R2003-0180 11-24-03 RESOLUTION NO. R2003-180
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND,
TEXAS, AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO
ENTER INTO AN ENGINEERING CONTRACT WITH BLACK & VEATCH
CORPORATION FOR ENGINEERING SERVICES ASSOCIATED WITH
THE PREPARATION OF A WATER AND SEWER RATE STUDY.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
Section 1. That certain contract by and between the City of Pearland and Black
&Veatch Corporation, a copy of which is attached hereto as Exhibit "A" and made a part
hereof for all purposes, is hereby authorized and approved.
Section 2. That the City Manager or his designee is hereby authorized to execute
and the City Secretary to attest a contract with Black&Veatch Corporation,for engineering
services associated with the preparation of a Water and Sewer Rate Study.
PASSED,APPROVED and ADOPTED this the 24th day of November ,
A.D., 2003.
TOM REID
MAYOR
ATTEST:
(7 : / /
.
. ,
eYNSGIR)
,ETARY,
APPROVED AS TO FORM:
a2,t-j-- Ca-L--- -
DARRIN M. COKER
CITY ATTORNEY
NOU 13 2003 14 : 13 RR PERRLFIND 5ERU10E CtR . 1 652 1719 TO 1679 P .01
EXHIBIT
CITY OF PEARLIND
STANDA1-D AGREEMENT
FOR gNGINEERING SER. LC
This Contract (Contract) is made between the City of Pearland, Texas
(hereinafter"City), and Black and Watch (hereinafter"Engineer") as follows:
1. Sumrnar�► of Contract Terms. The following information and referenced documents
shall be a part of this Contract:
Description of Project; Water and Sewer„ag§ Studtx
Engineer/Subconsultant(s) Fee Basis of Compensation
Black:and:.Veatch $55,000.00 Hourly_.Rate
Maximum Contract Amount $55,000.00
*All financial obligations created by this agreement are between the City and
Engineer, and shall not be construed to be between City and any subconsultant.
Delivery of plans, specifications and estimates:_ N/A
Attachments: Scope of Services—Exhibit A
Project Schedule— Exhibit B
2. Services and Payment.
Engineer shall perform services within the Standard of Care of the Engineering
profession as follow:
A. Engineer will furnish services to the City in accordance with the terms and
conditions specified in this Contract. Payment for the services of Engineer shall be due
and payable upon submission and approval of a statement for services to City.
Statements for services shall not be submitted more frequently than monthly.
After consultation with the City, the Engineer shall specify the basis of
compensation in the scope of work for the,project. The Engineer shall provide adequate
detail of the basis of compensation so that the City can determine the reasonableness
of the fees and have the ability to make reasonable progress payments to the Engineer
based upon work completed at the payment intervals. The Engineer shall subcontract
for all subconsultants, subject to City approval, necessary to complete the scope of
work. The subconsultarrt's fees and administrative mark-up, if any, shall be included in
the scope of work. Unless otherwise agreed upon, the method of compensation shall
be one of the following methods:
NOV 16 2003 14 : 14 FR PEARLRND SERVICE CTR . 1 652 1710 TO 1679 P .02
1. Salary Cost Times Multiplier Plus Direct Nonsalary Expense e Salary')
Compensation shall be based on 1) the direct salaries (including benefits)
of the Engineer's employees whose time is directly chargeable to the
project; 2) an agreed upon multiplier to compensate the Engineer for
overhead and profit; and 3) reimbursement for direct nonsalary
expenditures and subconsultant contracts as defined in the scope of work
for the project. The Engineer shall provide a proposal that includes the
total fees for the project, which shall not be exceeded without prior City
approval.
2. Per Diem ("Per Diem")
Compensation shall be based upon 1) an agreed upon lump sum per day
for specific services; and 2) reimbursement for direct nonsalary
expenditures and subconsultant contracts as defined in the scope of work
for-the-project. This method is'best'suited to-expertwitness work or other
short-term engagements involving intermittent services,
3. Cost Plus Fixed Fee ("Cost Plus")
Compensation shall be based upon 1) reimbursement of the actual costs
of all-services and supplies related to the project and 2) an agreed upon
fixed fee (profit), The Engineer shall provide en estimate of thee costs to
be reimbursed, but actual compensation shall be based upon invoices and
supporting documentation provided by the Engineer,
4. Lump Sum ("Lump")
Compensation shall be based upon an agreed lump sum payment for
completing the entire scope of work. This method is best suited to
investigations or studies and for basic services with limited scope and
complexity.
