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HomeMy WebLinkAboutThe Reed Group, Inc. 2015-03-17 ���c. /V� . 13iN - �.� �i —��i (�171 OF (�kl:�ll ��IENDMN:�T 1 TO CO�"T(L�('"t� 131�121� BET��'EE\ 7�HE REED GROI�P. 11C. and "I�HE ('IT1� ON l til.aH This nmendmem No. 1, entered on March 17. ?01�. revises the A�rcement for I'roless�onal sen ices ciated April ?l. ?01-� bet�y�een the Cih of lJkiah and The Reed Group. Inc. Cor professional cvnsuiting sen�ices related to preparation of a water rate studv. This Arnendment No. 1 changes the ti�llo���n� I Add to thc scope of ��ork the perfc�nnance of a ���aste��atcr rate studt�_ at an additional not-to-exceed cost of��7,8U0, as per attached Exhibit !�. Work for this additional scope �s to be completed b� June �U, ?O15 As a result. the re�ised total contract amouni is not-to-e�ceed $79,'_?> OU. ? Re�lace SecUOn 7.9 ot'the a�reement m its entiretv w�th the tollo��in�:: 7.�) Execution oi� :�greement. �fhis Aireemcnt ma�• be executed in duplicate originals, each hearmg the uriginal signature af ihe pa.nies. Altematnel�, th�s Agreement mav he e�ccuted and dcli�ered b} f'acsimile or ather electruni� transmissiun. and in rnc�re than one counterpart, each of whith shall be deemcd an on�inal, arid all of ���hich to��ethcr shall cunstitute one �u�d the ;ame instrument. V1'}ien e�ecuted usine either alternata�e. the e�ecuted a�reement �hall be decm�d �i orie�inal ad�»i,sible:is e�idence in an� adnvn�,trati�e or judicial prcx;eedin� to pra�e the terms aiid ccmtent of ttus A�;reement. Except as �xpressl` amended hv this nmendment, all other tenns remain unchanged and in full f'orce and ctlect t'v V�"IT�ESS V4'HEREUf=. THE P;IRTIL•S HA�'E E.l'ECL�TL•D ( I llti A1�1END`1�tiT ON 7'HE E FFEC'TI`'E DATE: THI: RFF;D GRO NC. ; s Y� � z�-� � -�`�� �1�--�--�' � � �� � 5 � D.q�rE. RC��3L•RT RrCD C(T1' UF lik[: BY" DATE: o�-D /� .I E CIIAI�-iBERS. C'1T1' MAN.4GER aT ���r �', � / Bl': �1 , ��'� � � �i � ,, � '�"�������L-''� DATE: ���� CT� / �S- hRl_ INE LAV4 LER. CITY CI,C:IZ!` �X"�;ti i F:l� THE REED GROUP, INC. November 13, 2014 Karen Scalabrini City of Ukiah 411 West Clay Street Ukiah,CA 95482 Subject: Proposal for Wastewater Rate Study Dear Karen, In response to your request, this ]etter outlines a scope of work for preparing a wastewater rate study for the City of Ukiah. As you know, I am currently engaged by the City to perform a water rate study. The wastewater rate study would have a similar scope, as described herein. The Reed Group, Inc.'s mission is to provide each client with a high level of service and unparalleled responsiveness. I take the time to recognize the unique aspects of each client's situation, and to develop solutions to address their needs. The cost of providing this level of service is usually competitive with other firms. In addition, I strive to be a long-term partner with clients and serve as an ongoing resource on utility rate and related financial issues. Many client relationships extend for more than ten years. The remainder of this letter proposal described the scope of work for the wastewater rate study It also provides a schedule and cost estimate. Wastewater Rate Study The proposed approach and scope of work for the wastewater rate study is consistent with a comprehensive study. This includes developing a multi-year financial plan, performing necessary cost of service analyses, and designing wastewater rates consistent with Proposition 218. Task 1 -Initiate Project and Review/Analuze Back�round In{ormation At the outset of the study a data and information request will be submitted to the City and a kick-off ineeting scheduled. The kick-off ineeting will be held to discuss key issues and any pressing concerns of the City (e.g., financial condition, capital improvement needs, etc.). We will also discuss the wastewater utility's current budget, existing and/or anticipated debt obligations, capital program needs, current reserves, financial concerns, wastewater rate structure and rate-setting objectives, and the City's expectations for the study. The kick-off ineeting will also be used to review a detailed timeline for completing the study including specific milestone dates, as well as the roles and responsibilities of both consultant and staff. 