Loading...
HomeMy WebLinkAboutRaftelis Financial Consultants, Inc. - 2010-04-26 J� CONTRACTS SUBMITTAL TO CITY CLERIC'S OFFICE To: JOAN FLYNN, City Clerk Name of Contractor: Amendment No. 1 to Raftelis Financial Consultants Purpose of Contract: For Example:Audit Services or Water Quality Testing Huntington Lake—Huntington Central Park Water Budget Rate Study Amount of Contract: $82,570.00.00 Copy of contract distributed to: The original insurance certificate/waiver distributed ❑ Initiating Dept. ❑ to Risk Management Finance Dept. ❑ ORIGINAL bonds sent to Treasurer ❑ l fio&s Date: Name Extensi City Attorney's Office /Q I2,OC l G:AttyMisc/Contract Forms/City Clerk Transmittal 1 f� c !!! I AMENDMENT NO. 1 TO AGREEMENT BETWEEN THE CITY OF HUNTINGTON BEACH AND RAFTELIS FINANCIAL CONSULTANTS, INC. FOR WATER BUDGET RATE STUDY THIS AMENDMENT is made and entered into the ay oft ,"C�b)_Xjl_,/2010, by and between the CITY OF HUNTINGTON BEACH, a California municipal corporation, hereinafter referred to as "City", and RAFTELIS FINANCIAL CONSULTANTS, INC., a North Carolina corporation,hereinafter referred to as Consultant. WHEREAS, City and Consultant are parties to that certain agreement, dated May 3, 2010, entitled "Professional Services Contract Between the City of Huntington Beach and Raftelis Financial Consultants, Inc. for Water Budget Rate Study" which agreement shall hereinafter be referred to as the "Original Agreement," and Consultant has requested additional compensation to complete the remaining tasks described in the Scope of Services of the Original Agreement; and City and Consultant have negotiated a new contract amount and wish to amend the Original Agreement to reflect the new compensation amount. NOW, THEREFORE, it is agreed by City and Consultant as follows: 1. ADDITIONAL COMPENSATION In consideration of the performance of the services described in the Original Agreement, City agrees to pay Consultant on a time and materials basis at the rates specified in the Original Agreement, an additional sum, including all costs and expenses, not to exceed Fifteen Thousand Dollars ($15,000.00). This additional sum shall be added to the original amount of Sixty-Seven Thousand Five Hundred Dollars ($67,500.00), for a new total contract amount of Eighty-Two Thousand Five Hundred Seventy Dollars ($82,570.00). 2. REAFFIRMATION Except as specifically modified herein, all other terms and conditions of the Original Agreement shall remain in full force and effect. 1 10-2659/53813 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and through their authorized offices the day, month and year first above written. RAFTELIS FINANCIAL CONSULTANTS, CITY OF HUNTINGTON BEACH, a INC. municipal corporation of the State of California ��,ofUl�t f N2DILAJ ,L, print name y Administrator ITS: (circle one)Chairman/President/Vice President ) INITIATED AND APPROVED: AND By: Director of lic Works D iune fi-v�cxrn s print name ITS_�(circle one) Secretar}/ChiefFinancial AP VED AS TO FORM: Officer/Asst. Secretary-Treasu'r`er- -- Tn City Attorney n 2 10-2659/53813 CITY OF HUNTINGTON BEACH -: Professional Service Approval Form - Amendment # 1 1. Date Requested: 9/9/10 2. Contract Number to be Amended: PW 010-020-00 3. Department: Public Works 4. Requested By: Ken Dills 5. Name of Consultant: Raftelis Financial Consultants, Inc. 6. Amount of Original/Prior Contract: $67,570 7. Additional Compensation Requested: $15,000 8. Original Commencement Date: 4/26/10 9. Original Termination Date: 12/21/10 10.Extended Date Requested: 7/1/11 11.Reason for Contract Amendment: The current contract is for the development of an allocation based water rate structure. This amendment will provide services to assist in the implementation of the new rate structure. 12.Are sufficient funds available to fund this contract? Yes ® No ❑ 13.Business Unit and Object Code where funds are budgeted: 50685806.69365 Department Head Signature Director of Finance (or designee) Signature CONTRACTS SUBMITTAL TO � � F CITY CLERIC'S OFFICE 2010 Nlfl,} 10 AN 3- 00 To: JOAN FLYNN, City Clerk Name of Contractor: Raftelis Financial Consultants Purpose of Contract: For Example:Audit Services or Water Quality Testing Huntington Lake—Huntington Central Park Water Budget Rate Study Amount of Contract: $67,570.00 Copy of contract distributed to: The original insurance certificate/waiver distributed Initiating Dept. to Risk Management ❑ ❑ Finance Dept. ❑ ORIGINAL bonds sent to Treasurer ❑ Date: NAmEi�n "�_ City Attorney's Office b 3 G:AttyMisc/Contract Forms/City Clerk Transmittal � / PROFESSIONAL SERVICES CONTRACT BETWEEN THE CITY OF HUNTINGTON BEACH AND � D/QTELI8 FINANCIAL CONSULTANTS,INC. FOR Water Budget Rate Study Table ofContents lScope of Services.....................................................................................................l 2 City Staff Aoustuooe--------------.----'-----'----'---''^2 { 3 Term;Time of Performance.....................................................................................2 4 Compensation......—...—.—.--^--^^^^^'~'—^~-----^-----'---''2 5 Extra Work............................................................................................................... 0 Method of Payment.-----------.---..—.---------------.'3 7 Disposition of Plans, Estimates and Other Documents -.------..--------j # Hold Harmless .........................................................................................................3 9 Professional Liability Insurance.------..—.----_---.---------.--.'* lU Certificate of Insurance............................................................................................5 I Independent Coutruotnc'--_-----.—.--'-.----'---_--.-.--.-----'o 12 Termination of Agreement.----.------------'----------'--'—'6 13 Assignment and Delegation-_---.—.-----'—'—'----------.-----'..6 14 .—....-.^..,.......—...-----.—.—.---..--------.7 15 City Employees and Officials..................................................................................7 16 Notices........................................................................................./ 17 Consent....................................................................................................................# 10 Modifiooiion.............................................................................................................a 19 0ootkou Headings � -.-------_—.--------.--_--'-_----------- 20 Interpretation of this Agreement----------.---.----.--------.8 21 Duplicate Original---'----------'--'----'—'-----'—'---'---'9 22 ----''--^--'-----~—'------~------^^^^^^--^~~`9 23 Legal Services Subcontracting Prohibited................................................................9 24 Fees..........................................................................................................lO 25 Survival.....................................................................................................................lU 26 Governing Law.........................................................................................................lO .27 ---.—.--_---'-----.-----'.---.---.-----..---...lO lO 20 .-----'~~'---------'-----^^''----'~----`—^---~'—` 29 Effective Date.................................................................................ll F >. PROFESSIONAL SERVICES CONTRACT BETWEEN THE CITY OF HUNTINGTON BEACH AND RAFTELIS FINANCIAL CONSULTANTS,INC. FOR Water Budget Rate Study THIS AGREEMENT ("Agreement") is made and entered into by and between the City of Huntington Beach, a municipal corporation of the State of California, hereinafter referred to as "CITY, and Raftelis Financial Consultants,Inc. a corporation of the State of North Carolina hereinafter referred to as "CONSULTANT." WHEREAS, CITY desires to engage the services of a consultant to develop a water budget rate structure ; and i S Pursuant to documentation on file in the office of the City Clerk, the provisions of the Huntington Beach Municipal Code, Chapter 3.03, relating to procurement of professional service contracts have been complied with;and CONSULTANT has been selected to perform these services, NOW,THEREFORE, it is agreed by CITY and CONSULTANT as follows: 1. SCOPE OF SERVICES i a i CONSULTANT shall provide all services as described in Exhibit "A," which is attached hereto and incorporated into this Agreement by this reference. These i E services shall sometimes hereinafter be referred to as the "PROJECT." CONSULTANT hereby designates Sanjay Gaur who shall represent it and be its sole contact and agent in all consultations with CITY during the 1 performance of this Agreement. i Z y{. I 1 E f y� i agree/surfnet/professional sves 50 to 100 12-07 1 of 11 E 1 f } 1 2. CITY STAFF ASSISTANCE CITY shall assign a staff coordinator to work directly with CONSULTANT in the performance of this Agreement. i 3. TERM, TIME OF PERFORMANCE Time is of the essence of this Agreement. The services of CONSULTANT are to commence on April 26 20 10 (the "Commencement Date"). This Agreement shall automatically terminate three (3) years from the Commencement Date, i unless extended or sooner terminated as provided herein. All tasks specified in Exhibit I "A" shall be completed no later than 240 days from the Commencement I Date. The time for performance of the tasks identified in Exhibit "A" are generally to be shown in Exhibit "A." This schedule may be amended to benefit the PROJECT if mutually agreed to in writing by CITY and CONSULTANT. In the event the Commencement Date precedes the Effective Date, CONSULTANT shall be bound by all terms and conditions as provided herein. 4. COMPENSATION In consideration of the performance of the services described herein, CITY agrees to pay CONSULTANT on a time and materials basis at the rates specified in i Exhibit "B," which is attached hereto and incorporated by reference into this Agreement, a fee, including all costs and expenses, not to exceed sixty-seven thousand five hundred seventy Dollars($ 67,570.00 i 5. EXTRA WORK @ l.. C In the event CITY requires additional services not included in Exhibit "A" f R or changes in the scope of services described in Exhibit "A," CONSULTANT will undertake such work only after receiving written authorization from CITY. Additional € agree/surfnet/professional svcs 50 to 100 12-07 2 of 11 i f i i 4 compensation for such extra work shall be allowed only if the prior written approval of CITY is obtained. 6. METHOD OF PAYMENT CONSULTANT shall be paid pursuant to the terms of Exhibit "B." i i 7. DISPOSITION OF PLANS, ESTIMATES AND OTHER DOCUMENTS { CONSULTANT agrees that title to all materials prepared hereunder, including, without limitation, all original drawings, designs, reports, both field and office notices, calculations, computer code, language, data or programs, maps, memoranda, . letters and other documents, shall belong to CITY, and CONSULTANT shall turn these i. materials over to CITY upon expiration or termination of this Agreement or upon i 3 PROJECT completion, whichever shall occur first. These materials may be used by CITY as it sees fit. 8. HOLD HARMLESS CONSULTANT hereby agrees to protect, defend, indemnify and hold harmless CITY, its officers, elected or appointed officials, employees, agents and volunteers from and against any and all claims, damages, losses, expenses, judgments, f demands and defense costs (including, without limitation, costs and fees of litigation of r . every nature or liability of any kind or nature) arising out of or in connection with i CONSULTANT's (or CONSULTANT's subcontractors, if any) negligent (or alleged negligent) performance of this Agreement or its failure to comply with any of its F obligations contained in this Agreement by CONSULTANT, its officers, agents or employees except such loss or damage which was caused by the sole negligence or willful r I misconduct of CITY. CONSULTANT will conduct all defense at its sole cost and expense ' and CITY shall approve selection of CONSULTANT's counsel. This indemnity shall agree/surfnet/professional sves 50 to 100 12-07 3 of 11 s_ apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as limitation upon the amount of indemnification to be i provided by CONSULTANT. 9. PROFESSIONAL LIABILITY INSURANCE i CONSULTANT shall obtain and furnish to CITY a professional liability insurance policy covering the work performed by it hereunder. This policy shall provide coverage for CONSULTANT's professional liability in an amount not less than One i Million Dollars ($1,000,000.00) per occurrence and in the aggregate. The above- mentioned insurance shall not contain a self-insured retention without the express written i. consent of CITY; however an insurance policy "deductible" of Ten Thousand Dollars 1 ($10,000.00) or less is permitted. A claims-made policy shall be acceptable if the policy further provides that: A. The policy retroactive date coincides with or precedes the initiation of the scope of work (including subsequent policies purchased as renewals or replacements). f, B. CONSULTANT shall notify CITY of circumstances or incidents that might give rise to future claims. i i CONSULTANT will make every effort to maintain similar insurance during i the required extended period of coverage following PROJECT completion. If insurance is i terminated for any reason, CONSULTANT agrees to purchase an extended reporting i i provision of at least two (2) years to report claims arising from work performed in connection with this Agreement. If CONSULTANT fails or refuses to produce or maintain the insurance F required by this section or fails or refuses to furnish the CITY with required proof that agree/surfnet/professional sves 50 to 100 12-07 4 of I 1 1 4 t insurance has been procured and is in force and paid for, the CITY shall have the right, at the CITY's election, to forthwith terminate this Agreement. Such termination shall not effect Consultant's right to be paid for its time and materials expended prior to notification of termination. CONSULTANT waives the right to receive compensation and agrees to indemnify the CITY for any work performed prior to approval of insurance by the CITY. 10. CERTIFICATE OF INSURANCE Prior to commencing performance of the work hereunder, CONSULTANT shall furnish to CITY a certificate of insurance subject to approval of the City Attorney i evidencing the foregoing insurance coverage as required by this Agreement; the certificate shall: j A. provide the name and policy number of each carrier and policy; B. state that the policy is currently in force; and C. shall promise that such policy shall not be suspended, voided or canceled by either party, reduced in coverage or in limits except after thirty (30) days' prior written notice; however, ten (10) days' prior written notice in the event of cancellation for nonpayment of premium. S 9 CONSULTANT shall maintain the foregoing insurance coverage in force i until the work under this Agreement is fully completed and accepted by CITY. The requirement for carrying the foregoing insurance coverage shall not derogate from CONSULTANT's defense,hold harmless and indemnification obligations as set forth in this Agreement. CITY or its representative shall at all times have the right to demand the original or a copy of the policy of insurance. CONSULTANT shall pay, in a I prompt and timely manner,the premiums on the insurance hereinabove required. agree/surfnet/professional svcs 50 to 100 12-07 5 of 11 i i t r i 3 i t 11. INDEPENDENT CONTRACTOR i CONSULTANT is, and shall be, acting at all times in the performance of this Agreement as an independent contractor herein and not as an employee of CITY. CONSULTANT shall secure at its own cost and expense, and be responsible for any and all payment of all taxes, social security, state disability insurance compensation, unemployment compensation and other payroll deductions for CONSULTANT and its officers, agents and employees and all business licenses, if any, in connection with the I PROJECT and/or the services to be performed hereunder. j i 12. TERMINATION OF AGREEMENT All work required hereunder shall be performed in a good and workmanlike l ! manner. CITY may terminate CONSULTANT's services hereunder at any time with or j without cause, and whether or not the PROJECT is fully complete. Any termination of this Agreement by CITY shall be made in writing, notice of which shall be delivered to CONSULTANT as provided herein. In the event of termination, all finished and unfinished documents, exhibits, report, and evidence shall, at the option of CITY, become its property and shall be promptly delivered to it by CONSULTANT. 13. ASSIGNMENT AND DELEGATION i This Agreement is a personal service contract and the work hereunder shall not be assigned, delegated or subcontracted by CONSULTANT to any other person or entity without the prior express written consent of CITY. If an assignment, delegation or , subcontract is approved, all approved assignees, delegates and subconsultants must satisfy the insurance requirements as set forth in Sections 9 and 10 hereinabove. : , agree/swfiet/professional sves 50 to 100 12-07 6 of 11 i f 14. COPYRIGHTS/PATENTS CITY shall own all rights to any patent or copyright on any work, item or material produced as a result of this Agreement. i 15. CITY EMPLOYEES AND OFFICIALS CONSULTANT shall employ no CITY official nor any regular CITY employee in the work performed pursuant to this Agreement. No officer or employee of CITY shall have any financial interest in this Agreement in violation of the applicable provisions of the California Government Code. 16. NOTICES Any notices, certificates, or other communications hereunder shall be given either by personal delivery to CONSULTANT's agent (as designated in Section 1 hereinabove) or to CITY as the situation shall warrant,or by enclosing the same in a sealed envelope, postage prepaid, and depositing the same in the United States Postal Service, to the addresses specified below. CITY and CONSULTANT may designate different j. f i addresses to which subsequent notices,certificates or other communications will be sent by j i notifying the other party via personal delivery, a reputable overnight carrier or U. S. i t certified mail-return receipt requested: i 3 TO CITY: TO CONSULTANT: City of Huntington Beach Sanjay Gaur ATTN: Kenneth J. Dills Raft_elis Financial Consultants Inc. 2000 Main Street 201 S. Lake Ave., Suite 301 Huntington Beach, CA 92648 Pasadena, CA. 91101 f Fp3. i( 3 agree/surfnet/professional svcs 50 to 100 12-07 7 of 11 f 3 f.. } ( , f 1 17. CONSENT When CITY's consent/approval is required under this Agreement, its } consent/approval for one transaction or event shall not be deemed to be a consent/approval i to any subsequent occurrence of the same or any other transaction or event. 18. MODIFICATION No waiver or modification of any language in this Agreement shall be valid unless in writing and duly executed by both parties. i 19. SECTION HEADINGS i The titles, captions, section,paragraph and subject headings,and descriptive ' l phrases at the beginning of the various sections in this Agreement are merely descriptive and are included solely for convenience of reference only and are not representative of matters included or excluded from such provisions, and do not interpret, define, limit or describe, or construe the intent of the parties or affect the construction or interpretation of any provision of this Agreement. 20. INTERPRETATION OF THIS AGREEMENT i The language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against any of the parties. I If any provision of this Agreement is held by an arbitrator or court of competent jurisdiction to be unenforceable, void, illegal or invalid, such holding shall not invalidate or affect the remaining covenants and provisions of this Agreement. No covenant or E E provision shall be deemed dependent upon any other unless so expressly provided here. As used in this Agreement, the masculine or neuter gender and singular or plural number shall be deemed to include the other whenever the context so indicates or requires. Nothingcontained herein shall be construed so as to require the commission of an act q Y € agree/surfneUprofessional svcs 50 to 100 ' 12-07 8 of 11 f i { E { contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no right to contract, then the latter shall prevail, and the provision of this Agreement which is hereby affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 21. DUPLICATE ORIGINAL The original of this Agreement and one or more copies hereto have been prepared and signed in counterparts as duplicate originals, each of which so executed shall, irrespective of the date of its execution and delivery, be deemed an original. Each duplicate original shall be deemed an original instrument as against any party who has C signed it. 22. IMMIGRATION CONSULTANT shall be responsible for full compliance with the immigration and naturalization laws of the United States and shall, in particular, comply with the provisions of the United States Code regarding employment verification. 23. LEGAL SERVICES SUBCONTRACTING PROHIBITED i CONSULTANT and CITY agree that CITY is not liable for payment of any f subcontractor work involving legal services, and that such legal services are expressly I outside the scope of services contemplated hereunder. CONSULTANT understands that pursuant to Huntington Beach City Charter Section 309,the City Attorney is the exclusive 1 legal counsel for CITY; and CITY shall not be liable for payment of any legal services f expenses incurred by CONSULTANT. agree/surfnet/professional svcs 50 to 100 12-07 9 of 11 E 24. ATTORNEY'S FEES In the event suit is brought by either party to construe, interpret and/or enforce the terms and/or provisions of this Agreement or to secure the performance hereof, i each party shall bear its own attorney's fees, such that the prevailing party shall not be i entitled to recover its attorney's fees from the nonprevailing party. 25. SURVIVAL Terms and conditions of this Agreement, which by their sense and context survive the expiration or termination of this Agreement,shall so survive. i 26. GOVERNING LAW i This Agreement shall be governed and construed in accordance with the laws of the State of California. 27. SIGNATORIES Each undersigned represents and warrants that its signature hereinbelow has the power, authority and right to bind their respective parties to each of the terms of this i Agreement, and shall indemnify CITY fully rr for any injuries or damages to CITY in the event that such authority or power is not�f act,held by the signatory or is withdrawn. d + CONSULTANT'S Initials k��' t 28. ENTIRETY i The parties acknowledge and agree that they are entering into this Agreement freely and voluntarily following extensive arm's length negotiation, and that each has had the opportunity to consult with legal counsel prior to executing this Agreement. The parties also acknowledge and agree that no representations, inducements, E promises, agreements or warranties, oral or otherwise, have been made by that party or anyone acting on that party's behalf, which are not embodied in this Agreement, and that agree/surfnet/professional svcs 50 to 100 12-07 10 of I I f t that party has not executed this Agreement in reliance on any representation, inducement, promise, agreement, warranty, fact or circumstance not expressly set forth in this Agreement. This Agreement, and the attached exhibits, contain the entire agreement between the parties respecting the subject matter of this Agreement, and supersede all prior understandings and agreements whether oral or in writing between the parties respecting the subject matter hereof. 29. EFFECTIVE DATE IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and through their authorized officers. This Agreement shall be effective i on the date of its approval by the City Attorney. This Agreement shall expire when i terminated as provided herein. CONSULTANT, CITY OF HUNTINGTON BEACH, RAFTELIS FINANCIAL CONSULTANTS,INC. a municipal corpor ion of the State of California COMPANY NAME By: City Administrator Sudhir Pardiwala,Vice President INITIATED AND APPR VED: print name i ITS: (circle one)Chairman/President/Vice President l Public Works Director/Chief LNID By: ALI' Diane Adams, Chief Financial Officer APPROVED AS TO FORM: print name �'�'v -2, r ITS: (circle one)Secretary/Chief Financial Officer/Asst. Secretary—Treasurer City Attorney 31 v F Date oro, agree/surfnet/professional svcs 50 to 100 12-07 11 of 11 a J E i f I f - i t EXHIBIT "A" A. STATEMENT OF WORK: (Narrative of work to be performed) Complete a water budget rate structure study to design and implement a new water budget rate structure for the City's water enterprise. B. CONSULTANT'S DUTIES AND RESPONSIBILITIES: 1. Attend meetings and give presentations as outlined in the Scope of Services 2. Deliver a Water Budget Rate Model in Excel 2007 format with proposed rates, revenue analysis and customer impact analysis. C. CITY'S DUTIES AND RESPONSIBILITIES: 1. Provide data to consultant as requested. 2. General project management, including review of memorandum and other deliverables. D. WORK PROGRAM/PROJECT SCHEDULE: The professional services contract stipulates a completion date of no later than 240 days from the commencement of the contract. The work program is given in detail in the Scope of Services/Proposal. Surfnet Exhibit A EXHIBIT "B" Payment Schedule (Hourly Payment) A. Hourly CONSULTANT'S fees for such services shall be based upon the following hourly rate and cost schedule: Please reference page 6 of the consultant's proposal. B. Travel. Charges for time during travel are not reimbursable C. Billiniz I. All billing shall be done monthly in fifteen (15) minute increments and matched to an appropriate breakdown of the time that was taken to perform that work and who performed it. 2. Each month's bill should include a total to date. That total should provide, at a glance, the total fees and costs incurred to date for the project. 3. A copy of memoranda, letters, reports, calculations and other documentation prepared by CONSULTANT may be required to be submitted to CITY to demonstrate progress toward completion of tasks. In the event CITY rejects or has comments on any such product, CITY shall identify specific requirements for satisfactory completion. 4. CONSULTANT shall submit to CITY an invoice for each monthly payment due. Such invoice shall: A) Reference this Agreement; B) Describe the services performed; C) Show the total amount of the payment due; D) Include a certification by a principal member of CONSULTANT's firm that the work has been performed in accordance with the provisions of this Agreement; and E) For all payments include an estimate of the percentage of work completed. Upon submission of any such invoice, if CITY is satisfied that CONSULTANT is making satisfactory progress toward completion of tasks in accordance with this Agreement, CITY shall approve the invoice, in which event payment shall be made within thirty (30) days of receipt of the invoice by CITY. Such approval shall not be unreasonably withheld. If CITY does not approve an invoice, CITY shall notify CONSULTANT in writing of the reasons for non-approval and the schedule of performance set forth in Exhibit "A" may at the option of CITY be suspended until the parties agree that past performance by CONSULTANT is in, or has been Surfnet Exhibit B hourly I brought into compliance, or until this Agreement has expired or is terminated as provided herein. 5. Any billings for extra work or additional services authorized in advance and in writing by CITY shall be invoiced separately to CITY. Such invoice shall contain all of the information required above, and in addition shall list the hours expended and hourly rate charged for such time. Such invoices shall be approved by CITY if the work performed is in accordance with the extra work or additional services requested, and if CITY is satisfied that the statement of hours worked and costs incurred is accurate. Such approval shall not be unreasonably withheld. Any dispute between the parties concerning payment of such an invoice shall be treated as separate and apart from the ongoing performance of the remainder of this Agreement. Surfnet Exhibit B hourly 2 A�� AATE(1�91QiNYlfYlf) CERTIFICATE OF LIABILITY INSURANCE 4/5/2010 (700 982-1156 FAX: (704)982-7012 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION Bear Insurance Service ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE MOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR 173 North Second Street ALTER THE COVERAGE AFFORDED 8Y THE POLICIES BELOW. Albemarle NC 20001 INSURERS AFFORDING COVERAGE NAIL 0 INSURED INSURER A Owners Insurance CO 32700 Raftelis Financial Consultants, Inc. INsuRmEkAuto Owners lose$ 1031 S Caldwell St INSURER C.Philadelphia Indleamity Ina. suite 100 INSURER 0: Charlot NC 28203 INSURER' E. COVERAGES THE POLICES OF INSMANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED.NOTIMTHSTANDING ANY REQUIREMENT,TERM OR COMMON OF ANY CONTRACT OR OTHER DOCIMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN,THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS,EXCLUSIONS AND CONDITIONS OF SUCH POLICIES.AC4REGJITE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. TYPE OF INSURANW POLICY NU lHdlTs RIBMI GENERAL LABILITY EACH OCCUR RBRCE $ 1,000,000 $ Co'elERaaL GENERAL LIABILITY -DAIWIDE TO MMSES cEa ocwnanoe) $ 50 000 A CLAIMS MADE Ea 1OCCUR 4266832900 1/21/2010 1/21/2011 MEDEXP(Arryanepereon� PERSONAL a ADV INJURY a 1,000,000 GENERAL AGGREGATE __$ 2,000,000 GENCL AGGREGATE LIMIT APPLIES PER PROOUCLS-COMMP AGO $ Z 00O 000 X POLICY PRO LOC -- AVTOMOBILE UARWY COMBINED SINGLE LINT $ 1,000,000 ANY Auro _ A ALL OWN*D AUTOS 4260132900 1/21/2010 1/21/2011 BODILY INJURY f SCHEDULED AUTOS (w pe—) x N$RED AUTOS BODILY INJURY s x NaN.ouVNm Auros (Per aceSd"% X r Additional Insured PROPERTY DAMAGE (Per acc+dMd) S OARAOE LIABILITY AUTO ONLY-EA ACCIDENT S ANY AUTO J ICG MHUOV-4-L e — OTHER THAN EA ACC $ AUTO ONLY: AGG S EXCESS r e LIAMI Y EA04 OCCURRENCE s 3,000,000 X OCCUR CLAIMS MADE AGGREGATE f 3,000,000 E 7�K'- B DEDUCTIBLE 266932902 1/21/2010 1/21/2011 $ xI ReravTloN s s,00 s WORKERS COMPENSATION WC STATU OTH- AND EMPLOYERS'LIABILITY YON T U-1 ER ANY PROPRIETOR/PARTNERIEKECUTNE❑ EL EACH ACCIDENT $ K�OFFWMEMBER EXCLUDED? (Mariddory In NH) E.L.DISEASE-EA SAL 9PRO�YISIONS below E L.DISEASE.POLICY LIMIT S C OTHimProfessional Liao PBSD394285 3/4/2010 3/4/2011 1,000,000. Claims Made Policy DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLESI EXCLUS110M ADDED DY ENDORSEMENT I SPECIAL PROVISIONS The City of Huntington Beach, its officers, elected or appointed officials, OW10yees, agents and wlunteers are DO'- named as certificate holder and as additional insured A2114h - CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION The City Of Huntington Beach DATE THEREOF.THE ISSIIWO INSURER WILL ENDEAVOR TO MAR. 30 DAYS WRITTEN 2000 Main Street NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT.BUT FAILURE TO OD SO SWILL Huntington Beach, CA 92648 IMPOSE NO 08LKIATIQN OR LUUSILITY OF ANY KIND UPON THE INSURER,RS AGENTS OR REPRES01TATIVE5. AUTHORS REPRESENTATIVE , Pamela Morton/PAM i ACORD 25 42009101) 01988-2009 ACORD CORPORATION. All rights reserved. INS026 poo9m+) The ACORD nann and logo are registered nmrks of ACORD CITY OF HUNTINGTON BEACH Professional Service Approval Form PART II Date: April 5, 2010 Project Manager: Ken Dills Requested by Name if different from Project Manager: Department: Public Works PARTS I & II OF THE PROFESSIONAL SERVICES CONTRACTS APPROVAL FORM MUST BE COMPLETED BY THE REQUESTING DEPARTMENT AND SIGNED FOR APPROVAL. PART I & 11 MUST BE FILED WITH ALL APPROVED CONTRACTS. 1) Name of consultant:Raftelis Financial Consultants, Inc. 2) Contract Number: PWK 010 020 00 (Contract numbers are obtained through Finance Administration) 3) Amount of the contract: $ 67,570 4) Is this contract less than $50,000? ❑ Yes ® No 5) Does this contract fall within $50,000 and $100,000? ® Yes ❑ No 6) Is this contract over $100,000? ❑ Yes ® No (Note: Contracts requiring City Council Approval need to be signed by the Mayor and City Clerk. Make sure the appropriate signature page is attached to the contract.) 7) Were formal written proposals requested from at least three available qualified consultants? ❑ Yes ® No 8) Attach a list of consultants from whom proposals were requested (including a contact telephone number.) RFPs from El Toro Water District and Yorba Linda Water District attached. 9). Attach Exhibit A, which describes the proposed scope of work. Attached. 10) Attach Exhibit B, which describes the payment terms of the contract. Attached. /6 Director of Finance (or designee) Signature Date CITY OF HUNTINGTON BEACH - Professional Service Approval Form PART I Date: 3/24/2010 Project Manager Name: Ken Dills Requested by Name if different from Project Manager: Department: Public Works PARTS I OF THE PROFESSIONAL SERVICES CONTRACTS APPROVAL FORM MUST BE COMPLETED BY THE REQUESTING DEPARTMENT AND SIGNED BY THE CITY ADMINISTRATOR, FOR APPROVAL, BEFORE PROCEEDING WITH THE SOLICITATION OR CONTRACT PROCESS. PART I MUST BE FILED WITH ALL APPROVED CONTRACTS. 1) Briefly provide the purpose for the agreement: Peform a water budget rate structure study. The study is part of a regional effort coordinated by the Municipal Water District of Orange County (MWDOC) and will be funded in part by a Prop 50 grant administered by the State Department of Water Resources. 2) Estimated cost of the services being sought: $ 67,570 3) Are sufficient funds available to fund this contract? ® Yes ❑ No 4) Is this contract generally described on the list of professional service contracts approved by the City Council? If the answer to this question is "No," the contract will require approval from the City Council.) ® Yes❑ No 5) Business Unit and Object Code where funds are budgeted: 50685806.69365. 6) Check below how the services will be obtained: ❑ A Bid solicitation process in accordance to the MC 3.03.060 procedures will be conducted. ® MC 3.03.08(b) —Other Interagency Agreement procedure will be utilized. ❑ MC 3.03.08— Contract Limits of$30,000 or less exempt procedure will be utilized. '�. Z,Y J0 ` Depart °ent Head Signature Date APPROVED DENIED ❑ f4ly'A ministrator's Signature Date Director of Finance's Initials Deputy City Administrator's Initials Date Date R55BUDGET City of Huntington Beach 3/24/20109:25:44 Available Budget Page- 1 As of March 31, 2010 Description Funds BA-YTD AA-YTD PA-YTD Available 50685806 Water Use Efficiency 00506 Water 50000 EXPENDITURES 51000 PERSONAL SERVICES 51100 Salaries, Permanent 66,396.00 2,532.80 63,863.20 52000 Salaries, Temporary 75,000.00 1,479.40 73,520.60 53000 Salaries, Overtime 8,000.00 8,000.00 55000 Benefits 27,378.00 1,065.37 26,312.63 51000 PERSONAL SERVICES 176,774.00 5,077.57 171,696.43 60000 OPERATING EXPENSES 63000 Equipment and Supplies 7,500.00 330.00 7,170.00 69300 Professional Services 100,000.00 100,000.00 69450 Other Contract Services 56,500.00 1,315.40 1,802.00 53,382.60 60000 OPERATING EXPENSES 164,000.00 1,645.40 1,802.00 160,552.60 80000 CAPITAL EXPENDITURES 82000 Improvements 250,000.00 250,000.00 80000 CAPITAL EXPENDITURES 250,000.00 250,000.00 88000 NON-OPERATING EXPENSES 88000 NON-OPERATING EXPENSES 50000 EXPENDITURES 590,774.00 6,722.97 1,802.00 582,249.03 00506 Water 590,774.00 6,722.97 1,802.00 582,249.03 50685806 Water Use Efficiency 590,774.00 6,722.97 1,802.00 582,249.03 CITY OF HUNTINGTON BEACH + , PROFESSIONAL SERVICES LISTING Department: Public Works Division or Fund Description Amount Public Works Administration Special Studies/Reports $10,000 Engineering/Development Development Processing/Other Consulting Services $65,000 Transportation Management Traffic Studies/Minor Design and Traffic Assessment/Plan Checking $15,000 Maintenance Admin/Street Tree Maint Tree Surveys/Special Reports $15,000 Building/Grounds Maintenance Facilities Surveys/Special Reports $20,000 506-Water Administration Water Conservation/Irrigation Master Plan $375,000 506-Water Engeer Design/Const Design/Technical Services/Project Management $650,000 506-Water Quality Water quality testing and analysis $130,750 506-Water Production As needed testing of controls $7,500 506-Water Meters As needed calibration of large meters $2,500 506-Water Use Efficiency Water rate study $100,000 507-WMP Eng Design/Const Design/Technical Services/Project Management $50,000 511 -Sewer Service Maintenance Design/Technical Services/Project Management $50,000 210-Adams/Ranger Station Design Design/Technical Services/Project Management $5,000 WOCWB Administration Facilities Master Plan $6,000 Total Professional Services $1,501,750 �- � � Coro a r 09s raC � s " A District of DislincIion '' Serving the Public - Respecting the Environment Auunist 20. 2009 v):.. . . :o Raftelis Financial Consultants I I 201 S. Lake Ave. Suite 80; Pasadena, CA 91 101 • ' *; Attn: Sudhir I'ardiwala . Re: Request for Proposal - Water 13uclget 13ased Tiered Rate Structure Evaluation and Implementation Project raj Dear Consultant: The E1 'I"oro Water District ("District") is connrtittcd to the iinplcrnentation of a water budget based tiered rate structure eftective July 1, 2010. In that regard, the District is I' �I seeking,a consultant "Consultant") to aS`+ist the: District in the various tasks leading up to and including the implementation of the rate structure. The District invites your 111•111 to I submit a proposal toprovide Consulting services to assist EfyV1.). t The proposal shall be concise and shall not exceed 25 pages in length including cover ° letters but excluding covers and tabs. Resumes and supplementary brochure type material are excluded from the page limit but shall be included in the proposal as an appendix. All material submitted in or with the proposal shall become the property of the District, unless it is clearly marked as proprietary information. The District reserves the right to use any ideas presented in the proposals, without compensation paid to the stil?mitter. Selection or rejection of the proposal shall not affect this right. �_ . A pre-proposal meeting with District staffto entertain questions and provide clarification of issues related to this project can be scheduled if deemcxl desirable. 'To arrange to meet with District state please contact Ms Polly Welsch, Boai Recariling Secretary 1 elsch(uPetwd.com or(949)8)7-700, Last 225 and she will make arrangements with the appropriate District staff. 1','ojeet Desel ipti��n The District provides domestic water, recycled v-vater and sanitary sewer collection_ treatment and disposal services to a population of more than 50.000 people in a . service area that covers approximate lv R.a square miles with approximately 1(a•000 water connections in portions of the Cities of Aliso Viejo, Lake Forest, Laguna A_,`ti" l-lilts_ Mission Viejo and all of the City of Laguna Woods. P.O. Box 4000 o Lciguna Hills, CA 92654--40C ° PhDni-� 949.837J050 Fox 947.837.7092 www.etwd .com El Toro Water District Currently the District bills for water services as follows: Water Use Charge— MWDOC.....................$1.72 Water Use Charge— ETWD..........................0.17 Fixed Meter Charge.................................various Capital Replace & Refurbishment charge........various The District intends to convert to a Water Budget Based Tiered Rate Structure effective duly 1, 2010. To achieve this goal, the District must: • Understand, evaluate and select the appropriate water based budget tiered rate structure model, • Assess the capabilities of the District's billing system. • Accumulated data regarding District customers, • Perform a Cost of Service Study, • Prepare a Revenue plan, • Design a tiered rate structure, • Comply with Prop 218, and • Adequately communicate the change to District customers. 1I. Project Schedule The project schedule is critical to the success of the project. .lThe following are proposed milestones for the project. Your proposal should include a detailed schedule of tilestones as you determine appropriate. Proposal Due Date Septerriber 11, 2009 Notice of Award September 25, 2009 Kickoff Meeting September 30, 2009 Evaluation of Alternative Tiered Rate Structures Oct - Nov, 2009 Billing System Assessment November, 2009 Billing System Modification/Replacement April, 2010 Data Gathering Oct— Nov, 2009 Cost of Service Dec --Jan, 2010 Revenue Plan Dec—.Ian, 2010 Tiered Rate Structure February, 2010 Prop 218 May, 2010 Outreach April —.July, 2010 The Consultant will prepare and submit monthly schedule updates at a minimum or as requested by the District. El Toro Water District III. Scope of Work The scope of' work as defined below describes the District's objectives for the project. The Consultant is encouraged to define a proposed scope to accomplish these objectives yet reflect any innovation, elaboration or clarification the Consultant feels appropriate to define their particular approach. The ultimate contract will be based on the proposed scope of work as accepted by the District. Phase I Understand, evaluate and select the appropriate water based budget tiered rate structure model. Under this phase the. District and Consultault will explore the various water based budget rate structure alternatives and develop a recommended structure that best suits the District. The Consultant will prepare a detailed report which (1) explains all the components of the rate structure, (2) includes an inventory ofitems/tasks necessary to implement the structure and (3) a timeline for accomplishing all tasks necessary to implement the rate structure (including a cost of service study, revenue plan and 218 process) effective July 1, 2010. Phase 11 Filling system assessment. (A) The Consultant will evaluate the District's current billing, system to ascertain if the system can accommodate the rate structure recommended in Phase 1. if the system is compatible with the proposed rate structure the Consultant will assist the District with modifications to the system to accommodate the new rate structure. (13) In the event it is determined that the billing system cannot accommodate the new rate structure, the Consultant will assist the District in the identification, acquisition, installation, set-up and training of the new billing system. The timeline developed in Phase I task (3) will provide for both alternatives regarding the billing system to insure a.Iuly 1, 2010 effective date. Phase III Data gathering. Implementation of a water budget based tiered rate structure will require that the District accumulate a significant amount of data regarding its customers. Specifically, it must match each meter within the system to the county tax roles and parcel numbers, determine the parcel size, determine the irrigable acreage of each parcel and the occupancy of each parcel. The Consultant will assist the District in the accumulation of all required data to implement; in a timely fashion the water budget based tiered rate structure. Phase IV Cost of Service. In order to complete the rate structure the Consultant will perform a Cost of Service study covering only the District's water operations. The last Cost of Service study was conducted for the 2009/2010 year. The Consultant should consider the merits of simply updating, based on inflation, the 2009/2010 study in lieu of undertaking a new study. Justification for the approach will be required to the extent necessary to satisfy the requirement - - El Toro Water District of Prop 218. Phase V Revenue plan and tiered rate structure. Using the data accumulated in Phase III and the Cost of Service Study completed in Phase IV, the Consultant will assist the District in the development of a revenue plan and the tiered rate structure. The rate structure will follow the model developed in Phase 1. Phase VI Prop 218. The Consultant will assist the District in the development of the Prop 218 Notice and the required nexus between the rates and the Cost of Service. IV. Additional Proposal Information The proposal should include as a minimum: A. Qualifications and Experience: The qualifications and experience of the firm relative to the subject project shall be clearly defined in the proposal. A resume defining qualifications and experience,and a description of levels of project responsibility for each of the individual(s) who would be assigned to those positions which the Consultant proposes to be included as part of the project team with special emphasis on experience on similar projects shall be provided. An organizational chart should be included which presents the Consultant's Project Manager as well as key personnel. It is important that the Consultant's internal organization incorporate key personnel to provide for overall project quality control. All subconsultants proposed to be used as part of the Consultant's project team shall also be listed and included in the organizational chart. B. References: A list of three to five individuals with addresses and phone numbers who are familiar with the Consultant's,and particularly the Project Manager's.performance on similar type projects within the last five years. C. Scope of Work: The detailed scope of work will be used as a basis for any subsequent contract negotiations. The scope of work may be based upon the information contained in Section III of this Request for Proposal and elaborated upon or clarified as deemed appropriate by the prospective Consultant. Tile scope of work should outline the approach the Consultant will use to address each of the phases identified and clearly express the Consultant's understanding of the project. D. Proposal: An analysis of the estimated hours and costs for the individual tasks and subtasks depicted in the accepted scope of work shall be provided. The analysis should detail the►nanhours estimated to conduct and complete each task element of the scope of work broken out by each consultant or class of consultants that will be assigned to the project. A matrix format giving hours per classification for each task shall be included to support the description of the total fee. Any services or tasks - 4 - El Toro Water Distlrict performed by subconsultants shall also be broken down by task, hours and position. Lump stem amounts will not be acceptable. A total not to exceed fee for performing the work outlined in the accepted scope of work shall be provided. The fee proposal shall set forth a free breakdown based on hourly rates, direct expenses, subconsultant's fees if applicable, by task, with a maximum total fee. The contract will be awarded on a time and materials basis with a fixed fee not to be exceeded without further authorization. E. Schedule: A detailed schedule for accomplishing those tasks outlined in the accepted scope of work shall be provided. The schedule should identify dates of completion for key project milestones or submittals. It is anticipated that a contract will be awarded after the meeting of the ETWD Board of Directors on September 24,2009. The Consultant will be expected to start work in a timely fashion after award ofa contract. F. The District anticipates issuing a Purchase Order with the. Consultant's proposal attached as the means of documenting compensation and proposed work product deliverable. G. The proposal must state that the Consultant will provide the District insurance as follows; professional liability coverage to be a minim►ini of$1,000,000 and general liability and property damage to be a minimum of$1,000,000. Any premium required by an insurance carrier for such coverage should be included in the propose fee. The District will not pay a separate insurance surcharge for the required coverage. 