City of San Marino
Comprehensive Citywide User Fee, Rate Study and
Sewer Rate Study
PROJECT ID: 2023-GEN-012 / TECHNICAL PROPOSALS / SEPTEMBER 6, 2024 Table of Contents
RAFTELIS PROPOSAL
Section One – Transmittal Letter............................................................... 1 Section Two – Experience and Qualifications.......................................... 3 Section Three – Outline Strategies and Options.................................... 17 Section Four - References........................................................................ 24 Section Five – Estimated Project Timeline ............................................. 30 Exceptions ................................................................................................. 31
REVENUE & COST SPECIALISTS PROPOSAL
Section One – Transmittal Letter............................................................. 35 Section Two – Experience and Qualifications........................................ 36 Section Three – Outline Strategies and Options.................................... 40 Section Four - References........................................................................ 44 Section Five – Estimated Project Timeline ............................................. 45 City of San Marino
Sewer Rate Study
RAFTELIS 1
445 S. Figueroa Street, Suite 1925, Los Angeles, CA 90071 www.raftelis.com
SECTION ONE – TRANSMITTAL LETTER
September 6, 2024
Mark Siegfried
Accounting Manager/Controller
City of San Marino
2200 Huntington Drive
San Marino, CA 91108
Subject: Proposal for a Comprehensive Citywide User Fee, Rate Study and Sewer Rate Study (Project ID: 2023- GEN012)
Dear Mark Siegfried:
Raftelis and Revenue & Cost Specialist, LLC (RCS) are pleased to submit this joint proposal for a Comprehensive Citywide User Fee, Rate Study and Sewer Rate Study. Raftelis and RCS can provide the full scope of services requested. I, Steve Gagnon, PE (AZ), Vice President, will serve as the Project Manager for the Sewer Rate Study and Eric Johnson will be the Project Manager for the Cost Allocation Plan and Citywide Fee Study. We propose separate contracts for each firm and both Eric and I are authorized to negotiate on behalf of our firms.
Sewer Rate Study
I have been conducting water and wastewater rate studies in Southern California for about 16 years of my 25 years as an engineering consultant.
There are a few reasons why I believe we are well suited to support the City and deliver a successful project:
1) We have a large practice in Southern California and have helped many agencies set rates. Some of our recent wastewater rate studies include the cities of San Clemente, Pasadena, Oxnard, Seal Beach, Orange, and the Olivenhain Municipal Water District. References are enclosed herein. 2) I am based in Orange County and can reach the City in one hour for in-person City Council meetings. 3) Should the need arise, our Strategic Communications Practice team members are accredited in public relations, hold certificates in public participation, and worked in utility and municipal government before joining Raftelis. Gina DePinto, APR, will prepare the public notice and review our presentations to promote clear, simple messaging that the public will understand. Gina has 30+ years of public relations experience including communications for the Orange County Water District.
Cost Allocation Plan & Citywide Fee Study
Revenue & Cost Specialists (RCS) has been providing fee studies and other costing services since 1980, making us the first and foremost expert in costing services for California. RCS’ skill set will generate maximum accountability for the City of San Marino. We have a history of delivering quality reports with defensible data that can be acted on and adopted.
RAFTELIS 2
445 S. Figueroa Street, Suite 1925, Los Angeles, CA 90071 www.raftelis.com
Our processes are straightforward, analytical and require minimal staff time. In the end, we strive to ensure that the City of San Marino will be able to confidently stand behind the Report recommendations. As former city staff ourselves, we understand how San Marino operates, what you want, and that your time is precious. If selected, RCS can begin work immediately.
RCS is based in Fullerton and can provide timely support to City staff for years to come.
This proposal is valid for 90 calendar days from the date of submittal. Please don’t hesitate to contact Steve or Eric should you have questions.
Sincerely,
Steve Gagnon, PE (AZ), Vice President
Raftelis Financial Consultants, Inc.
445 S. Figueroa Street, Suite 1925, Los Angeles, CA 90071 E: [email protected] / P: 213.262.9308
Eric S. Johnson, President
Revenue & Cost Specialists
1519 E. Chapman Avenue, Suite C, Fullerton, CA 92831
P: 714.992.9027 / E: [email protected]
Diversity and inclusion are an integral part of Raftelis’ core values.
We are committed to doing our part to fight prejudice, racism, and discrimination by becoming more informed, disengaging with business partners that do not share this commitment, and encouraging our employees to use their skills to work toward a more just society that has no barriers to opportunity.
Raftelis is registered with the U.S. Securities and Exchange Commission (SEC) and the Municipal Securities Rulemaking Board (MSRB) as a Municipal Advisor.
Registration as a Municipal Advisor is a requirement under the Dodd-Frank Wall Street Reform and Consumer Protection Act. All firms that provide financial forecasts that include assumptions about the size, timing, and terms for possible future debt issues, as well as debt issuance support services for specific proposed bond issues, including bond feasibility studies and coverage forecasts, must be registered with the SEC and MSRB to legally provide financial opinions and advice. Raftelis’ registration as a Municipal Advisor means our clients can be confident that Raftelis is fully qualified and capable of providing financial advice related to all aspects of financial planning in compliance with the applicable regulations of the SEC and the MSRB.
RAFTELIS 3
SECTION TWO – EXPERIENCE AND QUALIFICATIONS
Experience and
Qualifications
HELPING LOCAL GOVERNMENTS AND UTILITIES THRIVE
Local government and utility leaders partner with Raftelis to transform their organizations by enhancing performance, planning for the future, identifying top talent, improving their financial condition, and telling their story. We’ve helped more than 700 organizations in the last year alone.
RESOURCES & EXPERTISE: With more than 180 consultants, Raftelis has the largest water-industry financial and rate consulting practice in the nation. We also have experts in key related areas, like stakeholder engagement and data analytics, to provide additional insights as needed.
DEFENSIBLE RECOMMENDATIONS: Our senior staff is involved in shaping industry standards by chairing various committees within the American Water Works Association (AWWA) and the Water Environment Federation (WEF). Raftelis’ staff members have also co-authored many industry-standard books regarding utility finance and rate setting. Raftelis is registered as a Municipal Advisor so that we can model debt payments should debt be needed to fund capital improvement programs.
HISTORY OF SIMILAR SUCCESSES: Raftelis staff has assisted 1,700+ utilities throughout the U.S. with financial and rate consulting services with wide-ranging needs and objectives.
USER-FRIENDLY MODELING: Our models are tools that allow us to examine different policy options and cost allocations and their financial/customer impacts in real time. Our models are non-proprietary and are developed with the expectation that they will be used by the client as a financial planning tool long after the project is complete.
EXPERTS ON CALIFORNIA REGULATORY REQUIREMENTS: The regulatory environment in California has become more stringent due to Proposition 218. Besides developing well-thought-out financial plans, Raftelis staff members are very knowledgeable about these regulations and have made presentations on this subject at various industry conferences.
PUBLIC SECTOR FOCUS: Raftelis’ services have expanded to provide public-sector organizations with a wide range of management consulting services including strategic planning, organizational assessments, strategic communications, technology and cyber security, executive recruitment, and financial consulting. Our utility expertise includes water, wastewater, stormwater, recycled water, and solid waste. We help local governments and utilities improve their financial foundation while minimizing the impact on the people who rely on their services; enhance organizational performance; identify and develop top talent; establish strategic plans; use technology to provide and convey data-driven insights; and tell organizations’ stories in a compelling, concise way.
RAFTELIS 4
RAFTELIS EXPERIENCE
The Raftelis Los Angeles office alone completes approximately 30 to 40 water and sewer rate studies per year.
Recent or ongoing sewer rate studies include studies for the cities of Pasadena, Oxnard, Ontario, El Monte, Orange, San Clemente, Seal Beach, and Tracy. In the last five years, our Los Angeles office has completed at least 75 to 100 water and wastewater rate studies.
PROPOSED TEAM CONSULTANTS
Steve Gagnon, PE (AZ) will serve as the Project Manager for the sewer rate study. Steve has been helping water and wastewater agencies develop financial plans and set rates in southern California for over 16 years. He is a registered Municipal Advisor with the Municipal Securities Rulemaking Board and is located in Huntington Beach, CA.
Nick Kennedy will serve as Project Analyst. Nick works out of our Los Angeles office and has been with Raftelis for two years. He conducted water and sewer rate studies for the Cities of Hollister, Corte Madera, and Padre Dam Municipal Water District. On the following pages, we have included resumes and project roles.
SCHEDULE AND PRESENTATIONS
We propose the schedule shown in Section 5. The schedule will be affected by the City’s ability to provide equivalent dwelling unit (EDU) data. Rate structures and data needs are further described in Section 3. Assuming Raftelis has EDU data, we could meet the schedule in the RFP, however the City may need more time to gather EDU data.
Steve has been presenting the results of water and sewer rate studies to Councils, Boards and the public for at least 10 years and averages about 12 presentations per year. This practice helps us explain the basis for revenue increases and answer questions in a way that is easy to understand. Further, we have accredited communications staff, who have spent their career in government communications, who review our presentations for conciseness and clarity.
City of San Marino
PROJECT ANALYST
Nick Kennedy
PROJECT MANAGER
Steve Gagnon, PE (AZ)
COMMUNICATIONS
SUBJECT MATTER EXPERT
Gina DePinto, APR
RAFTELIS 5
Steve Gagnon PE (AZ)
PROJECT MANAGER
Vice President
ROLE
Steve will manage the day-to-day aspects of the project, ensuring it is within budget, on schedule, and effectively meets the City’s objectives. He will also lead the consulting staff in conducting analyses and preparing deliverables for the project. Steve will serve as the City’s main point of contact for the Sewer Rate Study.
PROFILE
Steve has 25 years of experience in financial analysis and environmental engineering. For the past 15 years Steve has provided financial planning and rate setting services to agencies all over California. He has also helped utilities make major investment decisions such as whether to invest in food waste to energy projects. He has also managed the construction and installation of water treatment equipment and oversaw Superfund remediation for the U.S.
Army.
KEY PROJECT EXPERIENCE
City of Pasadena (CA): Water and Wastewater Rate Study
Raftelis recently assisted Pasadena Water and Power in preparing its first professional water rate study, and Steve is serving as the Project Manager.
Raftelis helped the City select a rate structure by discussing the pros and cons of different rate structures. We prepared a financial plan to ensure rate revenue recovers all costs and will complete a cost-of-service study to allocate costs to each customer class, followed by a rate design to collect costs from each class based on the cost of service. Raftelis is conducting a wastewater rate study.
City of Oxnard (CA): Water Rate Study
In early 2023, Raftelis assisted the City of Oxnard to develop a financial plan and set rates for their water and utility. The City of Oxnard has a very vocal and involved customer base. We simplified their rate structure and helped assess capital spending. We held a series of open houses that discussed the basics of rate setting. We also presented to council; the first meeting was a rate-setting basics workshop and the second presented the draft rates. During the public hearing, Raftelis and Staff fielded questions from the public. The rates were implemented by Council in the Spring of 2023. Steve served as the Project Manager.
