CONTRACT 5724 Professional Services Agreement CLOSEDAgreement No. 5724
Agreement No.
r PROFESSIONAL SERVICES AGREEMENT
.. BETWEEN
THE CITY OF EL SEGUNDO AND
RAFTELIS FINANCIAL CONSULTANTS, INC.
This AGREEMENT is made and entered into this 4th day of June, 2019, by and
between the CITY OF EL SEGUNDO, a municipal corporation and general law city
("CITY") and RAFTELIS FINANCIAL CONSULTANTS, INC., ("CONSULTANT"). The
parties agree as follows:
1. CONSIDERATION.
A. As partial consideration, CONSULTANT agrees to perform the work listed
in the SCOPE OF SERVICES, below;
B. As additional consideration, CONSULTANT and CITY agree to abide by
the terms and conditions contained in this Agreement;
C. As additional consideration, CITY agrees to pay CONSULTANT a sum not
to exceed Ninety Eight thousand, Eight hundred forty-five dollars ($98,845)
for CONSULTANT's services. CITY may modify this amount as set forth
below. Unless otherwise specified by written amendment to this
Agreement, CITY will pay this sum as specified in the attached Exhibit "A,"
which is incorporated by reference.
2. SCOPE OF SERVICES.
A. CONSULTANT will perform services listed in the attached Exhibit "A,"
which is incorporated by reference.
B. CONSULTANT will, in a professional manner, furnish all of the labor,
technical, administrative, professional and other personnel, all supplies and
materials, equipment, printing, vehicles, transportation, office space and
facilities, and all tests, testing and analyses, calculation, and all other
means whatsoever, except as herein otherwise expressly specified to be
furnished by CITY, necessary or proper to perform and complete the work
and provide the professional services required of CONSULTANT by this
Agreement.
3. PERFORMANCE STANDARDS. While performing this Agreement, CONSULTANT
will use the appropriate generally accepted professional standards of practice existing at
the time of performance utilized by persons engaged in providing similar services. CITY
will continuously monitor CONSULTANT's services. CITY will notify CONSULTANT of
any deficiencies and CONSULTANT will have fifteen (15) days after such notification to
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cure any shortcomings to CITY's satisfaction. Costs associated with curing the
deficiencies will be borne by CONSULTANT.
4. PAYMENTS. For CITY to pay CONSULTANT as specified by this Agreement,
CONSULTANT must submit a detailed invoice to CITY which lists the hours worked and
hourly rates for each personnel category and reimbursable costs (all as set forth in
Exhibit "A") the tasks performed, the percentage of the task completed during the billing
period, the cumulative percentage completed for each task, the total cost of that work
during the preceding billing month and a cumulative cash flow curve showing projected
and actual expenditures versus time to date.
5. NON -APPROPRIATION OF FUNDS. Payments due and payable to CONSULTANT
for current services are within the current budget and within an available, unexhausted
and unencumbered appropriation of the CITY. In the event the CITY has not
appropriated sufficient funds for payment of CONSULTANT services beyond the current
fiscal year, this Agreement will cover only those costs incurred up to the conclusion of
the current fiscal year.
6. FAMILIARITY WITH WORK.
A. By executing this Agreement, CONSULTANT agrees that it has:
Carefully investigated and considered the scope of services to be
performed;
Carefully considered how the services should be performed; and
iii. Understands the facilities, difficulties, and restrictions attending
performance of the services under this Agreement.
B. If services involve work upon any site, CONSULTANT agrees that
CONSULTANT has or will investigate the site and is or will be fully
acquainted with the conditions there existing, before commencing the
services hereunder. Should CONSULTANT discover any latent or
unknown conditions that may materially affect the performance of the
services, CONSULTANT will immediately inform CITY of such fact and will
not proceed except at CONSULTANT's own risk until written instructions
are received from CITY.
7. TERM. The term of this Agreement will be from June 4, 2019, to September 30,
2020. Unless otherwise determined by written amendment between the parties, this
Agreement will terminate in the following instances:
A. Completion of the work specified 'in Exhibit "A";
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B. Termination as stated in Section 15.
8. TIME FOR PERFORMANCE.
A. CONSULTANT will not perform any work under this Agreement until:
CONSULTANT furnishes proof of insurance as required under
Section 22 of this Agreement; and
CITY gives CONSULTANT a written notice to proceed.
B. Should CONSULTANT begin work
written authorization to proceed,
CONSULTANT's own risk.
on any phase in advance of receiving
any such professional services are at
9. TIME EXTENSIONS. Should CONSULTANT be delayed by causes beyond
CONSULTANT's control, CITY may grant a time extension for the completion of the
contracted services. If delay occurs, CONSULTANT must notify the Manager within
forty-eight (48) hours, in writing, of the cause and the extent of the delay and how such
delay interferes with the Agreement's schedule. The Manager will extend the
completion time, when appropriate, for the completion of the contracted services.