5. Percent of Construction ("Percent")
Compensation shall be based upon 1) the "Harris County Curve for
Engineering Compensation" for basic and construction phase services;
and;2)..reimbursement for direct nonsalary.expenditures and subconsultant
contracts as defined in the scope of work for the project. The Engineer
shall provide a proposal that includes the estimated construction cost of
the project and the total fees for the project. If the actual low bid for
construction is 20% above or below the estimate, the engineering fees are
subject to equitable adjustment by mutual agreement of the Engineer and
City.
NOV 18 2003 14: 14 FR PERRLRND SERVICE CTR . 1 652 1710 TO 1679 P .03
If City fails to make any payment due Engineer for services and expenses within
thirty(30) days after receipt and approval of Engineer's statement for services therefor. ,
the amounts due Engineer will be increased at the rate of one percent (1%) per month
from said thirtieth (30 n) day, and, in addition, Engineer may, after giving seven (7) days'
written notice to City, suspend services under this Contract until Engineer has been paid
in full, all amounts due for services, expenses, and charges.
B. All the Engineer's working drawings, plans, and specifications, if required under
this Contract, shall be sufficiently accurate, detailed, and complete so that competitive
bids for the work can be obtained and the improvements constructed.
C. Approval of the Engineer's work by the City shall not-release the Engineer, its
employees, agents, or consultants, from the responsibility and liability for the accuracy
and competency of their designs, working drawings, -and specifications, or other
documents and services.
D. 'Subject to`Article 8 herein°or as otherwise agreed, the'Engineer shall promptly
correct errors in the Engineer's work, including errors discovered after final payment,
without receiving additional compensation.
E. Prior to execution of this agreement, the Engineer shall have prepared a project
schedule identified as an attachment to this agreement. The Project Schedule shall be
submitted in digital and paper form, in the Microsoft Project for Windows format. The
Project Schedule shall contain a complete schedule so that the Engineer's scope of
services under this contract can be accomplished within the specified time and contract
cost. The Project Schedule will provide specific work sequence and definite review
times by the City and the Engineer of the work performed. If the review time should
take longer than shown on the project schedule, through no fault of the Engineer,
additional contract time may be authorized by the City through a supplemental
agreement, if requested by a timely written request from the Engineer and approved by
the City.
3. Term and Termination. This Contract term will begin upon execution and end sixty
days after issuance of the certification of completion of construction by the Engineer.
The City may terminate this Contract at any time during its term by giving written notice
to Engineer. The City shall pay the Engineer for all services rendered to the date of
termination.
4. ...Modifications..City;without invalidating:.tbe Contract,::mayorder changes within the
general scope of the work required by the Contract by altering, adding to and/or
deducting from the work to be performed. If any change under this clause causee an
increase or decrease in Engineer's cost of, or the time required for, the performance of
any part of the Services under the Contract, an equitable adjustment will be made by
mutual agreement and the Contract modified in writing accordingly.
5. Subcontracts. lf, for any reason, at any time during the progress of providing
services, City determines that any subcontractor for Engineer is incompetent or
NOV 18 2009 14 : 15 FR PEARLRND SERVICE CTR. 1 652 1710 TO 1679 P.04
undesirable, City will notify Engineer accordingly and Engineer shall take immediate
corrective action, which may include cancellation of such subcontract. Subletting by
subcontractors shell be subject to the same regulations, Nothing contained in the
Contract shall create any contractual relation between any subcontractor and City.
6. Ownership of Documents. Ail drawings, report data, and other project information
developed in the execution of the services provided under this Contract shall be the
property of the City upon payment of Engineer's fees for services. Engineer may retain
copies for record purposes. Owner agrees such documents are not intended or
represented to be suitable for reuse by City or others. Any reuse by City or by those
who obtained said documents from City without written verification or adaptation by
Engineer will be at City's sole risk and without liability or legal exposure to Engineer, or
to Engineer's independent associates or consultants, and City shall indemnify and hold
harmless Engineer and Engineer's independent associates and consultants from all
claims, damages, losses, and expenses including attorneys' fees arising out of or
resulting.therefrom. Any such verification-or adaptation .will:entitle Engineer.to further
reasonable compensation, Engineer may rause all drawings, report data, and other
project information in the execution of the services provided under this Contract in
Engineer's other activities. Any reuse by Engineer will be at Engineer's sole risk and
without liability or legal exposure to City, and Engineer shall indemnify and hold
harmless City from all claims, damages, losses, and expenses including attorneys' fees
arising out of or resulting therefrom.
