HomeMy Public PortalAboutORD14426 • BILL NO. 2008-80
SPONSORED BY COUNCILMAN Penfold
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF JEFFERSON, MISSOURI, AUTHORIZING THE
MAYOR AND CITY CLERK TO EXECUTE AN AGREEMENT WITH RAFETILIS
FINANCIAL CONSULTANTS, INC. FOR WASTEWATER USER RATE STUDY.
WHEREAS, Rafetilis Financial Consultants, Inc., has been selected as the firm best
qualified to provide professional services related to the Wastewater User
Rate Study project;
NOW, THEREFORE, BE IT ENACTED BY THE COUNCIL OF THE CITY OF
JEFFERSON, MISSOURI, AS FOLLOWS:
Section 1. Rafetilis Financial Consultants, Inc., is hereby approved as the best
qualified firm to provide professional services and its proposal is hereby accepted.
Section 2.The Mayor and City Clerk are hereby authorized to execute an agreement
with Rafetilis Financial Consultants, Inc., for Wastewater User Rate Study.
• Section 3. The agreement shall be substantially the same in form and content as
that agreement attached hereto as Exhibit A.
Section 4. This Ordinance shall be in full force and effect from and after the date
of its passage and approval.
Passed: . , 02��0 Approved: AA61,
P esiding Officer Mayor
ATTEST: AP OV AS TO FORM:
_
i ClerV City Counselor
•
City of'... WRITER'S FILE
Jill
of ersoIn rM
COMMUNITY DEVELOPMENT �5 Memorandum
• 320 East McCarty Street • Jefferson City, Missouri 65101 P: 573.634.6410 F: 573.634.6562 www.jeffcitymo.org/cd
Date: September 29, 2008
To: Steve Rassmussen, City Administrator
Through: Pat Sullivan, Director, Community Development
From: Matt Morasch, Community Development Deputy Dire for for Public Works
Subject: Consultant Selection for Waste Water Division, User Rate Study
The standing consultant selection committee of the Community Development Department has
completed their review of consultants to perform the above noted study and determined that
Rafetilis Financial Services of Kansas City, is the most qualified to complete the project.
The committee consisting of Pat Sullivan, Drew Hilpert, Steve Schlueter, and myself met on
September 25th with key personnel of the Waste Water Division (Eric Seaman and Dave
Erwin) to review the submittals
Five firms submitted a letter of interest and qualification documents, with Rafetilis Financial
Services being ranked as the most qualified.
The City will now begin contract negotiations with Rafetilis Financial Services. We anticipate a
contract will be sent to the City Council for approval within the next two months. If you have
any questions please let us know.
MM:amh
cc: Terry Stephenson, Purchasing (with submittals and rating forms)
Eric Seaman, Waste Water
•
"building a better community"
U:\PublicWorks\ahaslag\Matt Morasch\Memo-User Rate Study.doc
CONTRACT FOR PROFESSIONAL SERVICES
WASTEWATER COST OF SERVICES STUDY
THIS AGREEMENT,made and entered into this Clay of �,, 2008, by and between the City
of Jefferson, Missouri, a municipal corporation, hereinafter referred to as the "City" with offices at
320 East McCarty, Jefferson City, Missouri, 615101, and Rafetelis Financial Consulting, Inc,
hereinafter referred to as the "Consultant".
WITNESSETH:
THAT, WHEREAS,the City desires to engage the Consultant to render certain technical and
professional services hereafter described in Exhibit A.
WHEREAS, the Consultant made certain representations and statements to the City with
respect to the provision of such services and the City has accepted said proposal to enter into a
contract with the Consultant for the performances of services by the Consultant.
NOW,THEREFORE,for the considerations herein expressed,it is agreed by and between the
City and the Consultant as follows:
1. Scope_of Services. The City agrees to engage the services of the Consultant to perform the
services hereinafter set forth in connection with the project described in Exhibit A.