City of Orange (CA): Water and Wastewater Rate Study
Steve is helping the City of Orange (City) update its water rates and rate structure to ensure that rates are based on cost-of-service principles. The study Specialties
• Utility cost-of-service & rate
structure studies
• Conservation rate studies
• Economic feasibility studies
• Capital budgeting studies
• Wastewater rate studies
• Capital recovery/capacity fee
studies
• Survey research of water &
wastewater utility characteristics &
rates
Professional History
• Raftelis: Vice President (2023-
present); Senior Manager (2020-
2022); Manager (2017-2019); Senior
Consultant (2014-2016)
• APTwater, Inc. (Now Ultura): project
manager (2011-2014)
• PBS&J (now ATKINS): project
manager - Utility Finance (2005-
2011)
• Earth Tech (now AECOM): Senior
project manager (2004-2005)
• Malcolm Pirnie, Inc. (now
ARCADIS): Consultant (2002-2003)
• National Parks Conservation
Association - Business Plan
Initiative: Business Plan Consultant
(2000)
• U.S. Army Corps of Engineers -
New England Division: project
manager (1995-1999)
• Geophex, Limited: Graduate
Research Assistant (1994)
Education
• Master of Business Administration -
University of Southern California
(2001)
• Master of Science in Environmental
Engineering - University of
Massachusetts (1995)
• Bachelor of Science in Civil
Engineering - University of
Massachusetts (1994)
Certifications
• Registered Professional
Environmental Engineer in Arizona
• Series 50 Municipal Advisor
Representative
Professional Memberships
• AWWA
RAFTELIS 6
includes a financial plan to fully fund operational and capital expenses and reserves. Steve also helped the City establish wastewater rates for its sanitation enterprise. The rates were revised to reflect sewer whereas they were previously based on water use.
City of Tracy (CA): Wastewater Rate Study
In 2019, the City of Tracy (City) engaged Raftelis to perform a wastewater rate study. Raftelis is currently working with City staff to best plan for expenses to minimize customer impacts, and Steve is serving as Project Manager.
Burbank Water and Power (CA): Water Rate Study
Raftelis assisted Burbank Water and Power with a professional water rate study. Raftelis helped staff select a rate structure from three structures including Budget Based Tiered Rates and performed a cost-of-service study to allocate costs to the customer classes. Burbank currently has a seasonal rate for commercial classes and has decided to go with a traditional tiered rate structure for single-family customers and a uniform rate for non-residential classes. Steve served as the Project Manager.
City of San Francisco Public Utilities Commission: Water and Wastewater Rate Study In early 2023, Raftelis assisted the City of San Francisco Public Utilities Commission to develop a financial plan and set rates for their water and wastewater utilities. The City has one of the lowest per capita water use in the state at 4 hundred cubic feet per single-family home per month. The City operates a very large water system that serves the city and many surrounding wholesale agencies. Raftelis worked with City Staff to functionalize their operating costs and develop a two-tiered rate for residential customers. Raftelis supported staff during rate committee presentations. The rates were adopted in the Spring of 2023. Steve served as the Project Manager for the water rate study.
City of Manhattan Beach (CA): Water Financial Plan and Rate Study Steve is helping the City of Manhattan Beach to create a water financial plan and set rates. The City had two major concerns; 1) wells were impaired in the near term and the city would have to purchase more imported water and 2) the City was unsure about tiered rates given recent litigation. Steve worked with city staff to discuss the pros and cons of tiered rates. After reviewing these pros and cons with the city attorney and manager, staff is recommending cost based tiered rates as of this writing. Steve will present the financial need and rate study results to city council and the public.
Otay Water District (CA): Wate Rate Study
Steve led a recent water rate study for the District in the Spring of 2022. Working with the District he updated their cost-of-service study, rate structure which included tier breakpoints. The District decided to use the Commodity Demand method and only base (commodity) and max day cost components as opposed to max day and max hour components. Based on discussions with District operations staff, the project team decided to allocate water purchase costs to what is termed base costs, reducing the water rate for tiers 1 and 2.
Running Springs Water District (CA): Water and Wastewater Rate Study Steve is assisting the Running Springs Water District (District) establish water and wastewater rates and evaluate the financial health of the Fire and Ambulance Department. The District is unique in that many residents are absentee owners of vacation homes. As such, the District is maintaining a higher than average level of fixed charges for both water and sewer to equitably distribute costs among full-time and part time residents. Steve also prepared a 10-year financial plan for the Fire and Ambulance Department showing its financial health under different property tax, other revenue and expenses assumptions, including fire engine replacement.
RAFTELIS 7
Hi-Desert Water District (CA): Water Rate Study
Steve is helping the Hi-Desert Water District (District) establish defensible and affordable water rates for a District with a high number of low-income residents. The study includes an update of their miscellaneous fees. The District has one main source of water, which limits the rate differentiation between tiers. The study includes an extensive outreach program to educate customers as to the need for rate adjustments.
City of Port Hueneme (CA): Cost-of-service Rate Study
The City of Port Hueneme (City) has some of the highest water rates in the area due to the amount of capital reinvestment needed to maintain the system. Steve is helping City Council and Staff assess the impacts of their decisions, including capital reinvestment, loan refinancing and fixed charge pricing on customer bills. The study included a rate workshop with City Council to show the Council the effects of their decisions.
Mesa Water District (CA): Water and Recycled Water Rate Study Mesa Water District (District) prides itself on the fact that it is no longer dependent on imported water. Steve helped the District revise their water and recycled water rates in a few months during a fast-paced rate study. The study included over 10 financial plan options for the Board to select from.
City of Pomona (CA): Water, Recycled Water, and Wastewater Rate Study Steve is currently helping the City of Pomona (City) establish water, recycled water and wastewater rates. He is establishing defensible tiered rates based on the City’s multiple sources of water and use characteristics. He is also establishing pumping charges based on the costs associated with serving water to high elevation customers. The engagement includes working with rate committee members, Staff and council members to ascertain their rate setting goals. It also includes a 10-year financial plan and modeling rates under industry standard reserve targets.
City of Lakewood (CA): Water Rate Study
Steve helped the City of Lakewood (City) develop cost-of-service based tiered water rates. Of note, Steve recommended revising the current practice of providing free water for the first four units of water in single family first tier. To ease the impacts of this change, the City decided to transition the rates over a 5-year period. The study included a full five-year financial plan and a review and recommendations on reserve levels.
Channel Islands Beach Community Services District (CA): Water and Wastewater Rate Study Steve helped the Channel Islands Beach Community Services District (District) establish equitable water and wastewater rates. Particularly noteworthy in this study was a class of customers that required the District to reserve capacity in the water treatment plant for possible future growth. Steve explained the cost causation-based rate for this customer class at Board meetings and the Public Hearing. Steve also held special web-based workshops with this customer class to explain cost-of-service principles and the basis for the rates.
City of Shasta Lake (CA): Water Financial Planning Study The City of Shasta Lake’s (City) water revenue dropped significantly during the recent drought - while their water costs increased due to emergency water purchases from expensive sources. In addition, the City’s infrastructure was over 80 years old which necessitated significant capital expenditures. Steve worked with City staff to develop a water financial plan that fully funded their capital program, reserves and operational expenses. The financial plan called for a 30% revenue increase in one year. Steve presented the basis for revenue adjustments and rate development at a well-attended public hearing at City Hall.
RAFTELIS 8
Santa Fe Irrigation District (CA): Water Cost-of-Service Study Santa Fe Irrigation District (District) has one of the largest per capita water use rates in the State due to its large lots, many of which have orchards and other agriculture requiring irrigation. Steve worked with City Staff and Board members to establish water cost-of-service based rates which included a complete restructuring of their fixed charges so that the District could pass through their fixed wholesaler charges. The consumption rates were based on the peaking characteristics of each class. Steve presented at a contentious Public Hearing, in which the rates were adopted, to answer Board and the Public’s questions.
City of Encinitas (San Dieguito Water District (CA): Water Cost-of-Service and Rate Study Steve helped the City of Encinitas (City) establish water rates that are based on cost-of-service principles. Cost-ofservice based rates create large bill impacts for the agricultural class. Steve worked with City staff and the Council rate setting committee to evaluate rates and explain rate setting basics to the committee and public in a Proposition 218 public hearing.
Trabuco Canyon Water District (CA) Water, Recycled Water, and Wastewater Rate Study Steve helped the Trabuco Canyon Water District (District) establish water, wastewater and recycled water rates.
The Trabuco Canyon Water District’s revenue plummeted significantly during the recent drought. Steve helped the District established rates, including drought rates, that fully funded operations, capital expenses and reserves. The District previously had a 7-tier rate structure. Steve helped the district establish a 4-tier rate structure in which the rates were based on the supply costs and peaking costs to serve water in each tier - as required by Proposition 218.
The study started with a pricing objectives exercise so that the Board could communicate its most important rate setting goals. Steve presented financial plan options and rate study results and a public hearing.
Sweetwater Authority (CA): Water Rate Study
Steve evaluated water rates, including drought rates, for the Sweetwater Authority in light of recent legal concerns over their current rate structure. The evaluation includes a cost-of-service study to clearly demonstrate the nexus between the rate for each single-family tier and the associated costs to serve that tier. The study started by soliciting input from Board members regarding their water pricing objectives so that rates could be designed accordingly.
Steve concluded the study with presentations to the District Board of Directors and the Public.
Moulton Niguel Water District (CA): Water and Wastewater Capacity Fees and Miscellaneous Fees Study
Steve prepared water and wastewater capacity fees and miscellaneous fees in June of 2016. The water and wastewater capacity fees were calculated using the buy-in methodology and varied by meter size. The Moulton Niguel Water District (District) also decided to implement a water demand offset fee for new water connections based on the premise that the recycled water system offsets potable water use and benefits potable water users. Steve attended Board meetings to help staff explain the rationale and basis for the capacity fees.
Steve also helped calculate miscellaneous fees by interviewing staff to assess the time and effort involved with the fees, benefit burden rates and material charges to properly calculate over three dozen fees for the water and wastewater systems. The deliverable included an excel model with which the District could update the miscellaneous fees in the future.
City of Redlands (CA): Water and Wastewater Rates and Development Impact Fees Study Steve updated the City of Redland's (City) water and wastewater rates and development impact fees. The rate study process included workshops with the City’s Utility Advisory Committee in which he presented the basics of rate RAFTELIS 9
setting and the financial environment of the utilities. The interactive workshops solicited input from committee members and staff regarding revenue adjustments and rates.
City of San Diego (CA): Renewable Energy Project
The City of San Diego (City) is considering a renewable energy project to take landfill gas and create electricity.
