AGR-7279 - RAFTELIS FINANCIAL CONSULTANTS INC - WATER AND SANITATION RATE STUDY SERVICES AGREEMENT7a7
PROFESSIONAL SERVICES AGREEMENT
Water nd Sanitation Rate Study Services]
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THIS PROFESSIONAL SERVICE AGREEMENT (the "Agreement") is made at
Orange, California, on this '-1 day of J 2021 (the "Effective Date") by and
between the CITY OF ORANGE,a municipal corporation("City"), and RAFTELIS FINANCIAL
CONSULTANTS, INC., a North Carolina corporation("Contractor"), who agree as follows:
1. Services. Subject to the terms and conditions set forth in this Agreement,
Contractor shall provide to the reasonable satisfaction of City the services set forth in Exhibit"A,"
which is attached hereto and incorporated herein by reference. As a material inducement to City
to enter into this Agreement, Contractor represents and warrants that it has thoroughly investigated
and considered the scope of services and fully understands the difficulties and restrictions in
performing the work. The services which are the subject of this Agreement are not in the usual
course of City's business and City relies on Contractor's representation that it is independently
engaged in the business of providing such services and is experienced in performing the work.
Contractor shall perform all services in a manner reasonably satisfactory to City and in a manner
in conformance with the standards of quality normally observed by an entity providing such
services to a municipal agency. All services provided shall conform to all federal, state and local
laws, rules and regulations and to the best professional standards and practices. The terms and
conditions set forth in this Agreement shall control over any terms and conditions in Exhibit "A"
to the contrary.
2. Compensation and Fees.
a. Contractor's total compensation for all services performed under this
Agreement, shall not exceed EIGHTY-FIVE THOUSAND SIXTEEN DOLLARS and 00/100
85,016.00) without the prior written authorization of City.
b. The above compensation shall include all costs, including, but not limited
to, all clerical, administrative, overhead, insurance, reproduction, telephone, travel, auto rental,
subsistence and all related expenses.
3. Pavment.
a. As scheduled services are completed, Contractor shall submit to City an
invoice for the services completed, authorized expenses and authorized extra work actually
performed or incurred.
b. All such invoices shall state the basis for the amount invoiced, including
services completed, the numUer of hours spent and any extra work performed.
c. City will pay Contractor the amount invoiced within thirty (30) days after
the approval of the invoice.
d. Payment shall constitute payment in full for all services, authorized costs
and authorized extra worlc covered by that invoice.
4. Chan e Orders. No payment for extra services caused by a change in the scope
or complexity of work, or for any other reason, shall be made unless and until such extra services
and a price therefor have been previously authorized in writing and approved by City as an
amendment to this Agreement. City's Project Manager is authorized to approve a reduction in the
services to be performed and compensation therefor. All amendments shall set forth the changes
of work, extension of time,and/or adjustment of the compensation to be paid by City to Contractor
and shall be signed Uy the City's Project Manager, City Manager or City Council, as applicable.
5. Licenses. Contractor represents that it and any subcontractors it may engage,
possess any and all.licenses which are required under state or federal law to perform the worlc
contemplated Uy this Agreement and that Contractor and its subcontractors shall maintain all
appropriate licenses, including a City of Orange business license, at its cost, during the
performance of this Agreement.
6. Independent Contractor. At all times during the term of this Agreement,
Contractor shall be an independent contractor and not an employee of City. City shall have the
right to control Contractor only insofar as the result of Contractor's services rendered pursuant to
this Agreement. City shall not have the right to control the means by which Contractor
accomplishes services rendered pursuant to this Agreement. Contractor shall, at its sole cost and
expense, furnish all facilities, materials and equipment which may be required for furnishing
services pursuant to this Agreement. Contractor shall be solely responsible for, and shall
indemnify, defend and save City harmless from all matters relating to the payment of its
subcontractors, agents and employees, including compliance with social security withholding and
all other wages, salaries, benefits, taxes, exactions, and regulations of any nature whatsoever.
Contractor acknowledges that it and any subcontractors, agents or employees employed by
Contractor shall not,under any circumstances,be considered employees of City,and that they shall
not be entitled to any of the benefits or rights afforded employees of City,including,but not limited
to, sick leave, vacation leave, holiday pay, Public Employees Retirement System benefits, or
health, life, dental, long-term disability or worlcers' compensation insurance benefits.