7. Insurance.
A. The Engineer shall procure and maintain for the duration of this Agreement,
insurance against claims for injuries to persons, damages to property, or any errors and
omissions relating to the performance of any work by the Engineer, its agents,
employees or subcontractors under this Agreement, as follows:
(I) Workers' Compensation as required by law.
(2) Professional Liability Insurance in an amount not less than $1,000,000 in
the aggregate.
(3) Comprehensive General Liability and Property Damage Insurance with
minimum limits of $1,000,000 for injury or death of any one person,
$1,000,000.for each occurrence, and $1,000,000 for each occurrence of
damage to or destruction of property.
(4) Comprehensive Automobile and Truck Liability insurance covering owned,
hired, and non-owned vehicles, with minimum limits of $1,000,000 for
injury or death of any one person, $1,000,000 for each occurrence, and
$1,000,000 for property damage.
NOV 18 2003 14: 15 PR PEARLAND SERVICE CTR . 1 652 1710 TO 1679 P .05
B. The Engineer shall include the City as an additional insured under the policies,
with the exception of the Professional Liability Insurance and Workers' Compensation.
Certificates of Insurance and endorsements shell be furnished to the City before work
commences. Each insurance policy shall be endorsed to state that coverage shall not
be suspended, voided, canceled, reduced in coverage or in limits except after thirty (30)
days prior written notice by certified mail, return receipt requested, has been given to
the City. Upon request, certified copies of all insurance policies shall be furnished to the
City.
8. Indemnity. Engineer shall indemnify and hold the City, its officers, agents, and
employees, harmless from any claim, loss, damage, suit, and liability of every kind for
which Engineer is legally liable, including all expenses of litigation, court costs, and
attorney's fees, .for injury to or-death of any person, for damage to any property, or
errors in design, any of which are caused by the negligent act or omission of the
Engineer, his officers, employees, agents, or subcontractors under this Contract.
9. Assignment. Engineer shall not assign this Contract without the prior written
consent of the City.
10. Law Governing and Venue. This Contract shall be governed by the I-w of the State
of Texas and no lawsuit shall be prosecuted on this Contract except in a court of
competent jurisdiction located in Brazoria County, Texas.
11. Entire Contract. This Contract represents the entire Contract between the City and
the Engineer and supersedes all prior negotiations, representations, or contracts, either
written or oral. This Contract may be amended only by written instrument signed by
both parties. Purchase orders issued under this Agreement shall contain a statement
nullifying additional terms and conditions on the reverse side of the purchase order and
referencing this Agreement.
12. Conflicts in Contract Documents. The above provisions shall govern over any
conflicting provision contained in any referenced contract document specified above.
13. Dispute Resolution Procedures. The Engineer and City desire an expeditious
means to resolve any disputes that may arise between them regarding this Contract. To
accomplish this, the parties agree to mediation as follows: If a dispute arises out of or
relates to this Contract, or the breach thereof, and if the dispute cannot be settled
through negotiation, then the parties agree..first to try.in_good-faith, and before bringing
any legal action, to settle the dispute by mediation of a third party who will be selected
by agreement of the parties.
NUU 16 2003 14 : 16 FR. PEARLAND SERVICE CTR: l 652 1710 TO 1679 P.06
EXECUTED and EFFECTIVE as of the day of , 20
CITY OF PEARLAND ENGINEER
By: By:
Printed Name: Printed Name:
Title: Title:
STATE OF TEXAS §
COUNrt OF §
BEFORE ME, the undersigned Notary Public, on this day personally appeared
, known to me to be:.the,person whose name is subscribed to the
foregoing instrument and acknowledged to me that he/she executed the same for the purposes
and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS DAY OF
A.D., 20 �
NOTARY PUBLIC IN AND FOR THE
STATE OF TEXAS
Printed Name:
My Commission Expires:
STATE OF TEXAS
COUNTY OF §
BEFORE ME, the undersigned Notary Public, on this day personally appeared
known to me to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he/she executed the same for the
purposes and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE THIS DAY OF
,A.D., 20 .
