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4.2. ERMUSR 07-12-2016 44 -- Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission Troy Adams, P.E.—General Manager John Dietz—Chair Al Nadeau—Vice Chair Daryl Thompson—Trustee MEETING DATE: AGENDA ITEM NUMBER: July 12, 2016 4.2 SUBJECT: 1 Governance Manual BACKGROUND: During the June Commission meeting, the Commission assigned the authority to the Commission Chair to approved entering into contract with Collaborative Learning, Inc. for the revision of the by-laws and governance policies with a not-to-exceed cap of$25,000. DISCUSSION: On June 15, Commission Chair John Dietz and I met with John Miner from Collaborative Learning, Inc. We reviewed the scope of work and discussed the process. At that time, John Dietz gave approval to execute the Professional Services Agreement as attached. ACTION REQUESTED: Staff requests the Commission receive the executed Professional Service Agreement and Exhibit. ATTACHMENTS: • Collaborative Learning, Inc. Professional Services Agreement(PSA) • Collaborative Learning, Inc. Draft PSA Exhibit B1 - ERMU Consulting Assistance Scope Page 1of 1 [iSIATURE Reliable Public' Power Provider P OWERED T O S ERV E 85 PROFESSIONAL SERVICES AGREEMENT This PROFESSIONAL SERVICES AGREEMENT ("Agreement") is dated June 22, 2016, by and • between Collaborative Learning, Inc. dba Collaboration Unlimited ("Consultant"), with offices at 12807 Aqua Valley, Helotes, Texas 78023-4127 and: Elk River Municipal Utilities, ("Client"), with • offices at 13069 Orono Pkwy NW,Elk River,MN 55330. NOW, THEREFORE, in consideration of the promises herein and for other good and valuable consideration, the parties agree as follows: 1. Services: Consultant will perform Consulting Services to be specifically authorized by Client. The Scope of Services is described in Exhibit B, which is attached to and made a part of this Agreement. Exhibit B may be revised from time to time by mutual agreement of Client and Consultant. 2. Independent Contractor: Consultant is an independent contractor and is not an employee of the Client. Services performed by Consultant under this Agreement are solely for the benefit of Client unless specified otherwise. Nothing contained in this Agreement creates any duties on the part of Consultant toward any person not a party to this Agreement. 3. Standard of Care: Consultant will perform services under this Agreement with the degree of skill and diligence normally practiced by professional engineers or consultants performing the same or similar services. No other warranty or guarantee, expressed or implied, is made with respect to the services furnished under this Agreement and all implied warranties are disclaimed. 4. Changes/Amendments: This Agreement may not be changed except by written amendment signed by both parties. The estimate of the level of effort, schedule and payment required to complete the Scope of Services, as Consultant understands it, is reflected herein. Services not expressly set forth in this Agreement are excluded. Consultant shall promptly notify Client of any requested changes to the Scope of Services that may affect the level of effort, schedule, or payment to Consultant. Consultant will not undertake any such requested changes in the Scope of Services until Client has agreed to equitable adjustment of the level of effort, schedule, and payment. If Consultant is delayed in performing its services due to an event beyond its control, including but not limited to fire, flood, earthquake, explosion, strike, transportation or equipment delays, or act of God, then the schedule or payment under the Agreement shall be equitably adjusted, if necessary, to compensate Consultant for any additional costs due to the delay. 5. Fee for Services: Consultant will provide professional services under this Agreement for a labor fee that is specified either as a fixed amount or as a maximum amount based on the actual hours of services furnished multiplied by Consultant's hourly billing rates. The labor fee will be specified in Exhibit B Scope of Services for each work task or group of work tasks authorized by Client. In addition to the labor fee, Client will also reimburse Consultant for all reasonable expenses directly related to the professional services furnished. Such expenses include but are not limited to the following: (a) Long distance telephone expenses. (b) Computer expenses. (c) Printing and reproduction at the applicable rates as of the date of invoice. (d) Reasonable travel and living expenses for personnel. (e) Other direct expenses related to services furnished. 1 86 PROFESSIONAL SERVICES AGREEMENT Consultant's hourly billing rates and standard charges for expenses are set forth in Exhibit A Fees for Services, attached hereto and made a part of this Agreement for all purposes. Consultant reserves the right to adjust the hourly billing rates and standard charges for expenses at least annually, effective for work performed on and after January 1 of each succeeding year during which this Agreement remains in effect. 