10. CONSISTENCY. In interpreting this Agreement and resolving any ambiguities, the
main body of this Agreement takes precedence over the attached Exhibit; this
Agreement supersedes any conflicting provisions. Any inconsistency between the
Exhibits will be resolved in the order in which the Exhibits appear below:
A. Exhibit: A: Proposal for Services/Scope of Work.
11. CHANGES. CITY may order changes in the services within the general scope of
this Agreement, consisting of additions, deletions, or other revisions, and the contract
sum and the contract time will be adjusted accordingly. All such changes must be
authorized in writing, executed by CONSULTANT and CITY. The cost or credit to CITY
resulting from changes in the services will be determined in accordance with written
agreement between the parties.
12.TAXPAYER IDENTIFICATION NUMBER. CONSULTANT will provide CITY with a
Taxpayer Identification Number.
13. PERMITS AND LICENSES. CONSULTANT, at its sole expense, will obtain and
maintain during the term of this Agreement, all necessary permits, licenses, and
certificates that may be required in connection with the performance of services under
this Agreement.
14. WAIVER. CITY's review or acceptance of, or payment for, work product prepared
by CONSULTANT under this Agreement will not be construed to operate as a waiver of
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any rights CITY may have under this Agreement or of any cause of action arising from
CONSULTANT's performance. A waiver by CITY of any breach of any term, covenant,
or condition contained in this Agreement will not be deemed to be a waiver of any
subsequent breach of the same or any other term, covenant, or condition contained in
this Agreement, whether of the same or different character.
15. TERMINATION.
A. Except as otherwise provided, CITY may terminate this Agreement at any
time with or without cause.
B. CONSULTANT may terminate this Agreement at any time with CITY's
mutual consent. Notice will be in writing at least thirty (30) days before the
effective termination date.
C. Upon receiving a termination notice, CONSULTANT will immediately cease
performance under this Agreement unless otherwise provided in the
termination notice. Except as otherwise provided in the termination notice,
any additional work performed by CONSULTANT after receiving a
termination notice will be performed at CONSULTANT's own cost; CITY
will not be obligated to compensate CONSULTANT for such work.
D. Should termination occur, all finished or unfinished documents, data,
studies, surveys, drawings, maps, reports and other materials prepared by
CONSULTANT will, at CITY's option, become CITY's property, and
CONSULTANT will receive just and equitable compensation for any work
satisfactorily completed up to the effective date of notice of termination, not
to exceed the total costs under Section 1(C).
E. Should the Agreement be terminated pursuant to this Section, CITY may
procure on its own terms services similar to those terminated.
F. By executing this document, CONSULTANT waives any and all claims for
damages that might otherwise arise from CITY's termination under this
Section.
16.OWNERSHIP OF DOCUMENTS. All documents, data, studies, drawings, maps,
models, photographs and reports prepared by CONSULTANT under this Agreement are
CITY's property. CONSULTANT may retain copies of said documents and materials as
desired but will deliver all original materials to CITY upon CITY's written notice. CITY
agrees that use of CONSULTANT's completed work product, for purposes other than
identified in this Agreement, or use of incomplete work product, is at CITY's own risk.
17. PUBLICATION OF DOCUMENTS. Except as necessary for performance of service
under this Agreement, no copies, sketches, or graphs of materials, including graphic art
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work, prepared pursuant to this Agreement, will be released by CONSULTANT to any
other person or public CITY without CITY's prior written
including graphic display information to be published in
be approved and distributed solely by CITY, unless
agreement between the parties.
18. INDEMNIFICATION.
A. CONSULTANT agrees to the following:
approval. All press releases,
newspapers or magazines, will
otherwise provided by written
i. Indemnification for Professional Services. CONSULTANT will
save harmless and indemnify and at CITY's request reimburse
defense costs for CITY and all its officers, volunteers,
employees and representatives from and against any and all
suits, actions, or claims, of any character whatever, brought
for, or on account of, any injuries or damages sustained by
any person or property resulting or arising from any negligent
or wrongful act, error or omission by CONSULTANT or any of
CONSULTANT's officers, agents, employees, or
representatives, in the performance of this Agreement, except
for such loss or damage arising from CITY's sole negligence
or willful misconduct.
ii. Indemnification for other Damages. CONSULTANT indemnifies
and holds CITY harmless from and against any claim, action,
damages, costs (including, without limitation, attorney's fees),
injuries, or liability, caused by any negligence, errors or
omissions, or failure of performance by Consultant, except for
such loss or damage arising from CITY's sole negligence or
willful misconduct. Should CITY be named in any suit, or
should any claim be brought against it by suit or otherwise,
whether the same be groundless or not, arising out of this
Agreement, or its performance, CONSULTANT will defend
CITY (at CITY's request and with counsel satisfactory to CITY)
and will indemnify CITY for any judgment rendered against it
or any sums paid out in settlement or otherwise.
B. For purposes of this section "CITY" includes CITY's officers, officials,
employees, agents, representatives, and certified volunteers.
