractors, products-completed operations, personal injury and advertising injury. Coverage under the policy will be at least as broad as ISO policy form CG 00 010 93 or equivalent thereof, including but not limited to, separation of insured’s clause. To the fullest extent allowed by law, for claims arising out of the performance of this Contract, the Town, its agents, representatives, officers, officials and employees shall be cited as an Additional Insured under ISO, Commercial General Liability Additional Insured Endorsement form CG 20 10 03 97, or equivalent, which shall read “Who is an Insured (Section II) is amended to include as an insured the person or organization shown in the Schedule, but only with respect to liability arising out of “your work” for that insured by or for you.” If any Excess insurance is utilized to fulfill the requirements of this subsection, such Excess insurance shall be “follow form” equal or broader in coverage scope than underlying insurance. 2. Vehicle Liability. Contractor shall maintain Business Automobile Liability insurance with a limit of $1,000,000 each occurrence on Contractor’s owned, hired and non-owned vehicles assigned to or used in the performance of the Contractor’s Work or Services under this Contract. Coverage will be at least as broad as ISO coverage code “1” “any auto” policy form CA 00 01 12 93 or equivalent thereof. To the fullest extent allowed by law, for claims arising out of the performance of this Contract, the Town, its agents, representatives, officers, directors, officials and employees shall be cited as an Additional Insured under ISO Business Auto policy Designated Insured Endorsement form CA 20 48 or equivalent. If any Excess insurance is utilized to fulfill the requirements of this subsection, such Excess insurance shall be “follow form” equal or broader in coverage scope than underlying insurance. 3. Professional Liability. If this Contract is the subject of any professional Services or Work, or if the Contractor engages in any professional Services or Work adjunct or residual to performing the Work under this Contract, the Contractor shall maintain Professional Liability insurance covering negligent errors and omissions arising out of the Services performed by the Contractor, or anyone employed by the Contractor, or anyone for whose negligent acts, mistakes, errors and omissions the TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 15 Contractor is legally liable, with an unimpaired liability insurance limit of $2,000,000 each claim and $2,000,000 annual aggregate. 4. Workers’ Compensation Insurance. Contractor shall maintain Workers’ Compensation insurance to cover obligations imposed by Federal and State statutes having jurisdiction over Contractor’s employees engaged in the performance of Work or Services under this Contract and shall also maintain Employers Liability Insurance of not less than $500,000 for each accident, $500,000 disease for each employee and $1,000,000 disease policy limit. 5. Builder’s Risk Insurance. Unless expressly waived by the Town Manager in a written addendum or amendment to this Contract, the Contractor shall be responsible for purchasing and maintaining insurance to protect the Project from perils of physical loss. The insurance shall provide for the full cost of replacement for the entire Project at the time of any loss. The insurance shall include as named insureds the Town, the Contractor, the Contractor’s Subcontractors and sub-subcontractors and shall insure against loss from the perils of fire and all-risk coverage for physical loss or damage due to theft, vandalism, collapse, malicious mischief, transit, flood, earthquake, testing, resulting loss arising from defective design, negligent workmanship or defective material. The Contractor shall increase the coverage limits as necessary to reflect changes in the estimated replacement cost. C. Cancellation and Expiration Notice. Insurance required herein shall not expire, be canceled, or be materially changed without 30 days’ prior written notice to the Town. 3.12 Performance Bond. The Contractor shall be required to furnish non-revocable security binding the Contractor to provide faithful performance of this Contract in the amount of one hundred percent (100%) of the total Contract Price payable to the Town. Performance security shall be in the form of a performance bond, certified check, cashier’s check or irrevocable letter of credit. This security must be in the possession of the Engineer within seven days after execution of this Agreement by the Town. If the Contractor fails to execute and deliver the security instrument as required, the Contractor may be found in default and the Contract terminated by the Town. In case of default the Town reserves all rights. All performance bonds shall be executed in the form attached hereto as Exhibit I, duly executed by the Contractor as Principal and having as Surety thereon a Surety company approved by the Town and holding a Certificate of Authority to transact surety business in the State of Arizona by the Arizona Department of Insurance. Individual sureties are unacceptable. All Insurers and Sureties shall have, at the time of submission of the performance bond, an A.M. Best’s Key Rating Guide of “A-” or better as currently listed in the most recent Best Key Guide, published by the A.M. Best Company. 3.13 Payment Bond. The Contractor shall be required to furnish non-revocable security for the protection of all persons supplying labor and material to the Contractor or any Subcontractor for the performance of any Work related to this Contract. Payment security shall be in the amount of one hundred percent (100%) of the total Contract Price and be payable to the Town. Payment security shall be in the form of a payment bond, certified check, cashier’s check or irrevocable letter of credit. This security must be in the possession of the Engineer within seven days after execution of this Agreement by the Town. If the Contractor fails to execute and deliver the security instrument as required, the Contractor may be found in default and the Contract terminated by the Town. In case of default the Town reserves all rights. All payment bonds shall be executed in the form attached hereto as Exhibit J, duly executed by the Contractor as Principal and having as Surety thereon a Surety company approved by the Town and holding a Certificate of Authority to transact surety business in the State of Arizona by the Arizona Department of Insurance. Individual sureties are unacceptable. All Insurers and Sureties shall have, at the time of submission of the payment bond, an A.M. Best’s Key Rating Guide of “A-” or better as currently listed in the most recent Best Key Guide, published by the A.M. Best Company. 3.14 Changes in the Work. The Town may, without invalidating this Contract, order changes in the Work consisting of additions, deletions or other revisions to the Contract and the Contract Price and the Contract Time shall be adjusted as provided below. The Contract Price and/or the Contract Time may only be changed by TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 16 the Town’s written approval authorizing said change, and said changes shall be performed under the applicable conditions of the Contract. The Contract Price shall be adjusted as a result of a change in the Work as follows: A. Additions. When the Town increases the scope of the Work, Contractor will perform the increased work pursuant to Contractor’s unit prices set forth on the Price Sheet. B. Deletions. When the Town decreases the Work resulting in a decrease in Contractor’s quantity of the Work, the Town shall be allowed a decrease in the Contract Price amounting to the quantity of the deleted Work multiplied by the Contractor’s unit prices. C. Estimating. Whenever the Town is considering a change to the Work, Contractor shall promptly, and in any event within five business days, estimate the price of the contemplated additional or deleted Work in good faith and as accurately as is then-feasible. The estimate shall show quantities of labor, material and equipment and shall be pursuant to the rates set forth in the Contractor’s Bid. 3.15 Substantial Completion. When the Contractor considers that the Work is Substantially Complete, the Engineer shall prepare and submit to the Contractor a comprehensive list of Punch List items, which the Contractor may edit and supplement. The Contractor shall proceed promptly to complete and correct Punch List items. Failure to include an item on the Punch List does not alter the responsibility of the Contractor to complete all Work in accordance with the Contract Documents. The Town shall determine when the Project and the Contractor’s Work is substantially complete. “Substantial Completion” means construction has been completed in accordance with the Contract Documents to the extent that the Town can use or occupy the entire Project, or the designated portion of the Project, for the use intended without any outstanding, concurrent construction at the site, except as may be required to complete or correct Punch List items. A prerequisite for Substantial Completion, over and above the extent of construction completion required, is receipt by the Town of acceptable documentation that Contractor has successfully tested and demonstrated all systems for their intended use. The date of Substantial Completion shall be confirmed by a Certificate of Substantial Completion signed by the Town and Contractor. The Certificate of Substantial Completion signed by the Town and Contractor shall state the respective responsibilities of the Town and the Contractor for security, maintenance, utilities, damage to the Work and insurance. The Certificate of Substantial Completion shall also include the Punch List as created by the Contractor and modified by the Town and establish the time for completion and correction of all Punch List items. If the Town and the Contractor cannot agree as to the appropriate date of Substantial Completion, such issue shall be submitted for dispute resolution in accordance with the procedures set forth in Article III, Part B below. Notwithstanding such disagreement, the Contractor shall diligently proceed with completion of the Punch List items. 3.16 Final Completion. The Town shall determine when the Project and the Contractor’s Work is finally completed. “Final Completion” means completion of the Project by the Contractor in accordance with the Contract Documents, certified to the Town by the Contractor. Final Completion shall be achieved only upon the Town’s written acceptance of (A) the construction, (B) all testing, (C) demonstration by Contractor that the Work functions as required by the Contract Documents and meets all Contract requirements, (D) resolution of all outstanding system deficiencies and Punch List items, if any, (E) delivery of all as-built documentation, drawings, completed record documents (with revisions made after Substantial Completion), annotated submittals and design document deliverables, (F) submittal, acceptance, and delivery of the one hundred percent (100%) complete O&M manuals, (G) delivery of warranties, inspection certificates, bonds and all other required documents, (H) all pre- requisites for final payment and (I) submittal of Contractor’s request for final payment and acceptance enclosing all required documentation. Upon Final Completion the Engineer shall issue a Certificate of Final Completion to the Contractor on behalf of the Town. Following receipt of payment from the Town, the Contractor shall make all payments due to the Subcontractors. 3.17 Payments to Contractor. Compensation for all Work necessary for the completion of the Project shall be included by the Bidder in the price bid for the items shown in the Bid. Only those items listed in the TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 17 Bid are pay items. Payment shall be conditioned upon Contractor’s compliance with the payment terms and conditions set forth below. Contractor expressly acknowledges and agrees that (A) the Contract Price is an estimated amount based upon an engineer’s estimate of the quantities of the Materials deemed necessary to perform the Work and (B) the amount of any payment to be made pursuant to this Contract shall be determined by the field-measured quantities of Materials actually installed by Contractor. Material or equipment delivered to the Project by or on behalf of Contractor shall not constitute material or equipment furnished in the performance of the Work until same has been incorporated into the improvements constituting the Project. Payment shall not constitute acceptance by the Town or evidence thereof of any Work performed. A. Progress Payments. 1. On or before the 15th day of each month after construction has commenced, the Contractor shall submit to the Town an application for payment consisting of the cost of the Work performed up to the end of the prior month, including the cost of material stored on the site or at other locations approved by the Town. The application shall be deemed approved and certified for payment seven days after it is submitted unless before that time the Town prepares and issues a specific written finding setting forth those items in detail that are not approved for payment under the Contract. Prior to submission of the next application for payment, the Contractor shall make available at the request of the Town a statement accounting for the disbursement of funds received under the previous application for purposes of audit. The extent of such statement shall be as agreed upon between the Town and Contractor. 2. Within 14 days after approval of each monthly application for payment, the Town shall pay directly to the Contractor the appropriate amount for which application for payment is made, less amounts (a) previously paid by the Town, (b) sufficient to pay expenses the Town reasonably expects to incur in correcting deficiencies which are set forth in writing and provided to the Contractor and (c) any retainage as set forth in subsection 3.17(B) below. 3. The Town’s progress payment, occupancy or use of the Project, whether in whole or in part, shall not be deemed as acceptance of any Work not conforming to the requirements of this Contract. 4. Upon Substantial Completion of the Work, the Town shall pay the Contractor the unpaid balance of the cost of the Work, less a sum equal to the Contractor’s estimated cost of completing any unfinished items as agreed to between the Town and the Contractor as to extent and time for Final Completion. The Town thereafter shall pay the Contractor monthly the amount retained for unfinished items as each item is completed. B. Retainage. With respect to the Work, the Town shall retain ten percent (10%) of the amount of each estimate until Final Completion and acceptance of all Material, equipment and Work covered by this Contract. 1. Any securities submitted by Contractor in lieu of retainage as may be allowed by law, shall be deposited in an escrow account by the Town. The Town shall be listed as payee or multiple payees with Contractor on all such securities. 2. When the Work is fifty percent (50%) completed, one-half of the amount retained including any securities substituted pursuant to subsection 3.17 (B)(1) shall be paid to the Contractor upon the Contractor’s request, provided the Contractor is making satisfactory progress on the Work and there is no specific cause or claim requiring a greater amount to be retained. After the construction Work is fifty percent (50%) completed, no more than five percent (5%) of the amount of any subsequent progress payments made under this Contract may be retained, provided the Contractor is making satisfactory progress on the Project. If, at any time, the Town determines satisfactory progress is not being made, ten TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 18 percent (10%) retention shall be reinstated for all progress payments made under this Contract after the determination. C. Payment for On-site and Off-site Stored Materials. Payment shall be made on account of Materials and equipment delivered and suitably stored at the site for subsequent incorporation in the Work. Payment may similarly be made for Materials and equipment suitably stored off the site, conditioned upon the Contractor furnishing evidence to the Town that (1) title to the Materials and equipment will pass to the Town upon payment therefore, (2) the Materials and equipment are adequately safeguarded and insured, including during transit from the off-site location to the Project site and (3) such other matters as the Town may reasonably request in order to protect its interests. With the prior, written approval of the Town, Contractor may advance order the bulk delivery of Materials to be incorporated into the Work over the course of this Contract. Upon delivery and receipt of supplier invoice, the Town shall pay for the bulk delivery, either directly to the Contractor or to the vendor or by joint check to Contractor and vendor, and shall receive a full release for the amount paid from vendor and Contractor. Contractor agrees to assume full responsibility for the safekeeping of all such Materials and shall guarantee to the Town that such Materials shall remain safe from theft or damage from any and all causes (unless caused by the sole negligence of the Town). Contractor shall immediately replace, repair or restore said Materials to their original condition so as to not cause any delay in the Work, and Contractor shall indemnify and hold harmless the Town for, from and against any and all loss, cost, liability or expense resulting from any loss or damage to any of the Materials described herein from any cause unless due to the Town’s sole negligence. Should the Town have reason to believe Contractor is not properly safeguarding any of the Materials, the Town shall have the right, but not the affirmative duty, to immediately take such steps as it deems necessary to do so, including removing Contractor from the job, replacing any Materials or expending any sums to properly carry out Contractor’s responsibility hereunder, and any amounts so expended shall be billed back to Contractor or deducted from any sums then or thereafter due to Contractor. Contractor shall fully insure all Materials stored on site as required by the Town, and if such insurance is not obtained due to a lack of insurable interest, the Town shall have the right to obtain such insurance and charge the amount thereof back to Contractor or deduct said amount from any funds then or thereafter due to Contractor. D. Title to Construction Work. The Contractor warrants that title to all Work covered by an application for payment shall pass to the Town no later than the time of payment. The Contractor further warrants that upon submittal of an application for payment, all Work for which applications for payment have been previously issued and payments received from the Town shall be free and clear of liens, claims, security interests or encumbrances in favor of the Contractor, Subcontractors, material suppliers, or other persons or entities making a claim by reason of having provided labor, Materials and equipment relating to the Work. E. Final Payment. 1. Final payment, consisting of the unpaid balance of the cost of the Work shall be due and payable at Final Completion and acceptance by the Town. Before issuance of final payment, the Town may request satisfactory evidence that all payrolls, Materials bills and other indebtedness connected with the Work have been paid or otherwise satisfied. 2. Simultaneously with Contractor’s request for final payment, Contractor shall submit the following items to the Town Representative: a. Red-line construction record drawings. b. Warranties. c. Two sets of documentation completely covering the operation and maintenance of the mechanical and electrical installation and all other equipment. The documentation shall include charts, diagrams, performance curves, catalog information, TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 19 lubrication manuals, and details pertaining to the functioning of various items of equipment. The documentation shall be divided logically into “systems” on the basis of operation, without respect to trades, subcontractors or arbitrary specifications sections. The relationship of the “systems” shall be clearly and concisely detailed. d. Affidavit Regarding Settlement of Claims. e. Other items reasonably required by the Town Representative. 3. In making final payment the Town waives all claims except for: a. Outstanding liens. b. Improper workmanship or defective Materials. c. Work not in conformance with this Contract or Work not completed. d. Terms of any special warranties required by this Contract. e. Delivery to Town of all warranties, operation and maintenance manuals, “AS-BUILT” record drawings and other documents as required by this Contract. f. Right to audit Contractor records for a period of three years. g. Claims previously made in writing and which remain unsettled. 4. Acceptance of final payment by the Contractor shall constitute a waiver of affirmative claims by the Contractor, except those previously made in writing and identified as unsettled at the time of final payment. F. Warranty. Contractor or its assignee shall give to the Town a one-year warranty against deficiencies in material and workmanship for all Work on the Project or other such warranty as required by the Town Engineer, which warranty shall begin on the date that the Town accepts the Work as provided in this Section. Any material deficiencies in material or workmanship identified by Town staff during the one-year warranty period shall be brought to the attention of the Contractor or its assignee that provided the warranty, which shall promptly remedy or cause to be remedied such deficiencies to the reasonable satisfaction of the Town Engineer. Continuing material deficiencies in a particular portion of the Work shall be sufficient grounds for the Town to require (1) an extension of the warranty for an additional one-year period and (2) the proper repair of or the removal and reinstallation of, that portion of the Work that is subject to such continuing deficiencies. Regardless of whether the applicable warranty period has expired, the Contractor agrees to repair any damage to the Work caused by Contractor’s construction activities on the Property. Nothing contained herein shall prevent the Town or Contractor from seeking recourse against any other third party for damage to the Work caused by such third party. 3.18 Offset. A. Offset for Damages. In addition to all other remedies at law or equity, the Town may offset from any money due to the Contractor any amounts Contractor owes to the Town for damages resulting from breach or deficiencies in performance or breach of any obligation under this Contract. B. Offset for Delinquent Fees or Taxes. The Town may offset from any money due to the Contractor any amounts Contractor owes to the Town for delinquent fees, transaction privilege taxes and property taxes, including any interest or penalties. TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 20 PART B - PERFORMANCE OF THE WORK 3.19 Project Videotape. The Contractor shall produce and provide a project videotape to the Engineer as required by MAG Supplement Section 105.5.3. All costs associated with the Project videotape produced in accordance with this Section shall be deemed incidental. 3.20 Soil and Subsurface Conditions. In addition to conformance to MAG Specifications, Section 102.4 (Examination of Plans, Special Provisions and Site Work), the Contractor shall make its own determinations as to the soil and subsurface conditions, including rock, caliche and ground water and shall complete the Work in whatever material and under whatever conditions may be encountered or created, without extra cost to the Town pursuant to the provisions of the MAG Supplement Section 102.4.1. 3.21 Work Scheduling. Time is of the essence for this Contract. Contractor shall provide the Engineer with any requested scheduling information and a proposed schedule for performance of the Work within the Contract Time in a form acceptable to the Engineer and approved by the Engineer, in his sole and absolute discretion, providing for commencement and completion of the Work (the “Schedule”). The Schedule shall include the date for Substantial Completion of the Work. The Engineer may revise the Schedule during the course of the Work. Contractor, to induce the Town to enter into this Contract, has and does hereby agree to fully perform and complete the Work for the Contract Price within the Schedule. 3.22 Contractor’s Representative. The Contractor or his authorized representative shall be present at the Work site at all times during working hours. Instructions and information provided by the Engineer to the Contractor’s representative shall be considered as having been given to the Contractor, per MAG Supplement Section 105.5.2. 3.23 Prosecution of the Work. The Contractor shall prosecute the Work so that the portion of the Work completed at any point in time shall be not less than as required by the Schedule. If the delay is an Inexcusable Delay, as defined below, the Contractor shall prepare a recovery schedule for the Engineer’s review and approval, showing how the Contractor will compensate for the delays and achieve Substantial Completion by the date(s) shown on the Schedule. If the Contractor is unable to demonstrate how it will overcome Inexcusable Delays, the Engineer may order the Contractor to employ such extraordinary measures as are necessary to bring the Work into conformity with the Substantial Completion date(s) set forth therein, the costs of which shall be included as part of the Cost of the Work. If the delay is an Excusable Delay, as defined below, the Engineer shall either (A) authorize an equitable extension in the Schedule to account for such delay, and equitably adjust the contract sum on account of such delay or (B) request that the Contractor prepare a recovery schedule showing how (if possible) the Contractor can achieve Substantial Completion by the applicable date shown on the Schedule, and equitably adjust the Contract Price in accordance with the provisions of this Contract on account of any extraordinary activities required of the Contractor on account of such recovery schedule. 3.24 Extensions of Time. A. Allowable Extensions. An extension in the scheduled date of Substantial Completion will only be granted in the event of Excusable Delays affecting the Schedule for the Work. The Contractor shall be entitled to general condition costs and extra costs related to the Excusable Delay for idle labor, equipment inefficiency and lost productivity of the performance of the Work. The Contractor must submit evidence reasonably satisfactory to the Town substantiating such costs. Such adjustment to the Price and Substantial Completion date shall be issued in a Change Order or Contract amendment, as applicable. B. Excusable Delay. To the extent any of the following events results in an actual delay in the Work, such shall constitute an “Excusable Delay” (to the extent not set forth below, a delay will be considered an “Inexcusable Delay”): 1. Delays resulting from Force Majeure. TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 21 2. Differing, unusual or concealed site conditions that could not reasonably have been anticipated by the Contractor in preparing the Schedule, including, without limitation, archaeological finds and unusual soil conditions (including rock or other geological conditions), underground foundations, abandoned utility lines and water conditions. 3. Delays resulting from the existence or discovery of Hazardous Materials on the Site not brought to the Site by the Contractor. 4. Delays resulting from changes in Applicable Laws occurring after the date of execution of this Contract. 5. Delays occurring due to the acts or omissions of the Town and those within the control of the Town. 6. Delays occurring due to the acts or omissions of a utility, so long as Contractor has coordinated with the utility causing the delay and the delay occurs despite reasonable steps taken by Contractor to avoid the delay. 7. Delays resulting from weather conditions that make it unreasonable to perform the Work in accordance with the Schedule; provided, however, that Contractor’s Schedule shall be deemed to include 14 days for weather delays (the “Expected Delay Days”), regardless of whether such weather delays are specifically set forth in the Schedule. Contractor shall notify the Town within 24 hours in writing of a weather related delay. If Contractor fails to give the required 24-hour notice, no such weather delay will be subtracted from the Expected Delay Days. Weather delays shall not be deemed “Excusable” unless all of the Expected Delay Days have been exhausted. 8. Delays resulting from Additional Work (defined below) that cannot be performed concurrently with the Work on the Schedule. C. Required Notice. In order to obtain an extension of time due to an Excusable Delay, the Contractor shall comply with the following requirements. The Contractor shall notify the Engineer in writing of the Excusable Delay as soon as practicable, but in no event more than seven Days after the Contractor becomes aware of the occurrence of the Excusable Delay. Such notice shall describe the Excusable Delay and shall state the approximate number of Days the Contractor expects to be delayed. After the cessation of the Excusable Delay, the Contractor shall notify the Engineer of the number of Days the Contractor believes that its activities were in fact delayed by the Excusable Delay. In the event that the delay arises as a result of a Change Order request by the Town, the request for an extension of time contained in the resulting Change Order proposal shall be deemed sufficient for purposes of this subsection. D. Determination. Within ten days after cessation of an event giving rise to either an Excusable Delay or Inexcusable Delay, the parties will use good faith efforts to agree on the extent to which the Work has been delayed and whether the delay is an Excusable Delay or an Inexcusable Delay. In the absence of agreement between the parties as to the then-current status of Excusable Delays and Inexcusable Delays, the Engineer will provide the Contractor with written notice of Engineer’s determination of the respective number of Days of Excusable Delay and/or Inexcusable Delay. The Engineer’s determination may be issued at such time as the Engineer deems reasonable, but not later than ten Days after receipt by the Engineer of the Contractor’s written request for such determination. The Contractor shall not, however, deem an issuance by the Engineer of such a determination to be a concurrence of the matters set forth in the Contractor’s request. The Contractor may invoke the dispute resolution procedures set forth in Part D below with respect to such determination. E. Concurrent Delay. To the extent the Contractor is entitled to an extension of time due to an Excusable Delay, but the performance of the Work would have been suspended, delayed or interrupted by the TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 22 fault or neglect of the Contractor or by an Inexcusable Delay, the Contractor shall not be entitled to any additional costs for the period of such concurrency. 3.25 Liquidated Damages. It is expressly understood that should Contractor fail to complete the Work covered hereby within the Contract Time, the Contractor agrees to pay and shall pay to the Town upon request therefore for each calendar day of delay beyond the original or revised scheduled time of completion of Contractor’s Work as liquidated damages, and not as a penalty, in the amount per day as set forth in MAG Specifications for each calendar day of delay. A. Prior to Termination. If the Contract is not terminated, the Contractor shall continue performance and be liable to the Town for the liquidated damages until the Work is complete. B. After Termination. In the event the Town exercises its right of termination, the Contractor shall be liable to the Town for any excess costs and, in addition, for liquidated damages until such time as the Town may reasonably obtain delivery or performance of similar Services. 3.26 Suspension by the Town for Convenience. A. Town Determination. The Town may order the Contractor in writing to suspend, delay or interrupt all or any part of the Work without cause for such period of time as the Town may determine to be appropriate for its convenience. B. Contract Adjustments. Adjustments caused by suspension, delay or interruption shall be made for increases in the applicable contract sum and/or the date(s) of Substantial Completion. No adjustment shall be made if the Contractor is or otherwise would have been responsible for the suspension, delay or interruption of the Work, or if another provision of this Contract is applied to render an equitable adjustment. 3.27 Termination by the Town for Convenience. The Town may, upon 30 days’ written notice to the Contractor, terminate this Contract, in whole or in part, for the convenience of the Town without prejudice to any right or remedy otherwise available to the Town. Upon receipt of such notice, the Contractor shall immediately discontinue all Services affected unless such notice directs otherwise. In the event of a termination for convenience of the Town, the Contractor’s sole and exclusive right and remedy shall be payment for all Work performed through the date of termination. The Contractor shall not be entitled to be paid any amount as profit for unperformed Services or consideration for the Town’s termination by convenience. 