HomeMy Public PortalAbout2016.03.24 Financial Consulting Solutions Sewer District Rate StudyCONTRACT AGREEMENT
BETWEEN
FINANCIAL CONSULTING SOLUTIONS
GROUP, INC.
Redmond Town Center
7525 — 166th Ave. NE, Suite D-215
Redmond, Washington 98052
AND
City of McCall, Idaho
216 East Park Street
McCall, ID 83638
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PROJECT: City of McCall & Payette Lakes Recreational Water and Sewer District Rate Study
THIS AGREEMENT combines all understandings between the Parties regarding professional
services for the Project named above and supersedes all prior proposals, quotations, solicitations,
negotiations, representations, agreements or understandings, whether written or oral.
The performance of the professional services herein described and authorized by City of
McCall, Idaho, as well as payment for such services, shall be in accordance with the terms and
conditions presented in this Agreement and the following Sections and Exhibits which are attached and
incorporated by reference which, taken together, shall constitute the whole Agreement.
Section I
Section II
Exhibit A
Relationship of the Parties
Contract Provisions
Scope of Work, Task Plan, and Budget
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals this
2 q day of /�aVat , 20 it, .
APPROVED: APPROVED:
FINANCIAL CONSULTING
SOLUTIONS GROUP, INC.
LS, \ ‘ir-4,4,JL-c---
Angie Sanchez Virnoche ckie Ayndi
Principal Mayor
City of McCall, Idaho
Date:
31:3-Li w
Date: _j eQ�/�(Q
ATTEST:
41+FCS GROUP
www.fcsgroup.com
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SECTION I: RELATIONSHIP OF THE PARTIES
The City of McCall, Idaho ("Client"), desires to execute sewer rate study to analyze revenue
requirements for its sewer collection, treatment, and disposal processes ("Project"). In furtherance of
the Project, the Client hereby contracts with Financial Consulting Solutions Group, Inc. ("FCS
GROUP") to perform the professional services described in Exhibit A of this Agreement. All services
shall be performed under the joint supervision of the Client's Representative, Peter Borner, or a
designee or designees identified in writing to FCS GROUP by the Client's Representative.
This Agreement shall inure to the benefit of and be binding upon successors, assigns, and legal
representatives of each of the Parties hereto. Any assignment or transfer of an interest in this
Agreement by either Party without the written consent of the other shall be void.
SECTION II: CONTRACT PROVISIONS
1. Scope of Work: FCS GROUP shall perform the service for the Client which as defined in Exhibit A
of this Agreement.
2. Time for Completion: The Scope of Work for the conduct of the study as set forth above is
anticipated to be completed by FCS GROUP within a time frame approximating that shown by the
following schedule:
Notice to Proceed: Upon signature of Contract Agreement by both Parties
Completion of Project: October 31, 2016
FCS GROUP agrees to perform the work described in the Scope of Work according to the contract
schedule. Any delays shall be agreed upon by FCS GROUP and Client prior to the due date. Changes
in the schedule caused by Client delays may require additional compensation and a change order.
If FCS GROUP is delayed in the performance of services by conditions which are beyond their control,
or by a change in the scope of work, the schedule showing time of performance may be revised. Any
revision thereto shall be submitted in writing to the Client for review and approval by the Client
Representative. If FCS GROUP's services are temporarily suspended by the Client in the interest of the
Project and with written notice to FCS GROUP, and the suspensions last longer than 90 consecutive
days, FCS GROUP shall be compensated for any additional labor and direct expenses incurred due to
the interruption and resumption of services.
3. Payment: FCS GROUP will be paid by the Client on a time and materials basis for 50% of the cost
outlined below and in accordance with budget attached hereto as Exhibit B. The remaining 50% of
expenses will be paid by the Payette Lakes Recreational Water and Sewer District. Direct expenses will
be charged as identified in Exhibit B. FCS GROUP agrees to perform the services as set forth in Exhibit
A at a cost not to exceed $35,335.00, which is half of the total budget of $70,670.00. It is understood
that FCS GROUP will not exceed this amount without the Client's prior written authorization.