2. Additional Services. The City may add to consultant services or delete therefrom activities
of a similar nature to those set forth in Exhibit A, provided that the total cost of such work does not
exceed the total cost allowance as specified in paragraph b hereof. The consultant shall undertake
such changed activities only upon the direction of the City. All such directives and changes shall be
in written form and approved by the Director of Community Development and shall be accepted and
countersigned by the Consultant or its agreed representatives.
3. Existing Data. All information, data and reports as are existing, available and necessary for
the carrying out of the work, shall be furnished to the Consultant without charge by the City, and the
City shall cooperate with the Consultant in every reasonable way in carrying out the scope of services.
The Consultant shall not be liable for the accuracy of the information furnished by the City.
4. Personnel to be Provided. The Consultant represents that Consultant has or will secure at
its expense all personnel required to perform the services called for under this contract by the
Consultant. Such personnel shall not be employees of or have any contractual relationship with the
City except as employees of the Consultant. All of the services required hereunder will be performed
by the Consultant or under the Consultant's direct supervision and all personnel engaged in the work
shall be fully qualified and shall be authorized under state and local law to perform such services.
None of the work or services covered by this contract shall be subcontracted except as provided in
Exhibit A without the written approval of the City.
WContract RaslProlessional ServiceslRafetelis Financial CdnsuilantsIWW Cost Study.wpd
5. Notice to Proceed. The services of the Consultant shall commence as directed in the Notice
to Proceed and shall be undertaken and completed in accordance with the schedule contained in
Exhibit A.
6. Compensation. The City agrees to pay the Consultant in accordance with the terms set
forth in Exhibit A,which shall constitute complete compensation for all services to be rendered under
this contract. The final payment will be subject to receipt of a requisition for payment and a statement
of services rendered certifying that the Consultant fully performed all work to be paid for in such
progress payments in conformance with the contract. It is expressly understood that in no event will
the total compensation and reimbursement to be paid to the Consultant under the terms of this contract
exceed the sum of Fifty-Three Thousand Three Hundred Thirty Dollars($53,330.00)for all services
required unless specifically and mutually agreed to in writing by both the City and Consultant. Such
compensation will be paid in progress payments,as specified in Exhibit A, except ten percent(10%)
shall be withheld from each phase until it is satisfactorily completed and the finished product for that
phase delivered to the City. No change in compensation shall be made unless there is a substantial
and significant difference between the work originally contemplated by this agreement and the work
actually required.
7. Failure to Perform,Cancellation. If,through any cause,the Consultant shall fail to fulfill
in timely and proper manner its obligations under this contract,or if the Consultant shall violate any
of the covenants, agreements,or stipulations of this contract,the City shall thereupon have the right
to terminate this contract by giving written notice to the Consultant of such termination and specifying
the effective date thereof, at least five (5) days before the effective day of such termination. The
Consultant may without cause terminate this contract upon 30 days prior written notice. In either such
event all finished or unfinished documents, data, studies, surveys, drawings, maps, models,
photographs,and reports or other materials prepared by the Consultant under this contract shall,at the
option of the City,become its property,and the compensation for any satisfactory work completed on
such documents and other materials shall be determined. Notwithstanding the above,the Consultant
shall not be relieved of liability to the City for damages sustained by the City by virtue of any such
breach of contract by the Consultant.
8. Assigment. The Consultant shall not assign any interest in this contract, and shall not
transfer any interest in the same(whether by assignment or novation), without prior written consent
of the City thereto. Any such assignment is expressly subject to all rights and remedies of the City
under this agreement, including the right to change or delete activities from the contract or to
terminate the same as provided herein, and no such assignment shall require the City to give any
notice to any such assignee of any actions which the City may take under this agreement,though City
will attempt to so notify any such assignee.
9. Confidentiality. Any reports, data or similar information given to or prepared or
assembled by the Consultant under this contract which the City requests to be kept as confidential
shall not be made available to any individual or organization by the Consultant without prior written
approval of the City.
