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HomeMy WebLinkAboutNS Purchasing - Raftelis Financial Consultant - Efland Sewer Rates StudyGRANGE CGUNTY BGARD GF CG~MMISSIONERS ACTION AGENDA ITEM ABSTRACT Meet ng Dade: J u ne 2, 2447 Action Agenda Item No. ~--~q~ SUBJECT Contract Approval with Raftelis Financial Consultants to Conduct a Rate Study for the Efland Sewer S stem DEPARTMENT: Purchasing, County Engineer PUBLIC HEARING: YIN} Nv ATTACHMENT(S): Request for Proposals (RFP) Raftelis' Response to RFP INFORMATION CONTACT: Pam Janes, 2452652 Paul Thames, 245-2304 PURPOSE: To award a contract for professional services associated with conducting a rate study for the Efland Sewer System to Raftelis Financial Consultants of Charlotte, North Carolina. BACKGROUND: The Efland Sewer System downed by Change County} currently provides sewer service to approximately 2U4 customers in the Efland area, a small, unincorporated community lying slang Interstate 85140 in central Qrange County. The rates being charged today were originally set in ~ 987 and have not been adjusted since that time. The system currentl o erates with an annual shortl"all of approximately $~ o4,a44 which is made up through Yp the General Fund. In prior discussion, the Board determined that the time has come to bring sewer rates in line with the cost of operating the system, and the best way to da this would be by hiring a consultant to conduct a rate study. A Request for Proposals RFP}was developed to select the consultant see attached}. Although costs were submitted to conduct the study, staff also asked for the qualifications of the firms so they could be considered while making a recommendation. Selection criteria included, but were not limited to, the quality of the proposal, technical capabilities, similar experience, innovation and creative methods and experience with .low income rate payers. The RFP was sent to four firms and advertised on the County website with two firms responding. A team consisting of the County Manager, Purchasing Director, County Engineer, Finance and Budget Directors evaluated the proposals. The team unanimously selected Raftelis Financial Consultants of Charlotte, North Carolina to conduct the study at a $~ 4,529, This includes a final report and a presentation of results at a BCDCC meeting. Raftelis has conducted several studies in the area, including work far C]vvASA, the City of Durham, Durham Count and the City of Burlington. The firm has also successfully completed y studies involving._iow Income rate payers for Charlotte Mecklenburg Utilities, Columbus Georgia}water Works, and the Birmingham Water Works Board. FINANCIAL INPACT. The cost of the rate study would be $14,829. An amount of $14,444 was allocated in the 2445-2447 CIP for this study. The additional amount of $4,829 has been included in the 2447~ZD48 C1 P, to cover remaining costs. Work will not commence until July 1, 2447. RFC4MM~NDATI4N~S~: The Manager recommends that the Board: ~ } award a contract to Raftelis Financial Consultants of Charlotte, Noah Carolina at an amount not to exceed $14,829 and ~}authorize the Purchasing Director to execute the contract pending final review by staff and the County Attorney. 3 nyyntP °r D ~ ra ~~i` ~ +~ 1r ~ ~? ,~ . r a~fh ~aY°~~~ Count y of Orange Department of Purchasing & Cent ral Services Pamela K. J ones, Director County of Orange, NC Request for Proposals #5130 Rate Study for Small Wastewater Collection Utility February 5, zDD7 PURPQSE: orange County was given your name and the name of your company by staff of the orange Water and Sewer Authority €oWASA} as potential utility rate study consultant for a small wastewater collective utility owned by Orange County. The purpose of this RFP is tv obtain a statement of qualifications and proposal far developing acost-of-servicelrate study for a small, orange Countywowned wastewater collection utility system. BACKGROUND: This utility, generally known as the Efland Sewer System, currently provides sewer service to approximately 200 customers in the Efland area, a small, unincorporated community lying along Interstate 85140 in central Qrange County: Most of the customers are single family residential users, but the system does provide service to three businesses two industrial customers and a self service car wash}, two churches, an elementary school and aCounty-owned community center, none of which generates more than 4000 gallons per day of wastewater flow. The entire system generates an average of approximately 1,DDD,DDD gallons of wastewater flaw per month, exclusive of ground water infiltration and inflow which has been known to increase flaw by apprvxirnately 5o°/n}, An expansion of that system, currently in the regulatory review process, is expected to provide sewer service to another 5075 customers, including several mare businesses and churches. The Efland Sewer System is unusual in a number of ways, beginning with system operation. While Orange County actually owns the system, the County has no staff that deals with the utility, other than the County Engineer and his assistant. They provide general system oversight and planning. Routine and repair system maintenance is performed under contract by 4WASA or its sub-contactors. Wastewater treatment is provided by the Town of Hillsborough wastewater is conveyed via pumping station and force vain sane five miles to Hillsborough's wastewater collection system}, Billing for system customer accounts is performed under contract by the 4rangeYAlamanceWoter System, a private non-profit water utility that provides water service to the area and to most of the sewer system customers hand thus bill collecting leverage, though a few customers still rely on wells}. The orange County Board of Commissioners set the utility rates for the Efland Sewer System, though the Board has not seen fit to increase the rates since they were first set in 1987. The current cost of operating the system now exceeds system rate-based income by approximately $~ OD,DDD per year. The sho~fall is met by funding transfers from the County's General Fund. The County Commissioners have historically been reluctant to raise rates because the existing customer base is comprised of low income, elderly and minority households. However, of late, a number of much higher income households have been added to the existing system and the proposed system expansion also promises tv serve a higher income community. Accordingly, the Board has determined that the time has come to bring sewer rates in line with the cost of operating the system. The Board has also P.4. Box 8181 * X29 East King Street * I-lillsborough, Nort h Carolina 27'278 Telephone: Area Code 919 245-2651 Fax: 644-3DD1 E~ mai I ~ Dcannel I~co.or ange.nc.us 4 instructed staff to develop strategies that may ultimately provide some level of support ~- in terms of financial assistance or lowered utility bills -~ to lower income households. Orange County staff has determined to pursue Board of County Commissioner directives in this matter, either, in whole or in part, by looking for assistance from consultants with expertise in developing a sound financial basis for setting utility rates. ~lllhile it would be very helpful if the County could engage a rate study consultant having expertise in creating a programmatic process for providing assistance to low , income ratepayers, we recognize that this particular aspect of Board goals may not be one that can be addressed in the context of a rate study. SUBNITTA~ ~EQUI~E~ENTS: Each submittal must include: The Statement of Qualificationsl Proposal should included the following information; . General background information about the firm Ename, address, year established, telephone numbers, electronic address, contact person} 2.. Relevant information about the firm's history and experience in sewer utility cost of service and rate making studies. include current contact information of past clients} 3, Statement of significance of firm's capabilities, experience, and approach to this project; . 4. General project approach and schedule timeline 5. Examples of innovation and creativity in such projects; 6. Familiarity, if any, with assistance to low income rate payers; 7. Statement or listing of information to be provided by Orange County 8. ~.isting of relevant experience with reference information; 9. listing of key personnel who will work on the study 10. Cost proposal to conduct the study, please also include optional cost tv make presentation at a night meeting in either Chapel Hill or Hillsborough. N.C. RFP Format Orange County has once again achieved the highest verifiable waste reduction rate in the State of North Carolina as calculated by the NG Waste Management Division. The 2002-2003 45°/~ reduction rate exceeds the 2001-2002 rate by a full 5°/p. In keeping with our efforts to reduce waste at its svuce,~we are asking that respondents double-side copies on recycled content paper tv the extent practicable. Each respondent is requested to submit one hard copy of your proposal and one ~~ } copy on CD ar via E-Mail ~dcannell co.oran e.nc.us} containing the complete RFP in Adobe Acrobat format by the submittal deadline at 5;00 pm EST, February 9, 2007. Proposals shall include a separate din sealed envelope attached only to original} clearly marked "Cost Proposal" along with the name of your firm. Most of the selection team members will conduct their individual reviews from the material provided in PDF format, so please ensure that they are'readable before they are Please submit your proposal to the orange County Purchasing Agent,129 East King Street, P4 Box 8~8~; Hillsborough, NC 27278. Orange County reserves the right to interview any and all f firms prior to selection. The Orange County Purchasing contact is David Connell, He can be contacted at ~9~ 9} 245-265 or via Email at dcannell~ca.orange.nc,us preferred}. A copy ofthis RFP as well as addendum will be posted on the Orange County website at: http;llwww.co.orange.nc.uslpurchasinglcurrent bids.htm.. Orange County reserves the right to reject any and all proposals and waive minor variances. Proposals received after the due dateltime shall not be considered. 