C. It is expressly understood and agreed that the foregoing provisions will
survive termination of this Agreement.
D. The requirements as to the types and limits of insurance coverage to be
maintained by CONSULTANT as required by Section 22, and any
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approval of said insurance by CITY, are not intended to and will not in any
manner limit or qualify the liabilities and obligations otherwise assumed by
CONSULTANT pursuant to this Agreement, including, without limitation, to
the provisions concerning indemnification.
19.ASSIGNABILITY. This Agreement is for CONSULTANT's professional services.
CONSULTANT's attempts to assign the benefits or burdens of this Agreement without
CITY's written approval are prohibited and will be null and void.
20.INDEPENDENT CONTRACTOR. CITY and CONSULTANT agree that
CONSULTANT will act as an independent contractor and will have control of all work
and the manner in which it is performed. CONSULTANT will be free to contract for
similar service to be performed for other employers while under contract with CITY.
CONSULTANT is not an agent or employee of CITY and is not entitled to participate in
any pension plan, insurance, bonus or similar benefits CITY provides for its employees.
Any provision in this Agreement that may appear to give CITY the right to direct
CONSULTANT as to the details of doing the work or to exercise a measure of control
over the work means that CONSULTANT will follow the direction of the CITY as to end
results of the work only.
21.AUDIT OF RECORDS. CONSULTANT will maintain full and accurate records with
respect to all services and matters covered under this Agreement. CITY will have free
access at all reasonable times to such records, and the right to examine and audit the
same and to make transcript therefrom, and to inspect all program data, documents,
proceedings and activities. CONSULTANT will retain such financial and program
service records for at least three (3) years after termination or final payment under this
Agreement.
22. INSURANCE.
A. Before commencing performance under this Agreement, and at all other
times this Agreement is effective, CONSULTANT will procure and maintain
the following types of insurance with coverage limits complying, at a
minimum, with the limits set forth below:
Commercial general liability:
Professional Liability
Business automobile liability
Workers compensation
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Limits
$2,000,000
$1,000,000
$1,000,000
Statutory requirement
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B. Commercial general liability insurance will meet or exceed the
requirements of the most recent ISO -CGL Form. The amount of insurance
set forth above will be a combined single limit per occurrence for bodily
injury, personal injury, and property damage for the policy coverage.
Liability policies will be endorsed to name CITY, its officials, and
employees as "additional insureds" under said insurance coverage and to
state that such insurance will be deemed "primary" such that any other
insurance that may be carried by CITY will be excess thereto. Such
endorsement must be reflected on ISO Form No. CG 20 10 11 85 or 88, or
equivalent. Such insurance will be on an "occurrence," not a "claims made,"
basis and will not be cancelable or subject to reduction except upon thirty
(30) days prior written notice to CITY.
C. Professional liability coverage will be on an "occurrence basis" if such
coverage is available, or on a "claims made" basis if not available. When
coverage is provided on a "claims made basis," CONSULTANT will
continue to renew the insurance for a period of three (3) years after this
Agreement expires or is terminated. Such insurance will have the same
coverage and limits as the policy that was in effect during the term of this
Agreement and will cover CONSULTANT for all claims made by CITY
arising out of any errors or omissions of CONSULTANT, or its officers,
employees or agents during the time this Agreement was in effect.
D. Automobile coverage will be written on ISO Business Auto Coverage Form
CA 00 01 06 92, including symbol 1 (Any Auto).
E. CONSULTANT will furnish to CITY duly authenticated Certificates of
Insurance evidencing maintenance of the insurance required under this
Agreement and such other evidence of insurance or copies of policies as
may be reasonably required by CITY from time to time. Insurance must be
placed with insurers with a current A.M. Best Company Rating equivalent
to at least a Rating of "A:VI I."
F. Should CONSULTANT, for any reason, fail to obtain and maintain the
insurance required by this Agreement, CITY may obtain such coverage at
CONSULTANT's expense and deduct the cost of such insurance from
payments due to CONSULTANT under this Agreement or terminate
pursuant to Section 155.
23. USE OF SUBCONTRACTORS. CONSULTANT must obtain CITY's prior written
approval to use any consultants while performing any portion of this Agreement. Such
approval must approve of the proposed consultant and the terms of compensation.
24. INCIDENTAL TASKS. CONSULTANT will meet with CITY monthly to provide the
status on the project, which will include a schedule update and a short narrative
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description of progress during the past month for each major task, a description of the
work remaining and a description of the work to be done before the next schedule
update.
25. NOTICES. All communications to either party by the other party will be deemed
made when received by such party at its respective name and address as follows:
If to CONSULTANT:
Raftelis Financial Consultants, Inc.