Steve prepared a financial model evaluating three alternatives: 1) do nothing and purchase electricity from a regional provider, 2) enter into a contract with a private entity to run and the renewable energy facility and sell electricity to the City at an agreed upon rate, 3) to purchase the facility and run it with City staff. The analysis gives the City a range of acceptable electricity rates for negotiating with a private party for option 2.
Delta Diablo Sanitary District (CA): Food Waste to Energy Financial Analysis Project Steve, as a sub-consultant to HDR, prepared the financial analysis for a potential food waste to energy project in which the Delta Diablo Sanitary District (District) would take food waste slurry, convert it to biogas and sell electricity. There were many unknowns in the project including exact operations and maintenance costs and the tipping fee from the nearby landfill. Steve performed a Monte Carlo simulation to help the District visualize the probability of a financially viable project given all the unknowns.
Encina Wastewater Authority (CA): Net Present Value Analysis Steve is helping the Encina Wastewater Authority (Authority) analyze the Net Present Value of three large capital investments: 1) their co-generation facility, 2) the heat dryer and 3) the fats, oils and greases (FOG) receiving facility that supports Encina’s co-digestion facility operation. For the co-gen facility, the analysis involves calculating the Net Present Value of electricity purchase costs with and without the co-gen facility. The heat dryer analysis involves calculating the equivalent annual cost of operating solely the centrifuge (with the associated disposal cost of sludge) versus operating the heat dryer and its reduced sludge disposal costs. Lastly, he is helping the Authority analyze its options for alternative digester fuels for co-digestion to enhance digester gas production - FOG versus beer waste - based on the tipping fees and associated maintenance costs of each.
City of Henderson (NV): Water and Wastewater Financial Planning and Rate Study Steve is creating water and wastewater rate and financial planning models for the City of Henderson as well as updating their water and sewer system development charges. The models will be used over the next 5 to 10 years not only to calculate water and wastewater rates but also to create yearly financial statements.
PROJECT LIST
• City of Anaheim (CA) - Wastewater rate study
• Boxelder County (CO) - Stormwater funding research
• Blue Plains Wastewater Treatment Plant (DC) - Valuation study • Confidential Fortune 500 Aerospace Corporation (CA) - Strategic remediation financial planning and analysis • City of Coronado (CA) - Wastewater rate study
• Earth Tech (CA) - Operation excellence plan
• Fallbrook Public Utility District (CA) - Water conservation-based sewer rates • City of Fullerton (CA) - Sewer fee assessment
• Helix Water District (CA) - Conservation based water rates; capacity fee study • Julian and Pine Valley Sanitation Districts (CA) - Wastewater rate study • Keweenaw National Historical Park, National Park Service (MI) - Business plan • City of La Habra (CA) - Sewer rate study and long-range financial plan • La Habra Heights County Water District (CA) - Water user rate study and long-range financial plan • City of Lemon Grove (CA) - Wastewater rate study
RAFTELIS 10
• Marine Corps Base Camp Pendleton (CA) - Utility privatization • Metro Wastewater Joint Powers Authority (CA) - Valuation of treatment capacity • City of Norman (OK) - Stormwater rate study
• Olivenhain Municipal Water District (CA) - Drought water rates; wastewater rate update; capacity and annexation fee update; long-term water planning financial model; water supply cost benefit analysis • Otay Water District (CA) - Capacity fees update; water rate structure update and drought phasing plan; performance metrics
• Town of Parker (AZ) - Water rate study; benchmarking and efficiency analysis • City of Pico Rivera (CA) - Valuation of groundwater
• pumping rights
• City of Poway (CA) - Water and wastewater rate models • Town of Quartzsite (AZ) - Third party rate review
• Rainbow Municipal Water District (CA) - Water conservation-based sewer rates • Rowland Water District (CA) - Water rate study
• San Antonio Water System (TX) - Sewer impact fee study • County of San Diego (CA) - Sewer utility rate study
• Sweetwater Authority (CA) - Water rate study
• U.S. Army Sudbury Annex Superfund Site (MA) - Base realignment and closure • Walnut Valley Water District (CA) - Water rate study
• City of Webster (TX) - Stormwater rate study
• Western Municipal Water District (CA) - Long-range financial plan RAFTELIS 11
Nick Kennedy
PROJECT ANALYST
Associate Consultant
ROLE
Nick will work at the direction of Steve in conducting data and financial analyses and preparing deliverables for the project.
PROFILE
Nick has a professional background in sustainable community development and data analysis. He holds a BS in Environmental Economics with a focus in Business Sustainability from Ohio State University.
KEY PROJECT EXPERIENCE
City of Hollister (CA): Wastewater Rate Study
The City of Hollister (City) engaged Raftelis in 2021 to conduct a comprehensive water and wastewater cost-of-service and rate study as well as a capacity fee study for the water and wastewater utilities. Nick served as an associate consultant on the project and was the lead analyst for the wastewater cost-of-service, rate study, and capacity fee study. The rate study required Raftelis to develop wastewater rates that would keep reserves in a healthy position while still providing fair and equitable rates to wastewater customers.
Padre Dam Municipal Water District (CA): Water, Recycled, and Wastewater Rate Study Padre Dam Municipal Water District (PDMWD) engaged Raftelis in 2021 to complete a comprehensive cost of service and rate study for their potable, recycled, and sewer enterprises as well as establishing an updated fully burdened hourly rate and creating a miscellaneous fee calculator for District use. Nick served as an associate analyst on the project and assisted in the development of rates for all three enterprises. Nick served as the lead analyst in creating an updated fully burdened hourly rate and creating the miscellaneous fee calculator.
PROJECT LIST
• City of Hollister (CA) – Wastewater rate study
• Padre Dam Municipal Water District (CA) – Water, recycled, and wastewater rate study • Mesa Water District (CA) – Cost comparison study
RELEVANT PROFESSIONAL EXPERIENCE
City of Columbus Department of Development Intern (OH)
Nick served as a Department of Development intern with the City of Columbus (City). He collaborated within the City’s government as well as other cities across the country. Nick led process reviewing recent updates to zoning codes in similar cities in the United States and making recommendations for the City moving forward, specifically pertaining to sustainable and equitable development. Research was also done to compare the City’s waste reduction goals compared to other cities. Recommendations were made and implemented into the Office of Sustainability’s 2030 Waste Reduction Plan.
Specialties
• Environmental Economics
• Community Development
• Business Sustainability
Professional History
• Raftelis: Associate Consultant
(2024-Present, 2021-2023)
• City of Columbus: Department of
Development Intern (2020-2020)
• Brightview Enterprise Solutions:
Data Analytics Intern (2020-2020)
Education
• Bachelor of Science in Environment,
Economy, Development, and
Sustainability – Ohio State
University (2020)
RAFTELIS 12
Brightview Enterprise Solutions: Data Analytics Intern (OH) Nick served as a data analytics intern with Brightview Enterprise Solutions in New Albany, OH. He worked across all business fronts in the company, including the Finance, Client Analytics, and Data Analytics teams. Nick created an annual breakdown within the Client Analytics team for one of the company’s largest clients and made recommendations on where money is best spent in future years based off the historical data. He assisted the Finance department in billing clients and paying vendors, as well as ensuring data quality. Nick used GIS applications to map out properties. He also created a dashboard for executive leadership to universally track KPI’s across different clients within the Data Analytics department.
RAFTELIS 13
Gina DePinto APR
COMMUNICATIONS SUBJET MATTER EXPERT
Manager
ROLE
Gina will provide input and guidance as a Subject Matter Expert for the communications components of this project and will review our presentations to ensure our message is clear and consistent and will prepare the Public Hearing Notice. Gina can provide broader services for strategic communications and stakeholder engagement.
PROFILE
Gina is an award-winning and accredited public relations professional with more than 34 years of experience and leadership in crisis communications, community outreach, advocacy, stakeholder engagement, marketing, and media relations in the public and private sectors. Gina’s leadership experience includes communications program management for $2 billion in public transportation and water infrastructure projects, including the Port of Long Beach Gerald Desmond Bridge Replacement Project and the Orange County Groundwater Replenishment System. The GWRS has been covered by international media including National Geographic, Wall Street Journal, New York Times, BBC, CNN, and NPR to name a few. Prior to joining Raftelis, Gina served the residents of Santa Barbara County as the first executive Communications Manager in the county government’s 171-year history. She advised the County Executive Team on strategic communications programs, crisis communication, media relations, issues management, internal communications, branding and culture change. During her tenure, the County Emergency Operations Center was activated 19 times and included two federally declared disasters, a global pandemic, two mass casualty incidents, and a $2M embezzlement in the Public Works Department. Born and raised in Phoenix, Arizona, DePinto served as a public information officer for the City of Phoenix, public relations director for Farnam Companies, Inc. (animal health and pet products), and coordinated publicity for Olympic and World Champion figure skater Dorothy Hammill prior to relocating to California. Gina earned a bachelor’s degree in organizational communication from Arizona State University, is accredited in public relations from the Public Relations Society of America (PRSA) and holds certificates in public participation from the International Association for Public Participation (IAP2). Gina is currently a member of the California Association of Public Information Officials (CAPIO), Public Relations Society of America (PRSA), Municipal Management Association of Southern California (MMASC) and AWWA CA-NV.
Specialties
• Strategic communications planning
• Crisis & risk communications
• Reputation management
• Stakeholder engagement
• Media relations & media training
• Development & oversight of earned
social and paid media
• Writing, copyediting, script writing
• Collateral development and art
direction
• Branding and marketing
• Public speaking
Professional History
• Raftelis: Manager, Strategic
Communications (2022-present)
• County of Santa Barbara:
Communications Manager (2016-
2022)
• Westbound Communications:
Account Director (2013-2016)
• Orange County Water District:
Communications Specialist (2006-
2013)
• Bylines Public Relations &
Marketing: Owner/Principle (1996-
2006)
• Farnam Companies: Public
Relations Director (2000-2003)
• City of Phoenix: Public Information
Officer (1998-2000)
• Martz Goldwater Public Relations:
Senior Account Executive (1996-
1997)
• Dorothy Hamill’s Ice Capades:
Marketing Manager & Publicist
(1993-1995)
Education
• Accredited in Public Relations –
PRSA (2013)
• Bachelor of Arts in Organizational
Communication - Arizona State
University (1987)
Professional Memberships
• Public Relations Society of America
• California Association of Public
Information Officials
• Municipal Management Association
of Southern California
RAFTELIS 14
KEY PROJECT EXPERIENCE
City of West Sacramento (CA): Water, Sewer, and Solid Waste Rate Study Communications and Outreach
Raftelis was hired to build stakeholder awareness of and support for the City's water, sewer, and solid waste rate study. Gina was the architect of the strategic communications plan that included detailed analysis of key stakeholders, messages designed to communicate complex concepts in a clear and concise manner, and print, digital, and video tools designed to raise awareness and support for the changes. The City has a significant community of Russian speakers, so materials were produced in English, Spanish, and Russian. Gina produced a custom explainer video in three languages to communicate how rates are developed, particularly within the framework of California Proposition 218 laws.