1-1. The proposal should include any additional material which the Consultant feels will aid the District in determining the Consultant's qualifications for performing the required work. V. Evaluation Procedures and Criteria The District may, at its discretion, conduct personal interviews with the Consultant's proposed key personnel and may contact recent clients. Selection ofthe Consultant will generally be based on the proposal contents,the prior experience of the firm,and the specific relevant project experience and capabilities of the designated project manager and support staff. The Consultant, and in particular the project manager, must be fully capable in all areas outlined under the scope of work. Based upon this information, District staf{T will recommend a Consultant to the District's Board of Directors for award ofa contract. The selected Consultant must be able to begin work immediately upon award ofa contract and must be able to maintain the required level of effort to meet the proposed schedule. The District reserves the right to request additional information from prospective Co►1Sl►ltantS prior to final selection and to consider information about a firm other than that submitted in the proposal or interview. The District may select for contract negotiations the Consultant that, in the District's judgement, will best meet District's needs irrespective of the - 5 - El Toro Water District comparison of fees and costs estimated by the applicants. Selection criteria will be based on a detailed evaluation of all facets of each proposal and their responsiveness to all provisions of this RFII. The District may use some or all of the following criteria in its evaluation and comparison of proposals submitted. The following list of criteria Is not intended to be all inclusive nor is the order intended to indicate their relative importance: • The firm's experience on similar types of projects and professional qualifications of the ConSLIltaflt'S team and, in particular, the Project Manager assigned to the District's project. The team's demonstrated ability to perform the work as indicated in the RJ--Ps scope of services will be essential. • The organizational structure of the proposed project team. • Recent references from local clients on similar type work performed by Consultant. • The Consultant's technical approach and methodology to performing the scope of services will be evaluated based upon completeness, demonstrated capability, responsiveness to the District's needs and demonstrated understanding of the work- requirements. • The Consultant's level of effort will be evaluated based on an analysis of the hours and fees proposed. • The proposed fee for completing the scope of service,.. • The proposed project schedule. • The financial stability of the Consultant. • The Consultant's demonstrated ability to meet all of the District's administrative requirements including insurance and liability. The District also reserves the right to not proceed with the selection of tile Consultant if the District deems it Is in its best interest not to proceed with the project for any reason. The District further reserves the right to modify the scope of work and to negotiate accordingly with the selected Consultant. The District shall not be responsible to any of the firms for the costs to prepare their proposal in response to this Request for Proposals. VI. Submittal of Proposals Proposals will be accepted until 12t00 p.m., Friday,September 11,2009 at the El Toro Water District Offices, 24251 Los Allsos Blvd., Lake Forest, California, 92630. Electronic submission of all documents is pi-eferred. - 6 - E6 Toro Water District The District reserves the right to reject any or all proposals and to terminate or postpone the project. The District will assume that those Consultants not responding by the time and date stipulated herein have elected not to participate in the proposal submittal process. Should you have any questions, please don't hesitate to contact the undersigned at(949) 8317-7050, extension 228. Sincerely, EL TORO WATER DISTRICT Michael P. Grandy Assistant General Manager/CFO - 7 - RFC ® 201 S. Lake Blvd, Suite 301 ❑ Phone 626.583.1894 N www.raftelis.com Pasadena•CA•91101 Fax 626.583.1411 RAFTELIS FINANCIAL CONSULTANTS,INC. September 11,2009 Mr. Mike Grandy Assistant General Manager / CFO El Toro Water District 24251 Los Alisos Blvd. Lake Forest,CA 92630 Subject: Proposal for Water Budget Tiered Rate Structure Evaluation and Implementation Project Dear Mr. Grandy: Raftelis Financial Consultants, Inc. ("RFC") is pleased to submit this proposal to assist the El Toro Water District ("District") with the evaluation and implementation project for water budget tiered rate structure. We believe that our unique combination of qualifications and experience will ensure successful implementation of forward-looking solutions that will be of benefit to the District and its customers. There are several issues facing the District to ensure effective implementation of water budget rates including the following: o Development of appropriate water budgets for individual properties which will require integration of the District's usage data for different accounts with the assessor's parcel data; o Stakeholders'involvement in developing policies for defining the water budgets; o Modifications to the billing system to accommodate the new rate structure. o Cost of service analysis to ensure costs are passed to users in proportion to the service received in compliance with Proposition 218; o Effective communication with the Board and the public to ensure understanding and acceptance; and RFC provides the District value added benefits in each of these areas. Our staff members have been assisting the District with rates for about a decade and are familiar with the District - its operations, user and usage data, and current financial situation. We offer the District: ➢ Knowledge. Our team members have performed more water budget rate studies than anyone else. We have performed or are performing water budget rate studies for Eastern MWD,Western MWD,Rancho California Water District,Palmdale Water District and cities of San Diego,Corona,Henderson,etc. Having worked for the District for many years,we are familiar with the District's systems. We have contacted the billing systems vendor- Continental Utility Solutions and are confident that we can work with them to upgrade the District's current billing system. ➢ Highly Qualified and Experienced Team. Our business and engineering qualifications enable us to develop water budgets efficiently and perform sound cost allocations supported by industry standards,lending confidence to decision makers and credibility to project results. The principal team members have accumulated over 50 years of experience in the field and are active members of the national and local industry associations. Mr. Gaut,who will be actively involved in the project,is co-authoring a chapter on water budget rates for the M1 Manual on water rates published by AWWA. ➢ Broad Experience. The District can rely on RFC's history of developing and assisting in the implementation of successful solutions for other agencies. We have conducted over 1,000 rate and financial studies across the US and over 300 in California. Additionally,we have worked with numerous assessors' data and wilt be able to integrate the billing and parcel data efficiently. ➢ Local Consulting Resources. We have a large, experienced staff to provide you a timely product. ➢ Quality. Each project has a specific quality control/ quality assurance ("QA/QC") plan that ensures the highest quality of assistance to the client. ➢ Model. RFC's rate model is very user-friendly with the capability to conduct scenario analyses graphically for ease of understanding and allowing policy makers to make quick decisions. ➢ Public Outreach and Presentations. RFC's experience in making presentations with easy to understand graphics will ensure that the District's staff and especially the customers realize the benefits and support the implementation of the water budget rate structure. ➢ Value. RFC performed the District's last rate study and we can readily update this study and provide value to the District at lower costs. To assist the District with this Study, RFC has put together a team with extensive experience. As a Vice President of RFC, I will serve as Project Manager and will be responsible for directing the study and ensuring transparent communications with the District and high quality of the work delivered. 1 am currently developing water budgets for the City of San Diego and have developed water budgets at the City of Madera and Palmdale Water District, and completed over 300 other rate and financial studies in California. As the project manager of the District's prior rate study, I have an in-depth understanding of the District's situation and will be in ideal position to assist the District to achieve its goal in a timely manner. Our water budget expert, Mr. Sanjay Gaur,will be the policy advisor to assist the District in making insightful policy decisions. Mr. Gaur is considered one of the leading experts in the development of water budget rates with more than 15 years of public sector consulting experience. He has developed `eater budget rates for numerous agencies in California including Eastern Municipal Water District, Rancho California Water District, Monterey Peninsula Water Management District, and Western Municipal Water District. Our project staff possesses broad experience and in-depth knowledge in the field of utilities finance, pricing and water budget designs. We are excited about this opportunity to assist the District with this important study. Our knowledge, experience and local resources will provide the District with the most economical and superior product Please do not hesitate to contact me at (626) 583-1894 if you have any questions. Sincerely, Sudhir Pardiwala Vice President A-T , - OO_ WATERBUDIESRA71E �°�UY Evaluation &Implementation Analysis September 11, 2009 RAFTELIS FINANCIAL CONSULTANTS, INC. 201 S.Lake Ave Ste 301 Pasadena, CA 91101 Phone: (626) 583-1894 Fax: (626) 583-1411 Proposal for Water Budget Tiered Rate Structure Study " September 2009 0 TABLE OF CONTENTS Page I. PROJECT UNDERSTANDING 1 A. Project Issues 1 B. Project Approach 2 II. SCOPE OF WORK 5 III. PROJECT SCHEDULE AND FEES 11 IV. FIRM OVERVIEW 13 V. PROJECT TEAM 14 VI. PROJECT EXPERIENCE & REFERENCES 16 VII. APPENDICES A. Resumes 19 B. Illustration 29 Alm RM 1 RAFTEUS FINANCIAL CONSULTANTS,INC. 11 0*$atep 6 C Proposal for Water Budget Tiered Rate Structure Study September 2009 I. PROJECT UNDERSTANDING The El Toro Water District ("District") provides water, wastewater and recycled water services to a population of approximately 51,000 in a service area of approximately 8.5 square miles. The District's water system is relatively modern,built in phases since 1960,with 6 reservoirs of combined capacity of 136 million gallons, over 170 miles of water lines and 8 booster stations with 13 pressure zones to deliver water to approximately 10,000 metered accounts. Due to its underlying geology, the District does not have any groundwater resources. It imports all of its water supply from Municipal Water District of Orange County ("MWDOC"), which is a member agency of Metropolitan Water District ("MWD"). Due to its dependence on imported water as its sole water source, the District currently has a pass-through system to recover the imported water cost increases of MWD. The current water rate structure of the District consists of four components: a water O&M monthly service charge varying by meter size starting at $7.60, a capital replacement and refurbishment ("R&R") monthly charge varying by meter size, a volumetric delivery rate of $0.17 per ccf ' and an MWDOC imported water rate for purchased water costs. To promote water conservation and efficient water use, the District is committed to the implementation of a water budget tiered rate structure by July 1, 2010. To achieve this aggressive goal in a timely manner, the District is seeking well qualified financial consultants specialized in designing water budget rate structure, and at the same time also having extensive knowledge about the District to complete the study effectively and efficiently. Having completed the previous cost of service studies with the District and with the expertise in the water budget rate design, RFC has an excellent understanding of the District's current issues and is in an ideal position to provide the District the most effective and efficient financial consulting services. A. PROJECT ISSUES The District's RFP identified several issues to be studied in the study. RFC has included a brief discussion on each below. © Understand, evaluate and select the appropriate water budget structure Success or failure in implementing a water budget rate structure will in large part be determined by the ability to determine fair and equitable water allowances. Budgets are generally determined by an equation that accounts for all the relevant factors of a customer that could influence water usage. It is important to provide a fair amount of usage for each customer, based on his/her characteristics, as the goals of a budget rate system are to promote efficient water use and to penalize wasteful consumption. Factors including landscaping needs and number of residents at each location will help determine the water budget per customer account. Irrigation needs can be determined to various levels of accuracy depending on the District's policy. The number of people per household and the daily allotment per person (or gallons per capita day "GPCD") are the two key factors determining the internal or domestic water budget. The census data and data from the State ' 1 ccf (or hundred cubic feet) = 748 gallons I RAFTEUS FINANCIAL CONSULTANTS,INC. AN ate, 1. Proposal for Water Budget 'Tiered. bate Structure Study September 2009 Department of Finance showing average density per household can provide a reasonable basis for establishing a default value, which can be updated locally upon customer requests via a variance program. There are numerous publications, mostly from the American Water Works Association ("AWWA"), and California legislation relating to water budget rate structures that can be used as defensible guidelines for the District's decision makers. Because almost 90 percent of the District's potable water sales are for residential and irrigation accounts, identifying the appropriate budgets for residential and irrigation customers are critical to the success of the study. However, allowances for non-residential customers will also be designed. Using appropriate industry standards and legal framework, RFC team members have established individualized water budgets for numerous agencies in Southern California, such as Palmdale Water District, Rancho California Water District, Western Municipal Water District,Eastern MWD,and the Cities of Madera and Corona, and Henderson in Nevada. © Evaluate the billing system and assist in implementing the new billing system RFC will review the capability of the District's current billing system to handle the water budget rate structure. Depending on the complexity of the budget rate structure, there will be required modifications to the existing billing system or acquisition and installation of the new billing system. RFC has already contacted Continental Utility Solutions and discussed with them the potential changes to the billing system. © Gather and incorporate assessor's data into the customer account database and water budget tiered rate calculations Implementation of the water budget rate structure will require collecting and processing a large amount of customer data such as parcel size, irrigable area and occupancy of each parcel to be used to determine the outdoor water budget. RFC will gather parcel data from the Orange County Assessor's office and electronically match it with account data in the District's system. © Identify and verify Proposition 218 issues related to rates, and assist the District in complying with Proposition 218 regulations. Proposition 218 dictates that an agency cannot collect revenue beyond costs required to provide service and the amount of fee may not exceed the proportional cost of service to the parcel. RFC recognizes that meeting the requirements of Proposition 218 is a legal issue and will work with the District's counsel, as we have done with numerous agencies, to ensure that the District is complying with regulatory requirements. RFC has assisted many agencies with Proposition 218 Notices and with implementation of new rates. Recent examples include the Cities of San Diego,Brea,Beverly Hills,Santa Fe Irrigation District and San Dieguito Water District. B. PROJECT APPROACH RFC will develop a water budget tiered rate structure designed to provide equity among customers, recover adequately the cost of services to meet the expenses of the District's operations and the costs associated with delivering water to its customers, be legally defensible and achieve the District's aggressive implementation goals by July 1, 2010. In order to address the stated issues in the District's RFP, we have proposed an interactive approach with District's staff. The following paragraphs highlight key elements of our proposed approach. 2 RAFTEL1S ENANCIAL CONSULTANTS,INC ti Proposal for Water Budget Tiered. Rate Structure Study September 2009 0 Strang and transparent communication with District staff, stakeholders, policy makers and public The proposed project approach entails several different, yet interrelated,work efforts that will require effective coordination between District staff and the RFC Project Team. Our management approach stresses communication, teamwork, objectivity, transparency and accountability for meeting project objectives. We believe in a no-surprise approach so that the client is aware of the status of the project at all times. Our approach includes regular communication and detailed documentation to ensure transparency and thoroughness of the project. RFC will work with District staff on an ongoing basis, via scheduled on-site meetings and web conferences, in order to transfer information and so that staff retains ownership over the final work product. RFC uses a web meeting tool, GoToMeetingTM, that allows clients to see in real-time the results of various analyses on their computer screens, thus providing an efficient and effective method of communication in addition to face-to-face meetings. 0 Development of Water Budgets for Customers There are several levels of accuracy that can be used in setting water budgets. The simplest form of a budget is using average data for the District as a whole and setting up allowances or tiers based on those averages. This would include average residential density for indoor use and average lot size and irrigated area for outdoor use. The target usage per capita and residential density would provide the indoor allowance, and the average evapotranspiration ("ET") data applied to the average irrigation area would provide the outdoor allowance. The sum of these two with an appropriate drought factor or conservation goal would be the basis for the budget. A more refined allowance would be based on the density of each household along with the irrigation area for that household combined with the daily ET data to generate dynamic allowance for each customer based on weather conditions.This latter method of setting budget rates would provide a fair allowance considering each individual account's unique needs. This method requires more time and effort to set up but pays in the long run in terms of greater customer satisfaction. Various levels of allowances can be designed based on the values of the parameters chosen. RFC's model will have the flexibility to test these parameters and the corresponding impacts on customers and the District. RFC will gather acreage data from the assessor's office and electronically integrate it with the District's customer data. Daily ET data is available from California Irrigation Management Information System ("CIMIS") and could be integrated with the District's billing system. Allowances would take into consideration efficiency factors for irrigation, and drought factors enforcing different levels of conservation, so that budgets would be automatically reset to send the appropriate price signal. Allowances for non-residential customers can also be set up simply by taking the average usage over a base period or developing more complex usage patterns based on number of employees,irrigation area, etc. 0 Determination of Cost of Service and Rate Structure One of the major goals of any rate study is to accurately and efficiently allocate costs to different customer classes and ensure revenue sufficiency while maintaining rate equity. Before equitable rates can be developed, it is necessary to determine costs of different functional areas and allocate those costs of service to customer classes in a sound and equitable manner. RFC has been assisting the District with its rates for the last several years. This is another area where our knowledge and rate model will provide value to the District. 3 RAFTEUS FINANCIAL CONSULTANTS,INC. C ♦Aater16 Proposal for Water Budget Tiered Rate Structure Study ' September 2009 0 Public Presentation and Outreach The success of this project is dependent upon gaining the support of the stakeholders. RFC's experience in making presentations with easy to understand graphics will ensure that the District's stakeholders, especially the customers, realize the benefits and support the implementation of the water budget rate structure. Seven printed copies of the final report accompanied by one electronic copy will be submitted to the District at the end of the study,which will include appropriate supporting data from the Model to address the requirements of Proposition 218 and to ensure that the calculations and methodologies used are transparent and easily understood by the public. 0 Development of Water Budget Rate Model Taping advantage of advances in computer technology, RFC has developed a financial planning computer model ("RFC Model") that will provide accurate, up-to-date financial planning and rate design information about the District's water utility. The RFC Model is one of the most advanced strategic planning tools available today. It is Windows-based and easy to learn and use. RFC will design the model to specifically recognize the unique needs, characteristics, and information based on the District's systems. The model can include: ® Adherence to industry standards and Proposition 218 rate-setting practices and procedures; ® Sufficient revenues that adequately recover all the operation and capital costs incurred by the District; ® Tiered water budget rate structure that promote conservation and efficient water use; ® Customer impact ,- - -_•: m E ° % i � t Ce _ s, r«rem°nn e�.e ew ;?m,e.c coma rvrbK soae�¢a analysts in „ a ra „ � - - rig•a •StNax ZO . graphical format r for the District to =Y aqT= RESULTS nrtnn nrin.x�,u PENALTY TIER DEFINITION Dusn,pt�°us �Caasumyuna` Re,eaue Ratubl.Re,' Perte¢ragx g[ make well— cuN+n r,,: e lE s nma+� is�umal Rer sIe Re, 1113 I50?o 'r B� 3, 5—ineh.—I i'> 1310'S 4-:0 informed L\DOORALLOC INPUTSALLOCATION _ ler lj_ Fj_ t19 IL9 _-1_5 _!rises s:�;,n,G3=h �wyc: T IT _I CPCD 60 cPloas PR calm dal' TIER'RITIPLmRg iier'� :!�` -_ __---._...---_ {-_—----.-- Ti., —__- - dectstons; 5. � P,e¢a (.IBas.R.W. Rates 3 90 1 -; >-. -_ Tia 1 1.0 50.63 Der i 1.946{ 6.5,I ___F ® Customized Z.o cl jf TOTAL 14,9331 S 1Z00 I S 10A3 I 1001¢ _ 0[_rDOOR�LLOCiTION INPUTS Titr= Dashboard with Ti"3 3-o S192 T.-b>Ti­—d-P.0—dNXaterB¢de.t D� r-_ Ei Adju.tme¢tFuur 70?0J°o[E7 Tina 8.0 S5 12 Coa; ability to perform .aPam.t {ae °,:¢fTgt Paca..a., : _ -- try B¢se Rase 50.64 ^-z.-r .i'W" sensitivity analyses _-- S3..M. wmw, -- t= I.La Monthly Usage Comparison amth Sample\Ionthh�Bill Comparison and see the » ' --, F^.r,n:ge e_c�e,!b-nr_h me:..3:ii s9oFa.a.�=e a.'xc,:.3-Ga mrn 3::1 _ changes in real y � —. I 5�0 -__ _,_____. . - i "-:.+:cf°.I:::YY b':4: A_;sG '+S'A .•"^ time in graphical -_�_--'---___-- __-� _. .o S30 --_ •t•[ian�a Perceatage otlmPacred Bdh,-s5C'hmgew Bdls 2t tR'a format; and Ease of input' -` - - = < 27 report printing 1 _ D¢tlgn Coulwn4+i:¢ A<+url G°u;ou:µ.ton Xzp- 1{'nta8rda.. 'L'¢Ifnrm Aumd 0= ,U feamMµl Cuevmµsio¢ .L Si1-ltl.S1U-1n ypSg SSa-40 S5,-s0336.30U re 14^ update, s, .I: - :.._ :. . SChange I,.Bill understanding, administration,and legal defensibility and compliance. Example of a customized Dashboard from the RFC Model is shown in the above figure. 4WS RAFIEUS FINANCIAL CONSULTANTS,INC. N 3 ate., Proposal for Water Budget Tiered Rate Structure Study September 2009 H. SCOPE OF WORK The following sections outline the tasks to complete a water budget tiered rate structure study ("Study") to design and implement a new water budget tiered rate structure that ensures financial sufficiency for the operations and capital costs of the enterprises, yet promotes conservation and efficient water use. While tasks are listed consecutively, elements of tasks may be done concurrently with other tasks. Task 1—Project Initiation, Management and Data Collection The Project Initiation task begins the Study so that it progresses in an efficient and deliberate manner. Task 1 includes the collection and review of all relevant data and documents, a kick-off meeting, project management and our quality assurance/quality control ("QA/QC")process. Task 1.1—Data Collection and Kick-off Meeting with District Staff The kick-off meeting provides a solid foundation for the project and serves as a forum in which District staff can provide input on the project's approach,work plan, schedule, 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. As part of this task, a detailed data request list will be submitted to the District so all appropriate data in the required format can-be forwarded to RFC prior to the kick-off meeting. Task 1.2—Ongoing Project Management The proposed project approach entails several different, yet interrelated, work efforts that will require effective coordination between District staff and the RFC Project Team. Our management approach stresses communication, teamwork, objectivity, transparency and accountability for meeting project objectives and timeline. 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-surprise approach and communicate with clients on a regular basis through face-to-face meetings, web conferences and telephonic conferences so that the client is aware of the status of the project at all times. RFC is proud of the quality of our work products and services delivered, ensured by our stringent QA/QC process,which is done throughout the duration of the Study by highly experienced and competent staff. Our thorough QA/QC process ensures validity,accuracy and consistency and provides assurance that the model being developed for the project is functioning properly and is based on sound rate making principles, standard industry practices and that the report produced is comprehensive,consistent with the results, and meets the high quality standards of RFC. Meetings: One (1) Kick-off Meeting. Deliverable: Data Request List,Regular Status Reports. Task 2—Evaluations of Alternative Water Budget Structures Task 2.1—Identify Various Water Budget Methodologies The task of identifying water budgets is often driven by the degree of variability within customer classes and the availability of data. If the customers within a customer class are largely the same, some assumptions can be 5 RAFTEUS FINANCIAL CONSULTANTS,INC. of A,vater16 Proposal for Water Budget Tiered Rate Structure Study u September 2009 NV made about the class as a whole when deterrnining the budgets. This can be the case with the residential customer class, in which simplifying assumptions can be made to develop water budgets. Accounts dedicated for irrigation will have outdoor water budget only,which takes into account irrigation areas,weather data, plant type and irrigation efficiency after adjustment by drought factors enforcing different levels of conservation. Commercial customers are often more varied and therefore their budgets are often based on historical usage. Water budgets for residential customers can be determined using a complex equation that takes into account numerous variables including: 0 Average residential density per household 0 Actual residential density per household 0 Average water use per capita per day 0 Average irrigation area per household 0 Actual irrigation area per household 0 Type of plants 0 Irrigation efficiency 0 Average EvapoTranspiration ("ET") data 0 Real time ET data 0 Drought factors A good starting point for identifying water budgets for non-residential customers is using historical usage pattern via rolling 3-year monthly average. Task 2.2—Evaluate Alternative Water Budget Structures As part of this task, RFC will evaluate up to three (3) alternative water budget structures, document key policy issues and will recommend the structure that best fits the District's objectives and goals. Mr. Sanjay Gaur,who has experience in dealing with several agencies, will participate in developing policy and providing insightful guidance during the policy setting process to ensure compliance with Proposition 218 and other State and regional legislations. The success of a program also depends on the ability to meet the customers' expectations for service. Water budgets are dynamic; changes in household size for residential customers or new regulations for commercial customers can both necessitate adjustments in a customer's water budget. It is important to have a system in place that allows customers to petition for an increase in their water budget. Variance programs will help to increase the accuracy of both indoor and outdoor water budgets and customer acceptance, as well as to address unique circumstances and exceptions for some customers who genuinely need larger water budgets. Such customers include those with special medical needs, higher densities or larger irrigation demands. RFC will also provide some insightful recommendations regarding the variance programs from previous experiences at Palmdale Water District,Rancho California Water District,Eastern 1V WD,and Western MWD. RMC 6 RAFfEUS FINANCIAL CONSULTANTS,INC, Proposal for Water Budget 'Tiered Rate Structure Study September 2009 Task 2.3—Prepare Report Highlighting Recommended Water Budget Structures After evaluating different water budget structures with input from the District, RFC will make recommendations for the structure that best fits the District's needs. A concise report will be provided that contains a detailed explanation of all the components of the proposed water budget structure and the other recommendations regarding the water budget policies such as variance programs and the default values of water budget components. In addition, the report will identify all tasks necessary to implement the proposed water budget tiered rate structure in an estimated timeline to meet the District implementation goal in July 1,2010. Meetings:Two on-site meetings to discuss alternative water budget structures. Deliverable:Water budget framework memorandum. Task 3—Billing System Assessment Task 3.1—Evaluate the District's Current Billing System RFC will work closely with District staff to review the capability of the District's current billing system to implement the proposed water budget rate structure as defined in Task 2. Depending on the complexity of the budget rate structure,modifications to the current billing system will be required. Task 3.2—Identify Modifications Required to the Current Billing Systems Based on the findings and recommendations of preceding tasks,RFC will document all key modifications to the current billing system in order to implement the proposed water budget tiered rate structure. Our discussions with the District's billing system indicate that the current system can be modified to accommodate changes in the rate structure. Task 3.3—Assist the District in Implementing the Required Modifications RFC will communicate with Continental Utility Solutions to provide them details about the changes in rate structure and assist the District in implementing the required modifications to the current billing system and ensuring that all the right calculations are performed and consistent with the proposed water budget structure. Meetings: One (1) on-site meeting included in Task 2 above and one (1) web conference to review current billing system and discuss available options for billing system upgrade. Deliverable: Billing system memorandum—Evaluations and Recommendations. Task 4— incorporation of Gathered Customer Data to Billing Systems Task 4.1—Gather Required Customer Data from Assessor's Office This project component includes data collection of all the parcels that fall within the District service area from the County Assessor's Office and the list of customers with the District. RFC will contact the Assessor's Office of Orange County to purchase the updated assessor roll database. 7 RAFTEIJS FINANCIAL CONSULTANTS,INC o-',)4 ater1!� Proposal for Water Budget 'Tiered Rate Structure Study September 2009 Task 4.2—Match Acquired Customer Data to Current Customer Database RFC will integrate electronically the two databases, from Assessor's Office and from the District's billing system, for each parcel within the District service area to determine the parcel size,if possible the irrigable area of each parcel. RFC will seek assistance from the District to match as many parcels as possible with the District billing system. Additional efforts that are required for this latter task, to obtain meaningful data match for evaluation of the impacts of water budgets,will be provided on a time and material basis. Meetings: One (1) on-site meeting with District staff to finalize database matching process. Deliverable: Integrated database of customer information from Assessor's office and District's billing system. Task 5 —Update of Existing Financial Plan and Cost of Service Analysis Task 5.1—Update Existing Financial Plan Using the prior financial model developed specifically for the District, RFC will update the District's financial plan for the current study period. The Project Team will escalate the District's operating budget on a line-item basis using different inflation factors, such as personnel, insurance, energy, etc., recognizing that not all expenses increase at the same level. In addition, RFC will project non-operating revenues such as late fees, interest earnings from reserves, and miscellaneous fees that may be used to either build reserves balances or offset rate increases. Ultimately, RFC will project the amount of revenue that must be collected through rates in order to meet expenses, debt coverage and reserve requirements for the study period and propose the associated revenue adjustments. A web conference using GoToMeetinem will be scheduled with the District to communicate and validate the updated financial plan. 7 <FI,Tero,54'atel'Dsstrt_t„__.-__. - -- .-__.-.....__-_1•�aterand-k�a-tecz-alerRate,}'ktoc3el.�. ._�....____.-. _ .-� -.____ 2 _L?<ashba�ad-F�Financial,Plan A _1Y20I0 _.- P.eu Rev Adjustments and Coverage RatiosT •*7i11ioi= Reserve Endin Balances �v e , B Inflated CIP Projections _ a - --- ---- --- ' - - _. s. — i - .. 57 ;z., s MA �t s s71 Rif- 17� F,__- F•_.._ F i_ F"'.3 r3^1= Y'�10 -Y�G1i 'Y20!2 -f,33 _cYiAis rfiIItO Y_011 -'t cat_ =Y_rT .`6 is I 12 11; F1'2009- FY 2010- FY 2011- Ft'2012- FY 2013- 15; Variables 2010 2011 2012 2013 2014 yF�NewDebtIssuance 5 4,100,000 5 8,000,000 S 5,000000 E�l,l? 89.7°0 100St 10040 100', 100'0 10.S59n • �-j pra:B.Ft F;:ztor-W-t—ter 95.0°0 100.. 100-0 100-0 100°0 5.00-1 P5 13.038'. 15.000% 15.000% 15.000% 15.000°a 93.7% -22 [{ev.td; ZJ 4.051°0 0.000°0 5A004o 0,000'.0 15.000°0 25.79 �r � rn:x•s Wastewater Operating Financial : Water Operating Financial Plan P $ al Plan � -_ I _ l . �11 ! _v_ .j.t;.— wr --:T -i—�Y'2O`.—'.— :' ;i_Jt� :YiJ!'_ =f:'vl? -Y 2.,?, -Y:_•i. 21 sew ..- T.c.e:st.fiir- e_e:•.es —__t.-c.v- •,s e. .eucs _< ,ce y -lrY .dt s #, t- -ria _ _ _ p. .ciT .ci-,Ze< l 4 I 4, H 2-v E4 iis t b as Dashboard-Fm Plan C-. 8 RAFTELIS FINANCIAL CONSULTANTS,INC. n o��iater16 � s.r Proposal for Water Budget Tiered Rate Structure Study we. September 2009 A Task 5.2—Update Cost of Service Analysis We will update our cost of service rate model designed previously for the District to reflect cost-causative concepts in accordance with generally accepted utility practices and Proposition 218. Figure above illustrates the Dashboard for the Excel-based Financial Plan Model used for the Cost of Service Analysis. Meetings: At least one (1) web conference. Deliverable: Financial and Cost of Service Model in Excel. Task 6—Water Budget Tiered Rate Calculations Task 6.1—Develop Water Budget Rate Model Based on the water budget framework provided in Task 2, RFC will develop a Water Budget Rate Model that will calculate revenue, customer impacts and conduct sensitivity wasteful analyses. The model will utilize data gathered from Task 4 { Excess Uzi) and 5. It is assumed that onlythe commodity portion of x '`_ `r'` ese p W oLiidoor ' revenue will be ad'usted into a water budget rate structure iiuloa"r vatcr, J g nudger wafei and no more then four (4) tiers would be utilized for this tkiilgee study. The current monthly service charges will be updated Tier 1 Tier 2 Tier s Tier 4 to reflect the required revenue adjustments resulting from Water Use—gallons per month Task 5. Customer Customer Impacts Task 6.2—Calculate Associated Customer Impacts Impacts SFR Customer with 3/4-in meter on Average month 200% ; The potential financial impacts on customers that may result from the proposed rate structures will also be considered. 1-10°°- The models will include a series of tables and figures that show projected rate impacts on different types of customers t at different levels of usage. These figures provide an 50% - - - -- - - - - - invaluable tool for evaluating how the recommended rates are impacting targeted customer groups and/or levels of usage to 0% m�.-'- 50/ 75% 90% 100% 120% 140% 200% 300% 600°h ensure that conservation and other pricing objectives are So L Usage(%of Total Water Budget) being addressed effectively. Percentage of Bills Impacted CustomerImpacts Meetings: At least one (1) web conference and I 30% - ------- -- - - --------- one on-site meeting to discuss the proposed 25% ---------- -------------- -------- -- ----------------------------- rates. 20% is% --- -- -- - - Deliverable: Water Budget Rate Model in ! io% ---- --- ----- ---------- ---- -- Excel — Proposed Rates, Revenue Analysis and 5% H n Fln F! n Customer Impact Analysis. 0% 69 69 69 69 tH N N !` _O u'1 O O 7o O O O V 69 69 to tH 69 b''1 � Yi fn VNI 6M9 f� � 69 A j $Change in Bills($proposed $current) 9 FC RAFTEUS FINANCIAL CONSULTANTS,INC. Proposal for Water.Budget Tiered Rate Structure Study September 2009 `1"ask 7 —Preparation of Study Report Task 7.1—Prepare Draft Report and Discuss Results with Staff The process of developing the financial plan and water budgets, as well as calculating the recommended rates will be documented in a draft report. This draft report will be submitted at the time the preliminary Model is presented to District staff. A comprehensive section on the assumptions and methodologies used to develop the financial,water budget and rate Model will be included. Task 7.2—Prepare Final Nexus Report Comments from the District staff will be incorporated into the Final Nexus Report as appropriate and the Model will be refined to reflect issues or concerns raised by staff and stakeholders. Seven printed copies of the final report and one electronic copy will be submitted to the District and will include appropriate supporting data from the Model to address the requirements of Proposition 218 and to ensure that the calculations and methodologies used are transparent and easily understood. Meetings:At least one (1) web conference regarding comments about the report. Deliverables: Seven printed copies and one electronic copy of the Final Nexus Report for the study Task 8—Presentation to District's Board and Assistance with Proposition 218 Task 8.1—Present Study Results to District's Board (optional) As an optional task, RFC will be available to present the results of the study to the District Board in detail in a workshop prior to providing public notification of the proposed rates. The presentation will highlight the collaborative process used to identify and prioritize important issues facing the District as well as the financial and other policies that will serve as framework for the water budget rate design. The results of the financial plan and the proposed water budget tiered rates will be presented. Task 8.2—Prepare Proposition 218 Notice RFC will assist the District in preparing a Proposition 218 notice. Proposition 218 dictates that an agency cannot collect revenue beyond what is necessary to provide service and that the amount of fee may not exceed the proportional cost of service to the parcel. RFC has assisted numerous cities all over California with Proposition 218 notices. Recent examples include the cities of Beverly Hills, Redlands and San Diego and Beaumont Cherry Valley Water District,Santa Fe Irrigation District, etc. Task 8.3—Attend and Present the Study's Results at Public Hearing (optional) Following the 45 day notice period,RFC will attend and present the proposed water budget tiered rate structure at the public hearing that is part of the Proposition 218 process,if requested by the District as an optional task. Meetings: At least one (1) web conference to discuss about Proposition 218 Notice and one (1) on-site presentation at public hearing. Deliverable: One electronic copy of Proposition 218 Notice. 10 RAFTELIS FINANCIAL CONSULTANTS,INC. �Qy3arer�. Proposal for Water Budget 'Tiered Irate Structure Study September 2009 III. PROJECT SCHEDULE and FEES We propose to complete the scope of work outlined in the Proposal for a not-to-exceed fee of $103,502 excluding Tasks 8.1 and 8.3. Upon approval of the proposal, RFC will provide the District insurance coverage for professional liability, general liability and property damage coverage. This fee estimate is based on approximately 570 hours of effort and the hourly billing rates for the personnel assigned to the project team. Our direct expenses are estimated based on travel to the District by members of the RFC project team for the six (6) meetings with District staff. It is our practice to bill monthly for fees and expenses based upon actual time incurred. The table below details the estimated hours and billing rates for each consultant and administrative support related to each task of the scope of work. Expenses relate to telephone charges,computers, postage, travel,etc. These expenses are estimated based on six (6) meetings. The meetings include the kick-off meeting, two (2) meetings to finalize water budget structure, two (2) meetings to discuss billing system issues and finalize database incorporation, and another final meeting to fine-tune the final water budget rate structure before proceeding to documenting the study results in the nexus report. Total fees and expenses will be limited to the not-to-exceed amount unless specific approval for an adjustment in scope is received from the District. RFC anticipates completion of the study to the draft report stage by March 2010 with the understanding that all data needed for the study is provided to RFC promptly in the desired format after receipt of data request list by the District. With our resources, we can expedite this schedule if necessary. The proposed schedule for the study is shown below. ,tY E aEjv", Task I-Peak It Inihaaan&Project I N Management 4 Wive D R gnen kn1—Agendaf r K,,k off Me tmg .... ._..,...... .. r ..... _ .,.,_.,., ...._.... ..4. .. _,.__„,...,,,. ... .__ T.k2 N 1 tion pfAIW rnative Water (' t BodgetSlraetures 7 Deliverable:Water Badger F,a ork Men andnm r me,v for r� I Task3-Evaluation of Current Billing sya 2 it. t _ ,. ___ _----- Deliverable Doramentanan of Rrc d d Modtfrca h C r B B g 1 e. Task4 I rpo t vof Gathered I Y � GnLi Data b 8 Ming Svatetts f a �P _.__.— A ..4..._.I ..t......_, _,.. Deliverable lntegrmed Database Matel—,horwaen cunersr Bdlmg S, ,a and Assessors Data Task 5-Update of Existing Fin..dal Plan Jj - and Costof Service Anal"e, Ode,...blea:Updatedp iA n adP paved Re,enne Adjnsrme Task6-Water B,alget TiemdRt , i t Calealati—, Debve bk P p sed Wale,BadgetT d Raw and[y An 1 sts i Tnek7-Pmptian of Study Report 6 1 1 = ©. ..._i. ...i_. ._. .. t .....,_......,W...__w... ...._, ,__ Dehve hle F 1 N zus Repan TaskB P trapto Unt. Board aad AMsi t ee with Piopoeilion 218 7 ( v l i t t Del veraMe:P,apast a 218 Nance 1 Represent Web Conlerence-aa Di,trct Staff vu COTOMectmg rx q Represent Meetmp went St.t(to FnaLS Parcel Darn MatcitmE .=-I Reprc cola lxLbdne mg web Uapxt Swif /�'� Represent Mee mEw nStaff ro Final,x Nelei Budget Rate Cakalatnna Represenry Mee[mg wolf S\vR Dtseasstng about At--W.tu Budget Structures Represent Prcsmrr.aon o(St.dl Res.....Detact BoaA(optnnnll ...e enrc Mee mg wnn S"n....s...I,—tbrrznr lea",System Re Pre ens!'reseorauon at Wbhe De.umg[opponal) 11 RAFTELIS FINANCIAL CONSULTANTS,INC. qt s�iatep16 Proposal for Water Budget Tiered Rate Structure Study t;., ``Y .g September 2009 EL TORO WATER DISTRICT" ¢' .q.,lYiirict oPUfit Hon .,�:rS°*v thahlic R�Vee1t!!�the enVf rjn�uenr$,.' WATER BUDGET TIERED RATE STUDY PROPOSED HOURS and FEES Task_ No of Hours_Requirements Total fees& oTask Descriptions Meet tings R Fin o Admin Total, Ex eSG/S 1 „ -Project Irritation&Project Management 1.1 Kick-off Meeting and Data Collection 1 16 8 24 $ 5,198 1.2 Project Management 20 12 32 $ 5,376 2 _Evaluation of Alternative Water Budget Structunr g 2.1 Identify Various Water Budget Methodologies 24 12 36 $ 7,548 2.2 Evaluate Alternative Water Budget Structures 2 20 30 50 $ 10,082 2.3 Prepare Evaluation Report 8 24 32 $ 5,976 3 Billing System Assessment 3.1 Evaluate District's Current Billing System 4 8 12 $ 2,296 3.2 Identify Modifications Required to the Current Billing Systems 1 10 16 26 $ 5,214 3.2 Assist the District in Implementing the Required Modifications 4 12 16 $ 2,988 4 : Incorporation of Gathered Customer Data to Billing Systems 4.1 Gather Required Customer Data from Assessor's Office 2 4 6 $ 1,148 4.2 Match Acquired Customer Data to Current Customer Database 1 8 60 r 68 $ 12,370 5 Update"of Existing Financial Plan and Cost of Service Analysis 5.1 Update Existing Financial Plan 4 12 16 $ 2,988 5.2 Update Cost of Service Analysis 4 8 12 $ 2,296 .6 'Water Budget Tiered Rate Calculations 6.1 Develop Water Budget Rate Model 12 60 72 $ 13,116 6.2 Calculate Associated Customer Impacts 1 6 24 30 $ 5,686 7 Preparation of Rate Study:Report " 7.1 Prepare of Draft Report 24 40 64 $ 12,392 7.2 Finalize Nexus Report 4 12 8 24 $ 3,532 8 presentation'to District Board and at Public Hearing 8.1 Present Study Results to District Board(optional) 1 8 14 22 $ 4,412 8.2 Prepare of Prop 218 Notice 4 8 12 $ 2,296 8.3 Attend and Present at Public Hearing(optional) 1 8 8 16 $ 3,374 TOTAL ESTIMATED MEETINGS/,HOURS 8 190 360 20: 570 HOURLY RATES $220 : $165, $66 ` j PROFESSIONAL FEES $41,800 i -$59,400 $1;200 "P $102 400 SG Sanjay Gaur _ W Yv Total Professional Fees excluding optional tasks $94 614 SP Sudhv Pardiwala Assessor Roll Purchase $3,QQQ 1Fin Cons=Khanh Phan/Steve Vuoso/Rebecca Sou Estimated Expenses $5,888 _.,._.-._._ _. _ TOTAL FIEFS & FENSE� 1 Optional Tasks-Pees` $7,786. If the District desires RFC to conduct the optional tasks 8.1 and 8.3 described above, additional fees of 57,786 are estimated in the above fee schedule. RVC 1 RAFTELIS FINANCIAL CONSULTANTS,INC o3ater16 Proposal for Water Budget Tiered Rate Structure Study September 2009 IV. FIRM OVERVIEW PRIMARY AREAS OF Raftelis Financial Consultants, Inc. ("RFC") was established in 1993 by George A. Raftelis ACTIVITY AND to provide national financial and management consulting services of the highest quality to SPECIALIZATION public and private sector clients. Specifically, we focus our services in the areas of Our experience in the water and environmental finance utility financial planning and pricing, strategic planning, resource wastewater utility industry � ty p g p g� g p g� spans a conservation, and related areas. We believe that we bring a unique combination of broad spectrum of financial, pricing,management,and leadership skills and experience to help our clients address their most important issues. accounting services. Specifically,our services LOCATION AND SIZE OF FIRM include: ECONOMIC ANALYSIS RFC is currently comprised of 22 consultants and 4 administrative support positions. RFC Cost of Service and Rate places a high priority on being responsive to our clients and, therefore, actively manages Analysis each consultant's project schedule to ensure appropriate availability for addressing client Conservation Rates Economic Feasibility needs. Analysis and Forecasting System Development Fee Pasadena Office Charlotte Office Kansas City Office Studies 201 S. Lake Avenue, Suite 301 1031 S. Caldwell Street 3013 Main Street Capital Financial Planning Consolidation Analysis Pasadena, CA 91101 Charlotte'NC 28203 Kansas City,MO 64108 Extension Policy Review Phone: 626-583-1894 Phone: 704-373-1199 Phone: 816-285-9020 MANAGEMENT AND Fax: 626-583-1411 Fax: 704-373-1113 Fax: 816-285-9021 ORGANIZATIONAL STUDIES Organizational Structure CONSULTING PHILOSOPHY AND INDUSTRY INVOLVEMENT Review Management Audits As a consulting philosophy,RFC maintains the practice of providing senior level assistance Policies and Procedures Review to our clients. While as necessary, we utilize staff support for specific data gathering and Personnel and Compensation analysis functions, it is not our practice to leverage our senior people with large teams of Analyses junior level consultants. Instead we provide skills gained through man ears of Operating Practices Review p g g y y consulting experience to best meet our clients' needs. SPECIAL ENVIRONMENTAL ASSISTANCE RFC has focused on being a leader in the water and wastewater industry. Our senior Litigation Support personnel h b very involved in industryassociations. Mr. GeorgeRaftelis recently Industrial Pretreatment Studies p have been �' y Meter Reading Productivity served as Chair of the Management Division of AWWA and has authored the book Water Studies and Wastewater Finance and PricingA Chive Guide Third Edition for which Automated Meter Reading Comprehensive ( )' Implementation many of the Project Team members wrote chapters. Mr. Pardiwala is vice chairman of the Rate Filing and Reporting CA-NV AWWA Business Management Division and authored the chapter on recycled Commercial Consulting water in the Manual of Practice published by the WEF. Mr. Sanjay Gaur is member of the UTILITY ACQUISITIONS American Water Works Association's ("AWWA") Rates and Charges Committee. He is Valuation Acquisition Bond Feasibility currently working on updating the M1 Manual. Mr. William Stannard is currently the Economic Rate Impact Analysis Chair of AWWA's Financial Accounting and Management Controls Committee and serves Expert Testimony Acquisition Strategy on the Texas AWWA Rates and Charges Committee. Mr. Harold Smith just completed a Development three-year term as Chair of AWWA's Strategic Management Practices Committee. Mr. Public Dissemination of Information Peiffer Brandt recently served as the Chair of the North Carolina AWWA-WEA Finance PROCUREMENT and Management Committee and manages the AWWA/RFC Water and Wastewater Rate ASSISTANCE Survey, the most comprehensive national rate survey. Feasibility Analysis Request for Proposals Preparation Financial Planning Privatization Procurements Contract Negotiations 13 RAFTEUS FINANCIAL CONSULTANTS,INC. o©�aver Proposal for Water ]Budget 'Tiered Rate Structure Study September 2009 V. PROJECT 'TEAM Each member of our proposed project team has an advanced business degree and is an experienced professional with skills in water and wastewater cost of service and rate setting. To effectively meet the District's objectives, we have organized a project team with extensive management, financial, and operational experience with municipal water and wastewater utilities. This project team has more than 50 years of combined experience providing consulting services to more than 300 governmental utilities on a broad range of cost of service and rate design studies. We have provided an organizational chart and brief summaries of the responsibilities for each of the team members below. More detailed resumes of each team member are provided in Section VI1. wa e o. Mr. Sudhir Pardiwala, PE —Project Manager ELTORO MBA, University of California—Los Angeles WATER DISTRICT M.S. in Chemical Engineering,Arizona State University Mr. Sudhir Pardiwala will serve as project manager to leverage PROJECT MANAGER POLICY ADVISOR his established knowledge and relationship with the District. ,> He will participate in meetings and lead relevant k=. • �,, r= .w _,:� `� � _.