HomeMy WebLinkAbout08/18/2009 18 Wastewater Rate and Charge Study Agreement with Financial Consulting Solutions Group, Inc. _ .
• BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT '
Item No. *I S
For Meeting of August 18, 2009
ITEM TITLE: A Resolution authorizing the City Manager to execute a Professional Services
Contract Agreement between the City of Yakima and Financial Consulting
Solutions Group, Inc., in an amount not to exceed $100,000, to develop a
Wastewater Rate and Charge Study.
SUBMITTED BY: Dave Zabell; Assistant City Manager
Scott Schafer, Wastewater Division Manager
CONTACT PERSON/TELEPHONE: Scott Schafer./ 249 -6815
SUM MARY EXPLANATION:
Staff respectfully requests City Council consideration of a resolution authorizing and directing
the City Manager to execute a Professional Services Contract Agreement between the City of
Yakima (City) and Financial Consulting Solutions Group, Inc. for the development of a
Wastewater Rate and Charge Study. -
The purpose of this Professional Services Contract Agreement is to define the scope of services
contracted between the City and Financial Consulting Solutions Group, Inc. to obtain a fair and
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accurate assessment of the Wastewater Division's current rate structure and charges and how it
relates to projected future needs and requirements. The scope of work to include:
1. Review of the historical financial performance of the wastewater utility, evaluate existing ■
financial policies /practices, and recommend altemative practices that may further City
goals in funding utility obligations.
2. Review of the City's existing wastewater connection charge methodology and
recommend changes to simplify the process for establishing the charge.
3. Establish a strategy to fund identified wastewater capital needs for the Wastewater
Division over a five to ten year study period.
4. Forecast operating revenues and expenditures over the same study period
5. Analyze the financial performance of the wastewater utility over the same study period
and recommend a rate revenue adjustment strategy.
6. Assigning "cost shares" and establishing "equity" for utility customers based on their
demands and usage of the wastewater system.
7. Review rates, charges and fees imposed to recover the cost of administrating the
Pretreatment Program
Continued on next page
Resolution XX Ordinance Contract XX Other (Specify) .
Funding Source: Wastewater Facility Pro Fund - 478
,ip
APPROVED FOR SUBMITTAL:
W Manager
/
0 STAFF RECOMMENDATION: Adopt the resolution
BOARD / COMMISSION /COMMITTEE RECOMMENDATION:
COUNCIL ACTION:
The attached resolution authorizes the City Manager to execute the Professional Services
Contract Agreement,with Financial Consulting Solutions Group, Inc. to develop a Waste , water
Rate and Charge Study. The attached contract agreement identifies the scope of work to be
performed, not to exceed $100,000. Funding for such services is to be directed from the
Wastewater Facility Project Fund 478 and was included within the 2009 authorized budget.
(See attached Agreement)
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III RESOLUTION NO. R — 2009-
A RESOLUTION authorizing the City Manager to execute a Professional Services Contract
Agreement between the City of Yakima and Financial Consulting
Solutions Group, Inc., in an amount not to exceed $100,000, to develop a
Wastewater Rate and Charge Study.
WHEREAS, the City of Yakima desires consulting services to provide a Wastewater
Rate and Charge Study to obtain a fair and accurate assessment of the Wastewater Division's
current rate structure and charges and how it relates to projected future needs and
requirements and,
WHEREAS, the consulting services provided will review the historical financial
performance of the wastewater utility, evaluate existing financial policies /practices, and
recommend altemative practices that may further City goals in funding utility obligations; and,
WHEREAS, the City of Yakima desires to review the existing wastewater connection
charge methodology and explore simplifying the process for establishing the charge while
remaining consistent with industry practice and Washington State guidelines RCW 35.92.025;
and,
WHEREAS, a strategy to fund identified wastewater capital needs for the Wastewater
Division over a five to ten year study period will be established, including a forecast of the
operating revenues and expenditures and an analyze of the financial performance of the
0 wastewater utility over the same study period with a recommendation of a rate revenue
adjustment strategy; and,
WHEREAS, assigning "cost shares" and establishing "equity" for utility customers based
on their demands and usage of the wastewater system will be reviewed; and,
WHEREAS, rates, charges and fees imposed to recover the cost of administrating the
Pretreatment Program will be reviewed; and,
WHEREAS, funding for such services was included within the 2009 authorized budget;
and,
WHEREAS, the City Council has determined that it is in the best interest of the City to
enter into a professional services contract agreement with a consultant selected for such
expertise; now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
The City Manager is authorized and directed to execute a Professional Services Contract
Agreement between the City of Yakima and Financial Consulting Solutions Group, Inc., in an
amount not to exceed $100,000, to develop a Wastewater Rate and Charge Study, a copy of
such agreement is attached hereto and by reference made a part hereof, now, therefore,
ADOPTED BY THE CITY COUNCIL this 18 day of August, 2009
David Edler, Mayor
ATTEST:
1111
City Clerk
July 20, 2009 Page 1
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CONTRACT AGREEMENT
BETWEEN
FINANCIAL CONSULTING SOLUTIONS CITY OF YAKIMA
GROUP, INC. AND City Hall
Redmond Town Center 129 N Second St.