City of Calistoga (CA): Water and Sewer Rate Study Communications and Outreach In 2022, the City hired Raftelis to conduct its latest water and sewer rate study, which was expected to face opposition. Rates were already the highest in the region because Calistoga is a small town of only 5,000 people whose rates must cover the cost of having significant and aging capital utility systems – economies of scale. Gina developed and executed an engagement plan to guide outreach activities for the rate study. The tactics included an engagement plan with a master message platform; bilingual website content, fact sheet, video, and social media content; direct mail; and a series of community meetings and Council presentations. The outreach began 18 months before the City Council successfully adopted new rates in December 2023.
Soquel Creek Water District (CA): Strategic Communications and Citizen Advisory Committee Facilitation
For many years, the Soquel Creek Water District capital expenditures, water reliability projects, and rates have been at best, a source of opposition, and at worst, legally contested. In 2023, under extreme inflationary pressures, Raftelis was hired to update the Financial Plan, thoroughly review the cost of service, develop and implement a robust strategic communications plan, and facilitate an ad-hoc Water Rates Advisory Committee comprised of two Board members and citizen volunteers. Input and feedback from the Committee was helpful to Board deliberations and informed rate study scenarios. The strategies and tactics included messaging, website content, editorials, press releases, custom explainer videos, social media, bill stuffers, weekly and monthly newsletter content, open houses, a webinar, and an informative Proposition 218 public notice designed in a way that customers want to read.
Ultimately, the Board successfully implemented new rates in February 2024.
City of Seal Beach (CA): Water and Sewer Rate Study Communications and Outreach As the strategic communications project manager, Gina is leading public outreach efforts for the City including development of a rate study website, and producing an outreach implementation plan, FAQs, custom videos, a calendar of events and public meetings, and the Proposition 218 Notice. To inform and engage residents and customers, Gina has facilitated informational webinars, community meetings, and open houses. In February 2024, the City Council voted to delay adopting new rates for further study and review, and while the City considers adding a tax measure on the 2024 General Election ballot.
Orange County (CA): Infrastructure Outreach and Communications For Water Reuse Project Gina led communications and outreach for the world's largest advanced water purification system for potable reuse.
While Orange County’s Groundwater Replenishment System (GWRS) is one of the most celebrated civil engineering and water reuse projects in the world, its success is equally recognized for the robust strategic public engagement and outreach program. In the early 2000s, public opposition had prevented or shuttered similar water reuse projects in Los Angeles and San Diego, but Orange County’s system earned the public’s trust and overwhelming support. The strategic communications plan included a support letter campaign, citizens advisory RAFTELIS 15
group, multicultural outreach, media outreach, speaker’s bureau, and facility tour program with technology demonstrations and water tasting. To date, the GWRS has never been publicly opposed. Initially producing 70 million gallons of purified water per day in 2012, the GWRS final expansion will increase capacity from 100 MGD to 130 MGD, enough to secure water reliability for more than 1 million people.
Port of Long Beach (CA): Infrastructure Outreach and Communications Gina led a team of six practitioners to design and manage the communication strategy for the $1.8 billion Port of Long Beach Gerald Desmond Bridge Replacement Project, one of the largest and most significant highway infrastructure projects in California. Roughly 15 percent of the nation’s waterborne cargo is trucked over it, and the bridge is a critical access route for commuters between the Port of Long Beach (Port), downtown Long Beach and surrounding communities. The work included the development of a content-rich website and mobile application to provide traffic conditions, construction updates, links to social media and live cameras, and weekly bilingual audio reports to deliver hands-free updates to professional truck drivers and commuters. Within months of launching, the app was featured as a successful communications case study in PR Week magazine.
Orange County (CA): Water Education and Outreach Program Development While leading strategic communications at the Orange County Water District (OCWD), Gina was engaged with planning and directing content, and engaging partners and sponsors for several signature events to engage generational audiences about regional and state water resources and supplies, water efficiency, and environmental sustainability. Key partners and sponsors included The Walt Disney Company, National Geographic, Wyland Foundation, UC Irvine, UCLA, NASA JPL, USGS, National Water Research Institute, California Department of Water Resources, and others to support events like the annual O.C. Water Summit, Children’s Water Education Festival, and the Groundwater Adventure Tour.
Orange County Water District (CA): Groundwater Contamination Outreach Orange County’s groundwater is the source of 75 percent of the drinking water for 2.4 million people. After levels of volatile organic chemicals and perchlorate were detected in groundwater wells exceeding the max loads allowed by the California Department of Public Health, the Orange County Water District (OCWD) initiated the South Basin Groundwater Protection Program to construct six monitoring wells to measure the direction and speed of the migrating contamination. Gina developed and managed the construction outreach plan to address impact mitigation measures, build support from municipal leaders, and assure residents that their drinking water was safe.
Outreach tactics included messaging, materials, face-to-face communication, and community meetings with maps, pictures, visuals, and access to subject matter experts. The successful outreach program achieved 100% support of the program from all municipal partners and no public opposition.
Carpinteria Groundwater Sustainability Agency (CA): Rate Study Communications and Engagement Gina provided strategic guidance to the Carpinteria Groundwater Sustainability Agency (CGSA) Executive Director in support of establishing a groundwater users sustainability fee. The CGSA was formed in 2020 after the groundwater basin was designated a high priority by the state Department of Water Resources under the Sustainable Groundwater Management Act (SGMA). Without the ability to collect rates or fees, the CGSA was operating on loans from the Carpinteria Valley Water District for two years. Gina developed and executed an engagement plan to guide outreach activities for the fee study. The tactics included an engagement plan with a master message platform; bilingual website content, fact sheet, video, and social media content; direct mail; and a series of community meetings and Board presentations. As recommended in Raftelis’ Fee Study Report, the CGSA Board of Directors approved a groundwater fee assessed beginning with FY 2022-23.
RAFTELIS 16
Santa Barbara County (CA): Crisis Communications and Disaster Response Over nearly six years as the Communications Manager for the County of Santa Barbara, Gina led communications for 19 extended emergencies including two federally declared disasters, a global pandemic, and two mass casualty incidents. In her first three months on the job, the county experienced two wildfires. To better serve the public, Gina initiated custom bilingual emergency messaging and social media across all communication channels, which is now the standard in California. Back-to-back wildfire and debris flow disasters that killed 23 people in Montecito necessitated staffing the Joint Information Center for seven continuous months to issue bilingual public information on preparedness, recovery and rebuilding, and support a 16-month Local Assistance Center and long-term Recovery Strategic Plan for the area.
Santa Barbara County (CA): Crisis Communication Messaging and Media Training Gina developed a crisis communication plan, key messaging, Q&A, and media spokesperson training to guide the County of Santa Barbara (County) through a $40 million pension rebalance and $2 million embezzlement in the Public Works Department. For the pension rebalance, 4,600 employees were engaged through a series of face-toface meetings with the executive and budget teams to address questions and concerns. The pension rebalance program ultimately led the County to embark on a 5-year transformation initiative and strategic plan called Renew 2022. Following the embezzlement, process improvements were implemented, and Gina developed messaging and collateral for a whistleblower program overseen by the County Auditor’s Office.
PRESENTATIONS
• “Public Engagement Strategies and Best Practices” (panelist), 2024 AWWA ACE Annual Conference, Anaheim, Calif.
• “How Will Artificial Intelligence Transform Your Communications and Community Engagement,” 2023 CANV AWWA Annual Fall Conference, Las Vegas, Nev. • “Business Communications,” County of Santa Barbara Employee University training and development curriculum (2019)
• “Elevate Your Leadership Communication Strategies,” County of Santa Barbara Leadership Certificate Program curriculum (2018)
• “Front Line Crisis Communications: Are You Prepared?” 2019 Public Relations Society of America Western District Conference, Phoenix, Ariz.
• “Emergency Communications: Technical Solutions, Political Risks, Community Information and Lessons Learned” (panelist), 2019 League of California Cities City Manager Conference, San Diego, Calif. • “Emergency Situations and Crisis Plans for PEG Channels” (panelist), National Association of Telecommunications Officers and Advisors (NATOA), Webinar • “Communication Tools and Methods During Times of Crisis,” 2018 California Association of Public Information Officials (CAPIO) Annual Conference, Santa Rosa, Calif. • “California’s Year of Wildfires” (panelist), 2018 California Association of Public Information Officials (CAPIO) Annual Conference, Santa Rosa, Calif.
• “Emergency Communications and the Joint Information Center” (panelist), 2018 Summer Session, Municipal Managers Association of Southern California (MMASC), Pasadena, Calif. • “Natural Disasters” panelist “Santa Barbara County Thomas Fire and 1/9 Montecito Debris Flow Communications,” 2018 National Information Officers Association (NIOA) Annual Conference, Clearwater Beach, Fla.
PUBLICATIONS
• “Customer Satisfaction Plunges As Rates Rise; What the Latest J.D. Power Study Report Tell Us and What You Can Do About It,” Think Tank, Raftelis, June 2022
• “Alisal Fire – Flood After Fire Threat Preparations,” consumer preparedness article, October 17, 2021 • “Behind the Scenes with the Emergency Public Information Communicators (EPIC),” guest editorial, Santa Barbara Noozhawk, April 13, 2017
RAFTELIS 17
SECTION THREE – OUTLINE STRATEGIES AND OPTIONS
Outline Strategies and Options
SEWER RATES
The City does not currently charge for sewer collection services. Water service is provided by California American Water. The City has two choices to charge for sewer:
1) Obtain water use data from California American Water and charge a fixed charge plus a charge based on estimated sewer discharge or:
2) Calculate EDUs based on Los Angeles County Sanitation Districts (LACSD) flow estimates and charge for sewer in a similar manner to LACSD. The charges could be levied periodically by direct customer billing or yearly on the county tax rolls.
Under either option, customers can be billed monthly or bimonthly directly or on the County tax roll. Option 2 is likely the easier long-term option as it requires less staff time to collect annual water use data and generates stable revenue. If charges are billed on the tax roll, the City can place a lien on the property for delinquencies. EDUs can be calculated from the LACSD revenue program. A home is equal to 1 EDU. As shown below, each type of customer has a flow per 1,000 square feet (or in some cases per room or other unit). Raftelis, with help and review from the City, would identify each type of commercial or institutional customer (hotel, store, office, etc.) and obtain square footage to calculate each customer’s EDUs from the County’s assessor roll. If the City decides to charge on the tax rolls, it must provide the charges to the County by August 10th.
RAFTELIS 18
Scope of Work
WE ASSUMED ONE IN-PERSON STAFF MEETING, ONE VIRTUAL STAFF MEETING AND CITY COUNCIL MEETINGS ARE IN-PERSON.