WContract ReslPtolessional ServiceslRa/etells financial Consultantslww Cost Study.wpd 2
10. Nondiscrimination. The Consultant agrees in the performance of the contract not to
discriminate on the grounds or because of race,creed,color,national origin or ancestry,sex,religion,
handicap,age or political affiliation,against any employee of consultant or applicant for employment
and shall include a similar provision in all subcontracts let or awarded hereunder.
11. Independent Contractor. The Consultant is an independent contractor and nothing herein
shall constitute or designate the Consultant or designate the Consultant or any of its employees as
agents or employees of the City.
12. Benefits not Available. The Consultant shall not be entitled to any of the benefits
established for the employees of the City not be covered by the Workmen's Compensation Program
of the City.
13. Liabilily. The parties mutually agree to the following:
a. In no event shall the City be liable to the Consultant for special, indirect, or
consequential damages, except those directly or approximately caused by the City
arising out of or in any way connected with this contract.
b. The Consultant shall defend,indemnify, and hold the City harmless from and against
all claims, losses, and liabilities arising out of personal injuries, including death, and
damage to property which are caused by the Consultant arising out of or in any way
connected with this contract.
14. Documents. That reproducible of tracings and maps prepared or obtained under the terms
of this Contract shall be delivered upon request to and become the property of the City upon
termination or completion of work. Copies of basic survey notes and sketches, charts,
computations and other data prepared or obtained under this Contract shall be made available,
upon request, to the City without restrictions or limitations on their use. When such copies
are requested,the City agrees to pay the Consultant its costs of copying and delivering same.
15. Nonsolicitation. The Consultant warrants that he had not employed or retained any
company or person, other than a bona fide employee working solely for the Consultant,to solicit or
secure this Contract, and that he has not paid or agreed to pay any company or person, other than a
bona fide employee working solely for the Consultant, any fee, commission, percentage,brokerage
fee, gifts, or any other consideration, contingent upon or resulting from the award or making of this
Contract. For breach or violation of this warranty,the City shall have the right to annul this Contract
without liability,or,in its discretion,to deduct from the Contract price or consideration,or otherwise
recover the full amount of such fee, commission,percentage,brokerage fee, gifts, or contingent fee.
16. Books and Records. The Consultant and all his subcontractors shall maintain all books,
documents,papers,accounting records and other evidence pertaining to costs incurred in connection
with this Contract,and shall make such materials available at their respective offices at all reasonable
times during the Contract and for a period of three(3)years following completion of the Contract.
17. DelUs. That the Consultant shall not be liable for delays resulting from causes beyond
the reasonable control of the Consultant; that the Consultant has made no warranties, expressed or
UAContract FJasV>rolessional Services Raletelis Financial ConsultanlslWW Cost Study.wpd 3
implied, which are not expressly set forth in this Contract; and that under no circumstances will the
Consultant be liable for indirect or consequential damages.
18. Notices. All notices required or permitted hereinunder and required to be in writing may
be given by first class mail addressed to the City of Jefferson Department of Community
Development, 320 East McCarty, Jefferson City, Missouri, 65101, and the Consultant, at Rafetelis
Finanical Consultants, Inc., 3013 Main Street, Kansas City,Missouri, 64108. The date and delivery
of any notice shall be the date falling on the second full day after the day of its mailing.
EXECUTED THIS DAY OF }1algjngftM, 2008. *7-9
CITY OF JEFFERSON RAFETELIS FINANCIAL
CONSULTANTS, INC.
Witte: iUA1itc4
A T.• ATTEST:
City Clerk Title:
APPROVED TO FORM:
Ci 6r&iselor
UACantract F7eslPmlessional ServicesVWalelelis Financial Ccnsuftan1s1WW Cost Study.wpd 4
EXHIBIT
City of Jefferson
4 - Qualifications for a Utility Rate Study
PROJECT APPROACH
The project approach described below is based on our understanding of the City's objectives as presented in its
Request for Proposals CTTP'� and upon our extensive experience in completing financial planning and rate
studies and developing rate models for other utilities across the country. This approach has been tailored to
address the specific objectives and concerns identified in the REP while still maintaining those elements that we
believe are essential for a successful rate study. However, this work approach is also designed to be flexible and
can be adjusted to meet the specific needs and objectives of the City. Reviewing and finalizing the scope of work
would be accomplished as part of Task 0.