7525 — 166th Ave. NE, Suite D-215 Yaldma, Washington 98901
Redmond, Washington 98052
PROJECT: WASTEWATER RATE AND CHARGE STUDY
THIS AGREEMENT combines all understandings between the Parties regarding
professional services for the Project named above and supersedes all prior proposals, quotations,
solicitations, negotiations, representations, agreements or understandings, whether written or oral.
The performance of the professional services herein described and authorized by the City
of Yakima, as well as payment for such services, shall be in accordance with the terms and
conditions presented in this Agreement and the following Sections and Exhibits which are attached
and incorporated by reference which, taken together, shall constitute the whole Agreement.
Section I - Relationship of the Parties
Section II - Contract Provisions
Exhibit A Scope of Work and Task Plan
Exhibit B - Fee Schedule
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals this
day of , 20
APPROVED: APPROVED:
FINANCIAL CONSULTING CITY OF YAKIMA
SOLUTIONS GROUP, INC.
Karyn Johnson
Principal
Date: Date:
ATTEST:
11110
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July 20, 2009 Page 2
SECTION I: RELATIONSHIP OF THE PARTIES
The City of Yakima ( "Client "), desires consulting services to provide a Wastewater Rate and
Charge study ( "Project "). In furtherance of the Project, the Client hereby contracts with Financial
Consulting Solutions Group, Inc. ( "FCS GROUP ") to perform the professional services
described in Exhibit A of this Agreement. All services shall be performed under the supervision of
the Client's Representative, Scott Schafer, or a designee or designees identified in writing to FCS
GROUP by the Client's Representative.
This Agreement shall inure to the benefit of and be binding upon successors, assigns, and legal
representatives of each of the Parties hereto. Any assignment or transfer of an interest in this
Agreement by either Party without the written consent of the other shall be void.
SECTION 11: CONTRACT PROVISIONS
1. Scope of Work: FCS GROUP shall perform the services for the Client as detailed in Exhibit
"A", Scope of Work, which is attached hereto and hereby incorporated by this reference.
2. Time for Completion: The Scope of Work for the conduct of the study as set forth above is
anticipated to be completed by FCS GROUP within a time frame approximating that shown by the
following schedule:
Notice to Proceed: The date this contract is approved by the City of Yakima
(expected no later than August 31, 2009).
Completion of Analysis: 120 days after Notice to Proceed (NTP), assuming
receipt of all requested data within 30 days of NTP.
Completion of Project: i8o days after Notice to Proceed, assuming receipt of
data within 30 days of NTP.
FCS GROUP agrees to perform the work described in the Scope of Work according to the contract
schedule. Any delays shall be agreed upon by FCS GROUP and Client prior to the due date.
Changes in the schedule caused by Client delays may require additional compensation and a
change order.
If FCS GROUP is delayed in the performance of services by conditions which are beyond their
control, or by a change in the scope of work, the schedule showing time of performance may be
revised. Any revision thereto shall be submitted in writing to the Client for review and approval by
the Client Representative. If FCS GROUP's services are temporarily suspended by the Client in the
interest of the Project and with written notice to FCS GROUP, and the suspensions last longer than
90 consecutive days, FCS GROUP shall be compensated for any additional labor and direct
expenses incurred due to the interruption and resumption of services.
