Title
Oak Lawn Water Negotiation - Consultant Fees
History
Beginning in August 2009, the Village began engaging three (3) different consultants for professional services related to due diligence review and the negotiations for contract renewal with Oak Lawn for water supply. This effort was in collaboration with four other customer communities of Oak Lawn’s wholesale system: Tinley Park, Oak Forest, Mokena, and New Lenox.
The three (3) consultants and the amount approved are as follows:
WRB, LLC $234,933
Malcolm Pirnie Engineering $120,060
Holland & Knight $322,500
Total $677,493
Of the amount listed above, the Village is responsible for 33% of the expense ($224,992). The remaining 67% is paid for by Mokena (10%), New Lenox (18%), Oak Forest (11%) and Tinley Park (28%). The Village of Tinley Park acts as the administrator of the contract.
As of December 2013, all five (5) communities have executed the intergovernmental agreement with Oak Lawn. Our collective work and combined approach generated very positive results for all communities. Specifically, the new agreement includes consent approach from member communities before certain expenses can be made by Oak Lawn, review and input into operations issues, the provision of asset management plan and a most favorable nation’s clause. In total, there were over 150 issues raised throughout the negotiations which were successfully negotiated.
At present, our authorized expenditure for Holland and Knight has expired and there is only $2,900 still available under our contract with WRB, LLC. We anticipate a certain amount of work related to closing out the agreement and preparing documentation. We also anticipate some services necessary to review the agreements being considered by the northern communities (Palos Park, Palos Hills, Chicago Ridge). This would be to ensure that there are no more favorable provisions are being provided to them than were negotiated by our customer group.
A summary of the work to be done by both is provided below:
Holland and Knight - $41,000
1. Resolution of small group of final details in the body of the Agreement and its 18 exhibits.
2. Preparation and completion of the Working Group’s Agreement regarding Southwest Water system Improvements paid for with 2006 Bonds.
3. Approval of Oak Lawn and North System Customers (Chicago Ridge, Palos Hills and Palos Park) of a “Conforming Agreement” that is consistent with the Work Group’s Master Agreement.
4. Coordination with Oak Lawn on another Conforming Agreement to be offered to the Southeast System Customers (Country Club Hills, Matteson and Olympia Fields).
WRB, LLC - $10,000
1. Assure that the exhibit packets to the Water Supply Agreement is final and complete and reflects the agreements made to date which includes logistical support work with Holland and Knight.
2. Support as directed in the launch of the Mutual Cooperation process in 2014 including any support requested and any of the 7 planned meetings.
3. Assist as directed in the proper reimbursement to southwest customers of incurred consultant costs related to the development of the Water Agreement and Due Diligence process.
4. Assist with any Southwest Customer request of any clarification of required action under the Water Supply Agreement.
5. Monitor, review and support any Southwest Customer actions related to the preparation of the Agreements for the North and Southwest customers relating to favored positions rights for the Southwest customers.
6. Organize and schedule any meetings or briefings needed or required by the Southwest customer team.
In total, we have authorized expenditures in the amount of $677,493. The authorized expense is for each specific consultant in comparison to the amount spent is provided below:
Authorized Billed Difference
Malcolm Pirnie $120,060 $108,529 $ 11,531
WRB, LLC $234,933 $231,978 $ 2,955
Holland & Knight $322,500 $342,382 $-19,882
Total $677,493 $682,899 $ - 5,396
As you can see, there are existing balances available for Malcolm Pirnie and WRB, LLC. With regard to Holland and Knight, the hours worked by attorney Barb Adams and the resulting expenses exceed our authorization by $19,882. However, this amount is included in her proposal of $41,000. As such, the total for both Holland and Knight and WRB, LLC, estimated amount of additional expenses over our current authorization is $50,396.
The prorata breakdown of this expense would be:
Orland Park $ 16,630
Tinley Park $ 14,111
New Lenox $ 9,071
Oak Forest $ 5,544
Mokena $ 5,040
As a reminder, Oak Lawn has agreed to reimburse our group for these expenses and pay for them as part of the capital expenses related to the overall system improvements. That means each community will receive full reimbursement for its exposure to date. However, it should be noted that the overall costs will eventually be redistributed to all communities on the system on a prorata basis. The overall impact to Orland Park is an additional reduction in our expenses from $224,992 to approximately $165,000 which is a savings of $52,000.
The Manager’s Committee has reviewed the scope of services for each proposal and recommends approval. In terms of day-to-day supervision of the engineer and attorney, as before, Bill Balling, WRB, LLC, will perform the necessary oversight.
On February 3, 2014, this item was reviewed by the Public Works Committee, recommended for approval and referred to the Village Board of Trustees for consideration.
Financial Impact
As noted above, the combined amount will be distributed on a prorata basis and the Village’s exposure would be $16,630 of $50,396 (33%). However, the way the proposals are written, we are not obligated to pay the full amount if the hours are not used.
Recommended Action/Motion
I move to approve entering into a reimbursement agreement with the Village of Tinley Park, IL for the professional services outlined in an amount not to exceed $16,630.