Task 1: Project Management, Kick-Off, and QA/QC
Kick-Off Meeting
The goals for the kick-off meeting include:
• Discussing project drivers
• Acquainting staff with our project team
• Identifying areas of concern, key issues, and confirming study goals and objectives • Finalizing the work plan and schedule
• Discussing the rate objectives
• Discussing the data request and any additional data requirements Prior to the kick-off meeting, we will prepare a data request. If the data is provided ahead of the kick-off, 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.
Project Management
Task 1 includes time for project management that involves client correspondence, schedule and budget control, progress reports, timely billing, and internal management of Raftelis staff. We will prepare monthly invoices that include the budget, schedule, work completed, and anticipated work.
QA/QC
Quality assurance/quality control (QA/QC) is performed at two project milestones: 1) at the completion of the financial plan and 2) after the completion of the cost of service and rate design. Our QA/QC program is as follows:
1) Built-In Model Checks: The model has several built-in checks to ensure that the client’s total expenditures are included. The built-in checks include: 1) ties to the client’s total operating budget; 2) a revenue requirement check to ensure rates are collecting the right amount of revenue derived from the financial plan; and; 3) a revenue proof to ensure rates are designed to collect the total revenue requirement. 2) Project Manager Review: The Project Manager reviews each model worksheet at each project milestone. 3) Senior Consultant Review: A Senior Consultant, who is not involved with the project, performs a complete model review. This review includes both modeling integrity and adherence to common rate-setting practices.
We use an analyst not involved with the project to provide a fresh perspective.
In addition, Raftelis has a 40-point checklist for QA/QC to check the most common modeling oversights. A portion of the checklist is shown on the following page.
RAFTELIS 19
Item Worksheet Review Step
1 Revenue Confirm the rates are bimonthly or monthly
2 Revenue Confirm the latest rates are in the model
3 Revenue Is calculated revenue within 1 to 2 % of actual revenue? 4 Revenue Check revenue from year-to-year, does it vary much? 5 Revenue Do any one-time revenue items need to be removed, like the sale of assets? 6 O&M Does the total O&M entered for a particular year tie back to the source document? If not, are you clear about why not?
7 O&M Has depreciation been removed?
8 O&M Are there any capital items in the budget that need to be removed to avoid double counting?
9 O&M If the debt is shown in the budget, is it also in the debt sheet? 10 O&M Review the year-to-year changes in O&M expenses. Is there a big change in one year, if so why?
11 O&M Water purchase costs - do they tie back to actuals for a year? 12 O&M Are calculated water purchase costs close to the budget for years that have a water purchase cost budget?
PLANNED MEETINGS:
• One virtual meeting with staff
DELIVERABLES:
• Kick-off meeting presentation, minutes, and data request list Task 2: Financial Plan Development
We will develop a financial plan model that recovers sewer operation and maintenance expenses, capital expenditures, and reserve funding. Raftelis will project revenue requirements over a 7-year planning horizon or any period desired.
Raftelis understands the importance of developing a user-friendly, flexible model that can be used for future financial planning. All our models include a financial plan dashboard with the following features:
1) Flexibility to change many assumptions such as sewer use, CIP levels, and revenue adjustments 2) Error flagging of problematic results such as failure to meet debt coverage, reserve targets, etc. 3) Sensitivity analyses and various “what-if” scenario assessments, so that impacts can be viewed instantaneously with built-in screen graphics
The dashboard is an effective tool to visually assess how each assumption or scenario impacts the financial plan.
This enables stakeholders to make decisions quickly regarding revenue adjustments, capital financing through paygo or debt, and reserve balances. A sample model dashboard is shown on the following page. Raftelis will hold a webinar to review assumptions and finalize the financial plan with which to calculate rates. We will also review reserves and compare reserve targets to other agencies. We’ve completed a couple of reserve studies which would be useful for this review.
RAFTELIS 20
PLANNED MEETINGS:
• One virtual meeting with staff
DELIVERABLES:
• Draft financial planning model in Microsoft Excel
Task 3: Sewer Rate Calculation
We will discuss the two rate structures discussed in Section 3 and calculate whichever structure staff selects. Billing in proportion to EDUs, as LACSD does, is likely the easier option and requires less long-term staff effort. The other option is to use water data to determine the charges to customers. The City will have the option of placing these charges on the tax roll and receiving rate revenue semiannually along with property tax payments or billing customers directly. Collecting sewer charges on the tax roll is very inexpensive, especially if the City currently does not bill all customers directly for other services. Charges placed on the tax rolls have many benefits including revenue stability and the option to place liens on a property should an account fail to pay. The City could place charges on County tax rolls, which likely garners less customer attention. In fact, a few of our Orange County clients have placed water capital charges on the tax rolls for this reason. As mentioned, the City would have to provide a count of EDUs. Raftelis will calculate rates for the 5-year rate setting period so that rates can be effective July 1, 2025.
Raftelis will develop a customized financial model that incorporates a dashboard to allow you to easily run scenarios and see the impacts in real time. Shown here is a sample dashboard that we developed for another project.
RAFTELIS 21
Bill Impacts
Raftelis will also determine the potential financial impact on customers. The model will include a series of tables and figures (graphs) that show projected rate impacts on different types of customers.
PLANNED MEETINGS:
• One in-person and one virtual meeting to review final charges DELIVERABLES:
• Proposed 5-year sewer rates
• Comprehensive customer bill impacts
• Rate model in Microsoft Excel
Task 4: Rate Survey Comparative Analysis
Raftelis will research the rates and bills for neighboring agencies providing sewer services. We will compare existing rates and sample bills for each agency. It’s important to know that there are many factors that can affect rates such as topography, size of the system, age, materials of construction, and whether the agency is neglecting system upkeep or aggressively pursuing capital investment. While all clients enjoy knowing what their neighbor agencies charge, we feel this information alone should not guide ratemaking decisions.
DELIVERABLES:
• Rate and bill survey in Microsoft Excel
Task 5: Two City Council Meetings
We assumed Raftelis will prepare a presentation and present study findings at two in-person City Council meetings.
The first meeting will be to present the study results, including the basis for rate adjustments, the assumptions, and customer bill impacts. We will answer Council questions and take feedback to incorporate into the 2nd Council presentation, where, ideally, we will obtain approval to proceed with the public hearing.
PLANNED MEETINGS:
• Two in-person City Council meetings
DELIVERABLES:
• Presentations in Microsoft PowerPoint
Task 6: Draft and Final Report
Raftelis will prepare a draft report detailing the revenue requirement and rate derivation from start to finish. We will incorporate City staff comments into the final report.
PLANNED MEETINGS:
• Virtual meetings as needed to discuss the report
DELIVERABLES:
• Draft and final report(s) in Microsoft Word
RAFTELIS 22
Task 7: Proposition 218 Notice Preparation
While requirements of Proposition 218 notifications are easy to satisfy, too many municipalities and utilities miss the opportunity to educate and inform customers of the need to increase rate revenues. Over the years, Raftelis has designed countless Proposition 218 notifications that go beyond the minimum dictated by statute to deliver visually appealing pieces that customers want to read. We can draft the content and match the City’s established brand guidelines to design custom graphics that support clear, positive messaging in the Notice. Once these arrive in mailboxes, customers will not only be properly notified but will understand the City’s needs and be more likely to support rate adjustments. Raftelis will deliver final press-ready documents in English for the City to print and mail notices to all parcel owners and customers of record. If additional languages are requested, the City will provide the translation, otherwise Raftelis can recommend certified translation services.
DELIVERABLES:
• Print ready Proposition 218 notice in English
Task 8: Public Hearing Presentation
To adopt the rates, the City must hold a public hearing. Raftelis will prepare a presentation and present study results at the public hearing. Our Project Managers do this often and are accustomed to answering Council and public questions. We assumed this meeting will be in person.
PLANNED MEETINGS:
• One in-person public hearing presentation
DELIVERABLES:
• Public hearing presentation in Microsoft PowerPoint
ADDITIONAL SERVICES: STRATEGIC COMMUNICATIONS
Raftelis’ Strategic Communication Experts have spent most of their careers in local government.
Examples of their capabilities include:
Rate Study Outreach and Community Meeting Support
Community engagement and strategic communications planning increases community acceptance of rate changes, enhances credibility with stakeholders and policymakers, and builds awareness of the value of the service and need for utility investments. Seeking public input into the rate study will help drive thoughtful decision-making.
Raftelis’ in-house Strategic Communications Services specialize in providing strategic communications counsel, public engagement, and community involvement and can provide the City with guidance, structure, strategies, tools, and tactics to communicate clearly and broadly to your customers and key stakeholders. We are often called upon to facilitate public meetings, Council and Board workshops, and advisory committees and commissions.
Raftelis can facilitate community meetings or open houses to inform the public about the need to adjust rates. This engagement would be separate from publicly noticed City Council meetings, workshops, and hearings. Our presentations are reviewed by our communications staff who are experts at developing clear, compelling, and consistent messages that build awareness and support with stakeholders. We recommend a public meeting process that can be highly collaborative and iterative; the feedback we receive from key stakeholders in these meetings can RAFTELIS 23
help guide the overall direction of the study and inform the methodologies and options ultimately selected for the final rate fee proposal.
Development of Multimedia Outreach Materials
Raftelis can do the heavy lifting of materials development. Effective design and creative services are more than just a pretty picture. A strategic and well-thought-out design can help to visually communicate messages interestingly and understandably. By focusing on the end user, our team works with the client to develop products and materials to help tell your story. We can develop a strategic engagement plan and message platform to deliver clear, compelling, and consistent messages that are also adaptable and flexible to accompany outreach. Materials typically include a mix of the following: website copy and graphics, fact sheets, talking points/FAQs, bill stuffers, on-bill messaging, social media posts and graphics, “explainer” videos, slide decks with speaker scripts, etc.
Here is an example of outreach materials we have prepared the City of Newport Beach, CA.
RAFTELIS 24
SECTION FOUR - REFERENCES
References
RAFTELIS HAS THE MOST EXPERIENCED UTILITY FINANCIAL AND MANAGEMENT CONSULTING PRACTICE IN THE NATION.
Our staff has assisted more than 1,700 public agencies and utilities across the U.S., including some of the largest and most complex agencies in the nation. In the past year alone, Raftelis worked on more than 1,300 financial, organizational, and/or technology consulting projects for over 700 agencies in 47 states, the District of Columbia, and Canada. Below, we have provided descriptions of projects that we have worked on that are similar in scope to the City’s project. We have included references for each of these clients and urge you to contact them to better understand our capabilities and the quality of service that we provide.
Pasadena Water and Power CA
Reference: Phyllis Hallowell, Management Analyst V
P: 626.744.3952 / E: [email protected]
Raftelis is assisting Pasadena Water and Power in preparing its first professional water rate study. Raftelis is helping the City of Pasadena (City) by presenting the pros and cons of different rate structures so that the City can select the most appropriate rate structure. Steve Gagnon presented the pros and cons of each of the below rate structures:
1. Traditional tiered rates by customer class (single family, multi-family, commercial, etc.)
2. Pasadena’s current rate structure, which is tiered by meter size
3. Budget-based tiered rates, which are tiered rates based on household size and lot size
RAFTELIS HAS PROVIDED FINANCIAL/
ORGANIZATIONAL/TECHNOLOGY ASSISTANCE
TO UTILITIES SERVING MORE THAN
25% OF THE U.S. POPULATION.