5 '~~f+ s ,c ay ~~ d~'- ~` ,~. : ~zx~ 'f' n i i A W J i.. r~ f t~.,,,, Q~~ii` ~AlAA /Jf/4 ~~ i r1~~~y~~~~, it1" ~ ~~Pt M~ v ' _- a -~_~3 . s x va ~~ ~~ r t : ~,~ z ~ $ , ~`~•?~r ~ s, `fit SAP ~~i+ ' ~ ~ L~ r~ ~ir~ x rf y~~~~ , ~ , k ~ t{rrif ~,i i V ~"iS r r ~ t °~~' ~~ ~^1Jprac: r ~~~ ~`~ ~E ~ .~ ~~ ;~k F [ALL k ,47~,~ ~~~a{y< < ~ PR~P~~AL FAR RATE. STUDY CAP S ~~FT~~, f , ' ' E ~ ' r~~k w t ~ ~~' ~ ?~~:~ .~. ,~~~.~ ... s ~`~~~ ~~ 5r..~ ~~~~ '~ASTF'~'AT'F.R ~~LL~~T`C~N UT LITY February 19, 2007 ~<-`ir ~'~'~y r~ k ~~"~4 C~s~~~~t EELANDSEwERSYSTEN Proposal far Rita Study for Srnal IlVast~wator Gal~ection Utility COMPANY OVERVIEW R.aftelis Financial Consultants, inc. ~"RFC"} was established in 1993 by George A. R~aftelis to provide national environmental and management consulting services of the highest quality to public and private sector clients. Specifically, we focus our services .~. the areas of environmental finance, utility fx~aancia, planning and pricing, strategic planning, resource conservation, and related areas. we believe that we bring a unique combination of leadership skills and experience to help our clients address them most important issues. LoCAT~oN AND szz~ of ~zRM RFC is currently comprised of 18 consultants and three adruinistrative support positions. RFC places a high priority on being responsive to our clients. Gn average, each staff consultant is involved with four to f ve projects at any one time in an effort to balance workload while maintaining responsiveness. Charlotte office Kansas City office Pasadena office 511 fast Boulevard 301.3 Main. Street Z01 S. Lake Avenue Suite 203 Charlotte, NC 28203 Kansas City, MO G41D8 Pasadena, CA 911D1 Phone: 70~-373w1199 Phone: 81G-285-9020 Rhone: G2G-583-1894 Fax: 7D4-373-1113 Fax: S~.G-2S5-9021 Fax: GZGw583-141. CoNSULTTNG PH~LOSaPHY, VALUES AND Vi~SS~oN STATEMENT As a consulting philosophy, RFC maintains the practice of providing senior level assistance to our clients. while, as necessary, we utilize staff support for speafic data gathe~.ng and analysis functions, it is not our practice tv leverage our senior people with large teams of junior level consultants. instead, we provide skills, experience, and mat~ity gained hough many years of consulting experience to best meet our clients' needs. R.FC's values include quality, teamwork, integrity, client responsiveness, innovation, knowledge and flexibility. As such, our mission is to be the most highly regarded innovative leader in providing financial, economic, and m.an.agement consulting to environmental utilities. R~`C has extensive experience on the state, regional, and national. level and is particularly well qualified to meet your project requirements and goals. The majority of our cUxrent projects relate to rate studies, development fee studies, ox bond feasibility studies for waterand/or wastewater utilities. PROJECT CONTACT The main contact for the proposed Rate Study fox Small ~w'astewater Collection Utility ~"Study"~ ~ be Mr. Lex w~armath, Vice Presidents Mr. warmath will serve as Pro jest Manager and services will be provided from the Charlotte off ce. He may be reached by phone ~704~ 373-1199 or by email, lwarm,ath a~raftelis.com. RAFTELIS FINANCIAL CONSULTANTS, INC. y Otx*~ti , ~r'y,. r ~~''r! ~xr~1,+~ EFLAND 5FwER SYS~'EI~ Proposal for Rafe Study far Small 1Nas~ewater Col legion Utility FIRM'S HISTORY .AND EXPERIENCE As discussed previously, RF`C is a full service water and wastewater finance, pricing, and management consulting ~. founded by George Raftelis in 1993. dur primary focus is water and wastewater rates studies, but we also provide other f~nancial~related services. we are well qualified to assist the County with Its Study, as well as other f~n,ancial or pricing issues that may arise. Two areas where RFC has capabilities that separate us from other fmaas are our experience in evaluating affordability and our database of rate structures and rate data from across the country. Each of these will be valuable as part of the Counts Study. Specificcauy, our services include: ECQN4MIC ANALY5IS Cost of Service and Rate Analysis Economic Feasibility Analysis and Forecasting System Development Fee Studies Capital Financial. Planning Consolidation Analysis Extension Palicy Review SPECIAL ENYIRQNMENTAL ASSISTANCE Litigation Support Industrial Pretreatment Studies Automated Meter Reading Implementation Rate Filing and Repvrdng Commercial Consulting UTILITY ACQUISIT'IQNS Valuation Acquisition Bond Feasibility Economic Rate Impact Analysis Expert Testimony Acquisition Strategy Development PRgCUREIVIENT ASSISTANCE Feas~b~.ty Analysis Request for Proposals Preparation Financial. Planning Privatization Procurements Contract Negotiations MANAGEMENT .AND QRGANIZATICINAL STUDIES C]rganizational Structure Review Management Audits Policies and Procedures Review Personnel and Compensation Analyses Uperating Practices Review RFC is an industry leader in preparing water and wastewater rate studies for municipalities. The map below and list of recent clients below represents the breadth of our client base. In addition, we have grouped brief project descriptions in the Relevant Experience/References section to amplify our experience in North Carolina, the Southeast, and across the Country. It is important to note that naauy of these projects involved assisting utilities such as the Orange water and Sewer Authority, City of Durham, Durham County, City of Burlington, and the Town of Hillsborough. ONSULTANTS, NC.~ 0~~~#~ T c,'+~ ~~rrt ~'xs~1~~~ EFLAND SEWER SYSTEM Proposal for Rate Studyfar Small Wastewater Collection Utility ;': ~ .:...:::::....:::::::~~~~1 ;~.. .... is .j: .: ':'..'. ~'. ~ , i! e' , ~~, . . ~~ ;~: ~ ~. *~ ~~'~: ~or~h Ca~o~,a Pxo~ect Expe~.e~.ce RFC personnel have worked with the following clients i~. Noah. Carolina: Asheville/Buncornbe water Authority Brunswick County Charlotte-Mecklenburg Utilities City of Albemarle City of Burlington City of Charlotte Cite of Concord City of Durham City of Hendersonville City of Kinston City of C)xford City of Lexington City of Raleigh City of Roxboro City of Salisbury City of wake Forest City of w~lmingtvn City of w~lson City of Winston-Salem Daxe County Uurhara County ~ ~~~ ~s~ ~~clo~~ soum ~ R~~io~ C 1~1~ ~~51' REG~a~ Fayetteville Public water Commission Greenville Utilities Comu~nission Lower Cape Fear water and Sewer Authority Mecklenburg County Meuse Regional water & Sewer Authority Orange water and Sewer Authority Piedmont Triad Water Authority Shelby Utilities South Bru~aswick Water and Sewer Authority Sumter Public works Town of Archdale Town of Cary Town of Garner Town of Hillsborough Town of Jamestown Town of Mills River Town of ~aksboro Union County wake County Water and Sewer Authority of Cabarrus County ~Concord~ ONSULTANTS, NC? q EFLAND SEwE>~ SYSTEM Proposal for date Studer for Small wastewater Collection Ut~llt~ .~ ~"iR ~C~s~'~i Rece~~ Natio~na~ clients In the past two years, RFC has assisted clients in 23 states including North Carolina. Below is an example from each sate. • Birmingham SAL} Water Words Board • Charlotte-Mecdenburg ~C} Utiliries • City of Phoenix, AZ City of Cobbs, NM • City of San Diego, CA City of Henderson, NV • City of VV~gton, DE~ • City of Buffalo, NY • Paducah ~"} Jvint Sewer Agency • Northeast Ohio Regional Sewer District • Colu.~nbus EGA} Water Works City of Por~and, 4R . • Town of (Ja.the, KS Allegheny County SPA} Sanitation Authority • Town of ~~nthrop, NSA. City of Newport, RI • City of Ba~tirnore, MD • Nashville ~`N} Metro Water Services • City of Saghaaw, NCI • Spartanburg CSC} Water System • City of Lee's Su~umi~ Nl4 Newport News OVA} Waterworks RAFfELIS FINANCIALS CONSULTANTS, INC. 1~ ~~r} ~x1N~i~ EFLAND SEWER SYSTEM Prapasal far Rate Study far Srr~all VIlastewa~er Collegian Utility STATFNIFl~T CJF SIG~I~~~ICAl~TC:~ Cast of Service and Pacing The goal of cost of service studies iS to develop rates and charges that best meet a utility's goals and objecdves RF'C has conducted 5a such projects in the last five yews and our personnel have conducted more than 604 dut~ag their careers. As a resnt of our experience with numerous uni~tie5, bath large and small, we have developed many different rate structures based on the needs and preferences of the utility anal/or its customers and stakeholders. RFC's typical methodology for conducting a rate study includes the following tasks: • Conceptual ~7esign - to identify the utility's objectives in order to ensure that we develop the most appropr~.te rates and rate structures. During this task, we work with the client to identify and priori~ze ab jegives such as rate equity and affordability, revenue sufficiency, conservation orientation, and rate stability. • .~7evelopment of a Rate Model -the model is the tool by which rates are calculated, and it allows far ongoing financial. planning and sensitivity analyses Fach rate model is custom built for the unity; however, we do have a project proven rate model template that we use as a basis far developing a utility's rate model. we develop models so that they may be manipulated and updated by utility staff. • Public outreach and Education - incorporates varying degrees of stakeholder/customer input throughout the study. Due to our extensive experience with cost of service and pricing studies, we ate very comfortable presenting results to a utility's governing body city council, board of commissioners, etc. Rate Survey RFC conducts the most comprehensive national water and wastewater rate survey. The A~.