7. Contractor Not A ent. Except as City may specify in writing, Contractor shall
have no authority, express or implied, to act on behalf of City in any capacity whatsoever as an
agent. Contractor shall have no authority, express or implied, to bind City to any obligation
whatsoever.
8. Desi nated Persons. Only those qualified persons authorized by City's Project
Manager, or as designated in Exhibit"A," shall perform worlc provided for under this Agreement.
It is understood by the parties that clerical and other nonprofessional worlc may be performed by
persons other than those designated.
9. Assi nment or Subcontractin. No assignment or subcontracting by Contractor
of any part of this Agreement or of funds to be received under this Agreement shall be of any force
or effect unless the assignment has the prior written approval of City. City may terminate this
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Agreement rather than accept any proposed assignment or subcontracting. Such assignment or
subcontracting may be approved by the City Manager or his/her designee.
10. Time of Completion. Except as otherwise specified in Exhibit "A," Contractor
shall commence the work provided for in this Agreement within five(5)days of the Effective Date
of this Agreement and diligently prosecute completion of the work in accordance with the time
period set forth in Exhibit"A"hereto or as otherwise agreed to by and between the representatives
of the parties.
11. Time Is ofthe Essence. Time is of the essence in this Agreement. Contractor shall
do all things necessary and incidental to the prosecution of Contractor's work.
12. Reserved.
13. Delays and Extensions of Time. Contractor's sole remedy for delays outside its
control, other than those delays caused by City, shall be an extension of time. No matter what the
cause of the delay,Contractor must document any delay and request an extension of time in writing
at the time of the delay to the satisfaction of City. Any extensions granted shall be limited to the
length of the delay outside Contractor's control. If Contractor believes that delays caused by City
will cause it to incur additional costs, it must specify, in writing, why the delay has caused
additional costs to be incurred and the exact amount of such cost at the time the delay occurs. No
additional costs can be paid that exceed the not to exceed amount stated in Section 2.a, above,
absent a written amendment to this Agreement.
14. Products of Contractor. The documents, studies, evaluations, assessments,
reports, plans, citations, materials, manuals, technical data, logs, files, designs and other products
produced or provided by Contractor for this Agreement shall become the property of City upon
receipt. Contractor shall deliver all such products to City prior to payment for same. City may
use,reuse or otherwise utilize such products without restriction.
15. Equal EmploVment OpUortunity. During the performance of this Agreement,
Contractor agrees as follows:
a. Contractor shall not discriminate against any employee or applicant for
employment because of race, color, religion, sex, national origin, mental or physical disability, or
any other basis prohibited Uy applicable law. Contractor shall ensure that applicants are employed,
and that employees are treated during employment, without regard to their race, color, religion,
sex,national origin,mental or physical disability, or any other basis prohibited by applicable law.
Such actions shall include,but not be limited to the following: employment,upgrading, demotion
or transfer,recruitment or recruitment advertising,layoff or termination,rates of pay or other forms
of compensation and selection for training, including apprenticeship. Contractor agrees to post in
conspicuous places, available to employees and applicants for employment, a notice setting forth
provisions of this non-discrimination clause.
b. Contractor shall, in all solicitations and advertisements for employees
placed by, or on behalf of Contractor, state that all qualified applicants will receive consideration
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for employment without regard to race, color, religion, sex, national origin, mental or physical
disability, or any other basis prohibited by applicable law.
c. Contractor shall cause the foregoing paragraphs (a) and(b)to be inserted in
all subcontracts for any work covered by this Agreement, provided that the foregoing provisions
shall not apply to subcontracts for standard commercial supplies or raw materials.
16. Conflicts of Interest. Contractor agrees that it shall not make, participate in the
making, or in any way attempt to use its position as a consultant to influence any decision of City
in which Contractor knows or has reason to 'know that Contractor, its officers, partners, or
employees have a financial interest as defined in Section 87103 of the Government Code.