The end product of the study will be a Wastewater Rate Model ("Rate Model") developed in Microsoft EgcelS
that will provide:
• A ten-year forecast of revenue requirements for the wastewater utility;
• Allocation of revenue requirements to customer classes and into rate structure components;
• Calculation of recommended rates and charges during the forecast period;
• Calculation of customer impacts for a variety of customers in different classes and at different usage
levels;and
• A summary of debt ser%ice coverage ratios and other key financial indicators based on projected revenue
generated by the forecast rates.
The Rate Model will become an integral component of the annual rate evaluation process. The Rate Model is
tailored to client needs and will allow for easy use and updating by City staff. In order to facilitate the update
process and enhance its value as a financial planning tool, the Rate Model will be designed to incorporate
graphical navigation tools, centralized data inputs, and printing assistance. These aspects of the Rate Model will
be beneficial to City staff if it chooses to conduct future rate updates internally. The Model is designed to be user
friendly to encourage ongoing use by staff as a planning tool to evaluate changing information.
Task 0: Project Initiation
The Project Initiation task will provide a basis for the study so that it progresses in an efficient and deliberate
manner. This task will include a kick-off meeting and the collection and review of all relevant data and
documents.
Task 0.1 —Kick-off Meeting
The kick-off meeting provides a solid foundation for the project. The meeting serves as a forum in which City
Management and Staff can provide input on the project's approach, work plan, scheduling, and priorities. A
successful meeting ensures that project participants are in mutual agreement as to the project goals and
expectations. RFC will develop a kick-off meeting package that contains the meeting agenda and presentation
materials to guide the discussion.
In conjunction with the kick-off meeting, RFC will conduct a Rate Making 101 Workshop with the ultimate goal
of educating City management and staff on wastewater pricing objectives then identifying and prioritizing the
City's pricing objectives and the important utility issues currently facing the City.
RAFTEUS
FINANCIAL R FC CONSULTANTS,INC. ;
City of Jefferson
Qualifications for a Utility Rate Study
RFC has found that it is beneficial to conduct a "Rate Making 101" type of workshop for our clients who would
like to explore the pricing objectives that influence wastewater rate setting. This is particularly useful as an
education tool and for exploring rate structures different from those that are currently used This workshop will
be the preliminary step in the process of developing the financial plan of the water and wastewater utilities and in
identifying the most effective user rate structures for achieving the utility's financial objectives. During this
workshop, RFC will explain each step in the process of developing wastewater rates, as well as trends in utility
rate-setting throughout the United States. We will examine the pricing objectives that drive the rate-setting
process; explore the various approaches to determining revenue requirements, study cost allocation
methodologies, and review the advantages and disadvantages of different rate structures and the effect that each
has on customer demand, revenue sufficiency, and rate equity. Participants in the Rate Making 101 Workshop
will leave with a better understanding of the rate-setting process and will be better equipped to identify how the
important issues currently facing the City will affect the process of determining the most appropriate user rate
structures. In addition, workshop participants will be able to communicate more effectively with policyznakers
and customers on matters related to rates and charges. Additional topics to be covered in the workshop could
include policies related to replacement funding,debt funding of CIP,and reserves management.
In conjunction with the Rate Making 101 Workshop, RFC will conduct a pricing objectives exercise with City
staff to prioritize the City's pricing objectives. In prior studies, some of these objectives have included the
following.
• Revenue Sufficiency—Rates should generate revenues sufficient to meet revenue requirements despite
fluctuations in demand.
• Revenue Stability—Rates should generate stable and predictable revenues from year to year.
• Defensibility—Rates should be designed according to standard industry practice and in accordance with
applicable law such that rate disputes are avoided.
