HomeMy WebLinkAbout25C - AGMT - SEWER AND WATER FINANCIAL PLANREQUEST FOR
COUNCIL ACTION
CITY COUNCIL MEETING DATE:
FEBRUARY 18, 2014
TITLE:
AMENDMENT TO AGREEMENT WITH
BLACK & VEATCH CORPORATION FOR
PREPARATION OF A SANITARY SEWER
AND WATER FINANCIAL PLAN
CITY MAAAGER
RECOMMENDED ACTION
CLERK OF COUNCIL USE ONLY:
❑ As Recommended
❑ As Amended
❑ Ordinance on 1" Reading
❑ Ordinance on 2nd Reading
❑ Implementing Resolution
❑ Set Public Hearing For
CONTINUED TO
FILE NUMBER
Authorize the City Manager and the Clerk of the Council to execute a second amendment to the
agreement with Black & Veatch Corporation, subject to nonsubstantive changes approved by the
City Manager and City Attorney, to prepare the City's Sanitary Sewer and Water Financial Plan, in
an amount not to exceed $100,000.
DISCUSSION
Approval of this recommended action will allow Black & Veatch Corporation (B &V) to perform
additional analysis and evaluation to complete the Sanitary Sewer and Water Financial Plan. This
plan is needed to address the City's long -term water and sanitary sewer infrastructure needs.
On October 17, 2011, the City Council approved a consultant agreement with B &V, in the amount
of $230,000, to prepare a Sanitary Sewer and Water Financial Plan. The report would assess the
City's water and sanitary sewer system and provide, among other items, a Rehabilitation and
Replacement schedule, a Capital Asset Management & Prioritization System model, and a rate
analysis.
On February 4, 2013, the City Council approved an amendment to the agreement with B &V, in an
amount not to exceed $150,000, for additional analysis to evaluate the potential impacts of a
possible sanitary sewer transfer between the Orange County Sanitation District and the City. Such
a change in ownership could result in a substantial change in costs to the City's Sewer Enterprise.
Over the course of the past year, several financial and operational issues have been subsequently
identified that require further analysis and inclusion in the final report. City management has
identified the goals and criteria of this analysis, such as appropriate reserve levels and additional
program costs. The added work is necessary to properly evaluate potential impacts financially,
managerially, and operationally, to both the water and sewer enterprises.
25C -1
Amendment to Agreement with Black & Veatch for Preparation
of a Sanitary Sewer and Water Financial Plan
February 18, 2014
Page 2
Staff recommends that the agreement be amended in order to complete the study. B &V has
performed well and has made all adjustments that the City has required. In addition, B &V has
demonstrated a successful record of assisting other utilities through the complex Proposition 218
requirements. The firm recently worked with the cities of South Gate, Downey, San Juan
Capistrano, Oxnard, and Long Beach on water and wastewater financial analyses. In the last five
years, B &V has conducted more than 30 such rate studies in accordance with Proposition 218
requirements.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
Funds are available in the Water Administration and Engineering Fund (Account 06017645-
62300).
Edwin "William" alvez, P.E
Interim Executi e Director
Public Works Agency
EWG /NS /RR
Exhibits: 1. Consultant Contract Agreement
APPROVED AS TO FUNDS AND ACCOUNTS:
Francisco Gutierrez
Executive Director
Finance & Management Services Agency
25C -2
SECOND AMENDMENT TO AGREEMENT
THIS SECOND AMENDMENT TO AGREEMENT is entered into on February 18, 2014, by and
between Black and Veatch Management Consulting, a California corporation ( "Contractor ") 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 A- 2011 -238, dated October 17, 2011 (hereinafter "said Agreement ")
by which Contractor has provided financial and engineering services required to prepare a sanitary sewer
and water utility financial plan.
B. By Amendment A- 2013 -026, dated February 4, 2013, the parties amended the Scope of Services and
added compensation to pay for the additional services.
C. In accordance with the terms and conditions of said Agreement, the parties again wish to amend the
Scope of Services to provide additional study services related to setting appropriate reserve levels and
capturing program costs. In addition, the consultant will assist with implementation of the fee study and
training in the asset management database.