~1./Rl~'C tY~ater and 1Pa.~tewat~r Rats Survey ~"Survey"} is conducted every two years, with the most recent version completed in ~oa~. The Survey includes data on rates and charges as well as rate structures and other fees. As a result of conducting this survey, RFC has a large database ofrate-related information for unities across the country. we will. be able to use this data as needed to help the City develop rates and rate structures that are consistent with current industry trends. Affordability The challenge of addressing affordability concerns is complicated by the broad diversity of Situations, constraints and policy considetadons that must be addressed to provide ratepayer assistance. As discussed later in this proposal, RFC has the experience that the County w~. require in working to develop a rate structure to appropriately accommodate all in.come levels. RAFfELIS FINANCIAL4 CONSULTANTS, INC. ,~ qtr! ~a~'~1~ EFLAND SEDER SYS~"EN~ Proposal for Rate Study for Small Wastewater Collection Utility PROJECT APPROACH AND TIMELINE Project Understanduag Since 1987, C)range County, Noah. Carolina ~"County"} has awned and operated a wastewater collection system for a small, utility serving approximately 240 custonaexs in Efland, Noah Carolina ~"Efland System"~. wastewater collected in the Efland System is conveyed to the Town of 1-~llsborough, North. Carolina ~"`own"} fog i~eatment and disposal The Ffland Syste~a consists p~ma~ily of ~esident~ customers; however, service is provided to a select number of commercial and industrial accounts. 'fie Efland System generates average monthly wastewater flows of 1.5 won gallons, including inflow and infiltration. The County is in the regulatory review process of expanding the Eflaaad System to serve 54-75 additional customers. The Eflan.d System's wastewater rates have ,remained unchanged since they were fast established in 1987. All customers pay a minimum charge of X15.74 which includes the fast 3,404 gallops based on water usage. Customers using above 3,444 gallons are then assessed a volumetric rate of X4.54 per 1,440 gallons of water usage. The County has requested proposals from certified consultants to conduct a wastewater Rate and Financial Planning Study ~"Study"} for the Efland System. Recently, the County determined that the cost tv operate the Efland System exceeded the amount of revenues being collected by approximately 14D,044 per year. 'T`his revenue shortfall is being subsidized currently by transfers from. the General Fund and the County is interested in evaluating the impact of adjusting rates to provide for aself-sustaining operation. ~ However, a significant portion of the customers that receive service from the Efland System are classified by the County as low-i~n.co~.e. As such, an important aspect of tb.is Study wi~1 be to evaluate the potential impact on customers while considering rate affordability pricing objectives. Scope of work The scope of work described below is based upon our review of the County's Request for Proposal #513D ~"RAP"} and our extensive experience in completing wastewater cost of service and rate studies for numerous other utilli.:des. 'I`bis approach has been tailored tv address the specific objectives and cvncem.s identified ~. the RFP, while still maintaining thane elements that we believe axe essential for completing a successful. comprehensive wastewater rate study. The County's RFP listed several objectives which the consultant will. be required to address, at a minimum, as part of the scope of work for the Study. Uur proposed scope of work and work plan, which is provided below, incorporates each of the items requested by the County. TASS .: Project Iniria~ion and Management we believe that the execution of a productive kickoff meeting with the County is the most effective way to begin a project of this nature. The goals fox this meeting include: Providing a forum to finalize the work plan and schedule with the County; Ensuring that we have an understanding of the overall goals of the Study; and Reviewing the data needs for the project ONSULTANTS, jNI C 5 ~a T ~•~f~ ~~rw~~• EFLAND SEWER SYSTEM Proposal for Rate 5tudyfor Small wastewater Collection Utility A successful meeting ensures that project partiapants are in mutual agreement on project goals, expectations, and assignment of respansibikties. Accomplishing these objectives wil help to ensure that the project progresses as smootbly as possible. Prior o the kick off meeting, we ~ prepare a detailed data request list that will. identify the in.formativn needed to complete the scope of woxk. l~or this study, it is :likely that the data requested will include: • Current and historical Operating Budgets that include data supporting the allocation of costs to the ~flaud System; • The most recent Capital Improvements Plan ~"CIP"~ that identifies the specific projects associated with the F Hand System. • Current utility policies, procedures and regulatory requirements; and • historical billing data and account data for customers served by the Efland System. Data Collection and Review A padmary goal of this task is to obtain a thorough understanding of the financial, opera~tiooa, regulatory, and political environment and understand the concerns regarding the current rates assessed to the ~flan.d System customers. Historical information will be reviewed related to costs, .dawn, capital spending, and revenues generated, to provide a better understanding of operating characteristics and to develop appropriate trends and growth factors for developing financial forecasts. During the data collecrion and review process, we will begin tv identify assumptions used to allocate and project costs that will be integrated into our model As these assumptions are identified, County representatives will have an oppo~.unity to review our findings to ensure that the assumptions make sense with regard to the County's pricing objectives. The objective of this task is two-fold. T'he first is for the County, with RFC's assistance, to identify and prioritise their rate setting ob jectives and to identify any potential oppart~anities to adjust the existing rate structure such that it more effectively addresses the County's pricing objectives. The second vb jecrive of this task is to develop an understanding of the County's operational and f nancial. data. Pro'ect Mana ement Consistent and competent project management is required to ensure project success and adherence to timelines and budgets. Our management approach stresses camlmunication, teamwork, objectivity, and accountability fox meeting project objectives. Management responsibilities extend to general adnai~ist~ative duties such as client correspondence, billing, project documentation, and administration of the study control plan. Project management components acre as follows. .A. Assignment of key project` beam members including. • A strong Project Manager, Lex ~w"armath, who is familiar urcth the County"s water and wastewater systems as well as regional utility trends and issues. lie will be responsible for RAFfELIS FINANCIAL6 CONSULTANTS, INC. i3 t ~5,+~~ 1 ~~1+a EFLAN~ SEWER SYSTEM ProposaC for Rats Study far SrnaCC wastewater CaClection Utility facilitating a close worki~.g relationship between the County and RFC staff and will be accountable for meeting the pro ject schedule, budget, and technical requirements of the project. Highly qualified staff Sufficient support resources to ensure timely complefion. Local resources to quickly and effectively respond to the County's requirements. .$. Client cantml and pmje~guidancs ~vill be ensured through: • Adopdon of procedures for regular and open communication between the project team members and County staff. • Regular progress reports and the project manager's use of RFC's internal project accounting and ma:aagement system.. These reports ~ also identity potential. problems, challenges, and solutions. • Coordination of project activities between RFC and County staff • C)ptional assistance in developing and presenting pro ject recommendations. Iruit~ation of tie uali Assurance uali Control Process The quality assurance/quality control ~"QA/QC"} process ensures that all RFC woxk is accurate and of the highest quality. The QA/QC process begins at the outset of the project when the Tiro jest tanager and QA/QC reviewer review the work plan and scope. The QA/QC reviewer is present at all internal project meetings and works closely with both the Project Manager anal the lead consultants 'This person examines project deliverables for consistency and accuracy and verifies that the f nanGi.a. model funcdvns correctly and is developed using sound rate making principles and standard industry practice 'The reviewer also verifies that that the project report is thorough, accurate, and consistent with the high quality standards of RFC. we have found that a formal. QA/QC process helps RFC provide clients with solutions that meet or exceed the high standards that our clients have come to expect TASK ~: development of Rate blade to Project Reveo.ues and Ez~penditures The next step is to develop rates based on the F Hand System's existing gate structure, as well as any viable modifications to the existing rate structure identified during discussions with County staff during Task 1. At the heart of any successful. rate study is the computer model that is used to develop revenue requirements and perform operational. and capital. financial planning; perform. cost distribution, classification and allocation; and calculate rates. As a result of our experience in performing hundreds of cost of service and rate studies, we have determined that while standardized rate models may be inexpensive to create, they do not provide the flexibility needed to address each utility's unique needs, pricing objectives, and compatibility with existing financial systems. For that reason, RFC creates customized cast of service and rate models based on standardized approaches for each of its rate study projects which allows us to tailor the model to na.eet each client's speafic needs. Cost of service and rate models developed by RFC typically consist of three :modules; a financial. planning module, a cost of service module and a rate calculation module. The financial. planning module 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 ONSULTANTS, NC? 0~~~~C. + ~~;~~ EELAND SE'~ER SYSTEM ~y- Proposal for Rate Study for Small Wastewater Collection Utility revenues Roam rniscellaneous sources. 