17. Indemni .
a. To the fullest extent permitted by law, Contractor agrees to indemnify,
defend and hold City, its City Council and each member thereof, and the officers, officials, agents
and employees of City(collectively the "Indemnitees") entirely harmless from all liability arising
out of:
1) Any and all claims under worlcers' compensation acts and other
employee benefit acts with respect to Contractor's employees or Contractor's subcontractor's
employees arising out of Contractor's work under this Agreement, including any and all claims
under any law pertaining to Contractor or its employees' status as an independent contractor and
any and all claims under Labor Code section 1720 related to the payment of prevailing wages for
public works projects; and
2) Any claim, loss, injury to or death of persons or damage to property
caused by any act, neglect, default, or omission other than a professional act or omission of
Contractor, or person, firtn or corporation employed by Contractor, either directly or by
independent contract, including all damages due to loss or theft sustained by any person, firm or
corporation including the Indemnitees, or any of them, arising out of, or in any way connected
with the worlc or services which are the subject of this Agreement, including injury or damage
either on or off City's property; but not for any loss, injury, death or damage caused by the active
negligence or willful misconduct of City. Contractor, at its own expense, cost and risk, shall
indemnify any and all claims, actions, suits or other proceedings that may be brought or instituted
against the Indemnitees on any such claim or liability covered by this subparagraph, and shall pay
or satisfy any judgment that may be rendered against the Indemnitees, or any of them, in any
action, suit or other proceedings as a result of coverage under this subparagraph.
b. To the fullest extent permitted by law, and as limited by California Civil
Code 2782.8, Contractor agrees to indemnify and hold Indemnitees harmless from all liability
arising out of any claim, loss, injury to or death of persons or damage to property to the extent
caused by its negligent professional act or omission in the performance of professional services
pursuant to this Agreement.
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c. Except for the Indemnitees, the indemnifications provided in this
Agreement shall not be construed to extend any third party indemnification rights of any kind to
any person or entity which is not a signatory to this Agreement.
d. The indemnities set forth in this section shall survive any closing,
rescission, or termination of this Agreement, and shall continue to be binding and in full force and
effect in perpetuity with respect to Contractor and its successors.
18. Insurance.
a. Contractor shall carry worlcers' compensation insurance as required by law
for the protection of its employees during the progress of the work. Contractor understands that it
is an independent contractor and not entitled to any worlcers' compensation benefits under any
City program.
U. Contractor shall maintain during the life of this Agreement the following
minimum amount of comprehensive general liability insurance or commercial general liability
insurance: the greater of (1) One Million Dollars ($1,000,000) per occurrence; or (2) all the
insurance coverage and/or limits carried by or available to Contractor. Said insurance shall cover
bodily injury, death and property damage and be written on an occurrence basis.
c. Contractor shall maintain during the life of this Agreement, the following
minimum amount of automotive liability insurance: the greater of(1) a combined single limit of
One Million Dollars ($1,000,000); or (2) all the insurance coverage and/or limits carried by or
available to Contractor. Said insurance shall cover bodily injury, death and property damage for
all owned, non-owned and hired vehicles and be written on an occurrence basis.
d. Any insurance proceeds in excess of or broader than the minimum required
coverage and/or minimum required limits which are applicable to a given loss shall be available
to City. No representation is made that the minimum insurance requirements of this Agreement
are sufficient to cover the obligations of Contractor under this Agreement.
e. Each policy of general liability and automotive liability shall provide that
City, its officers, officials, agents, and employees are declared to be additional insureds under the
terms of the policy, but only with respect to the work performed by Contractor under this
Agreement. A policy endorsement to that effect shall be provided to City along with the certificate
of insurance. In lieu of an endorsement, City will accept a copy ofthe policy(ies)which evidences
that City is an additional insured as a contracting party. The minimum coverage required by
Subsection 18.0 and c, above, shall apply to City as an additional insured. Any umbrella liability
insurance that is provided as part of the general or automobile liability minimums set forth herein
shall be maintained for the duration of the Agreement.
f.Contractor shall maintain during the life of this Agreement professional
liability insurance covering errors and omissions arising out of the performance of this Agreement
with a minimum limit of One Million Dollars ($1,000,000) per claim. Contractor agrees to lceep
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such policy in force and effect for at least five (5) years from the date of completion of this
Agreement.
g. The insurance policies maintained by Contractor shall be primary insurance
and no insurance held or owned by City shall be called upon to cover any loss under the policy.