3.28 Termination by the Town for Cause. A. Default; Cure. If the Contractor refuses or fails to supply sufficient properly skilled staff or proper Materials, or disregards laws, ordinances, rules, regulations, or orders of any public authority jurisdiction, or otherwise substantially violates or materially breaches any term or provision of this Contract, and such nonperformance or violation continues without cure for 15 days after the Contractor receives written notice of such nonperformance or violation from the Town, then the Town may, without prejudice to any right or remedy otherwise available to the Town, terminate this Contract. B. Substitute Performance. Upon termination of this Contract by the Town, the Town shall be entitled to furnish or have furnished the Services to be performed hereunder by the Contractor by whatever method the Town may deem expedient. Also, in such case, the Contractor shall not be entitled to receive any further payment until completion of the Work, and the total compensation to the Contractor under this Contract shall be the amount that is equitable under the circumstances. If the Town and the Contractor are unable to agree on the amount to be paid under the foregoing sentence, the Town shall fix an amount, if any, that it deems appropriate in consideration of all of the circumstances surrounding such termination, and shall make payment accordingly. The Contractor may dispute the Town’s assessment of the termination amount pursuant to the dispute resolution process set forth in in Part D of this Contract. TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 23 C. Contractor Insolvency. Upon the appointment of a receiver for the Contractor, or if the Contractor makes a general assignment for the benefit of creditors, the Town may terminate this Contract, without prejudice to any right or remedy otherwise available to the Town, upon giving three business days’ written notice to the Contractor. If an order for relief is entered under the bankruptcy code with respect to the Contractor, the Town may terminate this Contract by giving three business days’ written notice to the Contractor unless the Contractor or the trustee completes all of the following: 1. Promptly cures all breaches within such three-day period. 2. Provides adequate assurances of future performance. 3. Compensates the Town for actual pecuniary loss resulting from such breaches. 4. Assumes the obligations of the Contractor within the established time limits. 3.29 Contract Subject to Appropriation. The Town is obligated only to pay its obligations set forth in the Agreement as may lawfully be made from funds appropriated and budgeted for that purpose during the Town’s then current fiscal year. The Town’s obligations under this Agreement are current expenses subject to the “budget law” and the unfettered legislative discretion of the Town concerning budgeted purposes and appropriation of funds. Should the Town elect not to appropriate and budget funds to pay its Agreement obligations, this Agreement shall be deemed terminated at the end of the then-current fiscal year term for which such funds were appropriated and budgeted for such purpose and the Town shall be relieved of any subsequent obligation under this Agreement. The parties agree that the Town has no obligation or duty of good faith to budget or appropriate the payment of the Town’s obligations set forth in this Agreement in any budget in any fiscal year other than the fiscal year in which the Agreement is executed and delivered. The Town shall be the sole judge and authority in determining the availability of funds for its obligations under this Agreement. The Town shall keep Contractor informed as to the availability of funds for this Agreement. The obligation of the Town to make any payment pursuant to this Agreement is not a general obligation or indebtedness of the Town. Contractor hereby waives any and all rights to bring any claim against the Town from or relating in any way to the Town's termination of this Agreement pursuant to this section. 3.30 Additional Work, Materials and/or Overtime. Contractor expressly agrees that if overtime or additional workers or materials are necessary to meet the Schedule, that such overtime will be performed or additional workers or materials will be procured by the Contractor, and the additional expense thereof shall be borne by Contractor unless the delay requiring overtime was directly caused by the Town, in which event Contractor shall be entitled to compensation for such overtime Work. If the Town requests Contractor to perform additional Work in connection with the Project (“Additional Work”), Contractor shall charge the Town a negotiated fixed amount for the Additional Work. In the event a fixed amount cannot be negotiated, Contractor shall invoice the Town on a time and materials basis for the Additional Work at the unit prices set forth in the price sheet. 3.31 No Damage for Delay or Additional Work by the Town. Contractor shall adjust its operations to conform to any progress schedule changes and hereby waives and releases the Town from any liability for damages or expenses that may be caused to or sustained by Contractor by reason of such changes or by reason of delays in the Work, whether caused in whole or in part by conduct on the part of the Town, including without limitation, any breach of this Contract or delays by other contractors or Subcontractors. Contractor’s exclusive remedy in event of delay or Additional Work by the Town shall be an extension of time hereunder to complete the Work. 3.32 Risk of Loss. Contractor shall assume the risk of loss occasioned by fire, theft or other damage to Materials, machinery, apparatus, tools and equipment relating to the Work prior to actual installation in final place on the Project and acceptance by the Town. Contractor shall be responsible for damage to the Materials, TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 24 machinery, apparatus, tools, equipment and property of the Town and other contractors resulting from the acts or omissions of its Subcontractors, employees, agents, representatives Subcontractors, and for payment of the full costs of repair or replacement of any said damage. 3.33 Protection of Finished or Partially Finished Work. The Contractor shall properly guard and protect all finished or partially finished Work and shall be responsible for the same until the entire Contract is completed and accepted by the Engineer. The Contractor shall turn over the entire Work in full accordance with this Contract before final settlement shall be made. 3.34 Character and Status of Workers. Only skilled foremen and workers shall be employed on portions of the Work requiring special qualifications. When required by the Engineer, the Contractor shall discharge any person who is, in the opinion of the Engineer, disorderly, dangerous, insubordinate, incompetent or otherwise objectionable. The Contractor shall indemnify and hold harmless the Town from and against damages or claims for compensation that may occur in the enforcement of this Section. The Contractor shall be responsible for ensuring the legal working status of its employees and its Subcontractor’s employees. The Contractor agrees that once assigned to Work under this Contract, key personnel shall not be removed or replaced without written notice to the Town. If key personnel are not available for Work under this Contract for a continuous period exceeding 30 Days, or are expected to devote substantially less effort to the Work than initially anticipated, the Contractor shall immediately notify the Town and shall, subject to the concurrence of the Town, replace such personnel with personnel of substantially equal ability and qualifications. 3.35 Work Methods. The methods, equipment and appliances used on the Work shall be such as will produce a satisfactory quality of Work, and shall be adequate to complete the Contract within the Contract Time. Except as is otherwise specified in this Contract, the Contractor’s procedure and methods of construction may, in general, be of its own choosing, provided such methods (A) follow best general practice and (B) are calculated to secure results which will satisfy the requirements of this Contract. The Work covered by this Contract shall be carefully laid out in advance and performed in a manner to minimize interference with normal operation and utilization of the Town’s right-of-way. The Contractor shall exercise caution during the course of this Work to avoid damage to all known existing or possible unknown existing underground utilities. It shall conduct its operations in such a manner as to avoid injury to its personnel and to avoid damage to all utilities. Any damage done will be repaired without delay and at the expense of the Contractor. 3.36 Safety Fencing Requirement for Trenches and Excavations. The Contractor shall provide safety construction fencing around all open trenches and excavations during all non-working hours. In addition, the Contractor shall provide safety fencing around the Project site during working hours in order to ensure public safety. The Contractor shall provide for the safety and welfare of the general public by adequately fencing all excavations and trenches that are permitted by the Engineer to remain open when construction is not in progress. Fencing shall be securely anchored to approved steel posts located not less than six feet on center, having a minimum height of six feet, and shall consist of wire mesh fabric of sufficient weight and rigidity to adequately span a maximum supporting post separation of six feet. The fencing, when installed about the periphery of excavations and trenches, shall form an effective barrier against intrusion by the general public into areas of construction. The Contractor, at all times when construction is not in progress, shall be responsible for maintaining the fencing in good repair, and upon notification by the Engineer, shall take immediate action to rectify any deficiency. Prior to the start of any excavation or trenching required for the execution of the proposed Work, the Contractor shall submit to the Engineer for approval, detailed plans showing types of materials and methods of fabrication for the protective fencing. There will be no separate measurement or payment for furnishing, installing, or maintaining protective fencing. The cost shall be considered incidental to the cost of any other structures for which trenching is necessary. 3.37 Plans and Shop Drawings, Samples and Substitution of Materials. All submittals shall conform to MAG Specifications, Section 105.2 (Plans and Drawings) as modified by the MAG Supplement. Contractor shall furnish, within three business days following request therefore by the Town, detailed drawings of the Work, TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 25 samples of Materials and other submittals required for the performance or coordination of the Work. Substitutions shall be equal or superior to Materials specified in the Contract Documents, shall be clearly identified on submittals as “proposed substitutions” and shall be approved by the Town in accordance with Section 2.4 above. Contractor shall be fully responsible for the adequacy, completeness and promptness of all such submittals. Materials shall not be furnished to the jobsite unless same is in strict compliance with the Specifications or otherwise approved in writing by the Town. Approval by the Town shall not relieve Contractor of full responsibility for compliance with scope, intent and performance in accordance with this Contract. 3.38 Utilities. A. Cooperation. The Contractor shall comply with the requirements of MAG Specifications 105.6, as modified by the MAG Supplement. B. Utilities Shown on the Plans. 1. Regardless of what utilities are shown on the plans, it shall be Contractor's responsibility to verify these locations and any additional lines which may exist through consulting with the Town, utility companies and "Blue Stake." 2. Existing utilities are indicated on Project plans in accordance with the best information available. Contractor shall notify all owners of utilities when its Work is in progress and shall make such arrangements as are necessary to make any emergency repair to any utility, in a manner satisfactory to the Town of a damaged utility line, including individual or house service utility lines. 3. No extra compensation will be made for the repair of any individual or house service utility or utility lines damaged by Contractor's labor forces or equipment, nor for any damage incurred through neglect or failure to provide protective barriers, lights and other devices or means required to protect such existing utilities. 4. Contractor shall expose all sanitary and storm sewers, water, gas, electric, telephone utility lines, and other underground structures that might interfere with the Work, in order to permit survey location prior to construction. 5. Contractor shall assume full responsibility for damages to any underground facility/utility properly shown on the Plans or properly located by the Utility owner, as a result of failing to obtain information as to its location, failing to excavate in a careful and prudent manner (as defined in MAG Specifications), or failing to take measures for protection of the facilities/utilities. The Contractor is liable to the owner of the underground facility/utility for the total cost of the repair. C. Utilities Not Shown on the Plans. 1. If utility lines are encountered that are not shown on the plans, and not located, or incorrectly located by the utility owner, other than individual or house service utility lines, and these lines are damaged or work is required to clear same, then MAG Specifications, Section 109.8 and ARIZ. REV. STAT. § 40-360.21 et seq. shall apply. 2. The work necessary for the raising, lowering, or relocating of any such utility shall be at the utility owner’s expense. The necessary Work may be done by the utility owner or by Contractor, or as a collaborative effort, at the option of the utility owner. All Work shall be in accordance with the standards of the Town and the utility owner. TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 26 3. In most cases, individual or house service utility lines are not shown on the Plans. It shall be Contractor’s responsibility to locate and protect these individual or house services. If, due to Contractor’s operations, any of these lines are damaged, it shall repair or replace these lines in a manner satisfactory to the owner of the utility at no extra cost to the Town. In addition, the cost of location, protection, and working around these individual or house service utility lines shall be included in Contractor’s bid for the Work under this Contract. 3.39 Sampling and Testing. Sampling and testing shall conform to the requirements of the MAG Specifications, Section 106, as modified by the MAG Supplement. The Contractor shall obtain an independent laboratory or testing company and pay all costs of testing required by the Contract Documents, including testing required by MAG, the Specifications, the Town and other jurisdictional bodies. A copy of all test results shall be furnished to the Engineer in a summary report submitted at the subsequent construction progress meeting (time and date to be set upon Contract award) for tests performed. At Substantial Completion, the Contractor shall submit a final test report containing all test results which certifies the Work complies with the Specifications. This report shall be sealed by a professional engineer registered in the State of Arizona who was responsible for overseeing the testing and sampling. 3.40 Cooperation between Contractors. The Contractor shall comply with the requirements of MAG Specifications, Section 105.7, as modified by the MAG Supplement. 3.41 Outdoor Construction Time Restrictions. Unless otherwise permitted by the Engineer, construction will be restricted as listed in the following table: May 15 – September 15 September 16 – May 14 5:30 a.m. to 6:30 p.m. 6:00 a.m. to 6:30 p.m. Construction Work shall not begin Work prior to 7:00 a.m. and shall stop by 5:00 p.m. on Saturdays. There shall be no Construction Work on Sundays and all Town, State and Federal holidays. 3.42 Construction Survey. Construction survey and as-built record drawings shall conform to the requirements of the MAG Specifications, Section 105.8 (Construction Stakes, Lines and Grades), as modified by the MAG Supplement. Contractor shall provide and pay for all building layout staking, including elevations and all other Project staking. Replacement of construction stakes that have been knocked out due to Contractor's Work or lack of Work, weather conditions, traffic, vandalism or utility contractors will be done at Contractor's expense. 3.43 Survey Control Points. Existing survey markers (either brass caps or iron pipes) shall be protected by the Contractor or removed and replaced under direct supervision of the Engineer. Survey monuments shall be constructed to the requirements of MAG Specifications, Section 405. Lot corners shall not be disturbed without knowledge and consent of the property owner. The Contractor shall replace benchmarks, monuments or lot corners moved or destroyed during construction at no expense to the Town. Contractor and its sureties shall be liable for correct replacement of disturbed survey benchmarks except where the Town elects to replace survey benchmarks using its own forces. 3.44 Stockpile of Materials. A. Engineer Approval. The Contractor may, if approved by the Engineer, place or stockpile Materials in the public right-of-way provided such Materials do not prevent access to adjacent properties or prevent compliance with traffic regulations. An encroachment permit shall be required. Any applicable cost shall be paid by the Contractor and shall be presumed to be part of the Contractor’s bid. TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 27 B. No Traffic Interference. Traffic shall not be required to travel over stockpiled Materials and proper dust control shall be maintained. 3.45 Excess Materials. When excavations are made, resultant loose earth shall be (A) utilized for filling by compacting in place or (B) disposed of off-site. Excess or unsuitable material, broken asphaltic concrete and broken portland cement concrete excavated from the right-of-way shall be removed from the Project Site and disposed of by the Contractor. Waste material shall not be placed on private property without express permission of the property owner. The Contractor shall, at all times, keep the premises free from accumulation of waste materials or rubbish caused by its operations. At the completion of the Work, Contractor shall remove all equipment, tools and surplus materials, and shall completely clean the premises, removing and disposing of all debris and rubbish and cleaning all stains, spots, marks, dirt, smears or other blemishes. When the Work premises are turned over to the Town, they shall be thoroughly clean and ready for immediate use. Clean-up shall include removal of all excess pointing mortar materials within pipes and removal of oversized rocks and boulders left after finish grading. The Contractor shall provide for the legal disposal of all waste products and debris and shall make necessary arrangements for such disposal. 3.46 Dust Control and Water. Contractor shall implement dust control measures in accordance with MAG Specifications, Section 104.1, and the MAG Supplement. Installation and removal of fire hydrant meters should be scheduled at least three business days in advance through the Chaparral City Water Company. Watering shall conform to the provisions of MAG Specifications, Section 225. A deposit and installation fee in amounts set forth in the Chaparral City Water Company’s fee schedule is required for each meter. The cost of the water is at the prevailing rate. 3.47 Storm Water. Contractor shall obtain all local, county, state and federal storm water permits. 3.48 Temporary Sanitary Facilities. The Contractor shall provide ample toilet facilities with proper enclosures for the use of workers employed on the Work site. Toilet facilities shall be installed and maintained in conformity with all applicable State and local laws, codes, regulations and ordinances and shall be properly lit and ventilated, and kept clean at all times. Adequate and satisfactory drinking water shall be provided at all times and under no circumstances and under no conditions will the use of common cups be permitted. The Contractor must supply sanitary drinking cups for the benefit of all employees. 3.49 Electric Power, Water and Telephone. Unless otherwise specified, the Contractor shall make its own arrangements for electric power, water and telephone as needed. Subject to the convenience of the utility, it may be permitted to connect to existing facilities where available, but Contractor shall meter and bear the cost of such power or water, and installation and disconnect of such power, water and telephone services. 3.50 Energized Aerial Electrical Power Lines. Utility companies may maintain energized aerial electrical power lines in the immediate vicinity of this Project. Contractor shall not presume any such lines to be insulated. Construction personnel working in proximity to these lines may be exposed to an extreme hazard from electrical shock. Contractor shall ensure that its employees and all other construction personnel working on this Project are warned of the danger and instructed to take adequate protective measures, including maintaining a minimum ten feet of clearance between the lines and all construction equipment and personnel. (see: OSHA Std. 1926.550 (a) 15, as amended). As an additional safety precaution, Contractor shall call the affected utility companies to arrange, if possible, to have these lines de-energized or relocated when the Work reaches their immediate vicinity. The cost of such temporary arrangements shall be borne by the Contractor. Contractor shall account for the time necessary to cause such utility disconnection in the preparation of its Bid. Electrical utility companies may maintain energized underground electrical power lines in the immediate vicinity of this Project. These power lines represent an extreme hazard of electrical shock to any construction personnel or equipment coming in contact with them. Arizona law requires all parties planning excavations in public rights-of-way to contact all utility firms for locations of their underground facilities. Contractor shall ensure that its employees and TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 28 all other personnel working near any underground power lines must be warned to take adequate protective measure. (see: OSHA Std. 1926-651 (A), as amended). 3.51 Site Clean Up. Contractor shall at all times, but not less than daily unless otherwise agreed by Town Representative, keep the premises on which the Work is being performed clean and free from accumulation of any waste materials, trash, debris and excess dirt, and at all times shall remove Contractor’s implements, machinery, tools, apparatus and equipment from the jobsite when not needed on the jobsite. Should the Town Representative find it necessary in his/her opinion to employ help to clean up, remove or store any of the foregoing due to failure of Contractor to do so, the expense thereof shall be charged to Contractor. Verbal notice from the Town Representative on clean-up or removal is considered adequate notice hereunder, and failure to conform with his/her request within 24 hours thereof will be construed as a breach of this Contract by the Contractor and such charges will be made against Contractor’s account as are necessary to accomplish the clean-up or removal. The cost of cleanup, removal or storage by the Town, if not deducted by the Town from monies due Contractor, shall be paid by Contractor within five business days of written demand by the Town. 3.52 Use of the Site. Contractor shall at all times comply fully with all laws, orders, citations, rules, regulations, standards and statutes with respect to occupational health and safety, the handling and storage of hazardous materials, accident prevention and safety equipment and practices, including any accident prevention and safety program of the Town; provided, however, that the Town shall not be required to impose any safety requirements or administer any such programs and the review or requirement of any safety plan by the Town shall not be deemed to release Contractor or in any way diminish its liability, by way of indemnity or otherwise, as assumed by it under this Contract. Contractor shall conduct inspections regularly to determine that safe working conditions and equipment exist and accepts sole responsibility for providing a safe place to Work for its employees and employees of its Subcontractors, laborers, suppliers of material and equipment and any other person visiting the Site, for adequacy of and required use of all safety equipment and for compliance herewith. When so ordered, Contractor shall stop any part of the Work that the Town deems unsafe until corrective measures satisfactory to the Town have been taken. Should Contractor neglect to adopt such corrective measures, the Town may do so and deduct the cost from payments due Contractor. Contractor shall timely submit copies of all accident or injury reports to the Town. 3.53 Public Information and Notification. The Contractor shall submit a public information and notification plan for this Project (the “Notification Plan”) to the Town Representative at the first pre-construction meeting held prior to start of construction. The Notification Plan shall include, at a minimum, the items set forth in this Section 3.53; provided, however, that the Engineer may waive any portion of the requirements of this Section upon a written determination that the Project scope does not warrant such notification. Contractor shall provide Project information to affected residents and homeowners’ associations prior to and throughout the Project’s duration. The Contractor shall use the Notification Plan to inform the local citizens, businesses and Town officials, not less than five business days in advance, of (A) necessary operations that create high noise levels, (B) street closures, (C) detour locations, (D) haul routes and material delivery routes and (E) disruption of bus routes, mail routes and other delivery/pick-up routes. A. Neighborhood Notification. Prior to the start of any Work on the Project, the Contractor shall distribute a preliminary “Dear Neighbor” letter (8-1/2” x 11”), as submitted to and subject to the approval of the Engineer, to all businesses, property owners and residents within 300 feet of any portion of this Project. This “Dear Neighbor” letter shall include, at a minimum, the following information: 1. Contractor’s name, business telephone number and the 24-hour “Hot Line” telephone number for this Project. 2. Name of Contractor’s Project Manager. 3. Name of Contractor’s Project Superintendent. TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 29 4. Brief description of the Project. 5. Construction schedule, including anticipated Work hours. 6. Anticipated lane restrictions, including the expected duration thereof. 7. Name of Town’s Project Manager. 8. Name of the Engineer. The Town Manager or authorized designee shall provide the Contractor with a distribution list for this “Dear Neighbor” letter. Contractor shall (1) ensure that the letter is distributed to all persons and businesses indicated on the list provided by the Town Manager or authorized designee and (2) provide the Town Manager or authorized designee with a copy of the letter sent and sufficient proof of mailing. Subsequent to delivery of the “Dear Neighbor” letter, the Contractor shall distribute bi-monthly construction progress updates, including construction schedule and any additional information the Engineer deems important as a result of construction activities, to all persons and businesses included on the aforementioned distribution list. At the request of the Town Manager or authorized designee, Contractor may be required to distribute additional public notifications. At the end of construction a final “Dear Neighbor” letter shall be distributed to the persons and businesses on the aforementioned distribution list highlighting the Contractor’s and the Town’s appreciation for their patience during construction of the Project. B. 24-Hour Project Hotline. The Contractor shall be required to furnish a private 24-hour telephone line to be used solely for receiving incoming calls from local citizens or businesses with questions or complaints concerning Project construction operations or procedures (the “Hotline”). The Contractor shall include this Hotline telephone number on all public information distributed throughout the duration of the Project. Contractor shall ensure that Contractor personnel man the Hotline during all hours that there is any Work being performed on this Project; the Hotline shall be answered by a live answering service during all other hours. The Contractor shall maintain a log of incoming calls, responses and action taken that shall be submitted to the Engineer weekly and upon request. C. Public Meetings. The Contractor shall attend such public meetings as deemed necessary by the Town Manager or authorized designee. D. Press Releases. The Contractor shall, at the request of the Engineer, prepare press releases regarding the Project. E. Payment for Public Notification. The Town will pay, based on time and materials invoices, an amount not to exceed the amount designated in the Price Sheet and entitled COMMUNITY RELATIONS, for Work performed in accordance with the Notification Plan. Work that is eligible for reimbursement includes: the “Dear Neighbor” letters; bi-monthly progress reports; meetings with impacted businesses, residents, schools, churches or other groups; scheduling newsletter when necessary (at least monthly); temporary signs for local access; and maintaining the Hotline. No payment will be made under this item for any calendar day during which there are substantial deficiencies in compliance, as determined by the Engineer. The Contractor shall submit a final report/evaluation of its Notification Plan process performed for this Project. The report shall be submitted before the Contractor receives final payment. PART C - MISCELLANEOUS 3.54 Applicable Law; Venue. This Contract shall be governed by the laws of the State of Arizona and suit pertaining to this Contract may be brought only in courts in Maricopa County, Arizona. 3.55 Conflict of Interest. This Contract is subject to the provisions of ARIZ. REV. STAT. § 38-511. The Town may cancel this Contract without penalty or further obligations by the Town or any of its departments or TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 30 agencies if any person significantly involved in initiating, negotiating, securing, drafting or creating this Contract on behalf of the Town or any of its departments or agencies is, at any time while the Contract or any extension of the Contract is in effect, an employee of any other party to the Contract in any capacity or a consultant to any other party of the Contract with respect to the subject matter of the Contract. 3.56 Contract Amendments. This Contract may be modified only by a written amendment signed by persons duly authorized to enter into contracts on behalf of the Town and the Contractor; provided, however, that Change Orders may be issued and approved administratively by the Town when such changes do not alter the Contract Price. 3.57 Provisions Required by Law. Each and every provision of law and any clause required by law to be in the Contract will be read and enforced as though it were included herein and, if through mistake or otherwise any such provision is not inserted, or is not correctly inserted, then upon the application of either party, the Contract will promptly be physically amended to make such insertion or correction. 3.58 Severability. The provisions of this Contract are severable to the extent that any provision or application held to be invalid by a Court of competent jurisdiction shall not affect any other provision or application of the Contract which may remain in effect without the invalid provision or application. 3.59 Independent Contractor. It is clearly understood that each party will act in its individual capacity and not as an agent, employee, partner, joint venturer, or associate of the other. An employee or agent of one party shall not be deemed or construed to be the employee or agent of the other for any purpose whatsoever. The Contractor acknowledges and agrees that the Services provided under this Agreement are being provided as an independent contractor, not as an employee or agent of the Town. Contractor, its employees and subcontractors are not entitled to workers’ compensation benefits from the Town. The Town does not have the authority to supervise or control the actual work of Contractor, its employees or subcontractors. The Contractor, and not the Town, shall determine the time of its performance of the services provided under this Agreement so long as Consultant meets the requirements of its agreed scope of work and the specifications, plans/construction drawings as set forth in Section 2.1 above and Exhibit A. Contractor is neither prohibited from entering into other contracts nor prohibited from practicing its profession elsewhere. Town and Contractor do not intend to nor will they combine business operations under this Agreement. 3.60 Entire Agreement; Interpretation-Parol Evidence. This Contract represents the entire agreement of the parties with respect to its subject matter, and all previous agreements, whether oral or written, entered into prior to this Contract are hereby revoked and superseded by this Contract. No representations, warranties, inducements or oral agreements have been made by any of the parties except as expressly set forth herein, or in any other contemporaneous written agreement executed for the purposes of carrying out the provisions of this Contract. This Contract shall be construed and interpreted according to its plain meaning, and no presumption shall be deemed to apply in favor of, or against the party drafting the Contract. The parties acknowledge and agree that each has had the opportunity to seek and utilize legal counsel in the drafting of, review of, and entry into this Contract. 3.61 Assignment; Delegation. No right or interest in this Contract shall be assigned or delegated by Contractor without prior, written permission of the Town, signed by the Town Manager. Any attempted assignment or delegation by Contractor in violation of this provision shall be a breach of this Contract by Contractor. 3.62 Subcontracts. No subcontract shall be entered into by the Contractor with any other party to furnish any of the Materials, Services or construction specified herein without the prior, written approval of the Town. The Contractor is responsible for performance under this Contract whether or not Subcontractors are used. 3.63 Rights and Remedies. No provision in this Contract shall be construed, expressly or by implication, as waiver by the Town of any existing or future right and/or remedy available by law in the event of TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 31 any claim of default or breach of this Contract. The failure of the Town to insist upon the strict performance of any term or condition of this Contract or to exercise or delay the exercise of any right or remedy provided in this Contract, or by law, or the Town’s acceptance of and payment for Materials or Services, shall not release the Contractor from any responsibilities or obligations imposed by this Contract or by law, and shall not be deemed a waiver of any right of the Town to insist upon the strict performance of this Contract. 