3053 Freeport Boulevard #158•Sacramento,CA 95818-4346• (916)444-9622•www.TheReedGroup.org KAREN SCALABRINI NOVEMBER 13,ZO14 PAGE2 Task 2 - Develop Multi-Year Financial Plan and Determine Annual Revenue Requirements The financial plan is an annual cash-flow modeL This differs from standard accounting income statements. The financial plan will span up to a 10-year planning period consistent with the City's capital improvement program. It will be based on the detailed account structure used in the City's budget and financial accounting system. Separate funds and reserves within the wastewater utilitv will be modeled. Annual wastewater rate revenue requirements are determined through development of the financial plan model. The revenue requirement is based on annual operating and maintenance expenses, debt service obligations, and contributions towards capital program activities with consideration of non-rate revenues, financial reserves and reserve policies. The financial plan will consider: • Current and estimated future operating and maintenance costs • Estimated customer growth and changes in wastewater service demands, including the potential detachment of the "overlap" area from the Ukiah Valley Sanitation District in to the City's service area • Assumptions for inflation and interest rates • Need to fund long-term capital improvements and replacement of infrastructure • Existing and potential future debt service obligations, including debt service coverage • Estimated non-rate revenues including new connection fees and other sources. This task will also include analyzing and developing recommendations related to the City's financial reserves and reserve policies, including reserves for operations, capital replacement, and emergencies. Government Code Section 53756 (AB 3030 from 2008) allows the City to adopt a mechanism for automatically adjusting wastewater rates for inflation, if appropriate. This mechanism can be adopted for up to five years. The development of the financial plan will include how this provision could be incorporated into rate recommendations. Once a preliminary financial plan has been developed, we will confer with staff to discuss the current financial status of the wastewater utility and preliminary recommendations for annual wastewater rate revenue needs. It will also be an opportunity to qualitatively discuss the current rate structure, and potential alternatives to it. Task 3 - Update Citu Council on Interim Status and Obtain Input After completing a preliminary financial plan, assessing the condition of the wastewater utility, and conferring with staff, the City Council will be updated on the status of the project, and given an opportunity to provide input. This update, to be provided during a regular meeting, will include a summary of the project scope and schedule, a summary of the current financial condition of the wastewater utility, key issues to be addressed, the approach to developing study recommendations, and any initial observations. If it appears that changes to the rate KAREN SCALABRINI NovEMSER 13,2014 PAGE3 structure may be warranted, then this issue will also be raised with the City Council for consideration and input. This will be our first opportunity to hear the interests and concerns of the City Council and public. Meeting with the City Council early in the study process provides an opportunity to learn, first hand, the interests and concerns of the City Council and community. Task 4 - Per{orm Cost o{Service Analysis and Design Wastewater Rates Wastewater rates must meet the cost of service requirements embodied in Proposition 218 (Article XIII D of the California Constitution). This task will entail performing the cost of service analysis to proportionately allocate the annual wastewater rate revenue requirement to each customer class based on customer account, estimated wastewater flow, and strength cllaracteristics. Recent court decisions have raised the bar for justifying wastewater rates. Maintaining a relatively simple rate structure, such as the City's current structure, can help reduce the risk of legal challenge. The City's current wastewater rate structure includes fixed monthly base (minimum) charges and a uniform usage rate for each strength category. Significant changes to the rate structures are not envisioned in this study. However, adjustments to the rate structure may be suggested if they better meet cost of service requirements, improve revenue stability, and/or better achieve rate-setting objectives. Rate setting objectives may include administrative ease, customer understanding and acceptance, and conservation effectiveness. If appropriate, wastewater