Contractor will determine its own needs in procurement of insurance to cover liabilities other than
as stated above.
h. Before Contractor performs any worlc or prepares or delivers any materials,
Contractor shall furnish certificates of insurance and endorsements, as required by City,
evidencing the aforementioned minimum insurance coverages on forms acceptable to City, which
shall provide that the insurance in force will not be canceled or allowed to lapse without at least
ten(10) days' prior written notice to City.
i.Except for professional liability insurance coverage that may be required by
this Agreement, all insurance maintained by Contractor shall be issued by companies admitted to
conduct the pertinent line of insurance business in California and having a rating of Grade A or
better and Class VII or better by the latest edition of Best Key Rating Guide. In the case of
professional liability insurance coverage, such coverage shall be issued by companies either.
licensed or admitted to conduct business in California so long as such insurer possesses the
aforementioned Best rating.
j Contractor shall immediately notify City if any required insurance lapses or
is otherwise modified and cease performance of this Agreement unless otherwise directed by City.
In such a case, City may procure insurance or self-insure the rislc and charge Contractor for such
costs and any and all damages resulting therefrom, by way of set-off from any sums owed
Contractor.
k. Contractor agrees that in the event of loss due to any of the perils for which
it has agreed to provide insurance, Contractor shall look solely to its insurance for recovery.
Contractor hereby grants to City, on behalf of any insurer providing insurance to either Contractor
or City with respect to the services of Contractor herein,a waiver of any right to subrogation which
any such insurer may acquire against City by virtue of the payment of any loss under such
insurance.
1. ' Contractor shall include all subcontractors, if any, as insureds under its
policies or shall furnish separate certificates and endorsements for each subcontractor to City for
review and approval. All coverages for subcontractors shall be subject to all of the requirements
stated herein.
19. Termination. City may for any reason terminate this Agreement by giving
Contractor not less than five (5) days' written notice of intent to terminate. Upon receipt of such
notice, Contractor shall immediately cease work, unless the notice from City provides otherwise.
Upon the termination of this Agreement, City shall pay Contractor for services satisfactorily
provided and all allowable reimbursements incurred to the date of termination in compliance with
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this Agreement, unless termination by City shall be for cause, in which event City may withhold
any disputed compensation. City shall not be liable for any claim of lost profits.
20. Maintenance and Inspection of Records. In accordance with generally accepted
accounting principles, Contractor and its subcontractors shall maintain reasonably full and
complete books, documents, papers, accounting records, and other information (collectively, the
records")pertaining to the costs of and completion of services performed under this Agreement.
City and its authorized representatives shall have access to and the right to audit and reproduce
any ofContractor's records regarding the services provided under this Agreement. Contractor shall
maintain all such records for a period of at least three (3) years after termination or eompletion of
this Agreement. Contractor agrees to make available all such records for inspection or audit at its
offices during normal business hours and upon three(3) days'notice from City,and copies thereof
shall Ue furnished if requested.
21. Compliance witli all Laws/Immigration Laws.
a. Contractor shall be knowledgeable of and comply with all local, state and
federal laws which may apply to the performance of this Agreement.
b. If the work provided for in this Agreement constitutes a"public works," as
that term is defined in Section 1720 of the California Labor Code,for which prevailing wages must
be paid, to the extent Contractor's employees will perform any work that falls within any of the
classifications for which the Department of Labor Relations of the State of California promulgates
prevailing wage determinations, Contractor hereby agrees that it, and any subcontractor under it,
shall pay not less than the specified prevailing rates of wages to all such workers. The general
prevailing wage determinations for crafts can be located on the website of the Department of
Industrial Relations (www.dir.ca.ov/DLSR). Additionally, to perform work under this Contract,
Contractor must meet all State registration requirements and criteria,including project compliance
monitoring.
c. Contractor represents and warrants that it:
1) Has complied and shall at all times during the term of this
Agreement comply, in all respects, with all immigration laws, regulations, statutes, rules, codes,
and orders, including, without limitation, the Immigration Reform and Control Act of 1986
IRCA); and
2) Has not and will not knowingly employ any individual to perform
services under this Agreement who is ineligible to worlc in the United States or under the terms of
this Agreement; and
3) Has properly maintained, and shall at all times during the term of
this Agreement properly maintain, all related employment documentation records including,
without limitation, the completion and maintenance of the Form I-9 for each of Contractor's
employees; and
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4) Has responded, and shall at all times during the term of this
Agreement respond, in a timely fashion to any government inspection requests relating to
immigration law compliance and/or Form I-9 compliance andlor worksite enforcement by tlie
Department of Homeland Security, the Department of Labor, or the Social Security
Administration.
