Design

Technology Selection

Contractor

City reviews designs through an established review procedure in Service Agreement.

Technology Obsolescence

Contractor/ City

Contractor is responsible for selecting technology that is proven, will be permitted by agencies, and will meet performance guarantees. Contractor is responsible for technology obsolescence, except for change in law, unforeseen circumstances, and unspecified conditions for raw water and water demand.

Unforeseen Preexisting Site Conditions

City

Risks for change in law, unforeseen circumstances, and preexisting site conditions are the city’s risks.

Construction/Commissioning

Construction Period

Contractor

City monitors construction and tests to determine compliance with service agreement.

Acceptance Test

Contractor

Service agreement specifies guaranteed construction period after fulfillment of conditions precedent. Notice to proceed given after conditions precedent satisfied.

Payment

City/ Contractor

Facility not deemed suitable for commercial operation until test is passed. Retest principles outlined in service agreement.

Construction payment based on drawdown and milestone schedule in service agreement. City is responsible for payment when milestones are met by contractor.

Operations and Maintenance

Payment

City

City monitors performance via review of records and reports. City may conduct periodic inspections.

Preventive Maintenance

Contractor

Monthly service fee paid with a fixed and variable component consistent with tax laws and forms of financing (i.e., pass-through costs, the only variable component). Monthly reports typically accompany invoices.

Repairs and Replacements

Contractor/ City

Standard-of-care provisions and contractual obligations requiring proactive preventative maintenance program.

Capital Improvements

Contractor/ City

Contractor is responsible for all repairs and replacements to meet performance requirements, except for certain major improvements where the city may be responsible for costs. Contractor is responsible for all capital improvements required to meet performance requirements, except for certain major improvements where the city may be responsible for costs. City is responsible for capital improvements as a result of changes to performance standards. Renegotiation principles are included in the service agreement.

Supply of Raw Water

Infrastructure (e.g., pipelines, reservoirs, etc.)

City

City is responsible for supplying water to facility site at interface point. Contractor assumes responsibility at the interface point.

Quantity

City/ Contractor

Specified range of flows based on historical data is provided in the service agreement. Contractor assumes risk for flows within the specified range. City provides relief for flows outside of the range. Contractual provisions included for contractor to justify adjustments to service fees for flows outside of specified ranges.

Quality

City/ Contractor

Specified ranges of quality based on historical data are provided in service agreement. Contractor assumes risk for quality within the specified range. City provides relief for raw water quality (additional payment or reduction in treatment rate) outside of range.

Plant Performance

Quality (without change in law)

Contractor

Contractor is responsible for supply of specified water quality. Contractual provisions for the need to shut down facility if raw water quality prohibits ability to meet standards.

Quality (with change in law)

City

City is responsible for costs associated with upgrading and operating facility to meet new standards. Renegotiation principles are included in service agreement.

Quantity and Flow

Contractor/ City

Contractor is responsible for flows within specified range. Contractual provisions for delivery of water quantities requested by city outside of specified range.

Infrastructure for Transmission

City

City is responsible for installing and maintaining transmission and distribution systems for specified and requested flows.

Environmental/Permitting

Additional Environmental Review

Contractor

Contractor is responsible for complying with mitigation in existing final Environmental Impact Statement (EIS) and to prepare supplemental EIS/addenda if needed.

Existing

Contractor

Contractor is responsible for reporting to regulatory agencies and the city. City monitors contractor’s performance.

Change in Law

City/ Contractor

Typically allocated to the city. Limited risk can be allocated to contractor (i.e., dollar limit). Renegotiation principles are included in service agreement.

Permitting

Contractor/ City

Contractor secures most permits. City may be co-permittee. Securing permits typically undertaken as part of conditions precedent in service agreement.

Other Factors

Financing

City

City responsible for financing project as part of conditions precedent.

Escalation of Costs— Construction

Contractor/ City

Contractor holds price until a specified calendar date. Thereafter, price escalates at a percentage of a specified index (i.e., CPI, ENR, etc.)

Escalation of Costs— Operation

City

Service fee escalates annually at a percentage of a specified index (i.e., CPI). Certain pass-through costs are allowed.

Taxation

Contractor

All taxes (i.e., income tax) are contractor’s responsibility.

Natural Disaster

Contractor/ City

Insurance; renegotiation principles; force majeure provisions. City has responsible risk for amounts above uninsured portions.

Industrial Relations

Prevailing Wage Rates/Force Majeure

Contractor

Contractor’s choice whether or not to pay prevailing wages. Contractor’s risk if initial choice not to pay such rates is incorrect.

Strikes

Contractor/ City

For local strikes against the facility, contractor assumes risk. For national strikes, city assumes risk.