445 S. Figueroa Street, Suite 2270
Los Angeles, CA 90071
Attention: Sanjay Gaur
Phone: (213) 262-9304
Email: sgaur@raftelis.com
If to CITY:
City of EI Segundo
350 Main Street
EI Segundo, CA 90245
Attention: Juliana Demers
Phone: (310) 524-2332
Email: jdemers@elsegundo.org
Any such written communications by mail will be conclusively deemed to have been
received by the addressee upon deposit thereof in the United States Mail, postage
prepaid and properly addressed as noted above. In all other instances, notices will be
deemed given at the time of actual delivery. Changes may be made in the names or
addresses of persons to whom notices are to be given by giving notice in the manner
prescribed in this paragraph.
26. CONFLICT OF INTEREST. CONSULTANT will comply with all conflict of interest
laws and regulations including, without limitation, CITY's conflict of interest regulations.
27. SOLICITATION. CONSULTANT maintains and warrants that it has not employed
nor retained any company or person, other than CONSULTANT's bona fide employee,
to solicit or secure this Agreement. Further, CONSULTANT warrants that it has not
paid nor has it agreed to pay any company or person, other than CONSULTANT's bona
fide employee, any fee, commission, percentage, brokerage fee, gift or other
consideration contingent upon or resulting from the award or making of this Agreement.
Should CONSULTANT breach or violate this warranty, CITY may rescind this
Agreement without liability.
28.THIRD PARTY BENEFICIARIES. This Agreement and every provision herein is
generally for the exclusive benefit of CONSULTANT and CITY and not for the benefit of
any other party. There will be no incidental or other beneficiaries of any of
CONSULTANT's or CITY's obligations under this Agreement.
29. INTERPRETATION. This Agreement was drafted in and will be construed in
accordance with the laws of the State of California, and exclusive venue for any action
involving this agreement will be in Los Angeles County.
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30. COMPLIANCE WITH LAW. CONSULTANT agrees to comply with all federal, state,
and local laws applicable to this Agreement.
31. ENTIRE AGREEMENT. This Agreement, and its Exhibit(s), sets forth the entire
understanding of the parties. There are no other understandings, terms or other
agreements expressed or implied, oral or written. This Agreement will bind and inure to
the benefit of the parties to this Agreement and any subsequent successors and
assigns.
32. RULES OF CONSTRUCTION. Each Party had the opportunity to independently
review this Agreement with legal counsel. Accordingly, this Agreement will be
construed simply, as a whole, and in accordance with its fair meaning; it will not be
interpreted strictly for or against either Party.
33. SEVERABILITY. If any portion of this Agreement is declared by a court of
competent jurisdiction to be invalid or unenforceable, then such portion will be deemed
modified to the extent necessary
enforceable and, as so modified,
continue in full force and effect.
in the opinion of the court to render such portion
such portion and the balance of this Agreement will
34.AUTHORITYIMODIFICATION. The Parties represent and warrant that all necessary
action has been taken by the Parties to authorize the undersigned to execute this
Agreement and to engage in the actions described herein. This Agreement may be
modified by written amendment.
35.ACCEPTANCE OF ELECTRONIC SIGNATURES. The Parties agree that this
Agreement, agreements ancillary to this Agreement, and related documents to be
entered into in connection with this Agreement will be considered signed when the
signature of a party is delivered by electronic (.pdf) or facsimile transmission. Such
electronic or facsimile signature will be treated in all respects as having the same effect
as an original signature.
36. CAPTIONS. The captions of the paragraphs of this Agreement are for convenience
of reference only and will not affect the interpretation of this Agreement.
37. TIME IS OF ESSENCE. Time is of the essence for each and every provision of this
Agreement.
38. FORCE MAJEURE. Should performance of this Agreement be prevented due to fire,
flood, explosion, acts of terrorism, war, embargo, government action, civil or military
authority, the natural elements, or other similar causes beyond the Parties' reasonable
control, then the Agreement will immediately terminate without obligation of either party
to the other.
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39. STATEMENT OF EXPERIENCE. By executing this Agreement, CONSULTANT
represents that it has demonstrated trustworthiness and possesses the quality, fitness
and capacity to perform the Agreement in a manner satisfactory to CITY.
CONSULTANT represents that its financial resources, surety and insurance experience,
service experience, completion ability, personnel, current workload, experience in
dealing with private consultants, and experience in dealing with public agencies all
suggest that CONSULTANT is capable of performing the proposed contract and has a
demonstrated capacity to deal fairly and effectively with and to satisfy a public CITY.
[Signatures on next page]
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IN WITNESS WHEREOF the parties hereto have executed this Agreement the
day and year first hereinabove written.
CITY PF EL SEGUNDO
Greg rpe1�,
City anager
ATTEPT:
Tra y Weare,
City Clerk
APPROVED AS TO FORM:
Mark . Hensley,
City Attorney
REA
RAFTELIS FINANCIAL
CONSULTANTS, INC.