3.64 Attorneys’ Fees. In the event either party brings any action for any relief, declaratory or otherwise, arising out of this Contract or on account of any breach or default hereof, the prevailing party shall be entitled to receive from the other party reasonable attorneys’ fees and reasonable costs and expenses, determined by the court sitting without a jury, which shall be deemed to have accrued on the commencement of such action and shall be enforced whether or not such action is prosecuted through judgment. 3.65 Notices and Requests. Any notice or other communication required or permitted to be given under this Contract shall be in writing and shall be deemed to have been duly given if (A) delivered to the party at the address set forth below, (B) deposited in the U.S. Mail, registered or certified, return receipt requested, to the address set forth below or (C) given to a recognized and reputable overnight delivery service, to the address set forth below: If to the Town: Town of Fountain Hills 16705 East Avenue of the Fountains Fountain Hills, Arizona 85268 Attn: Kenneth W. Buchanan, Town Manager With copy to: GUST ROSENFELD, P.L.C. One East Washington Street, Suite 1600 Phoenix, Arizona 85004-2553 Attn: Andrew J. McGuire, Esq. If to Contractor: _________________________________ _________________________________ _________________________________ Attn: ____________________________ or at such other address, and to the attention of such other person or officer, as any party may designate in writing by notice duly given pursuant to this Section. Notices shall be deemed received (A) when delivered to the party, (B) three business days after being placed in the U.S. Mail, properly addressed, with sufficient postage or (C) the following business day after being given to a recognized overnight delivery service, with the person giving the notice paying all required charges and instructing the delivery service to deliver on the following business day. If a copy of a notice is also given to a party’s counsel or other recipient, the provisions above governing the date on which a notice is deemed to have been received by a party shall mean and refer to the date on which the party, and not its counsel or other recipient to which a copy of the notice may be sent, is deemed to have received the notice. 3.66 Overcharges by Antitrust Violations. The Town maintains that, in practice, overcharges resulting from antitrust violations are borne by the purchaser. Therefore, to the extent permitted by law, the Contractor hereby assigns to the Town any and all claims for such overcharges as to the goods and services used to fulfill the Contract. 3.67 Force Majeure. Except for payment for sums due, neither party shall be liable to the other nor deemed in default under this Contract if and to the extent that such party’s performance of this Contract is prevented by reason of force majeure. The term “force majeure” means an occurrence that is beyond the control of the party affected and occurs without its fault or negligence. Without limiting the foregoing, force majeure includes acts of God; acts of the public enemy; war; riots; strikes; mobilization; labor disputes; civil disorders; fire; floods; lockouts, injunctions-intervention-acts, or failures or refusals to act by government authority; and other TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 32 similar occurrences beyond the control of the party declaring force majeure which such party is unable to prevent by exercising reasonable diligence. The force majeure shall be deemed to commence when the party declaring force majeure notifies the other party, in accordance with Section 3.65, of the existence of the force majeure and shall be deemed to continue as long as the results or effects of the force majeure prevent the party from resuming performance in accordance with this Contract. Force majeure shall not include the following occurrences: A. Late Delivery. Late delivery of equipment or materials caused by congestion at a manufacturer’s plant or elsewhere, an oversold condition of the market, inefficiencies or similar occurrences. B. Late Performance. Late performance by a Subcontractor unless the delay arises out of a force majeure occurrence in accordance with this Section 3.67. Any delay or failure in performance by either party hereto shall not constitute default hereunder or give rise to any claim for damages or loss of anticipated profits if, and to the extent that such delay or failure is caused by force majeure. If either party is delayed at any time in the progress of the Work by force majeure, then the delayed party shall notify the other party in accordance with Section 3.65 and shall make a specific reference to this Section, thereby invoking its provisions. The delayed party shall cause such delay to cease as soon as practicable and shall notify the other party in writing. The time of Substantial Completion or Final Completion shall be extended by written Contract amendment for a period of time equal to the time that the results or effects of such delay prevent the delayed party from performing in accordance with this Contract. 3.68 Confidentiality of Records. The Contractor shall establish and maintain procedures and controls that are acceptable to the Town for the purpose of ensuring that information contained in its records or obtained from the Town or from others in carrying out its obligations under this Contract shall not be used or disclosed by it, its agents, officers, or employees, except as required to perform Contractor’s duties under this Contract. Persons requesting such information should be referred to the Town. Contractor also agrees that any information pertaining to individual persons shall not be divulged other than to employees or officers of Contractor as needed for the performance of duties under this Contract. 3.69 Records and Audit Rights. To ensure that the Contractor and its Subcontractors are complying with the warranty under Section 3.70 below, Contractor’s and its Subcontractors’ books, records, correspondence, accounting procedures and practices, and any other supporting evidence relating to this Contract, including the papers of any Contractor and its Subcontractors’ employees who perform any Work or Services pursuant to this Contract (all of the foregoing hereinafter referred to as “Records”), shall be open to inspection and subject to audit and/or reproduction during normal working hours by the Town, to the extent necessary to adequately permit (1) evaluation and verification of any invoices, payments or claims based on Contractor’s and its Subcontractors’ actual costs (including direct and indirect costs and overhead allocations) incurred, or units expended directly in the performance of Work under this Contract and (2) evaluation of the Contractor’s and its Subcontractors’ compliance with the Arizona employer sanctions laws referenced in Section 3.70 below. To the extent necessary for the Town to audit Records as set forth in this Section, Contractor and its Subcontractors hereby waive any rights to keep such Records confidential. For the purpose of evaluating or verifying such actual or claimed costs or units expended, the Town shall have access to said Records, even if located at its Subcontractors’ facilities, from the effective date of this Contract for the duration of the Work and until three years after the date of final payment by the Town to Contractor pursuant to this Contract. Contractor and its Subcontractors shall provide the Town with adequate and appropriate workspace so that the Town can conduct audits in compliance with the provisions of this Section. The Town shall give Contractor or its Subcontractors reasonable advance notice of intended audits. Contractor shall require its Subcontractors to comply with the provisions of this Section by insertion of the requirements hereof in any subcontract pursuant to this Contract. 3.70 E-verify Requirements. To the extent applicable under ARIZ. REV. STAT. § 41-4401, the Contractor and its Subcontractors warrant compliance with all Federal immigration laws and regulations that relate to their employees and their compliance with the E-verify requirements under ARIZ. REV. STAT.§ 23-214(A). TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 33 Contractor’s or its Subcontractors’ failure to comply with such warranty shall be deemed a material breach of this Contract and may result in the termination of this Contract by the Town. 3.71 Right to Inspect Plant. The Town may, at reasonable times, inspect the part of the plant or place of business of the Contractor or Subcontractor that is related to the performance of this Contract. 3.72 Warranties. Contractor warrants to the Town that all Materials and equipment furnished shall be new unless otherwise specified and agreed by the Town and that all Work shall be of first class quality, free from faults and defects and in conformance with the Contract. If at any time within one year following the date of Final Completion and acceptance of the entire Project (or such longer period as may be provided under warranties for equipment or Materials): (A) any part of the Materials furnished in connection with the Work shall be or become defective due to defects in either labor or Materials, or both, or (B) Contractor’s Work or Materials, or both, are or were not in conformance with original or amended Plans and Specifications, or supplementary shop drawings, then the Contractor shall upon written notice from the Town immediately replace or repair such defective or non- conforming Material or workmanship at no cost to the Town. Contractor further agrees to execute any special guarantees as provided by the Contract or required by law. Contractor shall require similar guarantees from all vendors and from all its Subcontractors. Contractor further agrees, upon written demand of the Town and during the course of construction, to immediately re-execute, repair or replace any Work that fails to conform to the requirements of the Contract, whether caused by faulty Materials or workmanship, or both. In the event Contractor shall fail or refuse to make such change upon the Town’s written demand, the Town shall have the right to have such Work re-executed, repaired or replaced, to withhold from or back charge to Contractor all costs incurred thereby. 3.73 Inspection. All Materials and/or Services are subject to final inspection and acceptance by the Town. Materials and/or Services failing to conform to the Specifications of this Contract will be held at Contractor’s risk and may be returned to the Contractor. If so returned, all costs are the responsibility of the Contractor. Upon discovery of non-conforming Materials or Services, the Town may elect to do any or all of the following by written notice to the Contractor: (A) waive the non-conformance; (B) stop the Work immediately; or (C) bring material or service into compliance and withhold the cost of same from any payments due to the Contractor. 3.74 No Replacement of Defective Tender. Every tender of Materials shall fully comply with all provisions of the Contract. If a tender is made which does not fully conform, this shall constitute a breach of the Contract as a whole. 3.75 Shipment Under Reservation Prohibited. Contractor is not authorized to ship Materials under reservation and no tender of a bill of lading will operate as a tender of the Materials. 3.76 Liens. All Materials, Service or construction shall be free of all liens and, if the Town requests, a formal release of all liens shall be delivered to the Town. 3.77 Licenses. Contractor shall maintain in current status all Federal, State and Local licenses and permits required for the operation of the business conducted by the Contractor as applicable to this Contract. A Class A General Engineering contractor’s license shall be required to perform the work. 3.78 Patents and Copyrights. All Services, information, computer program elements, reports and other deliverables, which may be patented or copyrighted and created under this Contract are the property of the Town and shall not be used or released by the Contractor or any other person except with the prior written permission of the Town. 3.79 Preparation of Specifications by Persons other than Town Personnel. All Specifications shall seek to promote overall economy for the purposes intended and encourage competition and not be unduly restrictive in TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 34 satisfying the Town’s needs. No person preparing Specifications shall receive any direct or indirect benefit from the utilization of Specifications, other than fees paid for the preparation of Specifications. 3.80 Advertising. Contractor shall not advertise or publish information concerning this Contract without prior, written consent of the Town. 3.81 Conflicting Terms. In the event of any inconsistency, conflict or ambiguity among the terms of the Contract, the IFB, the Scope of Work, any Town-approved Purchase Order, the Price Sheet, any Town- approved Work Orders, invoices and the Contractor’s response to the IFB, the documents shall govern in the order listed herein. PART D - ALTERNATIVE DISPUTE RESOLUTION 3.82 Scope. Notwithstanding anything to the contrary provided elsewhere in the Contract Documents, except for subsection 3.85(G) below, the alternative dispute resolution (“ADR”) process provided for herein shall be the exclusive means for resolution of claims or disputes arising under, relating to or touching upon the Contract, the interpretation thereof or the performance or breach by any party thereto, including but not limited to original claims or disputes asserted as cross claims, counterclaims, third party claims or claims for indemnity or subrogation, in any threatened or ongoing litigation or arbitration with third parties, if such disputes involve parties to contracts containing this ADR provision. 3.83 Neutral Evaluator, Arbitrators. The Town will select a Neutral Evaluator to serve as set forth in this ADR process, subject to the Contractor’s approval, which approval shall not be unreasonably withheld. In the event that the Town and the Contractor are unable to agree upon a Neutral Evaluator, the neutral evaluation process shall be eliminated and the parties shall proceed with the binding arbitration process set forth in Section 3.85 below. The Town and Contractor shall each select an arbitrator to serve as set forth in this ADR process. Each arbitrator selected shall be a member of the State Bar of the State of Arizona and shall have experience in the field of construction law. None of the arbitrators nor any of the arbitrator’s firms shall have presently, or in the past, represented any party to the arbitration. 3.84 Neutral Evaluation Process. If the parties have been unable to resolve the disputes after discussions and partnering, but the parties have agreed to a Neutral Evaluator, the following neutral evaluation process shall be used to resolve any such dispute. A. Notification of Dispute. The Town through its Engineer shall notify the Neutral Evaluator in writing of the existence of a dispute within ten days of the Town or the Contractor declaring need to commence the neutral evaluation process. B. Non-Binding Informal Hearing. The Neutral Evaluator shall schedule a non-binding informal hearing of the matter to be held within seven calendar days from receipt of notification of the existence of a dispute. The Neutral Evaluator may conduct the hearing in such manner as he deems appropriate and shall notify each party of the hearing and of its opportunity to present evidence it believes will resolve the dispute. Each party to the dispute shall be notified by the Neutral Evaluator that the party shall submit a written outline of the issues and evidence intended to be introduced at the hearing and the proposed resolution of the dispute to the Neutral Evaluator before the hearing commences. Arbitrators shall not participate in such informal hearing or proceedings process. The Neutral Evaluator is not bound by the rules of evidence when admitting evidence in the hearing and may limit the length of the hearing, the number of witnesses or any evidence introduced to the extent deemed relevant and efficient. C. Non-Binding Decision. The Neutral Evaluator shall render a non-binding written decision as soon as possible, but not later than five calendar days after the hearing. TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 35 3.85 Binding Arbitration Procedure. The following binding arbitration procedure, except as provided in subsection 3.85(G) below, shall serve as the exclusive method to resolve a dispute if (A) the parties cannot agree to a Neutral Evaluator as set forth in Section 3.83 above or (B) any party chooses not to accept the decision of the Neutral Evaluator. The party requesting binding arbitration shall notify the Neutral Evaluator of a request for arbitration in writing within three business days’ of receipt of the Neutral Evaluator’s decision. If the Contractor requests arbitration or if Contractor rejects the Town’s selection of a Neutral Evaluator, it shall post a cash bond with the Neutral Evaluator in an amount agreed upon by the parties or, in the event of no agreement, the Neutral Evaluator shall establish the amount of the cash bond to defray the cost of the arbitration as set forth in subsection 3.85(M) and the proceeds from the bond shall be allocated in accordance with subsection 3.85(M) by the Arbitration Panel. A. Arbitration Panel. The Arbitration Panel shall consist of three arbitrators: the Town’s appointed arbitrator, the Contractor’s appointed arbitrator and a third arbitrator (or “Neutral Arbitrator”) who shall be selected by the parties’ arbitrators as set forth in subsection 3.85(B) If more than one consultant or contractor is involved in a dispute, the consultants and/or contractors shall agree on an appointee to serve as arbitrator. The Neutral Evaluator shall not participate in the proceedings. B. Selection of Neutral Arbitrator. The parties’ arbitrators shall choose the Neutral Arbitrator within five business days of receipt of notification of a dispute from the Neutral Evaluator. The Neutral Arbitrator shall have the same qualifications as those of the arbitrators set forth in subsection 3.83. In the event that the selected arbitrators cannot agree on the Neutral Arbitrator as set forth above, the Neutral Arbitrator shall be the Default Neutral Arbitrator, a person or entity jointly selected by the Town and the Contractor. If the Town and the Contractor cannot agree on a Default Neutral Arbitrator, the Town and the Contractor shall each submit two names to an appropriate judge who shall select one person. C. Expedited Hearing. The parties have structured this procedure with the goal of providing for the prompt, efficient and final resolution of all disputes falling within the purview of this ADR process. To that end, any party can petition the Neutral Evaluator to set an expedited hearing. If the Neutral Evaluator determines that the circumstances justify it, the Neutral Evaluator shall contact the selected Arbitration Panel and arrange for scheduling of the arbitration at the earliest possible date. In any event, the hearing of any dispute not expedited will commence as soon as practical but in no event later than 20 calendar days after notification of request for arbitration having been submitted. This deadline can be extended only with the consent of all the parties to the dispute, or by decision of the Arbitration Panel upon a showing of emergency circumstances. D. Procedure. The Arbitration Panel will select a Chairman and will conduct the hearing in such a manner that will resolve disputes in a prompt, cost efficient manner giving regard to the rights of all parties. Each party shall supply to the Arbitration Panel a written pre-hearing statement which shall contain a brief statement of the nature of the claim or defense, a list of witnesses and exhibits, a brief description of the subject matter of the testimony of each witness who will be called to testify, and an estimate as to the length of time that will be required for the arbitration hearing. The Arbitration Panel shall review and consider the Neutral Evaluator decision, if any. The Chairman shall determine the nature and scope of discovery, if any, and the manner of presentation of relevant evidence consistent with deadlines provided herein and the parties’ objective that disputes be resolved in a prompt and efficient manner. No discovery may be had of any materials or information for which a privilege is recognized by Arizona law. The Chairman upon proper application shall issue such orders as may be necessary and permissible under law to protect confidential, proprietary or sensitive materials or information from public disclosure or other misuse. Any party may make application to the Maricopa County Superior Court to have a protective order entered as may be appropriate to confirm such orders of the Chairman. E. Hearing Days. In order to effectuate parties’ goals, the hearing once commenced, will proceed from business day to business day until concluded, absent a showing of emergency circumstances. TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 36 F. Award. The Arbitration Panel shall, within ten calendar days from the conclusion of any hearing, by majority vote issue its award. The award shall include an allocation of fees and costs pursuant to subsection 3.85(M) herein. The award is to be rendered in accordance with this Contract and the laws of the State of Arizona. G. Scope of Award. The Arbitration Panel shall be without authority to award punitive damages, and any such punitive damage award shall be void. The Arbitration Panel shall be without any authority to issue an award against any individual party in excess of twenty percent (20%) of the original Contract amount, but in no event shall any award exceed $2,000,000, exclusive of interest, arbitration fees, costs and attorneys’ fees. If an award is made against any individual party in excess of $100,000, exclusive of interest, arbitration fees, costs and attorneys’ fees, it must be supported by written findings of fact, conclusions of law and a statement as to how damages were calculated. Any claim in excess of twenty percent (20%) of the original Contract amount or in excess $2,000,000 shall be subject to the jurisdiction of the Superior Court of Arizona, Maricopa County. Any party can contest the validity of the amount claimed if an action is filed in the Superior Court. H. Jurisdiction. The Arbitration Panel shall not be bound for jurisdictional purposes by the amount asserted in any party’s claim, but shall conduct a preliminary hearing into the question of jurisdiction upon application of any party at the earliest convenient time, but not later than the commencement of the arbitration hearing. I. Entry of Judgment. Any party can make application to the Maricopa County Superior Court for confirmation of an award, and for entry of judgment on it. J. Severance and Joinder. To reduce the possibility of inconsistent adjudications: (1) the Neutral Evaluator or the Arbitration Panel may, at the request of any party, join and/or sever parties, and/or claims arising under other contracts containing this ADR provision, and (2) the Neutral Evaluator, on his own authority, or the Arbitration Panel may, on its own authority, join or sever parties and/or claims subject to this ADR process as they deem necessary for a just resolution of the dispute, consistent with the parties’ goal of the prompt and efficient resolution of disputes, provided, however, that the Contractor, Architect/Engineer and Project professionals shall not be joined as a party to any claim made by a Contractor. Nothing herein shall create the right by any party to assert claims against another party not germane to the Contract or not recognized under the substantive law applicable to the dispute. Neither the Neutral Evaluator nor the Arbitration Panel are authorized to join to the proceeding parties not in privity with the Town. Contractor cannot be joined to any pending arbitration proceeding, without Contractor’s express written consent, unless Contractor is given the opportunity to participate in the selection of the non-Town appointed arbitrator. K. Appeal. Any party may appeal (1) errors of law by the Arbitration Panel if, but only if, the errors arise in an award in excess of $100,000, (2) the exercise by the Chairman or Arbitration Panel of any powers contrary to or inconsistent with the Contract or (3) on the basis of any of the grounds provided in ARIZ. REV. STAT. § 12-1512, as amended. Appeals shall be to the Maricopa County Superior Court within 15 calendar days of entry of the award. The standard of review in such cases shall be that applicable to the consideration of a motion for judgment notwithstanding the verdict, and the Maricopa County Superior Court shall have the authority to confirm, vacate, modify or remand an award appealed under this Section, but not to conduct a trial, entertain the introduction of new evidence or conduct a hearing de novo. L. Uniform Arbitration Act. Except as otherwise provided herein, binding arbitration pursued under this provision shall be governed by the Uniform Arbitration Act as codified in Arizona in ARIZ. REV. STAT. § 12-1501, et seq. M. Fees and Costs. Each party shall bear its own fees and costs in connection with any informal hearing before the Neutral Evaluator. All fees and costs associated with any arbitration before the Arbitration Panel, including without limitation the Arbitration Panelists’ fee, and the prevailing party’s reasonable TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT DS2015-101 2169333.2 37 attorneys’ fees, expert witness fees and costs, will be paid by the non-prevailing party, except as provided for herein. In no event shall any Arbitrator’s hourly fees be awarded in an amount in excess of $200 per hour and (1) costs shall not include any travel expenses in excess of mileage at the rate paid by the Town, not to exceed a one way trip of 150 miles, and (2) all travel expenses, including meals, shall be reimbursed pursuant to the travel policy of the Town in effect at the time of the hearing. The determination of prevailing and non-prevailing parties, and the appropriate allocation of fees and costs, will be included in the award by the Arbitration Panel. Fees for the Neutral Evaluator shall be divided evenly between the Town and the Contractor. N. Confidentiality. Any proceeding initiated under ADR shall be deemed confidential to the maximum extent allowed by Arizona law and no party shall, except for disclosures to a party’s attorneys or accountants, make any disclosure related to the disputed matter or to the outcome of any proceeding except to the extent required by law, or to seek interim equitable relief, or to enforce an agreement reached by the parties or an award made hereunder. O. Equitable Litigation. Notwithstanding any other provision of ADR to the contrary, any party can petition the Maricopa County Superior Court for interim equitable relief as necessary to preserve the status quo and prevent immediate and irreparable harm to a party or to the Program pending resolution of a dispute pursuant to ADR provided herein. No court may order any permanent injunctive relief except as may be necessary to enforce an order entered by the Arbitration Panel. The fees and costs incurred in connection with any such equitable proceeding shall be determined and assessed in ADR. P. Change Order. Any award in favor of the Contractor against the Town or in favor of the Town against the Contractor shall be reduced to a Change Order and executed by the parties in accordance with the award and the provisions of this Contract. Q. Merger and Bar. Any claim asserted pursuant to this ADR process shall be deemed to include all claims, demands, and requests for compensation for costs and losses or other relief, including the extension of the Contract performance period which reasonably should or could have been brought against any party that was or could have been brought into this ADR process, with respect to the subject claim. The Arbitration Panel shall apply legal principles commonly known as merger and bar to deny any claim or claims against any party regarding which claim or claims recovery has been sought or should have been sought in a previously adjudicated claim for an alleged cost, loss, breach, error, or omission. R. Inclusion in Other Contracts. The Contractor shall cooperate with the Town in efforts to include this ADR provision in all other Project contracts. Subject to Contractor’s reasonable agreement, the Contractor agrees that any modification to this ADR provision that is included in the construction or other contracts shall also apply to the Contractor. It is the intent of the parties that any changes to this ADR provision in later contracts will be evolutionary and designed to incorporate the terms of this ADR provision without material changes to the substance or procedure of this ADR provision. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 2169333.2 EXHIBIT A TO INVITATION FOR BIDS NO. DS2015-101 [Specifications, Plans/Construction Drawings, Geotechnical Report] See following pages. S T DEV SHEA B I OWN O VELOPM BOULEV NTERS TECH F FOUN MENT S VARD & SECTIO HNICAL JU TAIN HI ERVICE & SAGU ON IMPR SPECIF UNE 2014 ILLS, AR ES DEPA UARO B ROVEM FICATIO RIZONA ARTMEN BOULE MENTS ONS A NT EVARD 2169333.2 Remainder of this document is on the Town’s website at http://www.fh.az.gov/available-bids.aspx and is incorporated herein by reference. 2169333.2 Remainder of this document is on the Town’s website at http://www.fh.az.gov/available-bids.aspx and is incorporated herein by reference. 2169333.2 EXHIBIT B TO INVITATION FOR BIDS NO. DS2015-101 [Substitution/Equal Request Form] See following pages. 2169333.2 SUBSTITUTION/EQUAL REQUEST FORM Shea Blvd. Widening Project DS2015-101 Bidder _____________________ hereby submits for Town’s consideration the following product, instead of the specified item, for the above Project. Section Page Paragraph/Line Specified Item ________________ _______ ________________________ _______________________________ Proposed Substitution: _______________________________________________________________________ ___________________________________________________________________________________________ (NOTE: See Article II – Bid Process; Bid Award, Section 2.4(C), Approval of Substitutions, or Section 2.4(D), Use of Equals, as applicable, for additional criteria concerning prior approval for substitutions or use equals of material and equipment.) Attach complete product description, drawings, photographs, performance and test data, and other information necessary for evaluation, indicating by highlighting all comparable data between specified item and proposed substitution or equal. Identify specific model numbers, finishes, options, etc. A. Will changes be required to Project design (architecturally, structurally, mechanically or electrically) in order to properly install proposed substitution? Yes _____ No _____ If Yes, explain: ____________________________________________________________________________________________ ____________________________________________________________________________________________ B. Will the undersigned pay for changes to the Project design, including engineering and drawing costs, caused by requested substitution? Yes _____ No _____ C. List differences between proposed substitution and specified item. Specified Item Proposed Substitution ___________________________________________ ____________________________________________ ___________________________________________ ____________________________________________ D. Does substitution affect Drawing dimensions? Yes _____ No _____ If Yes, explain: ____________________________________________________________________________________________ ____________________________________________________________________________________________ E. What effect does substitution have on other trades? ___________________________________ ____________________________________________________________________________________________ F. Does manufacturer’s warranty of proposed substitution differ from that specified? Yes _____ No _____ If Yes, explain: ____________________________________________________________ ____________________________________________________________________________________________ 2169333.2 B-2 G. Will substitution affect progress schedule? Yes _____ No _____ If Yes, explain: ____________________________________________________________________________________________ ____________________________________________________________________________________________ H. Will substitution require more license fees or royalties than specified product? Yes _____ No _____ If Yes, explain: ____________________________________________________________ ____________________________________________________________________________________________ I. Will maintenance and service parts be locally available for substitution? Yes _____ No _____ If Yes, explain: ____________________________________________________________ ____________________________________________________________________________________________ J. Will substitution be compatible with all adjacent material and/or applications to or on the proposed substitution? Yes _____ No _____ If no, explain what material substitutions will be required to make your proposed substitution compatible: ___________________________________________________________ ____________________________________________________________________________________________ List materials that will be required to provide compatibility: ___________________________________________ ____________________________________________________________________________________________ The undersigned hereby assumes all responsibility for all provisions indicated herein and agrees that, if adequate comparable information is not provided as required by Section 2.4(C), Approval of Substitutions, or Section 2.4(D), Use of Equals, as applicable, and this Form, the proposed substitution or equal shall be subject to rejection. The undersigned understands and agrees that the substitution requested, including all supporting data, must be submitted to and be in the possession of the Town ten (10) full calendar Days prior to the Bid Deadline, to be considered, including all supporting data for the substitution. Telegraphic (facsimile) or electronic (email) copies will not be considered. Submitted by: For Town’s Use Only: _______________________________________ Accepted: ____________________________________ Signature Accepted: ____________________________________ _______________________________________ Print Name By: ________________________ Date: ____________ _______________________________________ Remarks: _____________________________________ Title _____________________________________________ _____________________________________________ _______________________________________ Company Name _______________________________________ Address _______________________________________ City, State, Zip Code _______________________________________ Date Telephone No. 2169333.2 EXHIBIT C TO INVITATION FOR BIDS NO. DS2015-101 [Price Sheet] See following pages. TOWNOFFOUNTAINHILLS-SHEABLVDWIDENINGPRICESHEETfsfeSiBIDITEMNUMBERITEMDESCRIPTIONUNITQUANTITYUNITCOSTTOTAL104150PROJECTSIGNS (NEW)EA3s%i9SO.Dcj105801CONSTRUCTIONSURVEYINGLS1%/bDOC.DO%/6>,/Xxy.CD105620AS-BUILTSLS1%£0lSo.