3. Payment: FCS GROUP will be paid by the Client on a time and materials basis as outlined
below and' in accordance with the standard billing rates attached hereto as Exhibit B. FCS GROUP
agrees to perform the services as set forth in Exhibit A at a cost not to exceed $84,992. It is
understood that FCS GROUP will not exceed this amount without the Client's prior written
authorization.
Payment to FCS GROUP for services set forth in Exhibit A shall be: an amount equal to FCS
GROUP's standard billing rates as set forth in Exhibit B multiplied by the actual hours worked.
Should any unforeseen project delays, not caused by FCS GROUP, and /or any requested
amendments to the original scope of work, cause this contract to extend more than 90 days past the
original contracted schedule date, any work and /or amendments to the work shall be billed at the
standard billing rates in effect for the period of time the work is being performed. If said change in
billing rates will cause the project to exceed the amount stated in the preceding paragraph, a
change order will be prepared and signed by both parties.
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Direct expenses will be charged as identified in Exhibit B. Payment shall be made monthly upon
receipt and approval of FCS GROUP's invoice.
4. Supplemental Agreements: Supplemental Agreements may be entered into upon mutual
written agreement that would increase or decrease the scope and associated costs and payment.
5. Work to be Accomplished: All work accomplished will be performed under the direction of
the Client Representative or his /her Designee.
6. Termination: This contract may be terminated by the Client by giving FCS GROUP written
notice of such termination no fewer than fifteen (1.5) days in advance of the effective date of said
termination. FCS GROUP shall be entitled to terminate this agreement only in the case of a
material breach by the Client, and upon failure of the Client to remedy said breach within fifteen
05) days of said notice. In the event that the contract is terminated before completion, FCS
GROUP shall be paid for the services provided to date of termination on the basis set forth in
Paragraph 3, plus io% of the total compensation earned to time of termination to compensate for
FCS GROUP's rescheduling adjustments, reassignment of personnel, and related costs incurred
due to termination, unless termination is based upon FCS's material breach, in which case FCS
shall only be entitled to compensation for work completed prior to termination and accepted by
Client. The Client shall notify FCS of termination or abandonment in writing.
7. Indemnity: FCS GROUP shall comply with all Federal Government, State and local laws and
ordinances applicable to the work to be done under this Agreement.
• FCS GROUP hereby agrees to hold the Client, its elected officials, agents, officers and employees
harmless from and shall process and defend at its own expense, specific claims, demands or suits at
law or equity, arising from FCS GROUP's negligent performance of the provisions of this
Agreement; provided that if the Client and FCS GROUP are concurrently negligent, FCS GROUP
shall be required to indemnify and defend only in proportion to negligence of FCS GROUP. These
indemnity provisions shall not require FCS GROUP to defend or indemnify the Client against any
action based solely on the alleged negligence of the Client.
8. An Work Produced is Joint Property of FCS GROUP and the Client: The materials,
computer programs, reports, calculations, analyses, etc., generated by FCS GROUP under this
contract including the final report shall be the joint property of the Client and FCS GROUP. FCS
GROUP may retain copies thereof for work paper documentation and their own use unless
specifically restricted in writing by the Client as to use.
Computer models use generally available software, such as Microsoft Excel (TM), and FCS GROUP
does not intend or imply any warranty of those programs.
9. Financial Forecasts: Neither FCS GROUP's name nor the report and its financial projections
may be referred to or included in any prospectus or as a part of any offering or representation made
in connection with the sale of securities or participation interests to the public, whether through a
public or private offering.
The information used in developing the forecast assumptions will be derived from published
information and other sources FCS GROUP considers appropriate. However, FCS GROUP cannot
assume responsibility for the accuracy of such material. Moreover, forecasts are subject to many
uncertainties as to the future; therefore, FCS GROUP cannot represent that the projected financial
statements will be representative of the results that actually occur. FCS GROUP will endeavor to
0 include appropriate comments drawing the readers' attention to these matters.
io. Integrated Agreement: This agreement together with attachments or addenda, represents
the entire and integrated agreement between the Client and FCS GROUP and supersedes all prior
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July 20, 2009 Page 4
negotiations, representations, or agreements written or oral. This agreement may be amended by
written instrument signed by both the Client and FCS GROUP.
11. Independent Contractor: The parties intend that an independent Contractor /Client
relationship will be created by this agreement. No agent, employee, or representative of FCS
GROUP shall be deemed to be an agent, employee, or representative of the Client for any purpose.