�.�� �s presentations. He will also manage RFC staff in the review of data, development of the model, and documentation of the PROJECT STAFF study. He is a nationally recognized expert in water and -yyk� wastewater finance, management and pricing. He has over 30 years of experience in financial studies and engineering. He has conducted more than 300 water, wastewater, reclaimed water and storm water rate studies as well as connection fees including fire, park, traffic, library, and planning impact studies. He is a member of the AWWA Finance,Accounting and Management Controls Committee and authored a chapter on recycled water rates in the Manual of Practice titled Financing and Charges for Wastewater Systems published by the WEF. Mr. Sanjay Gaur— Policy Advisor Master of Public Administration, Harvard University M.S. in.Applied Economics, University of California—Santa Cruz Mr. Sanjay Gaur will serve as policy advisor for the project to help the District make insightful policy decisions regarding the water budget rate structure. He is considered one of the leading experts in the development of water budget rates with more than 15 years of public sector consulting experience. His extensive experience spans from providing economic analysis, financial analysis, cost benefit analysis to cost of service,water budget rate design, connection / development fees,conservation studies and demand forecasting. Mr. Gaur is an active member of the American Water Works Association's ("AWWA") Rates and Charges Committee and is currently working on updating the AWWA M1 Rate Manual. He has also participated as a speaker at a number of conferences regarding the design of utility rates, including those held by the Association of California Water Agencies, California Society of Municipal Finance Officers, Municipal Management Association of Southern It K 14 RAFTELIS NNANCIAL CONSULTANTS,INC. o;Q�ate,,16 Proposal for Water Budget Tiered Rate Structure Study September 2009 California and the American Water Works Association. Mr. Gaur has served as a guest lecturer for a graduate level Water Policy class at the University of California at Santa Barbara. Ms. Khanh Phan - Senior Consultant MBA in Finance, California State University—Los Angeles B.S. in Chemical Engineering, University of California—Berkeley Ms. Khanh Phan will be our lead consultant for the Study. She has served as a consultant on several water and wastewater cost of service rate studies, connection fees and reserve policy studies. Specific experience includes projects for the following utilities: the Cities of Banning and Livingston, and El Toro Water District and Goleta West Sanitary District in California; and water budget rates for Palmdale, Rancho California and Western Municipal Water Districts in California. She possesses strong analytical and managing skills acquired from her background, education and experience. Combined with her advanced computer skills, Ms. Phan performs an excellent job as a modeler. Mr. Steve Vuoso - Senior Consultant MBA in Finance, San Diego State University B.A. in Philosophy, Loyola Marymount University Mr. Vuoso has served as a lead or staff consultant on several water and wastewater rate and development impact fee studies including Beaumont-Cherry Valley Water District, California; Santa Fe Irrigation District, California; and the cities of San Francisco, San Diego, and Ontario in California; and North Las Vegas and Henderson in Nevada. He has recently completed a drought rate study for the San Dieguito Water District and assisted with budget rates for the Palmdale Water District and City of San Diego. Mr. Vuoso has extensive experience in financial modeling, financial accounting and application development. Rebecca Sou— Staff Consultant MBA in Finance, California State University - Fullerton B.S. in Management Science, University of California—San Diego Ms. Sou holds a Masters degree in Business Administration. She has experience providing high level financial research, modeling and reporting. She possesses advanced computer skills, excellent analytical and organizing abilities. Rebecca is currently assisting in water, wastewater and related studies for the Cities of Torrance and Banning, special districts at the County of San Bernardino, as well as La Canada Irrigation District and Triunfo Sanitation District. 15 RAFIELIS FINANCIAL CONSULTANTS,INC. -�4ater16 Proposal for Water Budget Tiered Rate Structure Study September 2009 VI. PROJECT EXPERIENCE & REFERENCES - The map on the left demonstrates the RFC team's experience in California, - which is unmatched by any other firm. As a result of this experience RFC -. M possesses first hand knowledge with solid experience in cost of service methodology, innovative and insightful approaches in designing water --=• =`;M`: budget rate structure and developing user-friendly rate models. We have been engaged with several clients specifically to develop rate and financial models for use by client staff. The RFC Project Team has extensive experience in serving clients on engagements related to water budget rate studies across California. Presented below is a relevant sample of projects in which RFC team .�a ';•• - members have participated in recent years. We have provided references : e� • -7 for each and urge you to contact them to better understand our capabilities ry _ and the quality of service we provide. PROJECT Palmdale Water District, California DETAILS Budget Rate Study The Palmdale Water District ("District") receives imported water primarily from the California State Billing System Evaluation Water Project ("SWP"). The SWP is cutting back on deliveries because of the drought in California. To Financial Policies prepare for the reduction of water supply, the District wanted to implement budget-based rates even though it had a five-tier rate structure. The average use in the District, which was primarily residential, REFERENCE was over one ac-ft per account per year. The District engaged RFC to help design budget rates and assist Mr.Curtis Paxton with the implementation including the billing system. RFC presented a conceptual design evaluating Asst.General Manager Palmdale water various alternatives based on the pricing objectives of the District. Budgets were based on average District population density for indoor allocations and weather data along with irrigation area for outdoor 2029 Last A�-enue Palmdale,CA 93551 allocations and historical allocations for commercial customers. The irrigation area is being determined Pal Phone: based on a percentage of the total parcel area acquired from the District's geographical information (661)947-4111 x 146 system (GIS) to reflect the impartiality of the water budgets. The formula for developing allocation budgets considers irrigation efficiency and type of landscape. The whole concept is to encourage efficient use of water and to provide users adequate water but penalize wasteful practices. The District uses the Cogsdale billing system. RFC interfaced with the Cogsdale staff to ensure that the budget rate structure can be smoothly implemented. Our study indicated that changes to the billing system were readily implemented at very minimal cost. One aspect that we worked on involved staff training to address customer concerns. With the new rate structure,it was anticipated that there would be numerous customer inquiries, and for the rate structure changes to be successful, it was necessary to satisfactorily address customer concerns. RFC developed a rate model that allowed the District to quickly view the impacts of alternate rates and budgets. This tool was invaluable when presenting results to the District Board of Directors so that they could see the impacts of revenue adjustments, rate structure changes, and financing options on their customers. 16 RAFTEUS FINANCIAL CONSULTANTS,INC. Proposal for Water Budget Tiered Rate Structure Study September 2009 PROJECT Rancho California Water District, California DETAILS Water Budget Rate Rancho California Water District("District") recently engaged RFC in a water budget rate study to design Study a water budget rate structure for its 35,000 residential and irrigation accounts in both Rancho and Santa REFERENCES Rosa Divisions. Budgets were based on average population density for indoor allocations and weather Mr.Jeff Amstrong data along with irrigation area for outdoor allocations. The formula for developing allocation budgets Chief Financial Officer Rancho California considers irrigation efficiency and type of landscape. The whole concept is to encourage efficient use of Water District water and to provide users adequate water but penalize wasteful practices. 42135 Winchester Road Temecula,CA 92590 RFC assisted the District in evaluating g different methodologies to allocate its water sources, mainly Phone: imported water and groundwater, to different customer classes. RFC also performed numerous analyses (951)296-6928 on the usage and landscape area relationships to create a rational landscape area cap for residential Mr.Matt Pressey accounts. RFC consulted the District in developing the variance programs to accommodate customers' Accounting Manager Rancho California future inquiries about their water budgets. In addition, RFC thoroughly analyzed the associated impacts Water District of the proposed water budget rate on the District's finance and its customers so the policy makers could 42135 Winchester Road make informed decisions. Temecula,CA 92590 Phone: RFC developed a water budget rate model that allowed the District to quickly view the impacts of (951)296-6932 alternate rates and budgets. The water budget rate structure was designed to ensure revenue stability, financial sufficiency and conservation program funding for the District. This tool was invaluable when presenting results in graphical format to the District Board of Directors so that they could see the impacts of different water budgets, different water source allocation methodologies and different landscape area caps on their customers in real-time. PROJECT Western Municipal Water District, California DETAILS Water Budget Rate RFC is currently assisting Western Municipal Water District ("District") in developing water budget rate Study structure for its retail customers residing in the cities of Murrieta and Riverside. The District imports REFERENCE most of its water from Metropolitan Water District of Southern California ("MWD"). The ultimate Mr.Tun Barr objective of the study is to identify and thoroughly examine three (3) potential water budget rate Water Use Efficiency Manager structures for each of the two identified cost centers (Murrieta and Riverside) that will later be presented Western Municipal to the Western's executive management team and Board of Directors. RFC is developing a water budget Water District 450 E.Alessandro rate model in Excel 2007 for each of the two cost centers to have the ability to change the default values Bhd' for all water allocation factors, to provide revenue and impact analysis and to generate sample customer Riverside,CA 92508 Phone: monthly bills under existing and proposed rates. At the end of the study, RFC will present the results to (951)789-5000 District Board in a workshop and provide justification to ensure that the Water Budget Rate Structure complying with Prop 218 requirements in a concise and yet detailed technical memorandum. The Model will then be delivered to the District. User manual and training will also be provided. no 17 RAFTEUS FINANCIAL CONSULTANTS,INC. ono ater� Proposal for Water Budget Tiered Rate Structure Study September 2009 VII. APPENDICES A. RESUMES B. ILLUSTRATION is RM RAFTEUS FINANCIAL CONSULTANTS,INC. c`'Nater6 Proposal for Water Budget 'Tiered Rate Structure Study September 2009 A. RESUMES SUDHIR PARDIWALA —Vice President as Project Manager TECHNICAL Mr. Pardiwala has over 30 years of experience in financial studies and engineering. He has extensive SPECIALTIES Financial Studies and expertise in water and wastewater utility cost accounting, budgeting and valuation, financial and Engineering revenue planning, and assessment engineering. He has conducted numerous water, storm water, Water and Wastewater reclaimed water and wastewater rate studies as well as system development fee studies, and has Utility Cost Accounting Budgeting and Valuation developed computerized models for these financial evaluations. Mr. Pardiwala has assisted public Financial and Revenue agencies in reviewing and obtaining alternate sources of funding for capital improvements,including Planning low interest state and federal loans and grants. He has assisted several utilities with State Revolving Assessment Engineering Reviewing/obtaining capital Fund and Water Reclamation Bond loans. Mr. Pardiwala is experienced in assessment engineering Improvement funding and administration. His engineering education and background provides him with an excellent basis Computer modeling for studies of public and municipal utilities. He authored the chapter on reclaimed water rates in the PROFESSIONAL Manual of Practice on Financing and Charges for Wastewater Systems recently published by the HISTORY Water Environment Federation ("WEF"). Raftelis Financial Consulting Vice President,2004—present RELEVANT PROJECT EXPERIENCE Black&Veatch 1997-2004 MWH 1985-1997 City of San Diego, California CF Braun 1979-1985 PFR l ng Systems 1977-1979 Mr. Pardiwala conducted numerous studies for the City of San Diego, including a water, EDUCATION wastewater and reclaimed water rate study. The entire wastewater rate study was conducted Master of Business with extensive stakeholder group involvement because of the changes required in the Administration University of California, wastewater rate structure to meet regulatory requirements. In addition, Mr. Pardiwala was Los Angeles, 1982 project manager for the City's reclaimed water rate study, impact fee studies for both water Master of Science, Chemical Engineering and wastewater, and a transportation charges study for agencies contributing to the City's Arizona State University,1976 regional wastewater facility. Mr. Pardiwala also managed a water demand study which Bachelor of Science, Chemical Engineering involved statistical analysis of historical water consumption to model projections based on Indian Institute of Technology,Bombay, to weather, economic activity, population, inflation, etc. Mr. Pardiwala also participated in a management audit of the City's Utility Department. PROFESSIONAL City of Redlands, California REGISTRATIONS Registered Professional Mr. Pardiwala has managed several financial projects for the City including water,wastewater Engineer (Chemical and Civil)California and reclaimed water projects. The studies were conducted with extensive stakeholder input. PROFESSIONAL The first rate studies involved significant rate adjustments as well as rate structure MEMBERSHIPS adjustments to ensure financial stability, meet debt coverage requirements, and regulatory American Water Works Association requirements. The analysis included calculation of outside-City charges and impact fees. Water Environment Federation The City received user-friendly working rate models for future updates. Mr. Pardiwala California Municipal Finance officers Association assisted the City with State Revolving Fund loans for reclaimed water and potable water. He Association of California Water helped them find grants for the reclaimed water project. Agencies OTHER RELEVANT PROJECTS • City of Atwater,California—Water and Wastewater Rate Study • City of Banning, California Water and Wastewater Rates Study 19 RAFTEUS FINANCIAL CONSULTANTS,INC. aterd Proposal for Water Budget Tiered Rate Structure Study September 2009 • Cities of Barstow and Visalia-California Storm Water Financing Plans and Rates • Beaumont Cherry Valley Water District,California—Water Rate and Connection Fee Study • City of Beverly Hills, California — Conservation Rate Study, Water Rate Study and Update, Connection.Fees,Valuation and Development of Replacement Program and Asset Inventory • City of Brea,California—Water Connection Fees and Related Fees and Charges • City of Burbank,California-Water,Wastewater,Bond Feasibility Study and Reclaimed Water Study • City of Carlsbad,California-Water,Wastewater,and Reclaimed Water Revenue Program • City of Cloverdale,California—Water and Wastewater Connection Fees and Rate Study • City of Corona, California—Water and Wastewater Rate Study • El Toro Water District—Water and Wastewater Rate Study and Connection Fees • City of Encinitas,California—Water and Wastewater Rate Study • City of Glendora,California—Water and Wastewater Financial Planning and Rate Study • Goleta West Sanitary District, California - Asset Management, Rate Study, Connection Fees, Financing Plan and Valuation Services • City of Henderson,Nevada—Water and Wastewater Rate Study • City of Los Angeles,California—Wheeling Charge Review • City of Madera, California—Water and Wastewater Rate Study • Metropolitan Wastewater Joint Powers Authority—Wastewater Valuation Study • Napa Valley Sanitation District—State Revolving Fund Loan Assistance • City of Ontario,California—Water,Wastewater and Reclaimed Water Rate Study • Portland Water Bureau,Oregon—Water Rate Study • City of Redlands, California—Water and Wastewater Rate Study, Reclaimed Water Funding and Bi- annual Rate Updates • City of Rialto,Rialto,California-Water and Wastewater Rate Study • City of Sacramento, California — Wastewater Rates Study, Water Development Fee and Wholesale Wheeling Charge Study • County of San Bernardino,California-Water and Wastewater Rate Study • City of San Diego, California — Water, Wastewater Connection Fee, Rate Study, Recycled Water Study,Water Budget Rate Study and Litigation Support • San Diego County Water Authority, California — Rate Analysis, Valuation Study, Wheeling Charge Study,Capacity Valuation • City of San Francisco,California-Water and Wastewater Rate Study • City of San Jose,California-Sewer Service Related Fees and Charges • San Gorgonio Pass Water Agency,California-Financing Plan • City of San Luis Obispo,California-Stormwater Financial Feasibility Study • Santa Fe Irrigation District,California—Water Connection Fees Study,Water Rate Study and Update • City of Santa Monica, California—Wastewater Rate Study • Town of Windsor, California - Water and Wastewater Connection Fees and Rates,Water and Water Reclamation Rate Studies,Impact Fee Review,and SRF Loan Application Assistance MAIM 20 RAFTEUS FINANCIAL CONSULTANTS,INC. o Proposal for Water Budget Tiered Rate Structure Study September 2009 TECHNICAL SPECIALTIES SANJAY GAUR — Manager as Policy Advisor Model Development With more than 15 years of public sector consulting experience, Mr. Gaut has worked extensively Conservation Rate Studies Cost of Service and Rate Design providing economic analysis, financial analysis, cost benefit analysis, cost of service, rate design, Studies Connection/Development Fee connection/development fees, conservation studies and demand forecasting. He is considered one Studies of the leading experts in the development of water budget rate structure, which is demonstrated by Economic Analysis Financial Analysis his experience and publications/speaking engagement. His experience spans the West Coast with the Cost Benefit Analysis majority of projects in California. These projects include engagements with Metropolitan Water Demand Forecasting District of Southern California, San Diego County Water Authority, Eastern Municipal Water PROFESSIONAL HISTORY District and the Santa Clara Valley Water District. Raftelis Financial Consultants, Inc. RELEVANT PROJECT EXPERIENCE Manager,2009—present Red Oak Consulting, Division of Malcolm Pirnie 2007- Rancho California Water District:Water Budget Rate Study 2009 MuniPmancial 2005—2006 Mr. Gaur served as project manager for development of water budget rate structure for residential A&N Technical Services 1999- and irrigation customers for Rancho California Water District. He worked closely with District staffs 2003 United States peace Corps, to develop a water budget rate model to provide thorough analyses on cost of service, revenues and Bulgaria 1995-1997 impacts of the proposed water budget rate structure. In addition, he consulted the District in EDUCATION implementation strategy and development of variance programs. Master of Public Administration,Public San Diego County Water Authority:Wholesale Water Rate Study Administration/International Development Mr. Gaur developed a rate model for the Water Authority that allocated resources and costs to Kennedy School of Government, 1 iarvard University Zoos member agencies. The model was used to develop different allocation scenarios based on historical Master of Science,Applied and spatial factors and served as a tool to guide the decision making process in determining fair and Economics University of California,Santa equitable allocations. Cruz 1994 Bachelor of Arts,Economics Eastern Municipal Water District: Water Budget Implementation Strategy and Environmental Studies University of California,Santa Mr. Gaur served as project manager for rate structure evaluation study by assisting Eastern Municipal Cruz 1992 PROFESSIONAL Water District ("EMWD") managers and Board in the evaluation and assessment of the feasibility of RECOGNITION implementing a water budget rate structure. Mr. Gaur also moderated a series of three interactive Who's Who in America 63-1 F,dition 2009 workshops to examine a water budget rate structure and its ability to meet EMWD policy goals such Finalist,National venture as equity,conservation and revenue stability. Competition(2003);Goldman Sachs Foundation lwship Roy Environmental Fellowship Metropolitan Water District of Southern California: Long Range Financial Plan (2002),Kennedy School of Government,llarvard University Mr. Gaur served as project manager for long-range financial plan study and facilitated workshops Academic scholarship(2001-2003), with management,member agencies, and stakeholders to assess the economic,political, and technical Kennedy School of Government, Harvard University, feasibility of a growth-related infrastructure charge. He also led seminars to inform participants of Certificate of outstanding service the prevailing industry standards for adhering to cost-of-service principles and navigating California's (1997),United States peace Corps complex legal environment. PROFESSIONAL MEMBERSHIPS OTHER RELEVANT PROJECTS American Water Works Association -Rates and Charges Committee e City of Calexico,CA-Water and Sewer Rate Study • City of Hollister,CA-Sewer Rate and Impact Fee Study • City of Huntington Beach,CA-Sewer Rate Study • City of Indio,CA-Water Rate Study • Irvine Ranch Water District,CA- Conservation Study 21 RAFTEUS FINANCIAL CONSULTANTS,INC. �Tlater16 Proposal for Water Budget Tiered Rate Structure Study "A September 2009 • Municipal Water District of Orange County,CA- Conservation Potential Study • Pacific Institute,CA-Greenhouse Gas Audit Model for Water Agencies • Pasadena Water and Power,CA-Water Cost-of-Service and Rate Design Study • City of Livingston, CA-Water Rate Study • Metropolitan Water District of Southern California,CA-Drought Allocation Model • City of Rio Vista,CA-Water and Sewer Rate and Impact Fee Study/ Rio Vista CA • San Diego County Water Authority,CA-Indexing Model/ San Diego CA • Santa Clara Valley Water District, CA-Project Evaluation-Water Conservation Project • Walnut Valley Water District,CA-Water Rate Study • Rancho California Water District,CA—Water Budget Rate Study • Western Municipal Water District, CA—Water Budget Rate Study REPRESENTATIVE PUBLICATIONS • Gaur,S.,"Water Rate Setting,"presented at the following: California Society of Municipal Finance Officers Chapters: Central Los Angeles, Channel Counties, Imperial County, San Gabriel Valley, South Bay and Twenty—Nine Palms. • Gaur, S., "Designing Water Rate Structures," presented at a workshop for Urban Water Institute, San Jose,California. February 17,2006. • Gaur, S. "How Much Should Water Cost? Theoretical and Practical Approach in Developing Water Rates." Guest lecturer at University of California, Santa Barbara, Course: Water Policy, Bren School of Environmental Science and Management. November,7,2006. • Gaur, S. "Policy Objectives in Designing Water Rates",Journal of American Water Works, 99:5 May 2007 p.112- 116. • Gaur, S. Corssmit, K. and Hotchkiss, D. "Water Rates Defining Cost of Service—Proposition 218 Implications," presented at the Association of California Water Agencies, May 7 , 2008 Spring Conference,Monterey, California. • Gaur, S. "Evolution of Water Rates," presented at the Association of California Water Agencies, December 3,2008 Fall Conference,Long Beach,California. • Gaur, S. "Managing Drought Scenarios," presented at the Association of California Water Agencies,December 4,2008 Fall Conference,Long Beach, California. • Gaur, S. Corssmit, K., Hildebrand,M. and Hotchkiss,D. "Defining Latest Trends in Conservation Rate Design," presented at the Utility Management Conference, February 18, 2009,New Orleans, Louisiana. • Gaur, S. "Conservation Rate Structures," presented at the International Water Efficiency Conference,April 1,2009 Newport Beach,CA • Gaur,S. "Developing a Water Budget Rate Structure: Eastern MWD Experience,"presented at the CA/NV AWWA Section,April 9,2009, Santa Clara, CA • Gaur, S. "Rates and Equity Issue" presented at Managing the Crisis: Essential Tools for Urban Water Managers, sponsored by Water Education Foundation and .Association of California Water Agencies,April 16,2009 (San Francisco) and April 23,2009 (Irvine) • Hildebrand, M. Gaur, S. and Salt, K. "Water Conservation Made Legal: Water Budgets and California Law"Journal of American Water Works, 101:4 April 2009 p.85-89. RE- 22 RAFTEUS FINANCIAL CONSULTANTS,INC. oto a ter d Proposal for Water Budget Tiered Rate Structure Study September 2009 KHANH PHAN - Senior Consultant as Lead Modeler TECHNICAL Ms. Phan has served as a consultant on several water rate studies and cost of service studies. SPECIALTIES Specific experience includes projects for the following utilities for the cities of Banning and Utility Cost of Service and Rate Structure studies Livingston, California, El Toro Water District, California, the Goleta West Sanitary District, economic Feasibility studies California,and Palmdale Water District,California. PROFESSIONAL RELEVANT PRO ECT EXPERIENCE HISTORY J Raftelis Financial Consultants,Inc. Western Municipal Water District, California Cons Senior Consultant,2008- Present RFC is currently engaged in a Water Budget Rate Study for the Western Municipal Water District ("District"). As a lead consultant, she consults the District in the development of an Awry Dennison Research Chemist,2004-2008 equitable and defensible water budget structure for retail customers for their two cost EDUCATION centers — Riverside Treated Service and Murrieta Treated Service. She performs thorough Master of Business analyses on usage, revenue and customer impacts associated with proposed water budget Administration-Finance rates. She also assists the District to prepare presentation and technical memorandum California State University,Los Angeles summarizing the study results to upper management team and District Board in order to Graduation March 2007 facilitate their informed policy decision process and to ensure Proposition 218 compliance. Bachelor of Science,Chemical Engineering Rancho California Water District, California University of California, Berkeley RFC recently conducted a Water Budget Rate Study for the Rancho California Water Graduation May 2003 District ("District"). As a lead consultant, she assisted the District to establish an equitable and defensible water budget structure for residential and irrigation customers for both Rancho and Santa Rosa Divisions. She performed thorough analyses on different methodologies of allocating water sources to different customer classes and determining landscape area caps for residential accounts, and on usage, revenue and customer impacts associated with proposed water budget rates. She assisted the District in preparation of a presentation of the study results to District Board in order to facilitate their informed policy decision process. Palmdale Water District, California RFC recently completed the Water Rate Study for Palmdale Water District ("District"). Ms. Phan developed a rate model to examine new rate structures for the District. The model and structure established allocations for residential usage and irrigation requirements for residential and non-residential customers. The study involved prioritizing pricing objectives, analysis of projected revenue, budgeted O&M costs, and allocations of cost of services and cash flows and impacts. Ms. Phan also assisted the District in establishing water budget allocation guidelines and assisted the District with the changes needed to be made to the billing system to implement the water budget rates. At the end of the study, she helped the District to draft the Proposition 218 Notice to reflect the proposed rate structure. ED 23 RAFTELIS FINANCIAL CONSULTANTS,INC o"`a�aterd Proposal for Water Budget Tiered Rate Structure Study � September 2009 Goleta West Sanitary District, California Goleta West Sanitary District ("District") was in the process of designing a new reserve policy to cover its share of replacement and refurbishment cost for the upgraded full secondary wastewater treatment plant in Goleta Sanitary District (GSD) in 2014. As a consultant, Ms Phan reviewed the necessary capital improvement projects of the District over the next 50 years, including replacement and refurbishments (R&R) of the collection system as well as improvements needed to refurbish the treatment plant. She developed a model of the long-tern financial plan that incorporated the assumptions on operations, capital and reserves requirements and recommended a policy identifying target amounts for the different reserves for the District's consideration. She developed a 50-year projection of rates for planning purposes. City of Livingston, California RFC performed a Water Rate Study for the City of Livingston ("City"). As a consultant,Ms. Phan is responsible for the development of a rate structure for the City based on analysis of revenue, O&M costs, and cash flow. The City has one of the lowest rates in the Central Valley and will experience significant increases in rates to make up for past revenue shortfalls and for capital improvements needed because of regulatory concerns. OTHER RECENT PROJECTS • El Toro Water District, CA—Cost of Service Study for Water and Wastewater • City of Redlands, CA—Valuation Study • City of Banning, CA—Water Rate Study and Connection Fees • City of San Diego, CA—Water Rate Study • San Dieguito Water District, CA—Water Rate Study • Clark County—Wastewater Rate Study • City of Torrance—Cost of Service Study • La Canada Irrigation District—Cost of Service Study MACM It P1% 24 RAFIELIS FINANCIAL CONSULTANTS,INC. Proposal for Water Budget Tiered Rate Structure Study September 2009 STEVE VUOSO - Senior Consultant as Supporting Consultant TECHNICAL Mr. Vuoso has served as a staff consultant on several California rate studies including the SPECIALTIES Utility Cost of Service and Rate cities of Brea, Ontario, Encinitas and San Diego. He has extensive experience in financial Structure Studies modeling, financial accounting, and is proficient in VBA programming and application Economic Feasibility Studies development in Microsoft's Access and Excel. Mr. Vuoso holds a BA in Philosophy from PROFESSIONAL Loyola Marymount University and an MBA from San Diego State University. HISTORY Raftelis Financial RELEVANT PROJECT EXPERIENCE Consultants,Inc. Consultant,2005-Present City of Los Angeles, California Showtime Networks Inc. Mr. Vuoso served as staff consultant on a wheeling charges study for the Los Angeles Business Analyst 2004 Department of Water and Power. The City was interested in determining the appropriate San Diego Convention and visitors Bureau charges to be levied on various customers that may wish to use the extra capacity in the Project Manager- City's system—from the Los Angeles Aqueduct to the distribution network—to transfer Internship 2004 water. Mr. Vuoso conducted the analysis unbundling the various costs so that users could Kirkland and Ellis be charged based up on the parts of the system they used. Legal Case Assistant,2000- 2002 Beaumont-Cherry Valley Water District, California EDUCATION Mr. Vuoso served as staff consultant on a cost of service water rate study for the Beaumont- Master of Business Administration- Finance Cherry Valley Water District. The region was experiencing rapid growth, as much as 20- San Diego State University, 30%, and the District wished to ensure that its rate structure allowed them to recover all 2004 Bachelor of Arts,Philosophy appropriate costs, support the rapid growth,and provide fair and equitable rates. Mr.Vuoso Loyola Nlarymount University, 1998 conducted a cost of service analysis to calculate rates for different classes of customers. City of San Diego, California Mr. Vuoso supported the reclaimed water rate study conducted for the City of San Diego ("City") by developing a user friendly interface for the rate model that was developed. The model interface assisted users in various printing capabilities, scenario analyses, and contained a feature that logged any changes to the model. City of Ontario, California Mr. Vuoso served as staff consultant on a water,wastewater and solid waste rate study. The study included a comprehensive review of the City of Ontario's revenue requirements and allocation methodology, review of user classifications, a cost of service analysis, and rate design for City users. Mr. Vuoso served as lead modeler and developed the water and wastewater rate models to help determine the appropriate rates and rate structure that would allow the City to recover the true cost of service in a fair and equitable manner. Santa Fe Irrigation District Mr. Vuoso completed a cost of service water rate study for the Santa he Irrigation District ("District"). The District's local water supply was unreliable due to drought and hydrological conditions, which led to volatile water purchase costs. As a result, the District 25 R C RAFTEUS FINANCIAL CONSULT4NTS,INC. o� ;ate,16 Proposal for Water Budget Tiered Rate Structure Study September 2009 had been running a deficit in recent years and was in danger of failing to meet its bond coverage requirements. Mr. Vuoso developed a financial plan and rate model to ensure the District would recover all costs of providing services and meet its coverage requirements. OTHER RELEVANT PROJECTS ® City of Atwater, California — Water and Wastewater Rate Study and State Revolving Fund Loan Assistance • Beaumont Cherry Valley Water District, California—Water Rate and Connection Fee Study • City of Beverly Hills, California — Water Rate Study, Connection Fees, Valuation and Development of Replacement Program and Asset Inventory • Goleta West Sanitary District, California - Asset Management, Water Rate Study, Connection Fees, Financing Plan • City of Henderson,Nevada—Water and Wastewater Rate Study • City of Madera, California—Water and Wastewater Rate Study • City of Portland,Oregon—Wholesale Rate Study and Financial Planning • City of Redlands, California—Water and Wastewater Rate Study,Reclaimed Water Funding • City of Sacramento, California — Wastewater Rates Study, Water Development Fee and Wholesale Wheeling Charge Study • City of San Diego, California — Water, Wastewater Connection Fee, Rate Study, Recycled Water Study,and Litigation Support • Santa Fe Irrigation District, California—Water Connection Fees and Rate Study • City of Santa Monica,California—Wastewater Rate Study • City of Springfield, Oregon—Wastewater Rate Model look r1mc 26 ft RAFTEUSS FINANCIAL CONSULTANTS,INC. 0��Nater1�) Proposal for Water Budget Tiered Rate Structure Study u September 2009 REBECCA SOU- Consultant as Supporting Consultant TECHNICAL Ms. Sou has served as a consultant on several water and wastewater rate studies and cost of SPECIALTIES Utility Cost of Service and Rate service studies. Specific experience includes projects for the following utilities for the cities Structure studies of Redlands, Livingston, San Francisco, and San Diego, and the Beaumont Cherry Valley Economic Feasibility Studies State Revolving Fund Water District. Assistance RELEVANT PROJECT EXPERIENCE PROFESSIONAL HISTORY City of Redlands, California Raftetis Financial Consultants,Inc. Ms. Sou served as a consultant for a water and wastewater rate study for the City of Staff Consultant,2008-Present Redlands ("City"). The goal of the study was to develop rates that are more responsive to Sony supply Chain solution,, cost of service and pay for necessary capital improvements. The study included a Inc. Business System Liaison,2007- comprehensive review of the City's revenue requirements and allocation methodology, 2008 review of the City's user classification, a cost of service analysis, and rate design for City California State University, users. RFC recently updated the water and wastewater rates for the City with input from the Department of Finance Utility Advisory Committee and surveyed neighboring utilities to benchmark rates. Ms. Sou Research Assistant,2006-2007 also helped the City to establish a suitable development impact fee program. She has O.K.Container Logistics,Inc. successfully adopted the equity buy-in approach to estimate fair recovering costs. She is Senior Import Operations Specialist,2004-2006 analyzing the differential impacts resulting from potentially lower water usage and wastewater discharges from senior and multi-family dwelling units as compared to single EDUCATION family residences. Master of Business Administration Triunfo Sanitation Water District, California California State University, Fullerton,2007 The District provides water service and wastewater service to different areas. In response to Bachelor of Science, the Metropolitan Water District (MWD) rate increase and water supply restrictions, the Management Science District wanted to review water rates and provide incentives for water conservation. The University of California,San Diego District discharges its wastewater to the Las Virgenes Municipal Water District for treatment 2004 and disposal. Ms. Sou developed financial planning and rate models for water, sewer and recycled water. The proposed rate alternatives were analyzed with the District Board in a workshop setting and impacts to customers were reviewed to develop the final recommendations. La Canada Water District, California Ms. Sou performed a water rate study for the District. The District had a five-tiered rate structure with small increases to the rates among the tiers. The District needed to fund a large capital project and address the large rate increases at MWD and potential mandatory cutbacks in water usage. Ms. Sou reviewed the expenses and revenues at the District and developed a water model that was capable of analyzing multiple scenarios. The proposed rates and impacts were reviewed in a working session with the District Board to develop the final rate recommendations. RFC 27 RS FINANCIAL CONSULTANTS,INC �0 terd Proposal for Water Budget Tiered Rate Structure Study September 2009 City of Torrance, California The City of Torrance has not updated its water and recycled water rate structure for over ten years. However, the City is facing challenges from increased water costs from MWD, significant capital and operating expenses. The City also wanted to review the contracts with Mobil Oil and California Water Company since the water rates developed for them fifteen years ago were underpriced and outdated. Ms. Sou conducted a water cost-of-service and recycled water rate study, performed multi-year financial planning and assisted the City in reviewing contracts with major industrial customers. She prepared different rate scenarios and helped the City in implementing a rate structure which is both conservative-oriented and equitable to all customer classes. City of Banning, California Ms. Sou conducted a water and wastewater cost-of-service study, as well as water connection fee study for the City of Banning. She developed revenue and expenses projections, determine revenue requirement and conducted cash flow analysis for the utilities. She also helped the City to evaluate the water and wastewater Capital Improvement projects (CIP) and determine the connection fee to serve new customers. City of Livingston, California Ms. Sou performed a Wastewater and Solid Waste Rate Study for the City of Livingston ("City"). Ms. Sou was responsible for the development of a rate structure for the City based on analysis of revenue,O&M costs, and cash flow. OTHER RELEVANT PROJECTS • City of Redlands — Water and Wastewater Rate Study, Wastewater Connection Fee Study, Senior Housing Impact Fee Study • City of San Bernardino—Water Cost-of-Service Rate Study • City of San Francisco—Water Cost-of-Service Rate Study • City of Atwater—Water Cost-of-Service Rate Study • City of San Diego-Water Cost-of-Service Rate Study,Recycled Water Rate Study • Golden State Water Company—Valuation Study • City of Simi Valley-Water Cost-of-Service Rate Study • City of Encinitas—Water Cost-of-Service Rate Study RIECY 28 VA RAFTEUS FINANCIAL CONSULTANTS,INC. Proposal for Water Budget Tiered Rate Structure Study September 2009 B. ILLUSTRATION 0 Water Budget Components for Residential Accounts Household size (SIZE) #of persons per acct Gallons per Drought Factor capita day (DFindood RN DOOR WATER (GP CD) BUDGET (IWB) ------------ Dwelling Units #of days (U N M) (DAYS) in the billing period, GPCD Size *Units * bays IWB(ccf DFIn door 748gallons /ccf Drought Factor (DF 'Outdood Landscape Area ET Adjustment'. OUTDOOR WATER (LA) Factors (ETAF) BUDGET (OWB) i Plant Factor/Irrigation Sq ft Efficiency Weather Factor (ET') Inch—w ater From CIMIS ETO LA ETAF DFOutdoor OWB(ccf 1200 1200 is conversion factor Rots 29 R 1M RAFTELIS FINANCIAL CONSULTANTS,INC. REQUEST FOR PROPOSAL CONSULTING SERVICES FOR PREPARATION OF A COST OF SERVICE AND WATER RATE STUDY FOR THE YORBA LINDA WATER DISTRICT IRRI January 2010 BOARD OF DIRECTORS William R. Mills, President Michael J. Beverage, Vice President John W. Summerfield, Board Member Ric Collett, Board Member Paul R. Armstrong, Board Member Kenneth R. Vecchiarelli, Secretary/General Manager 1 1. INTRODUCTION The Yorba Linda Water District is an independent special district, which operates under the authority of Division 12 of the California Water Code. The Yorba Linda Water District has been providing water and sewer services to the residents of the City of Yorba Linda and surrounding communities since 1959. The District is governed by a five-member Board of Directors, elected at-large from within the District's service area. The General Manager administers the day-to-day operations of the District in accordance with policies and procedures established by the Board of Directors. The Yorba Linda Water District employs a full-time staff of 78 employees. The District's Board of Directors meets on the second and fourth Thursday of each month. Meetings are publicly noticed and citizens are encouraged to attend. The District's service area can best be described as a suburban residential bedroom community. According to demographic data from a recent survey, about 60% of the District's residents are classified as either professional or white collar workers. Retail commercial businesses are located at key points throughout the service area. No heavy industrial or manufacturing occurs within the District's boundaries. There are, however, several small commercial/light industrial centers located in the southern and eastern portions of the District. Sources of water supply for the District include both groundwater and imported water. Groundwater is pumped from the Orange County Aquifer, and currently accounts for approximately 50% of the District's total water supply. The District also obtains import water from the Colorado River and northern California through the Municipal Water District of Orange County, the local wholesaler for Metropolitan Water District. 2. BACKGROUND The District provides water service to over 23,000 homes and businesses within a 23 square- mile territory serving the City of Yorba Linda, portions of Brea, Anaheim and Placentia, and a small unincorporated area in the County of Orange. The District has an annual operating budget of approximately $25-$30 million per year, and a current five year capital budget that approaches $45 million. The District is in the process of a comprehensive Asset Management Program study and implementation, and will make such information available to the consultant for use. Attachment A contains the water rate study report from September 10, 2009. A rate increase from $1.79/HCF and a $8.35 basic monthly service charge to $2.52/HCF and a $10.20 basic monthly service charge were approved at the Board Meeting. Historical Water Rates Since 2004, the District has implemented four rate adjustments. The rates which became effective on 9/10/09 are currently in place today. The following table provides a history of rate modifications since 2004: 2 Effective Effective Effective Effective Effective Type of Charge 01/01/2004 01/01/2006 07/01/2005 01/01/2008 09/14/2009 Basic Monthly Service $6.70 $7.47 $7:92 $8.35. $10.20 Charge Commodity Charge $1.33/HCF $1.48/HCF $1.57/HCF $1.79/HCF $2.52/HCF Service Classifications The District currently provides water service to four primary classes. The following is a breakdown of each class, including the number of services and percentages within each class as of June 30, 2009. Service Classifications Services % of Services Residential (Single-Family) 21,582 92%0 Residential (Multi-Family) 228 10/6 Commercial 799 3% Landscape& Irrigation 831, 4% Total 23,440_ 100% Service Classifications Services % of Services The District currently uses a legacy system for Utility Billing, but is in the process of converting to Cogsdale Utility Billing Software, which will link to the Great Plains Financial Accounting System, sometime in early calendar year 2010. The District uses Infosend to process, prepare, and send all water bills to customers. A. Project Schedule The project schedule is critical to the success of the project. The following are proposed milestones for the project. Your proposal should include a detailed schedule of milestones as you determine appropriate. Proposal Due Date: February 12, 2010 Notice of Award: February 25, 2010 Kickoff Meeting Cost of Service Evaluation Cost Allocation to Service Components Evaluation of Alternative Tiered Rate Structures Recommendation of Rate Structure Selection and Development of Rate Structure Data Gathering Prop 218 Compliance Outreach 3 The Consultant will prepare and submit monthly schedule updates at a minimum or as requested by the District. B. Scope of Work The scope of work as defined below describes the District's objectives for the project. The Consultant is encouraged to define a proposed scope to accomplish these objectives yet reflect any innovation, elaboration or clarification the Consultant determines appropriate to define their particular approach. The ultimate contract will be based on the proposed scope of work as accepted by the District. Element 1: Cost of Service Evaluation /Five Year Financial Plan In order to complete the rate structure the Consultant will perform a Cost of Service study covering only the District's water operations. Staff will fully assist the consultant and provide information as needed to complete this element. This element shall include, but is not limited to, the following tasks: • A user friendly model for use in preparing the study. The model must be prepared in Microsoft Excel and address functional ization and classification costs. This model will become the property of Yorba Linda Water District and may be used for any purpose; • Functionalize expense data by major and sub functions relating to the activities performed in the operation of the water utility system; • Classify functional expenses to cost components: capacity (demand) costs, commodity costs, customer costs, and other direct costs; • Classify plant investment by major cost category, treatment plants, reservoirs, pumping stations, mainlines, pipelines, and meters; • Classify operating, administrative, engineering, operations and maintenance (O&M) expenses, power costs, distribution systems, debt service, and reserve fund requirements; • After all expenses are classified, a projection of future expenses by category, including O&M, personnel, supplies and services, current and future debt service, and routine and non-routine capital; • Identify revenues to be generated from fixed and usage charges; • Determine accurate fixed costs across different customer group types ; • Ensure that projected revenues are adequate to cover projected operations, maintenance, and administrative costs; debt service; capital outlay; and capital reserves. Revenues and expense projections shall be based on historical records and expected growth rates; • Identify reserve requirements for operations and maintenance and capital programs, and recommend appropriate target reserve levels; • Prepare a Five Year Financial Plan based on the results from the steps above. 