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HomeMy WebLinkAbout25A - AGMT CAPITAL FACILITY CHARGE STUDYREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: FEBRUARY 5, 2019 TITLE: APPROVE AN AMENDMENT TO THE AGREEMENT WITH STANTEC TO INCLUDE A CAPITAL FACILITY CHARGE STUDY FOR THE WATER AND SEWER ENTERPRISES (NONGENERAL FUND) (STRATEGIC PLAN NO. 6, 1H) CITY MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ❑ As Recommended ❑ As Amended ❑ Ordinance on 151 Reading ❑ Ordinance on 2°d Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER Authorize the City Manager and Clerk of the Council to amend the agreement with Stantec to conduct a water and sewer enterprise capital facility charge study by increasing the compensation by an amount not to exceed $27,000, for a total agreement amount not to exceed $185,000, subject to nonsubstantive changes approved by the City Manager and City Attorney. On July 3, 2018, at the conclusion of a competitive bid process, the City entered into an agreement with Stantec to perform a cost of service study for the water and sewer enterprises. The primary tasks of the agreement are to create a financial plan for each enterprise, perform a cost -of -service analysis, and provide a recommended five-year rate structure for Council consideration. Throughout the course of the study, it has been identified that there is a need to develop and update Capital Facility Charges, otherwise known as Connection Fees, for the water and sewer enterprises, respectively. These types of charges are fees imposed by public utilities on new developments wishing to connect to the existing public water or sewer system, or on existing users that wish to upsize their current connection or increase the capacity by a change in their operation. The revenue collected from these charges are restricted and may only be used to construct new infrastructure, construct infrastructure capacity enhancements, reimburse the utility for past expansion projects, or for acquiring access to new water supplies. Staff recommends that the existing agreement with Stantec be amended to expand their scope of work to include a Capital Facility Charges study. Stantec will be able to provide this service on a cost-effective and expedient time frame due to work already performed for the cost -of -services studies (Exhibit 1 - Amendment). 25A-1 Approve an Amendment to the Agreement with Stantec to Include a Capital Facility Charge Study for the Water and Sewer Enterprises February 5, 2019 Page 2 STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal #6 - Community Facilities & Infrastructure, Objective #1 (establish and maintain a Community Investment Plan for all City assets), Strategy H (complete water/waste water rate study to ensure adequate resources to capture critical long-term capital needs). ENVIRONMENTAL IMPACT There is no environmental impact associated with this action. FISCAL IMPACT Funds are budgeted and available in the Water Administration and Engineering Account (No. 06017645-62300). Funds are estimated to be spent as follows: Fiscal Year Amount FY 2018/19 $27,000 TOTAL $27,000 101 Fuad S. SW eiss, PE, PLS Executiveirector Public Wor s Agency Exhibit: 1. Amendment to Agreement APPROVED AS TO FUNDS AND ACCOUNTS: Kathryn Downs Executive Director Finance and Management Services Agency 25A-2 FIRST AMENDMENT TO AGREEMENT TO PERFORM COST OF SERVICE STUDY FOR WATER AND SEWER ENTERPRISES THIS FIRST AMENDMENT to the above -referenced agreement is entered into on February 5, 2019, by and between Stantec ("Consultant"), and the City of Santa Ana, a charter city and municipal corporation organized and existing under the Constitution and laws of the State of California ("City"). RECITALS A. The parties entered into Agreement No. A-2018-172, dated July 3, 2018, by which Consultant agreed to perform a cost of service study for the City's water and sewer enterprises ("Agreement"). B. The Agreement remains in effect through July 2, 2021, with provision for extension, and the parties now wish to amend the Agreement to expand the scope of services and to increase the maximum expenditure under the Agreement to compensate for the additional services. The Parties therefore agree: 1. Section 1, Scope of Services, is amended to include the performance of a capacity charge study for the City's water and sewer enterprises, as described in Exhibit A. 2. Section 2.a., Compens_ation, is amended to increase the total sum to be expended under the Agreement by $27,000 to cover the cost of the capacity charge study as reflected on Exhibit A, which includes a contingency of approximately ten percent. 