NOTARY PUBLIC IN AND FOR THE
STATE OF TEXAS
Printed Name:
My Commission Expires:
NOU t e 2003 1 4 : 1 6 FR PEARLAND SERU 1 CE C:TR . 1 652 1710 TO 1675 P .07
17.2003 2 2aPri
Black&Veatch
November 2003
Pearlaxd, Texas
Water artd Wastewater Rate Study
Project Schedule
Elapsed Time Approximate
Description iro Date(al
Study Tasks:Project initiation1 week y�ecember 1
January 26
--Revenue-requirements 8 weeks
Cost of service analysis 10 weeks February 9
Rate design •
12 weeks February 23
Computer rrioolel development continuous
Meetings: December 1
Project Initiation - 1 week
Interim Staff Meeting
8 weeks January 26
City Council Meeting 13--14 weeks Match 1 to 8
Deliverables: February 23
Draft rate report 12 weeks
Final rate report 16 weeks March 22
Computer model de liveredluaining 16 weeks March 22
Approximate date is based upon a start date of December 1, 2003, and will be modified
based upon contract approval and actual authorization date to proceed.
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*w. TOTAL PAGE .07 sK*
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EXHIBIT (ATTACHMENT) A
Pearland, Texas
Consultant Scope of Services for
Water and Wastewater Rate Study
The scope of services to be provided is divided into six tasks, each of which is interrelated
and presented as follows:
Task 1. Project Initiation
Task 2, Revenue Requirement Determination
Task 3. Cost of Service Analyses
Task 4. Rates and Charges Analyses
Task 5. Computer Model Development
Task 6. Reports and Meetings
TASK I. PROJECT INITIATION AND DATA COLLECTION.
SUBTASK 1.1 — DATA COLLECTION
At the initiation of the project, we will visit Pearland's offices to collect and review basic
financial and statistical data provided by the City to include historical and current financial
information, reports by others, and operating and capital budgets. Where possible, financial
data will be reviewed in its current form and/or collected in an electronic format to avoid
duplication of effort with regard to data entry and to ensure data accuracy, Specific subtasks
will include:
✓ Data Request.
We will furnish the City with a list of basic data needed to conduct the study, The list
details a request for: customer information, background information on current billing
policies, financial and operating data, historical customer account and billing records,
reports by others, audits, budgets, fixed asset records, bond prospectuses, debt service
schedules, and ordinances.
• ✓ Review and Evaluation of Basic Data.
We will review all data received at the project initiation meeting in detail to ensure its
completeness and our understanding of historical water and wastewater operations,
financial policies, and other requirements of the utilities.
✓ Supplemental Data Request.
As the study progresses after initial data is reviewed, we may submit requests for
additional data and/or seek clarification of initial information received, as necessary.
•
SUBTASK 1.2—REVIEW OF EXISTING RATES
The purpose of this task is to analyze the current rate methodologies and billing policies in
order to gain an understanding of the existing utility cost recovery mechanisms of the City.
Specific subtasks of this analysis will include:
✓ Review of Existing Rate Methodologies.
We will conduct a review of the current methodologies the City uses to develop rates
and charges for water and wastewater service. This review will include discussions with
utility management regarding rate policy issues and as applicable, review of contractual
provisions with entities that receive utility service from Pearland. This review will form
the foundation for assessing the adequacy of the existing methodologies to equitably
recover cost of service as developed in subsequent tasks, and to determine that the
existing customer classes used are satisfactory.
• Identify and Evaluate Alternative Rate Structures.
Review of the existing rates will form the initial basis for identifying alternative rate
structures .and practices that the City of Pearland may wish to consider in the
formulation of new rates. The general guidelines for evaluating utility rates include
the following:
• Rate schedules should be clear and readily understood,
® Rates should be designed to allow recovery of the cost of providing service.
o Rates should reflect the cost of service by customer classification.
o Rates should promote revenue stability.
Recommendations will be developed with consideration to the above guidelines
consistent with management goals and policies.
TASK 2. FIVE-YEAR FINANCIAL PLAN
Revenue and revenue requirements for each utility will be developed into a forward looking
financial plan. The study period will be for a future five-year period recognizing growth and
adjustments to revenue and expenses to reflect anticipated changes in operations and costs.
SUBTASK 2,1 — REVENUES UNDER EXISTING RATES
Black & Veatch will project future water and wastewater sales and associated revenues
under current rate levels based upon historical and projected growth of customers and usage
characteristics.
