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HomeMy WebLinkAbout24-84 Approving Change Order 1 Amending Professional Serv Agmt between TOF and Westwater Research LLC 09-25-2024RESOLUTION 24-84 A RESOLUTION OF THE BOARD OF TRUSTEES OF THE TOWN OF FIRESTONE, COLORADO, APPROVING CHANGE ORDER NO 1 AND FURTHER AMENDING THE PROFESSIONAL SERVICES AGREEMENT BETWEEN THE TOWN OF FIRESTONE AND WESTWATER RESEARCH LLC FOR WATER RIGHTS TRANSACTION SERVICES WHEREAS, upon adoption of Resolution 20-96 on October 14, 2020 the Town of Firestone ("Town") entered into a Professional Services Agreement with WestWater Research, LLC ("WestWater") to partner with the Town for water rights transaction services which includes the evaluation of native water rights, negotiations with the owners, assistance in developing purchase and sale agreements, and execution of the agreements; and WHEREAS, since 2020 WestWater has transacted almost 1,000 acre feet of transferable water rights and 5,000 acre feet of storage, which acquisitions have advanced the Town's Water Action Plan and allowed for multiple water credit sales to developers; and WHEREAS, WestWater desires to continue its relationship with the Town and increase its compensation as set forth in Change Order No. 1; and WHEREAS given WestWater's success in working with all entities of the Town's Water Team and in acquiring water rights for the Town and advancing the Town's Water Action Plan and its desire to expand the scope of its acquisition of native water rights for the Town, staff recommends approval of Change Order No. 1; and WHEREAS, the Town also recommends that Section IX Illegal Aliens of the Agreement be deleted in its entirety as the statutory basis for the section was repealed by the State effective July 1, 2022. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF TRUSTEES OF THE TOWN OF FIRESTONE, COLORADO: Change Order No. 1 to the Professional Services Agreement between the Town of Firestone and WestWater Research LLC is approved in substantially the same form as the copy attached hereto and made a part of this resolution and the Mayor is authorized to execute the Change Order on behalf of the Town and the parties further agree to amend the Agreement by deleting in its entirety Section IX Illegal Aliens. INTRODUCED, READ AND ADOPTED this 25th day of September, 2024. Ke)F-41tTA1141 ATT ST: Mi a Gonzalez, Town Clerk APPROVED AS TO FORM: WiM . y own Attorney WestWater --�iesearch,.. Proposal To: Julie Pasillas, Town of Firestone From: WestWater Research, LLC Date: August 13, 2024 Re: Proposal for Continued Transaction Advisory Background and Purpose Over the last four years, WestWater Research, LLC ("WestWater") has partnered with the Town of Firestone ("Firestone" or "Town") to acquire native water rights to support development of the St. Wain Water Treatment Plant. To date, acquisition efforts have targeted shares of stock in the Godding, Last Chance, Rural, Lower Boulder, and New Coal Ridge Ditch Companies ('Tier 1 Ditches"). Firestone engaged WestWater via an Agreement for Professional Services dated October 14, 2020 ("2020 Agreement"). Under the 2020 Agreement, WestWater provided transaction origination and execution targeting 1,000 AF of water rights primarily in the Tier 1 Ditches and was compensated by a $5,000 per month "Retainer Fee" credited at 100% to the "Incentive Fee" equal to 5% of the total gross consideration paid for water rights originated by WestWater. Since 2020, WestWater has transacted nearly 1,000 acre-feet ("AF") of transferrable water rights and 5,000 AF of storage across 13 pending and completed transactions. Acquisitions have successfully advanced the Town's Water Action Plan ("WAP") and have allowed for multiple water credit sales to developments, which have funded WAP implementation. Considering these successes, Town staff and WestWater have recently discussed continuation of WestWater's acquisition efforts. This proposal outlines revisions and additions to WestWater's scope of services and budget. Scope of Services This scope of work is a continuation of ongoing transaction advisory services. WestWater will continue to work closely with the Town, its consultants and attorneys to implement a professionally managed water rights acquisition program. However, in addition to continuing acquisition efforts in Tier 1 Ditches, WestWater will prioritize acquisitions of shares in 'Tier 2 Ditches" as currently defined or may be defined by the Town in the future. Tier 2 Ditches currently include the Lupton Meadows, Lupton Bottoms, and Boulder & Weld ditches. Future Tier 2 additions may include shares in ditch companies on the lower St. Wain Creek, middle South Platte River, or lower Boulder Creek and other sources of supply as directed by the Town. Specific tasks are provided below. Task 1: Opportunity Evaluation and Due Diligence. Prior to initiating negotiations with prospective sellers, WestWater will perform preliminary due diligence analyses for each high -priority water asset owner. This process may include a preliminary title/ownership review based on county and state records; an assessment of historic and expected future water use; and watereuchange com Proposal for Continued Transaction Advisory an asset -specific valuation analysis. In preparation for negotiations, talking points for an initial meeting will be outlined. WestWater will prepare written opportunity assessments for potential acquisitions as necessary