Payment to FCS GROUP for services set forth in Exhibit A shall be: an amount equal to FCS GROUP's
standard billing rates as set forth in Exhibit B multiplied by the actual hours worked. Should any
unforeseen project delays, not caused by FCS GROUP, and/or any requested amendments to the original
scope of work, cause this contract to extend more than 90 days past the original contracted schedule
date, any work and/or amendments to the work shall be billed at the standard billing rates in effect for
the period of time the work is being performed. If said change in billing rates will cause the project to,
exceed the amount stated in the preceding paragraph, a change order will be prepared and signed by
both parties.
FCS GROUP will invoice Client monthly and payment shall be made within 30 days of receipt of
invoice.
•:;> FCS GROUP www.fcsgroup.com
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4. Supplemental Agreements: Supplemental Agreements may be entered into upon mutual written
agreement that would increase or decrease the scope and associated costs and payment.
5. Work to be Accomplished: All work accomplished will be performed under the direction of the
Client Representative or his/her Designee.
6. Termination: This contract may be terminated by the Client by giving FCS GROUP written notice
of such termination no fewer than fifteen (15) days in advance of the effective date of said termination.
FCS GROUP shall be entitled to terminate this agreement only in the case of a material breach by the
Client, and upon failure of the Client to remedy said breach within fifteen (15) days of said notice. In
the event that the contract is terminated before completion, FCS GROUP shall be paid for the services to
date on the basis set forth in Paragraph 3, plus 10% of the total compensation earned to time of
termination to compensate for FCS GROUP's rescheduling adjustments, reassignment of personnel, and
related costs incurred due to termination. The Client shall notify FCS of termination or abandonment in
writing.
7. Indemnity: FCS GROUP shall comply with all Federal Government, State and local laws and
ordinances applicable to the work to be done under this Agreement.
FCS GROUP hereby agrees to hold the Client harmless from and shall process and defend at its own
expense, specific claims, demands or suits at law or equity, arising from FCS GROUP's negligent
performance of the provisions of this Agreement; provided that if the Client and FCS GROUP are
concurrently negligent, FCS GROUP shall be required to indemnify and defend only in proportion to
negligence of FCS GROUP. These indemnity provisions shall not require FCS GROUP to defend or
indemnify the Client against any action based solely on the alleged negligence of the Client.
8. All Work Produced is Joint Property of FCS GROUP and the Client: The materials, computer
programs, reports, calculations, analyses, etc., generated by FCS GROUP under this contract including
the final report shall be the joint property of the Client and FCS GROUP. FCS GROUP may retain
copies thereof for work paper documentation and their own use unless specifically restricted in writing
by the Client as to use.
Computer models use generally available software, such as Microsoft Excel (TM), and FCS GROUP
does not intend or imply any warranty of those programs.
9. Financial Forecasts: Neither FCS GROUP's name nor the report and its financial projections may be
referred to or included in any prospectus or as a part of any offering or representation made in
connection with the sale of securities or participation interests to the public, whether through a public or
private offering.
The information used in developing the forecast assumptions will be derived from published information
and other sources FCS GROUP considers appropriate. However, FCS GROUP cannot assume
responsibility for the accuracy of such material. Moreover, forecasts are subject to many uncertainties
as to the future; therefore, FCS GROUP cannot represent that the projected financial statements will be
representative of the results that actually occur. FCS GROUP will endeavor to include appropriate
comments drawing the readers' attention to these matters.
10. Integrated Agreement: This agreement together with attachments or addenda, represents the entire
and integrated agreement between the Client and FCS GROUP supersedes all prior negotiations,
representations, or agreements written or oral. This agreement may be amended by written instrument
signed by both the Client and FCS GROUP.
11. Independent Contractor: The parties intend that an independent Contractor/Client relationship
will be created by this agreement. No agent, employee, or representative of FCS GROUP shall be
deemed to be an agent, employee, or representative of the Client for any purpose. FCS GROUP shall be
•:;> FCS GROUP www.fcsgroup.com
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solely responsible for all acts of its agents, employees, representatives, and subcontractors during the
performance of this contract.