6. Payment: Invoices are due and payable upon receipt. Client shall pay Consultant within 30 days of invoicing. If Client disputes any portion of an invoice, the undisputed portion will be paid and Consultant will be notified in writing within 10 days of the invoice of the exceptions taken. Additional charges for interest shall become due and payable at a rate of 1'% percent per month (or the maximum percentage allowed by law, whichever is lower) on the unpaid amounts. Any interest charges due from the Client on past due invoices are outside any maximum billing amounts established for this Agreement and shall not be included in calculating the maximum. If the Client fails to pay invoiced amounts within 60 days after delivery of invoice, Consultant, at its sole discretion, may suspend services hereunder or may initiate collections proceedings, participate in arbitration, or initiate litigation without waiving any right established hereunder or by law. 7. Insurance: During the performance of the Services under this Agreement, Consultant shall maintain the following insurance coverage. Upon request, Consultant will provide insurance certificates to the Client: Workers'Compensation Not Applicable Employer's Liability Not Applicable Commercial General Liability $1,000,000 per occurrence $2,000,000 aggregate Comprehensive General Automobile $1,000,000 combined single limit Professional Liability $ 300,000 per claim and in the aggregate 8. Indemnity: Following operation of applicable rights of contribution and to the extent permitted by law, Consultant agrees to indemnify, defend and hold harmless Client and its directors, officers and employees from and against any and all loss, damage, claim or liability (including without limitation, reasonable attorneys' fees) incurred by Client to the extent arising out of Consultant's negligent acts, errors or omissions, including claims by any third party or claims made by employees of Consultant. Consultant explicitly and expressly waives any right it has to immunity under applicable industrial insurance laws with respect to any action against Client and agrees to assume liability for actions brought by its own employees against Client as provided above. Following operation of applicable rights of contribution and to the extent permitted by law, Client agrees to indemnify, defend and hold harmless Consultant and its directors, officers, employees and sub consultants from and against any and all loss,damage,claim or liability(including,without limitation, reasonable attorney's fees) incurred by Consultant to the extent arising out of Client's negligent acts, errors or omissions, including claims by any third party or claims made by employees of Client. Client explicitly and expressly waives any right it has to immunity under applicable industrial insurance laws with respect to any action against Consultant and agrees to assume liability for actions brought by its own employees against Consultant as provided above. 2 87 PROFESSIONAL SERVICES AGREEMENT 9. Limitation of Liability: No employee or contractor of Consultant shall have individual liability to Client. To the extent permitted by law, the total liability of Consultant to Client for any and all claims arising out of this Agreement, whether caused by negligence, errors, omissions, strict liability, breach of contract or contribution, or indemnity claims based on third party claims, shall not exceed the specified insurance limits. 10.Consequential Damages: In no event and under no circumstances shall Consultant be liable to Client for any interest, loss of anticipated revenues, earnings, profits, increased expense of operations, loss by reason of shutdown or non-operation due to late completion, or for any consequential, indirect or special damages. 11.Termination: Either party may terminate this Agreement upon thirty(30) days written notice to the other party.Client shall pay Consultant for all services rendered to the date of termination plus reasonable expenses for winding down the services. If either party defaults in its obligations under this Agreement (including Client's obligation to make payments hereunder), the non- defaulting party may suspend performance under this Agreement, after giving seven (7) days written notice of its intention to suspend performance under this Agreement and if cure of the default is not commenced and diligently continued. 12.Reuse of Work Products: All documents, analyses and other data prepared by Consultant under this Agreement("Work Products") are instruments of service and are and shall remain the property of Consultant. Client shall have the right to make and retain copies and use all Work Products; provided, however, the use shall be limited to the intended use for which the services and Work Products are provided under this Agreement. Consultant may, at its sole discretion, copyright any of the Work Products; provided that copyrighting will not restrict Client's right to retain or make copies of the Work Products for its information, reference and use on the project or services under this Agreement. Client may not reproduce or distribute Work Products, in whole or in part, in any form to any other person or organization without first obtaining the written permission of Consultant. The Work Products shall not be changed or used for purposes other than those set forth in this Agreement without the prior written approval of Consultant. If Client releases the Work Products to a third party without Consultant's prior written consent, or changes or uses the Work Products other than as intended hereunder, Client does so at its sole risk and discretion and Consultant shall not be liable for any claims or damages resulting from or connected with the release or any third party's use of the Work Products. 