for prospective sellers who have expressed interest in receiving an offer. Task 1: Negotiations Management. Following completion of preliminary due diligence, WestWater will contact owners of selected high - priority water assets. Negotiations with water asset owners can be lengthy and require multiple meetings. WestWater will manage and lead the entire negotiations process from initial meetings through execution of a purchase and sale agreement. In addition to coordinating and leading multiple meetings, negotiation management services provided by WestWater typically include: • Developing and recommending proposed transaction terms. • Drafting letter(s) of intent to be tendered to the water right owner. • Providing market information to support negotiations with the water right owner. • Leading negotiations with the water right owner. • Coordinating with Town staff and legal counsel to prepare formal agreements reflecting the negotiated business terms. Task 3: Transactions Execution. WestWater will support the Town throughout the transaction execution process. Services will include: • Supporting engineering and legal due diligence on prospective water assets. • Preparing supporting data and information needed for presenting proposed acquisitions to, and gaining approval from, Town Board of Trustees and senior management. • Attending Board of Trustee meetings in which water right purchases are considered. • Assisting with the preparation and submittal of ditch company and regulatory approvals. • Coordinating financial closing of transactions. Deliverables WestWater's transaction advisory services will be operated as a program with regular, intermittent deliverables to the Town. Deliverables are anticipated to include opportunity assessments, letters of intent, due diligence reports, progress summaries, and recommendations. Timeline Transaction advisory will be ongoing as directed by the Town. Project Budget The proposed compensation structure will include two components: a monthly retainer fee and an incentive compensation fee. These components are described below: 1. Monthly Retainer of $10,000 per month. The monthly retainer ensures the availability of WestWater senior staff for transaction origination, development, and management throughout the term of engagement. vnterexc�a,ge cam Confidential Proposal for Continued Transaction Advisory Page 3 2. Incentive Compensation of 5% of the Consideration for completed transactions developed by or assigned to WestWater during the term ofthis agreement or during a tailing period of 18-months from termination of the agreement, payable upon financial closing of the transaction. Consideration may include, but is not limited to, payments in cash; warrants; options; fees; notes; assumed liabilities; earn -outs; alliances; and all other things of value exchanged or to be exchanged as part of the transaction. Accumulated Monthly Retainer fees paid to WestWater as of the date of closing of a transaction consummated by Town shall be deducted from the Incentive Compensation payable by Firestone to WestWater. Any remaining retainer fees not deducted from a given Incentive Compensation shall be carried forward and applied in the same manner to Incentive Compensations for future transactions. The only proposed change from the 2020 Agreement compensation structure is an increase to the Monthly Retainer amount. vm[ereachange cem Confidential Proposal for Continued Transaction Advisory Page 4 Appendix A 2024 Professional Rates & Services hieExecutive Officer HourlyPersonnel $600 Regional Directors, Principals, Chief Operating Officer $350 - $475 Senior Associates $225 - $325 Associates & Subject Area Directors $175 - $250 Analysts, GIS Analysts, & Data Management $125 - $175 Administrative and Support Staff $120 Expert witness rates ore billed at $500 per hour for deposition and trial days with a minimum f 8 hours per day billing. Rates increase 5-10% annually, effective on the first day of each calendar year. 2024 Project Related Expenses Expense Description Airfare Actual expense based on an economy class ticket for the most direct route and economical carrier based on availability with target minimum five (5) day advance purchase. Hotels Actual rates based on the standard single room. Rental Car Actual rates based on a standard, midsize car. Mileage Sixty-seven cents($0.67) per mile. Data Actual cost plus a 15% administrative fee. Reproduction Actual costs. Other Expenses Other standard and customary expenses such as business -related phone calls, postage and delivery charges, or incidentals will be fully reimbursed at cost. Subcontractor Fee Administrative management fee of 15% on subcontractor work managed by WestWater. watme�change cam Confidential AGREEMENT FOR PROFESSIONAL SERVICES T41S,AGREEMENT FOR PROFESSIONAL SERVICES (the "Agreement') is made and entered into this _L111 day of october , 2020 (the "Effective Date"), by and between the TOWN OF FIRESTONE, a Colorado municipal corporation with an address of 151 Grant Avenue, P.O. Box 100, Firestone, Colorado 80520 (the "Town"), and WESTWATER RESEARCH, LLC, an Independent contractor with a principal place of business at 320 E. Vine Dr. #223 Fort Collins, Colorado 80561 ("Contractor") (each a "Party" and collectively the 'Parties"). WHEREAS, the Town requires professional services; and WHEREAS, Contractor has held itself out to the Town as having the requisite expertise and experience to perform the