(X>%±2S6.oo205001ROADWAYEXCAVATIONCY3.935*K.3tt&220403DUMPEDRIPRAP (WITHFABRIC)CY28$tea*$3101044"ABCSY653$S.M$SJhSO*3101066°ABCSY6.235$(..no%3-7.V/Afr>31011212"ABCSY6,755$//.£>/r>%7*jSC&.do3212022"ACA-19SY76,926%0?*$(o73,/0?&3212043"ACA-19SY653s3o. od$/<?.£90.OO324121PCC PAVEMENT(FOR BUS BAY)(MAGSTD DTL252,MODIFIED)(9"THICK)SY865xro.ooS »329101TACKCOATTON21$1£0.oa$/S15O.O0336001SAWCUTPAVEMENTLF6.190%.US%V.&LZSo340001VERT CURB &GUTTER.MAG STD DTL220TYPE"A", H=6"LF5.961$<9co%SSL^.OO340002VERT CURB &GUTTER, MAG STD DTL220 TYPE "A",H=4"LF194%/Sod$1.9JOoo340003VERTICALSLIP CURB (STD DTLFH-225), H=8"LF200%/SOD%.lOOO.06340005CURB &GUTTER (MAGSTD DTL220-1,VARIABLEWIDTHGUTTER, H=4")LF80%/SCO/JlOO.oo340062SINGLE CURB, MAGSTDDTL222TYPE "B"LF48$3S.C0$/acooo340200CONCRETESCUPPER.MAGSTDDTL206EA1%S<teo.cd$S9Sb&>340204CONCRETESIDEWALK.MAGSTDDTL230SF19.053sa-?s%sa.i?sts340206CONCRETESIDEWALK, MAG STD DTL230(6" THICK)SF942*s.*s%V99>5.S>340209CONCRETE SIDEWALK(REINFORCED) (6"THICK)SF930$SSo%SJ/S.D£>340221MEDIANNOSETRANSITION,MAGSTDDTL223SF109%/S.Sfi$/.^7/.S&340263SIDEWALKRAMP,MAGSTDDTL235-3TYPE'CEA3%£(*M.a>$7JV0.OO340267SIDEWALKRAMP (DTLA)EA1%XLOSO.O)%t3'?So.C&340268SIDEWALK RAMP (DTL B)EA7%;<?AS(X>%/3,M*0>C-1 TOWN OF FOUNTAIN HILLS •SHEA BLVD WIDENING PRICE SHEET BID ITEM NUMBER ITEM DESCRIPTION UNIT QUANTITY UNIT COST TOTAL 340269 SIDEWALKRAMP(ADOTSTD DWG NO C-05.30)(TYPE C)EA 2 S/St>6D£>*20MC£ 340276 SIDEWALKRAMP(SCOTTSDALE STD DTL 2235-2)EA 1 %/SSCCfi %JSSO.DD 340301 CONCRETE VALLEY GUTTER,MAG STD DTL 240 SF 426 $/Uoo %L.M,C* 340406 DRIVEWAY ENTRANCE (MAG STD DTL251) (6"THICK)SF 358 %f£6 $J.oiJ.oo 342005 MEDIANPAVING (STAMPED CONCRETE)(ADOT STD DWG NO C-05.40)SF 2.376 $/,CD %26,.tturn 345001 ADJUST MANHOLE FRAME &COVER,MAG STD DTL 422 EA 9 %<Jl<.C6 $</73S.'m 345002 ADJUST VALVE BOX &COVER,MAG STD DTL 391-1 EA 19 %Sl0/?.C6 $9S0O.O6 350001 REMOVE AC PAVEMENT SY 11,201 *J.7S %34f(&.1S 350017 REMOVEAC PAVEMENT (MILLING)(2")(Per ADOT Spec 202-3.03C)SY 50,549 $/,*$•s or,j<//./S 350031 REMOVE VALLEY GUTTER SF 391 $J7.M>$5i«\aa 350041 REMOVE CURB &GUTTER LF 2,281 %3.S6 s79f£So 350042 REMOVE CURB LF 1,948 **#/>s 779J.M 350061 REMOVE CONCRETE SIDEWALK.DRIVEWAYS &SLABS SF 1,431 $/.So %2/</kSo 350082 REMOVE DRAINAGE HEADWALL EA 4 %3£S.od s /MOW 350083 REMOVE DRAINAGE SPILLWAY SF 165 $r?,,**'%SSZ.7S 350112 REMOVE GUARD RAIL LF 92 $h.€>0 $fsa.od 350201 REMOVE PIPES (LESS THAN24" Dia.) LF 30 $/#.0o %A?O0* 350221 REMOVE PIPES (24" Dia. TO 48" Dia.) LF 22 %//r.PD $iMt# 350280 REMOVE CATCH BASIN EA 2 $W0.O6 $ffio.oo 350602 REMOVE TRAFFIC MARKINGS 4"EQUIV LF 1,537 $/./S %f76>7.JS 350604 REMOVE SIGN.POST &POST BASE EA 12 %9e.O0 %/,at/>.0o 350805 RELOCATE SIGN W/NEW POST &POST BASE EA 27 s %/4>£o.c# 350606 RELOCATE SIGN PANEL EA 15 %S*.So $A71.&6 350632 REMOVE PULL BOX EA 22 $SS.O£>s /£/0tac* 350836 REMOVE &SALVAGE TRAFFIC SIGNAL POLE EA 4 %ss#.M>%££pett% 350637 REMOVE&SALVAGETRAFFICSIGNAL (CONTROLLERS) EA 3 %200.0O $faoc.oo C-2 BIDITEMNUMBER350638350711350712350717350718350906401001401101401110402101402102402104402121402122402123402136402140402141402142402146402401402411402412402500402501403002TOWNOFFOUNTAINHILLS•SHEABLVDWIDENINGPRICESHEETITEMDESCRIPTIONREMOVEEXISTINGFOUNDATION(36"MIN.BELOWFINISHEDGRADE)REMOVE(GUARDRAILENDTERMINALASSEMBLY)REMOVE(GUARDRAILAPPROACHENDTREATMENT)REMOVE(EXISTINGPAVEMENTSTRIPING)REMOVE(RAISEDPAVEMENTMARKERS)REMOVECHAIN LINKFENCETRAFFICCONTROLOFF-DUTYPOLICEOFFICERPORTABLECHANGEABLEMESSAGESIGNWHITESTRIPE60MILTHERMOPLASTIC4" EQUIVYELLOWSTRIPE60MILTHERMOPLASTIC4" EQUIVWHITESTRIPE90MILTHERMOPLASTIC4" EQUIVPAVEMENTSYMBOLSPREFORMEDBIKELANESYMBOLPREFORMEDBIKELANEARROWPREFORMEDPAINTMEDIANNOSERAISED PAVEMENTMARKERS.TYPE "C" (ADOTSTD DTLM-19)RAISED PAVEMENTMARKERS,TYPE "D"(ADOTSTD DTLM-19)RAISED PAVEMENTMARKERS.TYPE "G" (ADOTSTD DTLM-19)RAISED PAVEMENTMARKERS(FIREHYDRANT)(SCOTTSDALEDTLNO.2363)REFLECTIVETRAFFICSIGNPANELSIGN POST (PERFORATED) (2S)FOUNDATIONFORSQUARETUBEPOSTOBJECTMARKERSIGNPANELTYPE1OBJECTMARKERSIGNPANELTYPE2ELECTRICALCONDUIT(2") (PVC)C-3UNITEAEAEALFEALFLSHREA-DAYLFLFLFEAEAEAEAEAEAEAEASFLFEAEAEALFQUANTITYUNITCOST*/***• 0*7frTY><fi*£00.0060J00/£0#20\20.Od/OS.DOO^1,680S&O0756SS0.CO40,137-^£.371,&S2.312•*^47•3*?**35S&.0035'/S.00'/«A?574<?,so92f<JQ4263.S028*3JO234/7.S04862-.7S56/S0-06£&**J.3S0O1,352$/*/,06TOTAL%<2soo.oo*/7Sno\%C0PO/20C£?£.O0&CO.OG*/OSJooo2?9<&.*/C0~&J"37.too.Tr>W^DW.tS/#?.<&/.sttf.rd9.Y00C&^/^C**04SC6<&&.o**<£.00?.06$,&a.(x>%/,</<}/.00$9r.co$**9S.eb$y.AS2&$ft/O0.O£J$^3STbo$33S.06%//,94r.o* TOWNOFFOUNTAINHILLS•SHEABLVDWIDENINGPRICESHEETBIDITEMNUMBERITEMDESCRIPTIONUNITQUANTITYUNITCOSTTOTAL403004ELECTRICALCONDUIT(3")(PVC)LF535$/S.oo%4.i>Ao.£ta403018ELECTRICALCONDUIT(2 - 3")(PVC)LF2,920$a*.oo%&7j0O.Dd403022ELECTRICALCONDUIT(2 - 3")(HDPE)(DIRECTIONALDRILL)LF98%/sO.0£>%S#$0.06403051LEAD-INCONDUCTORWIRELF30.925%?0%f?.£l3J6403055SINGLEMODEFIBEROPTICCABLE(48 Fibers)(SMF048)LF5,833$J.00*Mb(,0.O&403300PEDESTRIANPUSHBUTTONPOSTEA1$*1£.OO%&1S.OO403301TRAFFICSIGNALPOLE, (TYPEA)(121)EA1%S7S.O0%X7&C*403316TRAFFICSIGNALPOLE,(TYPEW)EA3%Moo.oo$£t>4O0.M403465MAST ARMS, 65' LENGTHEA3%(t>*/M.0O%tq,^00,00403475LUMINAIREMAST ARM.20'LENGTHEA3%X7S.CO8 AhOS.ob403500PEDESTRIANPUSHBUTTONPOSTFOUNDATIONEA1%9?s.oo1<?9£.Oc)403502POLEFOUNDATION(TYPE A)EA1%f?s.oo5JfSo*403521POLEFOUNDATION(TYPE W)EA3$</tpc0-CO$t3s8rw.oo403601TRAFFIC SIGNALFACE (PEDESTRIAN)(MAN/HAND)(LED)(COUNTDOWN)EA16$too.a>$</jt0S&403605TRAFFICSIGNALFACE (TYPE F)EA13svs*a>%SfSo.oo403610TRAFFIC SIGNALFACE (TYPE Q)EA2%&/X00%/J?3D.00403611TRAFFIC SIGNALFACE (TYPE R)EA9SVS0./70$VaS&.oe403621PEDESTRIAN PUSH BUTTON(AUDIBLE)EA16%SaS.&a$<PYoaco403626TRAFFIC SIGNALMOUNTING ASSEMBLY (TYPE II)EA19%/tS.CD%A/fS.00403628TRAFFIC SIGNALMOUNTINGASSEMBLY (TYPE IV)EA1%V00.OO$¥0006403629TRAFFIC SIGNALMOUNTING ASSEMBLY (TYPE V)EA5%¥t*S.oo$2*JlSt*403630TRAFFICSIGNALMOUNTINGASSEMBLY(TYPEVI)EA1%S7S.Od$SlS.oa403631TRAFFICSIGNAL MOUNTINGASSEMBLY(TYPEVII)EA2%¥00o&$#00.CO403632TRAFFIC SIGNAL MOUNTING ASSEMBLY (TYPE VIII)EA1sSoo-ce%S*e>o.oc>403699CONTROLCABINETFOUNDATION(MODIFY)EA2s7S0O0%/SOO.00Q.A TOWN OF FOUNTAIN HILLS -SHEA BLVD WIDENING PRICE SHEET BID ITEM NUMBER ITEM DESCRIPTION UNIT QUANTITY UNIT COST TOTAL 403700 CONTROL CABINET FOUNDATION EA 1 $&7S.C&$Sr75.0<> 403703 CONTROL CABINET (TS 2 TYPE 1)EA 3 %£3,O00Cb S U9.OO0.C6 403705 CONTROLLER (ASC 3) (2100)EA 3 %V030.00 s /&,/J0.CO 403708 MISCELLANEOUS WORK (CONTROLLER CABINET) (INSTALL BATTERY BACKUP CABINET AND UNIT)(TOWN- FURNISHED) EA 3 $ £S0.tx> $ /0>S0 Or. 403709 MISCELLANEOUS WORK (REMOVEAND SALVAGE CONDUCTORS)LS %ZoSo.co s j2as&.rx> 403710 MISCELLANEOUS WORK (TRANSFER EMERGENCYPRE EMPTION EQUIPMENTAT SHEA/SAGUARO) LS $/AGO.CO %/20OOG 403711 MISCELLANEOUS WORK(TRANSFER EMERGENCY PRE EMPTION EQUIPMENTATTECHNOLOGYDRIVE)LS %/£00.CO s raoe.cc 403712 MISCELLANEOUS WORK (TRANSFER EMERGENCYPRE EMPTION EQUIPMENT ATCENTER LANE)LS %/aco.0o %{AO00T) 403713 MISCELLANEOUS WORK (TRANSFER I.I.S.N.S. FIXTURE AT SHEA SAGUARO) LS %tea0.a>$32G0.OO 403714 MISCELLANEOUS WORK (PAINTEXISTINGSIGNAL EQUIPMENT)LS %a/.oa>.<0 $J/.O00CO 403904 LUMINAIRE (HORIZ MOUNT) (HPS 250 WATT)EA 3 $</c#.oo %/£O0.&> 403906 INTERNALLY ILLUMINATED STREET NAME SIGN (I.I.S.N.S.)EA 2 %S&o.a>%tt.700.00 403915 CONDUCTOR(7 CONDUCTOR #14 IMSA CABLE)LF 715 %<L{,S $HUTS 403925 CONDUCTOR (20 CONDUCTOR #14 IMSACABLE)LF 2,230 $ISO $7f0Soo 403935 CONDUCTOR(NO. 10)LF 5,050 $^o $</J<tS.O0 403936 CONDUCTOR (NO. 8)LF 365 %/./S $V/71S 403937 CONDUCTOR (NO. 8) (INSULATED BOND)(GREEN)LF 1.510 s //S $/730.JO 404001 SIGNALDETECTOR LOOPS (6' x 40') (QUADRUPOLE)EA 5 %/£S0.0o %S£S0.oo 404004 COUNTER DETECTOR LOOPS (6' x 6')EA 29 S 70000 %J0.300.OO 404005 PROJECT ADVANCE COUNTER DETECTOR LOOPS (6' x 6') EA 18 %7CO.C0 $/S.teXLOb 404030 FIBER OPTIC SPLICE CLOSURE EA 8 %j2t,40.(D $£/.M0.tX> 404102 VIDEO DETECTION SYSTEM (3-CAMERA)EA 2 %24.J!S0.t0 %3fj<kZ>.0£> 404103 VIDEO DETECTION SYSTEM (4-CAMERA)EA 1 %3XSC0C0 .3£Soo.cb. 404202 NO. 5 PULL BOX,ADOT EA 17 S 7S&CO $/&,1SO.&6 404204 NO. 7 PULL BOX,ADOT EA 7 %J-7S.O0 1 IsJUSToo C-5 TOWN OF FOUNTAIN HILLS -SHEA BLVD WIDENING PRICE SHEET BID ITEM NUMBER ITEM DESCRIPTION UNIT QUANTITY UNIT COST TOTAL 404205 NO. 7 PULLBOXWITH EXTENSION. ADOT EA 17 %99J.o0 %/0.9,S.Oo 404210 NO 9 PULL BOX EA 8 %1JC0.OO %JZ&ooo.cn 415100 GUARD RAIL (W-BEAM G4) (1S) (MCDOTSTDDTL3003)LF 164 $nso %2J-70.o6 415201 DEPARTURE ENDTERMINAL (MCDOT STD DTL 3007)EA 1 %700.00 $7C0><Oc> 415205 APPROACH END TERMINAL (GET)(50"LENGTH)EA 1 %2b000O %2bo0.CO 415310 GUARDRAIL (NESTEDSTEEL W-BEAM)(TYPE3)(MCDOT STD DTL 3008-3)LF 38 $JHeo $&73.06 430001 DECOMPOSED GRANITE (1"SCREENED) (2"DEPTH)SY 3,909 $3.0O %/9.f</S.od 430008 HYDROSEEDING SY 4.650 %/<*3 $VklUd 430201 SHRUBS. 1 GAL.(COS 2620)EA 200 $/O.0O %£oooeo 430202 SHRUBS,5 GAL.(COS 2620)EA 14 %.ZO.0D $^o.cs 430303 TREES. 24" BOX(COS STD DTL2600 &2620)EA 5 %Jl>/S.£t>%/jZjS.Ob 430602 SALVAGE &RELOCATE NATIVE CACTI LF 77 %ISToo %S-71S.OO 430621 SALVAGE &RELOCATE NATIVETREES (12" CALIPER)EA 1 %/260.CP %/£oa.OQ 440201 IRRIGATION PIPING LF 1.275 S /*.00 %1<c30.O6 440261 IRRIGATIONSLEEVING (3")LF 12 s /£S>0 $/</V.0£> 440262 IRRIGATIONSLEEVING (4")LF 979 $/a.00 %//r/<?*<> 440801 MISC.IRRIGATION ITEMS (RELOCATE)EA 3 $Z7S.ot>%2U£S>0C 440830 LANDSCAPE AND IRRIGATION SYSTEM MODIFICATION LS 1 %$,CO0.OO %3f.oootP 505034 CATCH BASIN,MAG STD DTL 533 (L=17*)(ONE SIDE)EA 2 %7200.06 %/t</O0(& 505101 CATCH BASIN(ADOT STD DWG NO C-15.80)EA 4 %2wp.00 $JboOOO 505133 CONCRETE HEADWALL,MAG STD DTL 501 12" to 36"EA 1 $Ofoo.oo $C?-7o&.m 505136 JUNCTION STRUCTURE (DETAIL D1)EA 1 %Vb,bCOCD $</(?Jo0.oa 505139 SPILLWAY,MAG STD DTL 550 LF 5 $2S&. 00 S /,2SO. vo 505825 RETAININGWALL(CURB WALL WITH SIDEWALK)LF 12 %373 00 5 ysoosoo 505826 RETAININGWALL(ON DRILLED SHAFTS)SF 1.010 s /So.00 %/s/,soo.& 505905 STORM WTR POLLUTION PREVENTION PLAN LS 1 *f000.00 $$000*0>& C-6 TOWNOFFOUNTAINHILLS-SHEABLVDWIDENINGPRICESHEETBIDITEMNUMBERITEMDESCRIPTIONUNITQUANTITYUNITCOSTTOTAL510053WALL(MCO MONUMENT SIGN)LS1%L7OO.O0$O>700Oc>520009SAFETY RAIL(MAGSTD DTL145) (H=3'-6")LF184$V0.0O%73bado610851RELOCATEWATERMETEREA4$SA3.O0$£/O0- 0&61801612"STORMDRAINPIPELF30$$0e>o$£70O.OO61801818"STORMDRAINPIPELF10$/030o$/,oSo.oo61802024"STORMDRAINPIPELF226%/#0.0Q%27,/AO.0o61802230"STORMDRAINPIPELF281/S0.0O$920O.0O61851818"PIPECOLLAR,MAGSTDDTL505EA1%L<C.0Os&3V.O)61852424"PIPECOLLAR.MAGSTDDTL505EA8%93O00%tmn*61853030"PIPECOLLAR, MAGSTDDTL505EA4%/2S&.Oe53,000-06625023STORMDRAIN MANHOLE, MAGSTDDTL522SHALLOWEA1%327£.W%327S.CO800001MOBILIZATION/DEMOBILIZATIONLS1%/8S,oos*>s/&$/&>0~999994FURNISHWATERM.GAL2,000$/A0O%3^.000.Co999995CONTRACTORQUALITYCONTROLLS1%ysto0o.oo$¥3,00.00SUBTOTALBASEBID:$<?.86/,**?•**OWNER'SALLOWANCE:$200,000.00TOTALBASEBID(INCLUDINGOWNERSALLOWANCE)*:h^bt.^s^BIDALTERNATE ASUBTOTALBASEBID:$*,&i»il*i&'&~321202DEDUCT:2"ACA-19SY(76,926)$u.WH&3W3+)321202AADD:2"ACA-19SY19,425%o.n%/33,3*L>Sa321421AADD: ASPHALT-RUBBERCONCRETE(TERMINALBLEND)(2")SY57.501%9.70%S37,7S7./c321422AADD:LIMEWATERSY57,501$.04%/f/s&<>£~SUBTOTALBASEBID+SUBTOTALBIDALTERNATEA:%3Ci(S}.C*/*OWNER'SALLOWANCE:$200,000.00TOTAL BIDALTERNATE A(INCLUDINGOWNERSALLOWANCE)*:$s,a/e,sv/^9*ALLBIDSAREPRESUMEDTOINCLUDEALLAPPLICABLETAXES.CONTRACTORIS RESPONSIBLEFORENSURINGTHATALLMATERIALSCONTAINEDINTHEPLANSFORTHEPROJECTAREBIDONTHEPRICESHEET.C-7 2169333.2 EXHIBIT D TO INVITATION FOR BIDS NO. DS2015-101 [Federal Requirements] See following page. Not applicable to this Project. 2169333.2 EXHIBIT E TO INVITATION FOR BIDS NO. DS2015-101 [Licenses; DBE/WBE Status] See following page. LICENSES;DBE/WBE STATUS Shea Blvd.Widening Project DS2015-101 Attach a copy of your Contractor's License to your bid submittal. Attach a copy of your Business License to your bid submittal. * Business License must be either a Town of Fountain Hills Privilege Tax Business Licenseor an Arizona Transaction Tax (sales) Privilege Tax License Has your firm been certified by any jurisdiction in Arizona as a minority or woman owned business enterprise? Yes , No x • If yes, please provide details and documentation of the certification. 2169333 2 Issued To:1300034441748 III ARIZONA DEPARTMENT OF REVENUE LICENSE &REGISTRATION SECTION 1600 WEST MONROE PHOENIX,ARIZONA 85007-2650 BOND EXEMPTION CERTIFICATE 07067062 .,lll,l,l„lllll.lll..l,l.„ll.llll,ll,..„,lllllll,ll,llll„ll,l g'§NESBITT CONTRACTOR COMPANY INCORPORATED ml ssi 100 S PRICE RD g|.Hg TEMPEAZ 85281-3118 ALL communications and reports MUST REFER to this LICENSE NO. THE CONTRACTOR LISTED ABOVE IS EXEMPT FROM A.R.S.42-5007 BONDING -NOT TRANSFERABLE- FROM:August 1,2013 EFFECTIVE DATE TO: July 31,2014 July 13,2013 PRINT DATE Contractor Information ROC074063 Nesbitt Contracting Co Inc A COMMERCIAL 0740... Page I of 1 DISCLAIMER The dala supplied below is based on your specific request(s)and is correct to the best of our knowledge as of the date and time itwas extracted from our data files The information is providedwithoutpersonal research or analysis The data is subjectto change on a dailybasis. Youmayobtainadditionalpublicrecords relatedto any licensee, includingdismissed complaints and nondisciplinary actions and orders,by contacting the ROC directly If this information is required for legal purposes,you may request an affidavit or certified copies for a fee as specified in A.R.S.32-1104A3 Please read our Standard Disclaimer at www.azroc.gov/Legal/Disclaim.html Please note Thecompanyor individuals listedon this license mayholdother Arizona contractinglicenses. Toview information,status and complainthistoryforthe past two years on other licenses held,go to the License Inquirypage and do a "Company Name and Personnel" search byentering the name o( the company or individualslisted on the license Details for License Number 074063 (Thursday,July 17,2014 10:05:17 AM) Contractor License Name/Address/Phone Status/Action Class |Type |Entity Issued/Renewal Nesbitt Contracting Co Inc CURRENT 100 S Price Rd Tempe,AZ 85281-3118 Phone:(480)894-2831 A |COMMERCIAL |CORPORATION First Issued:12/31/1987 Renewed Thru: |06/30/2016 | License Class &Description A GENERAL ENGINEERING • Comments [TEMP LIC ISSUED 7/87]»[SEE MASTER FILE FOR ADD'L OFFICERS]«[SUSP 1/13/03-1/14/03 LACK OF BOND] Qualifying Party and Personnel TheQualifyingPartylisted below is associated withthis license. Allother persons named, if any, are associated withthe company. Theyare not all necessarily associated with this license. Name James Larkin Nesbitt Name Michael James Elliott Position QP/OFFICER |Qual.Date 12/31/1987 |Position OFFICER Name John Andrew Nesbitt Name Steven L Roulo Position OFFICER Position OFFICER Name Thomas James Nesbitt Position FORMER QP/OFFICER |Inactivation Date 07/27/1994 | Complaint Information Complaints against this contractor are listed below.Complaints that were cancelled,resolved or settled without a corrective work order or dismissed are not included.Contactthe Registrar of Contractors at 602-542-1525 or toll-free statewide at 1-877-MY AZROC (1-877-692-9762)to identify the ROC office location you need to visit to view complete complaint documentation. ~.._This is the number of complaints against this contractor that are currently open except those in which an agency inspection "'not found Upon adjudication some complaints are found tobe without ment andare dismissed has not occurred or a violation was Closed Cases Disciplined:0 This is the number of complaints that resulted in discipline against this contractor Resolved/Settled/ Withdrawn: Denied Access:0 This is the number of complaints closed against this contractor that were resolved or settled by the contractor or withdrawn by the complainant after issuance of a corrective work order or formal citation This is the number of complaints against this contractor that were closed without corrective work being performed because the contractor was denied access by the complainant Bankruptcy:0 This is the number ofcomplaints against this contractor that were closed because the contractor is in bankruptcy Bond [ 1 ]Information Effective Amount Paid Available 590,000.00 $0.00 $90,000.00 Number SF5764 Number 11127218763 Number 5085989 01/14/2003 07/01/1993 Effective 07/01/1991 Cancelled 07/25/1993 Bond [ 2 ]Information Effective Cancelled Amount Paid Available 01/13/2003 $90,000.00 $0.00 $90,000.00 Bond [ 3 ]Information Amount Paid Available $90,000.00 $0.00 $90,000.00 http://www.azrocgov/forms/details.asp?Iicense=07406; Company ST PAUL FIRE &MARINE INS CO Company THE AMERICAN INSURANCE COMPANY Company HARTFORD FIRE INSURANCE CO Notes Notes Notes 7/17/2014 2169333.2 EXHIBIT F TO INVITATION FOR BIDS NO. DS2015-101 [References] See following page. REFERENCES Shea Blvd. Widening Project DS2015-101 ContractorName:Nesbitt Contracting Co..Inc Provide the following information for three clients for whom Bidder has successfully completed similar projects as set forth in Section 2.16 within thepast60 months.Failure to provide three accurate and suitable references will result in disqualification.Biddermay alsoattachanothersheet withadditional references. 1.Company:City of Phoenix Address 1033 E.Madison St City/State/Zip Code Phoenix,AZ 85033 Contact:David Bradley Telephone Number:602-206-0446 Date ofContract Initiation:10/25/13 Date of Contract Expiration:4/7/14 Final Project Cost:1.247.107.00 Project Description:2013 RPSidPnMa1 Overlay JOA 24 2.Company:Arizona Uepartment of Transportation Address 1651 W.Jackson 121F City/State/Zip Code Phoenix,AZ 85007 Contact:Adam Brahn Telephone Number:602-71 2-2302 Date of Contract Initiation:7/17/13 Date of Contract Expiration:3/06/14 Final Project Cost:2,646,91 1. 00 Project Description:SR 587-SR 87 to JCT 1-10,AC Mill &Overlay with Guardrail Improvements 3.Company:City of Tempe Address 31 E.Fifth St City/State/Zip Code Tempe,AZ 85280 Contact:Tobv Crooks Telephone Number:480,-3 50-85 65 Date of Contract Initiation:5/09/13 Dateof Contract Expiration:7/31/13 FinalProjectCost:1 ,041,771.00 Project Description:Resurface Baseline Rd .Darrow to Rural 2169333.2 2169333.2 EXHIBIT G TO INVITATION FOR BIDS NO. DS2015-101 [Bid Bond] See following page. BID BOND Shea Blvd.Widening Project DS2015-101 KNOW ALL PERSONS BY THESE PRESENTS: THAT,NESBITT CONTRACTING CO.,INC. called Principal),as Principal and TRAILERS CASUAL'!VAHu SURF,iVmmmm n>AMcfeffi1^ organized and existing under the laws of the State of CONNECTICUT *^«*poVation with its principal office in the City of HARTFnRn 71—^~Z tt~t— WHEREAS,the Principal has submitted abid/proposal forSHEA BLVD WIPFNINK seetiontotheextentasifitvteerpiSatfcngAherein "*"'"^"'^"'*,he "r0Visi°nS °f the that aj£&$?£g$£g£*hiS b°nd Sha"™™-P*of the judgment reasonable attome,fees Witness our hands this 21ST day of JULY . NESBITT CONTRACTING CO., INC. Principal gjjj 2169333.2 James L.Nesbitt,President TRAVELERS CASUALTY AND SURETY^COMPANY OF AMERICA Seal WILLIAM J.PASSEY,A ITORNEY-IN-fACT PASSEY-BOND CO.,INC._^ Agency of Record travelers! Attoniev-In Fact No. WARNING:THIS POWER OF ATTORNEY IS INVALID WITHOUT THE RED BORDER POWER OF ATTORNEY Farmington Casualty Company Fidelity and Guaranty Insurance Company Fidelity and Guaranty Insurance Underwriters,Inc. St.Paul Fire and Marine Insurance Company St.Paul Guardian Insurance Company St. Paul Mercury Insurance Company Travelers Casualty and Surety Company Travelers Casualty and Surety Company of America United States Fidelity and Guaranty Company Certificate No.005893543 227705 KNOW ALU MEN BY THESE PRESENTS:That Farmington Casualty Company.St. Paul Fire and Marine Insurance Company.Si.Paul Guardian Insurance Company.St. Paul Mercury Insurance Company. Travelers Casualty and Surety Company. Travelers Casualty and Surety Company of America,and United Slates Fidelity and Guaranty Company are corporations duly organized under the laws of the State of Connecticut, that Fidelity and Guaranty Insurance Company is a corporation duly organized under the laws of the State of Iowa,and that Fidelity and Guaranty Insurance Underwriters.Inc.. is a corporation duly organized under the laws of the State of Wisconsin (herein collectively called the "'Companies"'),and that the Companies do hereby make,constitute and appoint William J. Passey,Debbie Lavo.Christina Shriner, and Michael W. I Iubay of the Cilv of .State of -Arizona .their true and lawful Attornev(s)-in-Fact.-Mesa- each in their separate capacity if more than one is named above,to sign,execute,seal and acknowledge any and all bonds,recognizances, conditional undertakings and other writings obligatory in the nature thereof on behalf of the Companies in their business of guaranteeing the fidelity of persons,guaranteeing the performance of contractsand executingor guaranteeingbondsand undertakingsrequiredor permittedin any actionsor proceedingsallowedby law. IN WITNESS WHEREOF,the Companies have caused this instrument to be signed and their corporate seals to be hereto affixed,this da) of May ._2QJi • 2nd Slate of Connecticut Cilv ol'Hartford ss. Farmington Casualty Company Fidelity and Guaranty Insurance Company Fidelity and Guaranty Insurance Underwriters.Inc. St.Paul Fire and Marine Insurance Company St.Paul Guardian Insurance Company St.Paul Mercury Insurance Company Travelers Casualty and Surety Company Travelers Casualty and Surety Company of America United States Fidelity and Guaranty Company -£.SEAL/g/\il.SEAL/!/ By: Robert L.Raney,Senior Vice Presideni On this the ~>nrl day of Mnv .2014 . before me personally appeared Robert L. Raney, who acknowledged himself to betheSeniorVice President of Farmington CasualtyCompany. Fidelityand GuarantyInsuranceCompany.Fidelityand GuarantyInsurance Underwriters.Inc..St.Paul Fireand Marine Insurance Company.St. PaulGuardian InsuranceCompany.St. Paul MercuryInsuranceCompany.Travelers Casualtyand Surety Company.Travelers Casualtyand SuretyCompanyof America,and UnitedStates Fidelityand Guaranty Company,and that he. as such,being authorized so to do. executedthe foregoing instrument forthe purposesthereincontainedby signingon behalfof thecorporationsby himselfas a duly authorizedofficer. In Witness Whereof.1hereunto sel my hand and official seal. My Commission expires the 30th day of June. 2016. 58440-8-12 Printed in U.S.A. ^-Mario C.Tetrcault.Nolan Public WARNING:THIS POWER OF ATTORNEY IS INVALID WITHOUT THE RED BORDER WARNING:THIS POWER OF ATTORNEY IS INVALID WITHOUT THE REDBORDER ^^ This Power of Attorney is granted under and by the authority of the following resolutions adopted by the Boards of Directors of Farmington Casualty Company.Fidelity and Guaranty Insurance Company.Fidelity and Guaranty Insurance Underwriters.Inc..St.Paul Fire and Marine Insurance Company.St.Paul Guardian Insurance Company.St.Paul Mercury Insurance Company.Travelers Casually and Surety Company.Travelers Casualty and Surety Company of America,and United States Fidelity and Guaranty Company,which resolutions are nowin full force and effect,reading as follows: RESOLVED,that the Chairman,the President,any Vice Chairman,any Executive Vice President,any Senior Vice President,any Vice President,any Second Vice President,the Treasurer,any Assistant Treasurer,the Corporate Secretary orany Assistant Secretary may appoint Attorneys-in-Fact and Agents toactfor and on behalf of the Company and may give such appointee such authority as his or her certificate of authority may prescribe to sign with the Company's name and seal with the Company's seal bonds,recognizances,contracts of indemnity,and other writings obligatory in the nature ofa bond,recognizance,or conditional undertaking,and any of said officers orthe Board of Directors atany time may remove any such appointee and revoke the power given him or her:and it is FURTHER RESOLVED,thai the Chairman,the Presideni.any Vice Chairman,any Executive Vice President,any Senior Vice President or any Vice Presideni may delegate allor any part of the foregoing authority tooneor more officers or employees of this Company,provided that each such delegation is in writing anda copy thereof is filed in the office of the Secretary; and it is FURTHER RESOLVED,that any bond,recognizance,contract of indemnity,or writing obligatory inthe nature ofa bond,recognizance,or condiiional undertaking shall be valid and binding upon the Company when (a)signed bythe President,any Vice Chairman,any Executive Vice President,any Senior Vice President or any Vice President,any Second Vice President,the 'Treasurer,any Assistant Treasurer,the Corporate Secretary or any Assistant Secretary and duly attested and sealed with the Company's seal bya Secretary or Assistant Secretary:or(b)duly executed (under seal,if required)byoneor more Attorneys-in-Fact and Agents pursuant lo the power prescribed in his or her certificate or their certificates of authority or by one or more Company officers pursuanl toa written delegation of authority;and it is FURTHER RESOLVED,thai the signature of each of the following officers:President,any Executive Vice President,any Senior Vice President,any Vice President, any Assistant Vice President,any Secretary,any Assistant Secretary,and the seal of the Company may be affixed by facsimile lo any Power of Attorney or lo any certificate relating thereto appointing Resident Vice Presidents,Resident Assistant Secretaries or Attorneys-in-Fact for purposes only of executing and attesting bonds and undertakings and other writings obligatory in the nature thereof,and any such Power of Attorney or certificate bearing such facsimile signature or facsimile seal shall be valid and binding upon the Company andany such power so executed and certified by such facsimile signature and facsimile seal shall be valid and binding on the Company inthe future with respect toanybondor understanding to which itis attached. I.Kevin E.Hughes,the undersigned.Assistant Secretary,of Farmington Casualty Company,Fidelity and Guaranty Insurance Company.Fidelity and Guaranty Insurance Underwriters.Inc..St.Paul Fire and Marine Insurance Company.St.Paul Guardian Insurance Company,St.Paul Mercury Insurance Company.Travelers Casualty and Surety Company,Travelers Casualty and Surety Company or America,and United States Fidelity and Guaranty Company do hereby certify that the above and foregoing isa true and correctcopy of the Powerof Attorneyexecutedby said Companies,whichis in full force and effectand has notbeen revoked. IN'TESTIMONY WHEREOF.I have hereunto sel mv hand .nd affixed the seals of said Companies this—-J I U day of <^J \J*~\ i\SEAL/S/ 1*-•'•;•&•/ t?~- Kevin E. Hughes. Assistant Secretary .20 To verify the authenticity of this Power of Attorney,call 1-800-421-3880 or contact us at www.iravelersbond.com.Please refer to the Attorney-in-Fact number,the above-named individuals and thedetails of the bond to which the powerisattached. WARNING:THIS POWER OF ATTORNEY IS INVALID WITHOUTTHE RED BORDER •tog fe m H STATE OF ARIZONA DEPARTMENT OF INSURANCE CERTIFICATE OF AUTHORITY I,JOHN A.GREENE,Director of Insurance of the State of Arizona,do hereby certify that TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA Domiciled in Connecticut NAIC NO.31194 is hereby authorized,subject to the provisions thereof and the Charter Powers of said Company,to transact the business of: CASUALTY WITH WORKERS'COMPENSATION DISABILITY MARINE AND TRANSPORTATION PROPERTY SURETY VEHICLE insurance within the State of Arizona until terminated at the request of the insurer or suspended or revoked by the Director of Insurance. Arizona Revised Statute §20-217 (C)states: A Certificate of Authority remains the property of the State of Arizona.Upon termination at the request of the insurer or revocation by the Director of Insurance,the insurer shall immediately deliver the Certificate of Authority to the Director of Insurance. In TESTIMONY WHEREOF,I have hereunto set my hand and affixed the official seal of the Director of Insurance at the City of Phoenix.The effective date of tins Certificate is JufcSLl,1997. E146 (01/97) John A.Greene Director of Insurance y t- <a as* SB mm m m mm Hi 3a *m e§a mm WSIISIS ffifrpll m JBm mm mm 7;praras sss m *•§•:?'. Ps$ 000843 l^S STATE OF ARIZONA •;:<;d^!^of insurance ^^THAT THIS INSTRUMENT IS A FULL,TRUE AND CORRECT COPY OF THE ORIGINAL ELECTRONICALLY FILED WITH THE NA TIONAL ASSOCIA TION OF INSURANCE COMMISSIONERS AND CONSISTS OF, 1 PAGE(S) Hereunto set my hand and the official seal of this department for the director of insurance this 14 january 2013. Authorized repjresentative 282944 Certificate No.: 2169333.2 EXHIBIT H TO INVITATION FOR BIDS NO. DS2015-101 [Key Personnel/Subcontractor Listing] KEY PERSONNEL/SUBCONTRACTOR LISTING Shea Blvd. WideningProject DS2015-101 Key Personnel and Subcontractors listed herein shall be utilized on this Project. Category:Personnel/SubcontractorName,Contact Information: Project Manager/Scheduler Joe Chavez,Nesbitt Contracting Co.,(602)339-5367 Gen.Superintendent Dan Bush,Nesbitt Contracting Co..(602)339-3912 Traffic Control Jeff.Road.Safe.(602)243-1218 Eler.criral Ross,CS Construction,(623)889-7650 Landscape Kevin,LandTech,(623)815-9216 Caissons Joe, Case Foundation,(602)454-09 68 Quality Control Sean,ACS,(480)9 68-019 0 Striping Randy,Franklin Striping,(480)898-118 0 2169333.2 2169333.2 EXHIBIT I TO INVITATION FOR BIDS NO. DS2015-101 [Performance Bond] See following page. 2169333.2 PERFORMANCE BOND Shea Blvd. Widening Project DS2015-101 KNOW ALL PERSONS BY THESE PRESENTS: THAT, ___________________________________________________________ (hereinafter called Principal), as Principal, and_________________________________________, a corporation organized and existing under the laws of the State of ____________________________, with its principal office in the City of ________________________ (hereinafter called the Surety), as Surety, are held and firmly bound unto the Town of Fountain Hills (hereinafter called the Obligee) in the amount of ______________________________(Dollars) ($_____________________), for the payment whereof, the said Principal and Surety bind themselves, and their heirs, administrators, executors, successors and assigns, jointly and severally, firmly by these presents. WHEREAS, the Principal has entered into a certain written Contract with the Obligee, dated the ________ day of _________________ 20___, for the material, service or construction described as ___________________________________________________________________ is hereby referred to and made a part hereof as fully and to the same extent as if copied at length herein. NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH, that if the Principal faithfully performs and fulfills all of the undertakings, covenants, terms, conditions and agreements of the Contract during the original term of the Contract and any extension of the Contract, with or without notice to the Surety, and during the life of any guaranty required under the Contract, and also performs and fulfills all of the undertakings, covenants, terms, conditions and agreements of all duly authorized modifications of the Contract that may hereafter be made, notice of which modifications to the surety being hereby waived, the above obligation is void. Otherwise it remains in full force and effect. PROVIDED, however, that this bond is executed pursuant to the provisions of Title 34, Chapter 2, Article 2, Arizona Revised Statutes, and all liabilities on this bond shall be determined in accordance with the provisions of Title 34, Chapter 2, Article 2, Arizona Revised Statutes, to the extent as if it were copied at length in this agreement. The prevailing party in a suit on this bond shall recover as part of the judgment reasonable attorney fees that may be fixed by a judge of the Court. Witness our hands this _______ day of ________________________ 20___. ____________________________________________ Principal Seal By: ________________________________________ ____________________________________________ Surety Seal By: ________________________________________ ____________________________________________ Agency of Record 2169333.2 EXHIBIT J TO INVITATION FOR BIDS NO. DS2015-101 [Payment Bond] See following page. 2169333.2 PAYMENT BOND Shea Blvd. Widening Project DS2015-101 KNOW ALL PERSONS BY THESE PRESENTS: THAT, __________________________________________ (hereinafter called Principal), as Principal, and _______________________________, a corporation organized and existing under the laws of the State of __________________________, with its principal office in the City of ______________________ (hereinafter called the Surety), as Surety, are held and firmly bound unto the Town of Fountain Hills (hereinafter called the Obligee) in the amount of ____________________________________(Dollars) ($___________________), for the payment whereof, the said Principal and Surety bind themselves, and their heirs, administrators, executors, successors and assigns, jointly and severally, firmly by these presents. WHEREAS, the Principal has entered into a certain written Contract with the Obligee, dated the ___________ day of _________________ 20___, for the material, service or construction described as _________________________________________ which Contract is hereby referred to and made a part hereof as fully and to the same extent as if copied at length herein. NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH, that if the Principal promptly pays all monies due to all persons supplying labor or materials to the Principal or the Principal’s Subcontractors in the prosecution of the Work provided for in the Contract, this obligation is void. Otherwise it remains in full force and effect. PROVIDED, however, that this bond is executed pursuant to the provisions of Title 34, Chapter 2, Article 2, Arizona Revised Statutes, and all liabilities on this bond shall be determined in accordance with the provisions, conditions and limitations of Title 34, Chapter 2, Article 2, Arizona Revised Statutes, to the same extent as if they were copied at length in this agreement. The prevailing party in a suit on this bond shall recover as a part of the judgment reasonable attorney fees that may be fixed by a judge of the Court. Witness our hands this _______ day of _________________, 20___. ____________________________________________ Principal Seal By: ________________________________________ ____________________________________________ Surety Seal By:________________________________________ ____________________________________________ Agency of Record 2169333.2 EXHIBIT K TO INVITATION FOR BIDS NO. DS2015-101 [Acknowledgments of Addenda received] See following page(s). 