• Simplicity and Ease of Implementation—Rates should be readily understandable by customers and be
able to be implemented using existing staff and the existing billing and collection infrastructure with only
minor modifications.
• Minimizing Rate Impacts—Rates should be designed and implemented in an effort to avoid inordinately
large increases or decreases in customer bills during the course of a single year.
+ Equity Among Customer Classes—Rates should be designed such that the costs recovered from each
customer class are directly related to the way in which class demand characteristics and usage patterns
cause the utility to incur costs and no customer class should subsidize or be subsidized by another
customer class.
• Affordability—Rates should be designed such that there are mechanisms in place that allow for
legitimately economically-disadvantaged customers to continue receiving wastewater service.
It is important to note that several of these pricing objectives can conflict with each other. During this exercise,
RFC will work with City staff to identify and prioritize all of the City's rate setting objectives.
As part of this exercise, participants will be able to contribute to a prepared list of common pricing objectives,
discuss the relevance of each objective, and prioritize and select the objectives that they believe are most
important_ As a result of conducting this type of exercise with numerous other clients,RFC has developed a
17
RFCCONSULTANTS,INC. 11
tl' Cit of Jefferson
Qualifications for a Utility Rate Study
process that allows participants to see the results of the prioritization process prior to the end of the workshop
such that the results can be discussed and revised if so desired.
RFC has conducted similar pricing objectives exercises and facilitated the prioritization of rate objectives and
criteria for many clients across the United States. The end project of this workshop will be a rate criteria matrix
prioritizing the City's rate objectives that will ultimately serve as the City's framework for the conceptual design of
the rates. The table below provides an example of a rate criteria matrix developed by RFC for three different
stakeholder groups as part of a similar engagement.
Stakeholders
Ob ectives A B C
Cost of Service Recovery `tidal V. imp.
Minimizing Customer Impacts Imp. V. lmp.
Legality Imp.
Conservation/Demand Management
Rate Stability mp. Imp. Imp,
Revenue Stability V. imp. V. Imp, V, dmp.
Equitable Contributions From New Customers Imp.
Easy to Understand Imp.
Easy to Update Imp. Imp. Imp.
Ease of Implementation V. Imp. V. Imp.
Affordability to Disadvantaged Customers Imp. i
Economic Development
Notes:
V. Imp. =Very Important,Imp. = Important,L. Imp. = Less Important
Task 0.2--Data and Document Review=
As part of this task, RFC will also conduct interviews with City Management and Staff to obtain a thorough
understanding of the financial, operational, regulatory, and political environment. Key issues and areas of
concern, such as operating procedures,rate and financial philosophies, and the pricing objectives used to develop
the current rate structures will be reviewed and discussed. Historical information will be reviewed related to
costs, customers, usage, demand patterns, capital spending, and revenues generated, to gain a better
understanding of recent changes in operating characteristics and to develop information and materials required to
facilitate subsequent tasks.
Task 0.3—Ongoing Project Management
The proposed project approach entails several different, yet interrelated, work efforts that will require effective
coordination between City staff and the RFC team. Our management approach stresses communication,
teamwork, objectivity, and accountability for meeting project objectives and includes general administrative duties,
including client correspondence,billing,project documentation,and administration of the study control plan.
RFCRAFTELIS FINANCIAL 12
CONSULTANTS,INC.
City of Jefferson
Qualifications for a Utility Rate Study
:
This task provides for consistent and competent project management to ensure that all deadlines and objectives
are met in a timely and efficient manner. We believe in a no surprises approach so that the client is aware of the
status of the project at all times. Our approach includes the following:
A strong Project Manager 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 the technical requirements of the project, schedule
and budget.
Task 9—Analysis of Revenue Requirements
The purpose of this task is to determine the revenue requirements for the utility services provided and identify
and resolve any additional revenue requirement issues/concerns.We will examine revenue needs based on several
criteria such as: financial sufficiency; revenue stability; current versus future customer impacts; capital
improvement program, and "pay-as-you-go" versus debt financing. This assessment will also include detail
examination of revenue reduction over the previous five historical years.