required professional services. NOW, THEREFORE, for the consideration hereinafter set forth, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: SCOPE OF SERVICES A. Contractor shall furnish all labor and materials required for the complete and prompt execution and performance of all duties, obligations, and responsibilities which are described or reasonably implied from the Scope of Services set forth in Exhibit A, attached hereto and incorporated herein by this reference and known as: Water Rights (W2020.9510). B. A change in the Scope of Services shall not be effective unless authorized as an amendment to this Agreement. If Contractor proceeds without such written authorization, Contractor shall be deemed to have waived any claim for additional compensation, including a claim based on the theory of unjust enrichment, quantum merit or implied contract. Except as expressly provided herein, no agent, employee, or representative of the Town is authorized to modify any term of this Agreement, either directly or implied by a course of action. II. TERM AND TERMINATION A. This Agreement shall commence on the Effective Date, and shall continue until Contractor completes the Scope of Services to the satisfaction of the Town, or until terminated as provided herein. B. Either Party may terminate this Agreement upon 30 days advance written notice. The Town shall pay Contractor for all work previously authorized and completed prior to the date of termination. If, however, Contractor has substantially or materially breached this Agreement, the Town shall have any remedy or right of set-off available at law and equity. III. COMPENSATION A. In consideration for the completion of the Scope of Services by Contractor, the Town shall as set forth in Exhibit A pay Contractor $5.0 00.00 retainer fee per month, which will be credited at 100% to the incentive compensation fee equal to five percent (5%) of total gross consideration paid for water rights presented by Contractor and acquired by the Town. The retainer amount shall include all fees, costs and expenses incurred by Contractor, and no additional Page 1 of 9 FIRESTONE amounts shall be paid by the Town for such fees, costs and expenses for the retainer fee. Contractor may submit periodic invoices, which shall be paid by the Town within 30 days of receipt. B. The Contractor shall be entitled to the incentive compensation for water rights that the Town places under contract that are identified and presented by Contractor during our engagement. Contractor shall not be entitled to the Incentive compensation If it Is determined that the transaction was originated without Contractor's direct or indirect involvement during the engagement period, and for water rights previously under negotiation by the Town. The Town shall provide a list of specific water right holdings that are exempt from Contractor's incentive compensation at the start of this engagement. Contractor will maintain records of its communications to assist a determination of whether incentive compensation is due. For water rights identified and presented by Contractor during our engagement, the incentive compensation shall be paid to Contractor If the Town later places the water rights under contract during an 18-month period following termination of our engagement. A. Contractor hereby warrants that it is qualified to assume the responsibilities and render the services described herein and has all requisite corporate authority and professional licenses in good standing, required by law. The work performed by Contractor shall be in accordance with generally accepted professional practices and the level of competency presently maintained by other practicing professional firms in the same or similar type of work in the applicable community. The work and services to be performed by Contractor hereunder shall be done in compliance with applicable laws, ordinances, rules and regulations. B. The Town's review, approval or acceptance of, or payment for any services shall not be construed to operate as a waiver of any rights under this Agreement or of any cause of action arising out of the performance of this Agreement. C. Because the Town has hired Contractor for its professional expertise, Contractor agrees not to employ subcontractors to perform any work except as expressly set forth in the Scope of Services. V. OWNERSHIP Any materials, items, and work specified in the Scope of Services, and any and all related documentation and materials provided or developed by Contractor shall be exclusively owned by the Town. Contractor expressly acknowledges and agrees that all work performed under the Scope of Services constitutes a "work made for hire." To the extent, if at all, that it does not constitute a "work made for hire," Contractor hereby transfers, sells, and assigns to the Town all of its right, title, and interest in such work. The Town may, with respect to all or any portion of such work, use, publish, display, reproduce, distribute, destroy, alter, retouch, modify, adapt, translate, or change such work without providing notice to or receiving consent from Contractor. If the Town reuses or makes any modification to Consultant's designs, documents or work product Without the prior written authorization of Consultant, the Town agrees, to the fullest extent permitted by law, to release the Consultant, its officers, directors, employees and sub -consultants from all claims and causes Page 2 of 9 