'I`he cost of service module a.s designed to support the equitable allocation of costs to different customer groups. The rate calculation module deexmin.es rates by taking into account the utility's pricing objectives. The model created fox this engagement will be developed using Microsoft Excel® and will. be based on a model framework that incorporates industry standard rate setting methodology. During the course of the project; County staff will be provided with working copies of the rate model such that they will. be able to provide input into the development of the xnadel, if desired. TASK 3: Faarecast Revenue Requirements Fox this study, revenue requirements will be projected fax a f ve-year foxecast period based upon histo~cal results; the current budget and the planar-ed capital costs associated with the ~fland system.. All casts allocated fox the operat~.an of the Ffland system ~ be incorporated into the xevenue requirements, including the treatment charges assessed by the Town of ~aillsboxough. It will be important to consider any prospective increases in the cost of treatment from the 'Town, as these costs ~ have a significant impact on the forecast of xevenue requirements. ~n addition, the xevenue xequirements ~ incorporate any proportionate allocations of County cont~.butions to reserve fund balances and debt service coverage requirements. RFC ~ work closely with the County's p`inance Department in oxdex to develop a plan fax funding the capital projects associated with the :~fland System, tv ensure that these costs can be incorporated accurately into the total. xevenue xequire~ments. ~.timately, RFC will. project exactly how much cash needs to be collected through wastewater rates in oxdex to meet expenses, both operations and maintenance ~"C~&M"} and capital, in each year of the foxecast period. TASK 4. Rate Calculation. Since the :~fland System consists pay of residential customers that exhibit similar flow characteristics, RFC does not an~tiapate conducting a detailed cost of service analysis that allocates costs into functional components and then to customers classes based on usage chaxacteristi.cs. l~owevex, RFC may consider certain modifications to the exiting rate st~ructvre that could require the allocation of xevenue requirements to different rate components. l~`or example, depending on the usage characteristics of the Ffland System's customers, a potential. alternative fox consideration is the use of a base charge rather tha:a a minimum charge. If it is detexrnined that a signibcant number of lowwincome customers are using less than 3,044 gallons per month, a base charge could provide rate relief to those customers who axe currently paying fox more than they are using. Conversely, those customers that axe using mare than ~,DDD gallons pear month wall. be required to absorb the additional xevenue xequirenaents, which is more consistent with. cost of service parin.ciples. R.FC will use projected flows, accounts, and xevenue requirements to calculate rates. we will project these rates fox five years so the County can gain an understanding of the long-term: axnpact of the proposed rates. c)nce proposed rates have been calculated, the model will also generate rate unpact schedules ,that will demonstrate the impact of the proposed rates on the bills paid by various types of customers. This is especially important since the County is sensitive to affordability issues impacting disadvantaged customers. ONSULTANTS, NC 8 is ,~ •~,r# ~~i~~i~ EF~.AN~ SEVER SYSTEM Proposal for Rate Study for Small 1Na~~ewater Collection Utility Rate Affordability As noted previously, the County indicates in its R,FP that it is currently subsidizing the l~fland System by appro~.mately ~100,00o per year. The RFP also indicates that ~s shortfall in revenue is associated with the Board's decision to leave rates unchanged ~ ~fland since they were first established in 1957. The basis of the Board's decision not to increase rates relates directly to the scant number of existing customers that axe considered to be low-income. Although the County is antexested in the l~fland 5ystena. becoming self sufficient, it still wants to evaluate alternative strategies fox addressing rate affordability. Since there are so few customers in the ~flaand System, and since such a high percentage of these customers axe considered to be low income, the County will need to carefully balance the customer impacts of a self suffiaent operation with its desixe to provide xelief to disadvantaged customers. RFC ~ work closely with County staff to undexstand its objectives and goals for addressing rate affordability. Several objectives that will be considered include: • Defining the appropriate target customer group; • l~valuating program alternatxveS erg. life line rates, rate Vouchers, law-a.ncvme xates}, • Defaning the correct criteria far qualifying participants; • Assessing the feasibility of implementation; and • Understanding program casts, including risk. Care roust be take to ensure that affoxdability options axe penmuissible under state law. RFC will. work with the County's legal counsel to ensure affordab%lity recommendations are not in violation with. applicable regulations. TASK 5: Fx~.alize Rate NtodeX and Report The bnanci.~ plan~ung and rate development process will be described along with preliminaxy Nate recommendations in a draft report of findings and recommendations. This xeport ~ also include an executive su.~maxy highlighting the major issues and decisions, the results, findings and xecomxnendations. A comprehensive section on the rate design. assumptions and methodologies used to develop the user rate calculations and the f~ua.ancial. plan will be included. A preliminary version of the rate model will also be provided to the County for comment. Comments from the County will be incorporated into the final report and the rate model to be delivered to the County. TASK d. Presentation of Results ~t]prional~ At the County's request RFC can be available to present the results and recommendations of the Study to the Board and local stakeholders in a comprehensive, yet simplistic format Any comments at the presentation will. be documented and, if appropriate, will be incorporated into the rate model and report so the rate study report can be finalized. RAFTELIS FINANCIAL CONSULTANTS, INC. ib ~~rr~ 1'i~~~,~ EFLAN~ SEWER SYSTEM SCI~E~ULE R.~C's P.xojec schedule should pxov~de pxojec~ partiapans with a com~n.on po~.t of reference fox pxojec~ structure and deadlines. The project schedule provided below assumes ghat dada can be obtained and processed in a tamely fashion. ~ Project Initiation ~ Develop Rate Model to Project Revenues Expenditures 3 Forecast Revenue Requirements 4 Rate Calculation 5 Finalize Rate Model & Report 6 Presentation of Results (Optional) Proposal for Rate Studyfor Small Wastewater Collection Utility Represents trip to Efland Represents key deliverables: the draft report, final report, and delivery of the rate model. ONSULTANTS, NC.10 iy q~~~~~ 1 ~r*'~,~ .~ ~rrf ~xs+ii EFLAND SEWER SYSTEM Proposal for Rate Study far Srnall wastewater Calection Utility INNC~VATIgN & CR~ATTVITY one of the most impottant aspects of this Study will be to integrate strategic financ%al plarming into the development of a program of rates and charges. RFC has extensive experience developing targeted financial. plans that balance a utility's (J&M and capital revenue requirements with its pricing objectives. Since such a large subsidy is being provided tv operate the ~fland System, it will be critical to evaluate the potential impacts on customers as the County moves toward making the system self sufficient. It is important to remember that this process will likely take time, requiring a phased approach that balances customer impacts with the need to generate additional revenue. It will. also be important to communicate the fundamentals of revenue cuff ciency, rate equity and rate affordability, to ensure that the County's entire customer base, including the Efland System, understand its objectives to operating a utility that is both sound fnancially and considers the broader impact on customers. FAMILIARITY WITH LOW INCOME RATE PAYERS :ft~C has successfully structured and implemented affordability prograrn.s for a number of utilities across the country including the Charlotte Mecklenburg Util%ties, Columbus V~'ater ~7orks ~Georg~.