4 Element 2: Cost Allocation to Service Components Using the data accumulated in Element I, the Consultant will assist the District in allocating the cost by year to the appropriate service components. This element shall include, but is not limited to, the following tasks: • Derive class of service unit cost; • Derive marginal unit costs for designing class of service rates; taking into account peak demand for customer classes, customer related costs such as meter reading, billing and fire protection. Note: The Consultant is required to justify the selection of the cost allocation; • Allocate classified costs to each class of service by customer, capacity, commodity, public fire protection, and pressure zone allocation factors; • At a minimum, the following methods should be evaluated — base-extra capacity method and commodity-demand method; • Adjust the Five Year Financial Plan developed in Element I based on results of steps above. Element 3: Develop the appropriate rate structure model. Under this element the District and Consultant will develop a rate structure that equitably meets the revenue requirements for the respective customer classes. Two types of rate structures that will be considered by the Board for all classes of customers include: 1. Inclining Block Rate Structure — a structure in which consumption is divided into blocks; each block has a price per unit of water consumed, which increases with each succeeding block. The customer's bill is the sum of consumption per block multiplied by the water price associated with that block. 2. Budget Based Tiered Rate Structure — a structure in which the budgeted consumption per connection is calculated based on the family size, lot size, and other landscaping/outdoor use features. The customer's bill is calculated based on the usage above and beyond the connection's calculated budget. The Consultant will prepare a detailed report which (1) explains all the components of the rate structure, (2) includes an inventory of items/tasks necessary to implement the structure and(3) a timeline for accomplishing all tasks necessary to implement the rate structure (including a cost of service study, revenue plan, and Proposition 218 process) for the new rates to be effective January 1, 2011. This element shall include, but is not limited to, the following tasks: • Recommend a water rate structure that is in compliance with the rate covenants of the outstanding Water Revenue Bonds and Proposition 218; • Design rates so that the agency fixed revenue stream is stabilized (during both wet and dry periods); 5 • Set accurate and efficient allocations for customers, based on empirical science, industry benchmarking and individual site conditions; and that all customers would be evaluated/allocated with the same standard (but not the same allocation); • Analyze the proposed rates for customer impacts and develop alternative rate structures, which are modeled to address negative impacts; • Compare customer groups and cost of service with neighboring water agencies of comparable size,type of treatment, and level of service; • Provide a"variance"process for customers to alter allocations set by the agency; • Finalize the Five Year Financial Plan developed in Element 1&2 based on results of steps above. Element 4• Data gathering(Upon approval of the rate structure improved by the Board). Implementation of a tiered rate structure (particularly if a water budget tiered rate structure is adopted) may require that the District accumulate a significant amount of data regarding its customers. The Consultant will assist the District in the accumulation of all required data to implement the recommended rate structure in a timely fashion. Element 5: Prop 218. The Consultant will assist the District in the development of the Prop 218 Notice and the required nexus between the rates and the Cost of Service. The Consultant shall recommend and help implement the appropriate process/procedure for water rate adjustments in accordance with Proposition 218. • Identify and verify the Proposition 218 issues related to rates, and assist the District in complying with Proposition 218; • Identify how the rates meet State and regional goals (California Urban Water Conservation Council BMP's, access to grants, etc.); • Suggest internal agency training and integration of the rate philosophy across the entire agency staff; • Establish a time-line and budget for the development and implementation of a tiered rate structure. "Note that Elements 1-5 may include tasks and deliverables not foreseen or contemplated in this proposal. 4. DISTRICT FURNISHED SERVICES District staff will be available to answer questions during all phases of the work. Water, sewer and other capital facility information from GIS and other District files are also available. 6 5. ELEMENTS OF PROPOSAL Submissions should address, at a minimum, the firm's experience with the following items: Please limit your proposal to twenty-five (25) pages, excluding cover letter, resumes, and pre- printed materials. Responses to this Request for Proposal shall be presented in the following format: A. Cover Letter: The letter shall be signed by an official authorized to bind the firm and shall contain a statement indicating that the proposal is valid for ninety days. B. Project Understanding: Present your understanding of the project and the general approach to be used. C. Scope of Work: Provide a detailed Scope of Work to accomplish the various tasks. Provide all labor, materials, tools, equipment, incidentals, professional staff and sub-consultants to fully complete the project. D. Personnel: Provide a staff chart and present the experience of the Project Manager and other key personnel to be assigned to prepare the plan, including any sub-consultants. A resume shall be included for the Project Manager and other key personnel, including education, employment history and experience relevant to the project, with corresponding dates. During the course of the project, substitution of key personnel is subject to the approval of the District. E. Relevant Experience: Provide a list of three to five projects where the proposed Project manager and key team members have performed similar work. For each, provide the name of project, location, brief description, and name and phone number of a contact person. F. Project Schedule: Provide a proposed project schedule for preparation of the plan. Ideally, the District would like to see the new rate structure in effect January 1, 2011. If that is not a reasonable expectation, so indicate and describe what can reasonably be expected as a completion date. G. Staff Hour Allocation: Provide a table listing project tasks and subtask, with proposed staff and staff hours for each. Provide estimated total hours for each , task and for the project. Include hours for any sub-consultants on team. H. Fee Summary: In a separate sealed envelope, provide a cover letter and Fee Summary. The fee summary shall include a cost and staff hour breakdown consistent with the requirements of the Scope of Work, detailed for each element listed in Section B. In addition, please provide your current rate schedule with corresponding effective dates. District will compensate the consultant for services performed on an hourly-rate basis plus project-related 7 expenses. Provide an estimated fee for each phase of the project and a Total Overall Not-to-Exceed Fee for the Plan. 6. PROPOSAL EVALUATION CRITERIA Evaluation and ranking of the proposals will be based upon the quality of the proposals, including comprehensiveness and responsiveness to the requirements of this RFP and the following criteria: • Similar experience, references, and qualifications of the Project Manager and other individual team members; • The understanding of the project, the approach and methodology that will be used to complete the project; • The committed project schedule for implementation and completion of the Scope of Services, and the projected use of staff hours; • After the proposals are reviewed and ranked based on technical merit, the fee envelope will be opened and reviewed. The proposal that, in the judgment of the reviewing staff, is the highest ranked with reasonable fee will be recommended to the Board for award; 7. PROPOSAL EVALUATION SCHEDULE The District shall utilize the following planning chart for the timetable and process of evaluating and selecting Consultant: February 1, 2010 at 1:30 p.m: Non-mandatory, pre-proposal meeting at the District office (although not mandatory, the District recommends interested Consultants attend) February 12, 2010 at 4:00 PM: All proposals due February 17, 2010: Consultant interviews with District Staff February 25, 2010: Board consideration for approval of Consultant Work will commence immediately following execution of a contract with required proof of insurance and accompanying additional insured endorsements, as described in Attachment B. Consultant must be ready to execute contract within five working days following notice of award by District. 8 8. GENERAL TERMS AND CONDITIONS 8.1 CONTRACT BETWEEN CONSULTANT AND DISTRICT The District will prepare a contract for implementation between the successful proposer and the District(see Attachment B for a sample contract). 8.2 LATE PROPOSALS It is the Consultant's sole responsibility to ensure that proposals are received at the District office prior to the scheduled closing time specified in this RFP. Proposals will not be accepted after the deadline. 8.3 WITHDRAWAL OF PROPOSALS Proposals may be withdrawn if written notification of withdrawal of the proposal is signed by an authorized representative of the proposer and received at the District office prior to the closing time for receipt of proposals. Proposals cannot be changed or withdrawn after the time designated for receipt. 8.4 DOCUMENTS TO BE CONSTRUED TOGETHER The RFP, proposal and all documents incorporated by reference in a contract entered into between the consultant and the District, and all modifications of said documents, shall be construed together as one document. 8.5 NEWS RELEASES News releases pertaining to the award of any contract resulting from this RFP shall not be made without prior approval of the District. The District's name shall not appear on customer lists, advertising or other materials used to promote the Consultant's services without prior written approval of the District. 9. CLOSING The District reserves the right to accept or reject any and all proposals, waive any defects or irregularity, modify the proposal terms or the selection process or negotiate a contract, along with a revised Scope of Services, schedule and fees with the selected consultant. The District reserves the right to eliminate or add tasks identified in the Scope of Work with a corresponding reduction or increase in the fee. Please be advised that the District may conduct informal interviews of the top two to three candidates on February 17, 2010, after proposals are evaluated. Five copies of the complete proposal and one separate sealed fee envelope must be received by the date and time specified in Section 7.0 of this RFP. Deliver or mail RFP to: 9 Hand Deliveries: Yorba Linda Water District 1717 E. Miraloma Avenue Placentia, California 92870 Attn.: Pat Grady,Assistant General Manager Mailed Deliveries: Yorba Linda Water District P.O.Box 309 Yorba Linda, California 92885-0309 Attn.: Pat Grady, Assistant General Manager Please email a copy to pgradygylwd.com by the deadline as well. 10 ATTACHMENT A YORBA LINDA WATER DISTRICT, WATER RATE REPORT SEPTEMBER 2009 11 Y®rba Linda Water District ' Water bate Report September/2009 12 Table of Contents Background ........................................................................................................ 14 Purposeand Scope............................................................................................ 14 Proposition 218 Compliance .............................................................................. 15 ServiceClassifications ....................................................................................... 15 Historical Water Rates........................................................................................ 16 ExistingWater Rates.......................................................................................... 16 Operating and Non-Operating Expenses ........................................................... 16 Vehicle and Equipment Expenses...................................................................... 17 Depreciation Expense........................................................................................ 18 Capital Improvement and Replacement Programs............................................. 18 OperatingReserves ........................................................................................... 19 Revenue Requirements and Revenue Targets .................................................. 19 Proposed Water Rate Increase.......................................................................... 20 Alternative 1 — Flat Commodity Rate for all Classes of Service ......................... 20 Alternative 2 - Block Tiered Rate Structure for Single-Family Residential Class 21 Wholesale Water Charges above Allocation Levels........................................... 25 Conclusions and Recommendations.................................................................. 26 Exhibit"A" — Proposition 218 Notice................................................................... 28 Exhibit "B" — Breakdown of Expenses and Outlay.............................................. 30 Exhibit "C" — Historical and Breakdown of Variable Water Costs ....................... 31 Exhibit"D" —Variable Water Costs Budget Assumptions................................... 32 Exhibit "E" — Five Year Capital Improvement Program....................................... 33 13 Background Yorba Linda Water District ("District") provides water and partial sewer service to approximately 23,000 homes and businesses within a 23 square-mile territory serving the cities of Yorba Linda, portions of Brea, Anaheim, and Placentia, and a small unincorporated area in the County of Orange. The District is an independent California Special District formed pursuant to California Water Code Division 12, Section 30,000 et seq. In 1959, local residents voted to organize the Yorba Linda County Water District by authorizing the issuance of$1,900,000 in general obligation bonds to acquire the assets of the Yorba Linda Mutual Water Company. From 1959 to the mid-1970's, the District's service area changed from an agricultural to a residential community. In 1978, the District expanded its boundaries by annexing nearly 7,000 acres of undeveloped land north of the Santa Ana River between Fairmont Boulevard on the west, and the San Bernardino/Orange County line on the east. The newly annexed territory was divided into two areas of benefit known as Improvement District No. 1 and Improvement District No. 2. This expansion increased the total area covered by the District to about 13,900 acres, or about 22 square miles. The District's service area can best be described as a suburban residential bedroom community. According to demographic data from a recent survey, about 60% of the District's residents are classified as either professional or white collar workers. Retail commercial businesses are located at key points throughout the service area. No heavy industrial or manufacturing occurs within the District's boundaries. There are, however, several small commercial/light industrial centers located in the southern and eastern portions of the District. Sources of water supply for the District include both groundwater and imported water. Groundwater is pumped from the Orange County Aquifer, and currently accounts for approximately 50% of the District's total water supply. The District also obtains import water from the Colorado River and northern California through the Municipal Water District of Orange County, the local wholesaler for Metropolitan Water District. The water system consists of more than 600 miles of various diameter water pipes, 13 reservoirs with a combined capacity of about 54 million gallons and nine water wells with a combined capacity of about 20 million gallons per day. In addition, there are three connections for imported water supply with a combined capacity in excess of 50 million gallons per day. Purpose and Scope The main purpose of this study is to design water rates for FY 2009/10 based on cost of service which will generate adequate revenues to support operations and maintenance (O&M) costs, a portion of capital funding, debt service and reserve requirements. This report will also provide the justification for the recommended rate structure with the goal of generating the revenue needs of the District. The existing water rate structure includes a monthly basic service charge and a commodity charge. The combination of these two charges generate the majority of the revenues required to cover the expenses of providing safe and reliable water service to the community for domestic, irrigation and fire protection purposes. Other revenue sources include the District's share of ad valorem property taxes, revenue from fees, leases and interest on investments. The scope of this Water Rate Report does not address the District's sewer rate or sewer related activities, as it focuses only on the water enterprise. 14 The 2009 Water Rate Report will address the District's current rate structure, the revenues and expenses from the District's FY 2009/10 budget and the methodology for a recommended rate structure that is sufficient to cover the District's expenditures. As identified in the FY 2009/10 Budget, the District has instituted cost saving measures to reduce or maintain expenses while maintaining or in some cases, increasing the level of service to customers. These cost reductions and service improvements include the following: • The number of authorized full time employees has been reduced by one position • Six authorized positions will remain vacant and have not been funded in FY 2009110 • No cost of living adjustments for employees were budgeted for FY 2009/10 • The total number of vehicles in the District's fleet will be reduced by four • Meters are now read on a monthly basis and customers billed within seven days • On line bill pay and web based bill viewing will be available in September • Web based agenda posting and report downloading will be improved • Increased customer service outreach, public information and programs supporting water conservation and water use efficiency Two options for the water commodity charge will be presented to the Board of Directors for consideration. One option includes a flat commodity charge, similar to the existing rate with an adjusted amount. The second option is a five-tiered water commodity charge designed to provide a lower rate for critical water usage and to promote water conservation for non-essential use. In both cases, the methodology and recommendation for an adjusted monthly service charge remains the same. A public hearing for the proposed rate adjustments is scheduled for September 10, 2009. Should the Board of Directors adopt a rate change, the effective date is scheduled to be September 14, 2009. Proposition 218 Compliance Proposition 218 is applicable to the District and compliance includes developing a nexus between the proposed rates and the costs for providing service, in addition to providing notification to the rate payers of a proposed rate adjustment 45 days prior to a public hearing. Additionally, the rate payers must be provided opportunity to protest the rate adjustments in writing. On July 23, 2009, District customers were notified of the September 10th public hearing by means of a mailed notice. The notice provided details of the proposed rate adjustment along with the protest procedures. A sample of the notice is attached as Exhibit"A". Service Classifications The District currently provides water service to four primary classes. The following is a breakdown of each class, including the number of services and percentages within each class as of June 30, 2009. Service Classifications Services % of Services Residential (Single-Family) 21,582 92% Residential (Multi-Family) 228 1% Commercial 799 3% Landscape& Irrigation O _4% Total 23,4467 100% 15 Historical Water Rates Since 2004, the District has implemented four rate adjustments. The rates which became effective on January 1, 2008, are currently in place today. The following table provides a history of rate modifications since 2004: Effective Effective Effective Effective Ty a of C ha rg a 01/01/2004 01/01/2005 07/01/2005 01/01/2008 Basic Monthly Service Charge $6.70 $7.47 $7.92 $8.35 Commodity Charge $1.33/HCF $1.48/HCF $1.57/HCF $1.79/HCF Existing Water Rates The current water rate structure includes a fixed basic monthly service charge of$8.35 per meter. Each water meter, regardless of size and water usage, is charged this minimum basic monthly service charge since it receives the benefit of service on demand. This basic monthly service charge generates revenue to cover a small portion (approximately 22% in prior years) of the District's fixed expenses. The justification for the basic monthly service charge is that expenses related to operating and maintaining the water system infrastructure are incurred regardless of the amount of water produced and delivered to the District's customers. These expenses include supplies and services, salaries and benefits, and expenditures related to the District's debt service. The debt service includes principle and interest payments on money borrowed to pay for capital improvement and replacement projects. The District's total debt service,for FY 2009/10 is approximately$2.8M. The current commodity charge of $1.79/HCF is the amount the District charges for each billing unit of o water used, which is equivalent to one hundred cubic feet or 748 gallons. This charge generates the majority of the District's total revenue and is intended to cover the balance of the fixed expenses as well as the variable expenses which include the costs to purchase water and the energy required to transport this water throughout the District's service area. The FY 2009/10 Budget identifies basic assumptions for the fiscal year's total expenses and total revenues. The water enterprise revenues calculated in the budget document were generated using the existing water rate structure and showed a net deficit of $8,617,261, not including principle repayment of debt and outlay for vehicles and equipment. The net loss also does not include outlay for capital improvements and replacements, which will be funded from reserves restricted for these capital outlays. The magnitude of this deficit underscores the importance of establishing a water rate that will generate the revenue required to fund the continuation of vital services to the community. Operating and Non-Operating Expenses The Adopted Budget for FY 2009/10 indentifies the total expenses of the District and allocates these expenses appropriately to the water and sewer enterprise funds. The cost to provide water service includes operating and non-operating expenses and capital outlay. Operating expenses include the day to day costs to purchase, deliver water to each service connection and to operate and maintain the water utility infrastructure. Operating expenses also include depreciation of the District's capital assets including reservoirs, booster pump stations, wells, pipelines, buildings, meters, fire hydrants and other appurtenances. Non-operating expenses and capital outlay include principle and interest payments on 16 debt service, vehicle and equipment purchases and capital improvement and replacement expenditures. Exhibit"B" provides a breakdown of the major expenses and outlay components. Variable Water Costs The Variable Water Cost components include the cost of water the District pays to the Municipal Water District of Orange County (MWDOC) for import water, assessments paid to Orange County Water District (OCWD) for local groundwater replenishment and power costs. The costs associated with each of these components are beyond the District's control as these expenses are primarily determined by external entities. In FY 2009/10, Variable Water Costs are anticipated to increase an unprecedented $2.2M from the previous fiscal year. Attached as Exhibit"C" is a graph depicting historical Variable Water Costs since FY 2006/07 and a breakdown with each variable cost component. Import water costs increased 14.1% effective January 1, 2009 and will increase another 19.7% effective September 1, 2009. Furthermore, it is expected this cost will rise another 21.5% by January 1, 2011. While the groundwater replenishment assessment (RA) increased by only 11.7% over the past two years, the basin production percentage (BPP), which establishes the amount of groundwater each agency can pump at the established RA, dropped dramatically from 80.1% in FY 2007/08 to 62% for FY 2009/10. This results in the District having to buy a higher percentage of water from the more expensive import water source. The FY 2009/10 Budget included assumptions which were the basis for the Variable Water Costs. An excerpt of these budget assumptions is attached as Exhibit"U. The table below presents a summary of the budgeted operating and non-operating expenses and other sources of outlay for FY 2009/10. Budget FY 2009/10 Operating Expenses Depreciation &Amortization $3,945,750 Variable Water Costs(GW, Import&Power) 14612,700 Salaries and Benefits 6,538,008 Supplies& Services 4,032,096 Subtotal $27,128,554 Non-Operating Expenses Interest on Long Term Debt $1,981,300 Other 194,500 Subtotal $2,175,800 Other Sources of Outlay Principal of Long Term Debt $825,000 Vehicles &Equipment 628,500 Subtotal $1,453,500 Total $30,757,854 Vehicle and Equipment Expenses The Adopted FY 2009/10 Budget also identifies $628,500 in vehicle and equipment expenses, including purchases to replace vehicles that have surpassed their useful life and have become a maintenance liability. Also included in this category of expenses are new portable pumps and a portable generator that allow the District to augment system capacity during emergencies, and periods of water and power supply 17 outages. These equipment purchases improve the District's reliability and service to its customers. Other expenses related to capital outlay include computer hardware and software upgrades required to complete conversion of the billing, accounting and human resources software systems and install a new computerized maintenance management software system. These additions and conversions will standardize and update the District's technological capability to track and manage District accounting functions more effectively and efficiently. In water rate discussions with the Board of Directors over the past three months, the Board, for FY 2009/10, has decided to fund the vehicle and equipment outlay from reserves, which are the same funding sources for other capital improvement and replacement programs. Depreciation Expense The District depreciates and amortizes expenses for capital improvement and replacement projects as well as vehicles and equipment with a purchase value in excess of$5,000. This is done in accordance with generally accepted accounting principles (GAAP) and appropriate government accounting practices. In FY 2009/10, depreciation in the water enterprise is estimated to increase to nearly$3.95M as shown in the expenses summary table. This amount represents approximately 13.5% of the District's operating and non-operating expenses. While this expense does not affect the District's cash flow, it does affect the value of net assets. In water rate discussions with the Board of Directors over the past three months, Staff was directed to defer 75% of the depreciation expense in calculating the revenue needs of the District. For this reason, the Water Rate Report considers a water rate that will generate only enough revenue to cover 25% of the depreciation expense. Currently, the District is in the process of developing an Asset Management Plan which will address the funding for replacing facilities in the future, including, but not limited to recommendations related to depreciation. When completed, the Board will re-evaluate the funding recommendations of the plan. The Asset Management Plan is scheduled to be completed by no later than April/2010. Capital Improvement and Replacement Programs In addition to the expenses previously identified, the District is continuing with its aggressive and much needed capital improvement and replacement program. The adopted Budget for FY 2009/10 identifies $44.6M in capital projects over the next five years with $34.5M of this total estimated for outlay in FY's 2009/10 and 2010/11. As stated previously, these projects and programs will be funded from previous general obligation bond fund balances (Improvement Districts 1 and 2 GO Bonds) and the 2008 Revenue Bonds which are currently in District reserves restricted for capital projects. In addition to these funds, with the adoption of the FY 2009/10 budget, the Board restricted the use of the Annexation Fund balance, which was previously reserved to offset yearly operating expenses, to fund the capital improvement program. Attached as Exhibit"E", is a listing of the District's Capital Improvement Program. 18 Operating Reserves The Water Operating Fund represents cash and investments dedicated to fund operating expenses. Revenue in excess of requirements to fund operating expenses would be invested and dedicated to reserves. Under the current rate structure, the Water Operating Fund has been decreasing substantially over the past few years,with a projected ending FY 2008/09 negative balance of$4.5M. The Governmental Finance Officers Association (GFOA) recommends a minimum operating (General Reserve) reserve of 5% to 15% of operating revenues or one to two months of operating expenditures (one to two months translates into about 8%to 17% of operating expenditures for the fiscal year). Using the 5-15% of operating revenue criteria for FY 2009/10, the District would be prudent to maintain a balance of $1,034,355 - $3,103,064 in its Water Operating Reserve. Using the 8-17% of operating expenditures criteria (which is more commonly used in local governments)the District should maintain an operating reserve balance of$2,344,248-$4,981,740 during FY 2009/10. The Water Operating Reserve is projected to be approximately negative $4.5M at the close of the FY 2008/09. A one-time transfer of Annexation Reserves has been approved to bring the Water Operating Reserve to zero. If the Board does not adjust the current rates as proposed, the District is budgeted to draw down the Water Operating Reserves to a negative ending balance of$5.5M as of June 30, 2010. Alternatively, if the Board adopts the proposed rate structure, the District is projected to have a positive ending balance in the Water Operating Reserve at year-end of $986,438, which is 25% depreciation expense. Although this amount does not quite meet the standards for reserves most commonly followed, it is preferable to the alternative if the proposed rate structure is not adopted. Revenue Requirements and Revenue Targets The development of the water rate is determined by the expenses derived in the Adopted Budget for FY 2009/10. The approved budget supports the short and long term goals and established objectives of the District and the estimated costs to achieve these objectives, to provide reliable service to the community. As shown in the previous table, the District's water operating and non-operating expenses for FY 2009/10 are estimated to be $30,757,854. The net revenue in FY 2009110 using the existing water rate structure and other identified revenue sources totals $20,687,093. The sum of these figures nets a shortfall of $10,070,761. As identified previously in the Vehicle and Equipment and Depreciation sections of this report, the Board of Directors has directed staff to defer 75% of the depreciation expense this year ($2,959,312) and has agreed to fund the vehicle and equipment outlay ($628,500) from reserves. These two decisions reduce the total expenses to$27,170,042, and the revenue shortfall to$6,482,949. With the total adjusted expenses identified, the non-operating revenue identified in the FY 2009/10 Budget of$1,325,400 is deducted from the total adjusted expenses of$27,170,042. This results in a net revenue target of$25,844,642, which represents the amount of revenue that must be generated from the water rates,which is a combination of the basic monthly service charge and the commodity rate. Budget FY 2009110 Adjusted Operating Expenses Adjusted Depreciation &Amortization (25%only) $986,438 Variable Water Costs(GW, Import&Power) 12,612,700 Salaries and Benefits 6,538,008 19 Supplies & Services 4,032,096 Subtotal $24,169,242 Non-Operating Expenses Interest&Principal on Long Tenn Debt $2,806,300 Other 194,500 Subtotal $3,000,800 Non-Operating Revenue ($1,325,400) Net Revenue Requirements $25,844,642 Proposed Water Rate Increase As previously mentioned, the water rates are made up of the basic monthly service charge and the commodity charge. The basic monthly service charge was established in prior years to cover 22% of the fixed operating expenses. For FY 2009/10, this report proposes that the basic monthly service charge cover 25% of these fixed costs, which includes the adjusted depreciation, salaries, benefits, supplies and services, for a total of $2,889,136. The budget assumes the District will serve an average of 23,680 accounts throughout the year. Based on this, the basic monthly service charge is recommended to be $10.20 per month for all meters, regardless of size, class of service, or water usage. Budget FY 2009/10 25% Adjusted Depreciation &Amortization _ _$986,438 $246,610 Salaries and Benefits 6,538,008 1,634,502 Supplies& Services 4,032,096 1,008,024 Total Revenue from Monthly Service Charge $2,889,136 $2,889,136/23,680 accounts/12 months=$10.20/month The balance of the revenue, or approximately $22,955,500 must then be generated by the commodity charge. Alternative 1 - Flat Commodity Rate for all Classes of Service The flat rate commodity charge would apply to all classes of service, regardless of meter size. The commodity charge is calculated by dividing the revenue required, less the revenue generated from the basic monthly service charge, by the number of billing units (hundred cubic feet of water) projected to be sold in FY 2009/10. This amounts to$2.52 per billing unit. $22,955,500/9,091,843 billing units=$2.52/Unit Under this scenario, every $.01 within the commodity rate generates approximately $90,900 in revenues. The following table is a breakdown of the various components that develop the recommended $2.52 commodity rate: 20 FY 2009/10 Budget $/Unit Expenses&Outlay(Excludes CIP) Variable Water Costs $12,612,700 $1.39 Salaries& Benefits 6,538,008 0.72 Supplies& Services 4,032,096 0.44 Depreciation (100%) 3,945,750 0.43 Debt Obligations(Principal& Interest) 2,806,300 0.31 Vehicles & Equipment 628,500 0.07 Other 194,500 0.02 Total Expenses&Outlay $30,757,854 $3.38 Deductions Basic Monthly Service Charge Collected ($2,889,136) ($0.32) Depreciation (75% -Deferred) - FY 2009/10 (2,959,313) (0.33) Vehicles &Equipment(Funded by reserves) (628,500) (0.07) Other Non-Operating Revenue (Prop. Tax& Misc) (1,325,400) (0.15) Total Deductions ($7,802,349) ($0.86) Net Commodity Rate $22,955,605 $2.52 Alternative 2 - Block Tiered Rate Structure for Single-Family Residential Mass Tiered water rate structures are proven to encourage water conservation practices. With the restriction of wholesale water supplies and resulting mandatory water conservation measures, Staff studied an alternative to the flat commodity charge and modeled the impacts of a block tiered rate on water revenues for single family residential accounts. This class of customers represents over 91% of the total customer base, 71% of the total water demands and the equivalent associated revenue. All other classes of service, which are not single family residential customers, would be charged the flat commodity charge of $2.52/Unit. The following tiered structured is recommended should the Board choose this alternative: Consumption Charge per Unit Tier 1 1 —10 units 2.17 Tier II 11 —30 units 2.50 Tier III 31 —60 units 2.83 Tier IV 61 —80 units 3.16 Tier V 81+ units 3.49 The expense and revenue estimates in the FY 2009/10 Budget are based on a fixed amount of water supplies available at wholesale pricing schedules. Agencies that exceed these allocations may still purchase imported water and local groundwater supplies, but at substantially inflated prices amounting to approximately three times and five times the new wholesale prices. The water supplies allocated to the District in FY 2009/10 from its wholesale suppliers amounts to approximately 21,970 acre feet, which was derived by the suppliers by averaging the three year water demands in calendar years 2004 through 2006 (the baseline). From this baseline, the wholesale water supplies were cut by 15% for FY 2009/10 with a small allowance added back for growth and past conservation practices. 21 Historically, water sales fall short of water purchases on the average by 3 to 8 percent. This difference is labeled as unaccounted for water and is comprised of water losses due to breaks, leaks, mainline flushing for water quality purposes, water used for fire protection purposes, water used for District financed construction projects, street and sewer cleaning, and losses from stuck and inaccurate/aging meters. The FY 2009/10 budget uses 5% as the estimated unaccounted water loss to determine the estimated revenue generated through the metered water sales. This results in 20,872 acre feet (9,091,843 billing units) in water sales. In developing a tiered rate alternative, Staff sampled the historic water use records and selected the single year that matched closest to the water use estimates for FY 2009/10. The closest match was-FY 2005/06 with total water sales of 9,122,629 HCF. With this data set, Staff ran an annual revenue calculation with a flat commodity rate of $2.52 and determined the proportion of the total revenue generated by each of the customer classes. The results of these calculations are shown below. FISCAL YEAR 2005/06 Historical Data #of % Billing Units Service Classifications Services Services Consumption % Consumption Residential (Single-Family) 21,193 92.2% 6,506,631 71.36/o Residential (Multi-Family) 225 1.0% 197,314 2.2% Commercial 791 3.4% 748,742 8.2% Landscape& Irrigation 782 3.4% 1,669,942 18.3% Total 221991 1000% 9 122,629' 100% Staff also performed a statistical comparison using the historical data sets from Calendar Years 2004 through 2006. This is consistent with the period that the District's wholesale supplier used to determine the FY 2009/10 baseline water supply allocation. The average of the three year data did not differ significantly from the FY 2005/06 data set as shown in the table below. Using the three year historical data set, staff also tallied average monthly water usage (demands) for the single family residential customer class and used this data to establish water use blocks or ranges for the tiered water rate structure. CALENDAR YEARS 2004-2006 Average Historical Data #of % Billing Units Service Classifications Services Services Consumption % Consumption Residential (Single-Family) 21,014 92.2% 6,608,385 71.0% Residential (Multi-Family) 223 1.0% 233,248 2.5% Commercial 790 3.4% 789,600 8.5% Landscape& Irrigation 773 3.40% 1,6711023 18.0% Total 22,800 100% 9,302,256 100% 22 Using the average water demands, staff developed a tiered block rate structure that is revenue neutral within the District's water allocation for FY 2008/09, when compared to the revenue generated by the flat commodity charge for the baseline allocation. The block rate structure generates a higher revenue stream proportionately to the water used within the higher blocks or tiers. The block rate structure also allows for a base indoor use of up to ten units per month at a substantially reduced rate of $2.17/HCF (Tier 1), when compared to the proposed flat commodity charge of $2.52/HCF. This first tier, while benefiting all customers, is particularly desirable to customers that tend to use much less water on the average. The next block or tier of use is for 11 to 30 units per month at a slightly discounted rate of $2.50/HCF (Tier 2). This block represents the average customer use with over 72% of the residential customers falling in or below this range on the average each month over the three year period tested. The vast majority of water used in this and subsequent ranges is for outdoor, irrigation use, which is primarily a non-essential water use. The table below shows the average usage patterns over the data set studied and the associated Tiers 1 through 5 selected. The results are also shown graphically in the chart below the table. The commodity rate in each tier was adjusted through trial and error, using the FY 2005/06 data set and testing various commodity charges through this data set to model equitable tiered ranges and appropriate revenue percentages within each range. If the revenue generated in any range fell short of revenue requirements, it was adjusted slightly and the model was rerun. If the revenue inside a particular tier ran too high above the equity range, the rate was adjusted down proportionately. The Modeling Results table shows that the revenue generated using the tiered rate structure totals approximately $16.28M, which is consistent with the target revenue (71%) of the total$22.96M revenue target required from the commodity charge. The balance of the revenue from the commodity charge is generated by other class customers including multi-family residential, irrigation, and commercial accounts using the flat commodity charge of $2.521HCF. Single Family Residential Water Demands for Calendar Years 2004-2006 Ave. Usage #Accts %Total Cum % Consumption %Total Cum % Tier 1 0-10 3,607 16.7% 16.7% 242,815 3.7% 3.7% Tier 2 11-20 6,350 29.4% 46.1% 1,211,129 18.6% 22.3% 21-30 5,708 26.4% 72.5% 1,715,584 26.3% 48.6% 31-40 2,926 13.5% 86.1% 1,227,352 18.8% 67.5% Tier 41-60 1,412 6.5% 92.6% 760,863 11.7% 79.1% 51-60 697 3.2% 95.8% 460,136 7.1% 86.2% Tier 4 61-80 574 2.7% 98.5% 468,955 7.2% 93.4% 81-100 184 0.9% 99.3% 196,255 3.0% 96.4% .Tier 5 101-200 132 0.6% 100.0% 202,911 3.1% 99.5% 201-500 10 0.0% 100.0% 31,984 0.5% 100.0% 21,600 100% 6,517,984 100.0% 23 24 Wholesale Water Charges above Allocation Levels The proposed water rates developed in this report were derived using the expenses and revenues identified in the approved FY 2009/10 Budget. The projected water rate revenues fall substantially short of entirely funding the cost of providing services as identified in the Budget, primarily in the depreciation component and vehicle and equipment outlay. Nonetheless, if the District reaches its water allocation point prior to the end of the fiscal year(June 30, 2010) and District customers still have water demands to be met, additional expenses the District will incur are the substantial added variable water costs, which are unbudgeted. This includes the wholesale cost of the incremental water purchased and the additional energy (power) costs used to pump it through the community. The FY 2009/10 Budget identifies $1,509,900 in energy expenses for pumping water from groundwater wells and through booster pump stations throughout the District's service area. Spread over the baseline of 21,970 AF of water purchases, this amounts to an average power cost for pumping of$68.73 per acre foot. As previously identified in this report and in the assumptions shown in Exhibit "D", the District's water suppliers have set the wholesale price for water purchases above the District's allocation of 21,970 AF, at $1,889 per AF for the first 1,640 AF. The costs are set at$3,077 for every acre foot purchased thereafter. The combined cost for water and power therefore is $1,889 + $68.73 = $1,957.73/AF (wholesale price) for the first overage level above allocation, and $3,077 +$68.73 = $3,145:73/AF (wholesale price)for all water purchased in the second overage level. As there are 435.6 HCF in an acre foot, the unit cost of water above allocation is $1,957.73 divided by 435.6, or $4.49 (Overage Level 1) per unit for the first 1,640 AF and$3,145.73 divided by 435.6, or$7.22 (Overage Level 2)per unit thereafter. As the District has not yet established an equitable and practical method to assess water use efficiencies for each and every customer, the Overage Level Charges can be considered a severe pricing disincentive to further support overall water conservation goals and to encourage water use efficiency for the entire District. The easiest and least expensive approach to administer these potential cost increases, if incurred,would be to apply the Overage Level rates to all customers if the District exceeds its baseline water supply allocation. District staff can track water production and import water purchase on a daily and monthly basis, and can determine if water consumption habits are trending toward causing the District to exceed its baseline water allocation for the year. The District can use proactive customer outreach to notify its customers of positive and negative water use trends and how they may affect water rate increases later in the year. If District customers consciously decide to not adjust their water use habits, Overage Level 1 and Overage Level 2 water rates should be implemented. The Board may further decide to levy fines or fees for failure to meet conservation goals in accordance with the Water Conservation Ordinance and with the statutory authority granted to the Board. Such fines or fees may be established by separate resolution of the Board of Directors. For example, the Board may choose to establish a fine or penalty of up to $10 per unit of water used in excess of an established allocation. It is clear from the analysis above that the District's increased variable costs alone may increase to $7.22 per unit in Overage Level 2. If the District has collected Overage Level 1, Overage Level 2 or alternate fines for water use above allocations, and following the water year audit, it is determined that the District will not be required to pay for all or any portion of this water at the established allocation prices, the Board may refund the surplus increment, transfer the balance to a rate stabilization fund for future use, commit the balance to active water conservation programs and improvements, or any combination thereof, as determined and approved by the Board of Directors. 25 Conclusions and Recommendations This Water Rate Report proposes a water rate increase for the monthly service charge from $8.35/mo. to $10.20/mo. for all customers and a commodity charge increase from $1.79/HCF to $2.52/HCF. The report also establishes an alternative tiered rate structure for all single family residential accounts as shown below. Consumption Charge per Unit Tier I A _°10 Tier II 11 —30 units 2.50 Tier III 31 -,60'units,. 