d. Contractor shall require all subcontractors or subconsultants to malce the
same representations and warranties as set forth in Subsection 21.c.
e. Contractor shall, upon request of City, provide a list of all employees
working under this Agreement and shall provide,to the reasonable satisfaction of City,verification
that all such employees are eligible to worlc in the United States. All costs associated with such
verification shall be borne by Contractor. Once such request has been made, Contractor may not
change employees working under this Agreement without written notice to City, accompanied by
the verification required herein for such employees.
f.Contractor shall require all subcontractors or sub-consultants to make the
same verification as set forth in Subsection 21.e.
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g. If Contractor or subcontractor knowingly employs an employee providing
work under this Agreement who is not authorized to work in the United States, and/or fails to
follow federal laws to determine the status of such employee,that shall constitute a material breach
of this Agreement and may be cause for immediate termination of this Agreement by City.
h. Contractor agrees to indemnify and hold City, its officers, officials, agents
and employees harmless for, of and from any loss, including but not limited to fines,penalties and
corrective measures City may sustain by reason of Contractor's failure to comply with said laws,
rules and regulations in connection with the performance of this Agreement.
22. Governin Law and Venue. This Agreement shall be construed in accordance
with and governed by the laws of the State of California and Contractor agrees to submit to the
jurisdiction of California courts. Venue for any dispute arising under this Agreement shall be in
Orange County, California.
23. Inte ration. This Agreement constitutes the entire agreement of the parties. No
other agreement,oral or written,pertaining to the worlc to be performed under this Agreement shall
be of any force or effect unless it is in writing and signed by both parties. Any worlc performed
which is inconsistent with or in violation of the provisions of this Agreement shall not be
compensated.
24. Notice. Except as otherwise provided herein, all notices required under this
Agreement shall be in writing and delivered personally, by e-mail, or by first class U.S. mail,
postage prepaid, to each party at the address listed below. Either party may change the notice
address by notifying the other party in writing. Notices shall be deemed received upon receipt of
same or within three (3) days of deposit in the U.S. Mail, whichever is earlier. Notices sent by e-
mail shall be deemed received on the date of the e-mail transmission.
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CONTRACTOR" CITY"
Raftelis Financial Consultants, Inc. City of Orange
445 S. Figueroa Street, Suite 1925 300 E. Chapman Avenue
Los Angeles, CA 90071 Orange, CA 92866-1591
Attn.: Steve Gagnon Attn.: Sonny Tran
Telephone: 213-262-9308 Telephone: 714-288-2497
E-Mail: sgagnon@raftelis.com E-Mail: stran@cityoforange.org
25. Counterparts. This Agreement may be executed in one or more counterparts,each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument. Signatures transmitted via facsimile and electronic mail shall have the same effect as
orig'inal signatures.
IN WITNESS of this Agreement, the parties have entered into this Agreement as of the
year and day first above written.
CONTRACTOR" CITY"
RAFTELIS FINANCIAL CONSULTANTS, CITY OF ORANGE, a municipal corporation
INC., a North Carolina corporation
By;By:
Printed Na e: Peiffer Brandt Mark A. Murphy,Mayor
Title: President&CEO
By. ATTEST:
Printed Name: Matthew ckson
Title: Corporate Secretary
Pamela Coleman, City Clerk
NOTE: City requires the following signature(s) on
APPROVED AS TO FORM: behalf of the Contractor:
1)the Chairman of the Board,the President or
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a Vice-President, AND (2) the Secretary, the
Chief Financial Officer, the Treasurer, an
Assistant Secretary or an Assistant Treasurer. If
Mary E. Bi ing only one corporate officer exists or one
Senlor Assi tant C1ty Attorne corporate officer holds more than one corporate
office,please so indicate. OR
The corporate officer named in a corporate
resolution as authorized to enter into this
Agreement. A copy of the corporate resolution,
certified by the Secretary close in time to the
execution of the Agreement, must be provided
to City.