~, Portland ~W'ater Bureau ~~]regan~, Birmingham Water Works Board ~Alabaxna~ and Buffalo Water Beard ~ew York. Descriptions of these projects are provided in Relevant experience and References section. Additionally, Chapter ~7 -.A~ordabiliy of Mr. Raftelis' book, Water and Wastewater Finance and Pricin . A Com rehensive Guide, was written by Patrick Smyth, one of RFC's proposed team members. The chapter discusses affordability and related polices and programs, and provides case studies. DATA REQUEST LIST The prelim.in,ary information required for thus Study is provided in the list below. A formal. data request list will be submitted to the Caunty prior to the Project ~.ick Off meeting It is possible that additional data, will be requested as the project progresses. Where possible, detailed data should be provided in digataJ. spreadsheet format ~ ~ } to allow for efficient data manipulation. The County is encouraged tv contact RFC with any questions regarding the data request list. • Financial Polities • Sewer Master Plan. • Budgets for the three :most recent f scat years • Audited f nancial. statements for the three most recent years • Summ~.rized annual demand data for the Efland System far the three most recent years l~l • Up-to~date debt service schedules allocated to the Ffland System. ~ • Number of customers, by class and meter sizes ~J • Five-year capital improvement plan ~ • Capital funding plan, if available • Documentation of ut~aity fnancial policies • Bond (Jfficial. Statements, including debt service coverage requirements ONSULTANTS, NC.11 IS EF~.AN D SEDER SYSTEM ~. I~ ~~~~ ~7~~"1,+ EFL.AND SEWER 5YS1~EM Proposal ~o Rate Study for Srna~~ wastewater Collection Ut~Nty R~FT~E~"AN~' :~~1'~RI~NC:~ ANT] ~k"F~NC:~S RFC has extensive experience in serving clients on similar engagements across the country. C)ur experience spans cost of service analysis, rate design., conservation rates, benchma~rking and billing. 'I'la.e principals of the fig. have provided assistance tv over 4Q4 water and wastewater utilities. As a result of this experience, we are very familiar with local, national and international issues and challenges that utilities face and we are able to provide our clients with a varier of solutions for their f~nan.cial. Alarming and pri~ng needs. Qur experience allows us to see client issues from different perspectives and to ensure value-added solutions. PROJ~eT DETAILS Grange Water anti Sewer Authority, North Caroli7aa Cast ai" Service Study RF'C assisted the Grange vVatex and Sewer Authority ~"C}wASA"} with the development of Rate Study a rate structure that would rovide meanie incentives to conserve water, but would not Rate Model p ~ have undue adverse rate impacts vn its customers. C~wASA, which had a unifox~n rate REI=ERENCE structurre, wanted tv evaluate a number of different rate structures to determine which Mr. Kevin Ray Director of Finance structure would satisfy the Board of Dixector's objectives. RFC held a workshop for the and Customer Service Board to describe vati.ous conservation rate structures. Based on the workshop and a Orange water antl Sewer Authority conceptual design presentation, the Board directed :RFC to evaluate three alternative rate 20~ Janes Ferry Rand structure scenarios. In order to evaluate these three alternative :rate structures fox QwASA, Carrbaro, NC X751 U Phone; ~9~9~ 53T~~36 tiae revenue requirements were developed by updating a cost of service study. RFC then used bill frequency analyses to dete~e the appropriate block cut offs, seasons, and rates under each alternative. wrth this information, :RFC was able to calculate customer impacts and to approxitx~ate the demand reductions under each alternative. Based or the results of this analysis, the seasonal rate structure was chosen by QwASA as the must beneficial alternative due to its moderate customer impacts, ease of implementation, and additional equity relative to the existing rate structure Eby forcing heavy summer users to bear the cyst burden for the peak demand}. UwASA also asked RFC to review its availability fees. 4wASA uses a unique methodology for calculating availability fees. Based on a study they conducted which found that water use was directly related to size of houses, QwASA bases its availability fees on the square footage of the house. PROJECT DETAILS City of Durham, North Caro~u.a Rate and Financial RF'C has provided professional assistance to the City of Durham, NC ~"City"} since I99G. Planning Model gFC is contently engaged in a study to update the City's existing water and wastewater Miscellaneous Fee Updates Rate and Financial Tanning Model ~"Model"}, originally developed by RFC in 1 ~9G; REI=ERENCE update the City's existing capital. facility fees; and calculate certain miscellaneous utility fees Mr. Terry Ralan and char es. 5 eaficall RFC is a datin the Ci 's Model to both reflect the content cost i.tt~lity D~rectar g p y~ p g ~ City of Durham of utility vpexations and to evaluate the implications of various capital plarmi:ag scenarios. 1a City Hall Playa RFC is also reviewing the City's cost basis and methodology for assessing capital faality Durham, NC 2718 Phone; ~9~9~ 5fi~~438~ fees, and, if necessary, recvrnmending an alternative methodology that is more consistent with the cost of providing capacity for growth. T'h.e study also includes assisting the City to ONSULTANTS, NC.13 ao ~0`~~ic 1 ~•f+~ r EFLAND SEwE~ SYSTEM Proposal for Rafe Study for Smal! wastewafier Callec~ion U~ilit}r calculate various rnisce~laneous utility fees, including public and private fire protection charges and water turn on services. PROJECT DETAILS ~Jurham Cowdty, ~'axth Ca~ro~ia.a Bond Feasibiiity For Durham County ~"County"~, RFC prepared a financial. feasibility study for the Rate ~°del issuance of approximately X25 million in revenue bonds, the first such issuance for REFERENCE Durham County. A rate model developed by RFC earlier in 2oa2 was used to project Mr. Crack Hill wastewater rates in the feasibility study based on the proposed bond issue. The proceeds Division Manage Durham County of the bond issue were allocated to a portion of the construcd.on cost of a new wastewater 120 E, Parrish Street, Suite 110 treatment plant to replace the lone existing plant in the County's Enterprise System. The Durham, NC 27701 stud included a Service A eernent between the Coup and the Town of C ,where Phone. ~g19~ 560.7992 y ~ ~ ~ Cary would use up to four MGD of treatment capacity and in return. pay an C)&M Charge and a portion of the debt service of the bonds through a Capital Charge. The resulting .rates from the rate model and other financial. data regarding the five-year forecast period are incorporated into a bond feasibility model and report. PROJECT DETAILS City of Buria%agto~n, Na~rtb. Caxoli~a.a Rate Study ~, May ZCD3, the City of Burlington ~"Cit~'} engaged RFC to perform a water and REFERENCE wastewater rate and financial. planning, study. The key deliverable of the study was the Frank Hake developn~.ent of a rate and financial plarming model that would be used to evaluate various Revenue Collections Manager alterations of the current rate structure. The City had had difficulty reaching demand City of Burlington P.o. Box 1358 pro jecdons with the closing of major industrial. users witlaha. past years. Since th.e City had 425 S, Lexington Avenue sore than sufficient water supply, its primary mvtivativn was to increase usage and Burlington, NC 27216 phone; ~336~ ~2Z*525 revenue. Recent upgrades to the system and expansion along with the loss of uadustty had left the enterprise fund for water operating at a defiat for the past two pears forting it to be subsidized by Cite reserves and the sewer enterprise fund to make up the revenue shortfall. As part of the study, the City was interested in evaluating opportunities to revise and update the current water and sewer rates; to create self sufficiency of both the water and sewer utility, to provide for increased equity among classes of custommers and to place greater emphasis an promoting water sales. The City was interested in improving their financial and capital plarmin.g capabilities by developing rates in the context of a 10 to ~ 5 year f ~nan..cial forecast. n addirion, the City requested that RFC evaluate the current level of impact fees and assessments and detearamine a more appropriate methodology for calculating these fees resulting in revised cost justified development impact fees. PROJECT DETAILS City of I]xford, Nom Caroliuna Rate Study In July 2oU4, the City of Oxford retained RFC to develop a comprehensive financial Bond Feasibility planning and rate model to evaluate revenue cuff ciency for both the water and wastewater REFERENCE utilities. The City of C)xford was anticipating a sigJuficant increase in growth due tv its Larry Thomas Public works Director proxirrvty to the Raleigh-Durham area. The growth was expected tv be both residential City of oxford and industrial. customers. Due to the expected growth in the area and the need for P.Q. Sox 1301 williamsbora Street renewal and replacement of assets, the City anticipated scant financing needs to Dxford, NC 27565 P one; (91 } 603.1 ~ 0 14 RAF"I"ELIS FINANCIAE C~NSUI.TANTS, INC. ai ~~f*xr. ~ ~~~yrr ~`rr! txr~~~Fr EF~A~D SEUI~ER SYSTEM Proposal far Rata Study far Sma Wast~~rat~r Col~~ctior~ Utility undertake its Capital Improvement Program.. In order to generate th.e revenues needed to address pro jected increases in operating cons and debt service cons, the City deeded to review and update their previous water and wastewater utility rate structure. The financial planning model developed by RFC incorporated the City's intensive capital am.pxoveament plan. and was structured so that the City could use the model to evaluate revenue impacts