13.Information Provided by Client: Client shall provide to Consultant in a timely manner any information Consultant indicates is needed to perform the services hereunder. Consultant may rely on the accuracy of information provided by Client and its representatives. 14.Confidentiality: With respect to this Agreement, Consultant shall be considered to be Client's representative for purposes of receipt of information under any confidentiality agreements between Client and third parties concerning issues within the scope of this Agreement. Client shall provide Consultant with copies of any such confidentiality agreements. Consultant shall comply with the restrictions in such confidentiality agreements and, if requested by Client, shall return all copies of any information deemed to be confidential under such agreements. 15.Opinions of Cost: Consultant does not control the cost of labor, materials,equipment or services furnished by others, nor does it control pricing factors used by others to accommodate inflation, competitive bidding or market conditions. Consultant estimates of contract services costs, operation expenses or construction costs represent its best judgment as an experienced and qualified professional and are not a guarantee of cost. 3 88 PROFESSIONAL SERVICES AGREEMENT 16.Dispute Resolution: If a dispute arises out of or relates to this Agreement, or the obligations of the parties therein, and if the dispute cannot be settled through negotiation,the parties agree first to try in good faith to settle the dispute by mediation using the Commercial Mediation Rules of the American Arbitration Association (AAA) before resorting to arbitration, litigation, or some other dispute resolution procedure. Thereafter, any unresolved controversy or claim arising from or relating to this contract or the obligations of the parties hereunder shall be settled by arbitration administered by a retired judge with experience in arbitrating.The retired judge selected must be mutually agreed upon by both parties. If a retired judge is not available, the parties will agree to another mutually agreeable arbitration administrator. Any judgment(s)on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof within the state of Minnesota. 17.Miscellaneous: (a) This Agreement is binding upon and will inure to the benefit of the Client and Consultant and their respective successors and assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party. (b) Client expressly agrees that all provisions of the Agreement, including the clause limiting the liability of Consultant, were mutually negotiated and that but for the inclusion of the limitation of liability clause in the Agreement, Consultant's compensation for services would otherwise be greater and/or Consultant would not have entered into the Agreement. (c) If any provision of this Agreement is invalid or unenforceable,the remainder of this Agreement shall continue in full force and effect and the provision declared invalid or unenforceable shall continue as to other circumstances. (d) This Agreement shall be governed by,and construed in accordance with,the laws of the State of Minnesota. (e) In any action to enforce or interpret this Agreement, the prevailing party shall be entitled to recover, as part of its judgment, reasonable attorneys'fees and costs from the other party. IN WITNESS WHEREOF, the parties have signed this Agreement the date first written above. Client: By , I Its 6eUver--4 \ v ttVt.A5Er Collaborative Learning, Inc. DBA Collaboration Unlimited By: lio4Q4e.2„ Its President Attachments: Exhibit A Fees for Services Exhibit B Scope of Services 4 89 DRAFT PROFESSIONAL SERVICES AGREEMENT-EXHIBIT B1 ELK RIVER MUNICIPAL UTILITIES CONSULTING ASSISTANCE SCOPE OF SERVICES TASK ORDER 2016-01 GOVERNANCE REVIEW& DEVELOPMENT PURPOSE The purpose of the Governance Review and Development process is to strengthen the Board's leadership and help ensure that Elk River Municipal Utilities (ERMU) continues to benefit from a consistent application of governance principles and policies in the future. Specifically, through the review, development, implementation, and monitoring of written policies, the ERMU Board will accomplish the following objectives: 1. Develop the Board's capability to be intentional and consistent in its policy leadership of ERMU. 2. Organize written policies to (1) address the full range of policy issues that the ERMU Board is likely to face; (2) clearly distinguish the respective roles and accountabilities of the Board and executive management; and (3) clearly delegate appropriate authority to Board officers and to the General Manager. 3. Ensure that policies are consistent with and responsive to current legal and regulatory requirements. Through this Governance Review and Development process, ERMU will obtain the information needed to build clarity and consensus about its desired governance model, as well as the means and resources by which that model can be fully developed and implemented. 4.