Sanjay
Vice President
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February 8, 2019
Mr. Joseph Lillio
Director of Finance
City of El Segundo
350 Main Street
El Segundo, CA 90245
Agreement No. 5724
445 S Figueroa Street Phone 213 262 9300 www.raftelis.com
Suite 2270 Fax 213 262 9303
Los Angeles, CA 90071
tibrject: Proposal for Water and Wastewater Rate Study
Dear Mr. Lillio:
Raftelis Financial Consultants, Inc. (Raftelis) is pleased to submit this proposal to assist the City of
El Segundo (City) in conducting the Water and Wastewater Rate Study (Study). Raftelis has a broad
range of experience in conducting water and wastewater rate studies. In fact, Raftelis has the
largest water and wastewater rate consulting practice in California and the nation. We have
assisted numerous utilities throughout California and across the U.S. conducting thousands of such
studies. We are excited to have the opportunity to assist the City in this important Study.
The scope of services is presented below.
Scope of Services
TASK 1 —PROJECT INITIATION, MANAGEMENT AND QA/QC
Task 1.1 Project Initiation and Data Collection
A productive on-site kick-off meeting is the most effective way to begin a rate study. The goals for the kick-
off meeting include:
0 Acquainting City Staff with our Project Team
• Establishing goals and objectives
Finalizing the work plan and schedule
0 Discussing the pricing objectives, including equity, affordability, and revenue stability among
other
• Discussing the data request and any additional data requirements
Prior to the kick-off meeting, we will prepare a detailed data request that identifies the information
needed. If possible, Raftelis will review the initial data before the kick-off meeting and will come
prepared with our questions to get the most out of the meeting.
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Agreement No. 5724
Scope of Services for Water and Wastewater Rate Study
City of El Segundo
Task 1.2 Project Initiation and Data Collection
Competent project management ensures a successful project. The project management task
involves client correspondence, progress updates, timely billing, and internal management of
Raftelis staff.
A well-defined QA/QC program fosters work products that meet or exceed our clients' standards. To
ensure robust quality control, one member of the Raftelis team (the Technical Reviewer) reviews the
model and results to ensure they are based on sound rate -making principles. The Technical Reviewer
provides an outside review and comment from someone who is not involved in the project.
Task 1.3 Pricing Objectives with Staff
We will complete a pricing objectives exercise with Staff to discuss and identify the goals of the rate
structure and to which degree the rate structure achieves the following objectives:
1. Revenue Stability
2. Affordability
3. Perceived Equity/Fairness
4. Simplicity
5. Conservation
We will perform an exercise with Staff for each enterprise in which we rank these pricing objectives
in order of importance and then identify the rate structures which promote each of these objectives.
Meetings: One (1) on-site kick-off meeting with City staff
Deliverables: Kick-off meeting agenda materials, meeting minutes, and data request list
TASK 2 - POLICY FRAMEWORK WORKSHOPS WITH CITY COUNCIL
Task 2.1 Policy rraniework Inquiry Workshop with City Council
Raftelis will begin the discussion with a review of the evolution of rate structures and the benefits
and challenges associated with each structure, including uniform rate, seasonal rates, inclining
tiered rates, and water budget rate structures. The goal of this discussion and the'Pricing Objective
Exercise' is for the City's elected officials to share with Raftelis its understanding of available rate
structures and for Raftelis to provide the City an overview of all applicable alternatives according to
the City's priorities and currently observed best management practices.
Raftelis will present a list of pricing objectives for the members of the City Council to rank. The
pricing objectives exercise and instructions prepared in Task 1 will be provided to the City prior to
the Workshop. Note that several of these pricing objectives can conflict with each other, especially
with conservation rate structures. For example, a rate philosophy focused on improving revenue
stability may conflict with affordability. Raftelis will discuss the implications so that stakeholders
can make informed decisions.
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Scope of Services for Water and Wastewater Rate Study
City of El Segundo
Task 2.2 Policy Framework Review with City Council
Based on the City Council's ranking of pricing objectives and other inputs gathered during the
preceding workshop, Raftelis will present the results of the pricing objective exercise and provide
the City Council with the basis for recommending an alternative rate structure, as appropriate,
along with other rate setting principles and policies to be used for the Rate Study.
Task 2.3 Rate Setting Principles and Study Framework Memorandum
Based on the City Council's ranking of pricing objectives and input regarding rate setting policies,
Raftelis will summarize the workshop results in a framework memorandum (Memo) to be used as
guiding principles for the Rate Study.
Meetings: Two (2) on-site workshops with City Council
Deliverables: PowerPoinf" Presentation materials, Pricing Objectives Exercise Packages in
electronic format and framework memorandum in Microsoft Word"
TASK 3 — FINANCIAL PLAN DEVELOPMENT
We will develop a financial plan for each enterprise — water and wastewater. The financial plans
will assess each enterprise's current financial status and suggest revenue adjustments to ensure
long term fiscal sustainability. Raftelis will project expenses and revenue requirements over a 10 -
year planning horizon. Projecting revenue adjustments over a 10 -year planning horizon illustrates
future rate impacts and potential challenges to each enterprise's financial health so the City can
plan expenses, reserve balances, or capital project scheduling to smooth rate impacts. We will
project revenue requirements based on the current budget, the City's long-term capital funding
strategy, and existing debt service (if applicable). Options for capital financing include rates, debt,
grants, SRF loans or infrastructure bank loans.