WHEREFORE, in consideration of the covenants contained in said Agreement, and subject to all the terms and
conditions of said Agreement, except those amended in this Amendment to Agreement, the parties agree as
follows:
1. Section 1, SCOPE OF SERVICES, shall be deleted in its entirety and replaced with the following:
"Consultant shall provide financial and engineering evaluation services to prepare a sanitary
sewer and water utility financial plan for the City, as set forth in Exhibit A, attached to said
Agreement. Said financial plan shall include separate analysis of both water and sewer utility
services.
Consultant shall 1) update the CAMPS model, provide preliminary condition assessments for
currently planned water and sewer projects, and 2) assist the City to update and implement the
water and sewer rate studies, as set forth in Exhibit A -1, attached to the First Amendment to
Agreement.
Additionally, Consultant shall provide the additional financial support services, meeting
attendance and report delivery required to complete the water and sewer service utility fee study,
as set forth Consultant's Proposal dated December 16, 2013, attached hereto as Exhibit A -2, and
incorporated by this reference. The City Manager may authorize additional services, in writing, if
such services are necessary to complete the fee study, implementation or database training."
2. Section 3.a., COMPENSATION, shall be amended to add $80,000.00 to pay for the additional study
services, meeting attendance and report delivery, as set forth in Exhibit A -2. An additional $20,000 contingency
is available for unanticipated costs and /or services required to complete the study. The total sum to be expended
pursuant to said Agreement shall not exceed $480,000, during the term of said Agreement.
Section 4, TERM, shall be amended to extend the termination date to December 31, 2014.
Exhibit 1
25C -3
4. Except as hereinabove amended, all terms and conditions of said Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to Agreement on the date
and year first written above.
ATTEST:
CITY OF SANTA ANA
MARIA D. HUIZAR DAVID CAVAZOS
Clerk of the Council City Manager
APPROVED AS TO FORM:
Laura Sheedy
Assistant City Attorney
RECOMMENDED FOR APPROVAL:
EDWIN "WILLIAM" GALVEZ, P.E.
Executive Director - PWA
BLACK AND VEATCH
ANN T. BUI
Director
25C -4
City of Santa Ana, CAI SANITARY SEWER AND WATER FINANCIAL PLAN
Scope of Work
PROJECT UNDERSTANDING
The City of Santa Ana wishes to obtain a qualified consultant to 1)
conduct an evaluation of the City's sanitary sewer and water systems and
2) to perform a comprehensive sanitary sewer and water rate study. The
study will entail an assessment of the City's infrastructure to develop a
Rehabilitation and Replacement (R &R) Program and then design both
sanitary sewer and water rates that comply with all legal requirements
and protect the long -term financial health of the systems. The major goals
identified include:
R1 Develop sanitary sewer and water rates that are fair, objective and
fiscally appropriate over a 20 -year study period.
iJ Assess the City's operations and budgets to determine current and
future level of service.
01 Evaluate the City s sanitary sewer and water infrastructure and
determine necessary improvements.
KI Develop an R &R Program and long -range budget for both the sanitary
sewer and water systems.
Provide alternative funding mechanisms to fund operations and capital
improvements while minimizing rate impacts.
11 It is also understood that the City may deem it necessary to perform
the following additional duties:
Project growth and water demands for the sanitary sewer and water
systems.
Conduct a rate analysis on the basis of available water supply.
it Build a complete and comprehensive CIP program for both the sanitary
sewer and water systems.
0 Develop a Water Master Plan using existing City GIS data.
Similar to other sewer and water systems in California, the City is facing
several challenges presented by reduced water demand, water supply
shortages, cutbacks in personnel, the recent adoption of S130-7, and
increased environmental regulations. in light of these, the City is striving
to provide reliable sewer and water services at affordable rates to its
residents. The result of this study will assist the City in meetings its goals.
City of Santa Ana Operations
The City of Santa Ana serves a population of about 320,000 residents in
Orange County, California. It obtains its potable water supply from
groundwater and import water via Metropolitan Water District, The
BLACK & VEATCH I Scope of Work
Exhibit A
25C -5
City of Santa Ana, CAI SANITARY SEWER AND WATER FINANCIAL PLAN
water system consists of 20 wells, 8 reservoirs for a total capacity of 49
million gallons, 7 import water interconnections, 7 booster pumping
stations, and 16 emergency interconnections with neighboring utilities.