=- 2 _ .
SUBTASK 2.2— REVENUE REQUIREMENTS
The development of revenue requirements will be based on an examination of historical
financial reports, current operating budgets, and capital improvement programs based on
data provided by the City. The detailed analyses to be conducted will provide an indication
of the degree of overall adequacy of rates and potential adjustments in respective annual
revenue levels needed to meet the projected revenue requirements of each utility for fiscal
years (FY) 2003-04 through 2007-08.
/ Operation and Maintenance Expense
Operation and maintenance expense forecasts will be developed by Black & Veatch in
conjunction with City staff to facilitate analysis and cost allocation. Operation and
maintenance expense estimates will be based on an analysis of historical financial
records, trends, and budgeted operation and maintenance expense incurred in providing
service to utility customers. Costs analyzed will include salaries and fringe benefits,
utilities, treatment costs, purchase of contractual services, and other material and
supplies costs. Any identified shared costs between the water and wastewater utilities
will be allocated between the two on an appropriate basis. A discussion with utility
management and operating personnel will be held to ensure incorporating any
anticipated changes in personnel, operations, and the future effects of inflation. Due to
significant growth which is expected to occur, consideration will be given to identifying
future personal service costs based upon industry benchmarks of desired staffing levels.
✓ Routine Capital Replacement Expenditures
Based on analysis of historical data and discussions with Utility staff, we will forecast
the requirements for capital outlays that recur anniiFilly. Such expenditures consist of the
normal and ongoing replacement of worn out or obsolete equipment. These
requirements are typically financed directly from utility operating revenues.
✓ Capital Improvement Program and Financing Plan
We will summarize City provided capital improvement programs for each utility to
include a description of each project, probable costs, and time of expenditure. A plan
for financing the water and wastewater major capital improvement programs will be
prepared for fiscal years (FY) 2004 to 2008 and include consideration of existing fund
balances, magnitude and timing of future bond sales, revenue bond covenants, impact on
utility rate levels, and City policy for the study period.
✓ Debt Service Expense
Principal and interest payments on outstanding debt obligations and any additional
bonds necessary to finance the major capital improvement program will be included in
determination of the revenue requirements.
✓ Revenue Adequacy and Indicated Adjustments
We will prepare an analysis summarizing the above revenues and revenue requirements
to determine the adequacy of revenues under existing rate levels. Forecasted revenues
will include revenue under existing rates for utility service, other operating income, and
--.;
interest income. Revenue requirements will be determined on a cash needs basis and
will include operation and maintenance expense, routine capital expenditures, the
revenue financed portion of major capital improvements, debt service on currently
outstanding and any required additional bonds, bond covenant requirements, and any
other indicated revenue requirements. In addition, the revenue requirements will include
a nominal allowance for working capital balances as considered necessary for a fully
self-supporting utility operation. Such allowance is considered necessary for providing
operating funds during periods of depressed sales due to adverse weather conditions and
for unscheduled or emergency expenditures. Separate operating cash flow statements
will be prepared for each of the water and wastewater utilities which will indicate any
needed revenue adjustments.
TASK 3. COST OF SERVICE ANALYSES
Fiscal year (FY) 2004 will be used for the purpose of conducting cost allocations and rate
design. Separate water and wastewater costs of service analyses will be conducted that
generally follow industry accepted cost methodologies. The cost ,of service to be
recovered from utility revenues is equal to operation and maintenance expense plus all
capital related costs, less revenues received from interest income and other non-operating
sources. Costs of service using a "cash basis" approach will be determined for the various
customer classes and types of service provided by the Utility.
SUBTASK 3.1 — DETERMINATION OF CUSTOMER CLASSES
Cost of service will be allocated to groups of customers with similar service requirements.
Customers are typically grouped into residential, commercial, industrial, high volume and
high strength users. Additional classifications can be applied to recognize specific
characteristics as deemed necessary by utility management. We will:
✓ Determine Appropriate Customer Classes
Review the existing customer class designations to determine appropriateness and
equitability and recommend to the Utility any revised and/or new customer class
designations, as needed.
✓ Estimate Customer Class Characteristics
Estimate usage and billing characteristics of each customer class and type of service.