As part of the financial plans we will review and discuss reserves for operating, capital, rate
stabilization, and emergency purposes for each enterprise.
Raftelis understands the importance of developing a user-friendly, flexible model that the City can
use for future financial planning such as inputting actual expenses and assessing the impact on
rates. Raftelis builds each client's model from the ground up, carefully tailored to individual needs
and preferences. Once completed, the model will serve as a comprehensive, yet flexible, planning
tool that will incorporate the City's operating budget, forecasted demand projections, capital
financing plan, revenue requirements, revenue projections, reserve balances, and customer impacts
The dashboard is the graphical interface which displays the model's results in an easily
understandable format. As denoted with corresponding letters in Figure 1 on the following page,
the dashboard contains several features, including the ability to show or indicate:
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Agreement No. 5724
Scope of Services for Water and Wastewater Rate Study
City of El Segundo
A.
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FY 201 ]Ola FY 2019
PAYGO or debt_w^
'
.,, _ _
„19w u �
�ttw tiida
�dl, ut dkFaavres t.uta moK �a�
.,
financed (shown in the CIP and Funding Sources for Water Funds chart)
D.
Reserve balances and
target levels according to District policies (shown in the Projected
Ending Fund Balances) with flagging features when projected balances fall below target
levels
It is an easy -to -understand format which shows the impacts of various assumptions so that
decisions regarding revenue adjustments, capital financing through pay -go or debt, and reserve
balances can be made quickly and efficiently.
Upon the completion of the financial plan model, Raftelis will hold two web -based workshops with
City staff to review the model and the assumptions for appropriateness and finalize the financial
plans for the City's Water and Wastewater Enterprises to be used for the rate design model.
Meetings: Two (2) web -based financial plan workshops with City staff
Deliverables: PowerPoint Presentation materials and draft financial plan model in Microsoft
Excel"'
41 Page
Agreement No. 5724
Scope of Services for Water and Wastewater Rate Study
City of El Segundo
TASK 4 - COST OF SERVICE ANALYSIS FOR WATER AND WASTEWATER SERVICES
Task 4.1 Cost of Service Analysis for Water Services
The cost of service study (COSS) provides rate defensibility in light of Proposition 218 and
determines the total cost to serve each customer class. For water and recycled water, the cost of
service analysis will follow industry standards provided in the Manual Ml: Principles of Water
Rates, Fees and Charges, 6th Edition (Manual M1) published by the American Water Works
Association (AWWA). Our cost of service methodology includes three steps:
Step 1: Review Customer Class Usage Patterns and Determine Customer Classifications
Raftelis will review historical water consumption to assess class water use patterns. Using this data,
we will determine peaking characteristics for each customer class and tier and discern whether
new classes may be warranted.
Step 2: Allocate Costs to Cost Components
Raftelis will functionalize costs into water service functions such as supply, transmission &
distribution, storage, and customer service. We will then allocate these functions to cost
components such as water supply, base demand, capacity (demand), customer service, and more.
From here, we will determine the unit cost for each cost component.
Step 3: Distribute Costs to Customer Classes
Next, we distribute costs to the customer classes using the unit costs developed in Step 2. This
results in the cost to serve each class which is based on how each class uses water.
Task 4.2 Cost of Set -vice Analysis for Wastewater Services
For the wastewater rate study cost of service analysis, Raftelis will use methodologies set forth by
the Water Environment Federation in their Manual of Practice No.27, Financing and Charges for
Wastewater Systems (which was co-authored by our staff members, Sudhir Pardiwala & Andrea
Boehling).
The wastewater COS analysis consists of seven major steps, as outlined below:
1. Determine non-residential customer flow and strength loadings based on water usage
2. Estimate the flow and strength of the residential customer class using plant balance
analysis, which takes into consideration infiltration and inflow (I&I)
3. Functionalize 0&M and capital costs into functional categories such as Collection,
Treatment, and Billing and Customer Service, etc.
4. Allocate each functional category into cost components such as Flow, Strength, and
Billing and Customer Service, etc.
S. Develop customer class characteristics by cost component
51 Page
Agreement No. 5724
Scope of Services for Water and Wastewater Rate Study
City of El Segundo
6. Calculate the cost component rates by dividing the total cost in each cost component in
Step 4 by the customer class characteristics in Step 5
7. Calculate the cost by customer class by multiplying the unit cost in Step 6 by the
customer class characteristics in Step 5
Meetings: None
Deliverables: Cost of service analyses for water and wastewater services in Microsoft Excel"'
TASK 5 - WATER AND WASTEWATER RATES DEVELOPMENT
Raftelis will calculate the current inclining tiered rates and discuss rate structure modifications as
warranted by the pricing objectives exercise in Task 1 and tier breakpoint modifications if
warranted and/or desired by City Staff. We will also discuss the current fixed and volumetric
components of the rate structure in -light of competing pricing objectives such as revenue stability,
conservation signaling, affordability and fairness. We will review the bill impacts of different
fixed/volumetric rate structures with City Staff to select the appropriate structure.