Costs and revenue requirements will be projected through a ten-year forecast period (FY 2009-FY 2018) based
upon the FY 2009 budget. Revenue requirements will be offset by non-user charge revenues as appropriate.
These offsets typically include wastewater connection charges, late fees, and other miscellaneous charges
recovered by the utility.
Task 2—Cost of Service Allocation
The Wastewater cost of service allocation will be performed using the methodology described in the Water
Environment Federation Manual of Practice No. 27, Financing and Charges for Wastewater Systems, with rates
being based on the results of this allocation.
The cost of service allocation will focus on identifying appropriate service functions, allocating the cost of service
(revenue requirements) to the service functions, determining how those services are used by each customer class,
and developing the cost allocation components of the computer model. RFC will analyze historical billing
information for each customer class, including an assessment of alternative customer classification that may.
provide a more effective approach to recovering costs from different customer classes. A "test year" will be
established as the basis for the cost of service allocation, and for calculating appropriate cost differentials among
customer classes.
Task 3—Financial Planning and Rate Model Development
The goal of this task is to develop the Rate Model that calculates wastewater rates. The Rate Model will
incorporate high level detail to calculate rates under the different rate structures identified in the previous task,yet
will be developed and structured specifically for ease of use in by City Staff in the future in conducting analysis of
alternative financial options and updating the rate calculations in future years.
s RAFFELIS FINANCIAL h 13
RFCCONSULTANTS,INC.
9
City of Jefferson
mo-
Qualifications for a Utility Rate Study
Task 3.1 —Development of Model Specifications
RFC understands the importance of developing a user-friendly, flexible Model that the City can use in the future
for financial planning and developing rates. Some of the features of the Model include:
• Adherence to industry standard rate setting practices;
• Ability to Model multiple rate structures simultaneously;
Ability to model changes in usage;
• Incorporation of financial planning over a 10-year planning horizon with ability to change certain
standard assumptions by year;
• Ability to calculate rates for multiple years and update rates annually with ease;
• Ability to flag errors and problematic results such as failure to meet debt coverage,reserve below=target
levels,etc.;
• Ability to calculate wholesale wastewater rates;
+ Ability to perform sensitivity analyses and see the changes in real time through built-in screen graphics;
and
• Ease of input,report printing,update,understanding, ease of administration,and legal defensibility.
In order to best design the Rate Model, RFC proposes to begin its modeling process by developing Model
specifications. The Model specification process will identify precise functionality, techniques, and structures and
will serve as the blueprint for Model design. 'l"SG'e envision that RFC will work closely with City Staff to determine
the appropriate specifications to ensure that all parties agree on the format and functionality of the Model.
During the Model specification subtask, City Staff and the Project Team will agree upon such things as the
structure of user interfaces.
The Rate Model will be developed in Microsoft Excel@ so that the City will not need any special software to
operate the Rate Model in the future. The City will own the rights to all computer models, documents,and other
reports created in the course of this study.
Task 3.2—Development of Financial Planning Model
The Rate Model is used to develop and project revenue requirements over the planning period and incorporates
both direct and indirect operational costs, capital costs (including pay-as-you-go capital and debt service), as well
as rate revenues and revenues from miscellaneous sources. Projection of revenue requirements, offsets,and water
and wastewater demand allows a utility to calculate overall revenue adjustments or rate increases. Projecting
revenue adjustments over a long planning horizon can illustrate future rate impacts and potential threats to the
City's financial situation, allowing the City to make adjustments to some expenses, reserve balances, or capital
project timing to smooth impacts and maintain financial stability. The financial planning capabilities of the Rate
Model will allow the City to test how future events such as capital construction or changes in regulatory
requirements may impact future rates and overall financial strength of the utility. RFC will utilize past expense
performance updated for current conditions, capital improvement planning, and projections of demand to
construct a 10-year Rate Model,
7
RFCRAFTELIS FINANCIAL
CONSULTANTS,INC. l
City of Jefferson
_ Qualifications for a Utility Rate Study
Revenue requirements will be projected over the rate setting period based on historical results, the current budget,
the City's capital improvement plan,and the utilities'existing debt service and other obligations. RFC will project
items in the City's budget such as O&M, labor, power, materials, and chemicals, with flexibility to adjust the
escalation factors annually and individually for different types of costs and override escalation with manual
entries. In addition, RFC will project non-user rate revenues such as late fees, interest, and miscellaneous fees.