► � ''' Copyright©2016 collaboration G1nlimited 90 PROFESSIONAL SERVICES AGREEMENT-EXHIBIT B1 SERVICES PROVIDED CU will provide process management and subject area expertise, and will conduct specific tasks and prepare specific work products. Basic tasks include an opening conference (telephone or in-person) with the Board Chair and General Manager, brief telephone interviews by CU with individual Board members and the General Manager, review of existing governance documents, and preparation of new governance documents. Recommended but optional tasks include a brief questionnaire of Board members and executive managers, observation of one or more board meetings (in- person or by video recording if available), and facilitation of a Board-Management retreat on effective governance and governance best practices. RECOMMENDED PROJECT ORGANIZATION CU recommends the formation of an ERMU Governance Policy Development Team consisting of the Board Chair,the General Manager and two other executive managers. The Board's general counsel will be an advisor, available to participate in Team work sessions and to review draft governance documents for compliance with applicable legal requirements. WORK TASKS CU proposes two phases of work. Phase 1 will consist of exploratory tasks that focus on an inventory and review of existing governance practices and documentation, exposure to best practices in governance for municipal utility organizations, and the development of foundational governance documents that address existing governance issues and set ERMU's direction for governance development. Phase 2, if the Board desires to proceed, involves the development of a comprehensive manual of Board governance policies. CU recommends the organization and development of policies based on the Carver Policy Governance Model®. The Board will review significant governance issues, consider alternative responses and adopt written policy statements, taking appropriate content from any existing written policies and other documented policy decisions. +.10,1► } Copyright®2016 Collaboration Unlimited 2 91 PROFESSIONAL SERVICES AGREEMENT-EXHIBIT B1 The Team will begin in Phase 1 with broadly stated policies that address the full range of policy issues that the ERMU Board is likely to face. These include the following four categories of policy: 1. Organizational Results Policies 2. Board-Management Relationship Policies 3. Delegation to Management Policies 4. Governance Policies In Phase 2, the Team will then systematically develop policies that are more detailed in each category, but only to the extent that the Team desires or sees a need to provide more specific policy direction. PHASE 1 CU will provide services to ERMU in the following work tasks: Task 1: Meeting or Conference Call with Board Chair and General Manager The Governance Review process will begin with an initial telephone conference or in-person meeting of approximately one (1) hour with the Board Chair and General Manager to discuss the governance review activities, schedule, document development, and logistics. (CU has proposed the afternoon of Wednesday June 15(h for an in-person meeting in Elk River). Task 2 (Optional): Board Member/Manager Questionnaire ($1500) CU will post a confidential on-line governance questionnaire and will compile responses received from Board members and those executive managers who regularly interact with the Board. The questionnaire will require approximately 20 minutes to complete. Task 3: Review of Governance Documents CU will review readily available ERMU governance documents such as enabling legislation, Bylaws, existing policies and resolutions, Board meeting agendas with supporting information, Board meeting minutes, etc. Task 4 (Optional): Board Member and Executive Manager Interviews ($2500) CU will conduct in-person interviews with individual Board members and executive managers (up to 45 minutes per interview) for the purpose of verifying existing governance practices and opportunities for improvement. « 1,► Copyright©2016 collaboration Unlimited 3 92 PROFESSIONAL SERVICES AGREEMENT-EXHIBIT B1 Task 5 (Optional): Facilitate Board Management Retreat($2500) CU will design and facilitate a retreat and work session (approximately four contact hours)with the Board members and executive managers to discuss governance principles and practices and to establish outcomes and process parameters for ERMU's new governance model. Task 6: Prepare Draft and Final Foundational Governance Documents Using information from the preceding tasks, CU will prepare the following draft and final draft documents: Policy guidance documents: a. ERMU Guidin_q Principles for Governance and Policy Development b. ERMU Governance Policy Manual Table of Contents(specific policy titles by category) c. ERMU Model Policy Format(generic format for preparing written policies) d. ERMU Policies Foundational Board Policies: a. The Board's relationship with the City of Elk River. b. The Board's relationship with Management (e.g. Delegation of Authority to the General Manager). c. The Board's own governance structure and process (e.g. Agenda Planning; Board Committees). d. How the Board delegates a portion of its authority to the General Manager and how the General Manager demonstrates accountability in relation to Board policy. Revised Bylaws: Based on the content of the preceding policies, CU will identify changes in the Board's existing Bylaws for consideration by the Team.After receiving comments from the Team, CU will prepare a revised draft of the Bylaws for review by the Team and the Board's General Counsel. d+1► Copyright©2016 collaboration Unlimited 4 93 PROFESSIONAL SERVICES AGREEMENT-EXHIBIT BI Governance Practice and Procedure Documents: CU is available to prepare the following supplemental documents that are useful in establishing Board practices and procedures to support implementation