Our model has the flexibility to instantaneously change tier widths and evaluate different
fixed/variable revenue structures to enhance revenue stability. To communicate the cost nexus for
tiered rates, the water rates have several cost components for each tier, as shown in the table
below, including, but not limited to water supply costs, delivery costs, peaking costs, conservation
costs, and revenue offsets (which lower the rates).
Water Rates Water
Supply
Delivery
RW
Program
Tier 1- Essential Use
$2.58
Tier...2 - Efficient.. Use................m
...............................
$2.58
Tier 3 - Inefficient Use
$2.58
Tier 4 - Excessive Use
$2.58
Uniform - CII Use
$2.58
Delivery
RW
Program
Conservation
_.... ........ _
Rev Offset Proposed
FY 2018
$0.15
$0.00
$0.00
-$0.21
$2.52
$0.33
$0.00
$0.00
$0.00
$2.91
$0.46
$2.55
$0.49
$0.00
$6.08
_ $0.67
$4.0.8 ......_
$0.49.
$0.00
$ ........_.. -
7.82
$0.17
$0.26
$0.05
-$0.17
$2.89
The model will calculate water rates under different revenue and rate scenarios as desired by Staff.
The Dashboard has proven to be particularly useful when making presentations to City Council,
allowing them to fully and instantly appreciate the impacts of their decisions.
The City operates a sewage collection system only. We will review the current sewer rates to ensure
that they reflect cost causation principles so that customer classes are charged in proportion to
their cost causation.
61 Page
Agreement No. 5724
Scope of Services for Water and Wastewater Rate Study
City of EI Segundo
We will analyze the bill impacts as a result of The assessment of the overall financial impacts
the new rates. If the rate structure is identical on customers is a tool for stakeholders
then this task is straight forward; if we revise to make informed decisions regarding different
the rate structure, we will clearly show who policy options and variables.
will be impacted and by how much. The model
will include a summary of customer bill
impacts resulting from the proposed rate
structure, using water as an example, is shown
in the two figures below.
Figure 1 shows Single Family Residential (SFR)
bill impacts at various use levels: The model
will have the ability to select a particular meter
size and see how bills are affected at different
usage levels. This tool has proven particularly
useful for public outreach campaigns and
during the Proposition 218 process.
Class wide customer impacts are show in
Figure 2: it shows how customers will see
changes in their bills if the proposed rate
structure is adopted. For example,
approximately 68% of the customers (2.7 +
30.2 + 35.0 percent) will see monthly increases
of less than $5. This is an invaluable tool to
facilitate informed decision making.
"" �d,ntpa1
Sample SFR Bills
40%
at different usage levels
35%
$180 1
$160
inside city wid7 3/4maer
$140
$120
20%
$100 .
16.5%
15%
119%
l0%
$r'0
II $20
"
'
g0 al.............�..11
......�
413W
1WNCuxr nt O�.
a0 $4023 $oa,l
2.«..
.�....,..,3
a $71, �'..,
$; ,A3
I
flfl $42e7
$170,62
$2-$5 $5-$10 $10-$25 >$25
N11PtlC%a`d�tFIk�0.Y.. ..$2 ..
.. ........
• 5224 -- $8 741 .................
9� ......�I,
2337
... ... .. ... ... ��..
....._
6 149' .,
"" �d,ntpa1
Residential Customer Impacts
40%
35,0%
35%
30%
ss%
20%
16.5%
15%
119%
l0%
5%..
2 7%
3 7%
OY.
r
5$0 $0-$2
$2-$5 $5-$10 $10-$25 >$25
$ change In Monthly His
Meetings: None
Deliverables: Draft water and wastewater rate models in Microsoft Excel'"
TASK 6 — RATE WORKSHOPS
Following the completion of the rate model, Raftelis will hold on-site workshop with City Staff to
develop different rate scenarios. The goal of this workshop is to identify the water and wastewater
rates that will be presented with the City Council. Raftelis will present the interim proposed rates
and discuss the benefits and challenges associated with each proposed rate alternative,
demonstrated through the water rate model. Changes and suggestions from Staff will be
incorporated into the analyses prior to presenting the results to the Council.
Upon incorporating City Staff comments from the prior Workshop, Raftelis will present the results
of our study during two workshops with the City Council. The presentations will discuss the
recommended reserve and fund levels, proposed long-term financial plan, and the proposed rate
structure and rates along with the resulting customer impact analysis. If necessary, Raftelis will use
71 Page
Agreement No. 5724
Scope of Services for Water and Wastewater Rate Study
City of El Segundo
the models to address any changes, comments, and feedback will then be incorporated into the final
models.