FCS GROUP shall be solely responsible for all acts of its agents, employees, representatives, and
subcontractors during the performance of this contract.
12. Equal Opportunity: FCS GROUP is committed to the principles of providing equal
employment opportunities for all employees. The performance and diversity of our employees will
help us meet the challenges of the present and the future in serving our clients. This policy
statement is a reaffirmation of our long - standing commitment to provide equal opportunity on the
basis of individual merit and personal qualifications to employees and applicants for employment
without regard to race, color, religious creed, sex, sexual orientation or preference, gender identity,
genetic characteristics or information of employee or family, age, national origin, ancestry, marital
status, citizenship, the presence of sensory, mental, or physical disability, pregnancy /childbirth or
related condition, medical condition, membership in the military service, veteran's status, political
ideology or any other basis protected by applicable federal, state, or local laws.
13. Notices: Notices to the Client shall be sent to the following address:
City of Yakima
Attention: Scott Schafer
City of Yakima Wastewater Treatment Plant
2220 E. Viola
Yakima, Washington 98901
Notices to FCS GROUP shall be sent to the following address:
Financial Consulting Solutions Group, Inc.
Attention: Karyn Johnson, Principal
Redmond Town Center
75 —166th Ave. NE, Suite D -215
Redmond, Washington 98052
14. Insurance Provided by Consultant:
a. Commercial Liability Insurance. On or before the date this Agreement is fully
executed by the parties, FCS GROUP shall provide the City with a certificate of insurance as proof
of commercial liability insurance with a minimum liability limit of One Million Dollars
($1,o00,000.0o) combined single limit bodily injury and property damage. The certificate shall
clearly state who the provider is, the amount of coverage, the policy number, and when the policy
and provisions provided are in effect. Said policy shall be in effect for the duration of this
Agreement. The policy shall name the City, its elected officials, officers, agents, and employees as
an additional insured, and shall contain a clause that the insurer will not cancel or change the
insurance without first giving the City thirty (3o) calendar days prior written notice. The insurance
shall be with an insurance company or a company rated A -VII or higher in Best's Guide and
admitted in the State of Washington.
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b. Commercial Automobile Liability Insurance. On or before the date this Agreement is
fully executed by the parties, FCS GROUP shall provide the City with a certificate of insurance as
proof of commercial automobile liability insurance with a minimum liability limit of One Million
Dollars ($i,000,000.00) combined single limit bodily injury and property damage. The certificate
shall clearly state who the provider is, the amount of coverage, the policy number, and when the
policy and provisions provided are in effect). Said policy shall be in effect for the duration of this
Agreement. The policy shall name the City, its elected officials, officers, agents, and employees as
an additional insured, and shall contain a clause that the insurer will not cancel or change the
insurance without first giving the City thirty (30) calendar days prior written notice. The insurance
shall be with an insurance company or a company rated A -VII or higher in Best's Guide and
admitted in the State of Washington.
c. Professional Liability Insurance. On or before the date this Agreement is fully
executed by the parties, FCS GROUP shall provide the City with a certificate of insurance as
evidence of Professional, Errors and Omissions Liability Insurance with coverage of at least One
Million Dollars ($i,000,000.00) per occurrence and an annual aggregate limit of at least One
Million Dollars ($1,000,000.00). The certificate shall clearly state who the provider is, the amount
of coverage, the policy number, and when the policy and provisions provided are in effect. The
insurance shall be with an insurance company rated A -VII or higher in Best's Guide. If the policy is
on claims made basis, the retroactive date of the insurance policy shall be on or before January 1,
2007, or shall provide full prior acts. The insurance coverage shall remain in effect during the term
of this Agreement and for a minimum of three (3) years following the termination of this
Agreement.
• - d. Insurance provided by Subcontractors. FCS GROUP shall ensure that all
subcontractors it utilizes for work /services required under this Agreement shall comply with all of
the above insurance requirements.
15. Non - Waiver: The waiver by either the City or FCS GROUP of the breach of any provision of
this Agreement by the other party shall not operate and /or be construed as a waiver of any
subsequent breach by either party or prevent either party thereafter enforcing such provision.