183 Tier IV 61 —80 units 3.16 Tier V 8'1+.units. Furthermore, the report identifies two additional tiers in the commodity charge for water use above the District's water allocation baseline. These tiers are indentified as the Overage Level 1 rate of$4.49/HCF and the Overage Level 2 rate of $7.22/HCF. All customer classes would be charged these Overage Level rates in the event the District's water supply purchases exceed its baseline allocation for FY 2009/10 and in the event subsequent Overage Level allocation points are exceeded. Should the Board of Directors implement rate adjustments set forth in this report, it is recommended that the effective date be September 14, 2009. Questions or comments related to this report may be directed to: Yorba Linda Water District 1717 E. Miraloma Ave Placentia, CA 92870 Tel: (714) 701-3000 Fax: (714) 701-3028 Email: info@ylwd.com Prepared by: Kenneth Vecchiarelli, P.E. General Manager RCE No. 64299 Exp: 6/30/2011 26 Exhibit"A" - Proposition 218 Notice Yorba Linda Water District Notice of Public Hearing to Consider Increasing and Modifying Water Rates NOTICE IS HEREBY GNEN that a public hearing to consider modifying and increasing rates for water service will be held m Thursday, September 10, 2009 at 6:30 P.M. or as soon as possible thereafter in the Yorba Linda Water District Board Chambers, 1717 East Miraloma Avenue,Placentia,CA 92870. At the public hearing,the Board of Directors will consider written objections and protests to the proposed changes that have been received prior to the conclusion of the public hearing. Such protests must be mailed in advance to the attention of the Board Secretary at Yorba Linda Water District,P.O.Box 309,Yorba Linda, CA 92885-0309,delivered in advance of the public hearing to the District offices at the address above and filed with the Board Secretary, or delivered in person and received by the Secretary prior to the conclusion of the public hearing. Water Charge Increase for All Customers and a customers represent over 90% of the District's account Tiered Rate Option for Single Family Residential base. The proposed tiers are shown in Table"A". Customers Proposed Effective Date — September 14, 2009 If the tiered rate alternative is not adopted by the Board, the flat charge of$2.52 per unit,if approved for all other Rate adjustments are being proposed to the water rates customers, would also apply to single family residential due to the increasing costs of operating,maintaining,and the new rates will become replacing the District's water system, the increasing costs accounts. If approved of purchasing and delivering safe and reliable water effective September 14, established 2009. The tiered rates and ranges have been estab service to the community, in addition to encouraging associated lished to be as revenue water users to conserve valuable water resources. neutral as practical, using historical average water use ranges, and applying the District's current water supply The District's water suppliers,in addition to raising their allocation. Residential customers have an opportunity rates significantly, have established a water supply with the tiered rate structure to lower their water bills allocation for FY 2009/10, starting July 1, 2009. This within the first two tiers,when compared to the fixed rate allocation limits the amount of water that. can be charge of$2.52 per unit applied to the same amount of purchased at the new wholesale rates, then cuts that water used Customers that use water in the higher historic average by nearly ten percent. Above these ranges, pay a higher rate for the increments within that limits,additional and dramatic water supply cost increases range only. have been established Within the allocation limit, the District will pay $701 per acre foot (af), effective Table, , dliered Rate Water CI iarge', September 1, 2009. The District may purchase , approximately 1,640 acre feet of additional water at a rate of$1,889 per acre foot(Overage Level 1). Water above this amount may be purchased at $3,077 per acre foot (Overage Level 2). These water costs are truly Water Consumed Price Per Unit unprecedented and require a different approach to setting Tier I 1 — 10 units $2.17 water rates. This wholesale water pricing requires retail Tier II 11 —30 units 2.50 agencies to promote water conservation goals to assure Tier III 31 —60 units 2.83 costs passed on to our customers, costs that are largely Tier IV 61 —80 units 3.16 beyond the District's control, stay as reasonable as Tier V 8 1+units 3.49 possible. This public hearing will consider an increase in the Basic Service Charge Increase water consumption charge per unit,from the current Proposed Effective Date — September 14, 2009 rate of$1.79 to$2.52. One unit of water is equal to 748 This public hearing will also consider an increase to gallons. The hearing will also consider the establish- the basic service charge from the current rate of$8.35 ment of an alternative tiered water rate structure for per month to $10.20 per month. If approved,this new single-family residential customers that have a dedi- rate will also take effect September 14, 2009. The basic cated water meter serving only their property. These service charge provides a faced revenue stream for the District, equivalent to approximately 25% of the fixed 28 costs of providing water service. Fixed costs are end of the fiscal,year(June 30, 2010)and our customers considered those costs that are not directly related to the still have water demands to be met; the only additional purchase of water and the energy required to pump it expenses the District will need to meet arc the new throughout our service area. Examples of fixed costs variable water operating costs, which includes the include materials,supplies,services,salaries,benefits,and wholesale cost of the incremental water purchased and the interest and debt principal payments. These costs are additional energy (power) costs used to pump it through incurred regardless of the amount of water purchased and the community. •llte Draft 2009 Water Rate Report sold. shows that the average cost of power for pumping in Exam Me Charges of Proposed Rates FY2009/10 is projected to be S68.73 per acre. foot (af). Your water hill is calculated by taking the units of water As previously identified in this notice,the District's water used within the Milling period (typically thirty days)and suppliers have set the purchase price for water above multiplying that number times the appropriate water YLWll's allocation point, at $1,889 per of for the first charge per unit. The basic service charge is then added to 1,G40 af. The costs are set at$3,477 for every acre foot get the total The average residential water use is around purchased thereafter. The combined cost for water and example of a typical unit trill power therefore is $1,889 + 68.73 = S1,957.73/af for the 30 units per month. using the current rates n shown a of a with the same till first overage level above allocation(wholesale cost), and calculated using the proposed new fixed and tiered rate the se +68.73ve =e level.(wholesale all water purchased there re alternatives for single family customers. For all other the second overage level (wholesale cost). As there are customers, the same bill calculated using the proposed allot units s S1 acre foot, tic unit cost of water above fixed rate would apply. allocation is 51,957.73 divided by 435.6, or 54.49 (Overage Level 1) per unit for fire first 1,640 of and Current Cost for 30 units of W ater(All Customers): S3,145.73 divided by 435.6, or$7.22 (Overage Level 2) Water Charge per unit thereafter. Water Usage 30(units)x$1.79= $53.70 35 This public hearing will consider an increase in the Basic Service Charge 8. Total Current Charges 562. 5 water consumption charge of S4.49 per unit and$7.22 per unit, respectively, for Overage Level 1 and Proposed Cost for 30 units of Water Using Flat Rate Overage Level 2, water use above allocation levels. (All Customers)-effective September 14,2009: These allocations may be established by separate Water Charge resolution of the Board of Directors. Alternatively, the Water Usage 30(units)x$2.52= $75.64 Board may choose to establish a fine or penalty of up to 0.20 $10 Per unit of water used in excess of the established Basic Service Charge 1 Total Proposed Charges(Fixed Rate) $8 . 0 allocation. Such fine or penalty must be adopted by separate Board Resolution. If the District has collected Proposed Cost for 30 units of Water Using Alternative Overage Level 1, Overage Level 2 or alternate fines for Tiered Rate (Single Family Residential Only) - water use above allocations,and following the water year effective September 14,2009: audit,it is determined that the District will not be required Water Charge to pay for all or any portion of this water at the above Tier I Water Usage 10(units)x$2.17= $21.70 allocation prices, the Board may refund the surplus Tier II Water Usage 20(units)x S2.50=$21.70 increment,transfer the balance to a rate stabilization fund 20 for future use, commit the balance to active water Basic Service Charge 10 Total Proposed Charges(Tiered Kale) $81. 0 conservation programs and improvements, or any combination of the above options, as approved by the Comparative Results:Tiered rate total is$3.90 leas than with Board of Directors at the public hearing. fixed rate water charge for the average bill of 30 units. Documents Available for Review: Proposed Water Rate for Water Sold Above YLWD's The Adopted FY 2009/10 Budget and the Draft 2009 Allocation in FY 2009/10(Overage Level 1 and 2) Water Rate Report may be viewed at the District's offices The proposed water rates described above were derived at the address on the front page of this notice, or by using the expenses and revenues identified in the accessing the District's wcbsitc at www.ylwd.com. approved Budget for FY 2009/10, along with the target rates and revenues calculated in the Draft 2009 Water If you received this notice, but are not the property Rate Report and as advised by the Board of Directors. owner or the tenant responsible for payment of the The projected water rate revenues fall substantially short water bill,please forward this notice to the responsible of entirely funding the cost of providing services as party. identified in the Adopted Budget. Nonetheless, if the District reaches its allocation point some time before the 29 Exhibit "B" - Breakdown ®f Expenses and Outlay Vehicles&Equipment Long Term Debt($2.8 M) ($0.6 M) 6% �1% Depreciation($3.9 M) '•-- k" 0 - 11✓zov u:.41 Yivi 3• �" � N `� 4 r� Y g � 30 Exhibit"C" - Historical and Breakdown of Variable dilater Costs $15 `ram $14 $13 r' c $12 1+ 0 $11 $10 1 $9 r $8 FY 2006/07 FY 2007/08 FY 2008/09 FY 2008/09 FY 2009/10 — --I—Actual)------- ----dud et --(Forecastl—....w... ---�Budetl_ ©Yearly Cost $10,703,037 $10,516,507 $11,156,500 $10,451,271 $12,612,700 A 1 31 Exhibit "D" - Variable Water Costs Budget Assumptions (Source: Excerpts from FY 2009/10 Budget) • Variable Water Costs include purchased water from Metropolitan Water District of Orange County (MWDOC), a readiness to serve(connection charge)and capacity charge from MWDOC, a groundwater replenishment assessment(RA)charge from Orange County Water District (OCWD), natural gas, propane and electricity to transfer water throughout the District's distribution system. • An allocation of 11,727 AF of import water for FY 2009/10 has been set by MWDOC for YLWD. • The MWDOC allocation establishes our total water budget at 21,970 AF for FY 2009/10. • A total of 11,727 AF will be purchased from MWDOC through the year at a rate of$604/AF from July 1, 2009 through August 31, 2009 and at a rate of$701/AF from September 1 through June 30, 2010. • Additional import water purchases above the 11,727 AF allocation, up to 1,173 AF (+10%), will be charged a rate of$1,889/AF. Additional import water beyond the+10%will be charged at $3,077/AF. • A total of 10,243 AF will be pumped from the groundwater basin and charged a replenishment assessment from OCWD at a rate of$249/AF to maximize the District's BPP of 62%. • An additional 330 AF may be pumped from the basin with an additional basin equity assessment (BEA)charge of$501/AF for a total cost of$750/AF. Additional groundwater pumped above these limits will be surcharged an additional $2,400 for a total cost of$3,150/AF. • The District will pump approximately 2,200 AF of groundwater from the Met storage pool within the basin, in accordance with the terms of the Conjunctive Use Program (CUP) at an average adjusted MWDOC rate of$584/AF. • Energy cost increases averaging 14.5%effective January 2009 are included in the energy component of the variable costs. No additional energy increases are assumed until late summer 2010. 32 Exhibit "E" - Five Year Capital Improvement Program Previously Approved Projects FY 2009110 FY 2010111 FY 2011/12 FY 2012113 Total Highland Reservoir 3,952,000 1,224,000 5,176,000 New Well 20 590,000 1,025,000 1,615,000 Wells 1,5,12 Upgrade 190,000 190,000 OC-51 Upgrade 100,000 100,000 Fairmont BPS Pump Retrofit 400,000 400,000 Zone Reconfig. Pipelines 1,300,000 1,300,000 San Antonio PRS Upgrades 270,000 270,000 Hidden Hills Reservoir 5,500,000 5,500,000 Fire Flow Impvmts Via Sereno&Ohio 25,000 100,000 125,000 Lakeview Sewer Lift Sta Upgrade 220,000 220,000 Anaheim Interties 150,000 150,000 Lakeview Fencing&Landscaping 210,000 210,000 GIS Implementation 100,000 100,000 Fairmont Site Improvements 300,000 300,000 Foxtail Pipeline 50,000 195,000 245,000 Elk Mtn. Reservoir Site Impvmts. 300,000 300,000 Palm Ave BPS Replacement 540,000 2,160,000 2,700,000 5,400,000 Zone 5 BPS 270,000 270,000 540,000 1,080,000 FY 2007-12 Program SUBTOTAL $13,767,000 $5,674,000 $3,240,000 $22,681,000 New Projects for CIP Plumosa Site Redevelop. Study 50,000 50,000 Asset Management Plan 120,000 120,000 Sewer Master Plan 350,000 350,000 CMMS Implementation 200,000 200,000 Zone Interconnect Stub-ups(3) 120,000 120,000 Corrosion Monitoring Program 20,000 20,000 Valley View Pipeline Replacement 120,000 120,000 Blair Drive Pipeline Replacement 50,000 50,000 Highland Pipeline Replacement 120,000 120,000 Plumosa Water Line Relining 110,000 110,000 Bastanchury Pipeline Replacement 1,300,000 1,300,000 Vista del Verde Valve Replacement 500,000 500,000 1,000,000 Highland BPS Replacement 1,000,000 6,500,000 7,500,000 Mixing/Re-Chlor Facil at 2 Res Sites 100,000 100,000 Non-Pot Water Facil for Irrig Use 900,000 900,000 1,800,000 West Wellfield 500,000 2,500,000 3,000,000 3,000,000 9,000,000 Proposed New Projects SUBTOTAL $4,560,000 $10,500,000 $3,900,000 $3,000,000 $21,960,000 COMBINED TOTAL $18,327,000 $16,174,000 $7,140,000 $3,000,000 $44,641,000 33 ATTACHMENT B YORBA LINDA WATER DISTRICT, SAMPLE CONTRACT JANUARY 2010 34 PROFESSIONAL SERVICES AGREEMENT BETWEEN THE YORBA 1LINDA WATER DISTRICT AND [INSERT PARTY] PROJECT/SITE: [INSERT DESCRIPTION] JOB #: [INSERT JOB#] DATE: [INSERT DATE] THIS PROFESSIONAL SERVICES AGREEMENT ("Agreement") is made and entered into on , 20, by and between the YORBA LINDA WATER DISTRICT, a local public agency, created and operating under authority of Division 12 of the California Water Code ("District"), and [INSERT CONSULTANT]("Consultant")(collectively referred to herein as the"Parties"). RECITALS WHEREAS,District is engaging in the Project described in the Scope of Work attached as Exhibit"A";and WHEREAS,District requires a professional consultant with the requisite knowledge, skill, ability and expertise to provide the necessary services for District during all phases of the Project to which the specialized services of Consultant are appropriate;and WHEREAS,Consultant represents to District that it is fully qualified and available to perform the services for and as requested by District;and NOW, THEREFORE, in consideration of the mutual promises, covenants, and terms and conditions herein, the Parties agree as follows: AGREEMENT 1.0. SCOPE OF WORK. The services to be provided by Consultant("Work")are called out in the Scope of Work attached as Exhibit "A" and incorporated herein by reference. All Work shall be performed in accordance with the standards customarily provided by an experienced and competent professional rendering the same or similar services and in such a prompt and continuous fashion as not to impede or delay the overall completion of the Project. 1.1. Project Manager. Consultant acknowledges that continuous and effective communication between District, Consultant, and other consultants (as appropriate) is necessary to the successful completion of the Project. Consultant may also be required to furnish copies of its work product and communications to others as requested by District. Consultant's primary contact with District shall be through District's Project Manager specified on Exhibit "A." District's primary contact with Consultant shall be through the Consultant's Representative, designated on Consultant's Cost Proposal attached as Exhibit"B,"and incorporated herein by reference.When requested by District,Consultant's Representative shall attend Project meetings and will undertake, as a part of its professional responsibility under this Agreement,to coordinate its activities with all appropriate individuals and consultants. 35 1.2. Use of Designs and Drawings. All work product of Consultant, whether created solely by Consultant or in cooperation with others, is prepared specifically and expressly for District and all right, title, and interest therein shall be owned by District. District shall make available to Consultant such information, documents,graphs, studies, etc.,which District possesses or has access to,which are relevant to Consultant's Work pursuant to this Agreement. 1.3. Review. Consultant shall furnish District with reasonable opportunities from time to time to ascertain whether the Work of Consultant are being performed in accordance with this Agreement. All Work done and materials furnished shall be subject to final review and approval by District. District's interim review and approval of Consultant's work product shall not relieve Consultant of its obligations to fully perform this Agreement. 1.4. Commencement of Work. The Project start date is called out on Exhibit"A." 1.5. Time Is Of The Essence. Consultant shall perform all Work with due diligence as time is of the essence in the performance of this Agreement. Time limits applicable for the performance of Consultant's Work are established in Exhibit"A." 2.0 COMPENSATION. As compensation for performance of the Work specified under the Scope of Work (Exhibit"A"), District shall pay Consultant an amount not to exceed that contained in Consultant's Cost Proposal (Exhibit `B"). Payment will be made at the rates set forth in Consultant's Fee Schedule, which is attached as Exhibit"C"and incorporated herein by reference.Costs or expenses not designated or identified in the Fee Schedule shall not be reimbursable unless otherwise provided in this Agreement. 2.1. Invoicing. Consultant shall submit an invoice within ten (10) days after the end of each month during the term of this Agreement describing the Work performed for which payment is requested.District shall review and approve all invoices prior to payment. District shall pay approved invoices within thirty (30) days of receipt. Consultant agrees to submit additional documentation to support the invoice if requested.If District does not approve an invoice,District shall send a notice to Consultant setting forth the reason(s)the invoice was not approved. Consultant may re-invoice District to cure the defects identified by District. The revised invoice will be treated as a new submittal. District's determinations regarding verification of Consultant's performance, accrued reimbursable expenses, if any, and percentage of completion shall be binding and conclusive. Consultant's time records, invoices, receipts and other documentation supporting the invoices shall be available for review by District upon reasonable notice and shall be retained by Consultant for three(3)years after completion of the Project. 2.2. Extra Services. Before performing any services outside the scope of this Agreement ("Extra Services"), Consultant shall submit a written request for approval of such Extra Services and receive written approval from District. District shall have no responsibility to compensate Consultant for any Extra Services provided by Consultant without such prior written approval. 3.0 TERMINATION. District may terminate this Agreement at anytime upon ten(10)days written notice to Consultant. Should District exercise the right to terminate this Agreement, District shall pay Consultant for any Work satisfactorily completed prior to the date of termination, based upon Consultant's Fee Schedule. Consultant may terminate this Agreement upon ten (10) days written notice to District in the event of substantial failure by District to perform in accordance with the terms hereof through no fault of Consultant; or in the event District fails to pay Consultant in accordance with the terms in Section 2.0;or if Consultant's Work hereunder is suspended for a period of time greater than ninety(90)days through no fault of Consultant. 3.1. Withholding Payment. In the event District has reasonable grounds to believe Consultant will be materially unable to perform the Work under this Agreement, or if District becomes aware of a potential claim against Consultant or District arising out of Consultant's negligence, intentional act or breach of any provision of this Agreement, including a potential claim against Consultant by District,then District may, 36 to the fullest extent allowed by law, withhold payment of any amount payable to Consultant that District determines is related to such inability to complete the Work,negligence,intentional act,or breach. 4.0. SAFETY. Consultant shall conduct and maintain the Work so as to avoid injury or damage to any person or property.Consultant shall at all times exercise all necessary safety precautions appropriate to the nature of the Work and the conditions under which the Work is to be performed, and be in compliance with all applicable federal, state and local statutory and regulatory requirements including State of California, Department of Industrial Relations (Cal/OSHA) regulations. Consultant is responsible for the safety of all Consultant personnel at all times during performance of its Work,including while on District property. 5.0 INDEMNIFICATION. 5.1. When the law establishes a professional standard of care for the Consultant's services,to the fullest extent permitted by law,Consultant will defend,indemnify and hold harmless District,its directors, officers,employees,and authorized volunteers from and against all claims and demands of all persons that arise out of,pertain to,or relate to the Consultant's negligence,recklessness,or willful misconduct in the performance(or actual or alleged non-performance)of the Work under this agreement. Consultant,shall defend itself against any and all liabilities,claims,losses,damages,and costs arising out of or alleged to arise out of Consultant's performance or non-performance of the Work hereunder,and shall not tender such claims to District nor to its directors,officers,employees,or authorized volunteers,for defense or indemnity. 5.2. Other than in the performance of professional services,to the fullest extent permitted by law, Consultant will defend, indemnify and hold harmless District,its directors,officers,employees and authorized volunteers from and against all claims and demands of all persons arising out the performance of the Work(including the furnishing of materials),including but not limited to claims by the Consultant, Consultant's employees and any subconsultants for damages to persons or property,except for damages resulting from the willful misconduct or active negligence of District,its directors,officers,employees,or authorized volunteers. 5.3. Consultant shall defend,at Consultant's own cost,expense and risk,any and all such aforesaid suits, actions or other legal proceedings of every kind that may be brought or instituted against District or any of its directors,officers,employees,or authorized volunteers,with legal counsel reasonably acceptable to District. Consultant shall pay and satisfy any judgment,award or decree that may be rendered against District or any of its directors,officers,employees,or authorized volunteers,in any and all such aforesaid suits,actions,or other legal proceedings for which Consultant is obligated to defend, indemnify and hold harmless District,its directors,officers,employees and authorized volunteers under this Agreement. 5.4. Consultant shall reimburse District or its directors,officers,employees,and authorized volunteers, for any and all legal expenses and costs incurred by each of them in connection therewith or in enforcing the indemnity herein provided. Consultant's obligation to indemnify shall not be restricted to insurance proceeds, if any,received by District or its directors,officers,employees,or authorized volunteers. 6.0 INSURANCE REQUIREMENTS. Prior to execution of this Agreement, and at any time thereafter on request,Consultant shall provide executed certificates of insurance and policy endorsements acceptable to District evidencing the required coverage and limits for each insurance policy. Each insurance policy shall be primary insurance as respects District, its affiliated organizations and its and their respective officers, directors, trustees, employees, agents, consultants, attorneys, successors and assigns (collectively, the "Covered Parties") for all liability arising out of the activities performed by or on behalf of Consultant. Any insurance, pool coverage, or self-insurance maintained by Covered Parties shall be excess of Consultant's insurance and shall not contribute to it. Except for the Errors and Omissions policy (sec. 6.4), each insurance policy shall provide, or be endorsed to provide, a waiver of rights of subrogation against Covered Parties. Each insurance policy shall provide, or be endorsed to provide, that coverage shall not be cancelled except after thirty (30) days prior written notice by U.S. Mail(ten(10)days for non-payment of premium)has been given to District. Unless otherwise approved by District, each insurance provider shall be authorized to do business in California and have an A.M.Best rating(or equivalent) of not less than "ANIL" Consultant shall provide and maintain at all times during the performance of this 37 Agreement the following insurance: (1)Commercial General Liability ("CGL") insurance; (2)Automobile Liability insurance; (3) Workers' Compensation and Employer's Liability insurance; and (4)Errors and Omissions("E&O") liability insurance. 6.1. Commercial General Liability. Each CGL policy shall identify Covered Parties as additional insured, or be endorsed to identify Covered Parties as additional insured using a form acceptable to the District. Coverage for additional insured shall not be limited to vicarious liability. Defense costs must be paid in addition to limits. Each CGL policy shall have liability coverage limits of at least $1,000,000 per occurrence for bodily injury, personal injury and property damage, and either at least (a) $2,000,000 aggregate total bodily injury, personal injury and property damage applied separately to the Project; or at least (b) $5,000,000 general aggregate limit for all operations. CGL insurance and endorsements shall be kept in force at all times during the performance of this Agreement and all coverage required herein shall be maintained after the term of this Agreement so long as such coverage is reasonably available. 6.2. Automobile Liability. Each Automobile Liability policy shall require coverage for"any auto" and shall have limits of at least$1,000,000 for bodily injury and property damage, each accident,and shall use ISO policy form "CA 00 01," including owned, non-owned and hired autos,or the exact equivalent. If Consultant owns no vehicles, this requirement may be satisfied by a non-owned auto endorsement to the CGL policy described above.Automobile Liability insurance and endorsements shall be kept in force at all times during the performance of this Agreement and all coverage required herein shall be maintained after the term of this Agreement so long as such coverage is reasonably available. 6.3. Workers' Compensation/Employer's Liability. Consultant shall cover or insure the existence of coverage under the applicable laws relating to Workers' Compensation insurance,all of their employees employed directly by them or through subconsultants at all times in carrying out the Work contemplated under this Agreement, in accordance with the "Workers' Compensation and Insurance Act" of the California Labor Code and any amendatory Acts. Consultant shall provide Employer's Liability insurance with limits of at least $1,000,000 each accident, $1,000,000 disease policy limit, and $1,000,000 disease each employee. By Consultant's signature hereunder, Consultant certifies that it is aware of the provisions of Section 3700 of the California Labor Code, which requires every employer to be insured against liability for Workers' Compensation or to undertake self-insurance in accordance with the provisions of that code, and that Consultant will comply with such provisions before commencing Work under this Agreement. Upon the request of District,subconsultants must provide certificates of insurance evidencing such coverage. 6.4. Errors and Omissions. Each E&O policy shall have limits of at least$1,000,000 per claim and $1,000,000 aggregate. Architects' and Engineers' coverage is to be endorsed to include contractual liability. E&O insurance and endorsements shall be kept in force at all times during the performance of this Agreement and all coverage required herein shall be maintained after the term of this Agreement so long as such coverage is reasonably available. 7.0. INDEPENDENT CONTRACTOR. The Parties agree that the relationship between District and Consultant is that of an independent contractor and Consultant shall not, in any way, be considered to be an employee or agent of District. Consultant shall not represent or otherwise hold out itself or any of its directors, officers, partners, employees, or agents to be an agent or employee of District. District will not be legally or financially responsible for any damage or loss that may be sustained by Consultant because of any act, error, or omission of Consultant or any other consultant, nor shall Consultant make any claim against District arising out of any such act,error,or omission. 7.1. Taxes and Benefits. Consultant shall be solely responsible for the payment of all federal, state and local income tax, social security tax,Workers' Compensation insurance, state disability insurance,and any other taxes or insurance Consultant, as an independent contractor, is responsible for paying under federal,state or local law.Consultant is not eligible to receive Workers' Compensation,medical,indemnity or retirement benefits through District, including but not limited to enrollment in CaIPERS. Consultant is not eligible to receive overtime,vacation or sick pay. 38 7.2. Permits and Licenses. Consultant shall procure and maintain all permits, and licenses and other government-required certification necessary for the performance of its Work, all at the sole cost of Consultant. None of the items referenced in this section shall be reimbursable to Consultant under the Agreement. 7.3. Methods. Consultant shall have the sole and absolute discretion in determining the methods, details and means of performing the Work required by District.Consultant shall furnish,at its own expense, all labor, materials, equipment, tools and transportation necessary for the successful completion of the Work to be performed under this Agreement. District shall not have any right to direct the methods,details and means of the Work; however, Consultant must receive prior written approval from District before assigning or changing any assignment of Consultant's project manager or key personnel and before using any subconsultants or subconsultant agreements for services or materials under this Agreement and any work authorizations. 8.0. NOTICES. Any notice may be served upon either Party by delivering it in person,or by depositing it in a U.S. Mail Deposit Box with the postage thereon fully prepaid, and addressed to the Party at the address set forth below: District: Kenneth R.Vecchiarelli,General Manager Yorba Linda Water District P.O.Box 309 Yorba Linda,California 92885-0309 Consultant: As designated in Exhibit"B." Any notice given hereunder shall be deemed effective in the case of personal delivery,upon receipt thereof,or,in the case of mailing,at the moment of deposit in the course of transmission with the United States Postal Service. 9.0 ASSIGNMENT. Neither Consultant nor District may assign or transfer this Agreement, or any part thereof,without the prior written consent of the other Party,which shall not be unreasonably withheld. 10.0 ATTORNEY'S FEES. In the event of any action arising out of,or in connection with,this Agreement,or the Work to be performed hereunder, the prevailing Party shall be entitled to have and recover, in addition to damages, injunctive or other relief, its reasonable costs and expenses, including without limitation, its attorney's fees. 11.0. BINDING ARBITRATION. Within thirty (30)days after service of a civil action on either Party arising out of, or in connection with, this Agreement, either Party may elect to submit the action to binding arbitration before the Judicial Arbitration and Mediation Service("JAMS"), located in Orange County. The Parties agree that upon an election to arbitrate, any civil action filed will be stayed until arbitration proceedings have concluded. Upon submission of the matter to JAMS,the submitting Party shall obtain from JAMS a list of three (3)randomly selected arbitrators and serve said list upon the other Party. In the event that there are more than two parties to the action, the number of arbitrators randomly selected and included in the list shall be increased by two for each additional party involved.Upon service of the randomly selected list of arbitrators,each party shall have twenty(20) days to eliminate two arbitrators from the list and return it to JAMS,with the selected arbitrator being the remaining name on the list. Should more than one name remain on the list,JAMS will randomly select the arbitrator from the names remaining on the list. Arbitration shall be scheduled for hearing on the merits no later than six (6) months after the date the arbitrator is selected.All parties shall be pennitted to conduct discovery as provided by the current rules of the California Code of Civil Procedure. All costs of JAMS or of the arbitrator for Work shall be divided equally among the Parties,unless otherwise ordered by the arbitrator.In an arbitration to resolve a dispute under this provision,the arbitrator's award shall be supported by law and substantial evidence. 12.0 FORCE MAJEURE. Upon written notice by the owing Party,the respective duties and obligations of the Parties hereunder(except District's obligation to pay Consultant such sums as may become due from time to time for Work rendered by it) shall be suspended while and so long as performance thereof is prevented or impeded by 39 strikes, disturbances,riots, fire, governmental action,war acts,acts of God,or any other cause similar or dissimilar to the foregoing which are beyond the reasonable control of the Party from whom the affected performance was due. 13.0 ENTIRE AGREEMENT. This Agreement, and the attached Exhibits,represent the entire and integrated agreement between District and Consultant and supersedes all prior negotiations, representations, or agreements, either written or oral. This Agreement may be amended only by written instrument signed by both District and Consultant. IN WITNESS WHEREOF,the Parties hereto have caused this Agreement to be entered into as of the day and year written above. District: Consultant: Yorba Linda Water District By: By: Kenneth R.Vecchiarelli,General Manager APPROVED AS TO FORM: McCormick,Kidman and Behrens,LLP By: Arthur G.Kidman,General Counsel Attachments: Exhibit A:Scope of Work Exhibit B:Cost Proposal for Work Exhibit C:Fee Schedule 40 XMMEA- q-NN rY t 1j it t= �• ` i_ iQ OIL 44 [I L v n� 3� ) f. e.�_..,......��........ E'..' t firyF _....RAY 5. k .�`,NY. h, •)dt.. �..�.�._.�. RAFTELIS FINANCIAL CONSULTANTS,INC. 0 RAFTELIS FINANCIAL CONSULTANTS,INC. February 11,2010 Mr.Pat Grady Assistant General Manager Yorba Linda Water District P.O.Box 309 Yorba Linda,CA 92885-0309 Subject:Proposal for Cost of Service and Water Rate Study Dear Mr.Grady: Raftelis Financial Consultants,Inc. (RFC) is pleased to submit this proposal to assist Yorba Linda Water District (District) with a comprehensive cost of service and water rate study.We believe that our unique combination of qualifications and ex- perience will ensure successful implementation of forward-looking solutions that will benefit the District and its customers. RFC has several unique features,which include: > Knowledge of Conservation Rate Structures.Our team members are highly experienced in developing water conser- vation rate structures. We understand the benefits and challenges with inclining block and water budget rate structures. We have performed more conservation rate structure studies than anyone else in California. We can design rate struc- tures that meet the unique needs of the District efficiently and effectively since there are no learning curves for us. > Local Consulting Resources.We have one of the largest consulting practices in California specializing in water and wastewater utility rate studies.RFC's office is less then an hour from the District's office. Less travel time translates into greater efficiency and lower costs to the District and the resources ensure timely completion. > Established Partner with MWDOC DWR Grant. RFC is Municipal Water District of Orange County's (MWDOC) preferred rate consultant to conduct the water budget rate studies. We have attended all the meetings at MWDOC relating to the DWR grant.We understand the logistical aspects of the grant and the data quality issues associated with Digital Map Products.This will be a value added service that we can provide. > Highly Qualified and Experienced Team.Our business and engineering qualifications enable us to develop conserva- tion rates efficiently and perform sound cost allocations supported by industry standards, lending confidence to deci- sion makers and credibility to project results.The principal team members have over 90 years of experience in the field and are active members of the national and local industry associations.Mr.Pardiwala,our Project Manager has over 30 years of experience in developing conservation rate structures and Mr.Gaur,our Deputy Project Manager,is co-author- ing a new chapter on water budget rates for the Principles of Water Rates,Fees,and Charges(MI Manual)published by American Water Works Association. Mr. George Raftelis, our Technical Reviewer,has more than 35 years experience and is considered a luminary in this field. Our qualifications provide assurance to the Board of the Directors and the public on the credibility of our results and recommendations. 201 South Lake Avenue,Suite 301 Pasadena,CA 91101 p:626.583.18941 f:626.583,1411 www.raftelis.com > Broad Experience.'Ihe District can rely on RFC's history of developing and assisting in the implementation of success- ful solutions for other agencies.We have assisted hundreds of agencies throughout California and the United States.The District will benefit from our extensive experience in assisting hundreds of utilities that have experienced similar chal- lenges and be able to implement the new rate structure smoothly. > Regulatory Knowledge. RFC has a strong regulatory knowledge having assisted many utilities in the state with Propo- sition 218 requirements and worked closely with many attorneys to draft Proposition 218 notices and make presenta- tions at public hearings. > Model.RFC's rate model is very user-friendly with the capability to conduct scenario analyses graphically for ease of understanding and allowing policy makers to make quick decisions. We are excited about this opportunity to assist the District with this important study.Please do not hesitate to contact me at(626)827-8931 or Sanjay Gaur at(213) 327-440S if you have any questions. Sincerely, Sudhir Pardiwala Vice President Note: This proposal is valid for 90 days. If we are selected for this project,we would like to negotiate the indemnification language. YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RA'-;-ESTUDY TABLE OF CONTENTS Teo E OF co�ffF=Kus ®1 Project Understanding 04 Scope of Work 04 Project Approach 06 Scope of Work 15 Personnel 18 Relevant Experience 22 Project Schedule&Staff Hour Allocation 23 Appendix A: Firm Overview 23 Who We Are 24 What Makes RFC Unique 25 Appendix B: Project Team Resumes 43 Appendix C: Contract Modifications RAFTELIS FINANCIAL CONSULTANTS,INC, YORBA t INDA WATER;DISTRICT � COST OF SERVICE AND WA.-ER RATE S­RJDY j PROJECT UNDERSTANDING -PROJECT UNDCFG�37ANIONNI The Yorba Linda Water District (District) has been provid- The District has an annual operating budget of approximately ing water service to over 23,000 residential and commercial $2S-$30 million a year and five-year capital budget approaching accounts located in the City of Yorba Linda, portions of Brea, $45 million. The District Budget for fiscal year (FY) 2009/10 Anaheim and Placentia. The District's water supply comes from projected a substantial deficit which underscores the need to two sources: groundwater and imported water. The District is consider a water rate restructuring and a supporting water rate responsible for the replenishment assessment to the Orange increase. In September 2009, District Staff submitted a Water County Water District (OCWD) for the groundwater pumped Rate Report to the District's Board of Directors(Board)propos- from the Orange County Aquifer to supply approximately SO ing two alternative rate structures:a"flat"(uniform)commodity percent of the District's water demand. The remaining water rate for all customer classes and a S-block tiered rate structure demand is imported water purchased from Municipal Water for the single family residential class. The Board approved the District of Orange County(MWDOC),the local wholesaler for uniform commodity rate alternative in September 2009. Only Metropolitan Water District of Southern California (MWD). one of the Directors was not in favor of the tiered rate structure. Based on historical purchases, the District's allocation for im- Most of the Directors favored the tiered rate at an appropriate ported water from MWDOC is set at 11,727 acre feet(AF)per time or wanted the tiered rates to include all customer classes. year. Additional imported water purchase above the 11,727 AF The Board acknowledged the importance of conservation, but is subject to penalty charges. was concerned most about equity across customer classes. The two types of rate structures that will be considered by the Board The District's service area is comprised of 93 percent residen- for all customer classes include an inclining tiered rate structure tial,3 percent small commercial/light industrial,and 4 percent and a water budget tiered rate structure. dedicated irrigation accounts. Based on historical usage data, 73.5 percent of the consumption is for residential use, 18 per- RFC is the largest consulting firm specializing in water and cent is for dedicated irrigation and 8.5 percent is for commercial wastewater rate studies in California and has assisted hundreds use.The average usage per account is approximately 0.88 AF per of utilities in California. Moreover, we have conducted more year. Single family residential accounts consumed on average conservation rate studies in California and water budget rate 0.69 AF per year per account from calendar years 2004 to 2006. studies in the United States than any other consulting firm.We The District's residential lots may be larger than in other agen- are currently assisting or have assisted the following agencies in ties, and this is reflected in this larger average usage. The cur- evaluating and/or implementing a water budget rate structure: rent water rate structure, as shown in the Table below,includes Eastern Municipal WD, El Toro WD, Indio Water Authority, two components: basic monthly service charge of$10.20 and Monterey Peninsula WD, Palmdale WD, Rancho California commodity charge of$2.52 per 100 cubic feet (hcf) effective WD,Western MWD,and the cities of San Diego,Madera, Co- September 14,2009. The large increase in commodity rates in rona and Henderson.Lastly,our principal team members have 2009 is a result of the large increase in MWD's rates. over 90 years of experience.Sudhir Pardiwala,our Project Man- Effective Effective Effective Effective Effective Type of Charge 1/1/2004 1/1/2005 7/1/2005 1/1/2008 9/14/2009 Basic Monthly Service Charge $ 6,70 $ 7.47 $ 7.92 $ 8.35 $ 10.20 Commodity Charge($/hcf) $ 1.33 $ 1.48 $ 1.57 $ 1.79 $ 2.52 11 hcf=748 gallons of water RAFTELIS FINANCIAL CONSULTANTS,INC,/01 YORBA C INDA WATER DISTRICT COST OF SERVICE AND tNAt'ER RAT F S IUDY 1 PROJECT UNDERSTANDING ager has over 30 years of experience and is currently assisting covered, debt coverage requirements are met, and reserves are the City of San Diego in evaluating a water budget rate strut- sufficiently funded. Our methods are consistent with industry ture. Mr. Sanjay Gaur, our Deputy Project Manager is consid- standards and allow for scenario analysis at the touch of a button ered one of the leading water budget experts and has 1S years to make quick decisions. of experience serving the municipal utility industry. He is co- authoring a new chapter on water budget rates in the Principles Revenue Stability of Water Rates, Fees,and Charges (M1 Manual) published by Given the current drought condition in California,many agen- American Water Works Association. Our Technical Reviewer, ties are facing an uncomfortable task of requiring customers George Raftelis is a national leader in developing conservation to cut back on water usage,while increasing their rates due to rate structure throughout the United States with over 3S years these cut backs. These rate increases occur because some fixed of experience. He is currently working with Metropolitan Wa- costs are recovered from the variable revenue. While this may ter District of Southern California in evaluating their cost-of- seem counterintuitive, the logic to cover fixed cost in the vari- service methodology and the associated rate structure. able revenue is based on the industry standards associated with cost of service analysis in allocating costs. Project t ass ues Based on the review of the request for proposal (RFP) and at- There are several potential solutions to this dilemma,including: tending the pre-proposal meeting, RFC has identified the fol- > Creation of a rate stabilization fund to cover temporary re- lowing project issues: duction in revenue > Passing on the fixed costs on the fixed (meter) charge so Financial Planning that revenue reduction is balanced by cost reduction One of the most important aspects of good financial planning > Passing on the fixed costs on an essential amount of usage is ensuring revenue sufficiency. With an operating budget of so that the District will not incur any loss from reduction in approximately $26 million, excluding depreciation and amor- discretionary usage. tization, in FY 2009/10 and a significant capital improvement program(CIP),it is essential that the District recover the costs of RFC will thoroughly review the District's cost structure and providing service. The FY 2009/10 budget projected a deficit of analyze the advantages and disadvantages of each method in or- $S.2 million after reducing various expenses,and a negative end- der to recommend the most appropriate method to the District ing balance of$S.S million in the operating reserves. The transfer in order to minimize impacts,ensure revenue stability and cus- of a portion of the property taxes to the state does not help. Even tomer equity. with the recent rate increase,which generated enough revenue to cover the deficits,the District's operating reserves are significant- Rate Structure Alternatives ly less than dictated by prudent business practices. The financial The District will decide on either the inclining block rate struc- plan needs to address this issue and ensure that the operating re- ture or the budget based tiered rate structure. Both of these serves are maintained in compliance with District policy. structures are considered conservation-oriented rate structures. The primary difference is that in the former rate structure us- To finance part of the projected$44.6 million in CIP over the ers are charged higher rates based strictly on use irrespective of next four years,the District issued a$3S million revenue bond their needs. The water budget rate structure,on the other hand, in 2008. Meeting the debt coverage covenant for the bond is targets efficient use. A large user could be charged at lower also an important issue that needs to be addressed in the finan- rates if the user is using water efficiently. Thus users with large cial plan. In the longer term,the financial plan should consider lots,which require more irrigation usage,are allowed higher al- various financing sources for future CIP projects. lotments of water at lower rates. RFC has helped numerous agencies to develop financial plans There are several issues to consider in developing water budgets. that ensure that all projected operating and capital costs are re- RFC with Tom Ash, one of the leading consultants in develop- RAFTELIS FINANCIAL CONSULTANTS,INC,/02 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE S)TUDY PROJECT UNDERSTANDING ing water budget rate structures that are equitable and politically acceptable,will conduct a workshop with the District Board and Staff to discuss different water budget methodologies and policy options to design the water budget framework to ensure smooth implementation. RFC team members have developed both rate structures for numerous utilities. During the last year,we have developed wa- ter budgets for numerous agencies in Southern California,such as El Toro Water District, Palmdale Water District, Rancho California Water District, Western Municipal Water District, Eastern