3. Except as modified by this First Amendment, all terms and conditions of the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to the Agreement on the date and year first written above. NORMA MITRE Acting Clerk of the Council APPROVED AS TO FORM SONIA R. CARVALHO City Attorney By: �wr� JGYN M. FUNI Assistant City Attorney STEVEN A. MENDOZA Acting City Manager CONSULTANT Name: Title: - signatures continue on next page - Page 1 of EXHIBIT 1 25A-3 RECOMMENDED FOR APPROVAL FUAD S. SWEISS, PE, PLS Executive Director Public Works Agency Page 2 of 2 25A-4 EXHIBIT A Stantec Consulting Stantec December 7, 2018 City of Santa Ana Attn: Rudy Rosas Public Works Agency, City Corporation Yard 215 South Center Avenue, Building A Santa Ana CA 92703 Re: Capacity Charge Study for Water and Sewer Enterprises Dear Mr. Rosas, Scope of Work for Capacity Charge Study On behalf of Stantec Consulting, we are pleased to submit the attached scope of work and fee to conduct a Water and Sewer Capacity Charge Study for the City of Santa Ana as an extension of our current rate study project for the City. Much like the current water and sewer rate study, we propose to have Hildebrand Consulting as a subconsultant (as the Project Manager).The study is intended to develop Capacity Charges for the water utility and update the capacity charge for the sewer utility. A capacity charge, also known as Capital Facility Charges and Connections Fees, Is a charge imposed by a public utility on new development wishing to connect to the watedsewer systems or on existing users that wish to upsize their connection or Increase required capacity within the system. The revenue collected from a capacity charge is restricted (see California Government Code 66000 at. seq.) and can only be used to increase the capacity of utility infrastructure, reimburse the utility for past expansion projects, or for acquiring access to new water supply (e.g. purchasing water rights). We will review the existing system assets for both water and sewer and review their respective capital improvement plans to determine the portion of the costs eligible for recovery within such capital recovery charges to ensure that a rational nexus exists between the capital costs and the benefits to new customers. The following describes our proposed scope of work. Task 1-A—Project Initiation & Data Collection To initialize the study, we will conduct a Kick-off Meeting conference call to discuss the goals of the project, data requirements, communication preferences, and the overall project schedule and key milestones for deliverables. Prior to the Kickoff Meeting, we will provide an initial data request list, which will Include the asset register for both systems, system capacity information, and capital spending information. We may already have some of this Information from our existing work. Upon receipt we will review all data received to confine its completeness. As part of our data review, and prior to the Kickoff Meeting, we will review origin and basis for the City's existing Water Availability Fees. Task 1'-B: Evaluate Existing Assets and Planned Growth Projects We will evaluate the value of the water and sewer system assets through the City's asset register. Based on original cost and age, we will assign each asset both a value and a function such that the value of each component of the existing water system Is determined. Our methodology for calculating the value of the system 25A-5 Stantec Consulting Scope of Work for Capacity Charge Study accounts for any outstanding debt and for third -party capital contributions that should offset the recorded value of system assets. In order to understand the value of the system's existing capacity we will evaluate the amount of capacity required to meet the demands of existing customers. The capacity is often measured In the form of 'equivalent residential units or'ERUs°. In order to be efficient, we propose to make simple assumptions regarding the capacities of the respective systems, as opposed to attempting a complex engineering analysis of the systems' capacities. We will also review the City's planning capital spending program as it relates to growth projects (if applicable). We will determine the cost of expanding the infrastructure by understanding the project costs and the capacity associated with the total capital program. Task 1-C: Capacity Charge Study Report Based on the above analysis, our team will develop Capacity Charge schedules for both water and sewer and summarize our methodology and findings in a Capacity Charge StudyReport. We will provide the draft report to City staff for review and Input. Price Proposal We propose to complete the two capacity charge studies for a lump sum amount of $24,839, to be invoiced monthly based on percent completion. The table below show the basis for the lump sum fee, both in terms of hourly rates (which are identical to the rates for our current rate study) and number of hours. Please let us know if you have any questions or comments regarding this proposal. We appreciate the opportunity to be of continued service to the City. Sincerely, David Hyder Principal, Financial Services Signing Authority 25A-6 AF0 Mark Hildebrand Hildebrand Consulting, LLC Project Manager