2196801.1 TOWN OF FOUNTAIN HILLS DEVELOPMENT SERVICES DEPARTMENT INVITATION FOR BIDS SHEA BLVD. WIDENING (DS2015-101) Addendum No. 1 Date: July 17, 2014 From: Paul Mood, Development Services Director Subject: Addendum No. 1 to Solicitation No. DS2015-101 Bid Deadline: July 22, 2014 (REVISED DATE); 3:00 p.m. (local time, Phoenix, Arizona) SCOPE This Addendum forms a part of the Contract and clarifies, corrects, or modifies the original Invitation for Bids document prepared by the Town of Fountain Hills. Acknowledge receipt of this addendum in the space provided on the attached “Acknowledgment of Addenda Received” form. This acknowledgement must accompany the submitted bid. Failure to do so may subject the bidder to disqualification. This Addendum No. 1 consists of modifications to the Contract Documents in response to bidder questions, a modification to Exhibit A (Specifications, Plans/Construction Drawings, Geotechnical Report) and Exhibit C (Price Sheet) for the Invitation for Bids No. DS2015-101 released on June 18, 2014. ADDENDUM 1. The Contract Documents are modified pursuant to the attached answers to bidder questions. 2. Exhibit A (Specifications, Plans/Construction Drawings, Geotechnical Report) is hereby amended as set forth in Exhibit 2, attached hereto and incorporated herein by reference. 3. Exhibit C (Price Sheet) is deleted in its entirety and replaced with the Price Sheet attached hereto as Exhibit 3 and incorporated herein by reference, which contains a revision to Bid Item 329101 and the addition of Bid Item 430008. EXHIBIT 1 TO ADDENDUM NO. 1 TO INVITATION FOR BIDS NO. DS2015-101 [Answers to Bidders Questions]                                         QUESTIONSANDCLARIFICATIONS: 1.Q)Thetackcoatlineitemisincorrect.21syshoulditnotbe21tn?A)Thespecialprovisionrefers toMAGSection329whereTackCoatismeasuredbytheton,sothebiditemshouldbe21ton.See revisedPriceSheet. 2.Q)Whatisthefurnishwateritem999994.TheunitisMGal.Whatdoesthatactuallymean?Seems likeareallylargevolumeofwater.A)ThespecialprovisionreferstotheADOTStandardSpecifications Section209.Section209Ͳ4MethodofMeasurement–Theworkwillbemeasuredbytheunitof1,000 USgallonsofwater(MGAL).Inthiscasewehave2,000M.gal,whichequatesto2,000,000gallonsof water. 3.Q)The84”CMPpipecalledoutintheplansforthejunctionstructurehasnopayitemnordothe specialssayitistobeincludedinthestructure.Towninstallingandproviding?A)The84”CMPpipeis tobeincludedwithITEM505136JUNCTIONSTRUCTURE(DETAILD1).Seerevisedspecification. 4.Q)ThespecialscallforallRGRCPpipetheplansshowHDPEwithnoreferencetoanyrgrcpwhichis it?Wouldthismeanthe84”CMPshownatthestructureisRGRCPaswell?ExistingisCMP?A)The informationintheTechnicalSpecificationsisnotintendedtoreplaceSections618,620,and621,and thatallstormdrainpipebeRCP.Theinformationisincludedtoprovideadditionalinformationto Section618shouldRCPbeused.HDPEandCMPshouldbeusedpertheplans.Seerevised specification. 5.Q)theSWPPisalumpsumitem.Itappearsthattheplansonlyincludedetailsforanyandall situations.Typically,we(contractor)areresponsiblefortheduringconstructionpractices.Theowners engineerdeterminesthefinalpracticesandusuallyshowsonaplanforalltobid.ThisspecincludesCOS whichsayswearetoincludefinal.Thatwouldmeanitisuptous(wideopenIwouldsay)?Would anythingextrathenrequestedbytheEngineerbeextra?A)Theerosion/sedimentcontroldetails providedareforuseduringconstruction.Thelandscapeplansandassociatedbiditemsprovidethe necessaryinformationforthefinalpractices.ThePlans,TechnicalSpecifications,andPriceSheethave beenrevisedtoincludehydroseedingofdisturbedareasnotplannedforlandscapingunderthis contract.  EXHIBIT 2 TO ADDENDUM NO. 1 TO INVITATION FOR BIDS NO. DS2015-101 [Specifications, Plans] ADDITIONSANDREVISIONSTOTHETECHNICALSPECIFICATIONS: OnPage52:Insertthefollowing: ITEM430008HYDROSEEDING: Hydroseeding:ConformtoCOSSupplementalSpecificationsSection430.12.13DESERTRESTORATION.  OnPage57:ITEM505136JUNCTIONSTRUCTURE(DETAILD1),thesecondparagraphisrevisedtoread: Thisworkshallalsoincludeallexcavation,shoringwhererequired,backfill,removalofexistingpipe,removalof existingconcreteheadwall,84”culvertextension,pipecollars,allstormdrainconnectionstojunctionstructure, concreteandreinforcingsteelcompleteandinplace,manhole,andappurtenancesasshownontheplansandas specifiedherein.  OnPage57:ITEM505136JUNCTIONSTRUCTURE(DETAILD1),2.0Materials:ismodifiedtoadd: 2.05CorrugatedMetalPipe:  84” Pipe shall have a minimum corrugation size of 3”x1”, minimum thickness of 0.109”, and shall be bituminous coated.  OnPage63:ITEM618016THRU625023STORMDRAINCONSTRUCTION,deletetheitemandinsertthefollowing: ITEM618016THRU625023STORMDRAINCONSTRUCTION:  General:ConformtoMAGandCityofScottsdaleSections618and625.  618.2MATERIALS:addthefollowingsentence: (E)HDPEPipeshallhavesmoothinterior.  618.3CONSTRUCTIONMETHODS:addthefollowingsentence:  HDPEPipefillheightsshallnottoexceed10’.    EXHIBIT 3 TO ADDENDUM NO. 1 TO INVITATION FOR BIDS NO. DS2015-101 [Price Sheet] TOWNOFFOUNTAINHILLS-SHEABLVDWIDENINGPRICESHEETNes3nrrBIDITEMNUMBERITEMDESCRIPTIONUNITQUANTITYUNITCOSTTOTAL104150PROJECTSIGNS(NEW)EA3$$105801CONSTRUCTIONSURVEYINGLS1$$105820AS-BUILTSLS1$$205001ROADWAYEXCAVATIONCY3,935$$220403DUMPEDRIPRAP(WITHFABRIC)CY28$$3101044"ABCSY653$$3101066"ABCSY6,235$$31011212"ABCSY6,755$$3212022"ACA-19SY76,926$$3212043"ACA-19SY653$$324121PCCPAVEMENT(FORBUS BAY)(MAGSTDDTL252,MODIFIED) (9" THICK)SY88$$329101TACKCOATTON21$$336001SAWCUTPAVEMENTLF6,190$$340001VERTCURB&GUTTER,MAGSTDDTL220TYPE"A",H=6"LF5,961$$340002VERTCURB&GUTTER,MAGSTDDTL220TYPE"A",H=4"LF194$$340003VERTICAL SLIP CURB (STD DTLFH-225),H=8"LF200$$340005CURB&GUTTER(MAGSTDDTL220-1,VARIABLEWIDTHGUTTER,H=4")LF80$$340062SINGLECURB,MAGSTDDTL222TYPE"B"LF48$s340200CONCRETESCUPPER,MAGSTDDTL206EA1$$340204CONCRETESIDEWALK,MAGSTDDTL230SF19,053$$340206CONCRETESIDEWALK,MAGSTDDTL230(6" THICK)SF942$$340209CONCRETESIDEWALK(REINFORCED)(6" THICK)SF930$$340221MEDIANNOSETRANSITION,MAGSTDDTL223SF109$s340263SIDEWALKRAMP,MAGSTDDTL235-3TYPE'CEA3$$340267SIDEWALKRAMP(DTL A)EA1$$340268SIDEWALKRAMP(DTL B)EA7$$C-1 TOWN OF FOUNTAIN HILLS -SHEA BLVD WIDENING PRICE SHEET BID ITEM NUMBER ITEM DESCRIPTION UNIT QUANTITY UNIT COST TOTAL 340269 SIDEWALK RAMP (ADOT STD DWG NO C-05.30)(TYPE C)EA 2 $$ 340276 SIDEWALK RAMP (SCOTTSDALE STD DTL 2235-2)EA 1 $$ 340301 CONCRETE VALLEY GUTTER,MAG STD DTL 240 SF 426 $$ 340406 DRIVEWAY ENTRANCE (MAG STD DTL 251) (6" THICK)SF 358 $$ 342005 MEDIAN PAVING (STAMPED CONCRETE)(ADOT STD DWG NO C-05.40)SF 2,376 $$ 345001 ADJUST MANHOLE FRAME &COVER,MAG STD DTL 422 EA 9 $$ 345002 ADJUST VALVE BOX &COVER,MAG STD DTL 391-1 EA 19 $$ 350001 REMOVE AC PAVEMENT SY 11,201 $$ 350017 REMOVE AC PAVEMENT (MILLING)(2")(Per ADOT Spec 202-3.03C)SY 50,549 $$ 350031 REMOVE VALLEY GUTTER SF 391 $$ 350041 REMOVE CURB &GUTTER LF 2,281 $$ 350042 REMOVE CURB LF 1,948 $$ 350061 REMOVE CONCRETE SIDEWALK,DRIVEWAYS &SLABS SF 1,431 $$ 350082 REMOVE DRAINAGE HEADWALL EA 4 $$ 350083 REMOVE DRAINAGE SPILLWAY SF 165 $$ 350112 REMOVE GUARD RAIL LF 92 $$ 350201 REMOVE PIPES (LESS THAN 24" Dia.) LF 30 $$ 350221 REMOVE PIPES (24" Dia. TO 48" Dia.) LF 22 $$ 350280 REMOVE CATCH BASIN EA 2 $$ 350602 REMOVE TRAFFIC MARKINGS 4"EQUIV LF 1,537 $$ 350604 REMOVE SIGN,POST &POST BASE EA 12 $$ 350605 RELOCATE SIGN W/NEW POST &POST BASE EA 27 $S 350606 RELOCATE SIGN PANEL EA 15 s $ 350632 REMOVE PULL BOX EA 22 $$ 350636 REMOVE &SALVAGE TRAFFIC SIGNAL POLE EA 4 $$ 350637 REMOVE &SALVAGE TRAFFIC SIGNAL (CONTROLLERS)EA 3 $$ C-2 TOWNOFFOUNTAINHILLS-SHEABLVDWIDENINGPRICESHEETBIDITEMNUMBERITEMDESCRIPTIONUNITQUANTITYUNITCOSTTOTAL350638REMOVE EXISTING FOUNDATION (36" MIN. BELOWFINISHEDGRADE)EA4$$350711REMOVE (GUARDRAILENDTERMINALASSEMBLY)EA1$$350712REMOVE (GUARDRAILAPPROACH END TREATMENT)EA1$$350717REMOVE (EXISTINGPAVEMENTSTRIPING)LF60$$350718REMOVE (RAISED PAVEMENT MARKERS)EA6$$350906REMOVECHAINLINKFENCELF20$$401001TRAFFICCONTROLLS1$$401101OFF-DUTYPOLICEOFFICERHR1.680$$401110PORTABLECHANGEABLEMESSAGESIGNEA-DAY756$$402101WHITESTRIPE60MILTHERMOPLASTIC4"EQUIVLF40,137$$402102YELLOWSTRIPE60MILTHERMOPLASTIC4"EQUIVLF371$$402104WHITESTRIPE90MILTHERMOPLASTIC4"EQUIVLF2.312$$402121PAVEMENTSYMBOLSPREFORMEDEA47$$402122BIKELANESYMBOLPREFORMEDEA35$$402123BIKELANEARROWPREFORMEDEA35$$402136PAINTMEDIANNOSEEA7$$402140RAISEDPAVEMENTMARKERS,TYPE"C"(ADOTSTDDTLM-19)EA574$$402141RAISED PAVEMENT MARKERS. TYPE "D" (ADOTSTDDTLM-19)EA92$$402142RAISED PAVEMENTMARKERS.TYPE "G" (ADOT STD DTLM-19)EA426$s402146RAISEDPAVEMENTMARKERS(FIRE HYDRANT)(SCOTTSDALEDTL NO.2363)EA28$$402401REFLECTIVETRAFFICSIGNPANELSF234$$402411SIGNPOST(PERFORATED)(2S)LF486$$402412FOUNDATIONFORSQUARETUBEPOSTEA56$$402500OBJECTMARKERSIGNPANELTYPE1EA1$$402501OBJECTMARKERSIGNPANELTYPE2EA1$$403002ELECTRICALCONDUIT(2")(PVC)LF1,352$$C-3 TOWN OF FOUNTAIN HILLS -SHEA BLVD WIDENING PRICE SHEET BID ITEM NUMBER ITEM DESCRIPTION UNIT QUANTITY UNIT COST TOTAL 403004 ELECTRICAL CONDUIT (3") (PVC)LF 535 $$ 403018 ELECTRICAL CONDUIT (2 - 3") (PVC)LF 2,920 $$ 403022 ELECTRICAL CONDUIT (2 - 3")(HDPE)(DIRECTIONAL DRILL)LF 98 $$ 403051 LEAD-IN CONDUCTOR WIRE LF 30,925 S $ 403055 SINGLE MODE FIBER OPTIC CABLE (48 Fibers)(SMF048)LF 5,833 $$ 403300 PEDESTRIAN PUSH BUTTON POST EA 1 $$ 403301 TRAFFIC SIGNAL POLE.(TYPE A) (12')EA 1 $$ 403316 TRAFFIC SIGNAL POLE,(TYPE W)EA 3 $$ 403465 MAST ARMS.65'LENGTH EA 3 $$ 403475 LUMINAIRE MAST ARM,20"LENGTH EA 3 $S 403500 PEDESTRIAN PUSH BUTTON POST FOUNDATION EA 1 $$ 403502 POLE FOUNDATION (TYPE A)EA 1 $$ 403521 POLE FOUNDATION (TYPE W)EA 3 $$ 403601 TRAFFIC SIGNAL FACE (PEDESTRIAN)(MAN/HAND) (LED) (COUNTDOWN)EA 16 $$ 403605 TRAFFIC SIGNAL FACE (TYPE F)EA 13 $$ 403610 TRAFFIC SIGNAL FACE (TYPE Q)EA 2 $$ 403611 TRAFFIC SIGNAL FACE (TYPE R)EA 9 $$ 403621 PEDESTRIAN PUSH BUTTON (AUDIBLE)EA 16 $$ 403626 TRAFFIC SIGNAL MOUNTING ASSEMBLY (TYPE II)EA 19 $$ 403628 TRAFFIC SIGNAL MOUNTING ASSEMBLY (TYPE IV)EA 1 $$ 403629 TRAFFIC SIGNAL MOUNTING ASSEMBLY (TYPE V)EA 5 $$ 403630 TRAFFIC SIGNAL MOUNTING ASSEMBLY (TYPE VI) EA 1 $$ 403631 TRAFFIC SIGNAL MOUNTING ASSEMBLY (TYPE VII)EA 2 $$ 403632 TRAFFIC SIGNAL MOUNTING ASSEMBLY (TYPE VIII)EA 1 $$ 403699 CONTROL CABINET FOUNDATION (MODIFY)EA 2 $$ C-4 TOWN OF FOUNTAIN HILLS -SHEA BLVD WIDENING PRICE SHEET BID ITEM NUMBER ITEM DESCRIPTION UNIT QUANTITY UNIT COST TOTAL 403700 CONTROL CABINET FOUNDATION EA 1 $$ 403703 CONTROL CABINET (TS 2 TYPE 1)EA 3 $$ 403705 CONTROLLER (ASC 3) (2100)EA 3 $$ 403708 MISCELLANEOUS WORK (CONTROLLER CABINET) (INSTALL BATTERY BACKUP CABINET AND UNIT)(TOWN- FURNISHED) EA 3 $$ 403709 MISCELLANEOUS WORK (REMOVE AND SALVAGE CONDUCTORS)LS $$ 403710 MISCELLANEOUS WORK (TRANSFER EMERGENCY PRE EMPTION EQUIPMENT AT SHEA/SAGUARO)LS $$ 403711 MISCELLANEOUS WORK (TRANSFER EMERGENCY PRE EMPTION EQUIPMENT AT TECHNOLOGY DRIVE)LS $$ 403712 MISCELLANEOUS WORK (TRANSFER EMERGENCY PRE EMPTION EQUIPMENT AT CENTER LANE)LS $$ 403713 MISCELLANEOUS WORK (TRANSFER I.I.S.N.S.FIXTURE AT SHEA SAGUARO)LS $$ 403714 MISCELLANEOUS WORK (PAINT EXISTING SIGNAL EQUIPMENT)LS $S 403904 LUMINAIRE(HORIZ MOUNT)(HPS 250 WATT)EA 3 $$ 403906 INTERNALLY ILLUMINATED STREET NAME SIGN (I.I.S.N.S.)EA 2 $$ 403915 CONDUCTOR (7 CONDUCTOR #14 IMSA CABLE)LF 715 $$ 403925 CONDUCTOR (20 CONDUCTOR #14 IMSACABLE)LF 2,230 $$ 403935 CONDUCTOR (NO. 10)LF 5,050 $$ 403936 CONDUCTOR (NO. 8)LF 365 s s 403937 CONDUCTOR (NO. 8) (INSULATED BOND)(GREEN)LF 1,510 $$ 404001 SIGNAL DETECTOR LOOPS (6' x 40')(QUADRUPOLE)EA 5 s $ 404004 COUNTER DETECTOR LOOPS (6' x 6') EA 29 $$ 404005 PROJECT ADVANCE COUNTER DETECTOR LOOPS EA 18 $$ 404030 FIBER OPTIC SPLICE CLOSURE EA 8 $$ 404102 VIDEO DETECTION SYSTEM (3-CAMERA)EA 2 $s 404103 VIDEO DETECTION SYSTEM (4-CAMERA)EA 1 $$ 404202 NO.5 PULL BOX,ADOT EA 17 $s 404204 NO.7 PULL BOX,ADOT EA 7 $$ C-5 TOWN OF FOUNTAIN HILLS -SHEA BLVD WIDENING PRICE SHEET BID ITEM NUMBER ITEM DESCRIPTION UNIT QUANTITY UNIT COST TOTAL 404205 NO. 7 PULL BOX WITH EXTENSION,ADOT EA 17 $$ 404210 NO 9 PULL BOX EA 8 $$ 415100 GUARD RAIL(W-BEAM G4) (1S) (MCDOT STD DTL 3003)LF 164 $$ 415201 DEPARTURE END TERMINAL(MCDOT STD DTL 3007)EA 1 $$ 415205 APPROACH END TERMINAL (GET)(50" LENGTH)EA 1 $S 415310 GUARDRAIL (NESTED STEEL W-BEAM) (TYPE 3) (MCDOT STD DTL 3008-3)LF 38 $$ 430001 DECOMPOSED GRANITE (1"SCREENED)(2" DEPTH)SY 3,909 $$ 430008 HYDROSEEDING SY 4.650 $$ 430201 SHRUBS.1 GAL.(COS 2620)EA 200 $$ 430202 SHRUBS,5 GAL.(COS 2620)EA 14 $$ 430303 TREES,24" BOX (COS STD DTL 2600 &2620)EA 5 $$ 430602 SALVAGE &RELOCATE NATIVE CACTI LF 77 $$ 430621 SALVAGE &RELOCATE NATIVE TREES (12"CALIPER)EA 1 $$ 440201 IRRIGATION PIPING LF 1.275 $$ 440261 IRRIGATION SLEEVING (3")LF 12 $$ 440262 IRRIGATION SLEEVING (4")LF 979 $$ 440801 MISC.IRRIGATION ITEMS (RELOCATE)EA 3 $$ 440830 LANDSCAPE AND IRRIGATION SYSTEM MODIFICATION LS 1 $$ 505034 CATCH BASIN, MAG STD DTL 533 (L=17')(ONE SIDE)EA 2 $s 505101 CATCH BASIN (ADOT STD DWG NO C-15.80)EA 4 $$ 505133 CONCRETE HEADWALL.MAG STD DTL 501 12"to 36"EA 1 $$ 505136 JUNCTION STRUCTURE (DETAIL D1)EA 1 $$ 505139 SPILLWAY.MAG STD DTL 550 LF 5 $$ 505825 RETAINING WALL (CURB WALL WITH SIDEWALK)LF 12 $$ 505826 RETAINING WALL (ON DRILLED SHAFTS)SF 1.010 $$ 505905 STORM WTR POLLUTION PREVENTION PLAN LS 1 $$ C-6 TOWNOFFOUNTAINHILLS-SHEABLVDWIDENINGPRICESHEETBIDITEMNUMBERITEMDESCRIPTIONUNITQUANTITYUNITCOSTTOTAL510053WALL (MCO MONUMENT SIGN)LS1$$520009SAFETYRAIL(MAGSTDDTL145)(H=3'-6")LF184$$610851RELOCATEWATERMETEREA4S$61801612"STORMDRAINPIPELF30$$61801818"STORMDRAINPIPELF10$$61802024"STORMDRAINPIPELF226$$61802230"STORMDRAINPIPELF28$$61851818"PIPECOLLAR.MAGSTDDTL505EA1$$61852424"PIPECOLLAR,MAGSTDDTL505EA8$S61853030"PIPECOLLAR,MAGSTDDTL505EA4$s625023STORMDRAINMANHOLE.MAGSTDDTL522SHALLOWEA1$$800001MOBILIZATION/DEMOBILIZATIONLS1ss999994FURNISHWATERM.GAL2,000s$999995CONTRACTORQUALITYCONTROLLS1$$SUBTOTALBASEBID:$OWNER'SALLOWANCE:$200.000.00TOTALBASEBID(INCLUDINGOWNERSALLOWANCE)*:$BIDALTERNATEASUBTOTALBASEBID:$321202DEDUCT:2"ACA-19SY(76,926)$$321202AADD:2"ACA-19SY19,425$$321421AADD:ASPHALT-RUBBERCONCRETE(TERMINAL BLEND)(2")SY57.501$$321422AADD:LIMEWATERSY57,501$$SUBTOTALBASEBID+SUBTOTALBIDALTERNATEA:$OWNER'SALLOWANCE:$200.000.00TOTALBIDALTERNATEA (INCLUDINGOWNERSALLOWANCE)*:$*ALLBIDSAREPRESUMEDTOINCLUDEALLAPPLICABLETAXES.CONTRACTORISRESPONSIBLEFORENSURINGTHATALLMATERIALSCONTAINEDINTHEPLANSFORTHEPROJECTAREBIDONTHEPRICESHEET.C-7 TOWN OF FOUNTAIN HILLS ACKNOWLEDGMENT OF ADDENDA RECEIVED INVITATION FOR BIDS SHEA BLVD.WIDENING DS2015-101 Addendum No.1 Nesbitt Contracting Co. ,Inc ,affirms that ADDENDUM No. 1has been (Nameof Vendor/Dcsigncc) received and that the information contained in ADDENDUM No. 1 has been incorporated in formulating the Vendor's Offer. —•^-liX - July 17,2014 Signed Date James L.Nesbitt Print Name President Title Nesbitt Contracting Co.,Inc Company Name 100 S.Price Rd Address Tempe,AZ 85 281 City.State.Zip Code 2196801.1 END OF ADDENDUM No. TOWN OF FOUNTAIN HILLS TOWN COUNCIL AGENDA ACTION FORM Meeting Date:8/7/2014 Meeting Type:Regular Session Agenda Type:Regular Submitting Department:Development Services Staff Contact Information:Paul Mood,Dev.Services Director,480-816-5129 Strategic Values:Council Goal: Maintain/Improve Community Infrastructure Not Applicable (NA) REQUEST TO COUNCIL (Agenda Language):CONSIDERATION of approval of Professional Services Agreement C2015-109 with HDR Construction Control Corporation in the amount of $411,878.00 for construction management services related to the Shea Blvd.Widening project. Applicant:NA Applicant Contact Information:NA Property Location:Shea Blvd.from SR87 to Technology Dr. Related Ordinance,Policy or Guiding Principle:NA Staff Summary (background): The project will widen Shea Blvd.to three lanes in each direction from Technology Dr.to a State Route 87.The project will also include drainage structures, a new signal at Saguaro Blvd.and pavement replacement on Saguaro Blvd.to a locationjust north ofTrevino Dr.The construction contract provides for 270 days for completion of the project. The Construction Management contract will provide a full time inspector, a half-time resident engineer and associated clerical staff for the nine month project for $336,878.The contract has a an allowance of $40,000 for an additional month if needed,$25,000 for nighttime milling and paving inspections and $10,000 for Quality Assurance testing as needed. The project is identified as one ofthe transportation capacity improvement projects in the 2015 Maricopa Association of Governments Arterial Life Cycle Program (MAG ALCP). The Proposition 400 half-cent transportation excise tax was approved byvoters in 2004 and funds 70% ofthe project.The Town is responsible for funding the remaining 30% of the project. Risk Analysis (options or alternatives with implications): Fiscal Impact (initial and ongoing costs;budget status):$411,878 Budget Reference (page number):330 &331 Funding Source:NA if Multiple Funds utilized,list here:Prop 400,CIP Fund,Developer Contributions &MCDOT Budgeted;if No,attach Budget Adjustment Form:NA Page 1 of 2 Recommendation(s)by Board(s)or Commission(s):NA Staff Recommendation(s):Staff recommends approval of Professional Services Agreement C2015-109 with HDR Construction Control Corporation as presented. List Attachment(s):Professional Services Agreement C2015-109 SUGGESTED MOTION (for Council use):MOTION to approve Professional Services Agreement C2015-109 with HDR Construction Control Corporation in the amount of $411,878.00 for construction management services related to the Shea Blvd.Widening project. Prepared by: NA 7/16/2014 Director's Approval: Paul Mood,Development Services Director 7/16/2014 Approved:ppryoved:*—-n an Buchanan,Town ManagerKenBuchanan,Town Manager 7/16/2014 Pace 2 of2 Contract No. C2015-109 2185101.2 PROFESSIONAL SERVICES AGREEMENT BETWEEN THE TOWN OF FOUNTAIN HILLS AND HDR CONSTRUCTION CONTROL CORPORATION THIS PROFESSIONAL SERVICES AGREEMENT (this “Agreement”) is entered into as of August 8, 2014, between the Town of Fountain Hills, an Arizona municipal corporation (the “Town”), and HDR Construction Control Corporation, a Nebraska corporation (the “Consultant”). RECITALS A. The Town is in need of a construction manager for the Shea Boulevard widening project (the “Project”). B. Consultant has previously worked on design issues, constructability and construction phasing for the Project and possesses unique knowledge and skills, which will enable Consultant to provide superior construction management services that will benefit the Town. C. Pursuant to Section 3-3-26 of the Town Code, the Town desires to enter into an Agreement with the Consultant for construction management services for the Shea Boulevard widening project (the “Services”). AGREEMENT NOW, THEREFORE, in consideration of the foregoing recitals, which are incorporated herein by reference, the following mutual covenants and conditions, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Town and the Consultant hereby agree as follows: 1. Term of Agreement. This Agreement shall be effective as of the date first set forth above and shall remain in full force and effect until August 8, 2016, unless terminated as otherwise provided in this Agreement. 2. Scope of Work. Consultant shall provide the Services as set forth in the Scope of Work, attached hereto as Exhibit A and incorporated herein by reference. 3. Compensation. The Town shall pay Consultant an amount not to exceed $411,878.00 for the Services at the rates set forth in the Fee Proposal, attached hereto as Exhibit B. 4. Payments. The Town shall pay the Consultant monthly, based upon work performed and completed to date, and upon submission and approval of invoices. All invoices shall document and itemize all work completed to date. Each invoice statement shall include a record of time expended and work performed in sufficient detail to justify payment. The contract number must be referenced on all invoices. 2185101.2 2 5. Documents. All documents, including any intellectual property rights thereto, prepared and submitted to the Town pursuant to this Agreement shall be the property of the Town. 6. Consultant Personnel. Consultant shall provide adequate, experienced personnel, capable of and devoted to the successful completion of the Services to be performed under this Agreement. Consultant agrees to assign specific individuals to key positions. Consultant agrees that, upon commencement of the Services to be performed under this Agreement, key personnel shall not be removed or replaced without prior written notice to the Town. If key personnel are not available to perform the Services for a continuous period exceeding 30 calendar days, or are expected to devote substantially less effort to the Services than initially anticipated, Consultant shall immediately notify the Town of same and shall, subject to the concurrence of the Town, replace such personnel with personnel possessing substantially equal ability and qualifications. 7. Inspection; Acceptance. All work shall be subject to inspection and acceptance by the Town at reasonable times during Consultant’s performance. The Consultant shall provide and maintain a self-inspection system that is acceptable to the Town. 8. Licenses; Materials. Consultant shall maintain in current status all federal, state and local licenses and permits required for the operation of the business conducted by the Consultant. The Town has no obligation to provide Consultant, its employees or subcontractors any business registrations or licenses required to perform the specific services set forth in this Agreement. The Town has no obligation to provide tools, equipment or material to Consultant. 9. Performance Warranty. Consultant represents that the Services rendered will conform to the customary professional standards in the field for similar services provided under similar circumstances at the same time and in the same locale. 10. Indemnification. To the fullest extent permitted by law, the Consultant shall indemnify and hold harmless the Town and each council member, officer, employee or agent thereof (the Town and any such person being herein called an “Indemnified Party”), for, from and against any and all losses, claims, damages, liabilities, costs and expenses (including, but not limited to, reasonable attorneys’ fees, court costs and the costs of appellate proceedings) to which any such Indemnified Party may become subject, under any theory of liability whatsoever (“Claims”) to the extent that such Claims (or actions in respect thereof) are caused by the negligent acts, recklessness or intentional misconduct of the Consultant, its officers, employees, agents, or any tier of subcontractor in connection with Consultant’s work or services in the performance of this Agreement. The amount and type of insurance coverage requirements set forth below will in no way be construed as limiting the scope of the indemnity in this Section. 11. Insurance. 11.1 General. A. Insurer Qualifications. Without limiting any obligations or liabilities of Consultant, Consultant shall purchase and maintain, at its own expense, hereinafter stipulated minimum insurance with insurance companies authorized to do business in the State of Arizona pursuant to ARIZ. REV. STAT. § 20-206, as amended, with an AM Best, 2185101.2 3 Inc. rating of A- or above with policies and forms satisfactory to the Town. Failure to maintain insurance as specified herein may result in termination of this Agreement at the Town’s option. B. No Representation of Coverage Adequacy. By requiring insurance herein, the Town does not represent that coverage and limits will be adequate to protect Consultant. The Town reserves the right to review any and all of the insurance policies and/or endorsements cited in this Agreement but has no obligation to do so. Failure to demand such evidence of full compliance with the insurance requirements set forth in this Agreement or failure to identify any insurance deficiency shall not relieve Consultant from, nor be construed or deemed a waiver of, its obligation to maintain the required insurance at all times during the performance of this Agreement. C. Additional Insured. All insurance coverage and self-insured retention or deductible portions, except Workers’ Compensation insurance and Professional Liability insurance, if applicable, shall name, to the fullest extent permitted by law for claims arising out of the performance of this Agreement, the Town, its agents, representatives, officers, directors, officials and employees as Additional Insured as specified under the respective coverage sections of this Agreement. D. Coverage Term. All insurance required herein shall be maintained in full force and effect until all work or services required to be performed under the terms of this Agreement are satisfactorily performed, completed and formally accepted by the Town, unless specified otherwise in this Agreement. E. Primary Insurance. Consultant’s insurance shall be primary insurance with respect to performance of this Agreement and in the protection of the Town as an Additional Insured. F. Claims Made. In the event any insurance policies required by this Agreement are written on a “claims made” basis, coverage shall extend, either by keeping coverage in force or purchasing an extended reporting option, for three years past completion and acceptance of the services. Such continuing coverage shall be evidenced by submission of annual Certificates of Insurance citing applicable coverage is in force and contains the provisions as required herein for the three-year period. G. Waiver. All policies, except for Professional Liability, including Workers’ Compensation insurance, shall contain a waiver of rights of recovery (subrogation) against the Town, its agents, representatives, officials, officers and employees for any claims arising out of the work or services of Consultant. Consultant shall arrange to have such subrogation waivers incorporated into each policy via formal written endorsement thereto. H. Policy Deductibles and/or Self-Insured Retentions. The policies set forth in these requirements may provide coverage that contains deductibles or self-insured retention amounts. Such deductibles or self-insured retention shall not be applicable with 2185101.2 4 respect to the policy limits provided to the Town. Consultant shall be solely responsible for any such deductible or self-insured retention amount. I. Use of Subcontractors. If any work under this Agreement is subcontracted in any way, Consultant shall execute written agreements with its subcontractors containing the indemnification provisions set forth in this Section and insurance requirements set forth herein protecting the Town and Consultant. Consultant shall be responsible for executing any agreements with its subcontractors and obtaining certificates of insurance verifying the insurance requirements. J. Evidence of Insurance. Prior to commencing any work or services under this Agreement, Consultant will provide the Town with suitable evidence of insurance in the form of certificates of insurance and a copy of the declaration page(s) of the insurance policies as required by this Agreement, issued by Consultant’s insurance insurer(s) as evidence that policies are placed with acceptable insurers as specified herein and provide the required coverages, conditions and limits of coverage specified in this Agreement and that such coverage and provisions are in full force and effect. Confidential information such as the policy premium may be redacted from the declaration page(s) of each insurance policy, provided that such redactions do not alter any of the information required by this Agreement. The Town shall reasonably rely upon the certificates of insurance and declaration page(s) of the insurance policies as evidence of coverage but such acceptance and reliance shall not waive or alter in any way the insurance requirements or obligations of this Agreement. If any of the policies required by this Agreement expire during the life of this Agreement, it shall be Consultant’s responsibility to forward renewal certificates and declaration page(s) to the Town 30 days prior to the expiration date. All certificates of insurance and declarations required by this Agreement shall be identified by referencing the RFP number and title or this Agreement. A $25.00 administrative fee shall be assessed for all certificates or declarations received without the appropriate RFP number and title or a reference to this Agreement, as applicable. Additionally, certificates of insurance and declaration page(s) of the insurance policies submitted without referencing the appropriate RFP number and title or a reference to this Agreement, as applicable, will be subject to rejection and may be returned or discarded. Certificates of insurance and declaration page(s) shall specifically include the following provisions: (1) The Town, its agents, representatives, officers, directors, officials and employees are Additional Insureds as follows: (a) Commercial General Liability – Under Insurance Services Office, Inc., (“ISO”) Form CG 20 10 03 97 or equivalent. (b) Auto Liability – Under ISO Form CA 20 48 or equivalent. (c) Excess Liability – Follow Form to underlying insurance. 2185101.2 5 (2) Consultant’s insurance shall be primary insurance as respects performance of the Agreement. (3) All policies, except for Professional Liability, including Workers’ Compensation, waive rights of recovery (subrogation) against Town, its agents, representatives, officers, officials and employees for any claims arising out of work or services performed by Consultant under this Agreement. (4) ACORD certificate of insurance form 25 (2014/01) is preferred. If ACORD certificate of insurance form 25 (2001/08) is used, the phrases in the cancellation provision “endeavor to” and “but failure to mail such notice shall impose no obligation or liability of any kind upon the company, its agents or representatives” shall be deleted. Certificate forms other than ACORD form shall have similar restrictive language deleted. 11.2 Required Insurance Coverage. A. Commercial General Liability. Consultant shall maintain “occurrence” form Commercial General Liability insurance with an unimpaired limit of not less than $1,000,000 for each occurrence, $2,000,000 Products and Completed Operations Annual Aggregate and a $2,000,000 General Aggregate Limit. The policy shall cover liability arising from premises, operations, independent contractors, products-completed operations, personal injury and advertising injury. Coverage under the policy will be at least as broad as ISO policy form CG 00 010 93 or equivalent thereof, including but not limited to, separation of insured’s clause. To the fullest extent allowed by law, for claims arising out of the performance of this Agreement, the Town, its agents, representatives, officers, officials and employees shall be cited as an Additional Insured under ISO, Commercial General Liability Additional Insured Endorsement form CG 20 10 03 97, or equivalent, which shall read “Who is an Insured (Section II) is amended to include as an insured the person or organization shown in the Schedule, but only with respect to liability arising out of “your work” for that insured by or for you.” If any Excess insurance is utilized to fulfill the requirements of this subsection, such Excess insurance shall be “follow form” equal or broader in coverage scope than underlying insurance. B. Vehicle Liability. Consultant shall maintain Business Automobile Liability insurance with a limit of $1,000,000 each occurrence on Consultant’s owned, hired and non-owned vehicles assigned to or used in the performance of the Consultant’s work or services under this Agreement. Coverage will be at least as broad as ISO coverage code “1” “any auto” policy form CA 00 01 12 93 or equivalent thereof. To the fullest extent allowed by law, for claims arising out of the performance of this Agreement, the Town, its agents, representatives, officers, directors, officials and employees shall be cited as an Additional Insured under ISO Business Auto policy Designated Insured Endorsement form CA 20 48 or equivalent. If any Excess insurance is utilized to fulfill the requirements of this subsection, such Excess insurance shall be “follow form” equal or broader in coverage scope than underlying insurance. 2185101.2 6 C. Professional Liability. If this Agreement is the subject of any professional services or work, or if the Consultant engages in any professional services or work adjunct or residual to performing the work under this Agreement, the Consultant shall maintain Professional Liability insurance covering negligent errors and omissions arising out of the Services performed by the Consultant, or anyone employed by the Consultant, or anyone for whose negligent acts, mistakes, errors and omissions the Consultant is legally liable, with an unimpaired liability insurance limit of $2,000,000 each claim and $2,000,000 annual aggregate. D. Workers’ Compensation Insurance. Consultant shall maintain Workers’ Compensation insurance to cover obligations imposed by federal and state statutes having jurisdiction over Consultant’s employees engaged in the performance of work or services under this Agreement and shall also maintain Employers Liability Insurance of not less than $500,000 for each accident, $500,000 disease for each employee and $1,000,000 disease policy limit. 11.3 Cancellation and Expiration Notice. Insurance required herein shall not expire, be canceled, or be materially changed without 30 days’ prior written notice to the Town. 12. Termination; Cancellation. 