Municipal Water District and the Cities of Madera and Corona,and Henderson in Nevada. Billing System Capability 1A Whichever rate structure the District chooses to implement at A ? Z' the end of the rate study, the District's billing system needs to "T­ F be ready and capable to handle the data required in each rate structure. In particular, the budget based tiered rate structure requires significant changes to the billing system in terms of 114 len Az V the customer information required and the ability to determine budgets for individual customers. RFC has worked with Cogs- "A ieg dale, the District's billing consultant when we developed the water budget rate structure at Palmdale Water District. This is a Jz 4, W9 value added service that we can provide the District. R k"MMYOYC k" Customer Outreach The change in rate structure from uniform (flat) to inclin- Z-1--,71, ing or water budget represents a significant change. it will be ­S� 7 important to inform and educate the customers about these 21 -S changes so that they understand the reasons and the impacts and can support the changes. A water budget rate structure fM- may require an added level of public outreach to ensure under- standing and acceptance. These are sensitive issues that must be skillfully handled. Cost of service requirements and equity goals must be balanced against the financial capacity of each customer group and local dynamics. By achieving the proper consultant, in his/her qualifications, experience and ability to balance,we can gain maximum customer acceptance for the fi- present concepts and alternatives in layman terms. RFC is well nal rate recommendations. To obtain community support and qualified to assist the District in this regard having assisted sev- understanding,it is important that they have confidence in the eral agencies with water budgets. RAFTELIS FINANCIAL CONSULTANTS,INC./03 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY SCOPE OF WORK F__�Y� O A1P1PH0/%CLn RFC's Project Approach is based on years of experience to ef- unique characteristics and goals. ficiently meet the District's goal and objectives. Our approach consists of the following elements: Strong and transparent communication with District staff Design a water rate structure that meet the Dls- The proposed project approach entails several different,yet in- trict's pricing objectives terrelated, work efforts that will require effective coordination Given the above challenges, RFC will conduct a workshop between District staff and the RFC Project Team. Our manage- with the District Board and staff to prioritize pricing objectives, ment approach stresses communication, teamwork, objectivity, which will then provide a platform to identify the appropriate transparency and accountability for meeting project objectives. rate structure that meets the District's unique needs. These pric- We believe in a no-surprise approach so that the client is aware ing objectives could include: of the status of the project at all times. Our approach includes > Equity: The rate structure needs to equitably recover the regular communication and detailed documentation to ensure water cost of service across customers based on their cor- transparency and thoroughness of the project. RFC will work responding demand characteristics,including peaking cost. with District staff on an ongoing basis, via scheduled on-site > Conservation:The rate structure needs to promote conser- meetings and web conferences,in order to transfer information vation as water supplies have reduced significantly in recent and to assure that staff retains ownership over the final work years due to severe drought in California. product.RFC uses a web meeting tool, GoToMeetingT"that al- > Financial Sufficiency and Stability: The rate structure lows clients to see in real-time the results of various analyses on needs to sufficiently recover the revenue requirements for their computer screens,thus providing an efficient and effective the water operations at various reduced consumption levels. method of communication in addition to face-to-face meetings. > Defensibility:The rate structure should comply with Prop- osition 218 and be legally defensible. Determination of cost of service and rate strue- > Administrative Ease:The rate structure should be relative- ture ly easy to administer. One of the major goals of any rate study is to accurately and ef- > Customer Understanding: The rate structure should be ficiently allocate costs to different customer classes and ensure easily understood by customer. revenue sufficiency while maintaining rate equity. Before equi- > Affordability: The District should provide water to cus- table rates can be developed, it is necessary to determine costs tomers for essential needs at an affordable price. of different functional areas and allocate those costs of service > Minimizing customer Impacts: The rate structure should to customer classes in a sound and equitable manner. RFC has not create major impacts on customers,especially small users. extensive experience in this area. Some of these pricing objectives conflict with each other and Development of water rate model have to be balanced to meet the District's goals. Since no one Taking advantage of advances in computer technology, RFC rate structure can meet all these objectives, it is important to has developed a slick financial planning computer model (RFC understand the strengths and weaknesses of any rate structure. Model)that provides accurate,up-to-date financial planning and The workshop will serve as a tool for RFC to understand the rate design information about the water utility.The RFC Model District's pricing objectives, to help the District Board and/ is one of the most advanced strategic planning tools available to- or Staff evaluate the different rate structures so that they can day.It is Microsoft Excel®based and easy to learn and use.RFC make informed decisions about different policy options avail- will design the model to specifically recognize the unique needs, able to design the rate structure that specifically fits the District's characteristics and information of the District. RAFTELIS FINANCIAL CONSULTANTS,INC./04 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY SCOPE OF WORK The model can include: conduct what-if scenarios on the water budget parameters A. S-year Financial Plan to determine the revenue require- (household size,gallons per capita,percentage of ET,etc.)by ments; customer class; B. Sufficient revenues that adequately recover all the operation F. Customer impact analysis in graphical format for the District and capital costs incurred by the District,provide adequate to make well-informed decisions. For instance, the District reserves to manage risks,and provided adequate debt cover- will know the percentage of the customers that will experi- age; ence a certain dollar amount of increase in their monthly C. Cost of service analysis that allocates functionalized costs to bills; the appropriate cost categories and customer classes to en- G. Customized Dashboard with ability to perform sensitivity sure sufficient and equitable cost recovery across customer analyses and see the changes in real time in graphical format; classes; and D. Adherence to industry standards and Proposition 218 rate- H.Ease of input, report printing, update, understanding, and setting practices and procedures; administration. E. Rate structure design including an inclining block rate and/ or a water budget rate model.The inclining block rate mod- An example of a customized water budget dashboard from the el will have the ability to change tier widths and rates. Ad- RFC Model is shown in the figure below ditionally, the water budget model will have the ability to Input to define where 1I�� fn1p1 �T penalty rate starts Indoor Water Budget KEY O1NPWTS ( � Usage Distributions Factors �� PENALTY T- IE .rN ___ -. Shows the usage .u:::a s<:tom„ j _ -------------------- GPCD "' �" l and bills C=fault 6lousencdd 4ceJJ7ie-"e; I \OR ALLOCATION INPUTS °e`3 J S0% �\ <,r., _% ;<r,cs=:r:_.•a:•y;<r H distribution in eaa s=== _« ,Y, TIER MULTIPLIERS _ - each tier. ND 6 For--ple,20.of the Iol Ba:e Mrei Rases , usage is Tin Tier 4.The Outdoor Water Budget Tier 3-,.e-s,i 1.0 50.6» - cona"anon effort o- -'------. — - shcuid focus a people Factors Tier E—,a 2.0 51-2$ a Tier' %art �'a'3-- "re•t on Tier OU DOOR ALLOCATION INPUTS ePdjusirnentF�ct°rs 3.0 .•�_a Fac!ca ire•3 tr.yr<r: - •.�- " u mi"tmen F.—�70% ="T 5_ � firer a,•.•.,•a+nU< 8. 0.12 rrorutar 45% -=t!ma:vvc<r:,<, , „at rnry Bins axse,r.;e i0.ui� os-:rr rmpxcee Customer Impacts �J Shows the customer Ri85 u g- 0 n z R�99�n impacts under tiered Shows the projected _-. proposed revenues under sas; - - rates. current and reliable s< rrecn«<r s s-3i s -.30 •. l tt j re.s .•i7d _L9 _.?4 t Nits seeareduction in the CORSUmptlOn. AN Tw;.3ttrsrirr wptiu�is -iigr i_..Y." 5,437 3.C3 3.03 ZS. (<$O ch-ngP in bilk) here. y ru 4 i TOTAL 14,933 5 17D0 5 10.43 10435 ^$Change in Bills e iere ra esvn lustitlea baseaon cost of service allocation to comply with Proposition 218 � l RAFTELIS FINANCIAL CONSULTANTS,INC.!05 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY SCOPE OF WORK _3(C(0P O OR The following sections outline the tasks to complete a comprehensive water rate study(Study)to design a rate structure that equitably recovers the water cost of service,ensures financial sufficiency for the operations and capital costs of the enterprise,yet promotes con- servation and efficient water use.While tasks are listed consecutively,elements of tasks may be done concurrently with other tasks. ............................................................................................................................................................................................................................................................................- Project Initiation, The Project Initiation task will begin the Study so that it progresses in an efficient and delib- TASK Management and erate manner.Task 1 includes the collection and review of all relevant data and documents, Data Collection i a kick-off meeting,project management,and our quality assurance/quality control process. ............................................................................................................................................................................................................................................................................. Task 1.1: Data Collection and Kick-off Meeting and accountability for meeting project objectives. Manage- with District Staff ment responsibilities extend to general administrative duties The kick-off meeting provides a solid foundation for the project such as client correspondence,billing, project documentation and serves as a forum in which District staff can provide input and administration of the study control plan. Project manage- on the project's approach,work plan,schedule,and priorities.A ment components are as follows: successful meeting ensures that project participants are in mu- tual agreement as to the project goals and expectations. RFC A. Assignment of key project team members including: will develop a kick-off meeting package that contains the meet- > A highly experienced management team,which includes ing agenda and presentation materials to guide the discussion. Sudhir Pardiwala as the Project Manager and Sanjay Prior to the kick-off meeting,a detailed data request list will be Gaur as Deputy Project Manager. Mr.Pardiwala has over submitted to the District so all appropriate data in the required 30 years of experience and is currently assisting several format can be forwarded to RFC.At a minimum,RFC will re- agencies including the City of San Diego in developing quest that the District provide an electronic database that in- conservation rate structures. Mr.Gaur is considered one cludes several years of historical customer billing data (cleaned of the leading experts in water budget rate design with of duplicates and corrected for compound meters) and the as- more than 1S years of experience in municipal utilities sociated landscape area developed by Digital Map Products. and is very active in industry professional organizations. Along with the data request list,RFC will provide a draft copy Both Mr.Pardiwala and Mr.Gaur will be responsible for of pricing objectives for District Staff review. Based on com- facilitating a close working relationship between the Dis- ments from the District,RFC will update the pricing objectives trict and RFC staff and will be accountable for meeting questionnaire, which will be completed by the District Staff the project schedule,budget,and technical requirements and /or Board as the foundation for the rate structure work- of the project; shop to educate and evaluate alternative water rate structures. > An experienced Technical Reviewer, George Raftelis, who is a national leader in developing water rate struc- Task 1.2:Ongoing Project Management tures,who has over 35 years of experience. Mr.Raftelis Consistent and competent project management is required to will be responsible for reviewing the methodology of ensure project success and adherence to timelines and budgets. this project to ensure it meets both RFC and industry This task involves multiple interrelated work efforts that will standards. Ultimately,he will be responsible for ensur- require effective coordination between District staff, the RFC ing client satisfaction and quality; Project Team, and District Board of Directors. Our manage- > Highly qualified staff; ment approach stresses communication,teamwork,objectivity, > Sufficient support resources to ensure timely comple- RAFTELIS FINANCIAL CONSULTANTS,INC./06 YORSA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY SCOPE OF WORK tion;and also identify potential problems, challenges, and solu- > Local resources to quickly and effectively respond to the tions; District's requirements. > Coordination of project activities between RFC and Dis- B. Client control and project guidance will be ensured trict staff. Review of and feedback on project delivera- through: bles;and > Adoption of procedures for regular and open communica- > Assistance in developing and presenting project recom- tion between the project team members and District staff; mendations. > Regular progress reports and the project manager's use of RFC's internal project accounting and management Meetings:One kick-off meeting system to track schedule and budget. These reports will Deliverable:Data request list and Pricing Objectives questionnaire .............................................................................................................................................................................................................................................................................. TASK ess that allows workshop participants to review the results of Hate Structure and Policy I the prioritization process prior to the end of the workshop such 213evelopment W®rl<Sh®pS that the results can be discussed and revised if so desired. .................................................................................................................................I Task 2.1: Pricing Objectives and Rate Strue- The end product of this workshop would be a rate criteria ma- ture Workshop trix prioritizing the District's objectives. This matrix would After we have gathered, reviewed, and analyzed the relevant ultimately serve as a framework for evaluating alternative util- background data,RFC will conduct a Pricing Objectives Work- ity rate philosophies and structures. The table below shows shop with the District's staff and/or other stakeholders to pri- a sample pricing objective scorecard. The first two columns, oritize the pricing objectives. In prior studies, clients have Classification and Rank Total,will be determined based on the appreciated the opportunity to discuss and review these early in pricing objectives exercise. Alternative rate structures are then the process. This mechanism promotes stakeholder ownership compared based on the pricing objectives and a couple of alter- and subsequent buy-in of the final results. Some of the pricing natives investigated in detail for implementation at the District. objectives identified in past studies have included the following: This approach allows the project to be efficiently completed > Equity Among Customer Classes; through an early buy-in. > Financial Sufficiency and Stability; > Conservation and Demand Management; Meetings.One workshop for pricing objective and alternative rate > Defensibility; structures. > Simplicity and Ease of Implementation; Deliverable:Presentation materials for workshops. > Customer Understanding; > Minimizing Customer Impacts and Raak Current Rate 1 ClassGntiun Objective Alternative 1 :ll�maGve 2 Total Stmctare > Affordability for Essential Use. 1 Financial Sufficient A A- A- E c 2 Revenue Stability A- B+ A It is important to note that several of these pricing e 3 Equitable Contrib fmm New Customers B. B A objectives can conflict with each other, especially a Cost of Service Based Allocations A A A r� with conservation rate structures. For example, a > s Defensitrili c+ A- A- rate philosophy focused on improving revenue sta- 6 Rate Stability C A- A- 7 Conservation/Demand Management C A- A bility may conflict with minimizing customer im- 8 Minimization of Customer Impacts A EB+ A- pacts. RFC will discuss the implications so that 9 Ease of implementation A C stakeholders can make informed decisions. 10 Sim le to Understand and U date A B- 11 Afforda '' to Disadvanta ed Customers C B As a result of conducting this type of workshop with 12 Economic Devel ment B B numerous other clients, RFC has developed a proc- OVERALL SCORE B+ l 1 RAFTELIS FINANCIAL CONSULTANTS,INC.107 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY SCOPE OF WORK ............................................................................................................................................................................................................................................................................ This task involves performing bill frequency analysis to determine the usage patterns, Detailed Review of usage block sizes and seasonal usage differentials for different customer groups, I and evaluation of the District's financial situation.In addition,this task will include de- ng Rate Struc- velopment of specifications for a customized financial planning and rate model for TASK tune and Financial financial projections, and policy issues associated with the implementation of the 3E 'sInformationxtl proposed water rate structure and future rate adjustments. ............................................................................................................................................................................................................................................................................. Task 3.1: Perform Bill Frequency Analysis !_ I WATER BU MSTOGRAM To help the District gain a better under- Total Bills standing of the consumption trends, RFC 35% - Median Usage = 54 ccf will examine the usage patterns of the dif- 30% ferent customer classes and the associated Average Usage= 80 ccf usage peaks. A sample water bill histogram 25% 23% is shown to the right. For example, 16% of 20% -:17% the water bills have monthly consumption 16% between 25 and 50 hcf. This kind of analy- 15% 13% 11% sis allows better decision-makingregarding 10% 10% rate design and analysis of customer impacts. 55o 5% Based on this historical analysis and plan- 5% 0% 0 0 OV ning data, the Project Team will develop 0% tu LIJ I projections of future water consumption. 5 10 25 50 75 100 250 500 750 1,175 Task 3.2: Evaluate and Recom- Monthly Billed Consumption Blocks (hcf) mend Financial Policies and Pro- grams As part of this task, RFC will evaluate the District's operating > Scenario Manager—RFC models have the ability to create, and capital reserve requirements, financial and rate policies save and compare different financial scenarios for ease of and recommend appropriate changes to the existing policies understanding impacts. that will allow the water utility to most effectively meet its fi- > Models multiple rate structures for different customer classes; nancial goals. These financial policy requirements will include > Provides flexibility to change various assumptions by year; identifying appropriate target reserve levels for the water util- > Calculates rates for multiple years and updates rates annu- ity's operating and capital programs; when these reserves can ally with ease; be used; infrastructure replacement funding from operations; > Flags errors and problematic results such as failure to meet debt funding of Capital Improvement Program (CIP),if need- debt coverage,reserves below target levels,etc.; ed; and debt service coverage designed to allow the District > Performs sensitivity analyses and runs various scenarios so to meet its financial objectives and goals while achieving im- that impacts can be viewed in real-time with built-in screen proved rate stability and revenue sufficiency. graphics;and > Provides ease of input,report printing,update,understand- Task 3.3: Development of Model Specifications ing,administration. RFC understands the importance of developing a user-friendly, flexible Model that the District can use for future financial plan- RTC rate models are customized to fit the specific needs and ning and rates development.Following are some of the features unique characteristics of the District.They contain a variety of of our rate Model: user friendly features including report generation,scenario anal- RAFTELIS FINANCIAL CONSULTANTS,INC.108 YORBA LINCDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY SCOPE OF WORK ysis and Dashboard functionality. The Dashboard is a custom- screenshot of a Dashboard from a previous project follows. built analytical tool that allows the model users to make changes to critical variables and see the resulting impacts instantly on Meeting/Conferenee:At least one phone conference with District staff the various elements of the District's financial plan. A sample Deliverables:Bill Frequency Analysis and Model Specifications _Q 1VT * Y •1 _,A Zero Selected Variables Re.e -:•No of years Display in Charts 5 Select year to show Financial Structure) 201 Umin Current Rr• � �� He.,ldtu.lmrn/.A Urhl t'w rragr FINANCIAL PLAN fa+.-r.m rtr-.•.:,. -4 c xsou P11113AiC7lUlly a�t a -o(>`0 20ou fnlT�#1� -�-fe9�n � Isor< '•,',N,17" ,s•Ag• \ o o ��II =sox sJo mil_-......__ _..-_. ....,..... __._.. .�.ow s. �_:., __ __.__ _.._,,.:• .,. _ t'ax mw zou : 1 _t roro :ou :oJR :m Rev Aehmts ­cluvl DILL CoverdV.e J. GDaM E.pemn ®De4:5ervrtes CiPn:rvn FvmJln¢� ,� --Renulrrd Drhl CDver.gr l')h% t'r Alert Dehf Covrragr 111 oril c.irrrnt Rrmnuea rvroRnsr�Rev..+ue; Mllhone RESERVES CIP Expenditures $ao $30 _ sat :.` IIIII�IIII r�uc $20 -< 54 • I J �6 $10 § ®Total Reserve Balances —1 i .Ld"•�io r�".itRQ�? _r � oAlmrt Reserve Balance � .DemfmRRclog nra�� Rev AdJmts / r�;"r~'\IO% 9% 9% 9% 9% D% r"�-•�y"rr�r"�"'-".y"y" (a re��t 0% f'New Debt ;�� n_1,N.•9N:ytlJ - s s a,aoo,000 s - s - $ - $ t'� ., y yr i Cam• ............................................................................................................................................................................................................................................................................ The objective of this task is to develop a forecast of water revenue requirements for a five-year planning horizon.This will include forecasting annual operating and main- Develop Forecast Of : tenance(O&M)expenses,reserve contributions,review of the water master plan to Annual Water ReV- identify capital outlays,pay-as-you-go capital items,and annual debt service.Also,as TASK 4enue Requirements part of this task,RFC will develop cash flow analysis and recommend reserve levels. .................................................................................................:........................................................................................................................................................................... Task 4.1: Develop Revenue Requirements ment subsidies,or infrastructure bank loans will be provided as This task will include the projections of budget items, such as options. Projecting revenue adjustments over a long planning annual costs related to sources of water supply, labor, power, horizon can illustrate future rate impacts and potential chal- materials,capital expenditures,plant investment,operating and lenges to the District's financial situation. This will allow the maintenance (O&M) expenses, reserve contributions, depre- District to make adjustments to expenses, reserve balances or ciation and debt service using assumptions based on different schedule capital projects to smooth rate impacts and maintain economic factors and growth trends. financial stability. RFC will develop a forecast of water revenue requirements over Task 4.2: Develop Multi-Year Cash Flow Analy- the planning horizon.This will include an estimate of revenues sis and Recommend Reserve Balances based on current rates, usage characteristics, and other non- RFC will develop a multi-year cash flow analysis to determine operating revenues. Revenue requirements will be projected the revenue adjustments needed to meet projected revenue over the rate-setting period based on historical results,the cur- requirements for the planning period, minimizing sharp rate rent budget, District's capital improvement plan, the utilities' fluctuations. The cash flow worksheet incorporates revenues existing debt service, other obligations and current economic generated from different sources, expenses needed to maintain trends. Capital cost financing from rates debt, grants, govern- the water system,any transfers in and out of the water enterprise RAFTELIS FINANCIAL CONSULTANTS,INC./09 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY SCOPE OF WORK fund, as well as the coverage needed to meet current and pro- Meeting/Conference:At least two GoToMeeting web conferenc- posed debt service requirements.RFC will also review reserves es and one on-site meeting with District staff policies to recommend appropriate reserves balances, such as Deliverables: 5-year Financial Plan Model and Proposed Rev- operating, capital,rate stabilization, etc., consistent with indus- enue Adjustment Schedule try standards and the District's risk management practice. ..................................................................................,.......................................................................................................................................................................................... As part of this Task,RFC will review water customer classifications for appropriateness,re- view and analyze historical customer class usage characteristics and peaking characteris- tics of different classes,and allocate cost of service to customer classifications.The cost of TASK 52onoasity O�Service service allocations will be based on either the Commodity Demand or Base-Extra Capac- SlS ity approach which are both consistent with American Water Works Association standards. ..................................................................................{ RFC will discuss the difference between these approaches and based on discussion with > Review historical data and peaking staff will determine which methodology is most appropriate for the District. characteristics Throughout the cost allocation process, RFC will comply with District policy considera- > Allocate costs to functional compo- tions, procedures, and currently known federal, state, and local rules, regulations, and nents guidelines.Additionally, RFC will ensure that all proposed rates are in compliance with > Calculate unit costs Proposition 218.Although not a law firm, RFC is very familiar with Proposition 218 and its > Allocate costs to customer classes implication on water rates. ..................................................................................i.......................................................................................................................................................................................... Task 5.1: Review Customer Class Usage Pat- Task 5.3:Allocate Functional Costs to Cus- terns and Determine Customer Classifications tomer Classes RFC will review and analyze historical water consumption,rev- Next,the costs associated with the functional components will enue records, and billing summaries to determine water usage be allocated to the various customer classifications on the ba- and peaking characteristics by customer class or subclass. We sis of the relative responsibility of each classification for service will then estimate the relative responsibility of each customer provided.Costs will be allocated based on the determination of class for each of the functional cost elements. This allocation units of service for each customer classification and the applica- will be based on billing summary data, other locally available tion of unit costs of service to the respective units.Throughout data which may be applicable,and RFC's experience with other the cost allocation process,RFC will comply with District poli- utilities exhibiting similar usage characteristics and patterns. It ties, and currently known regulations, and guidelines applica- will provide the basis for equitable cost allocations to each cus- ble to charges for water service.Additionally, RFC will ensure tomer class or subclass. that the proposed rates are in compliance with Proposition 218. RFC has many years of experience in developing cost of service Task 5.2:Allocate Costs to Functional Cost based rates that are in compliance with Proposition 218. Categories RFC will functionalize the costs into main functions such as Deliverables: Cost of Service Analysis, Cost Allocation by Cus- supply,transmission&distribution,storage,etc. The costs will tomer Class then be allocated to cost centers such as commodity,maximum hour, maximum day, customer service, meter capacity, etc. to determine the unit cost for each cost center. RAFTELIS FINANCIAL CONSULTANTS,INC.(10 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY SCOPE OF WORK ................................................................................................................................................................................................................................I.......................................... It is our understanding that the District Board will make a decision regarding which rate struc- ture to implement-an inclining block or water budget rate structure. RFC has described the tasks associated with both. Based on the pricing objectives and District policies, RFC will TASK Rate Structure design rate structures that meet the District's requirements taking into consideration the im- 6Design pacts on customers. ............................................................................................................................................................................................................................................................................ Task 6A: Inclining Block Rate Structure and/or meter size. The model will determine the required rate Task 6A.1. Data Process for each tier to collect the required revenue. To ensure that impacts from an inclining rate structure are properly determined, it is important to review consumption Task 6A.3.- Calculate Associated Customer Im- patterns to determine the revenue from different tiers and un- pacts derstand customer impacts. To develop this sample, RFC will RFC will determine the potential financial impact on custom- utilize three to five years of historical normalized consumption, ers that may result from the proposed rate structure.The model as identified in Task I and determine the changes under the will include a series of tables and figures that show projected current rate structure and proposed rate structure to determine rate impacts on different types of customers at different levels customer impacts. of usage.An example illustration is shown. Task 6A.2. Model Development Meetings: None RFC will develop an inclining block rate structure model with Deliverable:Draft copy of inclining Water Model in Microsoft Ex- the flexibility to change the tier widths based on customer class eel®2007 Sample Customer Monthly B110s at various usage levels $450 $400 7—Commodity $350 -Senfice Charge $30D —Current Bill $2250 $2ffl $101) $50 _ � � I ! � !. 0 5 15 30 50 75 100, Monthly Billed Usage(ccf) RAFTELIS FINANCIAL CONSULTANTS,INC. 11 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY SCOPE OF WORK Task 6B: Water Budget Rate Structure Task 6B.11. Water Budg- et Framework Workshop It is important that the stakehold- ers are involved in the process of designing an equitable water budg- et framework,and informed about different potential policy options and the associated implications of each policy option. RFC with Tom Ash, one of the leading con- sultants in implementing water budget rate structures that are eq- uitable and politically acceptable, 4, will conduct a workshop with the District Board and Staff to discuss different water budget methodolo- gies and policy options to design the water budget framework. The results of the workshop will be used as guidelines to develop a wa- ter budget rate structure. Task 6B.12. Identify Vari- ous Water Budget Methodologies The task of identifying water budgets is often driven by the ables including: degree of variability within customer classes and the availabil- > Average residential density per household or actual residen- ity of data. If the customers within a customer class are largely tial density per household the same, some assumptions can be made about the class as a > Average water use per capita per day whole when determining the budgets.This can be the case with > Average irrigation area per household or actual irrigation the residential customer class, in which general assumptions area per household can be made to develop water budgets.Accounts dedicated for > Type of plants irrigation will have outdoor water budget only,which takes into > Irrigation efficiency account irrigation areas,weather data,and plant type and irriga- > Average EvapoTranspiration(ET)data or real time ET data tion efficiency after adjustment for drought factors to account > Drought factors for different levels of conservation. Commercial customers are often more varied and, therefore,their budgets are often based other methods of determining water budgets based on median on historical usage. usage,meter size or historical usage will be discussed. A good starting point for identifying water budgets for commercial Water budgets for residential customers can be determined us- customers is using historical usage pattern via a rolling 3-year ing a complex equation that takes into account numerous vari- monthly average. RAFTELIS FINANCIAL CONSULTANTS,INC./12 YORPA LII`DA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY SCOPE OF WORK Task 6B.1.3:Develop Water Budget Framework three to five years of normalized historical consumption, as As part of this task, RFC will hold a workshop with District identified in Task 1 and determine the changes in bills under staff to develop the water budget framework that best fits the the current rate structure and the proposed water budget struc- District's objectives and goals.This will include the water budg- ture to determine customer impacts. Monthly consumption et formula to define indoor and outdoor allocation and how will be tied to the appropriate historical average ET data. the associated tiers will be defined.For instance,residential ac- counts could have tier 1 defined as the indoor allocation,tier 2 Task 6B.3:Model Development defined as the outdoor allocation and tier 3 as a percentage of Based on the water budget framework developed in Task the total indoor and outdoor allocation. 6B.1.4,RFC will develop a Water Budget Rate Model that will calculate revenue and customer impacts, and conduct sensitiv- The success of a program also depends on the ability to meet ity analyses. The model will utilize normalized representative the customers' expectations for service.Water budgets are dy- samples from Task 6B.2 and the associated landscape area for namic. Changes in household size for residential customers or each account. The Water Budget Rate Model has the following new regulations for commercial customers can both necessi- features: tate adjustments in a customer's water budget. It is important > Allocation for Water Budget.The ability to change the de- to have a system in place that allows customers to petition for fault values for the water allocation factors, such as gallons an increase in their water budget.Variance programs will help per capita per day or the percent of ET allocated for land- to increase the accuracy of both indoor and outdoor water scape area.The model will have the ability to change the ET budgets and customer acceptance,as well as to address unique adjustment factor for outdoor water use by customer class. circumstances and exceptions for some customers who genu- > Cost of Service Analysis. As discussed in Task S. inely need larger water budgets. Such customers include those > Revenue Analysis. The model determines the percent of with special medical needs,higher densities or larger irrigation revenues recovered in each tier and the associated price for demands. RFC will also provide some insightful recommen- each tier.In addition,the model will be able to easily update dations regarding the variance programs from previous expe- tiered rates, based on the future revenue requirements. For riences at Palmdale Water District, Rancho California Water instance, MWDOC rates could be updated and the associ- District,Eastern Municipal Water District,Western Municipal ated new rates calculated. Water District,and El Toro Water District. Task 6B.4:Calculate Associated Customer Im- Task 6B.1.4: Prepare Memo on Water Budget pacts Framework The potential financial impact on customers that may result RFC will summarize the workshop on the recommended water from the proposed rate structures will be determined.The mod- budget framework that best fits the District's needs.A concise els will include a series of tables and figures that show projected memo will be provided that contains a detailed explanation of rate impacts on different types of customers at different levels all the components used in developing water budgets and the of usage.These figures provide an invaluable tool for evaluating associated tiers. how the recommended rates are impacting targeted customer groups and/or levels of usage to ensure that conservation and Task 6B.2.Data Process other pricing objectives are being addressed effectively. One of the main challenges of developing a water budget model is having a representative sample of accounts and Meetings.One Water Budget Workshop consump-ition patterns that can be utilized to determine which Deliverable.Draft copy of Water Budget Model in Microsoft Ex- tiers the bills will end up, the generation of revenue and cus- cel®2007 tomer impacts. To develop this sample, RFC will utilize the RAFTELIS FINANCIAL CONSULTANTS,INC./13 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY SCOPE OF WORK ................................................................................................................................. TASK to change variables such as the gallons per capita per day for 7Rate Design Workshop indoor usage and the ET adjustment factor for outdoor al- .................................................................................................................................: locations. Issues such as revenue stabilization can also be ad- Task 7A Development of Rates dressed.The ultimate goal of this meeting is to develop a final Following the completion of the water budget or inclining recommendation of a water rate structure and rates,which will block rate model, RFC will hold up to two conference calls / be presented to the Board for approval. GoToMeeting"with District staff to develop different conser- vation rate scenarios. The goal of these conference calls is to Task 7.2: Finalize Rates identify conservation rates that will be presented at Rate De- After the Workshop, RFC will incorporate all the changes and sign meetings. feedbacks into the Rate Model and provide the District with the final water rates to be presented to the Board. During the Rate Design meetings, RFC will present the pro- posed rates and discuss the benefits and challenges associated Meetings:Up to two(2)conference calls and one(1)half-day Pate with each.RFC will demonstrate the Conservation Rate Mod- Design meeting with District Staff el. If the District proceeds with a Water Budget rate structure, Deliverable:Water Budget Rate Model in Microsoft ExcelO 2007- the model will include interactive manipulation of the model Proposed Pates,Revenue Analysis and Customer impactAnalysis ............................................................................................................................................................................................................................................................................ The goal of this task is to present final recommendations to District Staff and Board and pre- TASK pare reports detailing the results of the study.RFC will attend the public hearing and also dis- 8Rate Adoption cuss guidelines for staff training and customer service issues related to implementation. ........................................................................................................................................................................................................................I.................................................... Task 8A Present to District Board methodologies used to develop the user rate calculations and fi- RFC will assist staff in presenting the results of our study dur- nancial planning will be included.Comments and changes from ing a work session with the District Board prior to providing the District staff will be incorporated into the Final Report, public notification of the proposed water rates. The presenta- which will be refined to reflect appropriate issues or concerns tion will highlight the collaborative process used to identify raised by stakeholders.The final report will be submitted to the and prioritize the important issues facing the District and its District and will include appropriate supporting data from the water utility as well as the financial policies that will serve as Model to address the requirements of Proposition 218. framework for the financial plan.The proposed water rate struc- ture and the results of the financial plan will also be presented. Task 8.3: Public Hearing RFC will attend and assist staff to make a presentation at one RFC will hold discussion with staff to provide guidelines for (1)public hearing to District Board on the adoption of the new training on the new rate structure and adddress issues related to rate structure. RFC has assisted numerous agencies all over responding to customer concerns and handle variances. California with the adoption of conservation rate structures. Recent examples include the Cities of Beverly Hills,Redlands, Task 8.2: Finalize Model and Prepare Report Torrance,and San Diego. The process for developing the financial plan and proposed rate structures along with preliminary rate recommendations will Meeting/Conference:At least one phone conference with Dis- be described in a preliminary report of findings and recom- trict Staff,one on-site workshop with District Board and one public mendations. This preliminary report will include an executive hearing meeting summary highlighting the major issues and results of the study. Deliverables:Draft and Final Reports,Public Hearing Attendance A comprehensive section on the rate design assumptions and RAFTELIS FINANCIAL CONSULTANTS,INC,/14 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY PERSONNEL PROJECT MANAGEMENT TECHNICAL REVIEWER FERSO H K FL a-o 0Q Our proposed project team is comprised of individuals each of whom has an advanced degree and is an experienced professional with skills in water cost of service and rate setting.To effectively PROJECT STAFF WATER BUDGET EXPERT meet the District's objectives,we have organized a project team with extensive management and financial experience with municipal wa- 0009k4 ter utilities.This project team has more than 90 years of combined experience and has completed more than 400 cost of service and � p o o rate design studies.We have included Tom Ash on our team as a subconsultant serving as a water budget expert.We have provided an organizational chart and brief summaries of the responsibilities 0 of each of the team members.See Appendix B of this proposal for more detailed resumes of each project team member. Mr.Sudhir Pardiwala, PE-Vice President/Project Manager > Master of Business Administration,University of California-Los Angeles > Master of Science in Chemical Engineering,Arizona State University Mr. Sudhir Pardiwala is a nationally recognized expert in water and wastewater finance, Mr.Pardiwala will be responsible for management and pricing. He has over 30 years of experience in financial studies and en- managing this project and ensuring gineering. He has conducted more than 300 water, wastewater, reclaimed water and it is within budget,on schedule and storm water rate studies as well as connection fees including fire,park,traffic,library, and satisfactory to the client. planning impact studies. He has assisted numerous agencies with conservation pricing, drought management, and capital improvements funding through grants and low interest SRF/DWR loans. He is a member of the AWWA Finance,Accounting and Management Controls Committee and authored a chapter on recycled water rates in the Manual of Practice titled"Financing and Charges for Wastewater Systems"published by the WEF.He is the past chairman of the CA-NV AWWA Financial Management Committee and vice-chairman of its Business Management Division. .......................................................................................................................................................................................................................................................................... Mr.Sanjay Gaur, Manager- Deputy Project Manager& Primary Contact > Contact Information:phone:213.327.4405;fax:626.583.1411;email:sgaur@raftelis.com > Master of Public Administration,Harvard University > Master of Science in Applied Economics,University of California-Santa Cruz Mr. Gaur will work closely with Mr. Mr.Sanjay Gaur is one of the leading California rate experts with more than 1S years of Pardiwala to manage the project and experience. His extensive experience spans financial rate studies,cost of service,conser- ensure it is within budget,on schedule vation rate structure,including water budget rate design and connection/development an satisfactory to the client. fees. Mr. Gaur is active in a number of utility-related associations. He is a member of the American Water Works Association's (AWWA) Rates and Charges Committee. He has also participated as a speaker at a number of conferences regarding the design of utility rates,including those held by the As- sociation of California Water Agencies, California Society of Municipal Finance Officers,Municipal Management Association of Southern California and the American Water Works Association. Mr.Gaur has served as a guest lecturer for a graduate level Water Policy class at University of Santa Barbara. RAFTELIS FINANCIAL CONSULTANTS,INC./15 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY PERSONNEL Mr.George Raftelis, CPA- Chief Executive Officer/Technical Reviewer > Master of Business Administration,Duke University Mr. Raftelis has more than 3S years of experience in environmental finance, As Technical Reviewer, Mr. Raftelis strategic planning, resource conservation and related areas. He has served as would be responsible for making sure Partner-in-Charge, Project Manager, Technical Reviewer or Lead Consultant the methodology and approach meet on projects for more than 300 government utilities in the United States,Can- industry and RFC standards. ada,United Kingdom,Bulgaria and the Caribbean.Mr.Raftelis has been very involved in the water and wastewater industry associations.He has held numerous leadership positions and has served the chair of American Water Works Association's(AWWA)Management Division and the Rates and Charges Commit- tee.In addition,Mr.Raftelis has written a text entitled,Water and Wastewater Finance and Pricing:A Comprehensive Guide (Third edition)which has become an authoritative document for establishing utility financing plans and pricing structures. He also co-authored the AWWAs Revenue Requirements Manual and is often quoted in industry and fi- nance publications and at industry forums. ..................................................................................................................................................................................................................................................... Ms. Khanh Phan - Senior Consultant/Lead Consultant > Master of Business Administration in Finance,California State University-Los Angeles > Bachelor