13-1001_RAFTELIS FINANCIAL CONSULTANT, INC._D12_Agenda Report10/1/2013
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City of San Juan Capistrano
Agen e ort
TO: Karen P. Brust, City N?4 r•
FROM: Keith Van Der Maaten, Public Works and Utilities Direct r
Prepared by: Justin Kirk, Senior Management Analyst
DATE: October 1, 2013
SUBJECT: Consideration of Award of Personal Services Agreement for Water and
Sewer Rate Study (Raftelis Financial Consultant, Inc.)
RECOMMENDATION:
By motion, award a Personal Services Agreement to Raftelis Financial Consultant, Inc.
for a water and sewer rate study in the amount not to exceed $100,000.
EXECUTIVE SUMMARY:
The City of San Juan Capistrano (City) through its Utilities Department operates and
maintains a water system that provides service to approximately 11,200 connections
serving approximately 38,000 customers in our community and a small portion of Dana
Point. Periodic analysis of the costs to treat, purchase, and distribute water and the
costs to collect, treat and dispose of waste water, is required to ensure that the City's
water and sewer rates adequately recover the City's costs in providing those services
and comply with California law. The City solicited Request for Proposals from thirteen
(13) qualified firms on August 16, 2013 (Attachments 1 & 2). On September 6, 2013, the
City received bids, and has tabulated the results below:
CONSULTANT BID AMOUNT
Carollo Engineers $129,919
Raftelis Financial Consultant, Inc. $88,103
HF&H Consultants, LLC $75,185
Staff has reviewed the bids in accordance with applicable Municipal Code sections,
compiled the results, and contacted the relevant references. Based upon this review,
staff recommends the awarding of a Personal Services Agreement to Raftelis Financial
Consultant, Inc. for the performance of a water and sewer rate study in the amount of
$88,103. Due to the potential need for additional public meetings, staff has the
proposed agreement to not exceed $100,000.
City Council Agenda Report
October 1, 2013
Page 2 of 3
DISCUSSION/ANALYSIS:
The last cost -of -service rate study was completed in 2009-2010. In February 2010, the
City Council approved a series of five water and sewer rate adjustments over four
years. The last of these approved rate adjustments was implemented in July 2013. The
City Council at its July 16, 2013, regular meeting voted to not increase the Sewer Rates
for Fiscal Year 2013-2014. To ensure the rates are consistent with current costs, a rate
study was planned to be prepared and adopted during Fiscal Year 2013-2014. Raftelis
Financial Consultant, Inc. estimates that the rate study will take approximately six (6) to
seven (7) months, but has committed to completing it as quickly as possible. Staff will
work with the consultant to expedite the rate study and complete the rate study as
quickly as possible. The rate study will be conducted with the following goals:
• Continued operation of the water and sewer systems.
• Plan for repair and replacement of capital assets.
• Re-establish emergency reserves.
• Update cost of service information.
• Adjust for increased costs from Metropolitan Water District and San Diego
Gas and Electric (SDG&E).
• Develop a water supply funding strategy and related projects, including
recycled water and groundwater supplies.
Raftelis Financial Consultant, Inc. has worked on over 75 water and waste water rate
and/or financial studies in the past five (5) years in the State of California (Attachment
4), including the following Orange County agencies:
• City of Anaheim
• City of Brea
• East Orange County Water District
• EI Toro Water District
• City of Huntington Beach
• Mesa Consolidated Water District
• Municipal Water District of Orange County
• City of Newport Beach
• City of San Clemente
• South Coast Water District
• City of Torrance
FISCAL IMPACT:
The Adopted Fiscal Year 2013-2014 Budget includes a total of $120,000 ($80,000 in the
Water Enterprise Fund and $40,000 in the Sewer Enterprise Fund) for the purposes of a
water and sewer rate study. The proposal received from Raftelis Financial Consultant,
Inc. is in the amount of $88,103; however, due to potential additional public meetings,
the total amount of the proposed Personal Services Agreement was adjusted to not
City Council Agenda Report
October 1, 2013
Page 3 of 3
exceed $100,000, therefore providing additional funds in the event there are additional
meetings needed.
ENVIRONMENTAL IMPACT:
Not applicable.
PRIOR CITY COUNCIL REVIEW:
On May 7, 2013, City Council reviewed an agenda report and received a
presentation on "Consideration of Goals for the Water and Sewer Rate Study
which will be Completed in Fiscal Year 2013-2014", and provided direction to
staff for the goals of such a study.
COMMISSION/COMMITTEE/BOARD REVIEW AND RECOMMENDATIONS:
Goals for the Water and Sewer Rate Study were reviewed by the Utilities
Commission at its March 19, 2013, regular meeting. The Commission
recommended approval of the stated goals, and added several aspects which
they asked to be considered by the consultant and staff. This information was
conveyed to City Council at the May 7, 2013 meeting listed above.
The award of the Personal Service Agreement will be considered
Commission at its regular meeting of October 1, 2013. Staff
supplemental agenda report updating the City Council o
Commission's action.
NOTIFICATION:
Carollo Engineers
Raftelis Financial Consultants, Inc.
HF&H Consultants, LLC
ATTACHMENT(S):
at the Utilities
will prepare a
n the Utilities
Attachment 1 — Request for Proposals
Attachment 2 — Consulting Firms List
Attachment 3 — Personal Services Agreement with Raftelis Financial Consultant, Inc.
Attachment 4 — List of California Agencies
CITY OF SAN JUAN CAPISTRANO
REQUEST FOR PROPOSALS
FOR PROFESSIONAL CONSULTING SERVICES
TO PROVIDE
WATER AND SEWER UTILITIES RATE STUDY
SUBMIT PROPOSALS BY SEPTEMBER 6, 2013 TO:
Francie Kennedy, Water Conservation Coordinator
Utilities Department
City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, California 92675
INTRODUCTION and BACKGROUND
San Juan Capistrano is a small service area of approximately 38,000 residents
located in South Orange County, California north of San Diego and south of Los
Angeles. The City of San Juan Capistrano provides water and sewer services to
an area of approximately 14.4 square miles (9,200 acres) mostly within its
corporate boundaries, and including a small portion of Dana Point. The existing
service area population is projected to increase to about 41,000 persons by
ultimate build out in the year 2020. The majority of the service area consists of
residential (43 percent) and open space (48 percent) land use. Strip commercial
development makes up about 4 percent of the total service area. Other land
uses include agriculture (4 percent) and public/institutional (1 percent).
Water Operations
In Fiscal Year 2012-13, the City delivered 8,031 acre-feet of metered water to
11,217 customer accounts. The City constructed the San Juan Groundwater
Recovery Project (GWRP) in 2004. The GWRP is a reverse osmosis
filtration/treatment facility that produces up to 4,800 acre-feet of potable water
per year. This represents up to about 60 percent of the City's annual potable
water requirement as well as a significant portion of its emergency water supply
needs. Until construction of the GWRP, approximately 92 percent of the City's
potable water supply was purchased from the Metropolitan Water District of
Southern California (MWD). The remaining 8 percent was derived from local
groundwater sources. Construction of the GWRP has significantly changed
these percentages.
City of San Juan Capistrano — Rate Study RFP Page 1 of 27
Attachment 1
The City's water -budget -based rate structure (i.e., allocation -based) has been in
place since 1991-92, and in its current form consists of a fixed base tier for
residential customers, with an additional budget -based three tiered increasing
block rate structure for all residential customers and dedicated landscape and
agricultural meters/accounts. The allocation for residential accounts includes an
indoor component plus an outdoor component. The outdoor allocation changes
each month depending upon daily weather conditions during the monthly billing
period. It is based on irrigable area, 70% of ETo (reference evapotranspiration), a
monthly crop coefficient for turf grass, and effective rainfall. Single-family
residences are divided into two groups. Lots under 7,000 square feet are given a
standardized allocation for 3,636 square feet of irrigable area, while those over
7,000 square feet receive an individualized water budget based on their lot size.
The table below shows the current (2013-14) block rate structure for single-family
residential accounts. Water use up to the budget/allocation is charged at the
Base and Tier 1 rate. Use over 100% and up to 200% of the budget is billed at
the tier 2 rate. Use greater than 200% of the budget is charged at the tier 3 rate.
The complete water rate schedule with all customer classifications and their rates
can be viewed at: http://www.san*uancapistrano.ora/Index.asi2x?paae=894.
Single -Family Water Rates by Tier Cost per CCF of water
Base Rate: First 6 CCF used $ 3.18 per CCF
Tier I: Use up to 100% of the allocation $ 4.24 per CCF
Tier II: Use up to 200% of the allocation $ 6.37 per CCF
Tier III: Use greater than 200% of the allocation $11.67 per CCF
To the right is a pie chart showing water
sources for FY 12-13:
The chart below illustrates FY 12-13 water
use by customer sector:
3.58% 0.69%
■ Groundwater Recovery plant
■ Metropolitan Import
a Nm -potable wells
■ Recycled
City of San Juan Capistrano — Rate Study RFP Page 2 of 27
In 1989, as a potable water conservation effort, the City initiated a program to
use lower quality groundwater for designated non-domestic use. The City
installed a separate non-domestic water system to utilize this groundwater supply
for landscape irrigation of golf courses, parks, recreation areas, greenbelts,
schoolyards, highway medians, and industrial uses. The supplemental use of
recycled water will allow the City to meet the future total water demand of the
service area. The City has been working with neighboring Moulton Niguel Water
District and Santa Margarita Water District to purchase recycled water from their
treatment plants, until such time as the City chooses to expand its own treatment
facilities at the Jay B. Latham Regional Treatment Plant.
Legal Background
At the time of this writing, San Juan Capistrano's existing water rates are being
challenged in Superior Court (Case #30-2012-00594579). The outcome of this
case is still unknown. The City will communicate updates, as they are known, to
all potential respondents to this RFP. The outcome of this case will be
incorporated in the Rate Study and proposed rate structure.
Sewer Operations
The City operates and maintains a sanitary sewer collection and conveyance
system that includes approximately 122 miles of sewer lines in sizes up to 27
inches in diameter including two lift stations. Wastewater collected in the City's
collection system is conveyed to the South Orange County Wastewater
Authority's (SOCWA) Jay B. Latham Regional Treatment Plant (Treatment
Plant). SOCWA also operates the San Juan Creek Ocean Outfall (Ocean
Outfall), which discharges secondary -treated wastewater from the Jay B. Latham
plant, along with the brine from the Groundwater Recovery Plant, into the Pacific
Ocean for disposal. The City is one of five member agencies that own capacity
in the Ocean Outfall. In January 2004, the City completed the Sanitary Sewer
System Master Plan and Rehabilitation Program Report (Master Plan). The
Master Plan provided a rehabilitation program for the City's sanitary sewer
system infrastructure, portions of which date back to the 1920s. This program
was combined with the City's existing rehabilitation program and in conjunction
with the City's on-going sewer cleaning and videotaping, helps fulfill State and
Federal requirements to properly operate and maintain the collection system and
ensure hydraulic capacities to prevent system overflows. Additionally, the Master
Plan included the projected operational and capital costs associated with the
treatment and outfall through SOCWA. The plan was updated in 2007 to reflect
new programs/projects as well as updated costs and project timing, and is
currently under review by staff to identify priority projects and ongoing
maintenance strategies to be considered in this rate study.
City of San Juan Capistrano — Rate Study RFP Page 3 of 27
II. RATE STUDY OBJECTIVES AND CONSIDERATIONS
The primary objective of this Study is to present a strategy for meeting the water
and sewer utilities' financial obligations over a ten-year planning period. As such,
the Consultant shall consider as a guide the following objectives and
assumptions when developing the study:
1. The City requires this rate study to be accomplished as expeditiously as
possible. The Consultant is requested to provide a full schedule of
completion of all tasks.
2. The rate structure that the Consultant proposes for domestic and recycled
water sales, and for sewer, and the supporting study, shall satisfy the
requirements of all applicable law, including Proposition 218 (Prop 218).
3. Analyze the City's sewer, water, and recycled water master plans to
develop rates and rate structures that reflect the cost of service, and will
enable the City to cover capital replacement, depreciation of assets,
ongoing capital improvement, treatment, operations and maintenance
costs for the treatment, collection and distribution systems, as well as
maintain the required debt service coverage and appropriate operating
and capital reserves.
4. Forecast future revenue requirements for a ten-year study period
incorporating fiscal policies, capital -related costs, ongoing operating and
maintenance expenses, and other cash obligations of the water and sewer
utilities; determine annual revenue adjustments necessary to fund revenue
requirements.
5. Update, as appropriate, operating and capital reserve, debt management,
and other appropriate fiscal policies to ensure sound financial operations
of the water and sewer utilities, to maintain alignment with industry
standards and to meet or exceed the minimums established by municipal
bonding and rating entities.
6. Examine the calculations and assumptions in the existing water rate
structure, including the basic allocation's division into two segments (Base
and Tier 1) to provide affordable water for basic service needs, and/or
make recommendations on a strategy that achieves a similar goal, such
as the potential return to a single -tier allocation for prudent use.
7. Incorporate the increasing use of imported recycled water, with associated
costs, into the rate structure. Analyze the City's Recycled Water Master
Plan to refine the rate structure that will enable the City to cover operating
and maintenance costs for the recycled water distribution system and
City of San Juan Capistrano — Rate Study RFP Page 4 of 27
capital investment costs. Include potential SRF funds; loans and grants as
alternative analyses.
8. Ensure the rate structure's effective delivery of a year-round conservation
message, which defines prudent use through the water allocation or
budget formula (or communicates a message through an alternate
means), and encourages more efficient landscape practices.
9. It is recognized that during a prolonged and severe regional drought crisis,
the City will need to reduce water consumption through conservation.
Water budget based inclining block water rates, coupled with a robust
public awareness campaign, is an effective method of achieving this with
both landscape and residential customers. The structure of the inclining
block rates incorporated in this study, or a preferred alternative identified
by the study, will be such that it will provide a mechanism to support
conservation.
10. Devise a methodology to set budget -based allocations for commercial
customers. Recommend additional customer classifications if necessary.
Identify what sort of customer data City staff would need to accomplish
this.
11. For the sewer system, explore funding mechanisms for conversion of
septic systems to sewer, such as establishment of an assessment district.
12. Identify a mechanism for automatic pass-through of rate increases from all
imported water and energy suppliers, including Metropolitan Water District
of Southern California (MWD), Moulton Niguel Water District, Santa
Margarita Water District and San Diego Gas & Electric (SDG&E).
13. Identify a wholesale rate for the City to sell locally produced water, when
available, to other water agencies. This rate shall cover all of the City's
costs to produce and deliver the water.
14. Establish water and sewer impact fees for development.
III. RATE STUDY SCOPE
The City understands that there are viable firms that may specialize, and in fact
excel, in only one of the utility operational areas described in this RFP. In these
cases, firms are encouraged to submit the proposal in accordance with their area
of specialization. The City reserves the right to award all or any portion of rate
study scope to one or more vendors based on their experience and area of
expertise.
City of San Juan Capistrano — Rate Study RFP Page 5 of 27
Task 1 — Protect Orientation Workshop
Consultant shall conduct a project orientation workshop with City staff. During
this workshop the Consultant will confirm the study objectives and gain a
common understanding of the project team's expectations. Items to be
discussed shall include at a minimum:
• Implications of Proposition 218 and legal rulings
• Clarify roles, communication procedures, the project schedule, and due
dates for deliverables
• Detail information that will be needed to complete the study
• Review existing City policies as they relate to Utilities Department
operations such as debt service coverage ratios, reserve requirements,
etc., including reviewing comments and direction already received from
Utilities Commission and City Council members
• Develop criteria for financial plan forecast assumptions
• Review water, sewer, and recycled water master plans
• Communicating the value of water supply and reliability
Meetings:
(1) Meet with City staff for project orientation
Task 2 — 10 Year Financial Plan
Consultant shall develop financial planning models for the water (including
recycled water) and sewer operations for the ten-year study period. The financial
plan analysis shall consider the following elements:
Capital Improvements Program Funding. Consultant will review the CIP
to identify non -rate sources of funds applicable to the CIP that will result
in the lowest impact on utility rates. With assistance from staff,
Consultant will identify those projects related to growth, and projects that
are part of the utility's improvement and replacement program, including
depreciation.