The characteristics include total annual water use, ratio of peak to average rates of use,
wastewater pollutant characteristics, responsibility for infiltration and inflow in the
sewer system, and customer billing requirements. Estimates of class loading will be
based on bill tabulation data, system operating statistics, available special studies, and
our judgment and experience.
SUBTASK 3.2 — ALLOCATION OF COSTS OF SERVICE
Costs of service, or revenue requirements to be met from water and wastewater utility
service rates, will be first allocated to functional cost components to provide a basis for
subsequent allocations to customer classes, which will recognize estimates of each class'
service requirements. Class allocations will be compared to estimates of corresponding
class revenues under existing rates to identify relative adjustments by class, and in total for
the utility systems, to align revenues with allocated costs. This process will recognize
existing contractual requirements, accepted water(A«\VA) and wastewater (WEF) industry
rate-making standards, and will ccmply with all applicable State and Federal regulatory
requirements.
•
✓ Functional Cost Allocations.
We will allocate FY 2004 costs of service to-various cost components that constitute
functional classifications of the types of service each utility is required to provide. The
development of functional'cost allocations will recognize cost-causative
factors including annual and peak rates of water use; wastewater volume, capacity, and
strengths for sewer allocations; and service delivery considerations for any specific
customer classes.
✓ Development of Customer Class Units of Service.
We will estimate customer class service characteristics (use, demand, strengths, etc.)
associated with each of the functional cost elements recognizing the bill distribution
analysis, applicable data available in Utility records, engineering judgment about
customer class service requirements, and experience with other utility operations with
similar usage characteristics and patterns.
✓ Allocation of Costs to Customer Classes.
We will distribute costs by functional component to customer classes using unit costs of
service applicable to all system users and class units of service to determine each class'
proportional responsibility for total system costs. The relative responsibility of each
class of utility customers will be specifically determined based on each class' or users'
estimated service requirements.
✓ Determination of Revenue Adequacy by Customer Class.
We will prepare a comparison of revenues under existing utility rates with allocated
costs of service to determine the level of cost recovery by class and in total, and to
demonstrate any needed adjustments to align class revenues and allocated costs.
TASK 4. RATES ANALYSES
Rates and charges designed to recover the costs of service from each customer class will be
developed to also recognize Utility policy objectives.
SUBTASK 4.1 —DESIGN OF RATES
Schedules of rates and charges will be developed for each utility, which recover the costs of
service from each customer class for the test year within practical limits. Specific subtasks
will include:
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iJ-:F-ra __- -. --
✓ Determination of Revenue to be Generated by Rates.
Revenue to be recovered from rate structures will reflect the total cost of service by
customer class.
✓ Development of Rate Schedules.
We will develop a schedule of rates and charges that equitably and efficiently recover
total revenue requirements. Specific rate design issues for the water and wastewater
utilities to be addressed include:
> Rate structure or form
• Conservation awareness and consumption block thresholds
> Inside/outside customer rate differential
> Base charge considering fixed cost vs. readiness to serve recovery
> Fire protection charges
> Infiltration/inflow cost recovery
> Excess strength surcharges
SUBTASK 4.2- DETERMINATION OF CUSTOMER IMPACTS
✓ Adequacy of Proposed Rates.
We will compare revenues expected from each customer class under proposed rates with
the cost-of service to be recovered from individual customer classes and for the water
and wastewater systems in general to determine their adequacy.
✓ Typical Bill Comparison.
We will prepare comparisons of typical bills under existing and proposed rates for each
customer class under various levels of water usage and meter sizes for water and
N,wrastewater customers.
TASK 5. COMPUTER FINANCIAL PLANNING/RATE MODEL DEVELOPMENT
SUBTASK 5.1 -PROVIDE COMPUTER RATE MODEL
As part of the study, we will develop a personal computer based financial planning and
rate design model that will enable the City to periodically revise and update the
projections of revenue and revenue requirements, i.e., financial plans, the cost of service
analyses, and the design of adequate rates on a routine basis. The model is used to
calculate annual rate adjustments or to conduct what-if analyses reflecting the impact of
changes in significant system variables such as customer growth and volume projections,
revised budgeted revenues and expenditures, allowances for inflation, capital
improvement program schedules, and utility policy decisions. The model's framework
will be specifically tailored and designed to recognize the unique needs,of the City, its'
utility characteristics and information base. The model will incorporate required features
necessary to pennit continuing, user-friendly, "in-house" application by City staff. The
financial planning and rate model development task will include the following:
MODEL FEATURES
• Automated ability to change study periods and retain relative information
so that it can be used on an annual basis by City staff.