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EXHIBIT "A"
SCOPE OF 5ERVICES
Beneath this sheet.]
GcS:ii::itl3'-r i,3N t)'s=',N:`'f1 FEI F'TE{.IS 2 jrA
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Please note,since our Project Manager is local, we assalmed that he will attend staffand City Council meetings in person. .r
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Task 'f: Pr oje t lni iation, llPlan gem n an+d Quali E Ass ranc+li;alifiy r
ontwol
A kick-off ineeting identifies the goals,concerns, and project schedule.The goals for the kick-off ineeting include:
Acquainting City staff with our project team
Establishing goals and objectives
Finalizing the work plan and schedule
Discussing the pricing objectives,including equity,affordability, ancl revemie stability, among others
Discussing the data request and any additional data requirernents
Prior to the kick-off meeting,we will prepare a detailed data request that identifies the information needed.If possible,
Raftelis will review the initial data before the kicic-off meeting and wi11 come prepared with our questions to get the most r
out of the meeting.
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This taslc also includes hours for project management including client correspondence,progress updates, timely billirig,
and internal management of Raftelis staff.
Lastly,this task also includes time for quality assurance/quality control.To ensure robust quality control, the Project
Manager and Assista.nt Project Manager will review the model and results to ensure they are based on sound rate-malcing
principles.
ia'.r*i_:'L'; 'a+;V."-..
One on-site kick-off ineeting with City staff
a ,Y,;:.J._.:;
Kick-off ineeting agenda materials
Meeting minutes
Data request list
Results of the pricing objectives exercise
T111IIMZI IC A1P T 1.SPENDIN
Revenue requirements are only as good as the operating and capital spending Reeds and assumptions
that go infio them. If there is uncertainty in operating or capital spending needs,then revenue
requirerrtents, cost af service, and the associated rates being requested may be too high or too low. If
your utility is concerned with capita[spending needs and would like a third-party review of your needs
and/or assumptions, Raftelis' subject matter experts in capital project development and delivery are
here to help. Likewise, if your utility is interested in opportunities to take advantage of the new
Integrated Planning Law added to the Clean Water Act in 2019, Raftelis can help. Contact us to discuss
these value-added services, which can be provided under an optional task or a separate scope ofwork.
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it AiFT'ELBS 3
Ta k 2v 11Vate and Was ewater Financaa P an
z We will develop a financial plan for the water arid wastewater enterprise. We wi11 use the prior models as a starting pointandaddordeleteanydesiredorunusedfeatrestomalcetliem"clean" and easy to follow.Therefore,staffwill already Ue
Familiar with the models.The Financial plans will assess each enterprise's current financial status and suggest revenueadjustmentstoensurelong-term fiscal sustainability. RaPtelis wiIl project experises and revenue requirements over a 10-
year plar n.ing horizon.Projecting revenue adjustments over a 10-year planning horizon illustrates fufitre rafe unpacts andpotentialchallengestoeacheneerprise's financial health so.the City can plan expenses,reserve balances, or capital project
I scheduling to smooCh rate impacts.We will project revenue requirements based on the current budgef,the City's long-
term capital f-unding straeegy,and existing debt service(if applicable).
Raftelis understands the importance of developing a user-friendly,flexible model that the City can use for future Financial
planning such as inputting actual expenses and assessing the impact on rates.Raftelis builds each client's model from the
ground up,carefully tailored to individual needs and preferences. Once completed,the model wi11 serve as acomprehensive, yet flexible,planning tool that will incorporate the City's operating budget,foxecasted demand
projections,capital financing plan,revenue xequirements,revenue projections,reserve balances, and customer impacts.
1 The dashboard is the graphical interface that displays the rriodel's results.in an easily understandable format.As shown
on the following page,the dashboard contains several features, including the ability to show or indicate:
Revenue adjustments required for the study period to meet debt co erage and target reserve balance(s)
Projected operating costs and revenue streams(showii in the Water Operating Financial Plan chart)
o Different capital funding sourees(shown in the CIP and Funding Sources for Water Funds chart)
Reserve balances and target levels according to Ciry policies(shown in the Projected Ending Fund Balances)with
flagging features when rojected balances fall below target levels
It is an easy-to-unelerstand Format that shows the impacts of various assumptions so that decisions regarding revenue
adjustments, capital'uiancing through pay-go or debt,and reserve balances can be made quickly and eff'iciently.