• Examine projected rate increases for San Diego Gas & Electric (SDG&E)
and all imported water suppliers including the Metropolitan Water District
of Southern California (MWD). Evaluate allocation and demand
projections for San Juan Capistrano. Consultant shall develop different
scenarios about both the demand for imported water and City operational
practices in order to assess the ten-year financial plan relative to these
factors. A mechanism for automatic pass-through of rate increases from
City of San Juan Capistrano — Rate Study RFP Page 6 of 27
imported water suppliers and SDG&E will be included as part of the rate
study.
• Revenue Analysis. Using the current and future projected demands and
allocations for and of water, Consultant shall calculate revenue at current
fixed (service) and variable (commodity) rates for the 10 -year study
period. Address revenue from both fixed charges and variable charges,
and indicate their respective contributions to revenue stability.
• Ensure that this revenue meets the conditions of:
o The City's bond covenants; and of
o The California Urban Water Conservation Council's Best
Management Practices (BMPs) regarding rates, or is at least as
effective as the defined conditions (these BMPs are available at:
http://www.cuwcc.orci/mou/exhibit-1-bmp-definitions-schedules-
requirements.aspx; see BMP 1.4 concerning rates); and of
o Industry standards for rate -making, including the most recent
AWWA publications on the subject.
• Revenue Requirements. Consultant shall project operating expenses
based on the water and sewer program budgets, based on the amended
FY 13-14 budget and most recent projections, and a review of historical
cost trends in sufficient detail to:
o Recognize types of expenses incurred by the system;
o Project expenses for a ten-year study period;
o Recognize changes in certain costs consistent with changes in
projected utility operations.
o Design a rate structure with revenue stability when conservation is
achieved, both during short-term droughts, and permanently in
accordance with SBx7-7.
• Bond Compliance Analysis. An analysis will be conducted to demonstrate
that the covenants and financial requirements associated with any existing
or proposed bond obligations and other debt instruments, as well as the
City's debt management policy, are complied with over the forecast
period.
• Reserve Requirements. Consultant shall analyze reserve including:
o Operational and Maintenance as to satisfy yearly cash flow
requirement.
City of San Juan Capistrano — Rate Study RFP Page 7 of 27
o CIP Reserves as required to fund annual contribution for future
refurbishment programs.
o Rate Stabilization Fund as required to hedge against volatility of
revenue due to seismic and weather conditions, such as drought or
periods of abnormal rainfall and extraordinary costs such as when a
major source of supply has service disrupted, and alternate sources
are used.
o Emergency reserves.
Based on the above information, the Consultant shall develop a ten-year revenue
program that will maintain the water and wastewater systems and take into
account foreseeable risk, such as weather.
Deliverables:
(1) Financial planning model with 10 -year revenue program
Meetings:
(1) Meet with City staff to review financial planning model
Task 3 — Cost -of -Service Analysis
The Consultant shall conduct the cost -of -service analysis to ensure each
customer class pays its fair share of the cost within the City's existing water -
budget -based inclining block rate framework, or alternate rate structure achieving
the same goals. In this analysis the consultant shall identify major and minor
costs and assign cost drivers to each item in the ten year financial plan.
Once the Consultant has assigned cost drivers to each line item in the financial
plan, the Consultant shall allocate these cost drivers to each customer class
usage characteristics. The final goal of the analysis to be performed under this
task will be to target revenue for each customer class that meets the requirement
of Proposition 218 and is the basis for developing fair and equitable rates. Tiers
and pricing must be fully explained, and clearly related to cost of service for each
customer classification, in the final document.
A similar analysis is to be performed for the recycled water and sewer systems
and their associated drivers.
Task 4 Rate Design
Once the target revenues are estimated, the Consultant shall develop rate
structures that meet this revenue requirement. The following criteria and
assumptions must be among those considered and evaluated. While developing
the rate models, the Consultant is expected to bring expertise in rate design and
City of San Juan Capistrano — Rate Study RFP Page 8 of 27
an experienced perspective to the process, including any aspects deemed
important which are not specifically listed below.
• Maintaining the general framework of the existing water -budget -based rate
structure, or proposing an effective alternative. Include a discussion of
water -budgets compared to uniform rates and inclining block rates.
• Include explicit cost -of -service data and explanations to support the tiered
(or proposed alternative) pricing, including the City's several water supply
sources and the associated incremental cost differences of local
groundwater, water produced from the GWRP, imported potable, and
imported recycled water supplies.
• Achieve cost recovery in the service charge plus the customers' total
allocation sales (Tier 1, or Base and Tier 1 if the allocation is divided thus),
reflecting the SB x7-7 requirement for a 20% reduction in sales by 2020.
Determine the levels of costs covered by fixed and variable charges.
• Industry standards, best practices, and recent legal determinations and
recommendations concerning water rates and conservation measures,
including SB x7-7.
• Existing and potential water rate customer classifications, with the current
water budget calculations, and any proposed refinements.
• Conservation programs and the development of future water supplies.
• Linkage between urban runoff and excessive water usage due to
overwatering, and creating a potential funding mechanism for runoff
reduction to achieve compliance with state and federal mandates.
Task 5 — Sensitivity Analysis / Rate Workshop(s)
Once the rate models have been developed the consultant shall conduct a
sensitivity analysis within the models. This step will examine different scenarios
that may occur within the next ten years. The Consultant shall then conduct a
workshop with senior staff members to identify which rate scenario is financially
sustainable, legally justifiable and politically acceptable for the community of San
Juan Capistrano. During the workshop(s), water conservation based rates,
sewer, and recycled rate structures, the legal options associated with Proposition
218, and the drought pricing program shall be examined.
Deliverables:
(1) Cost of service analysis
(2) Proposed rate design and any alternatives developed
City of San Juan Capistrano — Rate Study RFP Page 9 of 27
(3) Sensitivity analysis as described above
Meetings:
(1) Meet with City staff to review cost -of service analysis and rate
design, as well as the scenarios described above
(2) Present this information to a joint meeting of the Utilities
Commission and City Council
(3) Additional meetings with staff or elected officials may be
requested at this stage.
Task 6 — Prepare Draft Reports
The Consultant shall prepare a draft report that includes the preferred rate model
and integrates the findings from the previous tasks. The report shall also include
a comparison of south Orange County water service providers' current and
proposed potable water rates (including revenue derived from property taxes and
any Mello -Roos fees), as compared to the City's current and proposed rates.
This will update the comparison done by City staff, which was last updated in
January 2013, and result in a template to use in the future.
The rate model and all calculations informing the study shall be included as a
PDF, legible for each page in the model spreadsheet, with each sheet clearly
titled and annotated to describe the function of each page in the model, and
referenced as an attachment, as the basis for rate calculations. The report will
also include a summary for each customer classification of the rate structure,
allocations, and costs proportionally included at each tier, to be used in the future
as informational handouts for the public. The Consultant shall provide twelve
(12) copies of the draft report for review and comment. After meeting with staff,
the Consultant shall present the draft report to the Utilities Commission and to
the City Council.
Deliverables:
(1) Draft Rate Study Report (12 copies)
(2) Summary of each customer classification
(3) Rate Model, and PDF of each page of model
(4) Rates comparison for south Orange County water agencies
(5) Template for ongoing normalized rates comparison among
south Orange County water agencies, as described above.
Meetings:
(1) Meet with City Staff to review these five deliverables
(2) Minimum of one joint special meeting with Utilities Commission
and City Council, to present the draft report
(3) Possible additional meeting(s) if requested
City of San Juan Capistrano — Rate Study RFP Page 10 of 27
Task 7 — Review, Revise & Present Final Report
Once the draft report is accepted by the City Council, the Consultant will present
the final report, including the recommended rate structure, at (1) Public
Information Workshop, (1) Utilities Commission meeting, and at (1) City Council
meeting. The Utilities Commission and City Council presentation is expected to
be at a single joint meeting.
The Consultant shall provide the City with twelve (12) bound copies and one (1)
unbound reproducible copy of the final report. The Report and model shall also
be provided on a CD-ROM using MS Word, Adobe Acrobat, and MS Excel
format.
Deliverables:
(1) Final Rate Study Report (12 bound copies and 1 unbound, plus
CD-ROM)
(2) Final summary of each customer classification
(3) Final Rate Model, and PDF of each page of model
(4) Recommended Rate Structure
Meetings:
(1) Public Information Workshop
(2) Minimum of one joint special meeting with Utilities Commission
and City Council, to present the final report and recommended
rate structure
(3) Possible additional meeting if requested
Task 8 — Prop 218 process
The Consultant will prepare the Prop 218 notification materials for City attorney
review and approval. After final approval by City Council, the Prop 218 notices
are to be mailed at the appropriate time in the process by the Consultant to all
parcels (mailing addresses) in the service area, and also as a special mailer to all
account holders.
Deliverables:
(1) Draft the Prop 218 notification materials
(2) After approval, mail the Prop 218 notice to two mailing lists
Meetings:
(1) Attendance and possible presentation at the first formal public
hearing, if requested by staff and/or elected officials
City of San Juan Capistrano — Rate Study RFP Page 11 of 27
Task 9 — Model Delivery and Training
The Consultant shall create a model compatible with the City computer software.
The model design shall consider incorporating user friendly functional updates for
conducting analysis of potential scenarios, including adjustment of water tiers or
blocks and unit rates, and recycled water and sewer rates, while maintaining
revenue levels and updating customer, O&M and CIP costs inputs for calculating
future rate adjustments and revenue requirements. The Consultant shall also
include 8 hours of training of staff for use of this model.
Deliverables:
(1) Rates model as described above
Meetings:
(1) Training session for City staff on use of the model (8 hours)
Task Summary
Below is a summary of tasks, deliverables, and a minimum number of meetings.
Please review the details of each task described more fully in the text above.
City of San Juan Capistrano — Rate Study RFP Page 12 of 27
Meetings with
Task
Deliverables
Meetings
Public, Utilities
with Staff
Commission, City
Council
1 — Project
One
Orientation Workshop
2 — 10 Year Financial
Financial planning model with
One
Plan
10 -year revenue program
3 — Cost of service
(Deliverable with task 5)
Analysis
4 — Rate Design
(Deliverable with task 5)
5 — Sensitivity
1) Cost of Service Analysis
One
• One joint meeting
Analysis & Rate
2) Proposed Rate Design
of Commission
Workshops
3) Sensitivity Analysis
and Council
1) Draft Rate Study Report
• One joint meeting
6 — Prepare Draft
2) Summary of each
of Commission
Reports
customer classification
One
and Council
3 Rate Model continued
City of San Juan Capistrano — Rate Study RFP Page 12 of 27
IV. INFORMATION TO BE SUPPLIED BY THE CITY
The City will be responsible to provide the following information:
1) Water meter size by customer class (i.e. single-family residential, multi-
family, commercial, etc.). Water Service revenues, by month, customer
class, and divided between meter fees and water commodity sales.
Recycled water and sewer revenues will also be provided.
2) Utility enterprise funds financial records for past 5 years.
3) Capital Improvement Program projected expenditures for the next 10
years.
4) Explanation of current rate structure and its evolution since 1991-92.
5) Utility master plans.
6) A copy of the previous two rate studies.
V. PRE -PROPOSAL MEETING
The City will conduct one meeting to provide detailed information regarding the
overall intent and objectives that are to be accomplished as part of this project.
This workshop will provide members of the consultant's proposed project team
City of San Juan Capistrano — Rate Study RFP Page 13 of 27
4) Rates comparison
5) Template for ongoing
normalized rates
comparison
1) Final Rate Study Report
• One Public
2) Summary of each
Information
7 — Review, Revise,
customer classification
Workshop, and
Present Final Report
3) Final Rate Model
• One joint meeting
4) Recommended Rate
of Commission
Structure
and Council
1) Draft Prop 218
• Attend first Public
8 — Prop 218 Process
notification
hearing if
2) Mail to two mailing lists
requested
9 — Model Delivery
Rates Model
One training
and Training
session (8
hours
IV. INFORMATION TO BE SUPPLIED BY THE CITY
The City will be responsible to provide the following information:
1) Water meter size by customer class (i.e. single-family residential, multi-
family, commercial, etc.). Water Service revenues, by month, customer
class, and divided between meter fees and water commodity sales.
Recycled water and sewer revenues will also be provided.
2) Utility enterprise funds financial records for past 5 years.
3) Capital Improvement Program projected expenditures for the next 10
years.
4) Explanation of current rate structure and its evolution since 1991-92.
5) Utility master plans.
6) A copy of the previous two rate studies.
V. PRE -PROPOSAL MEETING
The City will conduct one meeting to provide detailed information regarding the
overall intent and objectives that are to be accomplished as part of this project.
This workshop will provide members of the consultant's proposed project team
City of San Juan Capistrano — Rate Study RFP Page 13 of 27
with additional information that may be helpful in better understanding the goals
and objectives of the Project.
The meeting will be held on Wednesday, August 28, 2013 at 10:00 AM., in
City Council Chambers located at 32400 Paseo Adelanto, San Juan
Capistrano.
VI. PROJECT MILESTONE SCHEDULE
The following dates reflect the anticipated schedule for soliciting proposals,
selecting the consultant and awarding the contract.
Consultant Selection Milestones:
Date:
Pre -Proposal Meeting — in the San Juan
Capistrano City Council Chamber
August 28, 2013, 10:00 AM
Proposal Due Date
September 6, 2013, 4:00 PM
Oral Interview (optional)
September 12, 2013, time TBD
City Council Award of Contract
October 1, 2013
Consultant Notice To Proceed
October 2, 2013
Kickoff meeting with City Staff
October 7, 2013, 1:00 PM
Completing the work requested in this RFP is to be accomplished as
expeditiously as possible, and the City requests that the Consultant include with
the proposal, a timeline for completion and a schedule showing how these dates
are planned to be met. It is the City's intent to use the schedule submitted by the
consultant to administer the consultant's contract.
VII. PROPOSAL REQUIREMENTS
General
The Consultant is requested to submit the proposal using a letter type format
(may be stapled or bound). The Consultant is requested not to use custom
color graphics and/or custom color proposal covers in preparation of this
proposal. The minimum font size shall be 11 point.
The proposal should include the following:
a) Transmittal.
b) Index/Table of Contents.
City of San Juan Capistrano — Rate Study RFP Page 14 of 27
c) Brief introduction presenting your understanding of the project and general
methodology to be used.
d) The City requires this rate study to be accomplished as expeditiously as
possible. Identify and describe the ability of the Project Manager to begin
work immediately after the award of contract, to give this project priority,
and complete it in a timely manner.
e) Approach to the project including description of specific work tasks and
activities, and concepts for conducting the work.
f) Team organization, including an organization diagram.
g) Descriptions of at least three similar projects by the project manager and
key staff to be used on this assignment. Include three examples of
agencies for which the same project manager who will be assigned to this
rate study developed and implemented or refined water -budget -based rate
structures. Describe each work product in one paragraph, and provide
contact information for someone who worked with you at that agency.
h) Description of background and experience with Prop 218.
i) Project Schedule (see Section VI).
j) Fee Proposal, with details of hourly rates, fees for attending (and for
presentations at) meetings and workshops, and for all other tasks
associated with this study.
k) Brief resumes of key staff.