Ultimately, RFC will project revenues that need to be collected through user rates for water and wastewater in
order to meet expenses in each year of the forecast period.
The Model will develop a capital financing plan considering the capital expenses,project the timing of future debt
sales, and project annual debt service. Schedules for calculating debt service coverage will also be included. The
financial planning module will also provide cash management flexibility by tracking the net changes to reserve
balances on an annual basis. At a minimum, reserve balance will be tracked for the major funds such as the
Operating Fund and Construction Fund. RFC has also recommended to other utilities the addition of rate
stabilization and system renewal funds depending on rate setting objectives of the utility. We have advised many
client utilities on how to establish appropriate reserve levels for their major funds.
Finally, once the preliminary Rate Model is completed, RFC will meet with City Staff to provide a preliminary
demonstration and ensure the Model meets the specifications required by the City.
Task 3.3—Cost Allocations
The wastewater cost allocations -AU be developed to be consistent with standard industry methodologies. RFC
will develop cost allocation worksheets within the Model to allocate costs common to customer classifications on
a supportable allocation basis. We will review customer usage data for information pertaining to number of
customers, size of meters, volume of use, rates of use, capacity requirements, and wastewater strength. We will
then allocate costs to customer classes based on proportionate use and calculate appropriate unit costs. We will
determine the appropriate cost allocation functional components,review the City's customer class characteristics,
and estimate the relative responsibility of each customer class for each of the functional cost elements.
Task 3.4—Develop Rates
After evaluating the existing cost allocation base and assessing the impact of any proposed adjustments,
wastewater rates will be developed to address the City's pricing objectives as identified in the Rate Making 101
workshop. We recognize that rate-making is an art, so we will work .within the broad industry guidelines to meet
the pricing objectives of the City. We will also develop alternative rate structures as appropriate for the City not
only to ensure fair and equitable structure but also compliance with City's policy consideration and all currently
known federal,state,and local rules,regulations, and applicable guidelines.
Rates will be calculated for each year in the forecast period and adjusted,where possible, to provide for a smooth
forecast of rate adjustments. For example, changes in the timing of capital expenditures and the use of reserve
funds to mitigate short-term rate impacts are two ways that rate smoothing could be addressed. The objective is
to minimize the magnitude of customer impacts while still achieving long-term revenue objectives.
RAF11L11 FINANCIAI L
R FC CONSULT ANTS,INC. 1,
t ' City of Jefferson
Qualifications for a Utility Rate Study
-r �s
Tick 3.5—Review Wholesale Contracts
RFC will review the City's existing wholesale wastewater service and treatment contracts to ensure they are
consistent with the City's cost of service and provide equitable recover} of the City's cost of service. RFC will
propose recommended changes to the wholesale contracts if necessary to ensure equitable recovery of costs from
these customers.
Task 3.6—Review of Connection Fees
The purpose of this task is to review the adequacy of the City's wastewater connection fees. The wastewater
utility charges a fee of$300 to new customers to connect to the system,RFC will review the services associated
with this fee and assure that the fee is adequate in relation to the services provided.
Task4—Review of Billing Procedures
The purpose of this task is to ensure that the City's billing procedures, appeals process, and collection procedures
are adequate and equitable.
Task 4.1—Review Billing Procedures
RFC will review the City's process for billing customers, including collection of usage data, billing frequency,
collection terms, and other factors related to billing and collection. RFC will use our extensive industry
experience in working with utilities across the country to propose changes to improve the City's billing and
collection procedures.