rate schedules will be developed to cover a period of up to five years. Task 5 -Prepare Preli�ninarU Wastewater IZate Study Report This task, will involve preparing the Preliminary Wastewater Rate Study report proposing new wastewater rates. The report will fully document all work performed in a transparent and understandable manner. It will include (1) the 10-year financial plan, (2) cost of service analyses, (3) wastewater rate recommendations, and (4) other issues addressed during the study. The report will describe any need for increased annual wastewater rate revenues, the basis for the wastewater rates, and the reasons for recommending any rate structure changes. An electronic copy (PDF format) and up to fifteen bound copies of the Preliminary Report will be provided to staff. Task 6 - Present Study Recommendations in Council Workshop A workshop (or study session) will be held with the City Council to present and describe the analyses and recommendations of the wastewater rate study. The 60- to 90-minute workshop will allow for a more detailed presentation, a less formal discussion, and greater dialogue than available during a regular City Council meeting. It will be the opportunity to present and discuss details of interest to Council members, and provide deeper explanations of the wastewater utility's current situation, financial needs, and the wastewater rate recommendations. KAREN SCALABRINI NovEMSEtz 13,2014 PAGE4 A PowerPoint presentation will be prepared for the study session and submitted to the City prior to the meeting. Task 7- Prepare Final Wastewater Rate Stud y Report Once comments are received on the Preliminary Report a Final Wastewater Rate Study report will be prepared that reflects comments and direction from staff, the City Council, and public. The Final Report will provide the support and basis for proceeding with the Proposition 218 public notice process and public hearing to adopt new wastewater rates. An electronic copy (PDF farmat) and up to fifteen bound copies of the Final Report will be provided to staff. Task 8 - Present Study Recomrnendations in ReQular Council Meeting The Final Report and study recommendations will be presented in one regular City Council meeting. This presentation will be more abbreviated than the workshop, and geared toward summarizing recommendations for the benefit of the general public. The presentation will focus primarily on wastewater rate recommendations, the benefits to the City and customers, and the potential bill impacts recommendations will have on various "typical" customers. The presentation will also include comparing a typical single family wastewater bill with those in neighboring communities. A PowerPoint presentation will be prepared for the Council meeting and submitted to the City prior to the meeting. Task 9 -Assist in Draftin�Proposition 218 Notice I will assist City staff and legal counsel in drafting the required Notice of Public Hearing in compliance with Proposition 218 for the adoption of new wastewater rates. This notice must be mailed to all affected customers/property owners at least 45 days prior to the rate hearing. As required by Proposition 218, the notice will include the complete rate schedules, as well as the basis and reasons for the rate changes. Task 10 - Explain Rate Recornmendations at a Community Meeting During the 45-day public notice period prior to the rate hearing, a community meeting will be held to describe and explain the proposed wastewater rate recommendations and the impacts of the rates on customers. The meeting will focus on aiding public understanding of proposed wastewater rates, and be an opportunity to answer questions and address concerns. A PowerPoint presentation will be prepared for the community meeting and submitted to the City prior to the meeting. Task 11 - Present Study Recommendatioris at Rc�te HearinQ I will present wastewater rate recommendations during a City Council meeting and public hearing to adopt new rates. At the direction of the Mayor, I will also be available to answer questions regarding the completed study and wastewater rate recommendations. KARBN SCALABRINI NOVEMBER 13,2014 PacE5 A PowerPoint presentation will be prepared for the rate hearing and submitted to the City prior to the meeting. Project Schedule A proposed project schedule is outlines below. The schedule assumes award of contract in late November. Details of a project schedule will be discussed with staff