FIRESTONE of action arising from such uses, and shall indemnify and hold them harmless from all costs and expenses, including the cost of defense, related to claims and causes of action to the extent such costs and expenses arise from the Town's modification or reuse of the documents. The Town expressly acknowledges and agrees that the documents and data to be provided by Consultant under the Agreement may contain certain design details, features and concepts from the Consultant's own practice detail library, which collectively may form portions of the design for the Project, but which separately, are, and shall remain, the sole and exclusive property of Consultant. Nothing herein shall be construed as a limitation on the Consultant's right to re -use such component design details, features and concepts on other projects, in other contexts or for other clients. VI. INDEPENDENT CONTRACTOR Contractor is an independent contractor. Notwithstanding any other provision of this Agreement, all personnel assigned by Contractor to perform work under the terms of this Agreement shall be, and remain at all times, employees or agents of Contractor for all purposes. Contractor shall make no representation that it is a Town employee for any purposes. VII. INSURANCE A. Contractor agrees to procure and maintain, at its own cost, a policy or policies of insurance sufficient to insure against all liability, claims, demands, and other obligations assumed by Contractor pursuant to this Agreement. At a minimum, Contractor shall procure and maintain, and shall cause any subcontractor to procure and maintain, the insurance coverages listed below, with forms and insurers acceptable to the Town. Worker's Compensation insurance as required by law. 2. Commercial General Liability insurance with minimum combined single limits of $1,000,000 each occurrence and $2,000,000 general aggregate. The policy shall be applicable to all premises and operations, and shall include coverage for bodily injury, broad form property damage, personal injury (including coverage for contractual and employee acts), blanket contractual, products, and completed operations. The policy shall contain a severability of interests provision, and shall include the Town and the Town's officers, employees, and contractors as additional insureds. No additional insured endorsement shall contain any exclusion for bodily injury or property damage arising from completed operations. 3. Professional liability Insurance with minimum limits of $1,000,000 each claim and $2,000,000 general aggregate. B. Such insurance shall be in addition to any other insurance requirements imposed by law. The coverages afforded under the policies shall not be canceled, terminated or materially changed without at least 30 days prior written notice to the Town. In the case of any claims -made policy, the necessary retroactive dates and extended reporting periods shall be procured to maintain such continuous coverage. Any insurance carried by the Town, Its officers, its employees or Its contractors shall be excess and not contributory insurance to that provided by Contractor. Contractor shall be solely responsible for any deductible losses under any policy. Page 3 of 9 FIRESTONE C. Contractor shall provide to the Town a certificate of insurance as evidence that the required policies are in full force and effect. The certificate shall identify this Agreement. 1AIIN A. Contractor agrees to indemnify and hold harmless the Town and its officers, insurers, volunteers, representative, agents, employees, heirs and assigns from and against all claims, liability, damages, losses, expenses and demands, including attorney fees, on account of injury, loss, or damage, including without limitation claims arising from bodily injury, personal injury, sickness, disease, death, property loss or damage, or any other loss of any kind whatsoever, which arise out of or are in any manner connected with this Agreement if such injury, loss, or damage is caused in whole or in part by, the act, omission, error, professional error, mistake, negligence, or other fault of Contractor, any subcontractor of Contractor, or any officer, employee, representative, or agent of Contractor, orwhich arise out of a worker's compensation claim of any employee of Contractor or of any employee of any subcontractor of Contractor. Contractor's liability under this indemnification provision shall be to the fullest extent of, but shall not exceed, that amount represented by the degree or percentage of negligence or fault attributable to Contractor, any subcontractor of Contractor, or any officer, employee, representative, or agent of Contractor or of any subcontractor of Contractor. B. If Contractor is providing architectural, engineering, surveying or other design services under this Agreement, the extent of Contractor's obligation to indemnify and hold harmless the Town may be determined only after Contractor's liability or fault has been determined by adjudication, alternative dispute resolution or otherwise resolved by mutual agreement between the Parties, as provided by C.R.S. § IM0.5- 102(8)(c). IX. ILLEGAL ALIENS A. Certification. By entering into this Agreement, Contractor hereby certifies that, at the time of this certification, it does not knowingly employ or contract with an illegal alien who will perform work under this Agreement and that Contractor will participate in either the E-Verify Program administered by the United States Department of Homeland Security and Social Security Administration or the Department Program administered by the Colorado Department of Labor and Employment to confirm the employment eligibility of all employees who are newly hired to perform work under this Agreement. B. Prohibited Acts. Contractor shall not knowingly employ or contract with an illegal alien to perform work under this Agreement, or enter into a contract with a subcontractor that fails to certify to Contractor that the subcontractor shall not knowingly employ or contract with an illegal alien to perform work under this Agreement. C. Verification. 