The sanitary sewer system is a collection only system with 2 lift stations,
45,000 laterals, 8,000 manholes and 390 miles of pipelines.
PROJECT APPROACH
Black & Veatch has developed a project approach that relies on the
fundamental principle of first understanding the needs and priorities,
recognizing the evolving nature of the sewer and water systems, and then
developing a holistic, yet flexible solution aligned with meeting the City's
defined goals and stated objectives.
Rehabilitation and Replacement Program
To meet the City's objective of developing an R &R Program, Black &
Veatch will utilize our Comprehensive Asset Management & Prioritization
System (CAMPS) model. CAMPS utilizes a holistic approach to managing
assets for Capital Asset Management Programs. Due to the City's
immediate needs of defining a R &R Program that can be incorporated
into the rate study portion, Black & Veatch's approach is to employ the
CAMPS model.
The CAMPS model is based on projecting the capital
rehabilitation and replacement of each asset or grouping
of similar assets (e.g, long pipe runs) that will be needed
each year to service the City's customers. By aggregating
Capital R &R needs by year, financial needs are also
identified and can be integrated into the financial plan.
As illustrated in the flowchart to the right, the Ivey
activities consist of the following:
„5 Confirm all capital assets have been incorporated into
the inventory to properly project the R &R needs into
the future.
,;, Populate the CAMPS Model with available asset
inventory data to project R &R schedules and costs for
each capital asset by year, considering the following
critical elements:
Reporting on annual needs for each system.
Allowance for criticality rankings to be incorporated into the model
for prioritizing expenditures and considering multiple scenarios
based on risk tolerance.
BLACK & VEATCH I Scope of Work
25C -6
City of Santa Ana, CAI SANITARY SEWER AND WATER FINANCIAL PLAN
Develop specific recommendations for the rate study based on the R &R
modeling results and appropriate funding policy changes.
Sanitary Sewer and Water Rate Study
To meet the City's objective of performing a cost of service and rate study,
Black & Veatch will utilize the project approach depicted in Figure 1.
The key components consist of the following:
M
Cost of Service. The cost of service analyses
will take into consideration the functional
aspects of both system operations and cost
component's such as capacity costs, commodity
costs, customer costs and other direct costs.
The analysis will evaluate the existing systems
and the relative load placed on the systems by the different customer
classes to fairly allocate costs based on services received.
rMRate Design. The rate design recommendations will incorporate the
City's objectives of examining the rates that promote water
conservation goals. Through our experience with multiple utilities,
Black & Veatch will help develop rates and charges that are fair,
equitable, and defensible and in accordance with AWWA Manual M1
and WEF MOP 27.
BLACK & VEATCH I Scope of Work
25C -7
City of Santa Ana, CA I SANITARY SEWER AND WATER FINANCIAL PLAN
Methodology
Using the project approach as a guide, Black & Veatch has developed a
detailed methodology that outlines the required tasks to meet the City's
objectives.
Task 1— Project Management
The objective of this task will be to establish lines of communication, get
an in-depth understanding of the study goals and objectives, assign roles
and responsibilities, and address questions and concerns. Specific
subtasks are:
1.1 Meet to introduce consultant team to City staff, confirm the overall
project purpose, and discuss approach and strategies associated
with an R &R Program and rate study.
1.2 Obtain financial, operational and other pertinent information
based on initial data request. List of data required for the study
includes, but is not limited to:
I9 Sanitary sewer and water ISIS information (already made
available). Additional listing of assets not included in the GIS
database.
* Historical asset replacement documentation, historical
documentation of maintenance, and the latest Sewer and Water
Master Plans.
Revenue budget data covering rate schedules, basis for billings,
revenue data, and usage records for all customer classes for the
most recent five years.
* Expense budget data covering operation and maintenance
(0 &M), water purchases, routine capital outlay.
Long-term capital improvement project plan with estimated
costs and scheduling.
* Debt issuance official statements that provide information
about debt service, bond covenants, debt service coverage
requirements, etc.
REHABILITATION AND REPLACEMENT PROGRAM
Task 2 — Asset Inventory Gap Analysis
The objective of this task is to conduct an asset inventory assessment and
to identify gaps in the dataset. Specific subtasks are:
BLACK & VEATCH I Methodology
25C -8
City of Santa Ana, CAI SANITARY SEWER AND WATER FINANCIAL PLAN
2.1 Assess the GIS database provided by the City to confirm that
sufficient information is available to model capital rehabilitation
and replacement needs.