RAFTELIS 25
We prepared a financial plan to ensure that rate revenue recovers all costs. We will complete a cost-of-service study to allocate costs to each customer class. Raftelis will also provide a rate design to collect costs from each class based on the cost of service.
City of Oxnard CA
Reference: Jan Hauser, Wastewater Division Manager
P: (O) 805.271.2205 (M) 805.844.5501 / E: [email protected] In early 2023, Raftelis assisted the City of Oxnard (City) to develop a financial plan and set rates for their water and utility. The City of Oxnard has a very vocal and involved customer base. We simplified their rate structure and helped assess capital spending. We held a series of open houses that discussed the basics of rate setting. We also presented to council; the first meeting was a rate-setting basics workshop and the second presented the draft rates.
During the public hearing, Raftelis and Staff fielded questions from the public. The rates were implemented by Council in the Spring of 2023.
City of Ontario CA
Reference: Michael Sigsbee, Utilities Assistant General Manager P: 909.395.2653 / E: [email protected]
Raftelis conducted a water, wastewater, and solid waste study for the City of Ontario (City). The City has a total of 33,000 accounts, including 5,000 non-residential accounts, and sells approximately 43,000 ac-ft of water annually.
Wastewater treatment is provided by Inland Empire Utilities Agency, which also establishes a treatment charge for the City's retail customers. The study included a comprehensive review of the City’s revenue requirements and allocation methodology, a review of the City’s user classification, a cost-of-service analysis, and a rate design for City users. Several recommendations were provided to improve the equity of water and wastewater charges, including reclassification of customers and modifying the tiers.
City of El Monte, Utilities Division CA
Reference: Don Nguyen, Utilities Manager
P: 626.258.8603 / E: [email protected]
The City of El Monte Utilities Division (City) provides wastewater collection and conveyance service for the residents and businesses of the City’s municipal area. The City operates 8 sewage lift stations, 125 miles of mainline sewer pipeline and 2,687 manholes to provide service to more than 17,000 accounts. The City assesses sewer charges on a per EDU basis, and the sewer charges are included on the residents’ and businesses’ annual tax bills.
The City engaged Raftelis in 2023 to conduct a comprehensive sewer rate study. The sewer charges have remained the same since 2009. The City is experiencing rising operating costs in light of nationwide inflationary pressures and is desiring to begin funding a capital improvement plan with a focus on proactive maintenance, repair and replacement of the system. Raftelis is developing a comprehensive financial and rate model, assisting with the development of the five-year capital improvement plan, and calculating a five-year set of sewer charges. The study is still ongoing and will be presented to City Council and undergo the Prop 218 process during the spring of 2024.
RAFTELIS 26
City of Orange CA
Reference: Frank Sun, Deputy Director Public Works
P: 714.744.5529 / E: [email protected]
Raftelis prepared a 10-year financial plan and rates for the wastewater enterprise for the City of Orange (City). The rates included a capital component to convey the need for capital funding. The rates were also redesigned to reflect estimated sewer discharge as opposed to water use to truly reflect customer use of the sewer collection system.
Client
Affordability Analysis & Program DevelopmentDebt Issuance SupportDispute ResolutionFinancial & Capital Improvements PlanningRate Case SupportRate DesignRisk AnalysisCost of ServiceDevelopment/Impact FeesStormwater Utility DevelopmentOrganizational OptimizationWater/Wastewater Utility Valuation Alameda County Water District
Anaheim, City of
Arroyo Grande, City of
Atwater, City of
Bakersfield, City of
Benicia, City of
Beverly Hills, City of
Borrego Water District
Brea, City of
Brentwood (CA), City of
CAL FIRE/San Luis Obispo
Calleguas Municipal Water District
Camarillo, City of
Carlsbad Municipal Water District
Casitas Municipal Water District
Castaic Lake Water Agency
Central Basin Municipal Water District
Central Contra Costa Sanitary District
Channel Islands Beach Community Services
District
Chino Hills, City of
Chino, City of
Chowchilla, City of
Corona, City of
County of San Diego
Crescenta Valley Water District
Cucamonga Valley Water District
Del Mar Union School District
Delta Diablo Sanitation District
East Bay Municipal Utility District
East Orange County Water District
East Valley Water District
Eastern Municipal Water District
El Toro Water District
Elk Grove Water District
Elsinore Valley Municipal Water District
CALIFORNIA
EXPERIENCE
This table lists the California utilities that
Raftelis has assisted over the past five
years on financial, rate, and/or
management consulting projects.
RAFTELIS 27
Client
Affordability Analysis & Program DevelopmentDebt Issuance SupportDispute ResolutionFinancial & Capital Improvements PlanningRate Case SupportRate DesignRisk AnalysisCost of ServiceDevelopment/Impact FeesStormwater Utility DevelopmentOrganizational OptimizationWater/Wastewater Utility Valuation Escondido, City of
Galt, City of
Glendora, City of
Goleta Water District
Goleta West Sanitary District
Helix Water District
Henderson, City of
Hollister, City of
Holtville, City of
Huntington Beach, City of
Imperial County
Inland Empire Utilities Agency
Irvine Unified School District
Jurupa Community Services District
Kern County Water Agency
La Canada Irrigation District
La Habra Heights County Water District
Laguna Beach, City of
Lake Valley Fire Protection District
Las Virgenes Municipal Water District
Leucadia Wastewater District
Livermore, City of
Long Beach City of
Los Alamos Community Services District
Los Angeles Department of Water and Power
Los Angeles, City of Bureau of Sanitation
Madera, City of
Mammoth Community Water District
Marin Municipal Water District
Merced, City of
Mesa Water District
Metropolitan Water District of Southern
California
Modesto Irrigation District
Mojave Water Agency
Monterey County Water Resources Agency
Monterey, City of
Moulton Niguel Water District
Municipal Water District of Orange County
Napa Sanitation District
Ojai Valley Sanitary District
Olivenhain Municipal Water District
Ontario Municipal Utilities Company
Ontario, City of
Orange, City of
Palo Alto, City of
Phelan Pinon Hills Community Services District
Placer County Water Agency
RAFTELIS 28
Client
Affordability Analysis & Program DevelopmentDebt Issuance SupportDispute ResolutionFinancial & Capital Improvements PlanningRate Case SupportRate DesignRisk AnalysisCost of ServiceDevelopment/Impact FeesStormwater Utility DevelopmentOrganizational OptimizationWater/Wastewater Utility Valuation Pleasant Hill Recreation & Park District
Pomona, City of
Rainbow Municipal Water District
Ramona Municipal Water District
Rancho California Water District
Redlands, City of
Rincon del Diablo Municipal Water District
Riverside Public Utilities
Roseville, City of
Sacramento Regional County Sanitation
District
Sacramento, City of
Salton Community Services District
San Bernardino Valley Municipal Water District
San Bernardino, County of
San Clemente, City of
San Diego, City of Public Utilities Department
San Dieguito Water District
San Elijo Joint Powers Authority
San Gabriel County Water District
San Gabriel, City of
San Jose, City of
San Juan Capistrano, City of
Santa Ana, City of
Santa Barbara, City of
Santa Clara Valley Water District
Santa Clarita Water District
Santa Cruz, City of
Santa Fe Irrigation District
Santa Fe Springs, City of
Santa Margarita Water District
Santa Rosa, City Attorney’s Office
Scotts Valley Water District
Shafter, City of
Shasta Lake, City of
Sierra Madre, City of
Signal Hill, City of
Simi Valley, City of
Sonoma, City of
South Mesa Water Company
South Pasadena, City of
South San Francisco, City of
Sunnyslope County Water District
Sweetwater Authority
Temescal Valley Water District
Thousand Oaks, City of
Torrance, City of
Trabuco Canyon Water District
RAFTELIS 29
Client
Affordability Analysis & Program DevelopmentDebt Issuance SupportDispute ResolutionFinancial & Capital Improvements PlanningRate Case SupportRate DesignRisk AnalysisCost of ServiceDevelopment/Impact FeesStormwater Utility DevelopmentOrganizational OptimizationWater/Wastewater Utility Valuation Triunfo Sanitation District
Tustin, City of
Union Sanitary District
Ventura Regional Sanitation District
Ventura, City of
Vista, City of
Walnut Valley Water District
Watsonville, City of
West Basin Municipal Water District
Western Municipal Water District
Yorba Linda Water District
Zone 7 Water Agency
RAFTELIS 30
SECTION FIVE – ESTIMATED PROJECT TIMELINE
Estimated Project Timeline
The proposed schedule assumes a notice-to-proceed in mid-November 2024 and that Raftelis will receive the needed data by late December and be able to schedule meetings as necessary. The public hearing is anticipated for May 2025 for rates effective July 1, 2025.
TASKS
1. Project Management, Kick-Off
and QA/QC
City Provides All Data
2. Finanical Plan Development
3. Sewer Rate Calculation
4. Rate Survey Comparative
Analysis
5. Two City Council Meetings
6. Draft and Final Report
7. Proposition 218 Notice
Preparation
Public Notice Waiting Period
(45 days)
8. Public Hearing Presentation
Meeting and/or Delilverable
Deliverables
NOV DEC JAN FEB MAR APR MAY JUN
2024 2025
JUL
RAFTELIS 31
EXCEPTIONS
Exceptions
We request that the City consider making the following modifications, shown in red below, to the Professional Services Agreement. Most often, after a call between attorneys so that we can explain the intent of our edits, we are able to find mutually acceptable contract text.
1.0 Scope of Services
1.2. Consultant shall perform all Services under this Agreement in accordance with the standard of care generally exercised by like professionals under similar circumstances and in a manner reasonably satisfactory to City., as of the time and at the location the services are provided.
6.2. Unless the Parties agree in writing, all draft and final reports, documents, and other written material, and any and all images, ideas, concepts, designs including without limitation any website designs, source code, object code, electronic data and files, and/or other media whatsoever created material created or developed by Consultant in the performance of this Agreement and intended by Consultant as a deliverable hereunder (collectively, “Work Product”) shall be considered to be “works made for hire” for the benefit of City. All Work Product and any and all intellectual property rights arising from their creation, including, but not limited to, all copyrights and other proprietary rights, shall be and remain the property of City without restriction or limitation upon their use, duplication or dissemination by City upon final payment being made.; provided, that any use other than as intended and an re-use, modification or alteration thereof shall be at City’s sole risk. Consultant shall not obtain or attempt to obtain copyright protection as to any of the Work Product. Nothing in this Agreement shall be deemed or construed as a waiver, release, transfer, assignment or divestiture by Consultant hereby assigns to City all rights of ownership to the Work Product, including but not limited to any and all related of its intellectual property and proprietary rights that are not otherwise vested in the City pursuant to this paragraph, know-how or trade secrets.