1. If Contractor has employees, Contractor has confirmed the employment eligibility of all employees who are newly hired to perform work under this Agreement through participation in either the E-Verify Program or the Department Program. 2. Contractor shall not use the E-Verify Program or Department Program procedures to undertake pre -employment screening of job applicants while this Agreement is being performed. Page 4 of 9 FIRESTONE 3. If Contractor obtains actual knowledge that a subcontractor performing work under this Agreement knowingly employs or contracts with an illegal alien who is performing work under this Agreement, Contractor shall: notify the subcontractor and the Town within 3 days that Contractor has actual knowledge that the subcontractor is employing or contracting with an illegal alien who is performing work under this Agreement; and terminate the subcontract with the subcontractor if within 3 days of receiving the notice required pursuant to subsection 1 hereof, the subcontractor does not stop employing or contracting with the illegal alien who is performing work under this Agreement; except that Contractor shall not terminate the subcontract if during such 3 days the subcontractor provides information to establish that the subcontractor has not knowingly employed or contracted with an illegal alien who is performing work under this Agreement. D. Duty to Comply with Investigations. Contractor shall comply with any reasonable request by the Colorado Department of Labor and Employment made in the course of an investigation conducted pursuant to C.R.S. § 8-17.5-102(5)(a) to ensure that Contractor is complying with the terms of this Agreement. E. Affidavits. If Contractor does not have employees, Contractor shall sign the "No Employee Affidavit" attached hereto. If Contractor wishes to verify the lawful presence of newly hired employees who perform work under the Agreement via the Department Program, Contractor shall sign the "Department Program Affidavit" attached hereto. X. MISCELLANEOUS A. Governing Law and Venue. This Agreement shall be governed by the laws of the State of Colorado, and any legal action concerning the provisions hereof shall be brought in Weld County, Colorado. B. No Waiver. Delays in enforcement or the waiver of any one or more defaults or breaches of this Agreement by the Town shall not constitute a waiver of any of the other terms or obligation of this Agreement. C. Integration. This Agreement constitutes the entire agreement between the Parties, superseding all prior oral or written communications. D. Third Parties. There are no intended third -party beneficiaries to this Agreement. E. Notice. Any notice under this Agreement shall be in writing, and shall be deemed sufficient when directly presented or sent pre -paid, first class United States Mail to the Party at the address set forth on the first page of this Agreement. F. Severability. If any provision of this Agreement is found by a court of competent jurisdiction to be unlawful or unenforceable for any reason, the remaining provisions hereof shall remain in full force and effect. G. Modification. This Agreement may only be modified upon written agreement of the Parties. H. Assignment. Neither this Agreement nor any of the rights or obligations of the Parties shall be assigned by either Party without the written consent of the other. Page 5 of 9 FIRESTONE i I. Governmental Immunity. The Town and its officers, attorneys and employees, are relying on, and do not waive or intend to waive by any provision of this Agreement, the monetary limitations or any other rights, Immunities or protections provided by the Colorado Governmental Immunity Act, C.R.S. § 24- 10-101, at seq., as amended, or otherwise available to the Town and Its officers, attorneys or employees. J. Rights and Remedies. The rights and remedies of the Town under this Agreement are in addition to any other rights and remedies provided by law. The expiration of this Agreement shall in no way limit the Town's legal or equitable remedies, or the period in which such remedies may be asserted, for work negligently or defectively performed. K. Sublect to Annual Appropriation. Consistent with Article X, § 20 of the Colorado Constitution, any financial obligation of the Town not performed during the current fiscal year Is subject to annual appropriation, shall extend only to monles currently appropriated, and shall not constitute a mandatory charge, requirement, debt or liability beyond the current fiscal year, L. Representative Authority. Each person signing this Agreement represents and warrants that he or she is duly authorized and has the legal capacity to execute the Agreement. IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date. TOWN OF FIRESTONEr COLORADO � TOWN � l bjF F1AW o �. oc Bobbi Sindelar, Mayor