2.2 Meet with City staff to identify additional assets not in the GIS
system that will need to be evaluated.
2.3 Review historical asset documentation including maintenance
records, Master Plans, close - circuited television (CCTV) reports,
and other documents.
2.4 Conduct field inspections on the assets that are not in the GIS
system and have no historical maintenance documentation.
Task 3 — Capital Asset Rehabilitation and Replacement Needs Evaluation
The objective of this task is to develop the R &R Program based on
Comprehensive Asset Management & Prioritization System (CAMPS) that
can be used in the rate study tasks. CAMPS is an MS Access tools
developed by Black &'Veatch to manage all assumptions for projecting
R &R schedules and costs and to model the R &R activities and funding
parameters,
BLACK & VEATCH
„ kuildinga world ofdifference.
CAMPS
"Comprehensive Asset Management and Prioritization System"
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Specific subtasks are:
3.1 Develop a draft asset class listing based on the asset inventory
provided by the City for both sanitary sewer and water capital
assets.
3.2 Populate an Asset Class Library based on the agreed draft set of
classes. The library will contain logical units of assets also known
as "asset classes." In the context of CAMPS, asset classes are
BLACK & VEATCH I Methodology
25C -9
City of Santa Ana, CAI SANITARY SEWER AND WATER FINANCIAL PLAN
defined by those assets having a similar function, cost structure,
and useful lives and refurbishment intervals.
33 Incorporate into the Asset Class Library the useful lives,
rehabilitation program definitions, intervals and costs, and
replacement schedules and costs for each asset class based on
industry standards.
rR Define Useful lives: For each defined asset class a
determination as to expected useful life will be made. The useful
life is defined as the number of years of normal use that can be
expected prior to replacement becoming necessary. The
estimate will be based on our industry experience,
manufacturers' estimates, previous literature research, and our
work for other agencies. These estimates are contained within
our CAMPS Library,
M Define rehabilitation programs, intervals
and costs: Most asset classes require various
capital rehabilitations on a cyclic basis in
order to sustain or extend the asset's useful
lives. Pump stations, for example, can be
expected to undergo pump rehabilitation,
motor overhaul, replacement of electric
components, and mechanical overhaul at
intervals shorter than the cycle for the
replacement of the assets themselves. Where
such programs are applicable, we will define
appropriate rehabilitation intervals and costs
that might be considered capital expenditures.
GI Define replacement intervals and costs: For each asset class
an estimate of the base -year replacement cost will be
incorporated. The estimates will be based on the experience of
our engineers, construction cost estimates we have recently
prepared for other clients, industry standards, and our
experience with other agencies. For unique assets, we will
adjust historical costs to the base year using Engineering News
and Report (ENR) indices.
rO Where possible, replacement costs, like other asset
attributes, will be defined in terms of unit costs to facilitate the
class -based estimating approach (dollars per foot of various
types of pipe, dollars per gallon for storage facilities, dollars per
square foot for buildings of various classes, etc.).
€a Facilitate an Asset Class Validation Workshop: Each of these
components of the asset class will be presented in detail within
BLACK &VEATCH 1 Methodology
25C -10
City of Santa Ana, CAI SANITARY SEWER AND WATER FINANCIAL PLAN
a workshop setting to incorporate City - specific experience with
each asset class. We anticipate one 2 -hour workshop for each
area of capital infrastructure (sanitary sewer and water).
PA Understanding the time - sensitive nature of this study, Black &
Veatch will leverage our extensive asset class library to the extent
possible to collaboratively guide the City.
3,4 Define appropriate method for the City of determining asset value
to comply with GASB34 /35 standards, Black & Veatch proposes
evaluating the reproduction cost new less depreciation (RCNLD)
for assets within the inventory, as it provides a more accurate
account of current "value" of the assets than original acquisition
cost, less depreciation, CAMPS will be used to generate current
asset values and depreciation,
3.5 Develop R &R schedules from CAMPS projecting the specific
capitalized rehabilitation, replacement, and costs needed for the
next 20 years. Costs are escalated to the year of the R &R.