1) Alternative recommendations, especially relating to rate structure and rate
design.
Detailed Project Approach / Scope of Services
Describe your technical approach for completing the scope of services.
Identify and detail specific tasks as necessary to complete the work.
Proposers are encouraged to amplify the scope of services, to identify any
supplemental tasks necessary, and to recommend any alternatives which
may enhance the project or reduce costs. It should also include a discussion
of constraints, problems, and issues that should be anticipated during the
contract, and suggestions for approaches to resolve them.
Project Team
Include the project team organization chart in your firm's proposal and identify
the team members that will be responsible for project management. Identify
the key project tasks and the associated personnel responsible for those
tasks.
A resume for each team member shall be included in the proposal appendix.
Each resume should include description of projects in related areas,
especially detailing experience with budget -based or allocation -based rates.
The geographic location of the firm's major support offices and the location of
City of San Juan Capistrano — Rate Study RFP Page 15 of 27
key personnel throughout the duration of this rate study process shall be
identified. All proposed subconsultants and their staff members shall be
identified including their relevant experience.
Related Experience
The information requested in this section should describe the qualifications of
the firm, key staff and sub -consultants in performing projects within the past
five years that are similar in scope and size to demonstrate competence to
perform these services. The projects listed should be those for which key
staff and the project manager named for this project were responsible for
performing services. Information shall include:
a) Names of key staff that participated on named projects and their specific
responsibilities.
b) The client's name, contact person, addresses, and telephone numbers.
c) A brief description of type and extent of services provided.
d) Specifically identify three projects for which the same project manager
who will be assigned to this rate study developed and implemented or
refined water -budget -based rate structures. Describe each work product
in one paragraph, and provide contact information for someone who
worked with the project manager at that agency.
e) Completion dates (estimated, if not yet completed).
Fee Proposal
A Fee Proposal shall be included as part of the Proposal. The information
and detail included in the fee proposal shall conform to the provisions of
Section VIII, Fee Proposal Requirements, of this RFP.
Statement of Offer & Signature
The Proposal shall be signed by an individual authorized to bind the
consultant and shall contain a statement that the proposal is valid for a 90 -
calendar day period.
VIII. FEE PROPOSAL REQUIREMENTS
In preparing the fee proposal for this project, the consultant shall take into
consideration the following:
a. Compensation for services provided shall be an hourly rate plus
reimbursable with an upper limit.
NOTE: General office equipment and supplies, including but not limited
to, telephones, computers, printers, Xerox machines, etc., are not
considered reimbursable expenses. The Consultant shall include such
City of San Juan Capistrano — Rate Study RFP Page 16 of 27
overhead expenses in the hourly rate for each position classification and
no additional compensation will be made for such overhead expenses.
b. A work plan, together with a breakdown of labor hours by employee
billing classification, together with the cost of non -labor and subconsultant
services shall be included with the fee proposal. The labor breakdown
shall be compiled by project tasks and be based on a listing of work tasks
that correlates with the Consultant's defined scope of work for the project
proposal. This information will be used by City staff to evaluate the
reasonableness of the fee proposal and may be used in negotiating the
final fee amounts for the contract agreement.
c. The Consultant's standard billing rates for all classifications of staff likely
to be involved in the project shall be included with the fee proposal along
with the mark-up rate for any non -labor expenses and sub -consultants.
d. The Consultant's standard billing rates for presentations at meetings and
workshops.
IX. DUE DATE AND NUMBER OF COPIES OF PROPOSALS
Six (6) copies of the proposal are due at the City of San Juan Capistrano, Utilities
Department, 32400 Paseo Adelanto, San Juan Capistrano, California 92675, by
no later then 4 p.m. on September 6, 2013. Address your proposals to the
attention of Francie Kennedy, Water Conservation Coordinator, Utilities
Department.
X. LATE PROPOSALS
It is proposer's sole responsibility to ensure that its proposal is received at the
City Utilities Department prior to the scheduled closing time for receipt of
proposals. Proposals received after the closing time specified in the RFP will not
be considered and will be returned.
XI. SELECTION PROCESS
A selection committee composed of City staff will review the proposals and
consider the following factors to select the most qualified firm:
1. Completeness of proposal.
2. Firm's experience and resources relating to the project work plan including
innovative approaches.
3. Professional qualifications of key personnel and offices from which they
work.
City of San Juan Capistrano — Rate Study RFP Page 17 of 27
4. Project manager and the team's technical expertise and experience with
projects of similar scope.
5. Ability to commence work immediately and complete the RFP
expeditiously.
6. Control of cost, schedule and quality on previous projects, as directly
related to similar projects by contacted references.
7. Cost of services provided, based on the overall cost of the Project
services and the billing rates (hourly) for the balance of the Project.
8. References.
After evaluation of the proposal and interview, the City selection committee will
select the most qualified consultant to negotiate an agreement to provide the
consulting services through the completion of the Project.
The City reserves the right to reject any or all proposals, to waive any informality
or irregularity in any proposal received, and to be the sole judge of the merits of
the respective proposals received.
XII. INTERVIEW
Proposals will be evaluated and ranked based on the criteria described in
Section XI of this RFP. The highest ranked teams may be requested to
participate in an interview with the City's selection committee to further present
their teams' qualifications. The interview process will be informal consisting of a
questions and answers format. The Consultant teams will not be allowed to
perform a presentation as part of the interview process. Interviews will be
conducted on September 12, 2013 (if required).
XIII. AGREEMENT / INSURANCE REQUIREMENTS
The consultant selected for the study shall execute an agreement similar to the
sample City of San Juan Capistrano Professional Services Agreement (included
as Attachment A). If any exceptions are taken to any of the terms in the
agreement, the proposing firm should notify the City as soon as possible, or at a
minimum in the proposal. Proposals that are submitted by consultants unwilling
to execute the City of San Juan Capistrano agreement will be rejected.
In addition to Worker's Compensation, General Liability, and Automobile Liability
Insurance, the selected consultant must provide Professional Liability Insurance
coverage (Errors and Omissions) in accordance with the City of San Juan
Capistrano Professional Services Agreement.
City of San Juan Capistrano — Rate Study RFP Page 18 of 27
XIV. CITY'S RIGHTS
The City may investigate the qualifications of any proposer under consideration,
require confirmation of information furnished by a proposer, and require
additional evidence of qualifications to perform the services described in this
RFP. The CITY reserves the right to:
1. Reject any or all of the proposals.
2. Issue subsequent Requests for Proposals.
3. Cancel the entire Request for Proposal.
4. Remedy technical errors in the Request for Proposal process.
5. Appoint evaluation committees to review proposals.
6. Seek the assistance of outside technical experts in proposal
evaluation.
7. Approve or disapprove the use of particular subcontractors.
8. Establish a short list of proposers eligible for discussions after
review of written proposals.
9. Negotiate with any, all, or none of the proposers.
10. Solicit best and final offers from all or some of the proposers.
11. Award a contract to one or more proposers.
12. Accept other than the lowest priced offer.
13. Waive informalities and irregularities in proposals.
This RFP does not commit the City to enter into a contract, nor does it obligate
the City to pay for any costs incurred in preparation and submission of proposals
or in anticipation of a contract.
XV. PUBLIC RECORDS ACT
Responses to this RFP become the exclusive property of the City and subject to
the California Public Records Act. Those elements in each proposal which are
trade secrets as that term is defined in Civil Code section 3426.1(d) or otherwise
exempt by law from disclosure and which are prominently marked as "TRADE
SECRET", "CONFIDENTIAL", or "PROPRIETARY" may not be subject to
disclosure. The City shall not in any way be liable or responsible for the
disclosure of any such records including, without limitation, those so marked if
disclosure is deemed to be required by law or by an order of the Court.
Proposers which indiscriminately identify all or most of their proposal as exempt
from disclosure without justification may be deemed non-responsive.
In the event the City is required to defend an action on a Public Records Act
request for any of the contents of a proposal marked "confidential", "proprietary",
City of San Juan Capistrano — Rate Study RFP Page 19 of 27
or "trade secret", the proposer agrees, upon submission of its proposal for City's
consideration, to defend and indemnify the City from all costs and expenses,
including attorneys' fees, in any action or liability arising under the Public
Records Act.
XVI. QUESTIONS
Questions regarding this RFP can be sent to Francie Kennedy, Water
Conservation Coordinator via e-mail to: fkennedy@sanjuancapistrano.org.
Questions concerning information already contained in the RFP will be answered
in writing; questions requiring clarification or additional information will be
addressed in an addendum to this RFP. All return correspondences with
proposers, including questions and answers, will be communicated to all other
proposers.
City of San Juan Capistrano — Rate Study RFP Page 20 of 27
ATTACHMENT A - PERSONAL SERVICES AGREEMENT
PERSONAL SERVICES AGREEMENT
THIS AGREEMENT is made, entered into, and shall become effective this
day of , 2013, by and between the City of San Juan Capistrano (hereinafter
referred to as the "City") and (hereinafter referred to as the
"Consultant").
RECITALS:
WHEREAS, City desires to retain the services of Consultant regarding the City's
proposal to perform a water and sewer rate study; and
WHEREAS, Consultant is qualified by virtue of experience, training, education
and expertise to accomplish such services.
NOW, THEREFORE, City and Consultant mutually agree as follows:
Section 1. Scope of Work.
The scope of work to be performed by the Consultant shall consist of those tasks
as set forth in Exhibit "A," attached and incorporated herein by reference. To the extent
that there are any conflicts between the provisions described in Exhibit "A" and those
provisions contained within this Agreement, the provisions in this Agreement shall
control.
Section 2. Term.
This Agreement shall commence on the effective date and shall terminate, and
all services required hereunder shall be completed, no later than
Section 3. Compensation.
3.1 Amount.
Total compensation for the services hereunder shall not exceed $
[either, total contract amount, or amount per month or per fiscal year; also specify
whether the total compensation includes expenses, etc.], [as set forth in Exhibit "B,"
attached and incorporated herein by reference [if Consultant provides a cost proposal or
rate schedule]].
3.2 Method of Payment.
Subject to Section 3.1, Consultant shall submit monthly invoices based on
total services which have been satisfactorily completed for such monthly period. The
21
City will pay monthly progress payments based on approved invoices in accordance
with this Section.
3.3 Records of Expenses.
Consultant shall keep complete and accurate records of all costs and
expenses incidental to services covered by this Agreement. These records will be
made available at reasonable times to the City. Invoices shall be addressed as
provided for in Section 16 below.
Section 4. Independent Contractor.
It is agreed that Consultant shall act and be an independent contractor and not
an agent or employee of the City, and shall obtain no rights to any benefits which
accrue to Agency's employees.
Section 5. Limitations Upon Subcontracting and Assignment.
The experience, knowledge, capability and reputation of Consultant, its principals
and employees were a substantial inducement for the City to enter into this Agreement.
Consultant shall not contract with any other entity to perform the services required
without written approval of the City. This Agreement may not be assigned, voluntarily or
by operation of law, without the prior written approval of the City. If Consultant is
permitted to subcontract any part of this Agreement by City, Consultant shall be
responsible to the City for the acts and omissions of its subcontractor as it is for persons
directly employed. Nothing contained in this Agreement shall create any contractual
relationships between any subcontractor and City. All persons engaged in the work will
be considered employees of Consultant. City will deal directly with and will make all
payments to Consultant.
Section 6. Changes to Scope of Work.
For extra work not part of this Agreement, a written authorization from City is
required prior to Consultant undertaking any extra work. In the event of a change in the
Scope of Work provided for in the contract documents as requested by the City, the
Parties hereto shall execute an addendum to this Agreement setting forth with
particularity all terms of the new agreement, including but not limited to any additional
Consultant's fees.
Section 7. Familiarity with Work and/or Construction Site.
By executing this Agreement, Consultant warrants that: (1) it has investigated
the work to be performed; (2) if applicable, it has investigated the work site(s), and is
aware of all conditions there; and (3) it understands the facilities, difficulties and
restrictions of the work to be performed under this Agreement. Should Consultant
22
discover any latent or unknown conditions materially differing from those inherent in the
work or as represented by City, it shall immediately inform the City of this and shall not
proceed with further work under this Agreement until written instructions are received
from the City.
Section 8. Time of Essence.
Time is of the essence in the performance of this Agreement.
Section 9. Compliance with Law.
Consultant shall comply with all applicable laws, ordinances, codes and
regulations of federal, state and local government.
Section 10. Conflicts of Interest.
Consultant covenants that it presently has no interest and shall not acquire any
interest, direct or indirect, which would conflict in any manner or degree with the
performance of the services contemplated by this Agreement. No person having such
interest shall be employed by or associated with Consultant.
Section 11. Copies of Work Product.
At the completion of the work, Consultant shall have delivered to City at least one
(1) copy of any final reports and/or notes or drawings containing Consultant's findings,
conclusions, and recommendations with any supporting documentation. All reports
submitted to the City shall be in reproducible format, or in the format otherwise
approved by the City in writing.
Section 12. Ownership of Documents.
All reports, information, data and exhibits prepared or assembled by Consultant
in connection with the performance of its services pursuant to this Agreement are
confidential to the extent permitted by law, and Consultant agrees that they shall not be
made available to any individual or organization without prior written consent of the City.
All such reports, information, data, and exhibits shall be the property of the City and
shall be delivered to the City upon demand without additional costs or expense to the
City. The City acknowledges such documents are instruments of Consultant's
professional services.
Section 13. Indemnity.
To the fullest extent permitted by law, Consultant agrees to protect, defend, and
hold harmless the City and its elective and appointive boards, officers, agents, and
employees from any and all claims, liabilities, expenses, or damages of any nature,
23
including attorneys' fees, for injury or death of any person, or damages of any nature,
including interference with use of property, arising out of, or in any way connected with
the negligence, recklessness and/or intentional wrongful conduct of Consultant,
Consultant's agents, officers, employees, subcontractors, or independent contractors
hired by Consultant in the performance of the Agreement. The only exception to
Consultant's responsibility to protect, defend, and hold harmless the City, is due to the
negligence, recklessness and/or wrongful conduct of the City, or any of its elective or
appointive boards, officers, agents, or employees.
This hold harmless agreement shall apply to all liability regardless of whether any
insurance policies are applicable. The policy limits do not act as a limitation upon the
amount of indemnification to be provided by Consultant.
Section 14. Insurance.
On or before beginning any of the services or work called for by any term of this
Agreement, Consultant, at its own cost and expense, shall carry, maintain for the
duration of the agreement, and provide proof thereof that is acceptable to the City, the
insurance specified below with insurers and under forms of insurance satisfactory in all
respects to the City. Consultant shall not allow any subcontractor to commence work
on any subcontract until all insurance required of the Consultant has also been obtained
for the subcontractor. Insurance required herein shall be provided by Insurers in good
standing with the State of California and having a minimum Best's Guide Rating of A -
Class VII or better.
14.1 Comprehensive General Liability.
Throughout the term of this Agreement, Consultant shall maintain in full
force and effect Comprehensive General Liability coverage in an amount not less than
one million dollars per occurrence ($1,000,000.00), combined single limit coverage for
risks associated with the work contemplated by this agreement. If a Commercial
General Liability Insurance form or other form with a general aggregate limit is used,
either the general aggregate limit shall apply separately to the work to be performed
under this agreement or the general aggregate limit shall be at least twice the required
occurrence limit.
14.2 Comprehensive Automobile Liability.
Throughout the term of this Agreement, Consultant shall maintain in full
force and effect Comprehensive Automobile Liability coverage, including owned, hired
and non -owned vehicles in an amount not less than one million dollars per occurrence
($1,000,000.00).