ATTEST: /f O�`rvi V. Town APPROVED AS TO FORM: AilligmHayashi, Town Attorney WESTWATER RESEARCH, LLC By: Page 6 of 9 FIRESTONE NO EMPLOYEE AFFIDAVIT To be completed only if Contractor has no employees 1. Check and complete one: ❑ I, , am a sole proprietor doing business as I do not currently employ any individuals. Should I employ any employees during the term of my Agreement with the Town of Firestone (the "Town"), I certify that I will comply with the lawful presence verification requirements outlined in that Agreement. OR ❑ I, , am the sole ownerlmember/shareholder of a [specify type of entity — i.e., corporation, limited liability company], that does not currently employ any individuals. Should I employ any individuals during the term of my Agreement with the Town, I certify that I will comply with the lawful presence verification requirements outlined in that Agreement. 2. Check one. ❑ I am a United States citizen or legal permanent resident. The Town must verify this statement by reviewing one of the following items: ■ A valid Colorado driver's license or a Colorado identification card; ■ A United States military card or a military dependent's identification card, • A United States Coast Guard Merchant Mariner card; ■ A Native American tribal document; ■ In the case of a resident of another state, the driver's license or state -issued identification card from the state of residence, if that state requires the applicant to prove lawful presence prior to the issuance of the identification card; or ■ Any other documents or combination of documents listed in the Town's "Acceptable Documents for Lawful Presence Verification" chart that prove both Contractor's citizenship/lawful presence and identity. OR ❑ I am otherwise lawfully present in the United States pursuant to federal law. Contractor must verify this statement through the federal Systematic Alien Verification of Entitlement ("SAVE'] program, and provide such verification to the Town. Signature Date Page 7 of 9 FIRESTONE DEPARTMENT PROGRAM AFFIDAVIT To he completed only it Contractor participates in the Department of Labor Lawful Presence Verification Program I, as a public contractor under contract with the Town of Firestone (the 'Town"), hereby affirm that: 1. 1 have examined or will examine the legal work status of all employees who are newly hired for employment to perform work under this public contract for services ("Agreement") with the Town within 20 days after such hiring date; 2. 1 have retained or will retain file copies of all documents required by B U.S.C. § 1324a, which verify the employment eligibility and identity of newly hired employees who perform work under this Agreement; and 3. 1 have not and will not alter or falsify the identification documents for my newly hired employees who perform work under this Agreement. Signature STATE OFCOLORADO ) ss. COUNTY OF Date The foregoing instrument was subscribed, sworn to (or affirmed) before me this 2020, by as My commission expires: (SEAL) Notary Public Pace 8 of 9 FIRESTONE day of Of Contractor's Duties Town: EXHIBIT A SCOPE OF SERVICES During the term of this Agreement, Contractor shall perform the following duties, as directed by the See the attached proposal from WestWater Research, LLC for additional details. Contractor's Deliverables In performance of the duties described above, Contractor shall deliver the following items to the Town, during the timeframes established by the Town: • See the attached proposal from WestWater Research, LLC for additional details. Page 9 of 9 FIRESTONE i Main Office Pacific Northwest West Coast Southwest Rocky Mountain dye c �a 80.5 W. Idaho Street #310 20552 NE. 116" Circle 500 Capitol Mall, # 2350 4747N,7 " Street #412 320 E. Vine Dr. 4223 •7 Boise, ID 83702 Brush Pralrle, WA 98606 Sacramento, CA 95816 Phoenix, AZ 85014 Fort Collins. CO 80521 Researchac (208) 433-0255 (360) 695.5233 (916) 426.6366 (602) 595-7009 (970) 672-1811 Proposal To: Julie Pasillas, Town of Firestone From: WestWater Research, LLC Subject: Proposal for Water Rights Acquisition Assistance Date: September 15, 2020 Background and Purpose The Town of Firestone is looking to acquire native ditch rights in the lower St. Vrain River Basin to provide raw water supplies for augmentation of planned municipal wells and potentially for direct municipal use. The Town has previously developed a list of priority acquisition targets, consisting of shares and/or excess carriage agreements in the following ditch companies: Last Chance Ditch, Godding Ditch, Lower Boulder Reservoir & Ditch, Rural Ditch, and Coal Ridge Ditch. In addition, the Town is interested in acquiring firmed Windy Gap Project units and fully consumable effluent from the Saint Vrain Sanitation Plant. Over the next several years, the Town is looking to acquire at least 1,000 acre-feet of transferrable water supplies from these targets. The Town is willing to explore other water supplies, in addition to these seven targets, that meet its augmentation and/or direct use objectives. A comparison of recent Colorado -Big Thompson (CBT) unit sale prices to known sale prices for native ditch water rights in Water Division 1 (South Platte Basin) illustrates the motivation for the Town's water acquisition plans and the cost effectiveness of pursuing alternative water supplies (see Figure 1). The water acquisition targets are local and can be delivered to the Town's reservoir(s), have manageable return flow obligations, and have experienced limited historical market demand so prices are expected to be relatively low. ire is comparison of tceeent a rears of utsIt & rvattve unen Nate races pn,ao . $W,00 1 • sntao I .