under various scenarios. Since July 20x0, RFC has updated the model annually for the City of oxford to ensure that the City has the revenue sufficiency needed to continue to perform its needed capital improvements. RFC is currently performing its FY 2DOG rate update for the City. PROJECT RETAILS Town of Cary, North Carolina Cost of Service Study RFC developed a f ve-year water financial planning and rate model for the Public works and Rate Study ~~~ Department of the Town of Cary ~"Town"}. The project included a review of cost Band Feasibility Rate Made! allocations between water and sewer to ensure that neither utility was subsidizing the other. Impact Fee Anew water rate s~ucture was recommended based vn a three-dered residential rate to REFERENCE encourage conservation. The Town was Alarming significant capital expenditures ~. the near Ms. Karen Mills future to expand the water treatment plant and to accommodate a high rate of growth in Finance Director customers and demand. The model has been used to evaluate rate impacts of alte~aative Town of Cary 318 N. Academy Street financing plans. In addition, the project involved development of updated and cost justified Cary, NC 27512 development fees for waxer, sewer, streets, and recreation facilities. Both the proposed rate Phone: (9~9) ~6g~4~~0 structures and development fees were designed to assist the Town m. managin-g growth more effectively. The original engagement took approximately four months and was completed in July 1998. Since that time, RFC has also assisted in the development of a water conservation na.aster plan and utilized the crate model to generate forecasts for bond feasib~.ity studies for inclusion ifl Ufficial Statements issued in 24Di and 20x4 for approximately $l9 million and $2G million, respectively. Finally, RFC helped the Town develop water and sewer impact fees. PROJECT DETAILS Meuse Regional water & Sewer Authority, North Carolina Feasibility Study ~C recentl assisted the Meuse Re 'oval water & Sewer Authori "1vRwASA" in y ~ ~~ ~ REFERENCE evaluating the financial feasibility of the proposed construction of a 20.0 naiilian gallon per Mr. Harold Herring day ~"MGD"} Regional Surface water Treatment Plaaat ~"wTP"} and associated distribution Facecuhve Director Neese Regional Water & Sower system. The NRwASA was created in 2040 to address the State of North Carolina's Authority mandate to limit future ground water withdrawals from the Black Greek and tipper Cape 327 N. Queen St., Suite 121 Fear aquifers by approximately 15 muricipalifies in Lenoir County, Pitt County, and Greene Kinston, NC 28581 Phone: ~919~ 48~3~Z County. As a start up regional water unity, the fua.ancing plan. for the project incorporated approximately $70.75 million in USDA Rural Development Loans and approximately $2G.34 million ha. SRF Loans issued to pay a portion of the costs to construct the water system. The remaining project fiands were provided through various grant funding sources x$34.9 million} and member contributions ~$G.275 mi~%on}. The report focused on the fi~aancial feasib~.aty of the NRwASA as a going concern dufing the construction of the water system assets and ONSULTANTS, NC 15I as Dt ~Ri~ ~ ~r~~ ft EFLAND SEWER SYS~'EI~ Proposal for Rafe 5~udy for Small Wastewater Collegian U~ili~y the fast f ve years of ope~adons cans~dex~,g the ~~ial. unit agate as set forth in the ~n~er-Local ,Agreement and agreed upon by the eight ~8} original member entities. PROJECT DETAINS B~rmmgham wa~e~r Woxks Board, Alabama Cast of Service Study RFC conducted a cost of service study fox the Birmingham water Works and Sewex Board Rate Study the `Board"}. The Board provides retail water service to over 2D4,004 customers, retail. Band Feas~bilEty Rate Model sewex service to over 3,OOD customers, and raw water to over 100 industxial. accounts. RSE Process Thxough a cost of service study, RFC developed a rate stabilization and equalization ~"RSE"} Affordability Miscellaneous Fees process. As a part of a legal settlement wig the Cite of Birmingham, the Board agreed to come under regulation by the .Alabama Public Service Commission ~"PSC"}. C)ther utilities REFERENCE re red b the Alabama PSC have devely ed RSE rocesses to sixn ~ rate fain.. while Mr. Mac Underwood ~ y p p p~Y g General Manager the existing ~RSE's are based on rate of xeturn metxics, the Board's RSE had to be developed Birmingham Water Works Board to ensure debt service coverage requirements are satisfied. The RSE process defines when a ~~Og First Avenue North Birmingham, At. 352 rate increase or decrease is warranted. Once the Alabama PSC accepts the RSE, the Board's Phone; (2~5} Z~4.44~3 rates will increase without the Board being forced to enact the increase. By dying so, rate issues should become depoliticized. As part of the cost of service study, RFC also reviewed the methodology used to develop miscellaneous fees such as tap connection fees, xeconnecti,on fee, and bad order plumbing, and provided recomtnendadons fox xevising the fee calculations. In addition, RFC examined potentiaal affordability programs. RFC has also recently begun a project to develop system. development charges fox the Board. Uver the past four years, RFC has assisted the Board in preparing official. statements for three bond offerings in the amounts of ~3D0 million, X84 million, and X90 amill%on. RFC developed a program of rate increases necessary to pay the debt service and meet the bond requirements, assisted in preparing a presentation for the rating agencies, and RFC personnel paxti.apated in meetings with the rating agencies. PROJECT DETAINS Charlotte-Mecklenburg Utilities, North Carolina Cast of Service Study RFC originally assisted Charlotte~Nlecklenburg Utilities ~"Utilities"} in developing a water Rate Study and sewer financial planning and rate model and related user manual The rate model has Rata Model been used to update rates and assist with Utilities' financial planning. The model focused on REFERENCE providing long-team rates, management infoxmat~.on., and graphic representations of :model Mr. Doug Bean ou ut:. Since the o ' ' al model develo anent, RFC has rovided assistance in u datin and D~ractar ~' ~ p p p g Charlotte Mecklenburg Utilities refining the rate model on an annual basis. Recently, RFC completed a comprehensive 51gD Brookshire Boulevard revision to the methodology used tv calculate certain industrial. waste charges. As part of Charlatta, Nark Carolina X821 fi Phone. ~~o4j 399-~3Z1 this project; Rl~'C examined many different approaches, calculated the costs and impacts of implementing a new approach, and participated in meetings with Utilities' Advisory Council and the public to discuss the new recommended approach. Additionally, RFC has assisted Utilities in performing risk analysis on its revenue stream. Following years of abnormally dry ~......~ weather, the Charlotte area has received above average rainfall, As a result, revenues ONSULTANTS, NC.16 as D;~~~~ 1 ~~+Mrr ~rr1 ~it'~,F EFLAND SEWER SYSTEM Prapasa for Rate Study for Sma~i Wastewater ~a~lectian Utility declined even though the number of customers has continued to increase. RFC utilized risk analysis techniques to provide insights to Utilities which helped staff develop appropriate estimates of water and sewer billable units and more robust risk contingency plans. City of Buffalo, New York PRQJECT DETAILS RFC recently provided finance advisory services for a comprehensive cost of service and Cost of Seruice Study rate stud for the Buffalo water Board `Board"~. The Board's p~mary prang objectives Rate Study y were revenue cuff ciency afld equitable cost recovery from all customer classes. To achieve REFERENCE these objectives, RFC performed a cast of service study and developed two alternatives to Mr. Jose~l~ Giambra Commissioner of Public Worl<s the existing three-block, declining block rate structure. The results of the cost of service 85 Niagara Square study indicated that the discount. being realized by large volwme customers was not cost Room 502 Buffalo, NY 1~42~2 justified and that only a miwaor portion of consumption was within the midrhe rate block. ~71~} 651-5636 RFC recommended a phased approach to bringing the discount for consumption in the third rate block closer to a cost justified level and phasing out the middle rate block. Both the Board and the City's Common Council un.an~nously approved RFC's recommendations. As part of the project scope, RFC exa~uned the Board's existing rate affordability program in order tv. identify appo~ties far improvement and possible alternative programs that would more effectively target disadvantaged customer groups. fn order to provide the Board with some meaningful. guidance on selecting a~n affordability assistance approach, RFC prepared multiple evaluation matrices examining different affordability approaches and their relevance to the Board's needs and goals. The analysis included statistical data on the City's economic and demographic makeup. Based on this analysis, RFC was able tv make several observations about the goals that should be accomplished by any new program. PROJECT DETAILS C~t3' °f Portland Bureau of water, (]regon Wholesale and Retail Rate Study The City of Pordand water Bureau ~"Bureau"~ provides retail water service to customers Rate Model within the City and wholesale water service to i~ agencies under agreements that are Financial Planning expiring within the next couple of years. RFC assistance will be separated into two parts: REFERENCE assistance in developing wholesale rates; and development of a robust modeling tool for Mr. David Hasson on ' rate calculation and financial. lanniaa use b the Bureau. Finance Director ~g p g y City of Portland 112o SW ~~' Avenue, Suite 60D The Bureau is in the process of finalizing a new long term wholesale agxeement with Poriiand, DR 97284 ~503~ 8237156 explicit terms on rate setting, wholesale customers use 40 percent of the total water produced by the Bureau and generate about 2n percent of the total revenue under the current agreement The new agreements vr~ll take into account peaking factors and include take or pay basis arrangements, provide for interruptible water sales, and excess use. Qther factors that will enter into wholesale rates axe differential losses in the transmission and distribution systems and flexibility to include different asset rate bases far different customers for calculating rates under th.e utility basis. :Rfi`C has been engaged to develop rates consistent with. the new agreement for the wholesale agencies, ONSU~TANTS, NC.17 a~- r"r~ ~ttM~,+ EF~.AND SEWER SYSTEM Rropasal for Rate Study for Small wastowator Coll~ctian Utility review rate structure alternatives for its retail customers, review immpacts and provide flexibility fox planning fox the next Z4 years. The Bureau's existing retail rate structure consists of an increasing t.