Upon the completion ofthe financial plan model,Raftelis will hold two web-based worlcshops with Ciry sfaff to review
the model and the assumptions for appropriateness and finalize the finanGiaJ plans for the City's water and wastewater
enterprises to be used for the rate design model.
L.f i 3E'IA S:
Two web-based meetings with City staff as needed to discuss the financial plan
DE I';,$L S;
p Presentation materiaLs in PowerPoint
y Draft financial plan model in Excel
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as C 3: UVater and llV st water Cos t-of-service Analysis
The cost-of-service study provides rate defensibilitty in light of Proposition 218 and determines the total cost eo serve each
customer class. For water, the cost-o service analysis will follow industry standards provided in A NWA's Manual Ml, r,_`c°:
Principles of Water Rates,Fees and Charges, 7th Editzon. Our cost-of-service methodology includes three steps:
Step 1:Review Customer Class Usage Patterns and Deternune Customer Classifications—Raftelis will review =
historical water consumprion to assess class water use patterns. Using this data, we will determine peaking
characteristics for each customer class and tier and discern whedzer new classes may be warranted.
Step 2:Allocate Costs to Cost Components--Raftelis will functionalize costs into water service funetions such
as supply,t'ansmission and distribution, storage,and customer service.We wi11 then allocate these functions to
cost components such as water supply,base demand,capacity(demand),customer service, and more. From here, r
we will determine the unit cost For each cost component.
Step 3:Distribnte Costs to Customer Classes—Next,we will distribute costs to the customer classes using the
unit costs developed in Step 2.This results in the cost to serve each class,which is based on.how each class uses
water.
WVast va4er
For the wastewater rate study cost-of-service analysis,.Raftelis will use methodologies set Porth by WEF in their Manual of '
PYactice No.27,Financing and Charges for Waseewater Systems, which was co-authored by Sudhir Paxdiwala.The City
provides wastewater collection services and sends its wastewater to OCSD for treatment.Treatment costs are collected
via property taxes.
f Lf i iiW 7 I e"1N;
None
1 L.a/r,.1C 1_E:
Cost-of service analyses in Excel
ran r.is s
T sk 4:Wat- anc! 'il/asteverater Ra Devel op nen nd Cu tomer Sill
lmpacts
Water
Raf elis performed the prior water(and sanitation)rate study.The City has a tiered rate for SFR and MFR.customer.s and
a uniform rate for aIl other classes. We will discuss if there is a desire for rate structure changes sucti as adjusting the tier
breakpoints or adjusting the amount of fixed revenue collected,and we will update the current rates: We will review the
bill impacts of different fixed/volumetric rate structures with Ciry staff to select the appropriate strucCure.
Our model has the flexibiliry to instantaneously change tier widths and evaluate different fixed/variable revenue
structures to enhance revenue stability.To communicate the cost nexus for tiered rates,the water rates have several cost
components for each tier, as shown in the table below,including,but not limited to,water supply costs, delivery costs,
peaking costs,conservation costs,and revenue offsets,which lower the rates.
Derivation
p
of Volumetric Rates by Cost Componer ts
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Ti[e rl' 311 ';0 83 ' 0 6 ..._ $UO3': . :0]1 422 . ;
Tie'II 31'1: 0 83. 0 17 0:03 0.11 4 51'
Tter llif • . 3,11 . 3 0$G d:03 . 0:11 81
Wastewater
The City operates a sewage collection system and sends sewage to OCSD for treatment. It currently has a fixed charge for
operations and maintenance for SFR and MFR customers. It also has a Fixed capital charge for SFR and MFR customers.
Commercial customers are charged a volumetric rate.We will calculate the cost to serve each class,which is a function of
the winter water use of each class as winter water use is moxe reflective of water discharged to the sewer system.