16. Drafting of Agreement:. Both FCS GROUP and the City have participated in the drafting of
this Agreement. As such, it is agreed by the parties that the general contract rule of law that
ambiguities in the contract language shall be construed against the drafter of a contract shall have
no application to any legal proceeding, arbitration and /or action in which this Agreement and its
terms and conditions are being interpreted and /or enforced.
17. Governing Law: This Agreement shall be governed by and construed in accordance with the
laws of the State of Washington.
18. Venue: The venue for any action to enforce or interpret this Agreement shall lie in the
Superior Court of Washington for Yakima County, Washington.
19. Severability:
a. If a court of competent jurisdiction holds any part, term or provision of this
Agreement to be illegal, or invalid in whole or in part, the validity of the remaining provisions shall
not be affected, and the parties' rights and obligations shall be construed and enforced as if the
Agreement did not contain the particular provision held to be invalid.
b. If any provision of this Agreement is in direct conflict with any statutory provision of
the State of Washington, that provision which may conflict shall be deemed inoperative and null
• and void insofar as it may conflict, and shall be deemed modified to conform to such statutory
provision.
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July 20, 2009 Page 6
c. Should the City determine that the severed portions substantially alter this
Agreement so that the original intent and purpose of the Agreement no longer exists, the City may,
in its sole discretion, terminate this Agreement.
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EXHIBIT A: SCOPE OF WORK
The following Scope of Work (SOW) identifies the activities that FCS GROUP will perform for the
Project.
Task 1: Data Collection / Kick -off Meeting
Establish a foundation for the study by conducting a structured data collection process and review of
study issues, objectives, and scheduling requirements. The following subtasks will be performed:
• Prepare a written request for data / information to be collected from the City for the study.
This list will be submitted to the City in advance of the kick -off meeting.
• Prepare for and attend an on -site kick -off meeting with key City and FCS GROUP
participants to review scope, approach and schedule. Key issues and objectives will be
discussed, including potential changes to the current rate and connection charge structures.
• Review, analyze, and validate data as necessary for use in conducting the technical analyses.
Follow up with City staff (via telephone / email) for any additional items or explanations as
necessary.
Task 2: Financial Condition Review / Fiscal Policy Evaluation
Review the historical financial performance of the wastewater utility, evaluate existing financial
• polices /practices, and recommend alternative practices that might further City goals in funding
utility obligations. The following subtasks will be performed:
• Review five (5) years of historical financial statements to assess the overall financial
condition of the wastewater utility. Compare performance against published industry
standards for up to 10 financial performance indicators (e.g., debt to equity ratio, liquidity
ratios, O&M coverage ratio, etc.). This analysis will establish the context for the evaluation of
fiscal policies to be incorporated into the rate study.
• Review the City's existing policies and practices regarding cash reserves, debt management,
and system reinvestment funding through rates. Recommend enhancements, as warranted,
to provide for sound financial management. Evaluate the need for policies, the basis for
minimum thresholds, and the financial and rate impacts for establishing any new or revised
policies.
• Incorporate recommended policies into the revenue requirement analysis (Task 6).
Task 3: Connection Charge Review and Update
Review the existing connection charge methodology and recommend changes to simplify the charge
(per City request), while remaining consistent with industry practice and Washington state
guidelines (RCW 35.92.025). Update the current methodology and schedule of wastewater
connection charges applicable to new customers. The budget provides for up to two (2) alternative
methodologies. The following subtasks will be performed:
• Determine the existing cost basis to be incorporated into the charge. This includes evaluation
of existing plant-in-service, contributed assets, interest accumulation, and other
adjustments. Categorize costs by wastewater function (customer, flow, and treatment).
40 • Determine the future cost basis to be incorporated into the charge. This includes evaluation
of the long -term capital improvement program and assigning those needs as replacements,
upgrades and expansion projects. Categorize costs by wastewater function.
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July 20, 2oog Page 8
• r system capacity by function equivalent residential units) (expressed in a
Determine wastewate syste p ty y ( p q
that the existing and future planned system infrastructure can serve.
• Calculate the maximum allowable connection charge per customer equivalent and develop a
schedule of updated charges.
• Survey wastewater connection charges (per residential equivalent) for up to 10 neighboring
jurisdictions and compare against the City's current and proposed wastewater connection
charges.