14.3 Workers' Compensation.
If Consultant intends to employ employees to perform services under this
24
Agreement, Consultant shall obtain and maintain, during the term of this Agreement,
Workers' Compensation Employer's Liability Insurance in the statutory amount as
required by state law.
14.4 Proof of Insurance Requirements/Endorsement.
Prior to beginning any work under this Agreement, Consultant shall submit
the insurance certificates, including the deductible or self -retention amount, and an
additional insured endorsement naming City, its officers, employees, agents, and
volunteers as additional insured as respects each of the following: Liability arising out of
activities performed by or on behalf of Consultant, including the insured's general
supervision of Consultant; products and completed operations of Consultant; premises
owned, occupied or used by Consultant; or automobiles owned, leased, hired, or
borrowed by Consultant. The coverage shall contain no special limitations on the scope
of protection afforded City, its officers, employees, agents, or volunteers.
14.5 Errors and Omissions Coverage [FOR PROFESSIONS/WORK
EXCLUDED FROM GENERAL LIABILITY]
Throughout the term of this Agreement, Consultant shall maintain Errors
and Omissions Coverage (professional liability coverage) in an amount of not less than
One Million Dollars ($1,000,000). Prior to beginning any work under this Agreement,
Consultant shall submit an insurance certificate to the City's General Counsel for
certification that the insurance requirements of this Agreement have been satisfied.
14.6 Notice of Cancellation/Termination of Insurance.
The above policy/policies shall not terminate, nor shall they be cancelled,
nor the coverages reduced, until after thirty (30) days' written notice is given to City,
except that ten (10) days' notice shall be given if there is a cancellation due to failure to
pay a premium.
14.7 Terms of Compensation.
Consultant shall not receive any compensation until all insurance
provisions have been satisfied.
14.8 Notice to Proceed.
Consultant shall not proceed with any work under this Agreement until the
City has issued a written "Notice to Proceed" verifying that Consultant has complied
with all insurance requirements of this Agreement.
Section 15. Termination.
City shall have the right to terminate this Agreement without cause by giving
25
thirty (30) days' advance written notice of termination to Consultant.
In addition, this Agreement may be terminated by any party for cause by
providing ten (10) days' notice to the other party of a material breach of contract. If the
other party does not cure the breach of contract, then the agreement may be terminated
subsequent to the ten (10) day cure period.
Section 16. Notice.
All notices shall be personally delivered or mailed to the below listed addresses,
or to such other addresses as may be designated by written notice. These addresses
shall be used for delivery of service of process:
To City: City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attn :
To Consultant:
Section 17. Attorneys' Fees.
If any action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs
and necessary disbursements in addition to any other relief to which he may be entitled.
Section 18. Dispute Resolution.
In the event of a dispute arising between the parties regarding performance or
interpretation of this Agreement, the dispute shall be resolved by binding arbitration
under the auspices of the Judicial Arbitration and Mediation Service ("JAMS").
Section 19. Entire Agreement.
This Agreement constitutes the entire understanding and agreement between the
parties and supersedes all previous negotiations between them pertaining to the subject
matter thereof. [SIGNATURE PAGE FOLLOWS]
26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
ATTEST:
Maria Morris, City Clerk
APPROVED AS TO FORM:
Hans Van Ligten, City Attorney
CITY OF SAN JUAN CAPISTRANO
John Taylor, Mayor
CONSULTANT
IN
27
City of San Juan Capistrano
2013-14 Water and Sewer Rate Study
Consultants List
1 A&N Technical Services
2 Bartle Wells Associates
3 Bureau Veritas
4 Black & Veatch
5 Carollo Engineers, Inc.
6 CDM Smith
7 FCS Group
8 Hilton Farnkopf & Hobson, LLC
9 Kennedy Jenks Consultants
10 NBS
11 Raftelis Financial
12 Arcadis
13 Robert D. Niehaus, Inc.
Attachment 2
PERSONAL SERVICES AGREEMENT
THIS AGREEMENT is made, entered into, and shall become effective this day
of , 2013, by and between the City of San Juan Capistrano (hereinafter
referred to as the "City") and Raftelis Financial Consultant, Inc. (hereinafter referred to as
the "Consultant").
RECITALS:
WHEREAS, City desires to retain the services of Consultant regarding the City's
proposal to perform a water and sewer rate study; and
WHEREAS, Consultant is qualified by virtue of experience, training, education and
expertise to accomplish such services.
NOW, THEREFORE, City and Consultant mutually agree as follows:
Section 1. Scope of Work.
The scope of work to be performed by the Consultant shall consist of those tasks as
set forth in Exhibit' A," attached and incorporated herein by reference. To the extent that
there are any conflicts between the provisions described in Exhibit "A" and those provisions
contained within this Agreement, the provisions in this Agreement shall control.
Section 2. Term.
This Agreement shall commence on the effective date and shall terminate, and all
services required hereunder shall be completed, no later than June 30, 2014.
Section 3. Compensation.
3.1 Amount.
Total compensation for the services hereunder shall not exceed $100,000 in
total contract amount and shall include compensation includes expenses as set forth in
Exhibit "B," attached and incorporated herein by reference.
3.2 Method of Payment.
Subject to Section 3.1, Consultant shall submit monthly invoices based on
total services which have been satisfactorily completed for such monthly period. The City
will pay monthly progress payments based on approved invoices in accordance with this
Section.
Attachment 3
3.3 Records of Expenses.
Consultant shall keep complete and accurate records of all costs and
expenses incidental to services covered by this Agreement. These records will be made
available at reasonable times to the City. Invoices shall be addressed as provided for in
Section 16 below.
Section 4. Independent Contractor.
It is agreed that Consultant shall act and be an independent contractor and not an
agent or employee of the City, and shall obtain no rights to any benefits which accrue to
Agency's employees.
Section 5. Limitations Upon Subcontracting and Assignment.
The experience, knowledge, capability and reputation of Consultant, its principals
and employees were a substantial inducement for the City to enter into this Agreement.
Consultant shall not contract with any other entity to perform the services required without
written approval of the City. This Agreement may not be assigned, voluntarily or by
operation of law, without the prior written approval of the City. If Consultant is permitted to
subcontract any part of this Agreement by City, Consultant shall be responsible to the City
for the acts and omissions of its subcontractor as it is for persons directly employed.
Nothing contained in this Agreement shall create any contractual relationships between
any subcontractor and City. All persons engaged in the work will be considered employees
of Consultant. City will deal directly with and will make all payments to Consultant.
Section 6. Changes to Scope of Work.
For extra work not part of this Agreement, a written authorization from City is
required prior to Consultant undertaking any extra work. In the event of a change in the
Scope of Work provided for in the contract documents as requested by the City, the Parties
hereto shall execute an addendum to this Agreement setting forth with particularity all
terms of the new agreement, including but not limited to any additional Consultant's fees.
Section 7. Familiarity with Work and/or Construction Site.
By executing this Agreement, Consultant warrants that: (1) it has investigated the
work to be performed; (2) if applicable, it has investigated the work site(s), and is aware of
all conditions there; and (3) it understands the facilities, difficulties and restrictions of the
work to be performed under this Agreement. Should Consultant discover any latent or
unknown conditions materially differing from those inherent in the work or as represented
by City, it shall immediately inform the City of this and shall not proceed with further work
under this Agreement until written instructions are received from the City.
2
Section 8. Time of Essence.
Time is of the essence in the performance of this Agreement.
Section 9. Compliance with Law.
Consultant shall comply with all applicable laws, ordinances, codes and regulations
of federal, state and local government.
Section 10. Conflicts of Interest.
Consultant covenants that it presently has no interest and shall not acquire any
interest, direct or indirect, which would conflict in any manner or degree with the
performance of the services contemplated by this Agreement. No person having such
interest shall be employed by or associated with Consultant.
Section 11. Copies of Work Product.
At the completion of the work, Consultant shall have delivered to City at least one
(1) copy of any final reports and/or notes or drawings containing Consultant's findings,
conclusions, and recommendations with any supporting documentation. All reports
submitted to the City shall be in reproducible format, or in the format otherwise approved
by the City in writing.
Section 12. Ownership of Documents.
All reports, information, data and exhibits prepared or assembled by Consultant in
connection with the performance of its services pursuant to this Agreement are confidential
to the extent permitted by law, and Consultant agrees that they shall not be made available
to any individual or organization without prior written consent of the City. All such reports,
information, data, and exhibits shall be the property of the City and shall be delivered to the
City upon demand without additional costs or expense to the City. The City acknowledges
such documents are instruments of Consultant's professional services.
Section 13. Indemnity.
To the fullest extent permitted by law, Consultant agrees to protect, defend, and
hold harmless the City and its elective and appointive boards, officers, agents, and
employees from any and all claims, liabilities, expenses, or damages of any nature,
including attorneys' fees, for injury or death of any person, or damages of any nature,
including interference with use of property, arising out of, or in any way connected with the
negligence, recklessness and/or intentional wrongful conduct of Consultant, Consultant's
agents, officers, employees, subcontractors, or independent contractors hired by
Consultant in the performance of the Agreement. The only exception to Consultant's
responsibility to protect, defend, and hold harmless the City, is due to the negligence,
recklessness and/or wrongful conduct of the City, or any of its elective or appointive
3
boards, officers, agents, or employees.
This hold harmless agreement shall apply to all liability regardless of whether any
insurance policies are applicable. The policy limits do not act as a limitation upon the
amount of indemnification to be provided by Consultant.
Section 14. Insurance.
On or before beginning any of the services or work called for by any term of this
Agreement, Consultant, at its own cost and expense, shall carry, maintain for the duration
of the agreement, and provide proof thereof that is acceptable to the City, the insurance
specified below with insurers and under forms of insurance satisfactory in all respects to
the City. Consultant shall not allow any subcontractor to commence work on any
subcontract until all insurance required of the Consultant has also been obtained for the
subcontractor. Insurance required herein shall be provided by Insurers in good standing
with the State of California and having a minimum Best's Guide Rating of A- Class VII or
better.
14.1 Comprehensive General Liability.
Throughout the term of this Agreement, Consultant shall maintain in full force
and effect Comprehensive General Liability coverage in an amount not less than one
million dollars per occurrence ($1,000,000.00), combined single limit coverage for risks
associated with the work contemplated by this agreement. If a Commercial General
Liability Insurance form or other form with a general aggregate limit is used, either the
general aggregate limit shall apply separately to the work to be performed under this
agreement or the general aggregate limit shall be at least twice the required occurrence
limit.
14.2 Comprehensive Automobile Liability.
Throughout the term of this Agreement, Consultant shall maintain in full force
and effect Comprehensive Automobile Liability coverage, including owned, hired and non -
owned vehicles in an amount not less than one million dollars per occurrence
($1,000,000.00).
14.3 Workers' Compensation.
If Consultant intends to employ employees to perform services under this
Agreement, Consultant shall obtain and maintain, during the term of this Agreement,
Workers' Compensation Employer's Liability Insurance in the statutory amount as required
by state law.
14.4 Proof of Insurance Requirements/Endorsement.
Prior to beginning any work under this Agreement, Consultant shall submit
4
the insurance certificates, including the deductible or self -retention amount, and an
additional insured endorsement naming City, its officers, employees, agents, and
volunteers as additional insured as respects each of the following: Liability arising out of
activities performed by or on behalf of Consultant, including the insured's general
supervision of Consultant; products and completed operations of Consultant; premises
owned, occupied or used by Consultant; or automobiles owned, leased, hired, or borrowed
by Consultant. The coverage shall contain no special limitations on the scope of protection
afforded City, its officers, employees, agents, or volunteers.
14.5 Errors and Omissions Coverage [FOR PROFESSIONS/WORK
EXCLUDED FROM GENERAL LIABILITY]
Throughout the term of this Agreement, Consultant shall maintain Errors and
Omissions Coverage (professional liability coverage) in an amount of not less than One
Million Dollars ($1,000,000). Prior to beginning any work under this Agreement, Consultant
shall submit an insurance certificate to the City's General Counsel for certification that the
insurance requirements of this Agreement have been satisfied.
14.6 Notice of Cancellation/Termination of Insurance.
The above policy/policies shall not terminate, nor shall they be cancelled, nor
the coverages reduced, until after thirty (30) days' written notice is given to City, except that
ten (10) days' notice shall be given if there is a cancellation due to failure to pay a
premium.
14.7 Terms of Compensation.
Consultant shall not receive any compensation until all insurance provisions
have been satisfied.
14.8 Notice to Proceed.
Consultant shall not proceed with any work under this Agreement until the
City has issued a written "Notice to Proceed" verifying that Consultant has complied with all
insurance requirements of this Agreement.
Section 15. Termination.
City shall have the right to terminate this Agreement without cause by giving thirty
(30) days' advance written notice of termination to Consultant.
In addition, this Agreement may be terminated by any party for cause by providing
ten (10) days' notice to the other party of a material breach of contract. If the other party
does not cure the breach of contract, then the agreement may be terminated subsequent
to the ten (10) day cure period.
5
Section 16. Notice.
All notices shall be personally delivered or mailed to the below listed addresses, or
to such other addresses as may be designated by written notice. These addresses shall
be used for delivery of service of process:
To City: City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attn: Keith Van Der Maaten, Public Works and Utilities Director
To Consultant: Raftelis Financial Consultant, Inc.
201 S. Lake Avenue Suite 301
Pasadena, CA 91101
Attn: Sanjay Gaur
Section 17. Attorneys' Fees.
If any action at law or in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which he may be entitled.
Section 18. Dispute Resolution.
In the event of a dispute arising between the parties regarding performance or
interpretation of this Agreement, the dispute shall be resolved by binding arbitration under
the auspices of the Judicial Arbitration and Mediation Service ("JAMS").
Section 19. Entire Agreement.
This Agreement constitutes the entire understanding and agreement between the
parties and supersedes all previous negotiations between them pertaining to the subject
matter thereof.
Section 20. Counterparts and Facsimile signatures.
This Agreement may be executed by the Parties in counterparts, which counterparts
shall be construed together and have the same effect as if all the Parties had executed the
same instrument. Counterpart signatures may be transmitted by facsimile, email, or other
electronic means and have the same force and effect as if they were original signatures.
[SIGNATURE PAGE FOLLOWS]
N
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
ATTEST:
Maria Morris, City Clerk
APPROVED AS TO FORM:
Hans Van Ligten, City Attorney
CITY OF SAN JUAN CAPISTRANO
John Taylor, Mayor
CONSULTANT
KA
PROJECT APPROACH AND SCOPE OF
SERVICES
PROJECT APPROACH
In today's environment of economic recovery, a consist-
ently -arising challenge is meeting an agency's financial
needs in a manner that duly considers the concerns of
ratepayers who themselves are financially burdened.
RFC has delivered creative solutions addressing an
extensive range of such situations, built on the firm's ex-
perience with serving clients nationwide.
Implementation of defensible solutions begins with
communication. The project objectives detailed above are
developed with the end goal of public understanding and
enabling the elected officials to make informed decisions
about key financial drivers. As an example, the Financial
Plan Model is developed not only for the utility's contin-
ued use as a financial analysis tool, it is designed to be an
easy -to -update and easy -to -understand presentation tool
that provides full documentation to how the rates were
derived through a "cost build up" approach. In addition,
this project also includes a significant stakeholder that is
the Capistrano Taxpayer Association (CTA). Educating
the CTA on the rate structure and providing an under-
standing of the rationale behind the proposed structure
should be addressed as part of this study. As this project
may be subject to significant scrutiny and may be time
intensive as well, addressing the CTA upfront would be
considered a prudent financial and political decision.