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Example Stngle=Famify Bilb impacts:
C stomer Bill Im aacts Illustraling impacts on customers resulting from the acioptlon of the proposed rafes
We will analyze the bill impacts as a result of the singie Famiry eill Impacts
new rates. If the rate structure is identical,then 30,000 ---------------J'-""---
u
this taslc is straight forward.IP we revise the rate
zs,000 _
structure, then we will clearly show who will be
2a,oo - f"'
impacted and by how much.The model will
15000 -
include a summary of customer bill impacts o,000 - ---_..._.-..............._..
resulting from the proposed rate structure.Using s,000 —
water as an example,tlie figures to the right
T____,,,,_,;__,_...,_
show S'Rbill impacts at various use leve1s.The ago .gotoS5 >S o 'S2o S6o Stao }8..50 550 y oo >1 0 ,
model will have the ability to select a particular
meter size to see how bills are affecied at Example Singie-Famfly Residenfl l Customer 8ills:
differenC usage levels. rIllustratiiigcustomerilnpactsoftypicalresldenti'al customers at dfffererit usage levels
A P. I,:
Residential Customer Impacts with 3(4-inch Meter at Various
Usage Levels
One in-person meeting with City Staff to s oo ......_._.----....-..-_.---------
y_.-----------------—_
discuss draft results o
s oo
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r`
rVeryHl h 52hct , Draft water and wastewater raCe models in Vr1yLrnv-3hcf : Low 7hcf__tuleHlUm 19hCt ; Hlgh 23.nci 1
XCEL i Cu renf BIII 571.14 ; S1E18&l ' 5180.7fl__.~..a281.88 '.'
Z0.45--.
T.._........___................--"---'-'--'-'_"' sPrcposod 9i11 $98.6A j 592.78 5138:32 (_ 3= a 28
r
Iroi a t$1 1 (d.60)_! (513.76 511,47J ; 813.77. 573.83 . ..,
i- 929°6) .__•7.6°`_ ^6.695 142%
Impact(9oI^i_'8.690
Tas C a it C c
r en tatio
I'rom our prior experience with the City,we understand that it is preferred that Ciry staff present to the City Council.Raftelis will attend the meeting in support of Ci y staff and to answex questions as needed. We can also present if desired.
1cTe can prepare a draft presentation for City staff and i.ncorporate staff suggestions.
The presentations usually discuss the recommended reserve and fund levels,proposed long-term financial plan,and theproposedratestructureandratesalongwiththeresultingcustomerimpactanalysis, if necessary.The goal of this first City Council meeting is to get approyal to proceed with the Proposition 218 public hearing and no ice.
pt..Ay+ECJ A EETt aGS;
One on-scte City Council preseniation
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PowerPoint presentation
T C Ca 9raf k d ai e o 9 I+t
The process For developing the proposed_rates will be described in a draft water and wastewater rate study report. It is
imperaCive that the report clearly show the nexus between lhe proposed charges for service and the cost to provide said r
service.This draft report wi11 include an executive summary highlighting the major issues and decisions and an overviewoPoperations, the capital improvement plan, the financial p1an, and the final rates.We will fully derive the rates from the
revenue requirement lo the final fixed and volumetric rates by tier and class.
sre z a.i, 7
1
Comments FrQm City staff will be incorporated into the final report.The Final report will be submitted to the City and will
include appropriate supporting data from the model to address the requirements ofProposition 218.
1...i1 3? ]'d!L.'1+lC'a,S:
One webinar with City staff to discuss reports I •
l .
7 N yhS
DrafC report in Word format
Fina1 report in Word and PDF format
Task 7; Proposi ion 2°18 Public Hearing
Raftelis will prepare a Proposition 218 Public Hearing presentation, and support staff wi11 present the rate studies at a
Proposition 218 Public Hearing.We can also present the results if desired. Raftelis has presented at hundreds of public
hearings and, therefore,has experience with typical concerns raised by the public.We have cost-of-service experts that
can explain the rate derivation that is needed in this post-San Juan Capistrano rate-setting environment.We will
incorporate feedback from tYie Ciry Council presentation in Task 5.The presentation will tell our rate-setting basis and
justify the need for rate adjustments. Prior to the Public Hearing, Raftelis;will conduct one webinar with City staff to
review the presentation materials.
s,l di 3:"1"1 aGS:
One webinar to discuss the presentation materials with,City staff i
One in-person Proposition 218 Public Hearing
lCl,'W 1.:
PowerPoint presentation for Proposition 218 Public Hearing
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