12.1 For Town’s Convenience. This Agreement is for the convenience of the Town and, as such, may be terminated without cause after receipt by Consultant of written notice by the Town. Upon termination for convenience, Consultant shall be paid for all undisputed services performed to the termination date. 12.2 For Cause. If either party fails to perform any obligation pursuant to this Agreement and such party fails to cure its nonperformance within 30 days after notice of nonperformance is given by the non-defaulting party, such party will be in default. In the event of such default, the non-defaulting party may terminate this Agreement immediately for cause and will have all remedies that are available to it at law or in equity including, without limitation, the remedy of specific performance. If the nature of the defaulting party’s nonperformance is such that it cannot reasonably be cured within 30 days, then the defaulting party will have such additional periods of time as may be reasonably necessary under the circumstances, provided the defaulting party immediately (A) provides written notice to the non-defaulting party and (B) commences to cure its nonperformance and thereafter diligently continues to completion the cure of its nonperformance. In no event shall any such cure period exceed 90 days. In the event of such termination for cause, payment shall be made by the Town to the Consultant for the undisputed portion of its fee due as of the termination date. 12.3 Due to Work Stoppage. This Agreement may be terminated by the Town upon 30 days’ written notice to Consultant in the event that the Services are permanently abandoned. In the event of such termination due to work stoppage, payment shall be made by the Town to the Consultant for the undisputed portion of its fee due as of the termination date. 12.4 Conflict of Interest. This Agreement is subject to the provisions of ARIZ. REV. STAT. § 38-511. The Town may cancel this Agreement without penalty or further obligations 2185101.2 7 by the Town or any of its departments or agencies if any person significantly involved in initiating, negotiating, securing, drafting or creating this Agreement on behalf of the Town or any of its departments or agencies is, at any time while the Agreement or any extension of the Agreement is in effect, an employee of any other party to the Agreement in any capacity or a consultant to any other party of the Agreement with respect to the subject matter of the Agreement. 12.5 Gratuities. The Town may, by written notice to the Consultant, cancel this Agreement if it is found by the Town that gratuities, in the form of economic opportunity, future employment, entertainment, gifts or otherwise, were offered or given by the Consultant or any agent or representative of the Consultant to any officer, agent or employee of the Town for the purpose of securing this Agreement. In the event this Agreement is canceled by the Town pursuant to this provision, the Town shall be entitled, in addition to any other rights and remedies, to recover and withhold from the Consultant an amount equal to 150% of the gratuity. 12.6 Agreement Subject to Appropriation. The Town is obligated only to pay its obligations set forth in the Agreement as may lawfully be made from funds appropriated and budgeted for that purpose during the Town’s then current fiscal year. The Town’s obligations under this Agreement are current expenses subject to the “budget law” and the unfettered legislative discretion of the Town concerning budgeted purposes and appropriation of funds. Should the Town elect not to appropriate and budget funds to pay its Agreement obligations, this Agreement shall be deemed terminated at the end of the then-current fiscal year term for which such funds were appropriated and budgeted for such purpose and the Town shall be relieved of any subsequent obligation under this Agreement. The parties agree that the Town has no obligation or duty of good faith to budget or appropriate the payment of the Town’s obligations set forth in this Agreement in any budget in any fiscal year other than the fiscal year in which the Agreement is executed and delivered. The Town shall be the sole judge and authority in determining the availability of funds for its obligations under this Agreement. The Town shall keep Contractor informed as to the availability of funds for this Agreement. The obligation of the Town to make any payment pursuant to this Agreement is not a general obligation or indebtedness of the Town. Contractor hereby waives any and all rights to bring any claim against the Town from or relating in any way to the Town's termination of this Agreement pursuant to this section. 13. Miscellaneous. 13.1 Independent Contractor. It is clearly understood that each party will act in its individual capacity and not as an agent, employee, partner, joint venturer, or associate of the other. An employee or agent of one party shall not be deemed or construed to be the employee or agent of the other for any purpose whatsoever. The Consultant acknowledges and agrees that the Services provided under this Agreement are being provided as an independent contractor, not as an employee or agent of the Town. Consultant, its employees and subcontractors are not entitled to workers’ compensation benefits from the Town. The Town does not have the authority to supervise or control the actual work of Consultant, its employees or subcontractors. The Consultant, and not the Town, shall determine the time of its performance of the services provided under this Agreement so long as Consultant meets the requirements of its agreed Scope of Work as set forth in Section 2 above. Consultant is neither prohibited from entering into other contracts nor prohibited from practicing its profession elsewhere. Town and Consultant do not intend to nor will they combine business operations under this Agreement. 2185101.2 8 13.2 Applicable Law; Venue. This Agreement shall be governed by the laws of the State of Arizona and suit pertaining to this Agreement may be brought only in courts in the Maricopa County, Arizona. 13.3 Laws and Regulations. Consultant shall keep fully informed and shall at all times during the performance of its duties under this Agreement ensure that it and any person for whom the Consultant is responsible abides by, and remains in compliance with, all rules, regulations, ordinances, statutes or laws affecting the Services, including, but not limited to, the following: (A) existing and future Town and County ordinances and regulations, (B) existing and future State and Federal laws and (C) existing and future Occupational Safety and Health Administration standards. 13.4 Amendments. This Agreement may be modified only by a written amendment signed by persons duly authorized to enter into contracts on behalf of the Town and the Consultant. 13.5 Provisions Required by Law. Each and every provision of law and any clause required by law to be in the Agreement will be read and enforced as though it were included herein and, if through mistake or otherwise any such provision is not inserted, or is not correctly inserted, then upon the application of either party, the Agreement will promptly be physically amended to make such insertion or correction. 13.6 Severability. The provisions of this Agreement are severable to the extent that any provision or application held to be invalid by a Court of competent jurisdiction shall not affect any other provision or application of the Agreement which may remain in effect without the invalid provision or application. 13.7 Relationship of the Parties. It is clearly understood that each party will act in its individual capacity and not as an agent, employee, partner, joint venturer, or associate of the other. An employee or agent of one party shall not be deemed or construed to be the employee or agent of the other for any purpose whatsoever. The Consultant is advised that taxes or Social Security payments will not be withheld from any Town payments issued hereunder and Consultant agrees to be fully and solely responsible for the payment of such taxes or any other tax applicable to this Agreement. 13.8 Entire Agreement; Interpretation; Parol Evidence. This Agreement represents the entire agreement of the parties with respect to its subject matter, and all previous agreements, whether oral or written, entered into prior to this Agreement are hereby revoked and superseded by this Agreement. No representations, warranties, inducements or oral agreements have been made by any of the parties except as expressly set forth herein, or in any other contemporaneous written agreement executed for the purposes of carrying out the provisions of this Agreement. This Agreement shall be construed and interpreted according to its plain meaning, and no presumption shall be deemed to apply in favor of, or against the party drafting the Agreement. The parties acknowledge and agree that each has had the opportunity to seek and utilize legal counsel in the drafting of, review of, and entry into this Agreement. 2185101.2 9 13.9 Assignment; Delegation. No right or interest in this Agreement shall be assigned or delegated by Consultant without prior, written permission of the Town signed by the Town Manager and no delegation of any duty of Consultant shall be made without prior, written permission of the Town signed by the Town Manager. Any attempted assignment or delegation by Consultant in violation of this provision shall be a breach of this Agreement by Consultant. 13.10 Subcontracts. No subcontract shall be entered into by the Consultant with any other party to furnish any of the material or services specified herein without the prior written approval of the Town. The Consultant is responsible for performance under this Agreement whether or not subcontractors are used. Failure to pay subcontractors in a timely manner pursuant to any subcontract shall be a material breach of this Agreement by Consultant. 13.11 Rights and Remedies. No provision in this Agreement shall be construed, expressly or by implication, as waiver by the Town of any existing or future right and/or remedy available by law in the event of any claim of default or breach of this Agreement. The failure of the Town to insist upon the strict performance of any term or condition of this Agreement or to exercise or delay the exercise of any right or remedy provided in this Agreement, or by law, or the Town’s acceptance of and payment for services, shall not release the Consultant from any responsibilities or obligations imposed by this Agreement or by law, and shall not be deemed a waiver of any right of the Town to insist upon the strict performance of this Agreement. 13.12 Attorneys’ Fees. In the event either party brings any action for any relief, declaratory or otherwise, arising out of this Agreement or on account of any breach or default hereof, the prevailing party shall be entitled to receive from the other party reasonable attorneys’ fees and reasonable costs and expenses, determined by the court sitting without a jury, which shall be deemed to have accrued on the commencement of such action and shall be enforced whether or not such action is prosecuted through judgment. 13.13 Liens. All materials or services shall be free of all liens and, if the Town requests, a formal release of all liens shall be delivered to the Town. 13.14 Offset. A. Offset for Damages. In addition to all other remedies at law or equity, the Town may offset from any money due to the Consultant any amounts Consultant owes to the Town for damages resulting from breach or deficiencies in performance or breach of any obligation under this Agreement. B. Offset for Delinquent Fees or Taxes. The Town may offset from any money due to the Consultant any amounts Consultant owes to the Town for delinquent fees, transaction privilege taxes and property taxes, including any interest or penalties. 13.15 Notices and Requests. Any notice or other communication required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (A) delivered to the party at the address set forth below, (B) deposited in the U.S. Mail, registered or certified, return receipt requested, to the address set forth below or (C) given to a recognized and reputable overnight delivery service, to the address set forth below: 2185101.2 10 If to the Town: Town of Fountain Hills 16705 East Avenue of the Fountains Fountain Hills, Arizona 85268 Attn: Kenneth W. Buchanan, Town Manager With copy to: GUST ROSENFELD, P.L.C. One East Washington Street, Suite 1600 Phoenix, Arizona 85004-2553 Attn: Andrew J. McGuire, Esq. If to Consultant: HDR Construction Control Corporation 3200 East Camelback Road, Suite 350 Phoenix, Arizona 85018 Attn: Neil R. Richards, Vice President or at such other address, and to the attention of such other person or officer, as any party may designate in writing by notice duly given pursuant to this subsection. Notices shall be deemed received (A) when delivered to the party, (B) three business days after being placed in the U.S. Mail, properly addressed, with sufficient postage or (C) the following business day after being given to a recognized overnight delivery service, with the person giving the notice paying all required charges and instructing the delivery service to deliver on the following business day. If a copy of a notice is also given to a party’s counsel or other recipient, the provisions above governing the date on which a notice is deemed to have been received by a party shall mean and refer to the date on which the party, and not its counsel or other recipient to which a copy of the notice may be sent, is deemed to have received the notice. 13.16 Confidentiality of Records. The Consultant shall establish and maintain procedures and controls that are acceptable to the Town for the purpose of ensuring that information contained in its records or obtained from the Town or from others in carrying out its obligations under this Agreement shall not be used or disclosed by it, its agents, officers, or employees, except as required to perform Consultant’s duties under this Agreement. Persons requesting such information should be referred to the Town. Consultant also agrees that any information pertaining to individual persons shall not be divulged other than to employees or officers of Consultant as needed for the performance of duties under this Agreement. 13.17 Records and Audit Rights. To ensure that the Consultant and its subcontractors are complying with the warranty under subsection 13.18 below, Consultant’s and its subcontractors’ books, records, correspondence, accounting procedures and practices, and any other supporting evidence relating to this Agreement, including the papers of any Consultant and its subcontractors’ employees who perform any work or services pursuant to this Agreement (all of the foregoing hereinafter referred to as “Records”), shall be open to inspection and subject to audit and/or reproduction during normal working hours by the Town, to the extent necessary to adequately permit (A) evaluation and verification of any invoices, payments or claims based on Consultant’s and its subcontractors’ actual costs (including direct and indirect costs and overhead allocations) incurred, or units expended directly in the performance of work under this Agreement and (B) evaluation of the Consultant’s and its subcontractors’ compliance with the Arizona 2185101.2 11 employer sanctions laws referenced in subsection 13.18 below. To the extent necessary for the Town to audit Records as set forth in this subsection, Consultant and its subcontractors hereby waive any rights to keep such Records confidential. For the purpose of evaluating or verifying such actual or claimed costs or units expended, the Town shall have access to said Records, even if located at its subcontractors’ facilities, from the effective date of this Agreement for the duration of the work and until three years after the date of final payment by the Town to Consultant pursuant to this Agreement. Consultant and its subcontractors shall provide the Town with adequate and appropriate workspace so that the Town can conduct audits in compliance with the provisions of this subsection. The Town shall give Consultant or its subcontractors reasonable advance notice of intended audits. Consultant shall require its subcontractors to comply with the provisions of this subsection by insertion of the requirements hereof in any subcontract pursuant to this Agreement. 13.18 E-verify Requirements. To the extent applicable under ARIZ. REV. STAT. § 41-4401, the Consultant and its subcontractors warrant compliance with all federal immigration laws and regulations that relate to their employees and their compliance with the E-verify requirements under ARIZ. REV. STAT. § 23-214(A). Consultant’s or its subcontractor’s failure to comply with such warranty shall be deemed a material breach of this Agreement and may result in the termination of this Agreement by the Town. 13.19 Conflicting Terms. In the event of any inconsistency, conflict or ambiguity among the terms of this Agreement, the Scope of Work and the Fee Proposal, the documents shall govern in the order listed herein. 13.20 Non-Exclusive Contract. This Agreement is entered into with the understanding and agreement that it is for the sole convenience of the Town. The Town reserves the right to obtain like goods and services from another source when necessary. [SIGNATURES ON FOLLOWING PAGES] 2185101.2 12 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first set forth above. “Town” TOWN OF FOUNTAIN HILLS, an Arizona municipal corporation Kenneth W. Buchanan, Town Manager ATTEST: Bevelyn J. Bender, Town Clerk (ACKNOWLEDGMENT) STATE OF ARIZONA ) ) ss. COUNTY OF MARICOPA ) On ___________________, 2014, before me personally appeared Kenneth W. Buchanan, the Town Manager of the TOWN OF FOUNTAIN HILLS, an Arizona municipal corporation, whose identity was proven to me on the basis of satisfactory evidence to be the person who he claims to be, and acknowledged that he signed the above document, on behalf of the Town of Fountain Hills. Notary Public (Affix notary seal here) [SIGNATURES CONTINUE ON FOLLOWING PAGE] "Consultant" HDR CONSTRUCTION CONTROL CORPORATION,a Nebraska corporation ./n4./c fZiu4*ilMName: hu,l/c*?fl*S'0&+Title: (ACKNOWLEDGMENT) STATE OF C\(\1X>^) COUNTY OF \Wr\C0f )ss. , 2014, before me personally appeared [v €.I I„ On j i)|m l o , 2014,before me personally appeared jv €.I I JLUdMrdS -the \/\c£fa£lAi«dlpf HDR CONSTRUCTION CONTROL CORPORATION,a Nebraska corporation,whose identity was proven to me on the basis of satisfactory evidence to be the person who he/she claims to be, and acknowledged that he/she signed the above document on behalf of the corporation. (Affix notary seal here) 2185101.2 FLORA MONORAGON Notary Public -Arizona Maricopa County Expires 06/30/2015 ' Nlntnrv Pnhlir 0NotaryPublic 2185101.2 EXHIBIT A TO PROFESSIONAL SERVICES AGREEMENT BETWEEN THE TOWN OF FOUNTAIN HILLS AND HDR CONSTRUCTION CONTROL CORPORATION [Scope of Work] See following pages. HDR CONSTRUCTION CONTROL CORPORATION 3200 EAST CAMELBACK ROAD, SUITE 350 PHOENIX, ARIZONA 85018 CONSTRUCTION MANAGEMENT SCOPE OF WORK 1. Project Description. The Shea Boulevard Widening Project generally consists of roadway construction, mill and overlay of existing asphalt, sidewalk improvements, traffic signal improvements, traffic signal interconnect, drainage improvements, signage and striping, landscaping and other miscellaneous work as required. 2. Construction Phase. 2.1 Project Management. A. On-Site Management and Construction Phase Communication Procedures. Consultant shall provide and maintain a management team on the Project site to provide construction/contract administration, to be the Town’s representative, and to establish and implement coordination and communication procedures among Consultant, the Town, the design architect/engineer (“A/E”) and the Town’s selected construction contractor (“Construction Contractor”). Construction observations for the Project shall be performed by Consultant personnel with sufficient expertise to determine whether the construction is proceeding in accordance with the construction contract documents included or incorporated in the Town’s Invitation for Bids for the Project (“Contract Documents”). Construction observations shall be under the direct supervision of an engineer(s) registered in the State of Arizona and qualified to perform this work. Consultant shall comply with and have sufficient trained personnel to meet the schedule and man-hour requirements set forth in the Fee Proposal (Exhibit B). B. Construction Administration Procedures. Consultant, with input from the A/E, shall establish and implement procedures for: expediting and processing requests for information (RFIs); and review and approval of shop drawings, material and equipment sample submittals, contract schedule adjustments, change orders, material and equipment substitution requests and payment requests. Consultant shall establish and maintain logs for tracking all relevant information related to the above. Consultant shall maintain daily job reports and submit to the Town on a monthly basis. As the Town representative at the construction site, Consultant shall be the party to whom RFIs, submittals, schedule adjustments, substitution requests, test results, change order requests and payment applications shall be submitted. Consultant shall process the requests and forward them to the Fountain Hills Development Services Director with a recommendation for approval or denial. After approval or denial, Consultant shall notify the Construction Contractor of the Development Services Director’s decision. C. Construction Observation. Consultant shall establish and implement a program to observe and monitor the quality of the construction to ensure the Project is completed per the Contract Documents. The purpose of the program shall be to identify defects and deficiency in the work of the Construction Contractor. While Consultant shall not be responsible for construction means, methods, techniques, sequences and procedures employed by the 2 Construction Contractor in the performance of its contract, Consultant shall nevertheless advise the Town whether the construction means, methods, techniques, sequences or procedures will delay the work or cause a defect in the work. Consultant may, from time to time, issue work directives or field orders that consist of minor changes in the work not involving an adjustment in the contract sum or the contract time, but which are consistent with the overall intent of the Contract Documents. Consultant is authorized to reject work and transmit to the Town and Construction Contractor a notice of nonconforming work when the work does not conform to the requirements of the Contract Documents. Consultant is not authorized as a part of this service to change, revoke, alter, enlarge, relax or release any requirements of the Contract Documents or to approve or accept any portion of the work not performed in accordance with the Contract Documents. In the event the Construction Contractor fails to correct deficient work, Consultant shall issue a stop work order on behalf of the Town until such deficiencies are corrected. No action taken by Consultant shall relieve the Construction Contractor from its obligation to perform its work in strict conformity with the Contract Documents and in strict conformity with all applicable laws, rules and regulations. D. Design Changes. Any decision or action related to the design or engineering of the Project shall be referred to the A/E for action. No change in the design documents shall be made without written approval of the A/E and the Town. E. Project Site Meetings. Consultant shall conduct weekly coordination meetings at the Project site with the Construction Contractor, the Town’s designated representative and the A/E (if provided for in the Agreement between the Town and the A/E) and/or other stakeholders as needed. Consultant shall record, transcribe and distribute minutes to all attendees, the Town and the A/E. F. Construction Quality Assurance (Testing). Technical or special inspections required in the Contract Documents or per the Town’s adopted codes, and testing provided by the Construction Contractor, the A/E or others shall be monitored by Consultant. Consultant shall be provided a copy of all inspection and testing reports on the day of the inspection or test or within a reasonable time period. Consultant is responsible for providing the test results to the Construction Contractor and to the Town. In the event of a failed test, re- testing will be performed as directed in the Contract Documents. Consultant shall also collect all material delivery tickets. All test results and material tickets shall be compiled and delivered to the Town in electronic format at the end of the Project, as required in Subsection 3.1(B) below. G. Review of Requests for Changes to the Contract Time and Price. Consultant shall review with the A/E the contents of requests for changes to the contract work, time or price submitted by a contractor, assemble information concerning the request to determine the cause of the requests and make written recommendations to the Town with respect to acceptance of the requests. Consultant will implement the Town’s decisions regarding all requests for changes. All changes to the Agreement between the Town and Construction Contractor shall be only by change orders or contract amendments executed by the Town. H. Record Drawings, Operation and Maintenance Materials. As required by the Contract Documents, Consultant shall receive from the Construction Contractor red-line 3 construction record drawings, operation and maintenance manuals, warranties and guarantees for materials and equipment installed on the Project, and review such documents for completeness and submit documents to the Town. Upon verification of the red-line construction record drawings for correctness, Consultant shall transmit same to the A/E for preparation of the as- built drawings. Upon return of the as-built drawings to the Consultant from the A/E, Consultant’s engineer shall be the responsible engineer(s) for purposes of certifying the as-built drawings. “Certifying the as-built drawings” means the as-built drawings will be signed, sealed and dated by engineer(s) registered in the State of Arizona in his field of competence. Each plan sheet in the set shall be marked “As-Built”. In addition, if the Project requires certification by Maricopa County Environmental Services Department or the Arizona Department of Environmental Quality, Consultant shall provide such certification. I. Substantial and Final Completion. In consultation with the A/E and the Town’s inspectors (when applicable), Consultant shall review the Construction Contractor’s written requests for substantial completion and final completion and shall recommend to the Town when the Project and the Construction Contractor’s work has achieved substantial and final completion as defined in the Construction Documents. Consultant shall, prior to issuing a Certificate of Substantial Completion, compile a list of incomplete work or work that does not conform to the Contract Documents (punch-list items) based on his observations and input from the A/E and the Town’s inspectors (when applicable). This list shall be attached to the Certificate of Substantial Completion. The Certificate of Final Completion shall not be issued until the incomplete work has been completed and the Town is ready to accept the Project. Consultant shall issue the Certificate of Substantial Completion and Certification of Final Completion to the Construction Contractor. J. Project Close-out. 1. Within five days of the receipt of Construction Contractor’s written request for a punch list, Consultant shall perform an inspection for the purpose of creating a punch list. 2. Consultant shall notify Construction Contractor in writing of any deficiencies to be remedied prior to final acceptance by written punch-list. Final acceptance shall not be given until the punch-list items are completed in accordance with the Contract Documents. No one is authorized to amend the Contract Documents by use of the punch list, which is solely for the benefit of Construction Contractor to enable him to determine what items must be corrected before final acceptance will be recommended by the Consultant. 3. Upon completion of the deficient work, Construction Contractor may request a punch list inspection. If Consultant determines that all work has been completed, Consultant shall recommend in writing to the Town that final acceptance of the entire work be made as of the date of Consultant’s final inspection. 4. Simultaneously with Construction Contractor’s request for final payment, Construction Contractor is required to submit the following items to 4 Consultant: (A) red-line construction record drawings; (B) warranties; (C) three sets of documentation covering the operation and maintenance of the mechanical and electrical installation and all other equipment required to be furnished with such manuals; (D) other items required by the Contract Documents. No recommendation shall be made for final acceptance until these items have been received and are complete. K. Final Payment. Consultant shall provide to the Town a written recommendation regarding final payment to the Construction Contractor. A final change order, if applicable, shall be prepared by the Construction Contractor, reviewed and approved by the Consultant, with a written recommendation for approval by the Town. Consultant’s recommendation for final payment shall take into account the contract sum, as adjusted by any change orders, amounts already paid, and sums to be retained for incomplete work, liquidated damages and for any other cause under the Contract Documents. Consultant shall prepare a statement of final inspection stating that the work has been given a final inspection, that Construction Contractor has submitted the required documents, setting forth with detail any deviations in the work as completed, and estimating the cost of correction of such deviations. Consultant’s statement shall be transmitted to the Town along with Construction Contractor’s request for final payment. Consultant shall provide a copy of the statement of final inspection and Consultant’s estimate of the sum due to Construction Contractor. 2.2 Time Management. A. Construction Contractor’s Construction Schedule. Consultant shall review the Construction Contractor’s resource-loaded Construction Schedule and shall verify that the schedule is prepared in accordance with the requirements of the Contract Document and that it establishes completion dates that comply with the requirements of the Contract Documents. B. Construction Schedule Reports. Consultant shall, on a monthly basis and at the time of Construction Contractor’s pay application, review the progress of construction, evaluate the percentage complete of each construction activity as indicated in the Construction Contractor’s resource-loaded Construction Schedule and shall review such percentages with the Construction Contractor. Consultant shall advise and make recommendations to the Town concerning the alternative courses of action that the Town may take in its efforts to achieve contract compliance by the Construction Contractor. C. Consultant Review of Time Extension Requests. Prior to the issuance of change orders, Consultant shall advise the Town as to the effect Construction Contractor’s requests for time extensions will have on the Master Schedule. D. Recovery Schedules. Where Construction Schedule delays are encountered, Consultant shall request a recovery schedule in writing from the Construction Contractor and review the recovery schedule for compliance with the Contract Documents. Any delays that may affect the Master Schedule shall be reported to the Town in writing. 5 2.3 Cost Management. A. Change Order Control. Consultant, with input from the A/E, shall establish and implement a change order control system that is consistent with the Contract Documents. All proposed change orders shall first be described in detail by Consultant, with the assistance of the A/E when necessary, in a request for a proposal to the Construction Contractor, and shall be accompanied by technical drawings and specifications prepared by the A/E, when required. All change orders shall be classified into one of three categories: “Town Initiated Change Order,” “Error and/or Omission Change Order” and “Unforeseen Conditions Change Order.” Change order dollar amounts shall be traced by these three categories. At the end of construction, a Final Change Order Report will be prepared identifying each change order, its classification and amount. Total amounts for each classification shall also be reported. The Construction Contractor shall submit to Consultant for evaluation detailed information concerning the cost and time adjustments, if any, as may be necessar y to perform the proposed change work order. Consultant shall discuss the proposed change order with the Construction Contractor and determine the Construction Contractor’s basis of the cost and time impacts of performing the work. Consultant shall make recommendations to the Town on acceptability of the change in the work, prior to the Town’s execution of change orders. Consultant shall verify that change order work and adjustments of time, if any, required by approved change orders have been incorporated into the Construction Contractor’s Schedule. No change in the design shall be made without written approval of the A/E. No change order shall be approved without the written approval of the Town. B. Change Order Pricing and Verification. If a Change Order provides for an adjustment to the contract sum, the cost of the change in the work shall be made as prescribed in the Contract Documents. 1. Where a unit price is contained in the Bid Schedule and agreed to by Consultant and Construction Contractor, or when a unit price or lump sum is mutually agreed upon for the change in the work, the Consultant shall make recommendation to the Town. A Change Order shall be executed by the Town and Construction Contractor, prior to proceeding with the change in the work, unless an emergency situation exists. 2. Where a change in work is to be performed on a cost-plus basis, an estimate of the work shall be prepared by the Construction Contractor and reviewed by Consultant. With the Town’s approval, and based on recommendation from Consultant, Consultant’s Project Representative shall direct the Construction Contractor, in writing, to proceed with the change in the work. 3. In addition to receiving the required information from the Construction Contractor documenting time, materials, equipment, and sub-contractors employed to complete the change of work, Consultant shall personally monitor and record work effort involved in the change of work. Consultant and Construction Contractor shall confer on a daily basis, and come to a mutual agreement on the time, materials, equipment, and sub-contractors’ cost that day. As stipulated in the Contract 6 Documents, final cost of the change in the work shall be reflected and formalized in a Change Order, signed by both the Town and Construction Contractor. 