RFC's Project Approach is based on years of experience
that will serve to meet the City's goals and objectives effi-
ciently. Our approach consists of the following elements:
11 STRONG AND TRANSPARENT COMMUNICATION
WITH CITY STAFF
The proposed project approach entails several different
RAFIELIS FINANC!A1 CONSULTANTS, INC.
yet interrelated work efforts that will require effective co-
ordination between City staff and the RFC Project Team.
Our management approach stresses communication,
teamwork, objectivity, transparency and accountability
for meeting project objectives. We believe in a "no -sur-
prise" approach so that the client is aware of the status
of the project at all times. Our approach includes regular
communication and detailed documentation to ensure
transparency and thoroughness of the project. RFC will
work with City staff on an ongoing basis via sched-
uled in-person meetings and web conferences in order
to transfer information and to ensure that staff retains
ownership over the final work product. For web meet-
ings, RFC uses GoToMeeting®, which allows clients to
see in real-time the results of various analyses on their
computer screens, thus providing an efficient and effec-
tive method of communication.
2) CONSISTENT AND COMPETENT PROJECT
MANAGEMENT
The project will require effective coordination between
City staff, the consultant team, and elected officials (City
Council and Utilities Commission). An integral feature
of RFC projects is consistent and competent project
management which is critical to the timely and success-
ful completion of the project. Our management approach
stresses communication, teamwork, adequate resource
assignment, objectivity, and accountability for meeting
project objectives and includes the following:
Assignment of key project team members including:
• A strong and knowledgeable Project Manager, Mr.
Sanjay Gaur, who will be responsible for facilitating a
close working relationship between the City and RFC
staff and who is accountable to the City for meeting
CITY OF SAN .JUAN CAPISI RANO - 05 -
Exhibit A
the schedule, budget, and technical requirements
of the project. Mr. Gaut has more than 16 years of
consulting experience serving the public sector and
is a nationally recognized water budget expert in the
water industry. His experience spans the West Coast,
with the majority of projects in California. Recent
budget -based rate studies include engagements with
El Toro Water District, Rancho California Water
District, Western Municipal Water District, and the
Cities of Huntington Beach and San Clemente. Mr.
Gaut is active in a number of utility -related associa-
tions. He is a member of the American Water Works
Association's (AWWA) Rates and Charges Com-
mittee. He is also a frequent speaker at National and
California conferences, including AWWA, Utility
Management Conference, Association of California
Water Agencies and California Society of Municipal
Finance Officers.
A nationally -recognized and highly experienced
Project Director/Technical Reviewer, Sudhir Pardi-
wala, who will provide overall guidance and monitor
progress and quality of the services provided. With
more than 35 years of experience in financial stud-
ies and engineering, he has conducted numerous
water, storm water, reclaimed water, wastewater,
and solid waste rate studies involving conservation,
drought management, risk analysis, as well as system
development fee studies. He authored the chapter
on reclaimed water rates in the Manual of Practice,
Financing and Charges for Wastewater Systems,
published by the Water Environment Federation
(WEF) and presented papers at various conferences.
He was vice-chairman of the CA -NV AWWA Busi-
ness Management Division and Chairman of the
Financial Management Committee.
As added value to the City to expedite the comple-
tion of this study, Habib Isaac, who has more than
ten years of related experience, will serve as Task
Leader to ensure consistent workflow with project
deliverables and to manage senior consultants at
RFC. With a background in Applied Mathematics,
Mr. Isaac has developed numerous financial plan and
utility rate models and is well -versed in the cost of
service and benefit principles of Proposition 218 and
has formed numerous assessments districts, including
the Cove Assessment District in Cathedral City that
converted over 300 parcels from septic to mainline
sewer through successful Proposition 218 balloting.
• Highly qualified staff with many years of combined ex-
perience.
• Sufficient support resources to ensure timely comple-
tion.
• Ample resources to quickly and effectively respond to
the City's requirements.
Client involvement and control by:
• Adoption of procedures for regular and open commu-
nication between the RFC project team members and
City staff;
• Regular progress reports and the project manager's use
of RFC's internal project accounting and management
system. These reports will also identify potential prob-
lems, challenges, and solutions;
• Coordination of project activities between RFC
and City staff and review of any feedback on project
deliverables. RFC will conduct interim meetings to
discuss project progress and present preliminary results
through a combination of in-person meetings and web
conference meetings via GoToMeeting®; and
• Assistance in developing and presenting project
recommendations.
31 IDENTIFICATION OF OPERATIONAL AND
CAPITAL IMPROVEMENT INITIATIVES AND
FINANCING OPTIONS
The first step in conducting a long-term financial plan
study is to review and become familiar with all aspects of
the Utility's operations including business process, poli-
cies and procedures, operational and maintenance (O&M)
practices, capital improvement program (CIP) planning,
organizational structure, financial planning and manage-
ment, and the use of technology.
We will assist the City in achieving a suitable balance
among the financing options when developing the pro-
posed financial plans which will accomplish the following:
Ensure financial sufficiency to meet operating and
capital costs as well as prudent balances for Enterprise
Funds;
Meet the City's service policies and objectives; and
Maintain detailed financial plans to ensure that the
City's utilities are operating in a self-sufficient manner
and meeting debt covenant requirements.
- 06 - Cil Y OF SAN .JUAN CAFISTRANC� RAF?LLIS FINANCIAL CONSUL_ANTS, INC.
41 QUALITY ASSURANCENUALITY CONTROL
RFC follows strict Quality Assurance/Quality Control
(QA/QC) guidelines to ensure the quality of the work
effort and the final product. Typically, senior members of
our consulting practice will engage the Project Team on
specific issues critical to the project. The QA/QC mem-
bers also review the work effort for consistency, accuracy,
andvalidity and to ensure nothing is missing from the
administrative record. In addition, project budget and
progress are reviewed weekly by the Project Manager to
track progress, time, and expenses through RFC's project
management system. Regular progress reviews are also
conducted to ensure progress and to address critical is-
sues before they become problems or bottlenecks.
51 DEVELOPMENT OF FINANCIAL PLANNING AND
RATE MODELS
RFC has developed some of the most sophisticated yet
user-friendly computer financial and rate models avail-
able. 'Me model is one of the most advanced strategic
planning tools available today. It is Excel -based and is
easy to learn and use. "These models are tools that allow
us to examine different policy options and their financial/
customer impacts with great ease. In a workshop envi-
ronment with stakeholders and decision -makers, with
results summarized in both easy -to -understand graphical
and numerical formats, this tool allows us to quickly re-
view impacts of changes from different parameters. This
helps determine which policy option is feasible and helps
the working group to reach consensus quickly. This will
promote project efficiency and ease of understanding
for staff and decision -makers. Based on input from the
City, RFC will design the model to specifically meet the
unique needs of the City. We will provide training and
consultation to City staff on running the model, and if
needed, assist in updates to reflect future operational and
capital changes.
COST -BASED RATE SETTING
METHODOLOGY
If rates are perceived to be fair and equitable, users
are more likely to support changes in rates and rates
structure. In addition, Proposition 218 (California Con-
stitution Article 13D) imposes that:
1. A property -related charge (such as water and
wastewater rates) imposed by a public agency on
a parcel shall not exceed the funds required to
provide the property related service.
This is one of the most critical components for the new
rate study as the court has determined that the adminis-
trative record was not sufficient to show a nexus between
the rates derived and the cost incurred. Besides allocat-
ing costs to distinct customer classes based on demand,
it is of equal importance to build up the costs for each
defined tier to show a clear connection to the higher cost
of water within the higher tiers.
2. Revenues derived by the charge shall not be
used for any other purpose other than that for
which the charge was imposed.
The City is abiding by this as reflected by the utility's re-
serve policies and the fact that rate revenue for capital
improvements were used to fund capital on a Pay -As -
You -Go basis even though it was anticipated that the
City was to use debt financing.
3. The amount of the charge imposed upon any
parcel shall not exceed the proportional cost of
service attributable to the parcel.
Proportionality must be shown within the tiered rate
structure and cannot be set based on an arbitrary price
differential. The price differential must have a basis, and
our inclusion of this component will ensure that the City
has a thorough administrative record supporting the rates.
4. No charge may be imposed for a service unless
that service is actually used or immediately avail-
able to the owner of property.
'The City's cost allocation for recycled water will need
to be revisited and a new approach may need to be con-
sidered and vetted through with City staff and elected
officials to ensure compliance and a sound benefit nexus
to show that costs are not solely applied to residential
customers to reduce the rate for recycled water.
5. A written notice of the proposed charge shall be
mailed to the record owner of each parcel at least
45 days prior to the public hearing, when the agen-
cy considers all written protests against the charge.
RFC has facilitated numerous Proposition 218 mailing
for utility rates and we will work closely with the City
Attorney to develop Notice material that includes all the
RAF1111'; FINANCIAL CONSULTANTS, INC. CI1 Y OF SAN JUAN CAPISTRANO - 07 -
substantive Proposition 218 requirements.
As stated in the Manual M1, the AWWA Rates and
Charges Subcommittee also believes that "the costs of
water rates and charges should be recovered from classes
of customers in proportion to the cost of serving those
customers." To develop utility rates that comply with
Proposition 218 and industry standards while meeting
other emerging goals and objectives of the utility, there
are four major steps:
1. FINANCIAL PLAN DEVELOPMENT (or determi-
nation of revenue requirements as referred by the
Manual M1). The rate -making process starts with the de-
termination of future revenue requirements to sufficiently
fund the utility's operation and maintenance (O&M),
capital replacement and 'refurbishment (R&R), capital im-
provement and perpetuation of the system and to ensure
preservation of the utility's financial integrity. The basic
revenue requirements of a utility include O&M expenses,
debt service payments, contributions to specified reserves
and the cost of capital expenditures that are not debt fi-
nanced. Major capital projects are typically financed with
a combination of long-term debt, equity (or cash from
reserves), potential SRF funds, loans and grants. Debt
financing enhances equity in cost recovery as the existing
users do not have to pay 100 percent of the initial cost of
facilities that will be used for many years. However, debt
financing is more expensive in the long run. Two key
aspects of the financial plan consist of the determination
of the appropriate coverage ratio of debt financed capital
projects and the required revenue adjustments to ensure
financial sufficiency for its operational and capital needs
while meeting other emerging goals of the utility, such as
water conservation. For most utilities, the total revenue
requirements are met through revenues from rates. Non-
operating revenues, if any, provide offsets to total revenue
requirements. A customized, easy-to-use financial plan-
ning Model with Dashboard functionality with graphical
and numerical outputs will be developed to allow quick
review of various scenarios so that impacts can be visually
analyzed and informed decisions may be made.
2. COST OF SERVICE ANALYSIS. The annual costs of
providing water services, determined in the financial plan
development, should be allocated among the custom-
ers commensurate with their service requirements. In
this step, costs are identified and allocated to functional
cost components and distributed to respective customer
classes according to the industry standards provided
in the Manual M1 published by AWWA. California
Government Code Section 54999 mandates agencies
to conduct a thorough cost of service analysis every ten
years in determining the utility rates. Due to the City's
recent legal challenges, a thorough cost of service analy-
sis for water services is recommended to ensure rate
equity and regulatory compliance.
3. RATE DESIGN. Rates do more than simply recov-
ering costs. Properly designed rates should support and
optimize a blend of various utility objectives, such as
conservation, affordability for essential needs, and rev-
enue stability; and should work as a public information
tool in communicating these objectives to customers. In
this step, RFC will work within the legal framework and
industry standards to design appropriate rates to resolve
the City's current issues and achieve the City's objectives.
A customized rate model will be developed to assess
the customer impacts of different rate alternatives to
facilitate informed decision making. The results are sum-
marized in both easy -to -understand graphical format
and technical tabular format to ease communications
with elected officials about the financial consequences of
their decisions.
4. RATE ADOPTION. In the last step of the rate -making
process and in compliance with the Proposition 218 re-
quirements, the results of the analyses are documented
in a Study Report to help educate the public about the
proposed changes, the rationale and justifications behind
the changes and their anticipated financial impacts in
laymen terms. 45 days after sending out the public no-
tices, RFC will present at the public hearing to assist the
City's adoption of the new utility rates.
The RFC team is highly qualified in the development
of rates and charges for utility agencies. Our expertise
enables us to develop defensible rate structures, either in
traditional forms or, when appropriate, innovative forms
to address specific needs and circumstances. RFC's thor-
ough cost of service studies result in charges that are
developed based on sound rate -making principles that
can be supported before regulatory agencies, commis-
sions, elected officials, customer groups, or courts of law.
- 08 - C!?Y OF SAN JUAN CAPISI RANO RAF T ELIS FINANCIAL. CONSULiAN T S, INC.
PROJECT TASKS
The utility industry consistently seeks RFC as advisor
to lead the national discourse concerning rate structures.
RFC's value -add to the rate design process is based not
only on the level of technical expertise that results from
deep experience, but the ability to glean the best ideas
and strategies through the collaborative process. In
evaluating and updating the City's utility rates and rate
structure, RFC will use industry -accepted practices to
ensure a robust and defensible rate structure. That said,
every agency exhibits different characteristics and faces
different issues. RFC's industry -driving technical exper-
tise and deep experience — particularly with respect to
water budget rate structures — will provide the founda-
tion for a collaborative process that will tackle the City's
needs and concerns.
Earlier this year, for example, the American Water
Works Association AWWA requested that Mr. Gaur
lead a rate principles and rate design workshop at the
Utility Management Conference. Mr. Gaur led the
interaction -based strategic full-day workshop with
presenters and participants representing agencies from
across the country and oversees, of varying sizes, each
with their unique challenges.
The following sections outline the tasks we believe will
be involved to complete a comprehensive rate study
that accomplishes all of the City's goals. While tasks are
listed consecutively, elements of tasks may be done con-
currently with other tasks.
TASK 1: PROJECT ORIENTATION,
ADMINISTRATION AND DATA COLLECTION
The objective of this task is to provide a solid foundation
for the project and ensures that project participants are
in mutual agreement as to the project's approach, work
plan, schedule, and the City's priorities.
As part of the meeting, RFC will discuss: 1) the method-
ology for the existing rate structure; 2) the implications
of Proposition 218 and other legal rulings as they relate
to the City; and 3) communicating the value of water
supply and reliability to the City's customers. In addition,
forecast assumptions, master plans, and the City's poli-
cies will be reviewed.
A detailed data request list will be submitted to the City
prior to the meeting so that all appropriate data in the
required format can be forwarded to RFC. Upon receiv-
ing the items requested in the data request, the Project
Team will conduct a thorough review of the informa-
tion provided by the City. It is important for the Project
Team to get an understanding of the nature of both the
revenue streams and the revenue requirements over the
study period, especially for non-recurring expenditures
or volatile revenue requirements. In addition, RFC will
review the City's current structure of financial funds and
reserves and develop recommendations for appropriate
reserve levels that are consistent with industry standards
as well as the City's risk management practices to main-
tain or enhance financial solvency.
This task also includes ongoing project management.
Management responsibilities include general admin-
istrative duties such as client correspondence, billing,
project documentation, and administration of the study
control plan.
Meetings: One (1) Project Orientation Workshop
Deliverables: Data Request List, Orientation Workshop
Discussion Package, and Workshop Minutes
TASK 2A: 10 -YEAR FINANCIAL PLAN
The objective of this task is to project the City's revenue
needs for the study period. This major task requires an
assessment of revenues based on the existing rate and fee
schedules, an estimation of future revenue requirements,
the City's ability to meet projected revenue requirements,
and the determination of the level of revenue adjust-
ments and additional financing requirements.