~ree-dear rate structure for all custaxners with fixed tiers fox single family customers and dens based an the average usage in the preceding ~ 2-month period fox the remai~ai.ng customers. The current retail rates apply to all classes and do not take into account peaking factors which can vary scantly from class to class. Tb.e Bureau would like tv explore different rate structure options fox retail. custoxnexs and explore the creation of more classes to increase equity and fairness and encourage conservation. RFC is developing a computer rate model with several modules that includes the f nancial. plan, wholesale rates and retail rates is an integral part of the study. 'ice Bureau plans to use the rate xnadel for many years and the model will include: +~ user-friendly features; ~ the ab~.ty to download data from the Bureau's IT systems; ~ the flexibility to easily revise input data; s the ability to be updated annually; ~ the inclusion of various rate scenarios the Bureau is looking fox in both wholesale and retail rates; ~ detail and summary reports; • graphical representation of results fox easy understanding by the Counr,~ and' public; and +~ ability to complete scenario analysis to investigate options and impacts. PR4EGT DETAILS Loudoun County Sauitativn Authority, Virginia Cast of Service Study RF'C assisted the Loudoun County Sanitation Authority ~"LCSA"~ with an update of its Rate Study Band Feasibil~y water and sewer user fee charges. Loudoun County rs one of the fastest growing Rate Model communities in the country, presenting the LCSA witb. many challenges to meet the needs of REFERENCE ~~ rapidly grawin.g custoamer base. RFC worked with the LCSA tv perform a detailed cost Mr. Dale Nammes of service analysis for the water and sewer systems. This analysis provides the basis fox Director LCSA's conservation-based water and sewer rate structure. The results of the study will be ~.audaun County Sarntatian Authority used in a financial feasibility study, which is to be included in an Off cial. Statement for the ~8a Harrison Street, SF Issuance of revenue bonds to pay for a new sewer treatment plant. As a part of the pxoect, Leesburg, VA 2a17~ Pi~ane, ~7p3~ TT1•~095 RFC conducted a benchmarking analysis of financial. informadan~ ONSULTANTS, N' C~.18 as r a``}~~ , ~~'`,- .• s~r~ ~~rNii ~x P:~RSOw~~ EFLAND SEWER SYST"EN Proposal for Rate Study for Small wastewater Collection Utility To effectively meet County of (]range's ~"County"} project objectives for the Ffland Sewer System, we have organized a Project Team. with extensive experience in providing similar assistance to other public utilities and local govern~aents. Brief descriptions of each team member's capabilities are provided below and complete resumes fax each member of the Project Team are in the Append. Mr. Alexis Warmath, Vice President -~ Project Manager Mr. Warammath is a nationally recognized expert in water finance, rnan.agena.ent and pa~.cing. 13e has more than 14 years of consulting experience and has been with RFC far aver 12 years. Since joina~ng R~'C, Mr. W~.th has served as project ~.nager oar lead consultant in a variety of projects to assist utilities in addressing fi,naacial, ma~aage~n.ent, and public policy requirements. These projects include utility cosh of~service and rate studies, management studies, and financial feasibility studies for numerous clients. NMar. Wa~math will. serve as the Project Manager and w~ direct the wo.~ of the Pro jest Team. to ensure that the project meets all of the County's expectations. Mr. Bart Kreps, Seniax Consultant Financial Staff N1s. Kreps has participated on a variety of engagements related to cost of service rate studies, development fee studies, bond feasibility studies, and regionalization studies. Nivst recently, Mr. preps served as staff or lead consultant on a variety of rate studies and impact fee engagements for the City of Rock Hill, the Berkeley County Water & Sanitation Authority, the Laurens County Water & Sewer Com~ai.ssaon, the Cite of Florence, and the Hillsdale-Powell Utility District, Tennessee. . Patrick Smyth, CPA, Senior Technical Consultant -Technical Advisor / Quality (antral Mr. Smyth joined RFC in 1994 and currently serves as its Senior Technical Consultant. As an employee of RFC, Mr. Smyth has been involved in numerous cost of service anal rate design projects for public utilities. Mr. Smyth developed the cost of service model for the Metropolitan Water Dastdct of Southern California and served as Lead Consultant on the Dayton/Nlontgomexy County engagement He has extensive f nand. modeling experience and a broad range of computer related ~ technical skills. Mr. Smyth mai~atains his registration as a Certibed Public Accountant. n his role as Technical Advisor/C~uality Control, Mr. Smyda. wall be responsible for reviewing the financial forecast model developed for the bond feasibility study and the rate model developed for the water rate study. RAFfELIS FINANCIAL19 CONSULTANTS, INC. ~~ ~FLA[~D SF~VFR SYST~N~ a~ D~~xi~' ~~~~,. T ~~rr! ~~s~11*~ ~~LAN D SEWER SYSTEM Praposa~ for Rafe Study far Sma~ Was~ewa~er Collection Utility TECHNICALSPECIALTIES ALTS ~VARMAT~I ~- Projecti Ma~age~ Utility Cost of Service .Aexis ~"Lex"~ war~nath joined RFC in 1994, being the second full time employee and Rate Structure Studies lured b the firm. He has artici aced in a wide vaxie of ro'ects, coo all of Y P p tY p l ~ Bond Feas~b~l~y Studies Utility System Valua~an Studies the service areas offered by RFC. He has focused p~mati.y on rate and fraanci.al RegianalizafiianlGonsolidation planning studies and band feasibility studies. N~Cx. Warmath has been involved in a Studies number of studies involving transition to new rate structures to address specific Utility Financial Planning Studies P~~g objectives, including promotion of water conservation.. Mr. Warm~ath's Privatiza~an Assessment and a ertise in the then and ractice of utili rate anal. sis is demonstrated b his ~ '~ p ~ ~ ~ Implementa~an Development Fee Studies pos~~on as a member on die Rates and Changes Committee of the AU~w"A. Mr. Natural Resource Assessment Warmath has also served as the sole arbitrator in a rate dispute in Pickens County, and tUNanagement Planning South Carolina. Mr. waxnaatb. has extensive experience ifl conducting bond feasibility studies, and serves as die practice manager fox these types of studies PR~FESSICNAL HISTORY ~~ ~e ~ Raftelis Financia[ Consultants, Inc. Vice president, 1994 -Present RFC:~~I'T PR(]f FC'~ ~~PFRI~~'C~ Wetlands Center Metropolitan Government of lV'ashville, Tennessee Duke Research Assaciate,1992 RFC engaged in a five-year contract with the Metropolitan Government of Ernst ~ Whinney Nashville and Davidson Cvun Metro water Services "MwS" ifl March of ~ Senior Cansultant,1983 1987 ZDC1. Since then, N1s. Levin has served as die project manager on various analyses EDUCATION and studies performed fox Memo water Services. RFC performs an annual budget Master of Environmental review which involves reviewing the adequacy of budgeted revenues to cover Management, projected operating expenses and debt service requirements, particularly with regard Duke University,1993 to cum li.ance with the rate covenant test defined b the water and Sewer Revenue p y Postgraduate studies. in mathematics Bond Resolufion. RFC also conducts an analysis regarding the calculation of the University of Nadh Catalina average wastewater operations, maitatenance and replacement costs per 1DD cubic -Charlotte 199a -1991 feet of wastewater dow. 'dais analysis is performed annually to demonstrate that the Master of Business MVVS is in compliance with the user fee requirements of the United States Administration environmental Protection A ency. g Duke University,1988 Bachelor ot• 5cience in Economics RFC is currently performing a cost of service and rate study fox NHS. RFC will Duke University,1977 determine the cost o serve MwS water retail. customers, segregated between specific customer classes, as well as determine the cast to serve wholesale PROI=ESSIDNAI~ customers. As part of the cost of service study, RFC wall. review the methodology MEMBERSHIPS American dater Works used to develop miscellaneous fees such as tap fees, meter inspection fees, and flow Association test, and provide :recommendations fox revising fee calculations. As a last part of the Rates and Charges cost of service study, capital recovery fees will be calculated, so that NiwS may Subcommittee recover cost related to growing its system.. ~]the~r recent projects • Durham. County, Naarth Carolina ~-wastewater Rate and Band Feasibility Study • Brunswick County, Noah Carolina ~- Band Feasibility Study ONSULTANTS, NC?