of Science in Chemical Engineering,University of California-Berkeley Ms.Khanh Phan has served as a consultant on several water and wastewater cost of serv- Ms.Khanh Phan will assist Mr. Pardiwala and Mr.Gaur in the ice rate studies,connection fees and reserve policy studies. Specific experience includes implementation of the study. projects for the following utilities: the cities of Banning and Livingston, and El Toro Water District and Goleta West Sanitary District in California; and water budget rates for Palmdale,Rancho California,El Toro Water District and Western Municipal Water District in California. She possesses strong analytical and managing skills acquired from her background,education and experience. Combined with her ad- vanced computer skills,Ms.Phan performs an excellent job as a modeler. .................................................................................................................................................................................................................................................... Mr.Steve Vuoso - Senior Consultant/Support Analyst > Master of Business Administration in Finance,San Diego State University > Bachelor of Arts in Philosophy,Loyola Marymount University Mr.Vuoso has served as a lead or staff consultant on several water and wastewater Mr.Vuoso will assist Ms.Khanh rate and development impact fee studies including Beaumont-Cherry Valley Water Phan in the development of the District,Santa Fe Irrigation District,and the cities of San Francisco,San Diego,and appropriate models. Ontario in California; and North Las Vegas and Henderson in Nevada. He has re- cently complete drought rate studies for the City of San Diego,the Santa Fe Irrigation District,and the San Dieguito Water District and assisted with budget rates for the Palmdale Water District. Mr.Vuoso has extensive experience in financial modeling,financial accounting and application development. RAFTELIS FINANCIAL CONSULTANTS,INC.1 16 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY PERSONNEL Ms. Hannah Phan - Consultant/Support Analyst > Master of Business Administration in Finance,California State University-Los Angeles > Bachelor of Science in Business Administration,California State University-Los Angeles Ms. Phan has served as a consultant on several water rate studies and cost of service studies. Specific experience includes projects for the following utili- Ms. Hannah Phan will assist Mr.and Ms. Khanh Phan in gathering the the ties:the cities of San Diego,Santa Monica,Ontario,Escondido,Redlands and appropriate information. Banning, the Goleta West Sanitary District, California and the City of North Las Vegas,Nevada.Ms.Phan has an MBA and is an experienced modeler. ..................................................................................................................................................................................................................................................... Mr.Tom Ash -Water Budget Expert > Bachelor of Science in Ornamental Horticulture,Cal Poly Pomona Mr.Ash has over 2S years of experience in the fields of water use efficiency,pub- Mr.Ash will provide the team with lic education and horticulture'. On loan as a water conservation specialist from water budget consulting services. the University of California Cooperative to Western Municipal Water District, the first water conservation demonstration garden was designed with Tom as the first director. The national acclaim put water conservation in a 6 year drought on the map. The Irvine Ranch Water District requested the University to move Tom to Orange County where he was instrumental in the design and implementation of the water budget tiered rate structure that has been described as"the model"for such rates in the US.The Irvine Ranch Water District rate structure helped to reduce landscape water by some 58%in a few short years,stabilized agency revenues and grew customer satisfaction to over 90%.Mr.Ash created and implemented the rate structure allocations, public outreach, and conservation programs that supported the rate structure for home- owners, homeowner associations, the building industry, agriculture and commercial water users. Mr. Ash assisted the AWWA with a 2008 study of water budget rate structures,was an advisor to the US Drought Policy Task Force in 2003 and assists numerous water agencies with the design and implementation of water budget rates today. RAFTELIS FINANCIAL CONSULTANTS,INC./17 YORBA L.INDA WATER DISTRICT COST OF SERVICE AND WATER DATE STUDY RELEVANT EXPERIENCE G�ELEVQNT IMPEILro"HEN RFC has provided assistance to numerous utilities in California and across the country.The table below shows a partial list of utilities in California that we assisted. In addition,we have provided detailed descriptions of a sample of relevant projects that RFC and/or our staff has performed which are similar in nature to the Yorba Linda Water District project.We have also provided references for each of these projects and urge you to contact them to better understand our capabili- ties and the quality of service that we provide. Anaheim,city of Water ✓ ✓ ✓ Arcadia,City of Water ✓ ✓ ✓ Atwater,City of Water&Wastewater ✓ ✓ ✓ ✓ Beaumont Cherry Valley Water District Water&Conneciton Fee ✓ ✓ ✓ ✓ ✓" Banning,City of Water,Wastewater,&Recycled Water ✓ ✓ ✓ ✓ ✓ Beverly Hills,City of Water&Wastewater ✓ ✓ ✓ Brea,City of Water ✓ ✓ ✓ Casitas Municipal Water District Water I Castroville Water distirct Water&Wastewater ✓ ✓ ✓ Chowchilla,City of Water&Wastewater ✓ Corona,City of Water&Wastewater ✓ ✓ ✓ El Toro Water District Water&Wastewater ✓- ✓ ✓ ✓ Encinitas,City of Water ✓ ✓ ✓ Escondido,City of Water ✓ ✓ ✓ Goleta West Sanitary District Wastewater ✓ ✓ ✓ ✓ ✓ La Canada Irrigation District Water ✓ ✓ ✓ Livingston,City of Water,Wastewater,&Solid Waste ✓ ✓ ✓ Los Angeles Department of Water and Power Wheeling Charges ✓ Madera,City of Water&Wastewater ✓ ✓ ✓ Metropolitan Water District Water ✓ Olivenhain Municipal Water District Water&Recycled Water ✓ Ontario,City of Water,Wastewater,&Solid Waste ✓ ✓ ✓ Palmdale Water District Water ✓ ✓ ✓ Poway,City of Wastewater ✓ - Rancho California Water District Water ✓ ✓ ✓ Redlands,City of Water&Sewer _ ✓ ✓ ✓ ✓ ✓ ✓ Sacramento,City of Sewer ✓ ✓ ✓ ✓ Sacramento Regional County Sanitation District Sewer ✓ ✓ San Bernardino County Water&Wastewater ✓ ✓ ✓ ✓ Santa Clara Valley Water District Water ✓ ✓ ✓ ✓" City of San Diego Water, Wastewater, Recycled Water, ✓ ✓ ✓ ✓ ✓ ✓ Demand Projection,&Transportation San Diego County Water Authority Wheeling Charges,Valuation ✓ ✓ ✓ ✓ San Francisco Public Utility Commission Water,Wastewater,&Recycled Water ✓ ✓ ✓ ✓ Santa Monica,City of Wastewater ✓ ✓"' ✓ ✓ Simi Valley,City of Water ✓ ✓ ✓ Santa Fe Irrigation District Water ✓ ✓ ✓- Torrance,City of Water&Recycled Water ✓ ✓ ✓ Triunfo Sanitation District - Water&Wastewater ✓ ✓ ✓ Western Municipal Water District Water ✓ ✓ ✓ RAFTELIS FINANCIAL CONSULTANTS,INC./18 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY RELEVANT EXPERIENCE Services Provided Pa0mda0e Water Distilct QCAJ • Budget rate study The Palmdale Water District(District)receives imported water primarily from the California • Billing system State Water Project(SWP). The SWP is cutting back on deliveries because of the drought in evaluation California. To prepare for the reduction of water supply,the District wanted to implement • Financial policies budget-based rates even though it had a five-tier rate structure.The average use in the District, which was primarily residential,was over one ac-ft per account per year.The District engaged Client Reference RFC to help design budget rates and Mr.Curtis Paxton assist with the implementation includ- Assistant General ing the billing system. RFC presented Manager a conceptual design evaluating various Phone:661.947.4111 x 146 alternatives based on the pricing ob- jectives of the District. Budgets were based on average population density for indoor allocations and weather data along with irrigation area for outdoor allocations and historical usage for commercial custom- ers.The irrigation area was determined based on a percentage of the total parcel area acquired from the District's geographical information system (GIS).The formula for developing allo- cation budgets considers irrigation efficiency and type of landscape. The whole concept is to encourage efficient use of water and to provide users adequate water but penalize wasteful practices. The District uses the Cogsdale billing system. RFC interfaced with the Cogsdale staff and provided specifications to ensure that the budget rate structure could be smoothly imple- mented.Our study indicated that changes to the billing system were readily implemented at very minimal cost. One aspect that we worked on involved staff training to address customer concerns.With the new rate structure,it was anticipated that there would be numerous cus- tomer inquiries,and for the rate structure changes to be successful,it was necessary to satis- factorily address customer concerns. RFC developed a rate model that allowed the District to quickly view the impacts of alternate rates and budgets.This tool was invaluable when presenting results to the District Board of Di- rectors so that they could see the impacts of revenue adjustments,rate structure changes and financing options on their customers. RAFTELIS FINANCIAL CONSULTANTS,INC.f 19 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY RELEVANT EXPERIENCE Services Provided Rancho CaMorMa Water MsMct QC A) > Water budget rate Rancho California Water District (District) study recently engaged RFC in a water budget rate > Model development i study to design a water budget rate struc- Client Reference ture for its 35,000 residential and irrigation Mr.Jeff Amstrong accounts in both Rancho and Santa Rosa ; Chief Financial Officer Divisions. Budgets were based on average 5 Rancho California Water population density for indoor allocations and X" District weather data along with irrigation area for . - Phone:951.296.6928 outdoor allocations. The formula for develop- Mr.Matt Pressey € ing allocation budgets considers irrigation ef- Accounting Manager ficiency and type of landscape. The whole concept is to encourage efficient use of water and Rancho California Water to provide users adequate water but penalize wasteful practices. District Phone:951.296.6932 RFC assisted the District in evaluating different methodologies to allocate its water sources, mainly imported water and groundwater,to different customer classes. RFC also performed numerous analyses on the usage and landscape area relationships to create a rational land- scape area cap for residential accounts. RFC consulted the District in developing the vari- ance programs to accommodate customers'inquiries about their water budgets. In addition, RFC thoroughly analyzed the associated impacts of the proposed water budget rate on the District's finances and its customers so the policy makers could make informed decisions. RFC developed a water budget rate model that allowed the District to quickly view the im- pacts of alternate rates and budgets. The water budget rate structure was designed to ensure revenue stability, financial sufficiency and conservation program funding for the District. This tool was invaluable when presenting results in graphical format to the District Board of Directors so that they could see the impacts of different water budgets,different water source allocation methodologies and different landscape area caps on their customers in real-time. ........................................................_................................................................................................................................................................................................_ Services Provided Western IMuM( pap Water Mstftt QCA� > Water budget rate RFC is currently assisting Western Municipal Water District (District) in developing water study budget rate structure for its retail customers residing in the cities of Murrieta and Riverside. Client Reference The District imports most of its water from Metropolitan Water District of Southern Califor- Mr.Tim Barr nia(MWD). The ultimate objective of the study is to identify and thoroughly examine three n------ (3) potential water budget rate structures for each � ��" �', ��_j f * i ----- Manager I �,� of the two identified cost centers(Murrieta and Riv- Water Use Efficiency ;�. { =T' erside) that will later be presented to the Western's Western Municipal Water District =4 , 'i' executive management team and Board of Direc- Phone:951.789.5000 _ +� tors. RFC is developing a water budget rate model in Excel 2007 for each of the two cost centers that have the ability to change the default values for all water allocation factors, to provide revenue and impact analysis and to generate sample customer monthly bills under existing and proposed rates. At the end of the study,RFC will present the results to District Board in a workshop and provide justification to ensure that the Water Budget Rate Structure complies with Prop 218 requirements in a detailed technical memorandum. The Model will then be delivered to the District. User manual and training will also be provided. RAFTELIS FINANCIAL CONSULTANTS,INC.(20 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY RELEVANT EXPERIENCE Services Provided 0 Toro Water Mstftt QCA) > Water budget rate RFC has been assisting El Toro Water District study (District) with its rates for several years. The District recently engaged RFC to design a wa- Client Reference ter budget rate structure for its residential and Mr.Michael Grandy irrigation accounts to be implemented in July Assistant General Man- 2010.Residential water budgets include indoor ::ager/CFO allocations varying with number of occupants El Toro Water District and outdoor allocations varying with weather Phone:949.837.7050 data and irrigable area. The irrigation area was determined based on a percentage of the residual of the total parcel area minus building area acquired from the Assessors' database to be refined when better data is available for MW- DOC. The formula for developing allocation budgets considers irrigation efficiency and type of landscape. The whole concept is to encourage efficient use of water but penalize wasteful practices. RFC developed a water budget rate model that allows the District to quickly view the im- pacts of alternate rates and budgets, so that policy makers can make informed decisions. The water budget rate structure is designed to ensure revenue stability,financial sufficiency, and to provide the appropriate price signal on the different supply costs and conservation program funding for the District. This tool is invaluable when presenting results in graphi- cal format to the District Board of Directors so that they could see the impacts of different water budgets on their customers in real-time. It is expected that the Board will approve the water budget rate structure in May 2010. RFC assisted the District in developing variance programs to accommodate customers'with unique user characteristics. Lastly, RFC interfaced with the Continental Utility Solutions, Inc. (CUSI), the District's billing consultant,and provided specifications to ensure that the budget rate structure could be smoothly implemented. RAFTELIS FINANCIAL CONSULTANTS,INC.!21 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY PROJECT SCHEDULE&STAFF HOUR ALLOCATION PRIOJECTSCHEDU_�C RFC anticipates completion of the study to the final report stage within five(5)months from the contract award date. In the event that there are significant delays in information gathering,RFC will work with District staff to negotiate a re- vised schedule. The proposed schedule for the study is shown below. GStaol 14�1 o o Rc4C�jGbl 3 � f o eod1G � 4 ` . I CCfli �G�Lf 5 6A f Represents Meetings 8 Represents oae oc �^ � Public Hearing STAFF HOUR ALLOCA70 I The estimated hours of work required by each of our Project Team members for each task included in our Scope of Work are presented below. 9 D 9 10 8 12 - 6 36 10 - 12 -  - 22 99994 C4 RAhng FdTbFaJ o 4 - 10 14 12 24 - 36 e 8 - 16 -- - - 24 CJ Qnnej �, a 8 - 24 - - 32 CEO vNP- QGfbCOi 9 40 = - 112 10 - 162 10 - 14 - - 24 24 2 40 - 8 74 PM=Sudhir Pardiwala/Sanjay Gaur;TR=George Raftelis;FC=Steve Vuoso/Hannah Phan/Khanh Phan;TA=Tom Ash RAFTELIS FINANCIAL CONSULTANTS,INC.1 22 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE'STUDY APPENDIX A:FIRM OVERVIEW ............................................................................................................................. Pasadena Office O 201 S.Lake Avenue,Suite 301/Pasadena,CA 91101 p:626.583.1894/f:626.583.1411 Charlotte Office 1031 S.Caldwell Street,Suite 100/Charlotte,NC 28203 r p:704.373.1199/f:704.373.1113 a Kans s City Office I I Ji 3013 Main Street/Kansas City,MO 64108 p:816.285.9020/f.816.285.9021 WEAME www.raftelis.com ............................................................................................................................. Raftelis Financial Consultants,Inc. (RFC)was established in 1993 to provide national financial and management consult- ing services of the highest quality to public and private sec- tor clients. Specifically,we focus our services in the areas of environmental finance,utility financial 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 their most important issues. RFC is a corporation and is currently comprised of 29 staff members. RFC places a high priority on being responsive to our clients and, therefore, actively manages each consult- ant's project schedule to ensure appropriate availability for addressing client needs. RFC has three offices positioned strategically throughout the country to better serve our clients. As a consulting philosophy,RFC maintains the practice of providing senior level as- sistance to our clients. While,as neces- 41 li nary,we utilize staff support for specific ­ 11�`,`A 0271%:Lll-� -K data gathering and analysis functions,it is -Illy" not our practice to leverage our senior peo- 4L mr., ple with large teams of junior level consult- ............................................................ ants. Instead, we provide skills, expertise and The map above shows some maturity gained through many years of consulting experi- of the California utilities which ence to best meet our clients'needs. RFC staff has performed serv- ices for.RFC is the largest RFCs values include client satisfaction, teamwork, qual- utility financial consulting firm ity, responsiveness,integrity, innovation and knowledge. As in the State of California. such, our mission is to be the most highly regarded innova- tive leader in providing financial,economic and management consulting to utilities. RAFTELIS FINANCIAL CONSULTANTS,INC. 23 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY APPENDIX A:FIRM OVERVIEW Conservation Rate Design Specialists. We are the lead- ing experts on developing and implementing conservation rate structure. We understand the benefits and challenges WHVA - associated with inclining block rates, seasonal rates and wa- ter budget rate structures. We have performed or perform- ing water budget rate studies for Eastern Municipal Water District, El Toro Water District, Monterey Peninsula Water -VAKES Management District, Rancho California Water District, Palmdale Water District,Western Municipal Water District and cities of San Diego and Henderson. R—FJC National and State Experience.Our staff has consulted more than 400 utilities across the United States and conducted thousands of studies. In 2009,RFC worked on more than 200 UK ](2c) UIE projects for over 100 clients in 26 states. In California alone, RFC has performed hundreds of studies over the past 15 years. Depth of Resources.We have one of the largest rate study practices in the nation and in California. Local Experience.We have assisted numerous utilities in California with developing financial plans,cost of service studies and conservation rate structures. -- ��`• Industry Leadership. Our senior management staff is involved in shaping the indus- try standard by chairing various committees within American Water Works Association We have written one of the (AWWA) and Water Environment Federation (WEF). We have written one of the leading leading books on water and books on water and wastewater rate studies,Water and Wastewater Financing and Pricing wastewater rate studies,Water and co-authored other industry standard books,such as AWWA,M-1 Manual,Principles of and Wastewater Finance and Water Rates,Fees and Charges and WEF,Financing and Charges for Wastewater Systems. Pricing-A Comprehensive Guide(Third edition)and co- Modeling Experts. Due to depth of resources and experience,we have developed some of authored other industry stand- the most sophisticated and user friendly financial/rate models. These models are tools that and books,such as AWWA allow us to examine different policy options and their financial / customer impacts in real Manual M1, Principles of Water time. In a workshop environment,the model allows stakeholders to reach consensus quick- Rates,Fees and Charges and ly for different policy options. WEF,Financing and Charges for Wastewater Systems. Skilled in California Regulatory Requirements.The regulatory environment in California has .............................................................. become more stringent due to Proposition 218, the recent adoption of AB 2882-Allocation- Based Conservation Pricing,and AB 1881 -Water Conservation in Landscaping Act.RFC staff members are considered experts in this area. We have made presentations on these subjects at numerous conferences throughout California.In addition,we are frequently called on to be expert witnesses on these regulatory matters. Attitude. Our passion to produce high-quality work to the satisfaction of our clients has positioned us as the industry leader. Our goal is to exceed the expectations of our clients and continue to be the most sought after consulting firm in the industry. RAFTELIS FINANCIAL CONSULTANTS,INC.1 24 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY APPENDIX B:PROJECT TEAM RESUMES Alo_�PENDV O o FFr0__10J[ECr 7EAMF'_:D�ESUM�� Technical Specialties Sudhk Pardwa1 a, PE > Cost of service rate Studies Vice President as Project Manager > Conservation and drought management Studies Profile > Economic analyses Mr.Pardiwala has more than 30 years of experience in financial studies and engineer- • Water and wastewater utility cost ac- ing. He has extensive expertise in water and wastewater utility financial and revenue counting planning, and assessment engineering. He has conducted numerous water, storm > Valuation water, reclaimed water and wastewater rate studies involving conservation, drought > Financial and revenue planning management,risk analysis,as well as system development fee studies,and has devel- > Assessment engineering oped computerized models for these financial evaluations. Mr.Pardiwala has assisted > Reviewing/obtaining capital improve- public agencies in reviewing and obtaining alternate sources of funding for capital im- ment funding provements,including low interest state and federal loans and grants. He has assisted > Computer modeling several utilities with State Revolving Fund and Water Reclamation Bond loans. He authored the chapter on reclaimed water rates in the Manual of Practice on Financing Professional History and Charges for Wastewater Systems recently published by the Water Environment > Raftelis Financial Consultants,Inc.: Federation(WEF)and presented papers at various conferences. Vice President(2004-present) > Black&Veatch: Relevant Project Experience Principal Consultant(1997-2004) City of Redlands,California > MWH: Mr. Pardiwala has managed several financial projects for the City including water, Principal Engineer(1985-1997) wastewater and reclaimed water projects. The studies were conducted with extensive > CF Braun: stakeholder input. The first rate studies involved significant rate adjustments as well Senior Engineer(1979 1985) as rate structure adjustments to ensure financial stability,meet debt coverage require- • PFR Engineering Systems: ments, and regulatory requirements. The analysis included calculation of outside- Research Engineer(1977-1979) City charges and impact fees. The City received user-friendly working rate models for future updates. Mr. Pardiwala assisted the City with State Revolving Fund loans Education for reclaimed water and potable water. He helped them find grants for the reclaimed > Master of Business Administration-Uni- tiater project. versity of California,Los Angeles(1982) > Master of Science,Chemical Engineer- `• Beaumont-Cherry Valley Water District,California ing-Arizona State University(1976) Mr.Pardiwala served as Project Manager on a cost of service water rate study for the > Bachelor of Science,Chemical Engi- I Beaumont-Cherry Valley Water District. The region was experiencing rapid growth, neering-Indian Institute of Technology, i Bombay(1974) as much as 20-30%, and the District wished to ensure that its rate structure allowed them to recover all appropriate costs,support the rapid growth,and provide fair and equitable rates. RFC conducted a cost of service analysis to calculate rates for differ- Professional Registrations ent classes of customers. The District's water supply in the local groundwater basin > Registered Professional Engineer was limited and the basin was in overdraft. As a result the District was considering re- (Chemical and Civil)-California cycled water projects and importing water into the region. Mr.Pardiwala developed system capacity charges for new customers taking into consideration the new infra- Professional Memberships structure needed as well as the additional water supplies needed to provide service to > American Water Works Association new and existing customers. > Water Environment Federation > California Municipal Finance Officers City of Los Angeles,California Association € Mr.Pardiwala served as Project Manager on a wheeling charges study for the Los An- geles Department of Water and Power. The City was interested in determining the RAFTELIS FINANCIAL CONSULTANTS,INC./25 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY APPENDIX B:PROJECT TEAM RESUMES appropriate charges to be levied on various customers that may City of Beverly Hills,California wish to use the extra capacity in the City's system—from the Mr.Pardiwala served as Project Manager for RFC's engagement Los Angeles Aqueduct to the distribution network—to transfer with the City of Beverly Hills ("City"). RFC was engaged by water. the City to develop a rate and financial planning model that would be used to evaluate alternative rate structures and to City of Ontario,California provide more detailed forecasts to assist in the preparation of Mr. Pardiwala served as Project Manager on a water,wastewa- updating rates in future years. RFC modeled numerous alterna- ter and solid waste rate study.The study included a comprehen- tive rate structures and reviewed customer and revenue impacts sive review of the City of Ontario's revenue requirements and before recommending that the City modify its current three allocation methodology,review of user classifications,a cost of tiered rate structure to include a fourth tier that targets large ir- service analysis,and rate design for City users. rigation usage. In addition, RFC recommended that separate tiers be established for multi-family customers to reflect their City of Sacramento,California usage characteristics. RFC continues to provide updates to the Mr.Pardiwala managed a wastewater rate study to examine the model so that rates maybe projected in future years. charges associated with different types of residential and non- residential customers. The study included a comprehensive Clark County Water Reclamation District review of the City's revenue requirements and allocation meth- Mr. Pardiwala is Project Manager for a cost of service study odology, review of City's user classification, a cost of service for the District to help evaluate the current system of rates and analysis, and rate design for City users. Sacramento is one of charges to ensure that users were being charged appropriately. the few large Cities in the State that does not meter residential The District ahs not updated its rate structure system for many and a significant number of non-residential customers. The years and the current system based on fixture units is believed strength and flow allocation to these customers was revised. to need restructuring. RFC is managing the sampling and The resultant rates were fair and equitable and met the fiscal wastewater flow monitoring from different types of users to needs of the City's wastewater utility in the context of the City's determine the definition of an equivalent dwelling unit and the overall policy objectives and were designed for simplicity of flows from different types of users. There are multiple outreach administration,cost effective implementation and ease of com- meetings with member agencies and interested stakeholders to munication to customers. educate them on the process and to obtain buy-in. City of San Diego,California Mr. Pardiwala conducted numerous studies for the City of San City of Henderson,Nevada Diego, including a water,wastewater and reclaimed water rate Mr. Pardiwala served as Project Manager for the engagement study. The entire wastewater rate study was conducted with ex- with the City of Henderson ("City"). In Phase 1,RFC assisted tensive stakeholder group involvement because of the changes the City in conducting a Water and Wastewater Financial As- required in the wastewater rate structure to meet regulatory sessment. RFC developed a financial vision which will ulti- requirements. In addition, Mr. Pardiwala was project manager mately shape the utilities for the next ten years. As part of our for the City's reclaimed water rate study,impact fee studies for conceptual design process,RFC recommended several alterna- both water and wastewater,and a transportation charges study tive rate philosophies to be evaluated as part of Phase Il. The for agencies contributing to the City's regional wastewater facil- Model was also developed to evaluate certain rate philosophies ity. Mr. Pardiwala also managed a water demand study which and user charge structure modifications focused on improving involved statistical analysis of historical water consumption to the equitable recovery of costs from different user classes,legal model projections based on weather, economic activity,popu- defensibility of the rates and system development charges,rev- lation, inflation, etc. Mr. Pardiwala is currently evaluating the enue predictability, and conservation incentives. RFC devel- feasibility of a water budget rate structure for the City. He as- oped an allocation or budget for different meter sizes to ensure sisted the City with the Proposition 218 noticing and public that the tiered rates set up would fairly collect revenues from outreach. Mr.Pardiwala also participated in a management au- customers.RFC is currently updating the City's financial plan dit of the City's Utility Department. by participating in the City's rate implementation process. This includes presenting our final findings and recommendations to City Council and the Citizen's Advisory Committee. RAFTELIS FINANCIAL CONSULTANTS,INC./26 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY APPENDIX B:PROJECT TEAM RESUMES Other Relevant Project Experience > City of San Diego, California-Recycled Water Rate Study, > Beaumont Cherry Valley Water District, California-Water Valuation Study,and Water and Wastewater Financial Plan, Rate and Connection Fee Study Rate and Connection Fees Study,Litigation Support > Casitas Municipal Water District, California - Water Rate > City of San Fernando—Water and Wastewater Rates Study Study > City of San Francisco,California—Water,Wastewater Rate Study > Castroville Water District,California—Water and Wastewa- and Stormwater Incentives for Low Impact Development ter Rate Study > City of San Jose, California - Sewer Service Related Fees > City ofAtwater,California-Water and Wastewater Rate Study and Charges > City of Banning,California-Recycled Water Revenue Program > City of San Luis Obispo, California- Stormwater Financial > City of Beverly Hills,California-Asset Replacement Study, Feasibility Study Connection Fee Study, Conservation Rate Study,Valuation > City of Santa Monica,California-Wastewater Rate Study and Development of Replacement Program and Asset In- > City of Scottsdale,Arizona-Impact Fee Study ventory,and Water Rate Study and Update > City of Springfield,Oregon—Wastewater Rates Model > City of Brea, California - Water Rate Study, Connection > City of Upland,California-Valuation Study Fees and Related Fees and Charges Study > Clark County Water Reclamation District,Nevada-Cost of > City of Burbank, California - Bond Feasibility Study, Re- Service Study claimed Water Study,and Water and Wastewater Rate Study > County of San Bernardino,California-Water and Wastewa- > City of Carlsbad,California-Asset Replacement Study and ter Rate Study and Connection fees Water,Wastewater and Reclaimed Water Revenue Program > El Toro Water District, California - Water and Wastewater > City of Chino,California-Valuation Study Rates and Connection Fees > City of Chowchilla—Water and Wastewater Rates Study > Goleta Water District, California — Water Rate Study and > City of Cloverdale,California-Water and Wastewater Con- Connection Fees nection Fees and Rate Study > Goleta West Sanitary District, California - Asset Manage- • City of Corona,California-Water and Wastewater Rate Study ment, Connection Fees Study, Financing Plan, and Waste- > City of Encinitas, California - Water and Wastewater Rate water Rate Study Study > Metropolitan Wastewater Joint Powers Authority,California > City of Escondido, California -Valuation Study,Water and -Wastewater Valuation Study and Capacity Valuation Study Wastewater Rate Study > Napa Valley Sanitation District,California-State Revolving > City of Glendora,California-Water and Wastewater Finan- Fund Loan Assistance cial Planning and Rate Study > Olivenhain Municipal Water District—Water Financial Plan > City of Henderson, Nevada - Water and Wastewater Rate and Recycled Water Rates Study > Palmdale Water District—Water Budget Rate Study > City of Livingston, California—Water,Wastewater and Sol- > Portland Water Bureau,Oregon—Retail and Wholesale Wa- id Waste Rates Study and Litigation Support ter Rates Model > City of Los Angeles,California-Wheeling Charge Review > San Diego County Water Authority, California - Capac- > City of Madera,California-Water and Wastewater Rate Study ity Valuation,Rate Analysis,Valuation Study,and Wheeling > City of North Las Vegas, Nevada —Water and Wastewater Charge Study Rates Study and Model > San Gorgonio Pass Water Agency,California-Financing Plan > City of Ontario, California - Water, Wastewater and Solid > Santa Fe Irrigation District, California - Wastewater Treat- Waste Rate Study ment Plant Cost Evaluation,Water Connection Fees Study, > City of Redlands - Impact Fee Study, Non-Potable Water and Water Rate Study and Update Fee Study, Rocky MWC, Valuation and Lease Study, Bi- > Tacoma Public Utilities,Washington - 2008 Business Plan- annual Rate Updates,Reclaimed Water Funding,and Water ning Assistance and Financial Model and Wastewater Rate Study > Town of Windsor, California - Impact Fee Review, State > City of Rialto,California-Water and Wastewater Rate Study Revolving Fund Loan Application Assistance, Water and > City of Sacramento, California - Wastewater Rates Study Wastewater Connection Fees and Rates Study, and Water and Water Development Fee and Wholesale Wheeling and Water Reclamation Rate Studies Charge Study RAFTELIS FINANCIAL CONSULTANTS,INC.(27 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY APPENDIX B:PROJECT TEAM RESUMES Technical Specialties SanDay Gaur • Model development • Water budget rate studies Manager as Deputy Project Manager • Cost of service and rate design studies Profile • Connection/development fee studies With more than IS years of public sector consulting experience,Mr. Gaur has worked • Economic analysis extensively providing economic analysis,financial analysis, cost benefit analysis, cost of • Financial analysis service studies,rate designs,connection/development fee studies, conservation studies • Cost benefit analysis and demand forecasting. He is considered one of the leading experts in the develop- • Demand forecasting ment of water budget rate structures,which is demonstrated by his experience,publica- • Econometric analysis tions and speaking engagements. His experience spans the West Coast with the majority Professional History of projects in California.These projects include engagements with Metropolitan Water • Raftelis Financial Consultants,Inc.: District of Southern California, San Diego County Water Authority,Eastern Municipal Manager(2009-present) Water District and the Santa Clara Valley Water District. Mr.Gaur is active in a number • Red Oak Consulting,Division of of utility-related associations. He is a member of the American Water Works Associa- Malcolm Pirnie (2007-2009) tion's (AWWA) Rates and Charges Committee. He has also participated as a speaker • MuniFinancial(2005-2006) • A&N Technical Services(1999-2003) at a number of conferences regarding the design of utility rates,including those held by • United States Peace Corps,Bul- the Association of California Water Agencies, California Society of Municipal Finance garia(1995-1997) Officers, Municipal Management Association of Southern California and the Ameri- can Water Works Association.Additionally,Mr.Gaur has served as a guest lecturer for a Education graduate level Water Policy class at the University of Santa Barbara. • Master of Public Administration Public Administration/International Relevant Project Experience Development-:Kennedy School of Government,Harvard University El Toro Water District:Water Budget Lake Forest CA (2003) Mr. Gaur assisted El Toro Water District in the development and implementation of a • Master of Science,Applied Eco- water budget rate structure. This included facilitating the discussion on the policy op- nomics-University of California Santa Cruz(1994) tions associated with the allocation factors for indoor and outdoor needs with staff and • Bachelor of Arts,Economics and the Board,the development of a water budget model,and ensuring the billing system is Environmental Studies-University compatible with the new requirements associated with the water budget rate structure. of California,Santa Cruz(1992) The new rate structure is expected to be adopted in June 2010. Professional Recognition American Water Company:Water Rate Study/Monterey CA • Who's Who in America 63rd Edition (2009) The City of Monterey's water rate structure allowed for water budget programs deter- • Finalist,National Venture Competition mined by household size,lot size,zip code,and the number of large animals in the serv- (2003);Goldman Sachs Foundation ice area.Mr. Gaur examined and developed a water rate model for the service area. He • Roy Environmental Fellowship also assisted in the design of various water budget structures that allowed for accounta- (2002),Kennedy School of Govern- bility and examined customer impact of different rate structures.Results were presented ment,Harvard University at the California Public Utility Commission. • Academic Scholarship(2001-2003), Kennedy School of Government, Harvard University City of Corona:Water Budget Rate Study Chowchilla CA • Certificate of Outstanding Service Mr.Gaur served as a Project Manager for the City of Corona,Water Budget Rate study. (1997),United States Peace Corps He facilitated a workshop on the policy options associated with the development of a water budget rate structure. Based on these policy options, a water budget model was Professional Memberships developed that can conduct sensitivity analysis on allocation factors, price ratios, rev- > American Water Works Association -Rates and Charges Committee enue requirements and customer impacts. Eastern Municipal Water District:Water Budget Implementation Strategy Perris CA Mr. Gaur served as project manager for rate structure evaluation study by assisting East- RAFTELIS FINANCIAL CONSULTANTS,INC./28 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY APPENDIX B:PROJECT TEAM RESUMES ern Municipal Water District (EMWD) managers and Board in factors, such as weather conditions.The results from the study the evaluation and assessment of the feasibility of implementing provided information on which conservation program provid- a water budget rate structure.Mr.Gaur also moderated a series of ed the greatest return on investment. three interactive workshops to examine a water budget rate struc- ture and its ability to meet EMWD policy goals such as equity, Los Angeles Department of Water and Power: Daily De- conservation and revenue stability. EMWD was successfully able mand Estimates/Los Angeles CA to implement a water budget rate structure in April 2009. Mr. Gaur performed a econometric analyses on daily demand based on deviation from mean temperature. Results from the Western Municipal Water District: Water Budget Rate study helped redesign engineer estimates on sizing of water lines. Study/Riverside CA Mr. Gaur served as project manager for the implementation of Metropolitan Water District of Southern California: a water budget rate study,which included facilitating and lead- Drought Allocation Model/Los Angeles CA ing a discussion on the policy options associated with the de- Mr. Gaur developed a drought allocation model for Metropolitan velopment of a water budget rate study. Based on these policy Water District of Southern California member agencies. The alloca- options,a water budget model was developed that can evaluate lion is based on severity of drought,historical usage,and demand- different allocation factors for indoor and outdoor water use, hardening factor. The model served as a tool to guide decision determine price ratios for the corresponding tiers,and develop making process in determining fair and equitable allocations. the corresponding rates and customer impacts. Metropolitan Water District of Southern California: Long Rancho California Water District: Water Budget Study / Range Financial Plan/Los Angeles CA Temecula CA Mr. Gaur served as project manager for long-range financial Mr. Gaur assisted Rancho California Water District in the de- plan study and facilitated workshops with management,mem- velopment of a water budget rate structure. The project re- ber agencies, and stakeholders to assess the economic, politi- quired the consultant to develop a flexible water budget model cal, and technical feasibility of a growth-related infrastructure that could do multiply block with allocation and determine charge. He also led seminars to inform participants of the pre- the appropriate revenue within a month. The team was suc- vailing industry standards for adhering to cost-of-service prin- cessfully able to accomplish this task and assisted the District ciples and navigating California's complex legal environment. in implementing the new water budget rate structure.The rates where successfully adopted in November 2009. Monterey Peninsula Water Management District: Project Evaluation-Water Conservation Project/Monterey CA City of Huntington Beach: Sewer Rate Study/Huntington Mr. Gaur provided an evaluation of the conservation impact Beach CA of a toilet conservation pilot program for Monterey Peninsula Mr. Gaur served as project manager for a sewer cost-of-service Water Management District using an econometric analysis that and rate design study. The engagement called for the redesign was controlled for seasonal and weather conditions.The study of rates to achieve City's policy goals associated with improving confirmed expected savings estimates. inter-class equity,reducing administrative burden,and maintain- ing revenue stability,while adhering to cost-of-service principles. Municipal Water District of Orange County: Conservation Potential Study/Fountain Valley CA City of Indio:Water Rate Study/Indio CA Mr. Gaur developed an optimization model for conservation Mr.Gaur conducted a water rate study and presented results to programs. The results guided the District in developing a mas- City Council. The Council adopted the recommended water ter plan for conservation programs. rates, which provided an equitable allocation of cost between fixed and variable rates. City of Newport Beach:Water Rate Study/Newport Beach CA Serving as project manager for this study,Mr.Gaur assisted the Irvine Ranch Water District: Conservation Study/ Irvine City of Newport Beach to develop a long-range financial plan, Ranch CA and to evaluate and implement a conservation rate structure Mr.Gaur evaluated the District's conservation program by con- that adheres to cost-of-service principles and the provisions of ducting econometric analysis that controlled for exogenous California Proposition 218. Mr. Gaur also worked with New- RAFTELIS FINANCIAL CONSULTANTS,INC./29 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WAI'E ?HA 1 E S I( DY APPENDIX B:PROJECT TEAM RESUMES port Beach staff to identify policy objectives for prospective nal of American Water Works,99:S May 2007 p.112- 116, rate design alternatives. > Gaur, S. Corssmit, K. and Hotchkiss, D. "Water Rates De- fining Cost of Service—Proposition 218 Implications,"pre- Rancho California Water District:New Water Demand Off- sented at the Association of California Water Agencies,May set Fee/Temecula CA 7,2008 Spring Conference,Monterey,California. Mr. Gaur assisted Rancho California Water District in the de- > Gaur, S. "Moving Beyond the Public Workshop,"presented velopment of a New Water Demand Offset Fee. The New Wa- at the Municipal Management Association of Southern Cal- ter Demand Offset Program is a form of funding of conservation ifornia,July 1,2008 Summer Conference,La Jolla, Califor- measures that will help to create sustainable,zero water footprint nia. development. New developments will pay fees called New Water > Gaur, S. "Evolution of Water Rates,"presented at the Asso- Demand Offset Fees to create potable water savings in the exist- ciation of California Water Agencies,December 3,2008 Fall ing system to support water demand generated by new develop- Conference,Long Beach,California. ments. Water savings can be achieved by converting irrigation > Gaur, S. "Managing Drought Scenarios," presented at the accounts to recycled water or installing high efficiency retrofits to Association of California Water Agencies, December 4, replace inefficient fixtures for existing accounts in RCWD. This 2008 Fall Conference,Long Beach,California. fee is expected to be adopted in February 2010. > Gaur, S. "Rates 101; 4 hour training course conducted at the Annual 2009 California Society of Municipal Finance San Diego County Water Authority:Wholesale Water Rate Officers,San Francisco,California. Study/San Diego CA > Gaur, S. Corssmit, K., Hildebrand, M. and Hotchkiss, D. Mr.Gaur developed a rate model for the water authority which "Defining Latest Trends in Conservation Rate Design,"pre- allocated resources and costs to member agencies. The model rented at the Utility Management Conference,February 18, was used to develop different allocation scenarios based on his- 2009,New Orleans,Louisiana. torical and spatial factors and served as a tool to guide decision > Gaur, S. "Conservation Rate Structures," presented at the making process in determining fair and equitable allocations. International Water Efficiency Conference, April 1, 2009 Newport Beach,CA Publications > Gaur, S. "Developing a Water Budget Rate Structure: East- > Gaur, S.,"Adelman and Morris Factor Analysis of Develop- ern MWD Experience," presented at the CA/NV AWWA ing Countries,"The Journal of Policy Modeling,Vol. 19,Is- Section,April 9,2009,Santa Clara,CA sue 4,pp.407-41 S,August 1997. > Gaur, S. "Rates and Equity Issue" presented at Managing > Gaur,S.,"Water Rate Setting,"presented at the Annual 2006 the Crisis:Essential Tools for Urban Water Managers,spon- Conference of the California Society of Municipal Finance sored by Water Education Foundation and Association of Officers,Palm Springs,California. California Water Agencies,April 16, 2009 (San Francisco) > Gaur, S., "Water Rate Setting," presented at the following: and April 23,2009(Irvine California Society of Municipal Finance Officers Chapters: > Hildebrand, M. Gaur, S. and Salt, K. "Water Conservation Central Los Angeles, Channel Counties, Imperial County, Made Legal:Water Budgets and California Law"Journal of San Gabriel Valley,South Bay and Twenty—Nine Palms. American Water Works,101:4 April 2009 p.8S-89. > Gaur, S., "Designing Water Rate Structures," presented at a > Gaur,S."Whiskey's for Drinking,Water is for Fighting:Al- workshop for Urban Water Institute, San Jose, California. locating Water During a Shortage" presented at the Asso- February 17,2006. ciation of California Water Agencies, May 21, 2009 Spring > Gaur, S. "How Much Should Water Cost? Theoretical and Conference,Sacramento,CA. Practical Approach in Developing Water Rates." Guest > Gaur,S."Policy Issues and Challenges with Water Budgets: lecturer at University of California, Santa Barbara, Course: Eastern MWD Experience" presented at American Water Water Policy, Bren School of Environmental Science and Works Association,Annual Conference and Exposition 09, Management. November,7,2006. June 