Task 4.2—Review Bill Appeals Process
RFC will review the City's process for appealing wastewater bills and adjusting bills based on these appeals. RFC
will compare the City's process against those of other similar utilities to ensure that it is reasonable in relation to
industry practices. We will provide the City with recommendations to improve the effectiveness and equity of the
-- bill appeals process as necessary.
Task 5—Finalize Model and Report
The goal of this task is to work with City staff to finalize the Rate Model to ensure all the appropriate
specifications are included in the Model and prepare a Report detailing the financial vision and the financial plan
developed as part of this study.
The process for developing the financial vision, financial plan, and proposed rate structures along with
preliminary rate recommendations will be described in a draft report of findings and recommendations. This
Report will also include an executive summary highlighting the major issues and decisions, the results and
findings, and recommendations. A comprehensive section on the rate design assumptions and methodologies
used to develop the user rate calculations and financial planning will be included. A preliminary version of the
Rate Model will also be provided to the City for comment. Comments from the City will be incorporated into the
final report and the Rate Model will be delivered and demonstrated to present our findings and recommendations.
Twenty hard copies of the draft and final report will be provided. In addition, electronic versions of the Report
and Rate Model will also be forwarded to the City.
RAFTELIS
I
R FC CONSULTANTS,IN C l
i
City of Jefferson
Qualifications for a Utility Rate Study
RFC will schedule and conduct a training program for City Staff who will be responsible for use of the model in
the future. After the training, RFC staff will be available for technical assistance by telephone on an as needed
basis. RFC will also be available to develop updates to the model to incorporate changes to the City's cost
structure, capital program, and customer classification system.This element of work will be performed on a time
and material basis based on the specific needs of the City.
Task 6—Presentation of Results
The goal of this task is to present the findings and recommendations of the study to the City Council and relevant
stakeholders
RFC will meet with City staff, the City Council, and members of the City community and present our finding and
recommendations. The presentation will highlight the collaborative process used to identify and prioritize the
important issues facing the City's water and wastewater utilities. The proposed user rate structures and the results
of the financial plan will also be presented.
RAFTELIS F NANCIAL RFCCONSULTANTS,11INC.C.
{+' _ City of Jefferson
- : — Qualifications for a Utility Rate Study
PROJECT SCHEDULE
We propose a schedule of approximately three months for this project, as shown below. This schedule should
allow adequate time to complete the project within the February 2009 goal indicated by the City. The proposed
project team is available in this timeframe to complete the project approach outlined in this proposal on the
schedule proposed. If the City wishes to modify the schedule, this can be negotiated in the Project Initiation
Task to meet the City's needs.
Description Months
October December January
I
Task 0 Project Initiation
- Kick-off Meeting and hate Making 101
Task 1 Analysis of Revenue Requirements
Task 2 Cost of Service Allocation
Task 3 Financial Planning and Rate Model Development
Task 4 Review Billing Procedures
Task 5 Finalize Rate Model and Report
-- Task 6 Presentation of Results -
Presentation(s)to City Staf'and City Council
RAFTELIS FINANCIAL
R FC C NSIATANTS,INC. 18
City of.Jefferson City
Wastewater Cost of Service Study
Fee Proposal-Raftelis Financial Consultants
Hours Reqt irements
William Stannard, Thomas Beckley, PeifTer Brandt, Administrative
Project Director Project Manager Technical Advisor Support
0 Project Initiation 12 20 4
1 Analysis of Revenue Requirements 4 32 2
2 Cost of Service Allocation 4 44 2
3 Financial Planning and Rate Model Development 6 32 2
4 Review Billing Procedures 6 24 2
5 Finalize Rate Model and Report 4 24 2 2
6 Presentation of Results 12 32 1 2
Total estimated hours 48 208 11 8
Hourly rates $ 275 $ 165 $ 200 $ 60
Consultant Fees $ 13,200 $ 34,320 $ 2,200 $ 480
Estimated Fees $ 50,200
Expenses $ 3,130
Total Estimated Fees and Expenses $ 53,330