12. Equal Opportunity: FCS GROUP is committed to the principles of providing equal employment
opportunities for all employees. The performance and diversity of our employees will help us meet the
challenges of the present and the future in serving our clients. This policy statement is a reaffirmation of
our long-standing commitment to provide equal opportunity on the basis of individual merit and
personal qualifications to employees and applicants for employment without regard to race, color,
religious creed, sex, sexual orientation or preference, gender identity, genetic characteristics or
information of employee or family, age, national origin, ancestry, marital status, citizenship, the
presence of sensory, mental, or physical disability, pregnancy/childbirth or related condition, medical
condition, membership in the military service, veteran's status, political ideology or any other basis
protected by applicable federal, state, or local laws.
13. Notices: Notices to the Client shall be sent to the following address:
City of McCall, Idaho
Attention: Peter Borner
216 East Park Street
McCall, Idaho 83638
Notices to FCS GROUP shall be sent to the following address:
Financial Consulting Solutions Group, Inc.
Attention: Angie Sanchez Virnoche, Principal
Redmond Town Center
7525 — 166`h Ave. NE, Suite D-215
Redmond, Washington 98052
• FCS GROUP www.fcsgroup.com
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EXHIBIT A: SCOPE OF WORK, TASK PLAN, AND BUDGET
•:;> FCS GROUP www.fcsgroup.com
CITY OF MCCALL AND PAYETTE LAKES RECREATIONAL
WATER AND SEWER DISTRICT
CONSOLIDATED SEWER RATE STUDY
The City of McCall (City) and Payette Lakes Recreational Water and Sewer District (District) wish
to undertake a consolidated sewer rate study. The following scope of work will result in a rate
evaluation for both the City and the District independently so that all revenue and expenses for each
entity are identified and understood. A consolidated rate study will then be undertaken to evaluate
the rate impact to each entity of moving forward with consolidation. The following Scope of
Services describes the tasks that FCS GROUP proposes to conduct for this study.
SCOPE OF SERVICES
Assumptions: City and District to Provide
• All legal review
• Enabling Ordinances and/or Resolutions
• Data need lists
TASK 1: PROJECT INITIATION
This task includes the administrative tasks that will take place during the course of the study,
including:
• Data Request and Review — Prepare a request for information needed for the study. Such information
would include utility billing, financiaUbudget, capital and engineering information needed to perform
the rate study.
• Developing monthly progress reports and invoices
TASK 2: REVENUE REQUIREMENT (CITY AND DISTRICT)
The revenue requirement is defined as the total amount of rate revenue needed to meet the system's
financial obligations, including capital, debt service, operating, and policy -driven commitments. This
task will be completed for both the City and District independently to understand the requirements of
each system. This independent evaluation is important to establishing the financial requirements of
each entity and providing a transparent process. As costs are added or removed, a clear link to the
financial impact of each system will be quantified and will inform the decision making process
regarding consolidation.
• Customer Statistics Validation — A review of the existing customers for each entity will be undertaken
to understand the number of customers served by the City, District and under consolidation. The
current rates of each entity will be applied to the billing statistics provided to determine if reported
revenue can be validated. This task will provide the information needed to determine the revenue
changes for each system and the rate changes that each entity's customers may experience. This task
will confirm that the new rates proposed will generate sufficient revenue.
Consolidated Sewer Rate Study March 15, 2016
City of McCall and Payette Lakes Recreational Water and Sewer District
• Operating Forecast — FCS GROUP will forecast ongoing operating, maintenance, administrative,
debt service, and other cash obligations for each entity over a 20 year period. We will incorporate
economic factors for customer growth and any known changes in costs for O&M, capital
improvement program or other known changes in operational requirements. The baseline expenses
for each entity will be identified followed by incorporating anticipated cost changes under a no
consolidation scenario.
• Capital Financing Plan — Based on the Capital Improvement Plan (CIP) provided by each entity, FCS
GROUP will review how existing capital costs are financed.
• Revenue Needs Assessment — The revenue requirement assessment identifies the total revenue
requirement of each entity under a baseline scenario. The result will identify if each entity's rates are
sufficient. This will help isolate the rate impacts of consolidation versus rate impacts for other
existing operational needs.
TASK 3: CONSOLIDATED REVENUE REQUIREMENT
The consolidated revenue requirement will bring the appropriate revenue and costs together into one
system. Similar to Task 2, consolidated costs will include O&M, capital, debt service,
administration, and policy -driven commitments. Existing bonded debt service for the City system
will be identified and removed from the consolidated revenue requirement.