6.3. Consultant warrants and represents that it has secured all necessary licenses, consents or approvals necessary to the production of the Work Product, and that upon final payment, City shall have full legal title to the Work Product, and full legal authority and the right to use and reproduce the Work Product for any its intended purpose. Consultant shall defend, indemnify, and hold City, and its elected officials, officers, employees, servants, attorneys, designated volunteers, and agents serving as independent contractors in the role of city officials, harmless from any loss, claim, or liability in any way related to a claim the extent that any proper use by the City of any of the Work Product violates federal, state, or local laws, or any contractual provisions, or any rights or laws relating to trade names, licenses, franchises, copyrights, patents, or other means of protecting intellectual property rights, and/or interests in products, ideas, or inventions. Consultant shall bear all costs arising from the use of patented, copyrighted, trade secret, or trademarked documents, materials, equipment, devices, or processes in connection with its provision of the Work Product produced under this Agreement. If any use by city of any of the Work Product or other deliverables is held to constitute an infringement and the use of any of the same is enjoined, Consultant, at its expense, shall: (a) secure for City the right to continue using such Work Product and/or other deliverables by suspension of any injunction, or by procuring a license or licenses for City; or (b) modify the Work Product and other deliverables so that they become non-infringing while remaining in compliance with the requirements of this Agreement.
RAFTELIS 32
9.0 Independent Consultant
9.2. Consultant shall indemnify and hold harmless City and its elected officials, officers, employees, servants, designated volunteers, and agents serving as independent contractors in the role of City officials, from any and all liability, damages, claims, costs, and expenses of any nature to the extent arising from caused by Consultant’s negligent personnel practices. City shall have the right to offset against the amount of any fees due to Consultant under this Agreement any amount due to City from Consultant as a result of Consultant’s failure to promptly pay to City any reimbursement or indemnification arising under this Section. All duties of Consultant under this Section
9.2 shall survive termination of this Agreement.
9.3. In the event that Consultant provides any of the Services by or through any employee or any person whose work under this Agreement becomes cause for any payment or contribution required by law, including but not limited to the California Public Employees' Pension Reform Act (PEPRA), to the Public Employee Retirement System, Consultant shall be solely responsible for all such payments or contributions. Consultant shall indemnify and hold harmless City and its elected officials, officers, employees, servants, designated volunteers, and agents serving as independent contractors in the role of City officials, from any and all liability, damages, claims, costs, and expenses of any nature to the extent arising from caused by Consultant’s failure to make any such payment or contribution. City shall have the right to offset against the amount of any fees due to Consultant under this Agreement any amount due to City from Consultant as a result of Consultant’s failure to promptly pay to City any reimbursement or indemnification arising under this Section. All duties of Consultant under this Section 9.3 shall survive termination of this Agreement.
12.0 Insurance
Indemnification, Hold Harmless, and Duty to Defend
12.23 To the maximum extent permitted by law, Consultant shall defend, indemnify, and hold City, its officials, officers, employees, volunteers and agents serving as independent contractors in the role of city officials (collectively “Indemnitees”) free and harmless from any and all claims, demands, causes of action, costs, expenses, liability, loss, damage or injury, in law or equity, to property or persons, including wrongful death, in any manner arising out of or incident to any the extent caused by the negligent acts or omissions of Consultant, its employees, its agents, or its subcontractors in connection with the performance of this Agreement, excluding consequential damages but including without limitation the payment of all consequential damages and attorneys’ fees and other related costs and expenses, except for such loss or damage arising from the sole negligence or willful misconduct of City. With respect to any and all such aforesaid suits, actions, or other legal proceedings of every kind that may be brought or instituted against Indemnitees, Consultant shall defend Indemnitees, at Consultant’s own cost, expense, and risk, and shall pay and satisfy any judgment, award, or decree that may be rendered against Indemnitees to the extent of its indemnity obligation set forth above. Consultant shall reimburse City and its directors, officials, officers, employees, agents and/or volunteers, for any and all legal expenses and costs incurred by each of them in connection therewith or in enforcing the indemnity herein provided. Consultant’s obligation to indemnify shall not be restricted to insurance proceeds, if any, received by Consultant, City, its directors, officials, officers, employees, agents or volunteers. All duties of Consultant under this Section shall survive termination of this Agreement.
Consultant shall have no obligation to indemnify City or any other Indemnitee against liability for claims by a third party for failure to comply with its obligations under Article XIII D of the California Constitution (Proposition 218).
12.24 Consultant must obtain executed indemnity agreements with provisions identical to those in Section 13.1
12.23 from each and every subcontractor or any other person or entity involved by, for, with or on behalf of Consultant in the performance of the Services. If Consultant fails to obtain such indemnities, Consultant shall be fully responsible and indemnify, hold harmless, and defend the Indemnitees from and against any and all Claims in law or equity, whether actual, alleged, or threatened, arising or claimed to arise out of, pertaining to, or relating to the acts or omissions of Consultant’s subcontractor, its officers, agents, servants, employees, subcontractors, RAFTELIS 33
materialmen, contractors, or their respective officers, agents, servants or employees (or any entity or individual that Consultant’s subcontractor shall bear the legal liability thereof) in the performance of this Agreement, including the Indemnitees’ active or passive negligence, except for Claims arising from the sole negligence or willful misconduct of the Indemnitees, as determined by final arbitration or court decision or by the agreement of the Parties to the same extent as its indemnity obligations set forth in Section 12.23 above.
RAFTELIS 34
Technical Proposal for the City of San Marino
COST ALLOCATION PLAN
& CITYWIDE FEE STUDY
1519 E Chapman Ave
Suite C
Fullerton, CA 92831
(714) 992-9020
www.revenuecost.com
RCS 35
SECTION ONE – TRANSMITTAL LETTER
September 6, 2024
City of San Marino
2200 Huntington Drive
San Marino, CA 91108
Proposal – Cost Allocation Plan & Citywide Fee Study
Revenue & Cost Specialists, LLC (RCS) appreciates the opportunity to respond with this proposal to develop a Cost Allocation Plan and Citywide Fee Study. We have been providing fee studies and other costing services since 1980, making us the first and foremost expert in costing services for California. RCS’ skill set will generate maximum accountability for the City of San Marino. We have a history of delivering quality reports with defensible data that can be acted on and adopted.
Our processes are straightforward, analytical and require minimal staff time. In the end, we strive to ensure that the City of San Marino will be able to confidently stand behind the information and recommendations in the Report. As former city staff ourselves, we understand how San Marino operates, what you want, and that your time is precious. If selected, RCS can begin work immediately.
Based in Fullerton, we can provide timely support to City staff for years to come. The terms of this proposal will be honored for 90 calendar days from the date of submittal. Please contact Eric at (714) 992-9027 or [email protected] with any questions.
Sincerely,
ERIC S. JOHNSON
President
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SECTION TWO – EXPERIENCE AND QUALIFICATIONS
EXPERIENCE AND QUALIFICATIONS
RCS HISTORY
Revenue & Cost Specialists, LLC (Taxpayer ID No. 330787781) was founded in 1980 by two former City Managers and a Finance Director who, after the passage of Propositions 13 and 4, discovered that user fees were a legal option to recover lost municipal revenues.
Four decades later, RCS continues its focus on cost allocation and fee calculation services.
After the passage of AB 1600 in 1988, our company added impact fee calculation services to help municipalities finance public facility expansion.
In those early years, RCS principals published articles and presented at conferences, helping California municipal employees understand how fees work. Our early work is the foundation of how fees and cost allocation plans are calculated today.
In 2000, RCS created Government Software Systems to develop robust costing software that serves fee calculation needs better than spreadsheets. Our company has provided additional services to municipalities that include long-range financial planning, accounting procedures and utility rate studies.
RCS continues to thrive through repeat business, referrals and references. As a small business, RCS takes only a handful of new clients each year, allowing us to spend substantial time with them. In 2024, RCS celebrates its 44th year in business and is looking forward to another 40 plus years of partnering with municipalities.
QUALIFICATIONS
RCS’ principals make up the Limited Liability Company, which has been financially stable since the company started. Combined, RCS principals have over 100 years of experience in cost allocation plans and fee studies and served over 250 municipalities. We have provided these services to a wide array of public agencies, from the smallest special district to larger and more complex cities and counties. Though based in Orange County, we engage in projects throughout the State of California.
RCS principals specialize in:
• User Fee Studies
• Cost Allocation Plans
• Development Impact Fee Studies
• Special Financial Management Studies and Reports
These specializations allow RCS to focus on every aspect of municipal fees and be the best of what we do.
We are confident in our project time estimates and do not respond to RFPs when the project workload exceeds our capacity. We have suggested new fees that are not common practice throughout the state and have challenged and removed municipal fees that were not defensible. We have assisted municipalities in streamlining their fee-based processes.
RCS 37
All RCS principals have prior city experience, serving as analysts, managers or directors. We are all knowledgeable in fund accounting, department structures and municipal services. We stay current on pending financial and legal issues that challenge municipalities. All principals are comfortable speaking with city staff at all levels, drafting reports and resolutions, and presenting them to the public, stakeholders and City Council members.
Eric Johnson, President, has streamlined and perfected the process of CAP and User Fee Study engagements. With over 30 years and hundreds of studies completed, Eric has created a superior process that demands little staff time while obtaining maximum results. Eric quickly understands complex city services and how to calculate fees for them. He relates well with elected officials because he responds with candor and brevity. If you speak to any of Eric’s prior or current clients, they will tell you how easy the process was.
Scott Thorpe, Senior Vice President, joined RCS in 1985. Before that, he spent 13 years at the cities of Chula Vista, Covina, Anaheim and Brea, serving in various roles within the city manager’s offices. Scott performed user fee studies for several years, transitioning to development impact fees when AB 1600 went into effect.
He has written articles laying out the fundamentals of impact fees, and his work has generated tens of millions in fee revenues for cities.
Rick Kermer, Partner, was one of the founders of RCS. Rick used his CPA and audit experience to build cost allocation and user fee spreadsheets and software that passes rigorous analysis and reporting accounting standards. Rick’s work is the foundation of all the fee study work offered today. He is now semi-retired, taking only a handful of projects each year.
RCS 38
SAN MARINO PROJECT TEAM
While all RCS principals have worked independently on projects, Eric Johnson will be the project manager involved with the City of San Marino.
RCS may assign additional specialists to the project to help maintain the proposed schedule and ensure the quality of the product. For the sake of continuity, only RCS principals will interact with City staff, as our specialization and expertise will allow staff to focus on other City functions. We thoroughly understand and will be involved in every phase of the fee study, advising City staff when necessary.
Mr. Johnson’s resume is included in this proposal on the following page.