3.6 Prioritize the R &R schedule based on "needs first" constraint.
Needs first relies on the rehabbing or replacing assets that have
the highest immediate possibility of failure based on their
condition or life cycle. The updated R &R schedule will serve as the
basis for R &R activities in the rate analysis portion of the study.
3.7 Specific considerations in the evaluation will be using NASSCO
standards for sewer pipes and the incorporation of the water
meter replacement program,
SEWER AND WATER RATE STUDY
Task 4— Financial Plan
The objective of this task is to develop the financial plan for the sanitary
sewer and water systems. Specific subtasks are:
4.1 Review the latest Master Plans and Capital Improvement Program
(CIP) documents Black & Veatch will examine
major CIP to: (1) identify whether the list of
proposed projects appears to adequately and
thoroughly address sanitary sewer and water
improvement needs for the planning period,
and (2) determine whether the City's
methodology for project cost estimating
appears reasonable.
4.2 Develop historical bill tabulation for water
based on current billing system. The bill
BLACK & VEATCH I Methodology
25C -11
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City of Santa Ana, CA I SANITARY SEWER AND WATER FINANCIAL PLAN
tabulation is a critical element in examining usage trends,
potential structure modifications, and the creating new
customer classes, In evaluating bill tabulation data, the basis for
establishing new tiers, break points, exceptions and promoting
water conservation can be determined,
4.3 Develop an Operating Fund financial plan based on forecasted
revenue and expenses for the systems. The financial plan will
cover a five (5) year period. The financial plan will incorporate the
following elements:
0 Forecast sanitary sewer and water revenues under existing
rates for the planning period recognizing projected accounts,
volumes, and usage patterns by customer class,
Forecast sanitary sewer and water 0 &M expenses, power costs,
distribution systems, debt service, transfers, reserves, and other
expenditures,
4.4 Develop a Capital Fund long-term financial plan based on the
capital needs assessment in subtask 4.1. The financial plan will
include considerations for various financing alternatives and
include a review for affordability based on current and expected
rates.
4.5 Develop a R &R Fund financial plan based on capital needs
identified in R &R Program that will incorporate annual
depreciation expense.
4.6 Develop a profit and loss statement and cash flow forecast to
determine the cash flow needs of the systems, The cash flow will
serve as the basis for the cost of service and rate design analysis.
4.7 Review reserve fund levels and policy for operating, capital
improvement, R &R, and emergencies.
Tasic 5 — Cost of Service Analyses
The objective of this task is to perform a cost of service analysis tailored
to the City. The goal is to achieve revenue self- sufficiency between
services and customer classes within the rate framework. Specific
subtasks are:
5.1 Determine the appropriate functional classifications of costs for
allocation purposes.
5.2 Classify functional expenses to cost components such as capacity
costs, commodity costs, customer costs and other direct costs.
BLACK & VEATCH I Methodology
25C -12
City of Santa Ana, CAI SANITARY SEWER AND WATER FINANCIAL PLAN
5.3 Classify plant investment to the functional
costs categories such as supply, collection,
pump stations, treatment, transmission,
distribution, and meters.
5.4 Classify operating, administrative,
engineering, 0 &M, power, etc, to the
functional costs categories identified in
subtask 5.3.
5.5
Allocate the classified costs of the sanitary
sewer and water systems to the customer
classes based on the cost components identified in subtask 5.2.
5.6 Estimate class service characteristics associated with each of the
functional cost elements by recognizing the bill distribution
analysis performed in subtask 3.2.
53 Develop unit costs of service based on the cost allocations. The
unit costs of service are applicable to all system users and each
class' proportional responsibility for total system costs. The
relative responsibility of each class customer will be specifically
determined based on each class' estimated service requirements.
5.6 Prepare a comparison of class revenues under existing rates with
allocated class 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 6 — Rate Design
The objective of this task is to evaluate the City's existing rates and
identify potential modifications to the rates and rate structures. As part of
this task, an analysis of the City's billing system capability will be
incorporated. In general the design of rates and rate structures intend to
accomplish the following:
Be consistent with all applicable laws, statues, rules and regulations
governing fees, rates, and charges such as Proposition 218.
Address revenue sufficiency, stability, customer clarity, price signaling,
and water conservation goals as set forth in SBx7 -7.