RFC will develop forecasts of revenue requirements
for Water, Recycled Water and Wastewater Enterprises
over the ten-year planning horizon. This will include
an estimate of revenues based on current rates, usage
characteristics, and other non-operating revenues. Rev-
enue requirements will be projected based on historical
results, the current budget, capital improvement plans
(CIP), existing debt service and other bond compli-
ance requirements, pass-throughs from imported water
sources —Metropolitan Water District of Southern Cali-
fornia — and other obligations and current economic
trends. The financial plan will account not only for the
RAF1 [_PS FINANCIAL CONSULIANTS. iNC. CI -1 Y OF SAN .JUAN CAPISTRAND - 09 -
next ten years, but will also extend out through the City's
capital improvement plan. 'Ibis will ensure that future
capital needs are accounted for through a slow, measured
buildup of cash reserves as opposed to requiring drastic
spike in rates in one particular year. Rates, debt, grants,
government subsidies, or infrastructure bank loans will
be provided as options for capital cost financing. Project-
ing revenue adjustments over a longer planning horizon
can illustrate future rate impacts and potential chal-
lenges to the City's financial situation and allow the City
to make adjustments to expenses, reserve balances or
capital projects scheduling to smooth rate impacts and to
maintain financial stability. RFC will also ensure that the
generated revenue meets the conditions of the California
Urban Water Conservation Council's Best Management
Practices regarding rates and other most up-to-date in-
dustry standards.
RFC will develop a ten-year cash flow analysis to de-
termine revenue adjustments needed to meet projected
revenue requirements for the planning period, while
minimizing sharp rate fluctuations and debt coverage re-
quirements. Revenue requirements will be calculated for
each year in the forecast period and adjusted to provide
for a smooth forecast of revenue adjustments. For exam-
ple, changes in the timing of capital expenditures and the
use of reserve funds to mitigate short-term rate impacts
are two ways that revenue smoothing could be addressed.
The objective is to minimize the magnitude of customer
impacts while still achieving long-term revenue objectives.
RFC understands the importance of developing a user-
friendly, flexible Model that the City can use for future
financial planning development. Following, are some of
the features of our Financial Plan Model:
• Provides flexibility to change various assumptions by
year;
• Flags errors and problematic results such as: failure to
meet debt coverage, reserves below target levels, etc.;
• Performs sensitivity analyses and runs various
"what -if" scenarios so that impacts can be viewed in-
stantaneously with built in -screen graphics; and
• Accounts for and saves multiple scenarios for vari-
ous levels of funding through our Scenario Manager.
The Scenario Manager will provide the ability to run
a comparative analysis between different scenarios
to assist the City staff, the Utility Commission, and
the City Council with clearly understanding the ad-
vantages and disadvantages of each scenario each
scenario can be accommodate slight adjustments to
financial policies, reserve funding levels, debt cov-
erage, rate impact, and, of course, extent of capital
funding. Provides ease of input, report printing, up-
dates, understanding and administration.
The financial plans will be presented in an easy -to -
understand format on an interactive `Dashboard' which
shows the impacts of various assumptions so that deci-
sions regarding revenue adjustments, capital financing
through pay -go or debt and reserve balances can all be
made quickly and efficiently. A snapshot of the Dash-
board is shown on the following page.
RFC builds each client's Model from the ground up,
carefully tailored to individual needs and preferences.
Several features of the shown Model Dashboard in addi-
tion to the basic capabilities described above include the
ability to show or indicate:
1. Different funding sources of CIP
2. Toggle switches for:
a. Pass-throughs (SDG&E, MWD)
b. Water demand growth rate
c. Percent of R&R funding
3. Variable number of years displayed for financial plan
4. Variable funds displayed
5. Variable reserves displayed
6. Spin buttons (dynamic selection options) for scenario
analyses
As part of this task, RFC will work with City staff to de-
termine the features that will be included in the Model.
Upon completion of the Financial Plan Model, RFC
will hold a webinar with City staff to review the Model
and the assumptions for appropriateness, and finalize the
financial plans for Water, Recycled Water and Wastewa-
ter Enterprises to be used for the Rate Design Model.
Meetings: One (1) meeting with City staff to review as-
sumption and other inputs
Deliverables: Financial Plan component of the Model in
MS Excel° 2007 (deliverable in conjunction with Task 5)
TASK 26: REVIEW AND CALCULATE
CONNECTION FEES
RFC will review and evaluate the current water and
wastewater development impact fees regarding the cal -
to CEI Y OF SAN JUAN CLPI TRANCI RAF-, ELIC:: FINANCIAL CON ULIAN? , INC.
culation methods to ensure compliance with regulatory
and industry standards and to account for capital im-
provements that benefit future customers versus existing
customers. In addition, RFC will obtain and review the
latest planning documents to assess the growth in new
users and the related demands that will be placed on the
utility systems. Based on the City's 2010 Urban Water
Management Plan, the City is expected to reach full
build -out in 2035 and will grow by approximately ten
percent in population. This information will be useful for
determining cash flows and impacts on existing custom-
ers. Given the relatively limited amount of future growth,
connection fees will be a small revenue component of
the overall financial plan.
RFC will compile the current assets by function such as
land, collection, treatment, pumping, production, etc. to
ensure that any existing facilities that are needed to serve
new customers are accounted for in the development of
impact fees and the financial plan developed in Task 2A.
SAMPLE MODEL DASHBOARD
Mlllkxu Chart 3- Total ReserveChart
Sts
520
Sis
$10
$5 }
F
rr 1012. rr 2015 FY 2014 Fr.201S
NEW Endi.95.W es -+-'reel • A-tila La rates
Chart 2 - operating Financial Plan
� 535
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rr 1012. rr 2015 FY 2014 Fr.201S
NEW Endi.95.W es -+-'reel • A-tila La rates
Chart 2 - operating Financial Plan
� 535
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19,000AF
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19,158AF
4237 AF
19,316AF
19,39SAF
19,474 AF
19, 553 AF
19,62 AF
19,632 AF
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19,00DAF
18,175AF
17,290AF
14493 AF
16,563 AF
16,E29AF
16,697 AF
16,765 AF
16, 833 AF
16,833 AF
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$10o,0DD
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$1. mc. 000
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Emergency
-5£, Ox
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-510, 00C
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551, 000
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551. C06
551. XC
551, 006
RAF 11 1 1`1 FINANCIA1 CONSULTANTS, INC. CI'Y OF `AN _JUAN CAPISTRANO - i 1 -
The City will provide depreciation schedules and a list of
assets with their historical values and dates of construc-
tion/installation as part of the data request.
There are several methodologies for calculating capital fa-
cilities fees. The various approaches have largely evolved
on the basis of changing public policy, legal requirements,
and the unique and special circumstances of every local
agency. However, there are two general approaches that
are widely accepted and appropriate for water and waste-
water capacity facilities fees.
Buy -in Approach
The "buy -in" approach rests on the premise that new cus-
tomers are entitled to service at the same price as existing
customers. However, existing customers have already
developed the facilities that will serve new customers, in-
cluding the costs associated with financing those services.
Under this approach, new customers only pay an amount
equal to the net investment already made by existing us-
ers, based on replacement cost less depreciation. This net
equity investment is then divided by the current demand
of the system number of customers (or customer equiva-
lents) to determine the fee of the new user.
Incremental -Cost Approach
When new users connect to a water or wastewater system,
they use either surplus capacity from the existing system,
which must then be replaced, or they require new capac-
ity that must be added to the system to accommodate their
needs. Under the incremental -cost approach, new custom-
ers pay for additional capacity requirements, irrespective of
the value of past investments made by existing customers.
Based on our analysis of the City's assets, RFC will
evaluate the City's utility connection fees based on the
buy -in and incremental methodologies or a combina-
tion of both methodologies that are most applicable to
the City. The calculation of the fees will depend on fixed
assets, planned capital improvements, capital financing
assumptions, system capacities, and the level of service
or demand required to serve new customers. Proposed
development impact fees will meet applicable regulatory
requirements (Government Code 66000) in developing
rates and impact fees.
TASK 3: COST OF SERVICE ANALYSIS
The City has expressed interest in reviewing its current
tiered rate structure, developing a rate structure which
continues to promote water conservation, and evaluating
its current recycled rate structure to ensure that produc-
tion costs are fully recovered by the appropriate customers.
As a result, RFC will conduct a cost of service analysis
that re-evaluates the cost distribution between different
customer classes. Based on the cost of service analysis,
RFC will review and provide appropriate rate structures
for water, recycled water and wastewater. RFC will also
allocate cost of service to current customer classifications.
The cost of service analysis portion of the Study is often
viewed as a compliance measure for regulations such as
Proposition 218; another perspective is the defensibility
the analysis provides the City in terms of the selected
rate structure and rate levels. This level of confidence
provides additional support for the City's pursuing the
rates and rate structure that are best for the City and
its customers. RFC will pay very close attention to the
recent court's opinion regarding rate proportionality and
cost allocations for recycled water.
RFC specializes in the financial and rate development
of water and wastewater utilities. Thus, there is no sepa-
ration within the firm between a financial knowledge
base and an engineering one. Instead, analyses for the
City will be subject to technical review from personnel
who have decades of experience on both the financial
and engineering sides, and continue to be recognized as
industry leaders. Based on this, RFC is confident of its
determination of the cost allocation factors that steer the
cost of service process.
RFC will develop cost -based rates based on the City's
imported water consumption, peaking, and usage char-
acteristics. The cost of service analysis will be conducted
according to the following process:
Step 1 - Review Customer Class Usage Patterns
and Determine Customer Classifications
RFC will review and analyze historical water con-
sumption, revenue records, and billing summaries to
determine water usage and peaking characteristics by
customer class or subclass. We will then estimate the rel-
ative responsibility of each customer class for each of the
functional cost elements. This allocation will be based on
billing summary data, other locally available data which
may be applicable, and RFC's experience with other util-
ities exhibiting similar usage characteristics and patterns.
It will provide the basis for equitable cost allocations to
ii Y (_. - S. -PN JUAN CAPIS 'Fid?NG' �;�'F7 EI. IS FINANCIAL CONS(1l'AN 15, INC.
each customer class or subclass.
Step 2 — Allocate Costs to Functional Cost
Categories
RFC will f inctionalize the costs into main functions
such as supply, transmission & distribution, storage, etc.
The costs will then be allocated to cost centers such as
commodity, maximum hour, maximum day, customer ac-
counts, meter capacity, etc. to determine the unit cost for
each cost center.
Step 3 — Allocate Functional Costs to Customer
Classes
Next, the costs associated with the functional com-
ponents will be allocated to the various customer
classifications on the basis of the relative responsibility
of each classification for service provided. Costs will be
allocated based on the determination of units of service
for each customer classification and the application of
unit costs of service to the respective units.
Throughout the cost allocation process, RFC will com-
ply with the City's policy considerations, procedures,
and guidelines applicable to charges for water service
and ensure that proposed rates are in compliance with
Proposition 218.
Meetings: One (1) conference call with City staff to review
cost allocation inputs
Deliverables: Cost of Service analysis component of the
Model (deliverable in conjunction with Task S)
TASK 4: RATE DESIGN & SENSITIVITY ANALYSIS
RFC has been instrumental in the evolution of water
budget rate structures in
California and is very famil-
iar with the requirements of Gr
SB x7-7 as they pertain to
water sales reduction tar-
gets and the guidelines for
developing rate structures
such as for landscape are or
water budget allotments.
Rates will be calculated
in the Model and will be
developed to reflect the po-
tential financial impacts on
customers from the alterna-
tive rate structure(s) that will have been evaluated. RFC
will utilize the appropriate water consumption data and
allocation factors that the City has for developing water
budget allocations. The Model will include a series of
tables and figures that show projected rate impacts on
different types of customers at different levels of usage
or generation. Because the Dashboard functionality of
the Model inherently serves as a sensitivity -analysis tool
(See Step 1, below, for more detail), the Model can serve
on an on-going basis to evaluate how adjustments to the
rate structure will impact targeted customer groups and/
or levels of usage to ensure that conservation and other
pricing objectives are being addressed effectively. The
Rate Model will be developed according to the following
process:
Step 1 — Calculate Water Rates
The Model will be developed with the flexibility to
change tier widths based on customer class. To help
communicate with customers about the drivers be-
hind rate increases and the rationale behind why rates
between tiers are different, the water rates will have
several cost components for each tier including water
supply costs, the City's system costs (delivery costs),
conservation costs and other revenues to offset water sys-
tem costs. An example of this type of structuring is the
FY 2010 water rates for El Toro Water District, shown
below. Water supply rates in tiers 1 (indoor allocation)
and 2 (outdoor allocation) are associated with low water
supply costs, and tiers 3 (50 percent of total allocation)
and 4 are based on the cost expanding the supplemental
water supply and conservation programs. El Toro Wa-
ter District has only a limited supply of water available,
which is dedicated to efficient indoor and outdoor water
aphical interface showing impacts on
ustomers to optimize water structure.
. Offset using Income from Site Lease based on District's policy
RAFT[ I Ic FINANCIAL CONSULTANTS, INC. C1_1 Y OF SAN .JUAN CA.PISTRAN0 - 13
Current
Proposed Rates
Tiers
Rates
water Conserva-
Supply Delivery tion offset*
PP Y
Total
I. :•
I. :. -- L1 1.
I. :1
WEE.".
. Offset using Income from Site Lease based on District's policy
RAFT[ I Ic FINANCIAL CONSULTANTS, INC. C1_1 Y OF SAN .JUAN CA.PISTRAN0 - 13
use. If a customer wants to utilize water above an efficient
level, the District will need to secure water from other
sources, which include expanding their source of supple-
mental water supply. The conservation program is funded
through the consumption in the higher tiers as these are
the customers that directly benefit from such programs.
This build-up cost approach for deriving the rate for each
tier develops the rationale for the tiered rates and meets
the requirements of Proposition 218.
The Model will determine the rates required for each
tier to collect the required revenues. The Model will also
have the built-in capability to conduct various scenario
analyses to address different conservation issues such as
drought, loss of water supply etc., and to calculate water
rates under each scenario. The Dashboard, which displays
key variables and results in real-time on screen, will fa-
cilitate discussion to reach a consensus quickly. This has
proven to be particularly useful when making presenta-
tions to utilities commissions, city councils, and various
stakeholder groups, allowing them instantly to appreciate
the impacts of their decisions fully.
Step 2 - Perform Impact Analysis for Customers
RFC will also determine the potential financial impact
on customers that may result from the proposed rate
structure. The Model will include a series of tables and
figures that show projected rate impacts on different
types of customers at various levels of usage. The sample
customer impact illustration displayed on the following
page shows that 64% (48 + 16) of the customers will see
no more than a $2 increase in their bill.
Meetings: Up to two (2) webinars with City staff, as
necessary
Deliverables: Rate design and sensitivity analyses compo-
nents of Model (deliverable in conjunction with Task 5)
TASK 5: RATE WORKSHOPS
Task 5.1: Rate Design Workshop with City Staff
Following the completion of the Study (inclusive of
built-in sensitivity analyses) - Financial Plan, rate design,
cost of service analysis - RFC will conduct a workshop
with City staff to examine different viable rate scenarios
to consider for adoption. The goal of this workshop is
to identify the water rates that will be presented at the
rate workshop with the Utilities Commission and City
Council. RFC will present the interim proposed rates
and discuss the benefits and challenges associated with
each proposed rate alternative as demonstrated through
Graphical interface showing impacts on customers to optimize water budget rate structure.
-1 14 - C11Y OF SAN JUAN CAPISTRANO R1,F-! HS, FINANCIAL CONSAJI1AN' INC.
The overall financial impacts on
customers are a tool for stakeholders
to make informed decisions regarding
different policy options and variables.