~ a~ r ~rr# ~~Y~~,~ EF~A~D SEINER SYSTEM ...................................................................................... Proposal for Rate Studyfor Small'Ullastewater Colle~t~on Utility • City of Burlington, NC --Water and wastewater Rate Study • Town of PLillsborough, North Carolina - Develapruent/Impact Fee Study fox w'atex and wastewater • Town of Nlaxana, Arizona -water Finanaal Plarming/Rate Study • City of Concaxd/Cite of Albe~ade - economic Feasibility and Valuation Assessment • Concord, North Caxoli:aa -Bond Feasibility Study and water and Wastewater Rate Study • Piedmont Triad Regional Water Authority, Naxth Carolina -Feasibility Study • South Brunswick Pater and Sewer Author[tp, North. Carolina -Financial Valuation Study and Band Feasibility Study • Hallsdale-Powell Utility District -Financial Planning and Rate Structure Study • CJxfard, Narth Carolina -Water and Sewer Rate Structure and Financial. Planning Study • Cabarxus County, North Carolina -Bond Forecast and Feasibility Study, wastewater Rate Study • City of Hendersonville, North Carolina - water and Sewer Rate Study • Fayetteville Public works Coxn:mission, North Carolina -Utility Cost of Service and Rate Structure Study, Development Fee and ~igh~Streng~h Surcharge Study • City of Wilson, North. Caroli~a.a -water and Sewer Rate Study, Bond Feasibility Study, and wholesale Study • Neese Regional water and Sewer Authority, North Caroli~.a -Band Feasibility Study • white House Utilities Dist~.ct, Tennessee -water and Sewer Rate Study and wholesale Study Town of Cary, North Carolina -- Impact Fee Study, water and Sewer Rate Study, water Conservation Master Plan, Bond Feasibility Studies, and 13igh- StrengthSurcharge Study • ~allsdale-Powell Utility District, Tennessee -water and wastewater Rate and Financial. Plarming Study • City of W~in.gtan, North. Carolina -~ Revenue Bond Feasibility Study • City of Auburndale, Florida -water and w'astewatex Rate Study and Bond Feasibility Study • City of Avan Park, Florida -State Revolving Fund Assistance ONSULTANTS, N' C~.~ aG Dt~~{c ~ ~~`~a ~~~rt ~xrF,,~ti (ELAND SEWER SYSTEM Proposal far date Study for Small wastewater Calectian Utility TECHNICAL SPECIALTIES B.~-.T ~P~ ~- Lead. Co~.St~.ta~,t Rate Stmcture S#udies Bond Forecasts Bad preps joined the fin. in 2Q4~ as a staff consultant Dining his tenure at RFC, he and Feasibility Studies has paxticipated in a variety of projects related to water and wastewater unity finance Economic Feasibili#y S#udies and pricing. Specifcally, Mr. Kreps has served as lead consultant an nurnexous water U#ili#y Regionali~a#ion S#udies and wastewater rate studies, cost of service studies, bond feasibili studies, u~tili Qrganiza~onal Management ~ ~ S#udies regivnali~ation studies, and oxgaaizational management studies. PRQFESSIDNAL HISTQRY REL:~V.ANT PR4f ECT R~PERIFNC~ Raftelis Financial Consultants, InG. ~3allsdae-Powell Utility District, Tennessee Senior Consultant, 29o2-Present Mr. preps has served as lead consultant on several engagements with the 3allsdale- WaGhoviaSecurities Powell Utility 1istrict ~"SPUD"~ in Knoxville, Tennessee. SPUD has faced significant Fixed Income Trad~~g Analyst 1998-~OOO challenges related to capital infrastructure repair and replacement to meet the demands of its growing system. N1r. Kreps assisted in developing a water and wastewater rate EDUCATIQN model that has served as a financial planning tool for the District. The model was Master of Business Administration designed to evaluate a variety of financing assumptions and operating scenarios with the ~Concentratian in Finance and ultimate goal of recommending an appropriate program of rate adjustments to meet Environmental INanagement~ HPUD's projected revenue requirements. The University of Tennessee, 00~ 8achelar of Business Administration City afwiisv~n, Noah Carolina (Concentration in FinanGe3 ~, Kreps served as lead consultant on a bond feasibility and rate study fox the City of James Madison University, 1998 w~lson RFC canducted a bond feasibility study for a revenue bond issue of approximately X15 million to f.nance construction improvements to the City of wd.son's crater, wastewater and gas systems. The feasibility analysis utilized the rate model developed by RFC to project water and wastecater rates based on the proposed bond issue and additional financing including several state revolving loans. '1"he xesulthag rates from the rate model and other f nancial data regarding the f ve-pear forecast period were incorporated into a bond feasibility model and report The feasibility report eras included as part of the official statement to be issued in N'ovembex X442. Rack dill, South Caroiiaaa Mr. Kreps has served as both staff consultant and lead consultant on several engagements with the City of Rock l~l:.ill, South Carol%na the "City'"}. Spea.fically, Mr. Kreps assisted the City in calculating water, wastewater, storm water, and f re development impact fees, In addition, NSr. Kreps has worked with the City to develop a cost of service wholesale rate ~methvdology and associated model to serve as a basis for calculating wholesale water and wastewater rates. Based on a previous regionalization study canducted by RFC, it was determined that it was economically viable for the City to serve as a regional provider of crater and wastewater services to wholesale customers withiia and around York County, SC. ONSU~TANTS, NC 23 3a EFLAND SEWER SYSTEM Proposal for date Study for Srnal~ Vllas~ewa~er Colec~ior~ utili~r ~~"r1 L'ytr1~~~ ~thet a~ece~t pxojects • White pause Ut~.ty Distxict; Tennessee -~'C~'atex and Was~ewae~ Rate Study • Buffalo, New York - Water Cost of Service Rate Study • Pima County, Arizona Capital Planning Study • Newport News, Virginia. -Bond Feasibility Study • Cite of Durham, Noarth Carolina Water and Wastewater Rate Study • Durham County, North Caarohna --Wastewater Rate Study • Town of yak island, North Carolina -Bond Feasibility Study • C~]xford, North Carolina - Water and ~'astewater Rate Study • Stanly County, Noarth Carolina Water and Wastewater Rate Study • Concord, North Carolina --Wheeling Charge Study • Wilson, Noah Carolina Water and Wastewater Rate Study and Bond Feasibility Study • Laurens County, South Carolina ~-Water and Wastewater Rate Study • Borough of Carlisle, Pennsylvania --Wastewater Rate Study • Watauga River Regional Water Authority -~ Regional Pla.n.ning Study ONSUI.TANTS, NC 24 31 Dtx~~[ 1 ~r`}r f ~`~rf ~xsw~~`+ EFLAND SEWER SY5TEM Proposal for Rate study far Small Wastewater Collection Utility TECHNICAL. SPECIALTIES PATRICK S~r~, CPA - Tech~aica~ AdV~sar / (~u.a~ty Co~tro~ Gast of 5ervfce Studies As Technology Manager urith R,aftelis Financial Consultants, ~V1r. Smyth has been Rate Structure Studies Priva~~a~on Feasibility and involved in nuxnervus projects fox public u~lities. ~e has considerable fin.an.cial Implementation Analysis modeling expextise and a bxoad xange of coxnputex technology skies. Utility Financial Planning f.i~a~an Support Stranded Gast Analysis Mergers & Acquisf~ons RELEVANT PRUJECT E:~PERIENCE Feasibility N.[etropolitan Water I]ist~ict of Soutb.ern Ca~.fornia PRoFE551QNAL HISTaRY This protect involved a detailed cost of sexvice study fox the largest watex system in Raftells Financial Noxtb. Amefica. Nix. Smyth was responsible fox the design and construction of the Consultants, inc. Technofagy Manager,1594~ finnancial model, and assisted in producing an exhaustive xepvxt examining cyst of Present sexvi.ce issues facing the Mei~opolitan watex system. 'T'his woxk was used as the basis fox Wachovia Bank, NA the development of new wholesale rate struct~uxes fox Metropolitan's 27 membex Assistant Vice President,19~~- ~gOD agencies. ED~CATI~N Bachelor of , Env~.ronmental Protection. Agency SciencelBachelor ofArts in Mr, Smyth was the pximary technical and research resource fox this pxo ject in which Acc©unting Appalachian State University, RFC Was retained by the Department of Justice and the E'A ~. suppoxting a civil suit X568 against the Sewexage and Water Board of New 4xleans, the City of New ~xleans, and Bachelor of Science in Earth the State of Louisiana undex the Clean Watex Act. The suit sought to compel the Board Science to bxing its sewexage system into compliance with national environmental. stanndaxds and Magna cum laude, University tb,e CWA. Compliance would have required extensive rehabilitation of the sewex system of North Carolina at Charlotte, ~ gg~ infxastructure plus substantial changes in opexational and maintenance pxogxaxn.s. RFC was xesponsible fox developing estimates of compliance costs and wastewatex xate PRQFESSIQNAL MEMBERSHIPS ~ acts. As art of the anal sis, RFC develo ed a set of xatios and benchmarks fox p p y p Nord Garofina Association of evaluating rate affoxdability undex diffexent financial scenarios. RFC also developed a CPAs Certified Public Accountant matrix of bnancial indicators for evaluating the financial strength of the Board and the surrounding community. gther recent projects: • Nletxopvlitan ~"ater District of Southern California ~2 pro jects} Foxt Mill. and Yoxk County, South Carolina ~ 5ystem Consolidation, Cost of Sexvice and Rate Study • Charlotte-Mecldenburg Utility Depaxt~nent, Noxth Caxol.~.a ~5 projects} Columbus ~'atex Woxks, Georgia ~4 projects} • Watex ~7"vxks and Sewer Board of the City of Bia~minghaxn ~2 pxo jects} City of Dayton and Montgomexy County, C?hio ~2 projects} Salisbury, Naxtb. Carolina RAFfELIS FINANCIA~25 CONSULTANTS, INC.