4. Should negotiations break down between Consultant and Construction Contractor over the cost of the change in the work, Consultant, with the Town’s approval, shall be authorized to seek bids and have the work performed by another contractor. C. Progress Payments. Consultant shall review the payment applications submitted by the Construction Contractor and determine whether the amount requested reflects the progress of the Construction Contractor’s work. Consultant shall make appropriate adjustments to each payment application and shall provide and forward to the Town a Progress Payment Report. The Report shall state the total contract price, payments to date, current payment requested, percent work complete, percent payments made, retainage and actual amounts owed for the current period. Included in this report shall be a Certificate of Payment that shall be signed by Consultant and delivered to the Town. The issuance of a Certificate of Payment by Consultant shall constitute a representation by Consultant to the Town, based on Consultant’s observations and inspections at the site and on the data comprising the Construction Contractor’s application for payment, that: (1) the work has progressed to the point indicated; (2) to the best of Consultant’s knowledge, information and belief, the quality of the work is in accordance with the Contract Documents, subject to (a) an evaluation of the work for conformance with the Contract Documents upon Substantial Completion, (b) the results of any subsequent tests required by or performed under the Contract Documents, (c) minor deviations from the Contract Documents correctable prior to completion, and (d) any specific qualifications stated in the application for payment; (3) red-line construction record drawings are up to date; and (4) the Construction Contractor is entitled to payment in the amount certified. 2.4 Management Information System. A. Project and Construction Budget Revision. Consultant shall make recommendations to the Town on the impact of construction changes that may result in revision to the Project and construction budget. B. Change Order Reports. Consultant shall monthly prepare and distribute Change Order Reports during the construction phase. The Report shall list all the Town- approved change orders by number, a brief description of the change order work, the cost established in the change order time impacts, if any, and percent of completion of the change order work. C. Construction Contractor’s Safety Program Report. Consultant shall verify that a copy of Construction Contractor’s safety program is available at the job site, as required in the Contract Documents, and shall include a copy of the Construction Contractor’s weekly safety meeting agenda as an attachment to the weekly construction meeting minutes. Consultant shall not be responsible for or have any liability in whole or in part for Construction Contractor’s implementation of, or compliance with, contractor safety programs and safety laws, regulations, etc., nor shall Consultant be responsible for the adequacy, or completeness, of contractor safety 7 programs or the Construction Contractor’s compliance and performance thereof. Consultant has no responsibility for review of safety programs; however, if Consultant observes a violation of the Construction Contractor’s safety program or witnesses any potentially unsafe condition, he shall immediately notify the Construction Contractor and the Town’s representative of the potential violation/condition and if the violation/condition is not immediately cured, the Consultant shall issue a stop work order until the violation/condition is cured. 3. Post-Construction Phase. 3.1 Project Management. A. Record Documents. Consultant shall coordinate and expedite submittals of information from the Construction Contractor for as-built record drawings and specification preparation and shall coordinate and expedite the transmittal of Record Documents to the Town. Consultant shall certify the as-built record drawings as required under this Agreement. B. Testing and Material Tickets. Consultant shall compile all testing results and material tickets in electronic format and submit to the Town. C. Organize and Index Operation Maintenance Materials. Prior to the Final Completion of the Project, Consultant shall compile and verify completeness of manufacturers’ operations and maintenance manuals, warranties and guarantees as received from the Construction Contractor, and submit such documents to the Town. D. Warranty Inspection. Consultant shall notify the Town’s Development Services Director, who will appoint a staff member to jointly perform a warranty inspection with Consultant 10 months after final acceptance. 3.2 Cost Management. Consultant shall continue to provide services related to Change Orders, as required, during the Post-Construction Phase. 3.3 Management Information Systems. A. Close-Out Reports. At the conclusion of the Project, Consultant shall prepare final Project Cost and closeout reports. All of the Project information and documents shall be delivered to the Town upon completion of the Project. Following is a list of items to be included with the close-out package: 1. Copy of Certificate of Substantial Completion with a copy of the punch list itemizing incomplete or deficient items. 2. Copy of Certificate of Final Completion. 3. Copy of final change order, if required, prior to submitting final pay applications. 8 4. Final pay application with Affidavit for the Settlement of Claims, Record Drawings, Warranties, Operations and Maintenance Manuals and other items as required by the special conditions and/or Contract Documents. 5. 8 1/2” x 11” drawings showing the actual locations of landscape controllers and electric services, if applicable. B. Close-Out Meeting. At the conclusion of the Project, Consultant shall participate in a Project close-out meeting with the Town’s staff and the A/E to evaluate the process used on the Project and the results obtained and to discuss how the process might be improved for the next project. Consultant shall provide meeting minutes from close-out meeting. 4. Consultant’s Project Management Key Personnel. 4.1 Principal in Charge: Neil Richards, PE 4.2 Project Manager/Construction Manager: Chad McDermott, PE 4.3 Resident Engineer/Office Manager: Chad McDermott, PE 4.4 Construction Inspector: Nate Meddings 4.5 Construction Inspector (Night Shift): Joe Fitzner 4.6 Accountant: Viki Miller 4.7 Clerical (Office Assistant): Kathleen Tindell 2185101.2 EXHIBIT A TO PROFESSIONAL SERVICES AGREEMENT BETWEEN THE TOWN OF FOUNTAIN HILLS AND HDR CONSTRUCTION CONTROL CORPORATION [Scope of Work] See following pages. HDR CONSTRUCTION CONTROL CORPORATION 3200 EAST CAMELBACK ROAD,SUITE 350 PHOENIX,ARIZONA 85018 CONSTRUCTION MANAGEMENT SCOPE OF WORK 1.Project Description. The Shea Boulevard Widening Project generally consists of roadway construction,mill and overlay of existing asphalt, sidewalk improvements,traffic signal improvements, traffic signal interconnect, drainage improvements, signage and striping,landscaping and other miscellaneous work as required. 2.Construction Phase. 2.1 Project Management. A.On-Site Management and Construction Phase Communication Procedures. Consultant shall provide and maintain a management team on the Project site to provide construction/contract administration,to be the Town's representative,and to establish and implement coordination and communication procedures among Consultant,the Town, the design architect/engineer ("A/E") and the Town's selected construction contractor ("Construction Contractor").Construction observations for the Project shall be performed by Consultant personnel with sufficient expertise to determine whether the construction is proceeding in accordance with the construction contract documents included or incorporated in the Town's Invitation for Bids for the Project ("Contract Documents").Construction observations shall be under the direct supervision of an engineer(s)registered in the State of Arizona and qualified to perform this work. Consultant shall comply with and have sufficient trained personnel to meet the schedule and man-hour requirements set forth in the Fee Proposal (Exhibit B). B.Construction Administration Procedures.Consultant,with input from the A/E,shall establish and implement procedures for: expediting and processing requests for information (RFIs);and review and approval of shop drawings, material and equipment sample submittals,contract schedule adjustments, change orders, material and equipment substitution requests and payment requests. Consultant shall establish and maintain logs for tracking all relevant information related to the above.Consultant shall maintain daily job reports and submit to the Town on a monthly basis. As the Town representative at the construction site, Consultant shall be the party to whom RFIs, submittals, schedule adjustments, substitution requests, test results, change order requests and payment applications shall be submitted. Consultant shall process the requests and forward themto the Fountain Hills Development Services Director with a recommendation for approval or denial. After approval or denial, Consultant shall notifythe Construction Contractor of the Development Services Director's decision. C.Construction Observation.Consultant shall establish and implement a program to observe andmonitorthe quality of the construction to ensurethe Project is completed per the Contract Documents.The purpose of the program shall be to identify defects and deficiency inthe work of the Construction Contractor.WhileConsultantshallnot be responsible for construction means, methods,techniques,sequences and procedures employed by the Construction Contractor in the performance of its contract, Consultant shall nevertheless advise the Town whether the construction means, methods, techniques, sequences or procedures will delay the work or cause a defect in the work.Consultant may, from time to time, issue work directives or field ordersthat consist of minor changes in the work not involving an adjustment in the contract sum or the contract time,but which are consistent with the overall intent of the Contract Documents.Consultant is authorized to reject work and transmit to the Town and Construction Contractor a notice of nonconforming work when the work does not conform to the requirements of the Contract Documents. Consultant is not authorized as a part of this service to change, revoke, alter, enlarge, relax or release any requirements of the Contract Documents or to approve or accept any portion of the work not performed in accordance with the Contract Documents.In the event the Construction Contractor fails to correct deficient work,Consultant shall issue a stop work order on behalf of the Town until such deficiencies are corrected. No action taken by Consultant shall relieve the Construction Contractor from its obligation to perform its work in strict conformity with the Contract Documents and in strict conformity with all applicable laws, rules and regulations. D. Design Changes.Any decision or action related to the design or engineering of the Project shall be referred to the A/E for action. No change in the design documents shall be made without written approval of the A/E and the Town. E. Project Site Meetings. Consultant shall conduct weekly coordination meetings at the Project site with the Construction Contractor,the Town's designated representative and the A/E (if provided for in the Agreement between the Town and the A/E) and/or other stakeholders as needed.Consultant shall record,transcribe and distribute minutes to all attendees,the Town and the A/E. F.Construction Quality Assurance (Testing). Technical or special inspections required in the Contract Documents or per the Town's adopted codes, and testing provided by the Construction Contractor, the A/E or others shall be monitored by Consultant. Consultant shall be provided a copy of all inspection and testing reports on the day of the inspection or test or within a reasonabletime period. Consultant is responsible for providing the test results to the Construction Contractor and to the Town.In the event of a failed test, re- testing will be performed as directed in the Contract Documents.Consultant shall also collect all material delivery tickets.All test results and material tickets shall be compiled and delivered to the Town in electronic format at the end of the Project, as required in Subsection 3.1(B)below. G.Review of Requests for Changes to the Contract Time and Price. Consultant shall review with the A/E the contents of requests for changes to the contract work, time or price submitted by a contractor,assemble information concerning the request to determine the cause of the requests and make written recommendations to the Town with respect to acceptance of the requests.Consultant will implement the Town's decisions regarding all requests for changes.All changes to the Agreement between the Town and Construction Contractor shall be only by change orders or contract amendments executed by the Town. H. Record Drawings. Operation and Maintenance Materials.As required by the Contract Documents,Consultant shall receive from the Construction Contractor red-line construction record drawings, operation and maintenance manuals, warranties and guarantees for materials and equipment installed on the Project, and review such documents for completeness and submit documents to the Town.Upon verification of the red-line construction record drawings for correctness, Consultant shall transmit same to the A/E for preparation of the as- built drawings. Upon return of the as-built drawings to the Consultant from the A/E, Consultant's engineer shall be the responsible engineer(s) for purposes of certifying the as-built drawings."Certifying the as-built drawings" means the as-built drawings will be signed, sealed and dated by engineer(s) registered in the State of Arizona in his field of competence. Each plan sheet in the set shall be marked "As-Built".In addition,if the Project requires certification by Maricopa County Environmental Services Department or the Arizona Department of Environmental Quality,Consultant shall provide such certification. I.Substantial and Final Completion.In consultation with the A/E and the Town's inspectors (when applicable),Consultant shall review the Construction Contractor's written requests for substantial completion and final completion and shall recommend to the Town when the Project and the Construction Contractor's work has achieved substantial and final completion as defined in the Construction Documents.Consultant shall, priorto issuing a Certificate of Substantial Completion,compile a list of incomplete work or work that does not conform to the Contract Documents (punch-list items) based on his observations and input from the A/E and the Town's inspectors (when applicable).This list shall be attached to the Certificate of Substantial Completion.The Certificate of Final Completion shall not be issued until the incomplete work has been completed and the Town is ready to accept the Project. Consultant shall issue the Certificate of Substantial Completion and Certification of Final Completion to the Construction Contractor. J.Project Close-out. 1.Within five days of the receipt of Construction Contractor's written request for a punch list,Consultant shall perform an inspection for the purpose of creating a punch list. 2.Consultant shall notify Construction Contractor in writing of any deficiencies to be remedied prior to final acceptance by written punch-list.Final acceptance shall not be given until the punch-list items are completed in accordance with the Contract Documents.No one is authorized to amend the Contract Documents by use of the punch list,which is solely for the benefit of Construction Contractor to enable him to determine what items must be corrected before final acceptance will be recommended by the Consultant. 3. Upon completion of the deficient work,Construction Contractor may request a punch list inspection. If Consultant determines that all work has been completed,Consultant shall recommend in writing to the Town that final acceptance of the entire work be made as of the date of Consultant's final inspection. 4.Simultaneously with Construction Contractor's request for final payment, Construction Contractor is required to submit the following items to Consultant:(A)red-line construction record drawings;(B) warranties; (C) three sets of documentation covering the operation and maintenance of the mechanical and electrical installation and all other equipment required to be furnished with such manuals; (D) other items required by the Contract Documents.No recommendation shall be made for final acceptance until these items have been received and are complete. K. Final Payment.Consultant shall provide to the Town a written recommendation regarding final payment to the Construction Contractor. A final change order, if applicable, shall be prepared by the Construction Contractor,reviewed and approved by the Consultant,with a written recommendation for approval by the Town.Consultant's recommendation for final payment shall take into account the contract sum, as adjusted by any change orders,amounts already paid, and sums to be retained for incomplete work,liquidated damages and for any other cause under the Contract Documents.Consultant shall prepare a statement of final inspection stating that the work has been given a final inspection,that Construction Contractor has submitted the required documents,setting forth with detail any deviations in the work as completed,and estimating the cost of correction of such deviations. Consultant's statement shall be transmitted to the Town along with Construction Contractor's request for final payment. Consultant shall provide a copy of the statement of final inspection and Consultant's estimate of the sum due to Construction Contractor. 2.2 Time Management. A.Construction Contractor's Construction Schedule.Consultant shall review the Construction Contractor's resource-loaded Construction Schedule and shall verify that the schedule is prepared in accordance with the requirements of the Contract Document and that it establishes completion dates that comply with the requirements of the Contract Documents. B.Construction Schedule Reports.Consultant shall, on a monthly basis and at the time of Construction Contractor's pay application, review the progress of construction, evaluate the percentage complete of each construction activity as indicated in the Construction Contractor's resource-loaded Construction Schedule and shall review such percentages with the Construction Contractor.Consultant shall advise and make recommendations to the Town concerning the alternative courses of action that the Town may take in its efforts to achieve contract compliance by the Construction Contractor. C.Consultant Review of Time Extension Requests.Prior to the issuance of change orders, Consultant shall advise the Town as to the effect Construction Contractor's requests fortime extensions will have on the Master Schedule. D.Recovery Schedules.Where Construction Schedule delays are encountered, Consultant shall request a recovery schedule in writing from the Construction Contractor and review the recovery schedule for compliance with the Contract Documents.Any delaysthatmay affect the MasterSchedule shall be reported to the Town in writing. 2.3 Cost Management. A. Change Order Control.Consultant,with input from the A/E,shall establish and implement a change order control system that is consistent with the Contract Documents.All proposed change orders shall first be described in detail by Consultant, with the assistance of the A/E when necessary,in a request for a proposal to the Construction Contractor, and shall be accompanied by technical drawings and specifications prepared by the A/E,when required.All change orders shall be classified into one of three categories:"Town Initiated Change Order," "Error and/or Omission Change Order" and "Unforeseen Conditions Change Order." Change order dollar amounts shall be traced by these three categories.At the end of construction,a Final Change Order Report will be prepared identifying each change order, its classification and amount.Total amounts for each classification shall also be reported. The Construction Contractor shall submit to Consultant for evaluation detailed information concerning the cost and time adjustments,if any, as may be necessary to perform the proposed change work order.Consultant shall discuss the proposed change order with the Construction Contractor and determine the Construction Contractor's basis of the cost and time impacts of performing the work.Consultant shall make recommendations to the Town on acceptability of the change in the work, prior to the Town's execution of change orders. Consultant shall verify that change order work and adjustments of time,if any, required by approved change orders have been incorporated into the Construction Contractor's Schedule.No change in the design shall be made without written approval of the A/E. No change order shall be approved without the written approval of the Town. B.Change Order Pricing and Verification.If a Change Order provides for an adjustment to the contract sum, the cost of the change in the work shall be made as prescribed in the Contract Documents. 1.Where a unit price is contained in the Bid Schedule and agreed to by Consultant and Construction Contractor, or when a unit price or lump sum is mutually agreed upon for the change in the work, the Consultant shall make recommendation to the Town.A Change Order shall be executed by the Town and Construction Contractor, priorto proceeding with the change in the work, unless an emergency situation exists. 2. Where a change in work is to be performed on a cost-plus basis, an estimate of the work shall be prepared by the Construction Contractor and reviewed by Consultant. With the Town's approval, and based on recommendation from Consultant, Consultant's Project Representative shall direct the Construction Contractor, in writing, to proceed with the change in the work. 3. In addition to receiving the required information from the Construction Contractor documenting time,materials,equipment,and sub-contractors employed to complete the change of work, Consultant shall personally monitor and record work effort involved in the change of work.Consultant and Construction Contractor shall confer on a daily basis, and come to a mutual agreement on the time, materials, equipment, and sub-contractors' cost that day. As stipulated in the Contract Documents,final cost of the change in the work shall be reflected and formalized in a Change Order,signed by both the Town and Construction Contractor. 4.Should negotiations break down between Consultant and Construction Contractor over the cost of the change in the work,Consultant,with the Town's approval, shall be authorized to seek bids and have the work performed by another contractor. C. Progress Payments.Consultant shall review the payment applications submitted by the Construction Contractor and determine whether the amount requested reflects the progress of the Construction Contractor's work. Consultant shall make appropriate adjustments to each payment application and shall provide and forward to the Town a Progress Payment Report.The Report shall state the total contract price,payments to date, current payment requested, percent work complete,percent payments made, retainage and actual amounts owed for the current period. Included in this report shall be a Certificate of Payment that shall be signed by Consultant and delivered to the Town.The issuance of a Certificate of Payment by Consultant shall constitute a representation by Consultant to the Town,based on Consultant's observations and inspections at the site and on the data comprising the Construction Contractor's application for payment, that: (1) the work has progressed to the point indicated; (2) to the best of Consultant's knowledge,information and belief,the quality of the work is in accordance with the Contract Documents,subject to (a) an evaluation of the work for conformance with the Contract Documents upon Substantial Completion,(b) the results of any subsequent tests required by or performed under the Contract Documents,(c) minor deviations from the Contract Documents correctable prior to completion,and (d) any specific qualifications stated in the application for payment; (3) red-line construction record drawings are up to date; and (4) the Construction Contractor is entitled to payment in the amount certified. 2.4 Management Information System. A. Project and Construction Budget Revision.Consultant shall make recommendations to the Town on the impact of construction changes that may result in revision to the Project and construction budget. B. Change Order Reports.Consultant shall monthly prepare and distribute Change Order Reports during the construction phase. The Report shall list all the Town- approved change orders by number, a brief description of the change order work, the cost established in the change order time impacts,if any, and percent of completion of the change order work. C.Construction Contractor's Safety Program Report.Consultant shall verify thatacopy of ConstructionContractor's safety program is available atthe job site, as required in the Contract Documents,and shall include a copy of the Construction Contractor's weekly safety meeting agenda as an attachmentto the weekly construction meeting minutes. Consultant shall not be responsible for or have any liability in whole or in part for Construction Contractor's implementationof, or compliance with,contractor safety programs and safety laws,regulations, etc., nor shall Consultant be responsible for the adequacy, or completeness,of contractor safety programs or the Construction Contractor's compliance and performance thereof. Consultant has no responsibility for review of safety programs;however,if Consultant observes a violation of the Construction Contractor's safety program or witnesses any potentially unsafe condition, he shall immediately notify the Construction Contractor and the Town's representative of the potential violation/condition and if the violation/condition is not immediately cured, the Consultant shall issue a stop work order until the violation/condition is cured. 3.Post-Construction Phase. 3.1 Project Management. A.Record Documents.Consultant shall coordinate and expedite submittals of information from the Construction Contractor for as-built record drawings and specification preparation and shall coordinate and expedite the transmittal of Record Documents to the Town. Consultant shall certify the as-built record drawings as required under this Agreement. B.Testing and Material Tickets.Consultant shall compile all testing results and material tickets in electronic format and submit to the Town. C.Organize and Index Operation Maintenance Materials.Prior to the Final Completion of the Project,Consultant shall compile and verify completeness of manufacturers' operations and maintenance manuals, warranties and guarantees as received from the Construction Contractor,and submit such documents to the Town. D.Warranty Inspection.Consultant shall notify the Town's Development Services Director, who will appoint a staff member to jointly perform a warranty inspection with Consultant 10 months after final acceptance. 3.2 Cost Management.Consultant shall continue to provide services related to Change Orders, as required, during the Post-Construction Phase. 3.3 Management Information Systems. A.Close-Out Reports.At the conclusion of the Project,Consultant shall prepare final Project Cost and closeout reports.All of the Project information and documents shall be delivered to the Town upon completion of the Project. Following is a list of items to be included with the close-out package: 1.Copy of Certificate of Substantial Completion with a copy of the punch list itemizing incomplete or deficient items. 2.Copy of Certificate of Final Completion. 3. Copy of final change order,if required, prior to submitting final pay applications. 4. Final pay application with Affidavit for the Settlement of Claims, Record Drawings,Warranties,Operations and Maintenance Manuals and other items as required by the special conditions and/or Contract Documents. 5. 8 1/2" x 11" drawings showing the actual locations of landscape controllers and electric services,if applicable. B.Close-Out Meeting.At the conclusion of the Project,Consultant shall participate in a Project close-out meeting with the Town's staff and the A/E to evaluate the process used on the Project and the results obtained and to discuss how the process might be improved for the next project.Consultant shall provide meeting minutes from close-out meeting. 4.Consultant's Project Management Key Personnel. 4.1 Principal in Charge: Neil Richards, PE 4.2 Project Manager/Construction Manager:Chad McDermott,PE 4.3 Resident Engineer/Office Manager: Chad McDermott,PE 4.4 Construction Inspector:Nate Meddings 4.5 Construction Inspector (Night Shift): Joe Fitzner 4.6 Accountant:Viki Miller 4.7 Clerical (Office Assistant):Kathleen Tindell 2185101.2 EXHIBIT B TO PROFESSIONAL SERVICES AGREEMENT BETWEEN THE TOWN OF FOUNTAIN HILLS AND HDR CONSTRUCTION CONTROL CORPORATION [Fee Proposal] See following pages. TOWN OF FOUNTAIN HILLS SHEA BLVD. AND SAGUARO BLVD. INTERSECTION IMPROVEMENTS CM COST PROPOSAL HDR Construction Control Corporation 3200 East Camelback Road, Suite 350 Phoenix, Arizona 85018 1 Item Project Hourly Hours 8/1 to 8/31 Hours 9/1 to 9/30 Hours 10/1 to 10/31 Hours 11/1 to 11/30 Classification Rate Aug. 14 Monthly Costs Sept. 14 Monthly Costs Oct. 14 Monthly Costs Nov. 14 Monthly Costs Admin. Staff Viki Miller Accountant $89.00 2 $178.00 2 $178.00 2 $178.00 2 $178.00 Kathleen Tindell Clerical $68.00 8 $544.00 16 $1,088.00 16 $1,088.00 16 $1,088.00 Total Admin.Staff Cost 10 $722.00 18 $1,266.00 18 $1,266.00 18 $1,266.00 Project Staff Chad McDermott PM/RE $166.00 60 $9,960.00 96 $15,936.00 96 $15,936.00 96 $15,936.00 Nate Meddings Inspector $93.00 0 $0.00 168 $15,624.00 184 $17,112.00 144 $13,392.00 Total Site Labor 60 $9,960.00 264 $31,560.00 280 $33,048.00 240 $29,328.00 Total Labor Admin & Project 70 $10,682.00 282 $32,826.00 298 $34,314.00 258 $30,594.00 Direct Expense Vehicle Monthly Rate (each)$1,300.00 0 $0.00 2 $2,600.00 2 $2,600.00 2 $2,600.00 Total Fees HDR $10,682.00 $35,426.00 $36,914.00 $33,194.00 Allowance Additional Contract Time Allowance - Night Inspection Allowance - QA Testing $1,100.00 $1,100.00 $1,100.00 $1,100.00 Total Fees w/ Allowances $11,782.00 $36,526.00 $38,014.00 $34,294.00 TOWN OF FOUNTAIN HILLS SHEA BLVD. AND SAGUARO BLVD. INTERSECTION IMPROVEMENTS CM COST PROPOSAL HDR Construction Control Corporation 3200 East Camelback Road, Suite 350 Phoenix, Arizona 85018 2 Item Project Hourly Hours 12/1 to 12/31 Hours 1/1 to 1/31 Hours 2/1 to 2/28 Hours 3/1 to 3/31 Classification Rate Dec. 14 Monthly Costs Jan. 15 Monthly Costs Feb. 15 Monthly Costs Mar. 15 Monthly Costs Admin. Staff Viki Miller Accountant $89.00 2 $178.00 2 $178.00 2 $178.00 2 $178.00 Kathleen Tindell Clerical $68.00 16 $1,088.00 16 $1,088.00 16 $1,088.00 16 $1,088.00 Total Admin.Staff Cost 18 $1,266.00 18 $1,266.00 18 $1,266.00 18 $1,266.00 Project Staff Chad McDermott PM/RE $166.00 96 $15,936.00 96 $15,936.00 96 $15,936.00 96 $15,936.00 Nate Meddings Inspector $93.00 176 $16,368.00 168 $15,624.00 160 $14,880.00 176 $16,368.00 Total Site Labor 272 $32,304.00 264 $31,560.00 256 $30,816.00 272 $32,304.00 Total Labor Admin & Project 290 $33,570.00 282 $32,826.00 274 $32,082.00 290 $33,570.00 Direct Expense Vehicle Monthly Rate (each)$1,300.00 2 $2,600.00 2 $2,600.00 2 $2,600.00 2 $2,600.00 Total Fees HDR $36,170.00 $35,426.00 $34,682.00 $36,170.00 Allowance Additional Contract Time Allowance - Night Inspection Allowance - QA Testing $1,100.00 $1,100.00 $1,100.00 $1,100.00 Total Fees w/ Allowances $37,270.00 $36,526.00 $35,782.00 $37,270.00 TOWN OF FOUNTAIN HILLS SHEA BLVD. AND SAGUARO BLVD. INTERSECTION IMPROVEMENTS CM COST PROPOSAL HDR Construction Control Corporation 3200 East Camelback Road, Suite 350 Phoenix, Arizona 85018 3 Item Project Hourly Hours 4/1 to 4/30 Hours 5/1 to 5/31 Hours 6/1 to 6/30 Total Labor Total Cost Classification Rate Apr. 15 Monthly Costs May 15 Monthly Costs June 15 Monthly Costs Hours $ Admin. Staff Viki Miller Accountant $89.00 2 $178.00 2 $178.00 2 $178.00 22 $1,958.00 Kathleen Tindell Clerical $68.00 16 $1,088.00 16 $1,088.00 8 $544.00 160 $10,880.00 Total Admin.Staff Cost 18 $1,266.00 18 $1,266.00 10 $722.00 182 $12,838.00 Project Staff Chad McDermott PM/RE $166.00 96 $15,936.00 96 $15,936.00 40 $6,640.00 964 $160,024.00 Nate Meddings Inspector $93.00 176 $16,368.00 160 $14,880.00 0 $0.00 1512 $140,616.00 Total Site Labor 272 $32,304.00 256 $30,816.00 40 $6,640.00 2476 $300,640.00 Total Labor Admin & Project 290 $33,570.00 274 $32,082.00 50 $7,362.00 2658 $313,478.00 Direct Expense Vehicle Monthly Rate (each)$1,300.00 2 $2,600.00 2 $2,600.00 0 $0.00 $23,400.00 Total Fees HDR $36,170.00 $34,682.00 $7,362.00 $336,878.00 Allowance Additional Contract Time $40,000.00 Allowance - Night Inspection $25,000.00 Allowance - QA Testing $1,200.00 $0.00 $0.00 $10,000.00 Total Fees w/ Allowances $37,370.00 $34,682.00 $7,362.00 $411,878.00 Page 1 of 2 TOWN OF FOUNTAIN HILLS TOWN COUNCIL AGENDA ACTION FORM Meeting Date: 8/7/2014 Meeting Type: Regular Session Agenda Type: Regular Submitting Department: Administration Staff Contact Information: Ken Buchanan Strategic Values: Public Safety, Health Welfare Council Goal: Not Applicable (NA) REQUEST TO COUNCIL (Agenda Language): CONSIDERATION OF a LEASE AGREEMENT with Rural Metro Corporation for ambulance service staging at Fire Station 1. Applicant: Ken Buchanan, Town Manager Applicant Contact Information: Property Location: Related Ordinance, Policy or Guiding Principle: n/a Staff Summary (background): Currently Rural Metro Corporation does not pay rent for housing its ambulance service in Fire Station #1. The proposed lease will provide a two year period subject to the term of the Fire Protection Services Agreement for the Town of Fountain Hills. The lease allows the use of a space for an ambulance, ambulance bunkroom, ambulance day room, male and female bathroom, EMS storage cabinet space and shared employee parking spaces. Risk Analysis (options or alternatives with implications): n/a Fiscal Impact (initial and ongoing costs; budget status): $28,400.00 per annum with a 2% annual adjustment. Budget Reference (page number): n/a Funding Source: NA If Multiple Funds utilized, list here: n/a Budgeted; if No, attach Budget Adjustment Form: NA Recommendation(s) by Board(s) or Commission(s): n/a Staff Recommendation(s): Approve the Lease Agreement with Rural Metro Corporation. List Attachment(s): Proposed Lease Agreement will be provided early next week. SUGGESTED MOTION (for Council use): Move to approve the Lease Agreement between the Town of Fountain Hills and the Rural Metro Corporation for housing its Ambulance Service in Station #1. Prepared by: NA 8/7/2014 Director's Approval: NA 8/7/2014 Approved:f**"*\ &!aji G>uAfw<£L-c^- Ken Buchanan,Town Manager 8/7/2014 Page 2 of2 2202601.4 8/4/14 1 LEASE AGREEMENT THIS LEASE AGREEMENT (this “Lease”) is made and entered into this ______ day of August, 2014 (“Effective Date”), by and between Rural/Metro Corporation, an Arizona corporation (“Tenant”) and the Town of Fountain Hills, an Arizona municipal corporation (“Landlord”). The parties agree as follows: 1) Premises. Upon the terms and conditions herein, Landlord desires to lease to Tenant and Tenant desires to lease from Landlord those certain areas within that certain real property located at 16426 E. Palisades Blvd., Fountain Hills, Arizona 85268, on a non-exclusive basis and as designated by Landlord from time to time, the following such areas commonly known as: (a) a space for an ambulance in the Landlord’s Fire Station, (b) ambulance bunkroom, (c) ambulance day room, (d) male and female bathroom on the lower level, (e) EMS storage cabinet in hallway on the lower level, (f) a shared parking lot for Tenant's employees, contractors and agents (collectively,“Premises.”) 