%"' eBs CUSTOMER IMPACTS
SFR � MFR a IRR
59 Sk 65, Bti
:SO 53 55 $10 $15 525 550 1550
S ckwp In Wk
the Model. Changes and suggestions from staff will be
incorporated into the analyses prior to presenting the re-
sults at the joint meeting with the Utilities Commission
and City Council.
Task 5.2: Rate Design Workshop with Utilities
Commission and City Council
Upon incorporating comments from the workshop with
City staff into the Study, Mr. Gaur will present the re-
sults of the Study with the City's governing bodies. As
mentioned previously, Mr. Gaur is consistently called
upon by industry associations such as AWWA and
ACWA to explain to elected officials the complex issues
associated with alternative rate structures and has exten-
sive experience presenting to utilities' governing bodies.
"the presentation will highlight the collaborative process
used to identify and prioritize the important issues fac-
ing the City. The proposed rates and miscellaneous fees
will be presented along with other recommendations
resulting from the Study.
Meetings: One (1) meeting with City staff to review rate
design and cost of service analysis, one (1) joint meeting with
Utilities Commission and City Council
Deliverables: Presentation materials
TASK 6: PREPARATION OF RATE STUDY DRAFT
REPORT
"the process for developing the financial plan and
proposed rate structures along with preliminary rate
recommendations will be described in a draft report of
findings and recommendations. This draft report will be
submitted after the City Council Workshop to incor-
porate their input into the final result. As a means to
ensure that the study includes a thorough administrative
record, the Final Report will include an exhibit listing all
rate design assumptions and methodologies used to de-
velop the financial plan and rates. Comments from the
City staff will be incorporated into the Final Report and
the Model will be refined to reflect appropriate issues or
concerns raised. The report will be submitted to the City
and will include appropriate supporting data from the
Model to address the requirements of Proposition 218.
Also included for update to the City's last rate com-
parison study will be a survey of south Orange County
water service providers of up to five (5) comparable utili-
ties. RFC has extensive experience in conducting rate
surveys, as we have partnered with the American Water
Works Association (AWWA) to conduct a nationwide
biennial survey of water and wastewater rates and with
CA -NV AWWA to survey water utilities in California
and Nevada. This provides RFC with extensive survey
experience, a national database, and numerous contacts
throughout the industry that will be extremely useful in
collecting financial and rate information for the rate and
cost of service comparison. Comparing rates and costs
with other comparable agencies and industry bench-
marks can provide insights into a utility's pricing policies
related to service. As part of our comparison survey,
we will also determine whether the other agencies uti-
lize property tax or other dedicated revenue streams for
capital improvements, such as, Mello -Roos Districts.
Care should be taken, however, in drawing conclusions
from such a comparison as some factors including geo-
graphic location, demand, customer constituency, level of
treatment, level of grant funding, age of system, level of
FAFTFLIS FINANCIAL CONSULTANTS, INC:. CITY OF SAN JUAN CAP151RANO - 15 -
general fund subsidization, and rate -setting methodology Optional Task: Mailers to two (2) mailing lists, presenta-
can affect the cost of providing services. tion materials for the Public Meeting
Meetings: One (1) meeting with City staff and (1) joint spe-
cial meeting with Utilities Commission and City Council
Deliverables: Draft Rate Study Report (inclusive of four re-
port components)
TASK 7: PREPARE RATE STUDY FINAL REPORT
Following review of the Draft Report with City staff,
City Council, and the Utilities Commission, comments
will be incorporated into the Final Report and the Model
will be refined to reflect appropriate issues or concerns
raised.
Meetings: One (1) Public Information Workshop and (1)
joint special meeting with Utilities Commission and City
Council
Deliverables: Final Rate Study Report (inclusive of all Study
components)
TASK 8: PROPOSITION 218 ASSISTANCE
Based on our experience with Proposition 218 since its
passage in 1996, RFC will draft the required Proposition
218 notices. The notices will explain: 1) the purpose of
the rates; 2) how the rates are structured; 3) the time and
place of the public hearing; and 4) details regarding what
constitutes the existence of a majority protest as it relates
to the implementation of new/increased utility rates.
RFC will provide guidance to the City for the develop-
ment of the Proposition 218 notice and sign an affidavit
of mailing. RFC recognizes the meeting of Proposition
218 requirements as a legal issue and will work with the
City attorney, as we have with numerous agencies, to
ensure compliant notification materials. Following ap-
proval and as an optional task, RFC could mail the notice
to property owners as well as customers that are not the
property owner.
RFC will attend and make a presentation at one (1) pub-
lic hearing with the City Council on the adoption of the
new rate structures.
Meetings: One (1) Public Hearing Meeting
Deliverables: Proposition 218 notification materials for
approval
TASK 9: MODEL DELIVERY AND TRAINING
As part of this task, RFC will provide one train-
ing session to staff in the use of the Model. However,
throughout the course of this engagement, RFC will
utilize each in-person meeting to educate and train City
staff on each component of the model, which will allow
the final day of training devoted primarily to more spe-
cific questions regarding the Model. The training session
will include working through realistic sample scenarios
to fully prepare the staff to independently use and update
the model for future analyses. As described and shown
in Task 2, the Model's Dashboard is very easy to under-
stand and to tailor to various scenarios. Staff's update of
inputs such as O&M and CIP to the City's computer
software system will be present minimal administrative
burden on staff. RFC will continue to provide assistance
beyond this training to City staff to answer questions
and clarifications on model updates.
Meetings: Trainingsession
Deliverables: Model, training materials
- It -- CITY OF SAN JUAN CAPISTRANO RAFTELIS FINANCIAL CONSULTANS, INC.
PROJECT
SCHEDULE
RFC will complete the scope of work outlined in this proposal as shown in the schedule below. This
schedule assumes that we receive the notice to proceed by October 2, 2013. It will be necessary to
receive the requested data in a timely manner and be able to schedule meetings as necessary.
Project Orientation,
Administration and Data
1 Collection
Deliverable(o) Kick aff meeting package and data request list
10 -Year Financial Plan IsM
2
Deliverable(s); 10 -year Financial Plan Model n MS Excel'"' 2007, presentation materials for Financial Plan Workshop with Staff
3 Cost of Service Analysis il
Deliverablefs): Cost of Service Analyses for Water. RW and WW
Hate Oestgn 8 Sensitivity
4 Anatv�i�
Deliverable(s): Rate Design Model in MS ExcelTM 2007, Proposed Water, RW, WW and Wholesale rates, and Sensitivity Analyses
Sensnivily Analysis and Rate
5 Workshops
Deliverablefs): Presentation materials for the Workshops
Preparation of Draft Reporl w
Deliverable(s): Draft Rate Study Report, Summary of each customer classification, Draft Rale Model, Rales comparison for South Orange County water agencies and presentation materials for meetings with Staff and
Preparation of Final Report
Deliverable(sl: Final Rate Study Report, Final summary of each customer classification, Final Rate Model, and presentation materials for meeougsNmrkshops with Staff, public and elected officials
B Proposition 218 Assistance IF,- T '•
Deliverable(s): Draft Proposition 218 notification materials and presentation materials lot the public hearing
9 Model Delivery and Training
Deliverablels): Final Rate Model it MS Excel- 2007 and training materials for the training session with Staff
10 Project Orientabn Workshop with City Staff j. Public Hearing
1 Project Meetings with City Staff Proposition 218 Notice
Workshops I Meetings with Elected J
%16 Officials (Utilities Commission and City Delivery of Draft/Final Reports
Council)
RAFTLLIS FINANCIAL CONSULTANTS, INC. CITY OF SAN JUAN CAPISTRANO - i7 -
ALTERNATIVE
R E C 0 M M E N D A T 1 0 N S
In developing alternative recommendations related to rate structure and design, RFC will begin the discussion with a
review of the evolution of rate structures and the benefits and challenges associated with each structure, including uni-
form rate, seasonal rates, inclining tiered rates, and water budget rate structures. The goal of this discussion is for the
City to share with RFC its understanding of available rate structures and for RFC to provide the City an overview of
all applicable alternatives according to the City's priorities and currently observed best management practices. Once
rate structure alternatives and the City's preliminary preferences have been discussed, RFC will present an overview
of pricing objectives. Examples of pricing objectives include: need for an effective drought management tool; financial
sufficiency and stability; rate stability; reduction in peak demand; minimization of customer impacts; and affordability
for essential use, among others.
Sample Pricing Objectives Scorecard
This exercise will es row
and =M�Www
the selection of alterna-
tive rate strthat
have and
designs that have the
best potential to serve I Financial sufficiency A A- A -
the City's interests and o a 2 Revenue stability A- B+ A
needs. The steps in- �' E 3 Equity B. B A
volved in considering
selected alternatives are 4 Cost of Service Based A A A
outlined throughout our v oAllocations
proposed Project Tasks, > E 5 DefensibilityG A- A -
and the ultimate selec- '-' 6 Rate Stability C A- A -
tion of an alternative Conservation/Demand
rate structure and design m y Management C A_ A
will fully consider the o Minimization of
satisfaction of regulatory 8 Customer Impacts A B A -
guidelines and impacts 9 Ease of Implementation A B+ C
on customers. 10 Simple to Understand and A B+ B-
Update
B Affordability to
.a E 11 Disadvantaged Customers C B B
.. 12 Economic Development B B B
- 18 - CITY OF SAN JUAN CAPISTRANO RAFTELIS FINANCIAL CONSULTANTS, INC.
FEE PROPOSAL
RFC will complete the scope of work detailed in our Scope of Service in a timely and efficient manner. the table
below details the estimated hours for each consultant and administrative support related to each task of the scope of
work, and an additional table detailing the pricing for the optional task. Reimbursable expenses are billed at actual
cost. Additional meetings will be billed on a time and materials basis, and estimated cost per meeting is shown below.
Expenses include costs associated with travel and a $10 per hour technology charge covering computers, networks,
telephones, postage, etc.
Task
Task Descriptions
No of
Meetings
Hours Requirements
Total Fees &
Expenses
Total Fees &
Expenses
SP SG FC Admin
Total
1 Project Orientation, Administration and Data Collection
1
$4,068
10
12
1
23
$5,138
2 10 -Year Financial Plan
1
2
12
50
HOURLY RATES
64
$13,479
3 Cost of Service Analysis
2
12
30
$1,920 $1,560 $0 $3,740
44
$9,251
4 Rate Design & Sensitivity Analysis
2
12
60
$328
74
$15,101
5 Sensitivity Analysis and Rate Workshops
2
2
24
30
56
$12,786
6 Preparation of Draft Report
7 Preparation of Final Report
2
2
2
20
30
30
24
1
1
53
57
$11,896
$13,126
2
8 Proposition 218 Assistance
1
1
8
4
2
15
$3,428
9 Model Delivery and Training
1
10
6
16
$3,898
TOTAL ESTIMATED MEETINGS/ HOURS
30
13
138
246
5
402
HOURLY RATES
$260
$240
$195
$70
PROFESSIONAL FEES
$3,380
$33,120
$47,970
$350
$84,820
SP = Sudhir Pardiwala
SG = Sanjay Gaur
FC = Financial Consultant(s)
Total Fees
$84,820
Total Expenses
$3,283
TOTAL FEES & EXPENSES ESTIMATED
,$`88,103
OPTIONAL TASK
Task
Optional Task Descriptions
No of
Meetings
Hours Requirements
Total Fees &
Expenses
SP SG FC Admin Total
Additional Public Meetings, including preparation time
1
1
8 8 17
$4,068
(per meeting)
TOTAL ESTIMATED MEETINGS/ HOURS
1
1
8 8 0 17
HOURLY RATES
$260
j $240 $195 $70
PROFESSIONAL FEES
$260
$1,920 $1,560 $0 $3,740
SP = Sudhir Pardiwala
SG = Sanjay Gaur
FC = Financial Consultant(s)
Total fees
$3,740
Total Expenses
$328
TOTAL FEES & EXPENSES ESTIMATED
$4,068
RAFTELIS FINANCIAL CONSULTANTS, INC.
CITY OF SAN JUAN CAPISTRANO - 37 -
Exhibit B
CALIFORNIA EXPERIENCE IN THE PAST 5 YEARS
'he following tables list the California utilities that RFC has assisted
over the past five years on financial/rate consulting projects.
Alameda County Water District
w
✓
✓
✓
Anaheim, City of
w
✓
✓
✓
Arcadia, City of
w
✓
✓
✓
Atwater, City of
w, ww
✓
✓
✓
✓
Banning, City of
w, ww
✓
✓
✓
✓ ✓ ✓
Beaumont Cherry Valley Water District
w
✓
✓
✓
✓ ✓ ✓
Beverly Hills, City of
w, ww
✓
✓
✓
Borrego Water District
w, ww
✓
Brea, City of
w
✓
✓
✓
Carpinteria Sanitary District
ww
✓
✓
✓
✓
Casitas Municipal Water District
w
✓
✓
✓
Castroville Water District
w, ww
✓
✓
✓
Chowchilla, City of
w, ww
✓
✓
✓
Corona, City of
w, ww
✓
✓
✓
East Orange County Water District
w
✓
El Toro Water District
w, ww
✓
✓
✓
✓ ✓ ✓
Encinitas, City of
w
✓
✓
✓
Escondido, City of
w
✓
✓
✓
✓ ✓
Glendora, City of
ww
✓
Goleta West Sanitary District
ww
✓
✓
✓
✓ ✓
Holtville, City of
ww
✓
✓
✓
Huntington Beach, City of
w
✓
Indio Water Authority
solid
✓
Jurupa Community Services District
w, ww
✓
✓
✓
✓
La Canada Irrigation District
w
✓
✓
✓
✓
La Habra Heights County Water District
w
✓
Las Virgenes Municipal Water District
✓
✓
✓
✓ ✓
Los Angeles DWP
w
✓
Madera, City of
ww
✓
✓
✓
Mesa Consolidated Water District
w
✓
Metropolitan Wastewater Joint Powers
ww
✓
Authority
Metropolitan Water District
w
✓
Municipal Water District of Orange
✓
County
w
Napa Sanitation District
ww
✓
- 28 - CITY OF SAN JUAN CAPISTRANO RAFTELIS FINANCIAL CONSULTANTS, INC.
Attachment 4
Newhall County Water District
w
✓
Newport Beach, City of
w
✓
Olivenhain Municipal Water District
w
✓
Ontario, City of
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solid
✓
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Palmdale Water District
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Poway, City of
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Ramona Municipal Water District
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Rancho California Water District
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Redlands, City of
w, ww
✓
✓
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Riverside, City of
w, ww
✓
✓
✓
Sacramento, City of
ww
✓
✓
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Sacramento Regional County
ww
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Sanitation District
Salton Community Services District
ww
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San Bernardino County
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✓
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✓
San Clemente, City of
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San Diego, City of
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trans.
San Diego County Water Authority
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San Dieguito Water District
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San Francisco Public Utilities
✓
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Commission
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Santa Barbara, City of
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Santa Clara Valley Water District
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✓
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Santa Fe Irrigation District
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✓
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Santa Monica, City of
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South Coast Water District
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South Pasadena, City of
w, ww
✓
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Torrance, City of
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Triunfo Sanitation District
w, ww
✓
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Ventura, City of
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✓
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Ventura Regional Sanitation District
w, ww
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Western Municipal Water District
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Yorba Linda Water District
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RAFTLLIS FINANCIAL CONSULTANIS. INC. CITY OF SAN JUAN CAPISTRANO - 29 -
On the following pages, we have provided detailed descriptions of several projects that we have worked on in the
past five years that are similar in scope and/or size to the City's project. We also selected these projects because many
of our proposed Project Team members worked in similar roles on them. Our Project Manager, Sanjay Gaur, served
as Project Manager on many of these projects. We have included references for each of these clients and urge you to
contact them to better understand our capabilities and the quality of service that we provide. We have also included
recommendation letters from several of our clients as further evidence of our focus on client satisfaction.