• Operating Forecast — FCS GROUP will forecast ongoing operating, maintenance, administrative,
debt service, and other cash obligations for the consolidated entity over a 20 year period. We will
work with both entities to identify what costs are applicable to include. In addition, we will identify
known changes in costs as a result of consolidation.
• Capital Improvement Program — With the assistance of each entity, we will identify the capital
improvement program for the consolidated system. Each capital project will be listed separately
and identify the year of construction, annual cost and anticipated finding source.
• Capital Financing Plan — Based on the Capital Improvement Program identified, FCS GROUP will
develop a capital financing plan. Available resources will be considered such as capital replacement
charges, depreciation funding and fund balances. The analysis will be developed to be flexible
enough to evaluate different debt instruments such as revenue bonds, DEQ loans or USDA loans
since the requirements, term and interest rates will differ for various debt instruments.
• Revenue Needs Assessment - The revenue needs assessment will identify the total revenue
requirement of the consolidated system. Up to three (3) alternative scenarios will be evaluated to
determine changes to impact of project timing, debt instrument or other considerations the entities
would like to evaluate.
TASK 4: RATE DESIGN
The rate design task will take the consolidated revenue requirement identified in task 3 and determine
the user rate that is required to generate sufficient revenue. The number of customers under the
consolidated system will be used to determine the rate. The new rate will then be compared to the
existing rates paid by City or District customers to evaluate the customer impact. A new rate
structure and schedule will be developed for the consolidated system. Rates will be validated to
capture the necessary revenue under the consolidated system.
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Consolidated Sewer Rate Study March 15, 2016
City of McCall and Payette Lakes Recreational Water and Sewer District
TASK 5: DOCUMENTATION
FCS GROUP will document the study process, methodology, assumptions, findings and
recommendations in a written study report. A copy of the spreadsheet analysis for future use will be
provided.
• Final Report —We will submit up to ten (10) copies of the final report to the City and District
along with one electronic copy in PDF format.
• Spreadsheet Model — FCS GROUP will deliver a final copy of the Excel -based spreadsheet
model for future use.
TASK 6: MEETINGS/PRESENTATIONS
FCS GROUP will prepare for and participate in the following meetings:
• Initial meeting — One initial meeting to begin the study process, discuss goal, objectives and key
milestone dates (onsite)
• Staff Review Meetings — We will meet up to three (3) times with the project team to review draft
analyses and findings. We recommend one (1) onsite meeting and two (2) meetings via Go-To-
MeetingTM software and conference call. Go-To-MeetingTM allows all parties to view documents
in real time via an Internet connection.
• Board Meetings/City Council meetings — Prepare for and participate in up three (3) meetings with
the Board and/or Council. Time for presentation development is included for each meeting.
SCHEDULE
It is our understanding that the draft results of the analysis should be completed by July with the final
study completed before the anticipated November bond election. We have provided a proposed work
plan that identifies how we believe the work flow can be completed to meet the stated deadlines. All
technical effort is scheduled to be completed by the end of July with report delivery in October after
meetings with the Board/Council to allow feedback and input to be incorporated. Critical to meeting
this deadline is the commitment of all parties to ensure timely receipt of requested data/information;
quality of data; scheduling meetings in a timely manner; and the ability of the project team to provide
policy direction for the study to move forward at key study milestones. We will develop a schedule
of specific timelines for receiving data and key dates for analytical results, review and feedback once
the project has been initiated. We are willing to work collaboratively to develop a schedule that
meets the City and District's time constraints.