Specific subtasks are:
6.1 Analyze the existing rate structure and develop alternative rate
structures that address, at minimum, the following:
Lni A rate structure that incorporates water conservation rate
programs
BLACK & VEATCH I Methodology
25C -13
City of Santa Ana, CA I SANITARY SEWER AND WATER FINANCIAL PLAN
91 A rate structure that incorporates elderly low-income programs
9 A rate structure that incorporates emergency rates during
periods of drought or natural /manmade disasters
6.2 Analyze the current block sizes and seasonal rate differentials and
make recommendations to satisfy the California Urban Water
Conservation Council Best Management Practices,
6.3 Prepare comparison of revenues expected from each customer
class under proposed alternative rates and existing rates to
determine the adequacy of cost recovery,
6,4 Prepare comparisons of typical bills under the existing and
proposed rates for each customer class under various meter sizes
and levels of usage.
6.5 Provide a comparison of existing and proposed sanitary sewer and
water rates to selected neighboring municipalities,
Task 7 — Rate Model
The objective of this task will be to develop two independent Microsoft
Excel spreadsheet analyses rate models that establish financial planning,
cost of service, and rate design procedures. These models will enable City
staff to periodically revise and update the projections of revenue and
revenue requirements, financial plans, cost of service analyses, and
design of adequate rates on a routine basis. The City will be able to use
the model to calculate annual rate adjustments or to conduct "what -it"
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 policy decisions.
Provided below are some screenshots of the Black & Veatch model that
reflects new trends in modeling and takes advantage of software
developments, Some examples of new model enhancements include:
`t Specifically tailored and designed to recognize the systems' unique
needs, characteristics and information base, including compatibility
with the City's budgetary and accounting systems. ,
Fu Flexible capital improvement program scheduling allowing for changes
in costs, sources of funds, timing, and allowances for inflation.
0 Ability to develop financial plan 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.
BLACK & WATCH I Methodology
25C -14
City of Santa Ana, CA I SANITARY SEWER AND WATER FINANCIAL PLAN
El Ability to assess impact on cost of service allocations to user classes
and utility rates of alternative management decisions.
* Capability to independently design and develop rates and charges on
an annual basis, thus permitting staff to examine the phase -in needed
for rate adjustments over a period of time.
The model will test revenue generation by class and in total for
proposed rates and indicate impacts on customers served through a
typical monthly bill analysis.
The following were integrated for simplicity of use. Screen shots are
shown below.
PR "Virtual' Inputs Management - All inputs are managed through the
Inputs navigation function
1 Detailed Assumption Development - customized for each client's
needs; this allows for detailed development of revenues, expenses, and
capital and operating plans
tf Sensitivity Analysis - A dashboard system that allows users to create
scenarios for financial planning and rate revenue increases
General Navagation - Black & Veatch Model Home page
t. Navlgation Foeturos— provides users withthe ability to navigatethfoughoutthe model from onyworksheet.
2. Main — returns users to the Main Me no screen,
3. Inputs —takes users to the Model ranges designated for input variables.
4. Analysls — directs us ors to either the revenue sufficiency s can ario plan or the rate design modules.
6. Revenue Sufpclortcy —leads users through the calculations of the cash flow process.
8. Hatos/Cost of Service— leads usersthrough tha cost of service and rate design process.
7. Reports — directs users to custom ropons for use in meetings, documents or other purposes.
8. Harp— provides users help In understanding rote study components and navlgadng the model.
IJ
BLACK & VEATCH I Methodology
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City of Santa Ana, CAI SANITARY SEWER AND WATER FINANCIAL PLAN
Inputs Management - The Inputs Page
t. Clicking the "Inputs* button on the upper left will direct the user to the Inputs Page.
Note the Navigation Features bar is present on every page, to provide only nuvigodon and access
to features.
2. Inputs options are grouped by module —revenue sufficiency and cast of service y rate design.
All key inputs are accessible through this page, providing the user one place to find all inputs needed to
update the model,
3. Select the Budget button to proceed to the next example.
BLACK & VEATCH I Methodology
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City of Sonta Ana, CAI SANITARY SEWER AND WATER FINANCIAL PLAN
Scenario Plann
1, Navigation Features— provides titers withthe ability to navigate throughout the Model from
anyworksheot.