Task 4: Capital Funding Analysis
Establish a strategy to fund the identified wastewater capital needs over a five to io -year study
period. The budget provides for up to two (2) alternative capital funding strategies. The following
subtasks will be performed:
• Review the City - provided detailed capital project list. Incorporate capital inflation factors
and forecast annual capital project costs over the study period
• Identify potential sources for funding the projects including available cash reserves,
connection charges, direct rate funding, contributions, and the use of debt. Develop
alternative strategies for funding the capital programs, determining borrowing needs and
associated coverage requirements, cash flows, and fund balances over the study period. To
be conservative in our forecast, revenue bonds will be the assumed debt - financing
mechanism. Grants and /or low - interest loans will only be assumed if approval has been
received.
• Calculate new debt service costs and coverage requirements over the study period.
Task 5: Operating Forecast
Forecast operating revenues and expenditures over the study period. The following subtasks will be
performed:
• Review actual 2008, projected 2009, and current budgeted revenues and expense detail.
• Incorporate economic / financial assumptions and forecast annual operating revenues
(under existing rates) and expenditures over the study period. Incorporate any known or
expected future year costs not accounted for in the current budget (e.g., additional, future
staffing needs, changes in operations due to regulatory requirements, anticipated changes in
operational practices, etc.). Incorporate existing debt service schedules and integrate new
debt service costs for funding future capital costs.
Task 6: Revenue Requirement Analysis
Analyze the financial performance of the wastewater utility over the study period and recommend a
rate revenue adjustment strategy. The result will be the annual and cumulative percentage revenue
adjustments needed to meet the financial obligations of the utility. Cost recovery by customer class
will be determined in Tasks 7 and 8. The budget provides for up to three (3) revenue requirement
scenarios. The following subtasks will be performed:
• Integrate fiscal policies, capital financing impacts and the_operating forecast, and forecast
revenue requirements for the study period. Compare annual total cash and coverage
requirements against available annual rate and miscellaneous operating revenues, and
identify any projected shortfalls over the forecast period.
• Develop rate revenue strategies that meet financial obligations over the planning horizon and
provide smooth impact to utility customers, to the extent practical.
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Task 7: Cost of Service Analysis
The cost of service analysis provides a defensible basis for assigning "cost shares" and establishing
"equity" for utility customers based on their unique demands placed on the wastewater system. The
following subtasks will be performed:
• A Customer Statistics Analysis to evaluate individual customer data including: number of
accounts, dwelling units, meter size, and water use / wastewater contribution. Summarize
customer statistics to determine if the current customer classes remains appropriate, and for
subsequent use in developing alternative rates structures. Current customer classes include
single family residential, multi- family residential, and commercial /industrial. A strong waste
surcharge is imposed on customers with discharging wastewater exceeding domestic
strength thresholds (30o ppm BOD /TSS). In addition, the City imposes septage and
exceptional wastewater disposal charges.
• A "Price Out' of Rate Revenue by Customer Class under Existing Rates to validate the
underlying customer data set for use in assessing cost of service shifts and designing new rate
structures. This is a critical process in a cost of service rate study to provide the baseline for
analyzing the current distribution of costs by customer class in comparison to any indicated
shifts in the distributing of costs resulting from the cost of service analysis. Apply prevailing
rates to the customer statistics and calculate revenues by customer class. These calculated
revenues will be tested against actual reported revenues by customer class to determine if the
underlying data set is valid. Depending on the initial outcome, this could include follow up
with City staff to determine potential reasons for any significant discrepancies before moving
• forward with a new rate design.
• A Functional Allocation of System Assets and Expenses to provide the baseline for assigning
costs to customer classes. Review historical asset records and classify plant investment by
major categories. Major categories include collection, transmission, treatment, and general
plant. Functional service components include customer, flow, and treatment strength (BOD,
TSS).
• A Distribution of Costs to Customer Classes using the results of the customer billing analysis
and the functional ,cost allocation process. Allocate system costs to customer classes in
proportion to use /demand. Derive class of service unit costs for use in designing rate
structure components (further discussed in Task 8 below).
Task 8: Alternative Rate Structure Evaluation
The rate design incorporates specific pricing strategies that link to cost and policy parameters and
provide for revenue stability as well as understandability of the rate structure. The budget provides
for the calculation of up to two (2) alternative rate structures. The following subtasks will be
performed:
• Review and analyze the current wastewater rate structure. Recommend modifications
reflective of cost -of- service findings and policy objectives for simplicity and customer equity.