Meetings: Three (3) on-site Workshop to discuss draft and final water and wastewater rates
Deliverables: PowerPoint presentations for the Workshops
TASK 7 - ADMINISTRATIVE REPORT (AKA RATE STUDY REPORT) DEVELOPMENT
The process for developing the proposed rates will be described in a draft water and wastewater
rate study report. This draft report will include an executive summary highlighting the major issues
and decisions and an overview of operations, CIP, the financial plan and the final rates resulting
from the Study. A comprehensive section on the rate design assumptions and methodologies used
to develop the user -rate calculations and financial planning will be included as part of
administrative record in compliance with Proposition 218.
Comments from City Staff will be incorporated into the Final Report. The Final Report will be
submitted to the City and will include appropriate supporting data from the Model to address the
requirements of Proposition 218.
It is imperative that the Report clearly show the nexus between the proposed charges for service
and the cost to provide said service. The Report will lead the reader through Raftelis' methodology
to arrive at rates that are equitable, reflect the City's policies and values, and are driven by the City's
revenue requirements. The Report's ability to explain the rate development process and in a clear
and understandable manner will promote financial transparency, heighten legal defensibility, and
uphold the City's strong reputation with the public.
Meetings: One (1) webinar with City Staff
Deliverables: Draft Report, Final Report in Microsoft Word and pdf
TASK 8 - PROPOSITION 218 PUBLIC HEARING
Raftelis will prepare a Proposition 218 Public Hearing presentation and present the results of the
rate studies at a combined Proposition 218 Public Hearing. Raftelis has presented at hundreds of
public hearings and therefore has experience with typical concerns raised by the public. We have
cost of service experts that can explain the rate derivation that is needed in this post- San Juan
Capistrano rate setting environment. We will incorporate feedback from the City Council
presentation in Task S. The presentation will tell our rate -setting story and justify the need for rate
adjustments. Prior to the Public Hearing, Raftelis will conduct one (1) webinar with City Staff to
review the presentation materials.
Meeting(s): One (1) webinar to discuss the presentation materials with City Staff and one (1)
Proposition 218 Public Hearing
Deliverable(s): Microsoft PowerPointT" presentation for public hearing meeting
81 Page
Agreement No. 5724
Scope of Services for Water and Wastewater Rate Study
City of El Segundo
Project Fees
The following table provides a breakdown of our proposed fees for the Study split into Water and
Wastewater portions. This table includes the estimated level of effort required for completing each
task described and the hourly billing rates for our project team members. Expenses include costs
associated with travel, and a $10 per hour technology charge covering computers, networks,
telephones, postage, etc.
9 1 P a g e
Hours
Total Fees B Expenses
Web
Number of
Tasks
Meetings
Meetings
so
son
KP
Admin
Total
Water +WW
Water
WW
1. Kickoff Workshop, Data Collection 8
I
10
2
B
4
r
24
$5,850
$2.926
$2,825
Project Management
2. Policy Framework Workshops with City
2
16
2
12
r
30
$8,380
$4,190
$4,190
Council
3. Long Range Finanical Plan
3
8
1
36
45
$10,610
$5,305
$5,305
Development
4. Cost of Service for Water and
4
4
24
32
$7,500
$3,750
$3,750
Waatowoter Services
S. Water and WaetewalarRates
12
4
120
136
$31,080
$15,330
$15,530
Development
r
6. Rate Workshops
2
3
27
4
16
47
$13,285
$6,647
$6,647
7. Administrative Report Development
'1
12
4
60
6
82
$16,400
$9,200
$9,200
S. Proposition 218 Public Hearing
1;
1
3
1
4
13
$3,750
$1,875
$1,875
Total Esllnxaled Moelingsd Hours
7
7
97
22
280
10
409
Hourly Billing Rate
$285
$240
$210
$BO
Total Professional Foes
$28,615
$5,280
$58,800
$800
$93,495
Total Fees
$93,495
$46,748
$46,743
SG - Soijoy Gaur
SGn - Sieve Gagnon
Total Expenses
$5,350
$2,675
$2,675
KP - Khanh Phan
SC - Staff ConsuNants
Adrmm • A,*nfmislrabva SIaO"
Total Fees
& Expenses
,Xif ,;
9 1 P a g e
Agreement No. 5724
Scope of Services for Water and Wastewater Rate Study
City of El Segundo
We appreciate the opportunity to submit this proposal and look forward to assisting the City on this
project. Please contact me at (213) 262-9304 regarding any questions.
This letter proposal may be used to form an agreement by signing and sending a copy for our records.
Respectfully submitted, Accepted by:
RAFTELIS FINANCIAL CONSULTANTS, INC. CITY OF EL SEGUNDO
By: By:
Sanjay Gaur
Vice President Title:
Date:
101Page