during the project's kick- off ineeting. • City Council awards contract Late November • Hold kick-off ineeting Early December • Perform financial and rate analyses December-January • Update City Council on interim status and obtain input February • Submit Preliminary Report Late February • Conduct workshop with City Council Marchl • Submit Final Report Late March • Present rate recommendations in regular Council meeting April • City mails Proposition 218 notice to customers/property owners By April 30 • Hold community meeting on wastewater rate proposal May2 • City Council conducts wastewater rate public hearing Mid-June The proposed schedule for the wastewater rate study would enable to City to implement new wastewater rates with the beginning of the new fiscal year. The Reed Group, Inc. will rely on City staff to schedule and coordinate meetings with the City Council and the community, as well as to print and mail the Notice of Public Hearing. Estimated Study Cost The Reed Group, Inc. is prepared to perform the wastewater rate study for a total not-to-exceed cost of$37,800, including expenses. The table on the next page summarizes the estimated hours and professional fees by task, and includes an estimate of expenses. The table also lists the assumptions on which the estimate is based. My hourly billing rate for 2014 is $250; this rate will be maintained for the duration of the project. Travel time will be billed at one-half the standard hourly rate. There will be no charges for mileage, meals, or overnight lodging. Since overnight stays will likely be required for some trips to Ukiah, this represents a significant cost savings for the City. Other expenses for this project will be limited to the actual costs of copying, binding,and mailing work products. It is our practice to submit invoices monthly for the actual time and expenses incurred, subject to the not-to-exceed limit of the project. If the hours required to complete the project are less than estimated, then the overall cost of the project may be less than budgeted. Payment of invoices is due within 30 days of submittal. 1 This workshop might occur prior to the start of the regular Council meeting,or on another day. z This community meeting could be held at on any convenient day and time within the 45-day period prior to the public hearing. KAREN SCALABRINI NOVEMBER 13,2014 PAGE6 City of Ukiah Proposal for Wastewater Rate Study Detailed Cost Estimate B. Reed Prof. Fees& hou�s Ex enses Houriy Biling Rate --> $ 250 1. Initiate Project& Review/Analyze 6ackground Information 12 $ 3,000 2. Develop Multi-Year Financial Plan and Oeterrnine Re�enue Rqrnts. 16 $ a,0U0 3. Update City Council on Interim Status and Obtain Input 8 $ 2,OU0 4. Perform Cost of Service Analysis and Design Wastewater Rates 12 $ 3,000 5. Prepare Preliminary Wastewater Rate Study Report 40 $ 10,000 6. Present Study Recommendatians in Council Workshop 8 $ 2,000 7. Prepare Final Wastewater Rate Study Repo�t 8 $ 2,000 8. PresenC Recommendations in Regular Council Meeting 6 $ 1,5�0 9. Assist in Drafting Proposition 218 Notice 4 $ 1,000 10. Explain Rate Recammendations at a Community Meeting 8 $ 2,000 11. Present Study Recommendations at Rate Hearing 6 $ 1,500 Sub-Total 128 $ 32,000 Travel Time (billed at 1/Z hourly rate), no other travef expenses $ 5,250 Report Productio� and Mailing Expenses $ 550 I�roject Total � 3�,800 Assumptions: > Up to two on-site meetings with staff. Bi-weekly telephone status updates. > Four presentations to City Council (1 status update, i workshop, 1 regular meeting, and 1 public hearing). > One community meeting to explain rates and address questions. � Materials provided For all meetings and presentations. > Tra�el time billed at 1/2 hourly billing rate. No charges for mileage, meals, or lodging. > Fifteen bound copies of P�eliminary Repo�t and Final Report, plus PDF files of each. > Expenses related to document prepa�ation and mailing. * � :� * * This proposal letter has been prepared based my understanding of the City's needs at the present time. I am prepared to proceed with the project as described herein, and welcome the opportunity to discuss the proposal and the assistance needed by the City, particularly in regard to current litigation, at any time. If you have any questions regarding the proposal, please call me at (916) 444-9622. Thank you for this opportunity to be of continued service to the City of Ukiah. Sincerely, �� Robert Reed The Reed Group,Inc.