• Evaluate and demonstrate the ability of the resulting rates to generate the projected and
required revenues by testing rates against composite system customer demands. Identify
revenues to be generated from the fixed and volume -based components of the rate structure
to ensure adequate revenue stability.
• Prepare sample wastewater bills for each class of service comparing existing rates and
• proposed rate impacts. Conduct a survey of up to 10 neighboring jurisdiction's current
wastewater bills for the single family residential class.
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Task 9:
Pretreatment Program Rates, Charges and Fees
Review rates, charges and fees imposed to recover the cost of administering the pretreatment
program to include: significant industrial user (SIU) permit fees, minor industrial user (MIU) base
fees, and any costs incurred for outsourcing sampling and laboratory testing. The following subtasks
will be performed:
• Work with City staff to compile the list of identified charges and determine the key driver of
costs to be recovered by each fee, such as staff labor time, materials, or policy, in order to select
the appropriate analytical method for updating the charge.
• For primarily labor -based fees, determine a fully - loaded cost per productive labor hour at the
City. Circulate a questionnaire to appropriate City staff members to estimate the average amount
of time or range of time spent on each fee - related service. Compute the average full cost of
providing each service.
• For primarily materials -based fees, work with City staff to obtain estimates on costs incurred to
provide the service. Apply any associated labor time involved in the service, and compute the
average full cost of each service.
• For policy -based fees that seek to modify behavior, work with City staff to define intent and level
of the fee. Calculate fees accordingly.
Task 10: Meetings & Presentations
Prepare materials and attend the following meetings to review interim findings, obtain policy
direction, and present draft and final study results. The following meetings are anticipated:
• Up to three (3) meetings with City staff and management to review interim findings, receive
policy direction, and strategize for the City Council presentation.
• One (1) meeting with the City Council to present study results and recommendations.
Task 11: Documentation
Prepare /submit a study report summarizing major assumptions, findings and study
recommendations. A draft will be provided in electronic format for City staff review and comment.
A final report will be delivered in hard copy and electronic format. The supporting spreadsheet
analyses will be included as technical appendices.
Task 12: Project Administration / Management
Perform miscellaneous project set up activities, work paper documentation, internal scheduling /
workload planning, invoicing, ongoing client correspondence, and other miscellaneous
administrative / project management activities throughout the study.
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EXHIBIT B: FINANCIAL CONSULTING SOLUTIONS GROUP, INC. FEE SCHEDULE
The Exhibit below outlines the current hourly rates, estimated labor hours, cost per task and total
fee for the project.
Consultant Hours
Mfg Plaied Toter
Pdmipl Msaager Analyst Admin. ffiFmted Labor Expense Tot
Task Ulna Mags bap support Hours Budget Budget Budget
Hourly Billing Rates 1200 1165 1105 665
Task 1- Data Collection / Kick-off Meeting [1 mtg] 10 20 16 1 47 $7,045 5166 $7,211
Task 2 - Financial Condition / Fiscal Policy Review 2 10 10 22 $3,100 $3,100
Task 3 - Connection Charge Review / Update 8 32 16 56 $8,560 $8,560
Task 4 - Capital Funding Analysis 2 8 12 22 52,980 $2,980
Task 5 - Operating Forecast 1 4 16 21 82,540 $2,540
Task 6 - Revenue Requirement Analysis 4 20 16 40 $5,780 $5,780
Task 7 - Cost of Service Analysis 8 24 48 80 $10,600 810,600
Task 8 - Alternative Rate Structure Evaluation 8 24 32 64 $8,920 $8,920
Task 9 - Pretreatment Program Rates, Charges & Fees 4 40 12 56 $8,660 58,660
Task 10 - Meetings and Presastations [4 mtgs] 36 40 16 4 96 $15,740 $665 $16,405
Task 11 - Documentation 8 24 16 4 52 $7,500 $7,500
Task 12 - Project Administration / Management 4 8 4 3 19 52,735 $2,735
Is Total I 95 254 214 121 5751 $84,160 $8321 $84,992
DIRECT EXPENSES
Major direct expenses such as mileage, air travel, car rental, and lodging will be charged at cost
plus 5 %. Other expenses will not be directly charged. For any client - requested extraordinary
expenses, specific terms will be established prior to expenditure and billing.
4 111 1
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