• Specifically tailored and designed to recognize the unique needs;
characteristics, and the information base of the City's utilities, including
compatibility with'the utility's budgetary and accounting systems.
• Flexible capital improvement program scheduling allowing for changes in
costs, sources of funds, timing, and allowances for inflation.
• Ability to develop financial planning cash flow alternatives for changes in
customer, volume, and revenue projections; budgetary revisions;
variations in timing and amounts of revenue increases; debt service
structuring and different capital improvement program scenarios; and
changes in other parameters.
• Ability to readily assess impact on cost of service allocations to user
classes, user charges, and utility rates of alternative management
decisions.
• Capability to independently design and develop utility rates and charges
on an annual basis, thus permitting staff to examine the phase-in of needed
rate adjustments over a period of time.
• The model tests revenue generation by class and in total for proposed rates
and indicates impacts on customers served through a typical monthly bill
analysis.
• Incorporation of advanced programming features to automate basic
procedures such as initializing the rate model for a new budget year,
printing, setting-up screens for cash flow or other analyses, and navigating
throughout the rate model.
SUBTASK 5.1 - PROVIDE COMPUTER RATE MODEL TRAINING
We will provide a one (1) day training session that will be conducted at the Citti's offices.
This training session will orient City staff members in the use of the water and
wastewater model.
TASK 6. REPORTS AND MEETINGS
SUBTASK 6.1 - REPORT PREPARATION & DELIVERABLES
A rate report will be developed which explains the study approach, key assumptions, and the
findings and recommendations for both utilities, The report will be submitted in draft form
for review by City representatives before a final report is published and delivered. Specific
subtasks will include:
✓ Draft Report Preparation.
We will prepare the draft report covering development of revenue requirements, cost of
service analyses, rate design findings, and recommendations, This draft report will be
available for the City's review and approval,
3.20C
✓ Final Report Preparation.
Based on review comments received, we will revise the draft report and deliver 20
copies of the final report to the City.
SUBTASK 6.2 - MEETINGS & PRESENTATIONS
We will meet with City representatives,to gather data and information, discuss study
progress, report on interim findings, and present our final findings and recommendations
to the City of Pearland City Council. These meetings will be conducted in a workshop
format to encourage an active exchange of information by all participants and provide a
basis for complete understanding of relevant issues. Meetings will include:
V Utility Staff Meetings.
Attend two (2) meetings with City representatives during the course of the study to
gather data and review preliminary findings and discuss alternatives.
✓ Presentation to the City of Pearland City Council.
-. Meet with the City Manager, Mayor and Council of the City of Pearland to present
final results of the study's findings and recommendations. It is anticipated that two
(2) meetings will be required. A Power Point presentation will be used to present this
information in summary form.
✓ Additional Meetings.
At the City's request, we will be available for additional meetings with City staff or
Pearland City Council members as an additional service beyond the meetings
provided for herein.
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ATTACHMENT B
Pearland, Texas
Consultant Compensation for
Water and Wastewater Rate Study
Compensation is based on actual hours of worl/time devoted to providing the
described professional services. The Consultant will be paid at a hourly billing rate per
employee shown below. The City will reimburse the Consultant for actual, non-salary
expenses at direct cost to include travel related expenses while away from Consultant's
office, computer charges at $10.00 per hour, long-distance telephone, facsimile, postage,
printing and reproduction services. Unless amended by a duly authorized written change
order, the total payment for all services on this project, including both salary and non-
salary expenses, shall not exceed fifty five thousand dollars ($55,000).
The Consultant will submit monthly invoices to the City to indicate identification
of those professionals working on the project, hourly billing rate, salaries, and direct
expenses. The City will pay such invoices according to its normal payment procedures
and within thirty (30) calendar days of the City's receipt of the invoice. In the event the
City disputes any invoice item, the City shall give Consultant reasonable written notice of
such disputed item ten (10) days after receipt of such invoice and shall pay to Consultant
the undisputed portion of the invoice according to the provisions hereof.
Schedule of Hourly Billing Rates:
Project Manager S175 per hour
Senior Associate Consultant $l00 per hour
Associate Consultant S 75 per hour
Clerical S 60 per hour
Firm Vice President S225 per hour
(Technical Advisor—if used)