2. Summary of sign! [ice of output Irate revenue incretsosend debt service coverage) and override
functions used In scene rio analysis.
3. Summary graph showing a novel target balances (bars) and so tool turns Ibalances(diamonds) —
Fiscal years 2010 through 2012 show actual balances aline target level, indicating a rate revenue
adjustment is required to achieve these balances.
4. Summary graph showing a on ual target (horizontal lin as) and a ctu ad debt service coverall a (bars) —
Fisoolye ars 2909 and 2010 show actual coverage at the target level, Ind testing a rate revenue adjustment
Is required to achieve these results.
6. Summary graph showing the source of proceeds used to fund thaOR . These results are based onuser
designated funding selected on the CIP worksheet.
6. Summary graph showing a ran a Irate revenue adjustments.
Task 8-- Meetings, Reports and Presentations
The objective of this task is to identify meetings and deliverables for the
City. Specific subtasks are:
8.1 Attend at minimum one (1) monthly meeting with City staff.
Schedule conference calls as needed to update staff on progress of
the R &R Program and rate models,
8.2 Draft Report
U1 Document the preliminary findings associated with the R &R
Program
RI Document preliminary findings of financial plan, cost of service
and recommended rate structure
M Present draft report to the Water Resources Division, Finance
Department and member of City Council, as desired
BLACK & VEATCH I Methodology
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City of Santa Ana, CAI SANITARY SEWER AND WATER FINANCIAL PLAN
8.3 Final Report
C11 Incorporate changes pursuant to comments from City staff,
Subcommittee, and City Council
M Present final report to Subcommittee and City Council prior to
initiating Prop 218 requirements
TO Submit final reports and rate models in MS Word and Excel
2007, and Adobe Acrobat Portable Document [.pdo format
Task 9 — optional Tasks
The objective of this task is to identify optional duties that the City may
engage Black & Veatch to perform. The specific methodologies associated
with these items will be expanded upon the City's determination to
proceed with any specified item. Specific duties are:
H Project growth and water demands for the sanitary sewer and water
systems.
fs Conduct a rate analysis on the basis of available water supply.
Build a complete and thorough CIP program for both the sanitary
sewer and water systems.
1 Develop a Water Master Plan using existing City GIS data.
BLACK &VEATCH I Methodology
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City of Santa Ana, CAI SANITARY SEWER AND WATER FINANCIAL PLAN
Following are a few highlights and brief synopsis of the project team that
demonstrates the capabilities of Black & Veatch.
* Collectively the project team has over 100 years of providing
consulting services to municipal, special district, and investor owned
utilities.
* The project team members have deep utility industry knowledge, skill
sets and backgrounds that span the necessary technical disciplines to
effectively map, assess and make relevant and practical
recommendations to improve the sanitary sewer and water systems as
well the financial performance of the City's systems. These skills
include utility operations, finance, accounting, engineering processes,
regulatory and technology.
M Senior project team members, including the Project Manager, have
engineering backgrounds combined with business acumen that Is
unmatched by our competitors. The project manager has served as
expert rate witnesses and serves on national rates and financing
committees. This access to industry - setting trends and approaches can
be brought to bear on the City's study.
Project Manager
The proposed Project Manager, Ms. Ann Bui, has direct experience in
assisting water and sewer utilities conduct cost of service and rate design
studies. She recently assisted Marin Municipal Water District with its first
cost -of- service study. The project evaluated price elasticity impacts,
weather normalization techniques for revenue forecasting, and pricing
signals for conservation as well as several alternative rate structures. In
Orange County, Ms. Bui has provided financial planning and rate study
services to the City of San Juan Capistrano since 2009. She worked with
BLACK & VEATCH I Qualifications
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The senior members of
the Black & Veatch
Team are actively
Involved with the -
Industry's thought
leadership;
Ann Bui —AWWA
o Finance, Accounting
and Management
Controls Committee,
Vice Chair and Head
of Accounting /
Finance Handbook
Subcommittee
m Strategic
Management
Practices Committee,
Member
Keith Barber — National
Association of Clean
Water Agencies
n Finance Committee,
Member
Ahmad Habbian —
Associate Editor —ASCE
Journal of Piping Systems
• Trustee —AWWA
Distribution & Plant
Operation Division
• Past Chair - ASCE
Pipeline Division
Executive
Committee, ASCE's
Underground
Pipelines Asset
Management
(UPAM) Committee,
& ASCE's Technical
Committee on
Trenchless
Installation of
Pipelines
City of Santa Ana, CA I SANITARY SEWER AND WATER FINANCIAL PLAN
Schedule
The fallowing schedule assumes receipt of Notice to Proceed (NTP) on or
before September 20,20 11. The schedule reflects a high -level schedule
that provides time blocks and key dates for the activities. The proposed
schedule assumes timely receipt of requested data, timely turn - around on
materials submitted for review, and access to City staff for meetings.
