REPORT TO THE CITY COUNCIL FROM: GEORGEANNE A. WHITE, City Manager Office of Mayor & City Manager BY: JOHN ELLIS, Government Affairs Manager Office of Mayor & City Manager SUBJECT ..Title Actions pertaining to water lobbying, consulting, and regulatory services: 1. Affirm the City Manager's finding that The Gualco Group is uniquely qualified; 2. Approve a Consultant Services Agreement with The Gualco Group Inc., for an Amount Not to Exceed $60,000 Annually, Plus All Reimbursable Costs Incurred Under This Agreement, Not to Exceed $5,000 for the Term of the Agreement effective through July 31, 2024. ..Body RECOMMENDATION Staff recommends the City Council approve a consultant services agreement with The Gualco Group Inc. (Gualco) for an amount not to exceed $60,000 annually over a two-year period, plus reimbursable costs not to exceed $5,000 for the term of the agreement effective through July 31, 2024, for professional water lobbying, consulting, and legislative and regulatory services. EXECUTIVE SUMMARY The Office of the Mayor and City Manager, in conjunction with the City's Department of Public Utilities (DPU), seeks City Council approval of a professional consultant services agreement with Gualco, the City's current state water lobbyist, to continue performing professional water lobbying, consulting, and legislative and regulatory services. The proposed rate for service is unchanged from Gualco's current agreement. The term of the agreement is two years, with the option of two additional one-year extensions. BACKGROUND The functions of the City related to water are significantly affected by the actions of the state Legislature, the Office of the Governor, and state regulatory agencies. In response to anticipated and unanticipated actions by these entities, the City first retained Gualco in January 2015 to provide professional government relations and advocacy services for the City of Fresno Water Capital Plan. That agreement was effective through September 2015. After issuing an RFQ to provide legislative and regulatory lobbying and consulting services in Sacramento for water-related issues, the City has retained Gualco for professional water lobbying, consulting, and legislative and regulatory services since August 2016. The firm has developed a strong working relationship with the City's Department of Public Utilities (DPU). Gualco's representation has been crucial in helping the City secure more than $500 million in low-interest loans from the State Water Resources Control Board's Division of Financial Assistance, which has allowed the City to avoid bonded indebtedness. Since 2015, Gualco has been involved with securing over $460 million in funding through the following low-interest SRF Loans and state grants for DPU projects: $195 million Southeast Surface Water Treatment Facility (2015) - SRF loan $70.6 million Southwest Recycled Water Distribution System (2015) - SRF loan $77 million Kings River Pipeline Improvements (2016) - SRF Loan $76 million Regional Transmission Main Projects (2016) - SRF Loan $26.5 million Friant Kern Canal Pipeline Project (2016) - SRF Loan $14 million Northeast Surface Water Treatment Facility 4.5MG Tank (2019) - SRF Loan $2.2 million Prop 1 Grant - PCE Groundwater Cleanup (2018) - Grant $891,500 Prop 1 Grant - TCP Mitigation Feasibility Study (2018) - Grant The Gualco team were also active participants in the coalition that secured $100 million in the State budget for last Fiscal Year & the current Fiscal Year for subsidence repair on the Friant Kern Canal and two other major conveyance facilities. A significant amount of funding was included in the state budget this year for water and wastewater projects, which DPU will likely pursue. The Gualco team has been communicating with State officials on a regular basis to keep Fresno on their radars and determine the eligibility of proposed DPU projects for the anticipated funding opportunities. Gualco is helping to position DPU for success once funding opportunities are announced. Company President and CEO Jack Gualco has decades of experience and is well known both in the State Capitol as well as in the many state and California-based federal agencies that deal with water issues. These connections are critical on the always important water issue, especially at a time when drought, groundwater contamination and the State's Sustainable Groundwater Management Act (SGMA) are combining to create a complex political landscape. The California State Legislature, the Office of the Governor and State regulatory agencies continue to actively draft and adopt legislation that affects the City of Fresno's water operations. The specific areas of concern include, but are not limited to, water conservation and drought regulations, modifications and alterations to the Sustainable Groundwater Management Act, mandatory water and sewer consolidations between cities and disadvantaged communities, and application guidelines related to low-interest loans and grants for water supply, treatment, and distribution projects. Given the potential financial, operational, and technical impacts associated with proposed water-related legislation, the City has a need to extend Gualco's services as a legislative, administrative, and regulatory representative for the City on water-related issues, as well as maintaining relationships and monitoring activities of all relevant State agencies and departments. If approved, the consultant will continue to provide assistance in legislative affairs, intergovernmental relations, grants and program development, and other regulatory and lobbing services related to water at the state level. Gualco will continue to work with State officials to ensure maximum input on water matters of concern to the City as recognized by the consultant and/or instructed by the City. This will include, but is not limited to, the Governor's Office, state departments and agencies, boards and commissions, and key legislators and individuals. Gualco will meet with DPU officials, as well as the City's Government Affairs Manager, either in person or via teleconference, on a monthly basis to provide information of benefit to decision makers as part of a collaborative effort in overseeing the City's water lobbying efforts. The consultant will also provide monthly reports to the City on its performance obligations under this agreement. The City Administration will make these reports available to the City Council as part of its standardized reporting on all City lobbyist activities. The consultant will also hold at least one legislative strategy session each year with City officials, including representatives from both the City Administration and the City Council, to identify issues of priority for the City. ENVIRONMENTAL FINDINGS Approval of the consultant services agreement amendment is not a "project" within the meaning of Public Resources Code Section 21803 (CEQA Guidelines Section 15378) because the organizational and administrative activities as identified in the consultant agreement will not result in direct or indirect physical changes in the environment. LOCAL PREFERENCE Local preference was not implemented because Gualco is uniquely qualified. FISCAL IMPACT The proposed agreement will not have any impact on the General Fund. Funding has been appropriated in the Water Enterprise Fund for FY 2023 and will be appropriated in future year budgets. Attachments: Attachment 1 - Consultant Services Agreement Attachment 2 - Uniquely Qualified Memo