KEY STAFF *
S. Gaur - PM
S. Pardiwala - PD
K. Phan - SC
H. Phan - SC
B. Lim - SC
CLIENT CONTACT
Kenneth Dills
Public Works
Department,
Utilities Division
19001 Huntington
Street
Huntington Beach,
CA 92648
P: 714.375.5055
E: kdills@surfcity-
hb.org
COMPLETION
DATE
2013
* PM = Project
Manager; PD =
Project Director; SC
= Staff Consultant
CITY OF HUNTINGTON BEACH (CA)
SCOPE OF WORK
In 2010, City of Huntington Beach (City) engaged RFC to conduct a water budget rate
study and design a water budget rate structure for its 48,000 residential and irrigation
accounts. Budgets were based on household size for indoor allocations and weather and
irrigation area for outdoor allocations. The formula for developing allocation budgets
considers irrigation efficiency and type of landscape. The whole concept is to encourage
efficient use of water and to provide users adequate water but penalize wasteful practices.
RFC continued the water budget process in 2011 by developing a water budget rate
model that allowed the City to quickly view the impacts of alternate rates and budgets.
The water budget rate structure was designed to ensure revenue stability, financial suf-
ficiency and conservation program funding for the City. This tool was invaluable when
presenting results in graphical format to the City Council so that they could see the
impacts of different water budgets and different rate alternatives on their customers in-
stantaneously. In addition, RFC has additionally been requested to prepare the billing
system framework required to accommodate a water budget rate structure. As part of
this engagement, RFC conducted market research to identify potential vendors that had
successfully implemented a water budget rate structure and provided the City with a
list of vendors and their associated contact information. RFC contacted these vendors
to educate them on the City's needs associated with the water budget rate structure and
determined a ballpark cost figure. RFC followed up in 2012 with development of a Fi-
nancial Plan Model to evaluate financing options for the capital improvement projects
(CIP) included in its recently updated Water Master Plan, to assess the resulting finan-
cial impacts and to perform sensitivity analyses for different CIP scenarios.
- 30 -- CITY OF SAN JOAN CAPISTRANO RAFTELIS FINANCIAL CONSULTANTS, INC.
KEY STAFF
S. Gaur - PM
S. Pardiwala - PD / PM
K. Phan - SC
H. Phan - SC
B. Lim - SC
CLIENT CONTACT
Michael Grandy
Assistant GM/CFO
24251 Los Alisos
Boulevard
Lake Forest, CA 92630
P: 949.837.7050
E: mgrandy@etwd.com
COMPLETION DATE
2013
"The EI Toro Water District
and I have been working
Sudhir Pardiwala and his
team at RFC for many years.
We have come to rely on
their expertise in a number
Of very important aspects of
our business. RFC guided
Staff and Board through the
conversion from a uniform
commodity rate to a water
budget based tiered conser-
vation rate structure. Their
in-depth understanding and
straight forward communi-
cation style took a complex
and complicated topic and
broke it down into under-
standable components. Three
years into the program, we
have maintained a reduction
in consumption meeting our
20% by 2020 goal without
financial implications of the
reduced sales. "
- Michael Grandy,
Assistant GM/CFO
EI Toro Water District
EL TORO WATER DISTRICT (CA)
SCOPE OF WORK
RFC has been assisting El Toro Water District (District) with its rates for several
years. In 2006, the District had not updated its water and wastewater rates and rate
structure in over ten years and was operating at a deficit. RFC prepared a finan-
cial plan over a 12 -year period considering operating and capital expenses and debt
and reserve requirements. A cost of service analysis was also conducted to review
fairness of rates and rate structures. Multiple scenarios were developed to review
impacts and suggested a phased approach to implementing cost of service rates. Al-
ternate innovative sources of revenues were considered to minimize rate impacts.
RFC also reviewed the reclaimed water rates and surveyed surrounding agencies
to compare rates, sources of revenue, unit cost of providing service based on total
sales, etc. to determine the competitive effectiveness of the District's operations.
The adopted rates, resulting from the Cost of Service Study in 2006, unbundled
rate components to convey the true cost costs of various service components and to
continue equitably passing on the cost of water, wastewater and supplemental water
supply services to users. RFC continued the effort in 2009 by designing a water
budget rate structure for its residential and irrigation accounts to be implement-
ed in July 2010 to promote water -use efficiency. As a result, RFC has designed
a water budget rate structure which ensures revenue stability, financial sufficiency,
and provides the appropriate price signal on different supply costs and conserva-
tion program funding for the District. As part of the Study, RFC interfaced with
Continental Utility Solutions, Inc. (CUSI), the District's billing consultant, and
provided specifications to ensure that the budget rate structure could be smoothly
implemented. Next, RFC developed a water budget rate model that allows the Dis-
trict to quickly view the impacts of alternate rates and budgets, to aid policy makers
in making well-informed decisions in a timely manner. This tool proved invaluable
when presenting the results in a graphical format to the District Board of Direc-
tors because it enabled them to easily see the impacts of different water budgets
on their customers in real-time. As a result, the Board adopted the water budget
rate structure in June 2010. To minimize rate shocks to upper -tier users, RFC
developed a 3-phase implementation plan slowly phasing in Tier 3 and 4 rates. The
rate unbundling and phase-in implementation plan were found beneficial and use-
ful for the District during public outreach and rate implementation. The findings
and recommendations resulting from the Study were summarized and documented
in the Study Report. To address customer concerns, RFC also assisted the District
in developing variance programs to accommodate customers' with unique user char-
acteristics. RFC developed a web -based calculator so that customers could review
impacts. To address the Proposition 218 requirements, RFC assisted the District
with preparing the Proposition 218 notice sent out to property owners at least 45
days before the public hearing, detailing the rationale behind the changes in water
rates and explaining the rate design and justifications of proposed rates. In 2012,
RFC was retained by the District to conduct the cost of service update study to
update its water and wastewater rates, which went into effect on July 1st 2012 and
the supplemental water supply financial plan study to evaluate the impacts of the
supplemental water supply expansion on the Water and Wastewater Enterprises.
R/`•.FTFt- IS FINANCIAL CONSULTANTS. INC. CITY OF SAN _MAN CAPISTRANO - 31 -
KEY STAFF
S. Gaur - PM
S. Pardiwala - PD
K. Phan - SC
H. Phan - SC
CLIENT CONTACT
Tom Rendina
Municipal Services
Manager
100 Avendia
Presidio
San Clemente, CA
92672
P: 949.361.8312
E: rendinat@san-
clemente.org
COMPLETION
DATE
2013
CITY OF SAN CLEMENTE (CA)
SCOPE OF WORK
In 2011, the City engaged RFC to conduct a Recycled Water, Sewer and Water Rate
Study (Study) to address the steady declines in water demand that led to revenue
shortfalls and a combined deficit of $1.7 million and to establish equitable rates in com-
pliance with Proposition 218. 'Ihe Study included the development of financial plans
for the Water and Sewer Enterprise Funds (to ensure financial sufficiency in order to
meet operation and maintenance (O&M) costs, to ensure sufficient depreciation funding
for capital replacement and refurbishment (R&R) needs, and to improve the financial
health of the enterprises), the development of fair and equitable water and sewer rates
and the review of current rate structure for recycled water (RW) and the modeling of
impacts resulting from recycled water system expansion. In addition, RFC evaluated the
benefits and costs of implementing a full water budget rate structure. RFC assisted the
City in merging the County parcel data with the water consumption by addresses for
single family residential accounts. Based on this information, RFC developed a water
budget model that was able to examine different estimates on weather factors (seasonal
or historical daily) and landscape estimates (percentage of lot size, grouping of lots sizes
by bins and lot size minus footprint). The analysis concluded that due to recent water
conservation efforts and the unique characteristics of the City, potential outdoor wa-
ter savings provided by water budget rates for residential customers were minimal and
not substantial enough to offset the increased costs of implementation and administer-
ing such a rate structure that the City would incur. The usage analysis also suggested
changes to the season and tier definitions for the current water rate structures. RFC
also developed a web -based bill calculator for the City residential customers as a public
outreach tool for the recommended changes to the water and sewer rates. The bill calcu-
lator was posted on the City's website for residential customers to easily assess the actual
impacts on their monthly bills. RFC followed up in 2013 with a rate update study to up-
date the City's water and wastewater rates and the recycled water rate study to calculate
equitable recycled water rates for both contractual and non -contract customers effective
after the completion of the recycled water plant expansion.
- 32 CITY OF SAN JUAN CAPISTRA.NC? RAFTELIS FINANCIAL CONSULTANTS. INC.
KEY STAFF
S. Gaur - PM
S. Pardiwala - PD
K. Phan - SC
H. Phan - SC
CLIENT CONTACT
Jeff Armstrong
Chief Financial Officer
42135 Winchester Road, P.O.
Box 9017
Temecula, CA 92589-9017
P: 951.296.6928
E: armstrongj@ranchowater.
com
COMPLETION DATE
2012
I am writing to thank RFC,
and particularly Sanjay Gaur
and Khanh Phan for the high
quality, professional consult-
ing services provided in the
recent engagements —Water
Budget Rate and Water De-
mand Offset Fee Studies.
Even though the schedules for
both studies were unusually
tight, the work products were
well-writted and presented.
Their creative solutions to the
complex problems surrounding
water budget rate structures
were of tremendous help in
implementing water budget
rates at the District. They were
very responsive, reliable, and
knowledgable. "
- JeffArmstrong, CFO
Rancho California Water District
RANCHO
CALIFORNIA
WATER
DISTRICT
(CA)
SCOPE OF WORK
In 2009, Rancho California Water District (District) engaged RFC in a wa-
ter budget rate study to design a water budget rate structure for its 35,000
residential and irrigation accounts in both Rancho and Santa Rosa Divisions.
RFC assisted the District in evaluating different methodologies to allocate its
water sources, mainly imported water and groundwater, to different customer
classes. RFC also performed numerous analyses on the usage and landscape
area relationships to create a rational landscape area cap for residential ac-
counts. RFC consulted the District in developing the variance programs to
accommodate customers' inquiries about their water budgets. In addition, RFC
thoroughly analyzed the associated impacts of the proposed water budget rate
on the District's finances and its customers so the policy makers could make
informed decisions. RFC developed a water budget rate model that allowed
the District to quickly view the impacts of alternate rates and budgets. The
water budget rate structure was designed to ensure revenue stability, financial
sufficiency and conservation program funding for the District. This tool was
invaluable when presenting results in graphical format to the District Board
of Directors so that they could see the impacts of different water budgets, dif-
ferent water source allocation methodologies and different landscape area caps
on their customers in real-time. To continue the effort, in 2009, RFC was en-
gaged for a New Water Demand Offset Fee Study. The New Water Demand
Offset Program is a form of funding of conservation measures that will help
to create sustainable, zero water footprint development. New developments
will pay fees called New Water Demand Offset Fees to create potable water
savings in the existing system to support water demand generated by new de-
velopments. Water savings can be achieved by converting irrigation accounts
to recycled water or installing high efficiency retrofits to replace inefficient
fixtures for existing accounts in the District. Implementation of the New Wa-
ter Demand Offset Program is a key component to support sustainable new
development without generating additional net demand on the existing sys-
tem. RFC researched water savings and costs for each conservation program/
fixture at various agencies, calculated the estimated water demand of new ac-
count using water budget and built a model to calculate the individualized
water demand offset fees based on the characteristics of the new development,
such as lot size and landscape area. The Study was completed and the results
were presented to the Board in the same month. The District's current water
capital facilities financing program estimates $323 million to be spent by the
end of 2030. Due to the significant amount of capital spending expected, in
November 2011, the District commissioned RFC to evaluate its existing ca-
pacity fee methodology and update the fee to ensure that new customers pay
an equitable share when joining the District's system. The results were sum-
marized in the Water Capacity Fee Study Report and presented to the Board
in March 2012.
RAFTCi_IS FINANCIAL CONSULTANTS. INC. CITY OF SAN JUAN CAPISTRANO - 33 -
KEY STAFF
WESTERN MUNICIPAL
S. Gaur - PM
S. Pardiwala - PD
WATER DISTRICT (C A)
K. Phan - SC
H. Phan - SC
SCOPE OF WORK
B. Lim - SC
Western Municipal Water District (District) serves roughly 24,000 retail and 8 wholesale
customers in western Riverside County with approximately 125,000 acre ft. of water per year
CLIENT
from the Colorado River, State Water Project, and groundwater. RFC has assisted the Dis-
CONTACT
trict with several projects including the development of a water budget rate structure for its
Rod LeMond,
retail customers, the development of a long-term financial plan for each cost center within
CPA Assistant
the District, a review and analysis of the annual water rate update, a water budget web calcu-
GM/CFO
lator to be used as a public outreach tool, and development of connection fees for the retail
14205 Meridian
water, wastewater, and recycled water services within the District. The main objective of the
Parkway
water budget rate study was to identify and thoroughly examine three potential water budget
Riverside, CA
rate structures for each of the two identified cost centers (Murrieta and Riverside). RFC
92518
developed a water budget rate model in Microsoft Excel' so each of the two costs centers
P: 951.571.7203
have the ability to change the key factors for all water allocations, to provide revenue and
E: rlemond@
impact analysis, and to generate sample customer monthly bills under existing and proposed
wmwd.com
rates. To assist the District during the water budget rate implementation, RFC developed a
web -based bill calculator as a public outreach tool to allow customers to review their alloca-
COMPLETION
tions compared with their actual usage and their bill impacts. The water budget rate structure
DATE
was successfully adopted. In 2010, RFC also assisted the District in its annual water rate
2012
update study to ensure revenue sufficiency to recover the increasing costs of imported water
and to enhance revenue stability by designing a rate structure that will reduce the District's
dependency on property tax to fund its operations. In order to better financially manage all
14 enterprises, the District needed a comprehensive, yet user-friendly financial plan model
which could be used to facilitate com-munications between staff and the District's Board of
Directors about the financial implications of different financial policies and capital projects.
The Model assists coordination and decision making between the engineering and finance
staff to prioritize capital projects and to define a capital financing plan to achieve a sustain-
able and achievable solution. Recently, the District engaged RFC to develop a customized
30 -year Financial Plan Model (Model) with the ability to conduct scenario analysis. The
interactive dashboard of the Model displays the Long -Term Financial Plan of the 14 enter-
prises in graphical format. A CIP manager was developed to save a customized CIP scenario
to be used for financial implication evaluations. The built-in scenario manager enables the
Model users to save, load, and compare the results of different assumptions, inputs, and CIP
scenarios. Customized financial reports in preset printed format can be generated at indi-
vidual enterprise level and at aggregate level for the whole District. The District continued
to retain RFC to make necessary modifications and to add more features, including the rate
calculation module for Riverside Treated service area, to the Model in order to address newly
arisen issues and concerns. Finally, in 2012, the District engaged RFC to develop the con-
nection fees for its retail water, wastewater, and recycled water services. The District updated
its Master Plans for Retail Water in Riverside service area, Riverside Recycled Water and
for Wastewater in 2009, but has not incorporated them into the current connection fees. In
addition, the District currently does not assess connection fees for recycled water and desired
to develop one to recover the capital cost to support the associated growth. RFC devel-
oped the connection fees Model to evaluate different policy options related to allocations
of tertiary recycled water treatment values to potable, wastewater, and recycled water and
to calculate the connection fees for retail water, wastewater, and recycled water based on the
framework established after working closely with District staff.
- 34 - Cil Y OF SAN JUAN CAPISTRANO RAFTELIS FINANCIAL CONSUL?ANTS, INC.