2) Term. a) The initial term of this Lease shall be a period commencing on the Effective Date (the “Commencement Date”) and terminating on the date that is two (2) years after the Commencement Date, unless earlier terminated in accordance with the terms hereof (the “Initial Term”), subject, however, to the provisions of Section 2(b) concerning extensions or renewals of this Lease. b) Tenant shall have the option (a “Renewal Option”) of extending the Initial Term to coincide with the term of that certain FIRE PROTECTION SERVICES AGREEMENT (the “Agreement”) dated May 21, 2009 as amended, for fire protection and emergency medical services by and between Landlord and Tenant (“Renewal Period”). The Initial Term and each Renewal Period are hereinafter collectively referred to as the “Term.” Notwithstanding anything to the contrary contained in this Lease, this Lease shall terminate upon termination of the Agreement pursuant to the terms of the Agreement. 3) Rent. a) During the Term, Tenant shall pay to the Landlord as rent (“Rent”) for the Premises from and after the Commencement Date the amounts specified below, which shall cover all costs, taxes, maintenance, operating costs and utilities, as follows: i) During the first year of the Initial Term; $28,440.00 per annum. ii) During the second year of the Initial Term; $29,008.80 per annum. iii) During any year during the Renewal Period; Rent shall be increased by two percent of the previous year's Rent. 2202601.4 8/4/14 2 b) Rent shall be payable on or before the fifth business day of each month in equal monthly installments (except that rental payable for less than a full month shall be payable based on the number of days in such month for which such rental is payable) at Landlord's mailing address in Section 16 of this Lease or at such other place as Landlord has notified Tenant in writing at least 30 days in advance. 4) Use of the Premises. Tenant may use and occupy the Premises for the following uses: (a) the provision of medical emergency and non-emergency transportation and related services to the community and/or adjacent communities, including, but not limited to, (i) the parking, staging, washing and cleaning, maintaining and/or repairing of ambulance and/or other emergency vehicles, (ii) the stocking, and/or replenishing of medical supplies related to ambulance services rendered to the community, and/or (iii) the Premises being occupied twenty-four (24) hours a day, seven (7) days a week with vehicles and/or employees departing and returning to the Premises at any time, day or night; and (b) any other lawful use or purpose. 5) Condition of Premises and Improvements. a) Landlord represents and warrants as of the Effective Date of this Lease: i) that the Premises electrical, plumbing (including septic, if applicable), sprinkler, and HVAC systems, are sound, operational and in good working condition (for example -- the HVAC unit sufficiently heats and cools the Premises); ii) and for the Term of this Lease, the physical structure including but not limited to the building, its supports, ceiling, and/or roofing are physically sound without material fault and/or infestation (for example -- the roof and roofing system is structurally sound and watertight); iii) Landlord has not received notice of any violation of any applicable laws, including, without limitation, zoning requirements and injunctions, in respect of any of the Premises that has not been corrected, and to Landlord’s knowledge, no such violation or violations exist as of the Effective Date that would have a material adverse effect on the use and occupancy of the Premises, as now used and occupied or as intended to be used and occupied by Tenant. If, at any time after the Effective Date Tenant’s particular use and occupation of the Premises is not permitted for any reason whatsoever (including, without limitation, pursuant to any applicable laws or property restrictions), Tenant shall have the right to terminate this Lease upon thirty (30) days’ written notice to Landlord; iv) that the Tenant, on paying Rent and performing its obligations under the Lease herein, shall have, and hold quiet enjoyment and non-exclusive leasehold title, occupation and enjoyment of the Premises during the Term of this Lease; and 2202601.4 8/4/14 3 v) the Premises, to the Town Manager's actual knowledge without investigation, including subsurface soils, ground water or surface water are: (1) free from any Hazardous Substances; and (2) in compliance with all applicable Environmental Laws. For purposes of this Lease, “Hazardous Substance” or “Hazardous Substances” shall mean any chemical, pollutant, contaminant or waste (including, without limitation, toxic, hazardous, infectious, sanitary, solid, radioactive material containing polychlorinated biphenyls), as such terms, or any similar terms, are at any time used under any applicable federal, state, local and foreign laws, statutes, codes, regulations, rules, ordinances, decrees, permits, administrative orders, judicial decisions or the like (collectively “Laws”) relating to pollution or protection of the environment, natural resources or human health. “Environmental Laws” shall mean any and all Laws relating to (i) pollution or protection of the environment, natural resources or human health from any Hazardous Substance; or (ii) nuisance, trespass or toxic tort, including, without limitation, Laws relating to emissions, discharges, releases or threatened releases of any Hazardous Substance or otherwise relating to the manufacture, processing, distribution, use, generation, treatment, storage, disposal, transportation or handling of any Hazardous Substance. Environmental Laws also shall include, but are not limited to, the Clean Air Act, the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, the Safe Drinking Water Act, the Occupational Safety and Health Act of 1970 (“OSHA”), the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986 (“SARA”), the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 (“RCRA”), the Hazardous Substances Transportation Act, and the Toxic Substances Control Act of 1976 (“TSCA”) and any amendments to any of the foregoing or rules promulgated thereunder. Landlord shall be solely responsible for any contamination or Hazardous Substances on or under the Premises that occurred or is the result of or continues as a result of any direct or indirect event prior to the Effective Date of this Lease. Tenant shall not be responsible for any event that was caused by any direct or contributing action or failure to act on the part of Landlord, and Tenant shall not be in any way responsible for any contamination or Hazardous Substances above or below ground that are caused by or contributed to by any other extraneous property. b) If at any time any removal or remediation of any environmental contaminant is sought or ordered or any liability or penalty is sought or imposed by any person with respect to the Premises, or by any authority having jurisdiction thereof on account of the presence of any Hazardous Substance at or any migration thereof from the Premises, whether based on alleged violation of applicable Environmental Laws, actual damage to persons or property resulting therefrom, or otherwise, Landlord shall defend, indemnify and hold harmless Tenant therefrom and against all claims, demands, losses, costs, expenses, and liabilities on account 2202601.4 8/4/14 4 thereof, unless and to the extent caused by any breach of Tenant’s obligations hereunder or caused by Tenant or its employees, invitees or guests. c) Tenant shall have the right but not the duty or obligation, prior to taking possession of the Premises, and at any other time during the Term, to inspect and test for the presence of Hazardous Substances on or about the Premises. If any such inspection or test suggests that Hazardous Substances are present, Tenant shall promptly give notice thereof to Landlord, and Tenant shall have the right, if Tenant so elects, to terminate this Lease upon thirty (30) days' notice to Landlord. Upon notice to the Landlord of the presence of Hazardous Substances on the Premises, Landlord may arrange for the prompt remediation and removal of such Hazardous Substances. If Hazardous Substances are discovered in the Premises prior to Tenant taking possession of the Premises, and Tenant elects not to terminate the Lease, the Premises shall not be deemed available to Tenant and Rent shall not be due or commence unless and until Landlord has completed the remediation and removal of such Hazardous Substances; provided, however, that if Landlord elects not to remediate or remove such Hazardous Substances as described above, Landlord shall have the right to terminate this Lease upon thirty (30) days' notice to Tenant. After the completion of remediation undertaken by Landlord, Tenant shall again have the right, prior to taking possession, to re- inspect for the presence of Hazardous Substances. If any such re-inspection shows that Hazardous Substances remain, Tenant shall have the right to terminate this Lease upon thirty (30) days’ written notice to Landlord. d) Tenant may not make any structural or nonstructural changes to the Premises. 6) Maintenance and Repairs. a) Landlord’s Obligations. Landlord shall perform all routine repairs and maintenance and shall repair, remove and/or replace all exterior, interior, structural and/or nonstructural items including without limitation, the building(s)’ structure, roof (including all substructure thereof), gutters, exterior walls, doors, interior walls, plumbing, HVAC system, refrigeration (including condensers and related equipment), electrical, fixtures, parking lot and/or all other improvements located on the Premises. b) Failure to Maintain, Repair and Replace. If Landlord fails to address and either repair or replace any items to be addressed by Landlord under this Lease or is not diligently completing the item(s) within ten (10) days of the Tenant’s written notice of such items, in addition to any other rights or remedies Tenant may have at law or in equity, Tenant may make such reasonable needed repair(s) and/or replacement(s). Tenant shall have the right of setoff or deduct and reduce Tenant’s Rent (or any other amounts due under this Lease) by any reasonable amounts it incurs under this Lease, together with a five percent (5%) administrative fee. Notwithstanding the above, if the item that is the Landlord’s responsibility fails and its failure causes substantial unreasonable interference and/or difficulty, or unreasonably affects the health and wellness of the Tenant, its 2202601.4 8/4/14 5 employees, agents, contractors or licensees, or unreasonably affects the ability of Tenant to conduct its business in the Premises, then Tenant shall have the right to terminate this Lease. 7) Destruction of Premises. a) If all or any portion of the Premises shall be partially or totally damaged or destroyed by fire or other casualty, then, whether or not the damage or destruction shall have resulted from the fault or neglect of Tenant or its employees, agents, contractors or invitees, Landlord may, with reasonable dispatch and continuity, perform all work necessary to repair, restore, replace and rebuild the Premises or the damaged portion thereof, including all alterations, improvements and additions therein regardless of by whom made (the “Landlord’s Restoration Work”). b) If the Premises is rendered partially untenantable as a result of a fire or other casualty, Rent payable hereunder shall be abated in proportion to the area of the Premises that is rendered untenantable for the period from the date of such damage or destruction to the date upon which Landlord’s Restoration Work is completed. If the Premises is rendered totally untenantable, Rent payable hereunder shall abate completely for the period from the date of such damage or destruction to the date upon which Landlord’s Restoration Work is completed. c) Notwithstanding any contrary provision contained in this Section 7, if twenty percent (20%) or more of the Premises is rendered untenantable by fire or other casualty, Landlord or Tenant may, at its respective option, terminate this Lease by giving written notice to the other within thirty (30) days after the date of such fire or other casualty. Such termination shall be effective on the date specified in such notice of termination. d) If Landlord shall not complete Landlord’s Restoration Work within ninety (90) days after the date of any fire or other casualty, Landlord or Tenant may, at its option, terminate this Lease by giving written notice to the other at any time after said ninety (90) day period and prior to the date the Landlord’s Restoration Work is completed. Such termination shall be effective on the date specified in such notice of termination. e) Any Rent paid by Tenant for a period beyond the date of termination of this Lease or for any period of abatement shall promptly be refunded by Landlord to Tenant. f) The provisions of this Section 7 shall be considered an express agreement governing any case of damage or destruction of the Premises by fire or other casualty and any law now or hereafter in force which is inconsistent with the provisions of this Section 7 shall have no application. 2202601.4 8/4/14 6 8) Condemnation. a) If at any time during the Term, title to the whole or materially all of the Premises shall be taken by the exercise of the right of condemnation or eminent domain, or by agreement among Landlord, Tenant and those authorized to exercise such right, this Lease shall terminate and expire on the date of such taking, and the Rent required to be paid by Tenant shall be apportioned and paid to the date of such taking. For purposes of this Section 8 “materially all of the Premises” shall be deemed to mean that so much of the Premises (including loss of parking) have been taken that Tenant’s customary use thereof for its operations is materially altered in Tenant’s reasonable judgment. b) In the event of the taking of the whole or any part of the Premises at any time during the Term, the rights of Landlord and Tenant to share in the net proceeds of any award for the Premises and damages upon any such taking, shall be as follows and in the following order of priority: i) to Tenant, the value of any personal property and fixtures owned by Tenant, and any other item of damage to Tenant, including the value of Tenant’s leasehold, business interruption and relocation expenses. Tenant may join in Landlord’s action or pursue a separate action; ii) to Landlord, all of the award except as provided in subsection (i) above. c) If at any time during the Term, title to less than the whole or less than materially all of the Premises shall be taken as aforesaid, all of the award or awards resulting from said condemnation shall be applied by the parties and paid over to the cost of demolition, repair and restoration of that part of the Premises that are the responsibility of each party, as the case may be. Any balance remaining in the hands of Landlord after payment of such costs of repair and restoration shall be kept by Landlord and the Rent adjusted as provided in Section 8(d) below. d) If title to less than the whole or less than materially all of the Premises shall be taken as aforesaid, this Lease shall continue, but the Rent thereafter payable by Tenant shall be reduced from the date of such partial taking in the same proportion as the number of square feet in the building on the Premises left after the taking as said amount bears to the total number of square feet in the building on the Premises immediately prior to such taking, and shall be further equitably reduced for any lost parking. In addition, Rent shall abate for such period of time and in such similar manner during the course of said restoration and rebuilding. e) If the temporary use of the whole or any part of the Premises shall be taken by any lawful power or authority, by the exercise of the right of condemnation or eminent domain, and such temporary use materially interferes with Tenant’s use of the Premises as reasonably determined by Tenant, Tenant may terminate this Lease upon thirty (30) days’ notice to Landlord. If such temporary taking does not materially interfere with Tenant’s use of the Premises, the term of this Lease shall 2202601.4 8/4/14 7 not be reduced or affected in any way and Tenant shall continue to pay in full the Rent and other charges required to be paid hereunder, without reduction or abatement. Tenant shall be entitled to receive for itself any award or payment made for such use. 9) Indemnity. a) Except when caused or contributed to (whether directly or indirectly) by the acts, omissions or negligence of Landlord or its agents, contractors, subcontractors, employees or invitees and subject to Section 22, Tenant will indemnify, protect and hold Landlord harmless for, from and against any liens, damages, losses, liability claims or expenses (including reasonable attorneys’ fees) resulting solely from any activities of Tenant, its agents, employees or invitees on the Premises. b) Except when caused or contributed to (whether directly or indirectly) by the acts, omissions or negligence of Tenant, its agents, contractors, subcontractors, employees or invitees, Landlord will indemnify, protect and hold Tenant harmless for, from and against any liens, damages, losses, or liability claims or expenses (including reasonable attorneys’ fees) which result from any activities of Landlord, its agents, employees or invitees on the Premises or which arise out of any breach of Landlord’s obligations, warranties and representations to Tenant as contained in this Lease. 10) Insurance. For purposes of providing insurance coverage during the Term of this Lease, Tenant shall provide Landlord, on or before the Commencement Date, with a certificate of insurance demonstrating the following coverage: a) Commercial General Liability and Automobile Liability. Commercial general liability insurance and automobile liability with coverage limits of not less than $1,000,000 for each occurrence, with an overall aggregate limit of $5,000,000. b) Property Coverage. Property insurance providing coverage for Tenant’s furniture, personal property, fixtures and equipment in the Premises, with coverage in an amount equal to the replacement cost thereof. c) Additional Insured. The commercial general liability, and automobile liability insurance coverage required hereunder shall name the Landlord, its agents, employees, and officers, as an Additional Insured. d) Notice of Cancellation. Tenant shall immediately notify the Landlord, in writing, of Tenant’s cancellation of its insurance coverage. e) Certificates of Insurance. Upon written request, Tenant shall furnish to Landlord Certificate(s) of Insurance issued by Tenant’s insurer as evidence that the coverage: (1) is placed with reasonably acceptable insurers; (2) is detailed on the Certificate(s) as specified in this Lease; and (3) is in full force and effect on the Commencement Date. Upon written request, Tenant shall also furnish to Landlord updated Certificate(s) as policies are renewed. 2202601.4 8/4/14 8 f) Waiver of Subrogation Rights. Landlord and Tenant and all parties claiming under them mutually release and discharge each other from all claims and liabilities arising from or covered by insurance required to be maintained, respectively, by the parties under this Lease, regardless of the cause of the damage or loss. Each party shall secure from its insurer proof that its respective insurer honors this provision. 11) Assignment and Subletting. Tenant may assign or sublet all or any portion of this Lease or the Premises to an affiliate, parent or subsidiary corporation, or to any successor by merger, acquisition or consolidation. Tenant shall not otherwise assign this Lease, nor sublet the Premises or any part thereof. 12) Surrender. At the expiration or earlier termination of this Lease, Tenant shall peaceably and quietly surrender the Premises to Landlord in a broom-clean and sanitary condition and in essentially the same order, condition and repair as of the Commencement Date, ordinary and reasonable wear and tear and damage by casualty or condemnation excepted. Any improvements, fixtures or personal property left on the Premises by Tenant at the termination of this Lease shall belong to Landlord. 13) Default – Grounds. The occurrence of any of the following events shall constitute a Default on the part of Tenant: a) Failure to pay any Rent or any other sum due and payable hereunder within ten business (10) days after written notice of failure to pay on its due date has been received by Tenant; or b) Default in the performance of any of Tenant’s obligations under the Agreement or hereunder where such default is continuing for thirty (30) days after written notice thereof from Landlord to Tenant and Tenant has failed to cure the default or has failed to commence curing the default, and to diligently and in good faith prosecute the default’s cure to completion. 14) Default – Remedies. Upon the happening of any Default, Landlord, at any time thereafter, may: a) With notice to Tenant, declare the Term ended and through court proceedings only, remove and/or evict Tenant and all parties occupying the same or any of them, and again repossess and enjoy the Premises; b) Cure any Default(s) of Tenant and add the Landlord’s reasonable expenses, including reasonable attorneys’ fees, in doing so to the Tenant’s Rent to be paid hereunder. Landlord may add interest on any such sum at the rate of twelve percent (12%) per annum due under this subsection until paid, together with a five percent (5%) administrative fee. 15) Holding Over. If Tenant holds over in the Premises beyond the expiration of the Term, this Lease will continue to govern the relationship of the parties except that the Term shall be deemed a month to month tenancy, which tenancy may be terminated as 2202601.4 8/4/14 9 provided by law, and the Rent payable to Landlord by Tenant shall be the sum of one hundred twenty-five percent (125%) of the Rent in effect upon such expiration. 16) Notices. Any notice required or permitted to be given pursuant to this Lease shall be in writing: (i) delivered in person; (ii) deposited in the United States mail, postage pre-paid, registered or certified mail, return receipt requested; or (iii) by a nationally recognized overnight courier service, to the following addresses: to Landlord: Town Manager Town of Fountain Hills 16705 East Avenue of the Fountains Fountain Hills, AZ 85268 to Tenant: Rural/Metro Corporation 9221 E. Via de Ventura Scottsdale, AZ 85258 Attn: Legal Counsel or to such other place as the respective addressee may have designated in a written notice to the other party. Service by mail will be deemed to have occurred forty-eight (48) hours after deposit of said notice in the United States mail. Personal delivery will be effective upon receipt or upon refusal to accept the notice. Notices may be given by each party’s respective counsel. It is expressly understood between the parties hereto that Tenant’s regional and/or local employees including, without limitation, those working at the Premises are not empowered to give instruction regarding the leasehold. Only Rural/Metro’s National Director of Real Estate or Company executive is empowered to give any instruction or notice regarding the Lease and any notice or instruction issued by any other party is null and void. 17) Other Legal Terms. Waiver. The failure by either party to insist on strict performance by the other party of any provision of this Lease shall not be a waiver of any subsequent breach or default of any provision of this Agreement. Severability. If any portion or portions of this Lease shall be for any reason invalid or unenforceable, the remaining portion(s) shall be valid and enforceable and carried into effect unless to do so would clearly violate the present legal and valid intention of the parties hereto. Survival. Any provisions of this Lease creating obligations extending beyond the term of this Agreement shall survive the expiration or termination of this Lease, regardless of the reason for such termination. Headings. The headings used in this Lease are for convenience only and do not limit the contents of this Lease. Amendments. Any amendments to this Lease shall be effective only if in writing and signed by authorized representatives of both parties. Entire Agreement. Except for the Agreement, this Lease constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes any previous agreements or understandings, whether oral or written. No Third Party Beneficiary. Neither party intends in any 2202601.4 8/4/14 10 manner whatsoever to create an interest or beneficiary in a third party. Exhibits. All Exhibits referenced herein are incorporated into this Lease in their entity. Lease when used throughout this Lease shall include all referenced Exhibits. Legal Fees. In the event either party brings any action for any relief, declaratory or otherwise, arising out of this Lease, or on account of any breach or default hereof, the prevailing party shall be entitled to receive from the other party reasonable attorneys’ fees, costs, and expenses. Time. Time is of the essence hereof. Publicity. Neither party shall identify or make reference to the other party in any communication, advertising or other promotional modality regardless of its form without prior written consent from the other party. 18) Governing Law. This Lease shall be subject to and governed according to the laws of the State of Arizona, regardless of whether either party is or may become a resident of another state. The parties agree that the venue and jurisdiction shall be exclusively in the state and federal courts located in the County of the Premises in the above State. 19) Counterparts. This Lease may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. 20) Compliance with Federal Law. This Lease has been negotiated at arms length and in good faith by the parties. Nothing contained in this Lease, including any compensation paid or payable, is intended or shall be construed to (i) require, influence or otherwise induce or solicit either party regarding referrals of business or patients or the recommending of any medical goods or services to the other party or any of its affiliates; or (ii) interfere with a patient’s right to choose his or her own health care provider. It is the intent of the parties that the terms and conditions of this Lease comply with certain federal laws and regulations concerning the delivery of health care services, including, without limitation, the Ethics in Patient Referrals Act codified at 42 U.S.C.A. § 1395nn and the general proscription on fraud and abuse in Medicare and Medicaid codified at 42 U.S.C.A. §1320a-7(a) and 1320a-7(b). 21) Form W-9. Landlord agrees to provide Tenant with a fully completed and properly signed US Department of Treasury form W-9 at least thirty (30) days prior to the Rent Commencement Date. No Rent shall be due or payable until Tenant receives the form W-9. If Landlord changes its business or legal name, Landlord agrees to notify Tenant in writing, within 30 days of any such change, and submit a new Form W-9 reflecting such change(s). 22) Budget Law and Non-appropriation. Landlord is obligated only to pay its obligations set forth in this Lease as may lawfully be made from funds appropriated and budgeted for that purpose during Landlord's then current fiscal year. Landlord's obligations under this Lease are current expenses subject to the "budget law" and the unfettered legislative decision of the Landlord concerning budgeted purposes and appropriation of funds. Should Landlord elect not to appropriate and budget funds to pay its Lease obligations, this Lease shall be deemed terminated at the end of the then-current fiscal year term for which such funds were appropriated and budgeted for such purpose and Landlord shall be relieved of any subsequent obligation under this Lease. The parties agree that the Landlord has no obligation or duty of good faith to budget or appropriate the payment of 2202601.4 8/4/14 11 the obligations found in this Lease in any budget in any fiscal year other than the fiscal year in which this Lease is executed and delivered. Landlord shall be the sole judge and authority in determining the availability of funds for its obligations under this Lease and Landlord shall keep the other party informed as to the availability of funds for this Lease. The obligation Landlord to make any payment pursuant to this Lease is not a general obligation or indebtedness of Landlord. The Tenant hereby waives any and all rights to bring any claim against the Landlord from or relating in any way to Landlord’s termination of this Lease pursuant to this Section 22. 23) Cancellation. Notice is hereby given that the provisions of Ariz. Rev. Stat. § 38-511 are applicable to this Lease and are hereby incorporated herein as though set forth in its entirety. 24) Disclosure. Notwithstanding anything to the contrary contained in this Lease, this Lease may be disclosed to any board, official, officer, party or person as Landlord or its counsel may determine is necessary, including entry into any public record and disclosure at any public meeting or hearing. IN WITNESS WHEREOF, the parties have caused this Lease to be executed by their duly authorized representatives on the day and year first above written. LANDLORD: TOWN OF FOUNTAIN HILLS, an Arizona municipal corporation Kenneth W. Buchanan, Town Manager ATTEST: Bevelyn J. Bender, Town Clerk Tax Identification Number(s) 2202601.4 8/4/14 12 TENANT: RURAL/METRO CORPORATION, an Arizona corporation By: Greg James Title: Division President TOWN OF FOUNTAIN HILLS TOWN COUNCIL AGENDA ACTION FORM Meeting Date:8/7/14 Meeting Type:Regular Session Agenda Type:Regular Submitting Department:Administration Staff Contact Information:Ken Buchanan,Town Manager,480-816-5130,kbuchanan@fh.az.gov Strategic Priority:All Council Goal:All REPORT TO COUNCIL (Agenda Language):SEMI-ANNUAL REPORT on progress of implementing Council's Strategic Plan Goals and Operational Priorities for FY2013-14. Applicant:NA Applicant Contact Information:NA Property Location:NA Related Ordinance,Policy or Guiding Principle:Fountain Hills Strategic Plan 2010 and Strategic Plan Goals and Operational Priorities established at FY2013-14 Council retreats. Staff Summary (background):An in-depth report is providedto Councilsemi-annually on progress toward implementing Strategic Plan Goals and Operational Priorities for the fiscal year.This is the report for the second half of FY13-14. Some of the metrics in this report differ from previous reports.The following narrative will explain how metric variances occur under the current reporting system. The foundation of Strategic Plan 2010 is the citizen-crafted,long-range Vision for the Town and its eight Strategic Values.Strategic Directions are enumerated in the plan as guiding principles to fulfill the Vision and Values.At the Council Retreat each year,specific Strategic Directions are established as Strategic Planning Goals for the year. There are inherent difficulties in reporting metrics on Strategic Planning Goals that are based on long-range,"build out" visions for the Town that must necessarily be achieved incrementally -some may literally take decades to achieve. The percentages that have historically been assigned to indicate progress toward achieving goals are inconsistent with actual accomplishment of the over-arching goals. Council also establishes Operational Priorities at the Council Retreat each year.Operational Priorities are accomplished by utilizing action plans and action steps based on budget allocations.Operational Priorities can be tied back into the Vision,Values,and Strategic Directions in the Strategic Plan. There are many overlaps inthe current Semi-Annual Report, which calls for reporting both on Strategic Planning Goals and on Operational Priorities.Moving forward in FY14-15 when reporting on Council Goals, staff believes that the Semi-Annual Report should deal exclusively with Operational Priorities that are based on the Strategic Plan. Further, reporting on Operational Priorities will more accurately reflect accomplishment of actions steps if the metrics are tied to benefits obtained by the expenditure of budgeted funds. Risk Analysis (options or alternatives with implications):NA Page 1 of 2 Fiscal Impact (initial and ongoing costs;budget status):NA Budget Reference (page number):NA Recommendation(s)by Board(s)or Commission(s):NA Staff Recommendation(s):NA Attachment(s):Report entitled Semi-Annual Report -Strategic Plan Goals and Operational Priorities FY13-14,dated August 7,2014. SUGGESTED MOTION (forcouncil): NA Approved: Ken Buchanan,Town Manager Date Page 2 of 2