Schedule
Task j Project Initiation
Task 2 Revenue Requirement (City/District)
Task 3 j Consolidated Revenue Requirement
Task 4 j Rate Design
Task Documentation
Task 6 j Meetings/Presentations
Initial Meeting
Staff Review Meetings (3)
Board/City Council (date to be determined) • (3)
Mareh__ April. May ( June t July Aggust lSgptember j October
3
Consolidated Sewer Rate Study
City of McCall and Payette Lakes Recreational Water and Sewer District
March 15, 2016
BUDGET
The total proposed level of effort to complete the Consolidated Sewer Rate Study is summarized
below. Our normal billing practice is to bill based on time and materials actually expended, not to
exceed the total budget. Each task identifies the billable hourly rate and expected number of hours
required of each consultant in order to accomplish the proposed scope of work. The estimate for the
identified technical tasks of the study is $37,300, or 55 percent of the total budget. The process tasks
such as presentations and documentation total $30,170 accounting for 45 percent of the project
budget. An optional task for a parity certificate has been included for $3,200. The City and District
may wish to adjust the number of meetings budgeted to minimize budget. If we have scaled our
approach out of line with the City and/or District's expectations, we would be more than happy to
negotiate the appropriate level of effort.
Task
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ANALYTICAL TASKS
Task 1- Project Initiation
8
-
4
4
16
$2,760
Task 2 - Revenue Requirement
0
Revenue Requirement City
4
8
32
-
44
6,520
Revenue Requirement District
4
8
32
-
44
6,520
Customer Statistics Validation (City and District)
2
4
36
-
42
5,860
Task 3 - Consolidated Revenue Requirement
8
16
40
-
64
9,920
Task 4 - Rate Design
5
8
24
37
5,720
Subtotal Analytical Tasks
31
44
168
4
247
$37,300
PROCESS TASKS
Task 5- Documentation
4
4
40
4
52
$7,180
Task 6 - Meetings/Presentations
0
Initial Project Meeting (onsite)
12
-
-
-
12
2,880
Staff Review Meetings (1-onsite, 2 GoTo@ 2 hours each)
16
4
4
-
24
5,060
Board/JWAG Meetings w/ Presentation (3-onsite)
36
12
12
60
12,300
Subtotal Process Tasks
68
20
56
4
148
$27,420
TOTAL LABOR BUDGET
99
64
224
8
395
$64,720
Expenses
Airfare/Car/Lodging (1 person -5 airfare, 5 lodging )
$2,750
TOTAL PROJECT BUDGET
$67,470
Optional Task:
Parity Certiticate
12
-
4
-
$3,200
TOTAL PROJECT BUDGET (with Optional Task)
$70,670
' Hourly billing rate includes $5.00/hour bchnology charge
Optional Task: Parity Certificate
If necessary and requested, FCS GROUP will provide the City and District a consolidated system
parity certificate. The work completed as part of the consolidated sewer rate study will be used to
provide an evaluation of the cash flow analysis of the consolidated system and if the consolidated
system pledged revenue will be able to adequately bond finance the identified project(s) and meet
credit enhancement metrics as identified by the IBBA such as having pledged revenues that are at
least 125% of the maximum annual debt service on all existing and proposed parity debt service
including the debt service to be paid to the IBB SA. Per the October 1, 2010 Dodd -Frank Act Section
975 created a new class of regulated persons, "municipal advisors," and requires these advisors to
register with the Securities and Exchange Commission. FCS GROUP is not a registered municipal
4
Consolidated Sewer Rate Study March 15, 2016
City of McCall and Payette Lakes Recreational Water and Sewer District
advisor, our work is solely related to the feasibility and cash flow analysis of the anticipated bond
issue and is not related to advice on financial products, structure, timing or issuance of municipal
securities.
5
transmittal
°Gil> C S GROUP
Solutions -Oriented Consulting
TO: BessieJo Wagner, CMC
City of McCall
216 East Park Street
McCall, ID 83638
FROM: Angie Sanchez Virnoche
REGARDING: Contract Agreement
TRANSMITTED as checked below:
I-J1-J
DATE: April 21, 2016
['For approval ['For your use 0As requested ['For review & comment by
['Approved as submitted ['Approved as noted ['Returned for corrections
❑Resubmit no. copies for approval ['Submit no. copies for distribution
['For Proposal or Report due
REMARKS: Attached please find one fully executed original contract agreement for the City of McCall &
Payette Lakes Recreational Water and Sewer District Sewer Consolidation Rate Study. Thank you.
7525 166TH Ave. NE, Suite D-215, Redmond, WA 98052 • VOICE (425) 867-1802 • FAX (425) 867-1937 • www.fcsgroup.com