of the preceding Foundational Board Policies. a. Board member expectations and commitment to serve(makes clear what the Board member is expected to do and the commitment of time and effort that will be required to perform well as a Board member). b. Program description for New Board member orientation. c. Templates for use by the General Manager for routine reporting of policy compliance and organizational performance (performance indicators and metrics) to the Board. d. General Manager performance planning and review procedure and documentation e. An annual (or bi-ennial) Board calendar (delineating specific recurring responsibilities of the Board such as General Manager review, annual audit, strategic plan review and update, work plan/budget review and approval, etc.) 4 Copyright©2016 Collaboration Unlimited 5 94 PROFESSIONAL SERVICES AGREEMENT-EXHIBIT B1 PHASE 2 CU will provide services to ERMU in the following work tasks: Task 7: Policy Manual Development Following the receipt of any comments and/or suggested changes to the draft policy guidance documents and policy statements prepared in Phase 1,CU will conduct an initial telephone/Internet conference with the ERMU Governance Policy Development Team. The purpose of this conference is to agree on any modifications necessary for acceptance of the draft documents and to establish the protocols and schedule for developing the remaining policy documents identified in the ERMU Governance Policy Manual Table of Contents. CU will directly engage with the Team in the policy development process through a sequence of email communications and telephone/Internet and/or face-to-face conferences. The Board Chair and General Manager will schedule at least one monthly conference of up to two hours duration over a period of 4-6 months. Subject to mutual agreement between ERMU and CU on conference dates and the ability to adequately prepare for them, the Board Chair and General Manager may schedule additional conferences to accelerate the process. It is expected that the development of all policies will require up to six such conferences. CU is also willing to facilitate a process in which the Team meets face-to-face in longer work sessions and on fewer occasions. CU will submit monthly (or more frequently if agreed) to the Board Chair and General Manager a proposed agenda for each conference, a questionnaire to guide the development of new policy content, and draft policy documents as initially drafted or redrafted from the discussions in earlier conferences. CU will provide these documents to the Board Chair and General Manager at least two weeks in advance of each scheduled Team conference. CU will post questionnaires on an Internet website so that they can be accessed and completed online. It is highly desirable for all Board members to provide input into the policy process by completing all the questionnaires. Questionnaires will be completed at least one week in advance of the next scheduled conference. The agenda for each conference will include a discussion of questionnaire responses, and a review of policy drafts. Copyright @2016 Collaboration Unlimited 6 95 PROFESSIONAL SERVICES AGREEMENT- EXHIBIT BI The Board Chair will determine when a drafted policy is in final form for presentation to and approval by the full Board. CU recommends that the Board Chair and General Manager schedule a special study session of the Board at the conclusion of Phase 2 to present the entire draft RU Governance Policy Manual for consideration and approval. CU is available to facilitate this work session in-person or by video conference and will also be available to facilitate additional telephone/Internet conferences or to facilitate additional work sessions in-person, as required for a successful outcome. Task 8 (Optional): Board - Management Retreat: Strategic Framework($7500) CU recommends a two-day Board — Management Retreat about midway through the policy development process. The purpose of this retreat is twofold: 1. To review draft policy developments to that point and to discuss any significant policy questions that the Team has identified and placed in a "parking lot" for consideration by the full Board. 2. To further develop ERMU's "Strategic Framework" consisting of vision, core purpose, mission, and core values for inclusion in the Board's Results policies. FEE Phase 1 Fee: The initial labor budget for services authorized by this scope of services for the Phase 1 tasks shall not exceed $24,500 (exclusive of the optional tasks) unless authorized in advance by Client. Travel and related expenses will be billed by CU and reimbursed by ERMU at cost. Phase 2 Fee: A preliminary budget for Phase 2 Task 7 is $15,000 to $25,000 plus the actual cost of expenses. The most significant budget variables are the number of topics included in the ERMU Governance Policy Manual and the number of telephone/Internet and/or on-site work sessions. SCHEDULE CU will begin work immediately upon execution of this Exhibit B2 by ERMU. The proposed schedule for completion of the tasks and delivery of the work products described in this scope of services will be determined by mutual agreement of ERMU and CU. Copyright©2016 Collaboration Unlimited 7 96 PROFESSIONAL SERVICES AGREEMENT- EXHIBIT BI This Exhibit Accepted for the Elk River Municipal Utilities. By Troy Adams, General Manager Date Oze\ Zeott, A 442t.t,NO ' Copyright©2016 Collaboration Unlimited 8 97