Black & Veatch understands the time - sensitive nature of both the
developments of an R &R Program and the execution of the Rate
Study and as such we have the availability and resources to start this
project immediately upon receipt of City's NTP.
Notice to Proceed
10
i
Task 1. Project Management
graft Report
e•
City Presentation(Fele 2012)
0 Regular Meeting
Task 2. Asset Inventory GAP Analysis
•N
Public Hearing Presentation (Tap)
Task 3. Capital Asset R &R Needs Eval
Task 4. Financial Plan'
==.
Task 5. Cost of Service Analyses
ME
Task 6. Rate Design
oo
Nil
Task 7, Rate Model
IN
IN
Task 8. Meetings & Reports
10
i
10 Noticeto Proceed ❑
graft Report
e•
City Presentation(Fele 2012)
0 Regular Meeting
Final Report IFeb 2012)
•N
Public Hearing Presentation (Tap)
BLACK & VEATCH ( Schedule 4
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EXHIBIT A -2
December 16, 2013
City of Santa Ana
Attn: Brian Ige
PWA - Water Division
220 S. Daisy Ave. M -85
Santa Ana, CA 92703
Dear Mr. Ige:
Per your request, Black & Veatch is pleased to submit to the City of Santa Ana (City)
the following scope of work and fee estimate for additional work items related to
the Water and Sewer Rate Studies.
Task 1- Financial Support Services
The City has experienced many delays and identified several potential issues with
respect to moving forward on its planned water and sewer rate adjustments. As a
result, under this task, Black & Veatch proposes to perform the following subtaslcs:
• Update the water and sewer rate studies. Specifically, Black & Veatch will
update the study to reflect fiscal year (FY) 12/13 actuals and preliminary FY
13/14 budget figures. Projections for necessary revenue adjustments will
also be updated as necessary
• Provide recommendations on cost recovery mechanisms for capital
projects. For this subtask, Black & Veatch will work with City staff to help
development funding mechanisms for specifically identified needs. As
needed, we will work with Finance and City staff to outline any business
processes that may be necessary to implement any recommendations.
• Assist City with rate implementations. For this subtask, Black & Veatch will
work with City staff to help with implementation of the recommendations
from the rate studies, as well as other identified issues. Such assistance may
include, but is not limited to, development of policies for reserve levels,
external department cost allocations, and level of service agreements.
• Assist City with Cost Allocation review. Black & Veatch understands that
the City is currently updating its indirect cost allocation methodology. Under
this subtask, Black & Veatch will work with City staff to help determine the
impacts of changes in methodology to the utilities.
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• Provide the City with CAMPS /iCIP training. Under this subtask, Black &
Veatch will provide City staff with training on the Capital Asset Management
& Prioritization System (CAMPS) /iCIP asset database.
Task 2 - Meetings and Reports
This task covers necessary meetings and reports that are generated through the
completion of Task 1.
Based on our understanding of the City's request, we estimate that the above
additional items may be performed for a not -to- exceed fee of $80,000. A summary of
the level of effort and expenses for these tasks is provided in the table below.
Project Senior Project Total
Task Description Manager I QA IQC Leads. Analyst I Cost
Taskl. Financial Support Services 80 2 80 116 $55,400
Task 2. Meetings &.Reports 60 8 22 $20,600 '.
Total Hours 140 10 80 138 $76,000
Direct Expenses _ ;_$4,000,,
We are pleased to proceed with this engagement and look forward to working with
the City. If you have any questions, please contact me at (949) 302 -6017
(BuiA @bv.com).
Yours very truly,
BLACK & VEATCH CORPORATION.
Ann T. Bui
Director, Black & Veatch Management Consulting
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