• • stnuo $'111Un N I �Ii• s+rUnn $la,txla sta,000 � . �• i sa t,., Dols CBT Units • •j'••8�ai� f ��1•• •••I i410 yH�l:•� •• Native Ditch Shares I+u. 2016 in Water Division 1 • r+n,,uv a I bnJn18 rnq)019 la." O The Town contacted WestWater Research, LLC (WestWater) to request a proposal to provide assistance in acquiring native ditch water tights. This proposal lays out the anticipated scope and services that WestWater will provide to the Town in the course of identifying, negotiating, and securing water rights for the Town. www.watetip n8e.taal 2 1 P a g e Proposal —Firestone —Water Rights Acquisition Assistance September 15, 2020 WestWater will work with the Town to implement a professionally managed water rights acquisition program. The following tasks and services are expected to be completed by WestWater in the process of identifying, negotiating, and successfully closing on water right acquisitions for the Town. I. Develop Water Rights Acquisition Strategy. WestWater will review past studies and documents supporting the Town's water acquisition strategy focused on the five target ditch companies. WestWater will also conduct an initial analysis of potential alternative water supply sources and will communicate any alternative concepts to the Town. This task will define any Town preferences in WestWater outreach efforts, protocol and procedures for communicating information between WestWater and the Town, and cost expectations. 2. Prioritize Water Rights for Acquisition. An initial economic analysis will be conducted to identify any unit price ($ per acre-foot) disparities between the target water sources, leading to a prioritization of the five target ditch companies based on value. WestWater will develop an inventory of landowners within the five target ditch companies. The inventory will be developed as a spatial geodatabase based on land ownership, with attributes such as known share ownership and recent transactions. Selected owners and business contacts will be ranked to inform the order in which prospective sellers will be engaged. This process will consider various owner attributes — information and perspective of the prospective sellers, relative size (land acres or water volume), current use considerations, and other factors. Sometimes there is a story that informs potential willingness to sell, such as ownership by an estate or trust, absentee landowners, or recent life events. Each water right owner will be assigned a relative priority (high, medium, and low) reflecting the expected level of success for the transaction. Transaction Origination. WestWater will develop and maintain market information relevant to the water acquisition targets and can provide periodic market updates to the Town's water team. WestWater will originate and manage water right transactions in coordination with the Town. WestWater will initiate contact with owners of high -priority water rights and manage on -going communications in an effort to solicit interest and initiate negotiations. This owner outreach will be conducted according to the outreach approaches and timelines recommended in the water acquisition strategy. Negotiations with water right owners can be lengthy and require multiple meetings. WestWater will manage and lead the negotiation process from initial meeting through execution of a purchase and sale agreement. In addition to coordinating and leading meetings, negotiation management services provided by WestWater typically include: a. Initial "fatal "flaw" due diligence (ownership review, historic use analysis, valuation analysis) to minimize "dead deal" costs. b. Develop and recommend proposed transaction terms. For some water transactions, this may involve the development of Opportunity Assessments for review by the Town that include a summary of the water right, owner information, estimated water volume, initial due diligence findings, recommended additional research, and recommended price terms. c. Meetings with the Town's water team (staff, attorneys, engineers) d. Draft letter(s) of intent to be tendered to the water right owner, in coordination with the Town's water team and legal counsel. e. Lead negotiations with the water tight owner. 4. Transactions Execution. WestWater will support the Town through the transaction closing process. Transaction services provided by WestWater typically include: a. Coordinate with attorneys on final due diligence on prospective water rights including liens and encumbrances or other issues that may prevent or delay the sale. b. Coordinate with attorneys on the preparation of purchase agreements and related documents. c. Assist and consult with legal counsel on structure of purchase agreements and documents. d. Coordinate financial closing of transactions. w .wateknN+em 3 1 P a g e Proposal — Firestone— Water Rights Acquisition Assistance September 15, 2020 WestWater may complete other tasks and services as part of managing the water rights acquisition program for the Town. Periodic participation in the Town's regular water team meetings is anticipated. Deliverables Upon notice to proceed, this project will be operated as a program, with regular intermittent deliverables to the Town in the pursuit of water rights. Deliverables are expected to