1S,2009,San Diego,CA > Gaur, S. "Designing Water Rates," All day seminar at the > Gaur,S."Economics of Desalination"presented at the Asso- Center for Water Education.Hemet,California. January 12, ciation of California Water Agencies,December 2,2009 Fall 2007. Conference,San Diego,CA. > Gaur,S."Policy Objectives in Designing Water Rates",Jour- RAFTELIS FINANCIAL CONSULTANTS,SULTANTS,INC./ 30 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY APPENDIX B:PROJECT TEAM RESUMES Technical Specialties George Rafteft, CPA • Utility cost of service and rate struc- Chief Executive Officer as Technical Reviewer ture studies • Economic feasibility studies Profile • Water budget rate studies Mr.Raftelis has more than 35 years of experience in environmental finance,strategic plan- ning,resource conservation and related areas.He has served as Partner-in-Charge,Project Professional History • Raftelis Financial Consultants,Inc.: Manager,Technical Advisor or Lead Consultant on projects for more than 300 govern- President(2009-present) ment utilities in the United States,Canada,United Kingdom,Bulgaria and the Caribbean. Chief Executive Officer/President Mr.Raftelis has been very involved in the water and wastewater industry associations.He (1993-2008) has held numerous leadership positions and has served the chair of American Water Works • Ernst&Young: Association's (AWWA) Management Division and the Rates and Charges Committee.In Partner(1984-1993) addition,Mr.Raftelis has written a text entitled,Water and Wastewater Finance and Pric- Director,National Environmental ing:A Comprehensive Guide (Third edition) which has become an authoritative docu- Consulting Practice(1975-1984) ment for establishing utility financing plans and pricing structures. He also co-authored • United States Army: the AWWKs Revenue Requirements Manual and is often quoted in industry and finance First Lieutenant(1969-1973) publications and at industry forums. Education Relevant Project Experience • Masters in Business Administration -Duke University(1975) San Francisco Public Utilities Commission, California- Cost of Service and Rate • Bachelors of Science in Mathemat- Design Study ics and Economics-Eckerd Col- The City retained RFC to conduct a comprehensive cost of service and rate design study lege(1969) that included a review of revenue requirements,user classifications,costs of service,and the design of a system of user charges for the City's Water and Clean Water Enterprises. Professional Registrations Cost of service rates were designed for both inside and outside-City customer classes. > Certified Public Accountant 'Ihe wastewater study involved analysis of several departments including allocation of Professional Memberships direct administrative charges. The wastewater study analyzed the substitution of a low- • American Water Works Association: income discount for the existing lifeline rate and the effect it would have on all customers. Past Chair,Management Division; Additionally,cost allocations were updated to more accurately represent costs by class to Past Chair,Financial Management develop cost of service rates. One of the more unusual aspects of the wastewater study Committee;Past Chair,Rates and was the incorporation of an oil and grease (O/G)parameter in the cost of service analy- Charges Committee sis.Mr.Raftelis served as the Project Director. • EPA Environmental Financial Ad- visory Board:Chair,Public Sector Metropolitan Water District of Southern California—Wheeling Charge Study Finance Options Work Group During this project, RFC assisted the Metropolitan Water District (MWD), the larg- • Water Environment Federation est water supply authority in the world,in evaluating the appropriateness of a proposed wheeling pricing structure as it related to deregulation of the water industry in Califor- nia. Specifically, RFC looked at ways of allocating costs to various functional compo- nents of MWD's system. Part of the analysis focused on the identification of stranded cost and its appropriate allocation into the wheeling charge.Mr. Raftelis served as the Project Manager. Metropolitan Water District of Southern California—Cost of Service and Rate De- sign Study RFC performed a cost of service and rate design study for the Metropolitan Water District of Southern California(District).RFC developed and constructed a detailed cost of service RAFTELIS FINANCIAL CONSULTANTS,INC,131 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY APPENDIX B:PROJECT TEAM RESUMES model,and provided extensive assistance in producing a compre- City of Henderson,Nevada-Water and Wastewater Finan- hensive report providing an in depth look at cost of service issues cial Assessment facing the Metropolitan water system,which serves 27 member In Phase I,RFC assisted the City of Henderson in conducting a agencies consisting of 14 cities, 12 municipal water districts and Water and Wastewater Financial Assessment. RFC conducted a one county water authority.Over 16 million people in more than two-day workshop with City staff and policy makers explaining 300 cities and unincorporated areas reside in the service area,and the objectives, principles and methodology of a cost of service over SO percent of the water used in the service area is provided by rate study and the various associated issues. RFC developed a the District.Mr.Raftelis was Project Manager. financial vision which will ultimately shape the utilities for the next ten years. For Phase II, RFC developed a financial plan- City of Beverly Hills,California—Water Rate Study and Model ning and rate model (Model) to serve as a comprehensive, yet Mr. Raftelis was Project Director for an engagement with the flexible,planning tool that incorporates a ten-year financial plan, City of Beverly Hills (City) in which they wished to conduct forecasted demand projections, revenue requirements,user rate a comprehensive water rate study that included a review of rev- calculations, system development charges, revenue projections, enue requirements, user classifications, costs of service, and fund balances, customer impacts, and all relevant financial poli- the design of a system of user charges for the City's water serv- cies related to replacement and reserve funding requirements ice that would promote water conservation.The City engaged developed as part of Phase I.The Model was also developed to RFC to develop a rate and financial planning model that would evaluate certain rate philosophies and user charge structure mod- be used to evaluate alternative rate structures and to provide ifications focused on improving the equitable recovery of costs more detailed forecasts to assist in the preparation of updating from different user classes, legal defensibility of the rates and rates in future years. system development charges, revenue predictability, and con- The City's rate structure consisted of a three-tiered increasing servation incentives.RFC developed an allocation or budget for block water rate structure with no differentiation among cus- different meter sizes to ensure that the tiered rates set up would tomer types.RFC modeled numerous alternative rate structures fairly collect revenues from customers. RFC is currently updat- and reviewed customer and revenue impacts before recom- ing the City's financial plan by participating in the City's rate mending that the City modify its current three tiered rate struc- implementation process.This includes presenting our final find- ture to include a fourth tier that targets large irrigation usage.In ings and recommendations to City Council and any the Citizen's addition, RFC recommended that separate tiers be established Advisory Committee.Mr.Raftelis has served as Project Director for multi-family customers to reflect their usage characteristics. throughout the duration of the engagement. For commercial,industrial,and municipal customers,RFC rec- ommended that the City implement a uniform commodity rate, Arlington County Department of Environmental Services,Vir- since these customers have lower peaking factors than residen- ginia—Water and Wastewater Cost of Service and Rate Study tial customers.RFC continues to provide updates to the model RFC is in the final stages of a water and wastewater cost of serv- so that rates may be projected in future years. ice and rate study for Arlington County Department of Envi- ronmental Services (County). Mr. Raftelis is serving as Project City of Los Angeles Bureau of Sanitation,California—Sani- Director. The County has requested assistance in reviewing tation Rate Study its current system of water and wastewater rates and charges. For the City of Los Angeles Bureau of Sanitation a rate differ- In particular, RFC has evaluated the equity of the County's ex- ential for septage waste generated outside of the City was de- isting user rate and charges among the existing customers and veloped. Using a utility basis rate approach, a premium was evaluated the customer impacts associated with alternative rate calculated to be charges to waste haulers for the treatment of structures.The County has also requested assistance in evaluat- outside-City septage waste.To determine the premium,a rate to ing financing alternatives related to the County's capital improve- return to apply to that portion of the City's capital investment ment program,which may also include the utilization of the rate used in processing septage waste was developed.A number of model to facilitate the preparation of a written feasibility report factors were considered in calculating the rate of return,such as: to be used by the County in obtaining a bond rating or credit en- allowable rates of return as approved by the California Public hancement for debt obligations.RFC is also developing new in- Service Commission,risk considerations,and returns recovered frastructure availability fees for the County along with a model by other utilities.Mr.Raftelis was Project Manager. for use by the County staff in the future. RAFTELIS FINANCIAL CONSULTANTS,INC./32 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RAT ;)TUDY APPENDIX B:PROJECT TEAM RESUMES Birmingham Water Works Board,Alabama—Water Rate Study Cobb County,Georgia—Comprehensive Rate Analysis For the Birmingham Water Works Board(BWWB)in Birming- This project dealt with a comprehensive rate analysis for Cobb ham,Alabama,Mr.Raftelis assisted in developing water rates as County, Georgia. This County is one of the fastest growing Project Manager. The project dealt with: (1) identifying util- counties in the Metro-Atlanta area and wholesales services to ity costs for three areas serviced by the BWWB; (2) allocating a number of communities inside and outside the County. The those costs to functional categories (source of supply, treat- study focused on developing wholesale rates to these com- ment,transmission,distribution,administration,and customer munities as well as retail rates for other County customers. In service); and (3) calculating rates for classes of BWWB cus- addition,another major study was conducted for the Board to tomers.The base-extra capacity demand approach was used for examine the relationship between impact fees, user charges, calculating water rates.The project was later expanded to auto- and conservation pricing, and to develop a recommended rate mate the rate setting methodology.BWWB has a large compo- and financial plan.Mr.Raftelis served as Project Manager. nent of usage sold to raw water customers. Columbus Water Works, Georgia—Ongoing Financial and Cary Utility Department, North Carolina — Water and Management Studies Wastewater Financial Planning and Rate Model RFC was engaged for a multiphase project with Columbus Wa- With Mr. Raftelis as Project Manager, RFC developed a five- ter Works (CWW) involving a financial management systems year water and wastewater financial planning and a rate model evaluation, cost of service analysis, block rate design, contract for the Public Works and Utility Department of the Town of rate analysis,and financial reporting system review.Mr.Raftelis Cary.The project included a review of cost allocations between was Project Manager. The project goal was development and water and wastewater to ensure that neither utility was subsi- implementation of equitable yet understandable cost-based dizing the other.A new water rate structure was recommended rate structures for both inside city and contract customers.The based on a three-tiered residential rate to encourage conserva- task was complicated by the recent departure of several large tion.The Town is planning significant capital expenditures over contract and wholesale customers and major looming capital the near future to expand the water treatment plant and to ac- needs. The study used a S- to 10-year planning horizon that commodate a high rate of growth in customers and demand. incorporated long-term capital planning needs, debt funding The model will be used to evaluate rate impacts of alternative assumptions, operating cost projections, and demand projec- financing plans.In addition,the project also involved develop- tions.The Water Works Board voted on and agreed to the five- ment of updated and cost justified development fees for water, year program as recommended by RFC and CWW staff sewer, streets, and recreation facilities. Both the proposed rate structures and development fees were designed to assist the District of Columbia Water and Sewer Authority,Washing- Town in managing growth more effectively. ton D.C. RFC was engaged to assist the law firm of McGuireWoods in Charlotte-Mecklenburg Utility Department,North Carolina evaluating the customer affordability and economic feasibility —Water and Wastewater Financial Planning and Rate Model of extensive wastewater capital improvements required by the RFC assisted the Charlotte-Mecklenburg Utility Department District of Columbia Water and Sewer Authority (DCWASA) (Utility) and the City of Charlotte in developing a water and during a 20-year planning period.Mr.Raftelis served as Project wastewater financial planning and rate model, and related Director.As part of this analysis,RFC developed an economic user manual. Mr. Raftelis served as Project Manager. The rate feasibility model(Model)to include customer affordability and model will be used for updating rates and the City's financial financial strength criteria that served as the basis for determin- plan in the future. The model focuses on providing long-term ing and driving the appropriate implementation schedule for rates,management information,and graphic representations of the capital costs under four alternatives. This included exten- model output. In addition, Mr. Raftelis assisted the Utility in sive research of affordability indices embraced by the AWWA, developing an extension policy and tap-in privilege procedures USEPA,and other relevant governmental and non-governmen- for expanding water and wastewater services within this major tal agencies. geographical area.This assistance included developing capacity RFC used these affordability indices along with its rate survey charges for the Utility's major capital improvement program. and extensive industry experience to develop wastewater rate affordability thresholds within the District of Columbia service RAFTELIS FINANCIAL CONSULTANTS,ANTS,INC'.1 33 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY APPENDIX B:PROJECT TEAM RESUMES area.These thresholds and certain financial strength indicators, (MAWSS) to conduct a comprehensive water and sewer rate such as debt coverage and fund balances, were incorporated study. Mr. Raftelis served as Project Director. RFC created a into the model to determine the most appropriate implementa- rate and financial planning model which was used to analyze tion schedule for the extensive wastewater capital improvement MAWSS'existing rate structure by allocating costs to each util- program. The goal of the analysis was to develop a long-term ity, and more importantly, between the fixed monthly com- implementation plan that would not adversely affect the afford- ponent and the volumetric component. RFC also performed ability of wastewater services to lower income families while a wholesale rate study, impact fee study, and miscellaneous allowing the DCWASA to protect its current bond ratings and fee study.The rate study and miscellaneous fee study involved financial strength indicators. gathering benchmarking and key metric data to compare MAWSS' miscellaneous fees, reserve fund policies and debt City of Durham,North Carolina-Rate Model Update and service coverage ratios and identify areas of improvement. Conservation Rate Study RFC has provided professional assistance to the City of Dur- City of Myrtle Beach,South Carolina—Water and Wastewa- ham (City) since 1996. In 2006, RFC completed a study to ter Cost of Service and Rate Study update the City's existing Water and Wastewater Rate and Fi- RFC is conducting a water and wastewater cost of service and nancial Planning Model (Model), originally developed by rate study for the City of Myrtle Beach with the objective of RFC in 1996; update the City's existing capital facility fees; moving to a rate structure that addresses the City's water re- and calculate certain miscellaneous utility fees and charges. source conservation goals. The Myrtle Beach area has become Specifically, RFC updated the City's Model to both reflect the one of the nation's most popular resort and retirement com- current cost of utility operations and to evaluate the implica- munities.As a result, the City has experienced a significant in- tions of various capital planning scenarios.Most recently,RFC crease in both its permanent and seasonal population that has enhanced the Model to assist in evaluating and implementing accelerated the capital needs of its water and wastewater sys- conservation rates for the City. RFC developed recommenda- tems.As part of the study a five year financial planning and rate tions for the appropriate conservation rate structure to meet model has been developed to facilitate evaluation of the rate the City's pricing objectives within the context of a five-year fi- impacts of alternative operating strategies and capital financing nancial forecast to address capital investment requirements.Mr. plans.RFC provided a rate update that included a reconfigura- Raftelis was Project Manager. tion of the rate model to assess the financial impact of obtain- ing a State Revolving Fund (SRF) Loan.As part of this update, Mount Pleasant Waterworks, South Carolina - Financial RFC developed a variety of schedules to demonstrate specific Planning and Rate Model operating and financial data requested in the SRF Loan Appli- RFC has provided continued assistance to the Mount Pleasant cation.Mr.Raftelis is serving as Project Manager. Waterworks. Initially engaged in 2005, RFC developed a new Microsoft Excel'-based Utility Financial Planning and Rate City of Pompano Beach,Florida—Rate and Financial Plan- Model to could be used by the MPW staff in its annual financial ning Study and Model planning and utility rate setting process.RFC designed the new RFC is serving in a multi-year contract for the City of Pompano Utility Financial Planning and Rate Model to maximize its in- Beach (City)with Mr.Raftelis as Project Director.RFC was en- terface and exchange of information with the other information gaged to conduct a rate and financial planning study for the City's and financial systems used by the MPW. The Utility Impact water,wastewater, reuse and stormwater utilities.As part of the Fee Model was developed to incorporate forecasted capital im- study, RFC developed a rate and financial planning model to provements needs and subsequently redesigned to share capital calculate revenue requirements for each utility using the City's and other information with the Rate Model to ensure consist- budget and capital improvement plan. RFC has utilized the ent financial planning through utility rates and the growth re- model to determine the self-sufficiency of each utility and the lated capital charges.Mr.Raftelis was Project Director. level of water,wastewater and stormwater rate adjustments nec- essary over the next five-year period to ensure sufficient revenues Mobile Area Water and Sewer System,Alabama—Water and and adequate debt service coverage.The model is being used to Sewer Rate Study calculate wholesale sewer charges for a neighboring community. RFC was engaged by Mobile Area Water and Sewer System The model will be used in the future to model alternative rate RAFTELIS FINANCIAL CONSULTANTS,INC./34 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY APPENDIX B:PROJECT TEAM RESUMES structures that address the City's pricing objectives. and Wholesale Service Contract Review > City of Scottsdale,Arizona—Water Cost of Service and De- City of Portland Bureau of Water, Oregon — Contract Re- velopment Fee Study view and Rate Model Development > City of Ottawa, Canada—Water,Wastewater and Stormwa- RFC had two engagements with the City of Portland Water Bu- ter Cost of Service and Rate Study reau (Bureau). The first engagement involved reviewing a pre- > City of Charlotte, North Carolina —Water Cost of Service liminary wholesale contract that established the cost of service and Rate Structure Studies structure for the Bureau's wholesale customers.The second en- > Birmingham Water Works Board —Water Rate and System gagement included assisting in developing wholesale rates and Development Charge Studies and"Stranded"Cost Analysis developing of a robust modeling tool for ongoing rate calcula- > Columbus Water Works, Georgia —Water and Wastewater tion and financial planning use by the Bureau. As part of this Rate Studies project, RFC developed rates consistent with the new agree- > Washington Council of Governments, Washington, DC — ment for the wholesale agencies, reviewed rate structure alter- Cost Equity Study natives for its retail customers,and reviewed impacts.RFC also d Selected Litigation Support and Expert Testimony Clients developed a comprehensive computer model to support the cost allocation and rate design set forth in the new wholesale > City of New York,New York water service agreements. The model incorporated the spe- > City of Los Angeles,California cific cost allocation methodology and structure set forth in the > City of Wilmington,Delaware > State of Kansas wholesale agreements.RFC worked closely with Bureau staff in the development of the model specifications and the design of > City of Peoria,Illinois the model.Multiple versions were tested in collaboration with > City Phoenix,Arizona the Bureau to ensure that it would meet or exceed their expec- > Orange County,Florida tations.Mr.Raftelis served as Project Manager. > City of Jasper,Alabama > City of Niagara Falls,New York Regional Municipality of Ottawa-Carleton, Ontario, Cana- > City of Billings/Billings Heights,Montana da—Water Rate and Financial Planning Study > City of North Myrtle Beach,South Carolina Mr.Raftelis,as Project Director, conducted a water rate and fi- > City of Lake City,South Carolina nancial planning study for the Regional Municipality of Otta- > Grand Strand Water&Sewer Authority,South Carolina wa-Carleton. The primary focus of this study (Phase I) was to > Town of Grafton,Massachusetts evaluate the different pricing options available and select an > City of Pekin,Illinois approach which met the pricing objectives of the Municipality, > Bristol County Water Authority,Rhode Island one of which was the desire to use price to effectuate water con- > Dedham-Westwood Water Authority,Massachusetts servation. Phase II of the study developed specific water rates Selected Valuation Analyses Clients based on the selected approach. > City of Birmingham,Alabama > Bristol County Water Authority Rhode Island Other Relevant Project Experience > Charlotte-Mecklenburg Utilities,North Carolina Selected Utility Cost of Service and Rate Study Experience > Dedham-Westwood Water Authority > San Francisco Public Utilities Commission — Water and > Grafton Water District Sewer Cost of Service Study > Grand Strand Water and Sewer Authority,South Carolina > Metropolitan Water District of Southern California - Cost > Greenville Utilities Commission,North Carolina of Service and Rate Design Study > Town of Hingham,Massachusetts > Metropolitan Water District of Southern California—Water > Lexington-Fayette Urban County Government,Kentucky Wheeling Charge Development > Town of Millbury,Massachusetts > Los Angeles Department of Water and Power — Wheeling > Town of Nantucket,Massachusetts Rate Analysis > New York City Law Department > San Antonio Water System,Texas—Water and Sewer Rate Study > Orange County,Florida > City of Portland, Oregon — Water Cost of Service Study > Town of Oxford,Massachusetts > Peace River/Manasota Regional Water Supply Authority,Florida RAFTELIS FINANCIAL CONSULTANTS,INC./35 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY APPENDIX B:PROJECT TEAM RESUMES Technical Specialties Khan Phan • Utility cost of service and rate structure Senior Consultant as Lead Consultant studies • Economic feasibility studies Profile • Water budget rate studies Ms.Phan has served as a consultant on numerous water and wastewater cost of serv- ice rate studies, connection fees and reserve policy studies. Her specific experience Professional History • Raftelis Financial Consultants,Inc.: includes projects for the following utilities in California: Rancho California Water Dis- Senior Consultant(2008-present) trict,Western Muni cipal Water District,El Toro Water District,Goleta West Sanitary District, Palmdale Water District and the cities of Banning and Livingston. She pos- • Avery Dennison: Research Chemist(2004-2008) sesses strong analytical and managing skills acquired from her background,education and experience. Combined with her advanced computer skills,Ms.Phan performs an Education exce llent job as a modeler. • Master of Business Administration Finance-California State University, Relevant Project Experience Los Angeles(2007) Western Municipal Water District,California • Bachelor of Science,Chemical RFC is currently engaged in a Water Budget Rate Study for the Western Municipal Engineering-University of California, Water District(District). As a lead consultant,she consults the District in the devel- Berkeley(2003) opment of an equitable and defensible water budget structure for retail customers for their two cost centers—Riverside Treated Service and Murrieta Treated Service. She performs thorough analyses on usage,revenue and customer impacts associated with proposed water budget rates. She also assists the District with preparation of pres- entation and technical memorandum summarizing the study results to upper man- agement team and District Board in order to facilitate their informed policy decision process and to ensure Proposition 218 compliance. Rancho California Water District,California RFC recently conducted a Water Budget Rate Study for the Rancho California Water District (District). As a lead consultant,she assisted the District as they established an equitable and defensible water budget structure for residential and irrigation cus- tomers for both Rancho and Santa Rosa Divisions. She performed thorough analyses on different methodologies of allocating water sources to different customer classes and determining landscape area caps for residential accounts and on usage, revenue and customer impacts associated with proposed water budget rates. She assisted the District in preparation of a presentation of the study results to District Board in order to facilitate their informed policy decision process. Palmdale Water District,California RFC recently completed a Water Rate Study for Palmdale Water District (District). Ms. Phan developed a rate model to examine new rate structures for the District. The model and structure established allocations for residential usage and irrigation requirements for residential and non-residential customers. The study involved pri- oritizing pricing objectives,analysis of projected revenue,budgeted O&M costs,allo- ri cations of cost of services,cash flows and impacts. Ms.Phan also assisted the District in establishing water budget allocation guidelines and assisted the District with the necessary changes to the billing system to implement the water budget rates. At the RAFTELIS FINANCIAL CONSULTANTS,INC./36 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY APPENDIX B:PROJECT TEAM RESUMES end of the study, she helped the District draft the Proposition City of Banning,California 218 Notice to reflect the proposed rate structure. RFC performed a connection fees study for the City of Ban- ning,California (City).Ms Phan assisted in developing a mod- El Toro Water District,California el to calculate the connection fees involving infrastructure as RFC recently completed a comprehensive Cost of Service well as water supplies which are crucial to the approval of new Study for El Toro Water District(District). Ms.Phan is respon- development. She investigated the price of water purchased sible for developing a rate model to examine new water and from State Water Project to meet increasing water demand of sewer rates for the District to reflect the increased water cost the City. from Metropolitan Water District of Orange County and the increased operating costs for the District's water and sewer sys- Other Relevant Project Experience tems. The model analyzes projected revenues,budgeted O&M > City of Redlands,California—Valuation Study costs,cost of service,the District's financial plan and customer > City of Banning, California — Water Rate Study and Con- impacts as a result of proposed rate increases. nection Fees In addition,Ms.Phan is currently assisting the District with the > City of San Diego,California—Water Rate Study Water Budget Rate Study scheduled to be implemented in fiscal > San Dieguito Water District,California—Water Rate Study year 2011. This involves integrating the District's account data > Clark County,Nevada—Wastewater Rate Study with the assessor's parcel data and ultimately determining the > City of Torrance,California e—Cost of Service Study parcel area and landscape area of each parcel to be used in water > La Cafiada Irrigation District, California— Cost of Service budget rate design and in the implementation of the new rate Study structure. Goleta West Sanitary District,California Goleta West Sanitary District (District) was in the process of designing a new reserve policy to cover its share of replace- ment and refurbishment cost for the upgraded full secondary wastewater treatment plant in Goleta Sanitary District (GSD) in 2014. As a consultant,Ms Phan reviewed the necessary capi- tal improvement projects of the District over the next 50 years, including replacement and refurbishments (R&R) of the col- lection system as well as improvements needed to refurbish the treatment plant. She developed a model of the long-term financial plan that incorporated the assumptions on operations, capital and reserves requirements and recommended a policy identifying target amounts for the different reserves for the District's consideration. She developed a SO-year projection of rates for planning purposes. City of Livingston,California RFC performed a Water Rate Study for the City of Livingston (City). As a consultant,Ms. Phan was responsible for the de- velopment of a rate structure for the City based on analysis of revenue, O&M costs, and cash flow. The City has one of the lowest rates in the Central Valley and will experience significant increases in rates to make up for past revenue shortfalls and for capital improvements needed because of regulatory concerns. RAFTELIS FINANCIAL CONSULTANTS,INC./37 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY APPENDIX B:PROJECT TEAM RESUMES Technical Specialties Stave Vu0so > utility cost of service Senior Consultant as Support Analyst > Rate structure studies > Conservation rate studies Profile > Drought management plans Mr.Vuoso has served as a lead consultant on several rate studies in California, in- > Economic feasibility studies cluding the cities of Los Angeles, San Diego, Ontario and the Beaumont-Cherry > Capital recovery fee studies Valley Water District. In addition, he has served as lead consultant on several other € utilties outside of California on the West Coast,including the Cities of Portland,OR; Professional History North Las Vegas,NV; and Henderson, NV.He has extensive experience in financial > Raftelis Financial Consultants,Inc.: modeling, financial accounting, and is proficient in VBA programming and applica- Senior Consultant(2008-present) tion development in Microsoft's Access and Excel. Staff Consultant(2005-2008) > Showtime Networks Inc.: Relevant Project Experience Business Analyst(2004) > San Diego Convention and Visitors City of Los Angeles,California Bureau: Mr.Vuoso served as staff consultant on a wheeling charges study for the Los Ange- Project Manager-Internship(2004) les Department of Water and Power.The City was interested in determining the ap- > Kirkland and Ellis: propriate charges to be levied on various customers that may wish to use the extra Legal Case Assistant(2000-2002) capacity in the City's system—from the Los Angeles Aqueduct to the distribution network—to transfer water. Mr.Vuoso conducted the analysis unbundling the var- Edueation ious costs so that users could be charged based up on the parts of the system they > Master of Business Administration, used. Finance-San Diego State University (2004) Beaumont-Cherry Valley Water District,California > Bachelor of Arts,Philosophy-Loyola Mr. Vuoso served as lead consultant on a cost of service water rate study for the Marymount University(1998) Beaumont-Cherry Valley Water District. The region was experiencing rapid growth, as much as 20-30%, and the District wished to ensure that its rate structure allowed Professional Certifications them to recover all appropriate costs,support the rapid growth,and provide fair and > Microsoft Office 2000 Specialist-Excel equitable rates. Mr.Vuoso conducted a cost of service analysis to calculate rates for different classes of customers. City of San Diego,California Mr.Vuoso served as lead consultant water rate studies completed for the City of San Diego in 2006 and 2009.The timeline for the original study was extremely short,but in that time period RFC conducted a full cost of service water rate study.Among the tasks involved were a full customer usage analysis,a capital improvement program re- view,the development of operating and capital financing plans,and cost of service al- locations consistent with the American Waterworks Association Base-extra Capacity methodology.As part of the update in 2009, RFC developed a brand new financial planning and rate model,as well as developed drought rates to be implemented dur- ing periods of mandatory water restriction. City of Ontario,California Mr.Vuoso served as lead consultant on a water,wastewater and solid waste rate study. The study included a comprehensive review of the City of Ontario's revenue require- ments and allocation methodology, review of user classifications, a cost of service i analysis,and rate design for City users. Mr.Vuoso served as lead modeler and devel- RAFTELIS FINANCIAL CONSULTANTS,INC./38 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY APPENDIX B:PROJECT TEAM RESUMES oped the water and wastewater rate models to help determine > El Toro Water District, California -Water and Wastewater the appropriate rates and rate structure that would allow the Connection Fee Study City to recover the true cost of service in a fair and equitable > Goleta West Sanitary District, California - Asset Manage- manner. ment Study, Connection Fee Study,Water Rate Study, and Financing Plan Santa Fe Irrigation District > San Bernardino County,California-Rate Model Mr.Vuoso completed a cost of service water rate study for the > Santa Fe Irrigation District - Wastewater Treatment Plant Santa Fe Irrigation District. (District). The District's local water Cost Evaluation and Water Cost of Service and Rate Study supply was unreliable due to drought and hydrological condi- tions,which led to volatile water purchase costs. As a result,the District had been running a deficit in recent years and was in dan- ger of failing to meet its bond coverage requirements. Mn Vuoso developed a financial plan and rate model to ensure the District could implement a set of rates that would recover all costs of pro- viding services and meet bond coverage requirements. Other Relevant Project Experience > Beaumont Cherry Valley Water District, California -Water Rate and Connection Fee Study > Casitas Municipal Water District, California - Water Rate Study > City of Atwater,California-State Revolving Fund Loan As- sistance and Water and Wastewater Rate Study > City of Beverly Hills, California - Connection Fee Study, Valuation and Development of Replacement Program and Asset Inventory,and Water Rate Study > City of Henderson, Nevada - Water and Wastewater Rate Study > City of Los Angeles,California-Wheeling Charges Study > City of Madera, California - Water and Wastewater Rate Study > City of Ontario, California-Water,Wastewater and Storm- water Rate Study > City of Redlands, California - Reclaimed Water Funding Study and Water and Wastewater Rate Study > City of Sacramento, California - Wastewater Rate Study, Water Development Fee Study, and Wholesale Wheeling Charge Study > City of San Diego,California-Litigation Support,Recycled Water Study,Water and Wastewater Rate Study,and Water, Wastewater Connection Fee Study > City of Santa Monica,California-Wastewater Cost of Serv- ice and Rate Study > City of Springfield,Oregon-Wastewater Rate Model > Clark County Water Reclamation District,Nevada-Cost of Service Study RAFTELIS FINANCIAL CONSULTANTS,INC./39 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY APPENDIX B:PROJECT TEAM RESUMES Technical Specialties Hannah Phan > Utility cost of service and rate structure Staff Consultant as Support Analyst studies > Financial planning studies > State revolving fund assistance Profile Ms. Phan has served as a consultant on numerous water, wastewater, and recycled water rate and cost of service studies. Some specific experience include projects Professional History for the following utilities for the cities of San Diego,Anaheim,Livingston, Ontario, > Raftelis Financial Consultants,Inc.: Senior Consultant(2007-present) Redlands, Beverly Hills and Banning, California, the Goleta West Sanitary District, > Merati Economic Group: Olivenhain Municipal Water District,California and the City of North Las Vegas,Ne- vada.Ms.Phan has an MBA and is an experienced modeler. Economics Analyst(2006-2007) Education Relevant Project Experience > Master of Business Administration- City of San Diego,California California State University,Los Angeles RFC is currently assisting the City of San Diego (City) in conducting a water,waste- (2007) water, and recycled water rate study to evaluate the costs of providing utility services > Bachelor of Science,Business and the rates to charge customers.The study included a comprehensive review of the Administration-California State s City's revenue requirements and allocation methodology,review of the City's user clas- University,Los Angeles(2004) sification,an analysis of cost-of-service and rate design for City users. The rate structure was modified to provide a more equitable sharing of costs consistent with regulatory requirements. The recycled water rate study involved evaluation of various scenarios involving capital projects with increased sales, cost sharing between water and waste- water,phasing in rates,repayment of past costs incurred by water to fund the recycled water program.Ms.Phan assisted in building the rate models,preparing the scenarios € and conducting economic analyses of the alternative scenarios. City of Beverly Hills,California The City of Beverly Hills (City) engaged RFC to develop a rate and financial planning € model that would be used to review customer classes, evaluate alternative rate struc- tures and to provide more detailed forecasts to assist in the preparation of updating rates in future years. The City's water rate structure consisted of a three-tiered increasing block water rate i structure with no differentiation among customer types. RFC modeled numerous alternative rate structures and reviewed customer and revenue impacts before recom- mending that the City modify its current three tiered rate structure to include a fourth tier that targets large irrigation usage. The City's wastewater rates were restructured to more equitably recover the costs of servicing the different customer classes to conform to EPA regulations. RFC continues to provide updates to the City so that the enterprise funds can continue to be financially stable. Ms.Phan assisted in conducting the pricing 's objectives to determine the objectives most important to the City's stakeholders and developed the water and wastewater rate models to determine the appropriate rates and rate structure for the City's utility services. City of Anaheim,California The City of Anaheim(City)engaged RFC to conduct a water cost of service rate study. To address the financial objectives of the City and identify a water rate structure that is fair and equitable while sufficiently recover the costs of providing water service,RFC developed a water rate and financial planning model to calculate and forecast cost justi- RAFTELIS FINANCIAL CONSULTANTS,INC./40 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY APPENDIX B:PROJECT TEAM RESUMES fied water rates appropriate to recover the operating and capital Water Rate and Connection Fees Study costs of the wastewater enterprise over a twenty(20)year plan- > Beaumont-Cherry Valley Water District, CA— Water Rate ning period. Study > Tacoma Water Department, WA — Water Financial Plan Olivenhain Municipal Water District,California Study Ms. Phan is currently assisting the Olivenhain Municipal Water > City of Escondido, CA —Water and Wastewater Rate and District (District) in conducting a recycled water rate study to Fees and Connection Fees Study determine the rates charged to customers. The District obtains recycled water from four different sources:the City of San Diego, Vallecitos Water District,Rancho Santa Fe Community Services District,and the 4S Regional Recycled Water System.The exist- ing agreements defined the costs of different sources of recycled water to the District.To address all of those issues and concerns, RFC developed a recycled water financial and rate model to de- termine the costs of providing service and the required revenue to be collected from customers. In addition,the model is built to evaluate when the District is able to take over the 4S Regional Recycled Water System,as stated in the agreement with the de- veloper. Goleta West Sanitary District,California The Goleta West Sanitary District (District) was evaluating sev- eral alternatives regarding constructing their own wastewater treatment plant and expanding the current facility at Goleta Sani- tary District,where the District has been sending their wastewa- ter for treatment. RFC built a financial planning model for the District to find the most economically effective option.Further- more, the District engaged RFC in conducting a miscellaneous fee study to evaluate the current fee structures to better represent the cost of service. Ms. Phan assisted in conducting economic analyses of the alternatives and developing the miscellaneous fee model for the District. Other Relevant Projects > City of Ontario, CA—Water,Wastewater, and Solid Waste Rate Studies > City of Redlands,CA—Water,Wastewater and Connection Fees Cost of Service Study > City of North Las Vegas,NV—Water and Wastewater Rate Studies > Clark County Water Reclamation District, NV — Sewer Cost of Service Study > City of Santa Monica, CA — Wastewater Cost of Service Study > City of Banning, CA — Water, Wastewater, and Recycled RAFTELIS FINANCIAL CONSULTANTS,INC.1 41 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY APPENDIX B:PROJECT TEAM RESUMES Technical Specialties ®m Ash > Water budgets Water Budget Expert Professional History Profile > Irvine Ranch Water District: Mr.Ash has over 2S years of experience in the fields of water use efficiency,public edu- Water Conservation Coordinator(1993- cation and horticulture.On loan as a water conservation specialist from the University 98;2001-2003) of California Cooperative to Western Municipal Water District,the first water conser- > University of California: vation demonstration garden was designed with Tom as the 1st director.The national Cooperative Extension Advisor(1987- acclaim put water conservation in a 6 year drought on the map.The Irvine Ranch Water 93) District requested the University to move Mr.Ash to Orange County where he was in- > On-loan to Western Municipal Water strumental in the design and implementation of the water budget tiered rate structure District(from UCR)(1987-1991) that has been described as"the model'for such rates in the US.The Irvine Ranch Wa- > University of California,Riverside: ter District rate structure helped to reduce landscape water by some S8%in a few short Staff(1984-86) years,stabilized agency revenues and grew customer satisfaction to over 90%.Mr.Ash > California State Polytechnic University, created and implemented the rate structure allocations,public outreach,and conserva- programs that supported the rate structure for homeowners,homeowner associa- tionPomona: Staff(1979-84) tions,the building industry,Agriculture and commercial water users.Mr.Ash assisted the AW WA with a 2008 study of water budget rate structures,was an advisor to the US Education Drought Policy Task Force in 2003 and assists numerous water agencies with the design > Bachelor of Science,Ornamental Horti- and implementation of water budget rates today. culture-Cal Poly Pomona In 2000, Mr. Ash was the recipient of the first "Excellence in Water Conservation" Award presented by the California Urban Water Conservation Council.An advisor to Awards Sunset Magazine and the Australian Landscape Industry,he developed the first stud- > CUWCC Excellence in Water Conser- ies using ET controller technology to reduce water demand and urban runoff starting vation,2000(1st recipient) in 1997.He is the author of Landscape Management for Water Savings,published by the U.S.Bureau of Reclamation (1997) and the book Water Preparedness Plan for the National Nursery and Landscape Association (2004).He has assisted public agencies in Georgia,North Carolina,New Mexico,Utah,Nevada,California,Arizona,Texas,Or- egon and Colorado.Tom was a guest lecturer to the Australian Landscape Association and water agencies in Sydney,Perth and Melbourne in 2006. Publications > Landscape Management for Water Savings(1998,USBR,MWD,DWR) > A Guide to High Desert Landscaping(1991,Mojave Water Agency) > Water Preparedness Plan(2004,National Landscape Association) RAFTELIS FINANCIAL CONSULTANTS,INC./42 YORBA LINDA WATER DISTRICT COST OF SERVICE AND WATER RATE STUDY APPENDIX C:CONTRACT MODIFICATIONS APPENDV Q CONTRACT MOMIR"MAMONS-i We would like to respectfully request making the following modifications to the indemnification language included in the Sam- ple Contract which was included in the RFP.Information that we are requesting modification to is noted in red below. INDEMNIFICATION S.1.When the law establishes a professional standard of care for the Consultant's services, to the fullest extent per- mitted by law,Consultant will defend,indemnify and hold harmless District,its directors,officers,employees,and au- thorized volunteers from and against all claims and demands of all persons that arise out of,pertain to,or relate to the Consultant's negligence,recklessness,or willful misconduct in the performance(ot actual at alleged non-petfallilairk-C) of the Work under this agreement. Consultant shall defend itself against any and all liabilities,claims,losses,damages, and costs arising out of or alleged to arise out of Consultant's negligent performance al 1"JI.-PeLformance of the Work hereunder, and shall not tender such claims to District nor to its directors, officers, employees, or authorized volun- teers,for defense or indemnity. Consultant will not be held liable for claims caused by the negligence of the District,its directors,officers,employees or authorized volunteers. S.2. Other than in the performance of professional services, to the fullest extent permitted by law, Consultant will defend, indemnify and hold harmless District, its directors, officers, employees and authorized volunteers from and against all claims and demands of all persons arising out the performance of the Work(including the furnishing of ma- terials),including but not limited to claims by the Consultant,Consultant's employees and any subconsultants for dam- ages to persons or property,except for damages resulting from the willful misconduct or active negligence of District, its directors,officers,employees,or authorized volunteers. other ir-6-1 Floceedings of eye,y kind that rilay be biought ot instituted dy'ainst Distlict 0i ally of its ditectots,5.3. eunsultant shaH defend, at eornultdnt� owir cost, expense and tisk, any and all such aforesaid suits, actions-or 'Zillptuyees, ot authmized voluntects, with legal COMM! reasonably acceptable to District. Consultant Shall pay culd obligated to defend,iiideijudf� and hold hainfless Bistict,its directurs,officers,eillployeesand authorized valanteers legal expvusrs and costs hicutted by rach of then,ill connectiUll tht:MWIth U1 ill CLILgW6116 the indeninity herein plu- RAFTELIS FINANCIAL CONSULTANTS,INC.(43