include items such as: recommendations on priority water right targets, acquisition strategy plans, opportunity assessments, and due -diligence reports for water rights transactions that advance. In addition to the intermittent deliverables listed above, WestWater anticipates regular meetings and conference calls with the Town to provide updates on status of the project and to make decisions on whether to proceed with specific actions. Timeline The initial two tasks (strategy and prioritization) are expected to require approximately 6 to 8 weeks to complete. The timeline and schedule for the remainder of the project will largely depend on the speed and success of negotiations with water right owners. Based on previous acquisition projects, the estimated time of completion is 24 to 36 months. Additional time will be required to complete regulatory approvals following acquisition. Most ditch companies have bylaws and required processes that impact the transfer of ownership (such as a right of first refusal) or the change of use (Catlin bylaws) The actual time required is highly variable based on the complexities of negotiations. WestWater will ensure that every effort is made to move the process along as quickly as possible. Compensation All services under the project will be compensated as follows: • Monthly retainer fee of $5,000 per month while the acquisition effort is active. • Incentive compensation fee equal to five percent (5%) of total gross consideration paid for water rights presented by WestWater and acquired by the Town. • Monthly retainer fees paid by the date of closing will be credited toward the incentive compensation. Any monthly retainer fees not credited for a particular transaction will be rolled over to the next transaction. • WestWater shall be entitled to the incentive compensation for water rights that the Town places under contract that are identified and presented by WestWater during our engagement. WestWater shall not be entitled to the incentive compensation if it is determined that the transaction was originated without WestWater's direct or indirect involvement during the engagement period, and for water rights previously under negotiation by the Town. The Town shall provide a list of specific water right holdings that are exempt from WestWater's incentive compensation at the start of this engagement. WestWater will maintain records of its communications to assist a determination of whether incentive compensation is due. For water- rights identified and presented by WestWater during our engagement, the incentive compensation shall be paid to WestWater if the Town later places the water rights under contract during an 18-month period following termination of our engagement. Qualifications WestWater is a leading economic and financial consulting firm specializing in water rights and water resource development in the United States. WestWater provides market intelligence, valuation, transaction advisory, strategic planning, and asset management services relating to water rights. WestWater utilizes water rights transaction data to guide its water acquisition plans and negotiations. WestWater maintains a proprietary database of water right transactions in Colorado and other Western states known as Waterlitix. Our commitment to data and analysis allows WestWater to bring more than just a broker relationship, instead backing up its recommendations with a data -informed perspective and providing comfort to clients in making good business decisions. A company statement of qualifications and staff resumes can be provided if requested by the Town. www.watmxch ang•Fam Docusign Envelope ID: F31A9881-7ACD-4B5E-B8CD-73CCBF3C79F4 Date of Issuance: CHANGE ORDER No. 1 Effective Date: September 25, 2024 Project: Owner. Town of Firestone Owners Contract No.: W2020-9510 Water Rights (W2020-9510) Contract: Date of Contract: October 14, 2020 Professional Service Agreement Water Rights (W2020-9510) Contractor: Engineers Project No.: N/A WestWaeter Research, LLC The Contract Documents are modified as follows upon execution of this Change Order: Description: Increase in the monthly retainer fee Attachments (list documents supporting change): 2024 WestWater Rearch LLC Proposal CHANGE IN CONTRACT PRICE: CHANGE IN CONTRACT TIMES: Original Contract Price: Original Contract Times: ongoing ❑ Calendar days Substantial completion (days or date): $5,000 per month Ready for final payment (days or date): Upon completion [Increase] [Decrease] from previously approved Change [Increase] [Decrease] from previously approved Change Orders Orders No. 0 to No. 0: No. 0 to No. 0: $0.00 Contract Price prior to this Change Order. $5.000 per month [Increase] of this Change Order: $5,000 per month Contract Price incorporating this Change Order: $10,000 per month RECOMMENDED: By: Director (Authorized Signature) Date: Substantial completion (days): ( Ready for final payment (days): Contract Times prior to this Change Order. Substantial completion (days or date): _ Ready for final payment (days or date): Upon completion [Increase] [Decrease] of this Change Order: Substantial completion (days or date): +0 Ready for final payment (days ordate):±i Contract Times with all approved Change Orders: Substantial completion (days or date): Ready for final payment (days or date): Upon completion ACCEPTED: By. ,tA yor(Aut prized ignatur /Date: b ACCEPTED: By: �•�w+K iknt S~ JL own raor (Authorized Signature) Date: 9/19/2024