RCS 39
EDUCATION
Bachelor of
Arts in
Political
Science -
University of
Redlands
AFFILIATIONS
California
Society of
Municipal
Finance
Officers
Government
Finance
Officers
Association
Eric S. Johnson
President
Mr. Johnson serves as President of Revenue & Cost Specialists with over 34 years of professional knowledge in cost recovery model and user fee studies. He focuses on providing a positive experience for RCS clients, which minimizes staff interruptions yet still produces a comprehensive, defensible study that is adopted by the governing board.
Municipal Experience
City of Redlands – Redevelopment Intern (1987-1989)
Relevant Project Experience
City of Long Beach – Comprehensive Fee Study: RCS was selected in 2019 to perform a multi-year comprehensive update of Long Beach’s 2,850 fees, fines and permits.
City of Santa Clarita – Cost Allocation Plan and Comprehensive Fee Study: RCS developed a Cost Allocation Plan and Comprehensive Fee Study for the City most recently in 2024 and has also updated the Cost Allocation Plan every year since 2011.
RCS has been providing these services for the City since 1995.
City of Santa Barbara – Cost recovery model and Comprehensive Fee Study: RCS completed a Development Services Fee Study 2019 and a Fire Department Fee Study in 2020. The City Council adopted changes to its fee schedule.
City of Carson – Cost Allocation Plan and Comprehensive Fee Study: RCS completed a Cost Allocation Plan and Comprehensive Fee Study for the City in 2022, and the City Council adopted the suggested user fees in 2023.
City of Lompoc – Cost recovery model and Comprehensive Fee Study: RCS completed a Comprehensive Fee Study for the City originally in 2015 and most recently in 2022, in which the City adopted the suggested user fees.
RCS 40
SECTION THREE – OUTLINE STRATEGIES AND OPTIONS
OUTLINE STRATEGIES AND OPTIONS
The City of San Marino wants to identify the full costs of all operational services that are either currently charged a fee or could be charged a fee.
RCS will first update the City’s Cost Allocation Plan (CAP), which is necessary in calculating the fully burdened hourly rates for employees and is an effective way to distribute the overhead costs to other funds, departments, and the end-user services. Our Cost Allocation Plan is powerful in capturing the maximum overhead charges to enterprise funds. If excluded from this Citywide Fee Study, RCS will use the City’s prior Cost Allocation Plan.
Next, RCS will perform the fee study, reviewing the staff time and program costs involved with each service and calculating the full cost of services for each fee. The proposed fee structure will recover these costs in the most equitable and efficient way possible. The user fees will represent how operations are conducted in the City, and may involve flat fees, deposits, valuation-based fees, step-increase fees, or a combination of these. The eventual fee recommendations included in the final report and master fee resolution will be defensible, easy to understand, and be supported by City staff.
The most important part of our work is performed through a series of focused meetings with staff.
Scheduled meetings commit staff to the timeline and ensure that our study draws from the most knowledgeable person on the subject matter. A series of meetings also gives City staff time to digest and reflect on the information generated. RCS uses only company principals with more than 20-plus years of experience to conduct these meetings, which makes the process quicker and the results more accurate. Our process provides the City with well-documented and defensible service costs that will be used to develop fees that comply with Propositions 4, 218 and 26.
We also identify 100% of the staff time on 100% of the services they provide. This gives City staff a complete perspective on their time allocations instead of merely looking at time allocations for individual services in a vacuum. These methods will ensure that City staff feels confident about the data and, therefore, confident in supporting the results in public hearings.
The other key result of identifying 100% of City services is that we are identifying not only the cost of fee services, but of community-supported services, such as police, street and park maintenance services. This allows us to have a real discussion with real numbers with the City Council about tax subsidy policy. Since we are identifying the full costs of fee services, we are also identifying the current subsidy of general tax dollars for these services. Therefore, we can show the City Council how much fee services are subsidized at the expense of community-supported services. Does the City want to continue to use precious tax dollars to support, for instance, a bathroom remodel and permitting inspection that only benefits a particular property owner or use those tax dollars on things that can only be supported by tax dollars, like police patrol and park maintenance? They will now have that information to be able to make that conscious choice.
Changing the discussion from fee increases to tax subsidy policy along with RCS’ experience in successfully RCS 41
presenting the results of similar studies to City Councils ensures that the City will be able to meet its policy objectives.
RCS will provide the City of San Marino with the requested printed and electronic copies of the final versions of the Cost of Services Study and Cost Allocation Plan, including related schedules and cost documentation in a format that can be edited and updated by City staff to accommodate desired changes.
Project Kick-Off
Task 1: Prepare City Data
RCS will review and prepare necessary files for the project. This includes obtaining and reviewing prior user fee reports and fee schedules, line-item budget details, salary schedules, MOUs and fringe benefit details.
Task 2: Kick-off Meeting
RCS will conduct a Citywide meeting, explaining the operational methodology of the study and the role of staff. We will review any possible issues that may arise as well as answer any questions from staff about the process. This meeting is crucial for the process as we want to ensure that everyone understands the various steps in the process and what is expected of them.
Cost Allocation Plan
Task 1: Identify Central Services and Allocate Staff Time RCS will meet with various departments to identify and review central services and allocate staff time and costs for those services. Examples of central services include payroll, risk management, and facility maintenance. City staff time involved in the meetings would be approximately 1-2 hours per central service department.
Task 2: Develop Allocation Factors
RCS will meet with City staff to develop the allocation factors for each central service identified in the above task. These factors will form the basis for determining fully burdened hourly rates and allocating central service costs. This meeting will be concurrent with the time allocation meeting. Though City staff involvement in data gathering is a function of the availability of the required information, RCS will develop allocation factors that are easily reproducible from year to year but still equitably allocate central service costs. RCS will calculate allocations to the functional centers and review the results with the managers of the various central service departments. City staff time to review the results of the allocations will be less than 1 hour per department.
Task 3: Prepare and Review Draft Cost Allocation Plan with City RCS will prepare a Draft Report with allocations to end user departments using our 20-step allocation model. RCS will review this Draft Report with the City’s management, making any necessary adjustments to ensure that costs are allocated properly.
Task 4: Prepare Final Cost Allocation Plan
RCS will then prepare a Final Report with allocations to end user departments. These results will be used RCS 42
for the general overhead component of the Fee Study and can also be used to determine the amounts for transfers to the General Fund for support provided to other funds. RCS will provide the City’s requested number of printed copies, as well as a PDF file of the Overhead Cost Allocation Study. RSC will also provide a computer-based model for adjusting these fees and charges for the City’s current and future needs, providing an electronic copy of the final study that can be edited and updated as needed. RCS will consult with City Staff as necessary to defend the cost allocation plan in the event of audits or other challenges.
User Fee Study
Task 1: Review the Service List with Staff
RCS will review the service list through meetings with City staff. We will also work with Departmental staff to determine any changes to the fee calculation methods. The end result, whichever method is used, will be a fee structure that best fits the City going forward. While this list will change during the course of the Study as it is refined, it will be the initial basis from where we start. City staff time for this review will be approximately 1 hour per department.
Task 2: Staff Time/Contract Cost Allocations
RCS will interview personnel providing end-user services to ensure that costs from all functional areas directly involved with a service are included in the cost of that service. This component will form the bulk of the time spent by staff. There will be two to four meetings with supervisory level staff in each functional area to create and verify the amount of time spent by staff on the services identified in the task above. We do not ask City staff to do our job by filling out forms detailing how they spend their time. This interactive process, and the fact that we allocate 100% of all departmental staff, ensures that the information being generated is valid and reliable. Total time commitment per department varies from 2-20 hours, through a series of working meetings.
Task 3: Develop Fully Burdened Hourly Rates
RCS will develop a fully burdened hourly rate for each departmental employee, including salaries and benefits, miscellaneous operating services and supply costs, citywide overhead and departmental overhead.
Task 4: Prepare Draft Report
RCS will prepare a Draft Report that identifies the total costs for each service, along with current fees, and makes fee recommendations for each service presented as well potential new fees for services the City provides but does not charge for. Service costs will be compared with existing recovery levels. RCS will review this report with the departments so that each will have input on the fees presented in the Final Report. City staff time would be approximately 1-2 hours per department for those departments that have fee services.
Task 5: Prepare Final Report
Based on staff input, RCS will prepare a Final Report, which will have recommendations for new fees, subsidy percentages and revenue projections from those fees. The Report will include text and summary tables that will clearly explain the results and the context. All recommended fees will comply with Propositions 4, 218, 26 and any other applicable laws. RCS will provide a PDF file of the Final Report. Any Master Fee Schedule revisions will also be made available in Word, Excel and/or PDF formats. RSC will provide a computer-based model for adjusting these fees and charges for the City’s current and future needs, providing an electronic copy of the final study that can be edited and updated as the need arises and RCS 43
allowing for the requirements referred to in the City’s RFP. RCS will consult with staff as needed to defend the fee study in the event of audits or other challenges.
Task 6: Survey Similar Municipalities
RCS will survey other municipalities and document the findings. The survey summary would compare similar fees for services at different cities, however our results cannot explain why the fees differ.
Task 7: Present Report to the City Council
RCS will assist City staff, the City Council in the review and adoption of revised service fees and subsidy percentages, at up to three public meetings. RCS will assist City staff in the implementation of the revised service fees.
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SECTION FOUR - REFERENCES
REFERENCES
Jurisdiction Contact Title
City of Carson Tarik Rahmani
(310) 952-1755
Deputy City Manager
[email protected]
RCS completed a Cost Allocation Plan and Comprehensive Fee Study for the City in 2022, and the City Council adopted the suggested user fees in 2023.
City of Lompoc Dean Albro
(805) 875-8274
City Manager
[email protected]
RCS completed a Comprehensive Fee Study for the City originally in 2015 and most recently in 2022, in which the City adopted the suggested user fees.
City of Long Beach Geraldine Alejo
(562) 570-5478
Revenue Management Officer
[email protected]
RCS was selected in 2019 to perform a three-year comprehensive update of Long Beach’s 2,850 fees, fines and permits.
City of Santa Barbara James Hamilton
(805) 564-5504
Comm Dev Business Manager
[email protected]
RCS completed a Development Services Fee Study 2019 and a Fire Department Fee Study in 2020. The City Council adopted changes to its fee schedule.
City of Santa Clarita Carmen Magana
(661) 255-4997
Admin Services Director
[email protected]
RCS developed a Cost Allocation Plan and Comprehensive Fee Study for the City most recently in 2024 and has also updated the Cost Allocation Plan every year since 2011. RCS has been providing these services for the City since 1995.
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SECTION FIVE – ESTIMATED PROJECT TIMELINE
ESTIMATED PROJECT TIMELINE
RCS is available to begin work immediately with the proposed schedule outlined below. This schedule, of course, will require the cooperative participation of City staff.
Project Timeline Month
1 Month
2 Month
3 Month
4 Month
5 User Fee Study
Obtain Budget & Personnel Data
Review Service List
Review Staff Time Allocations
Develop Fully Burdened Hourly Rates
Review Draft & Final Report
Prepare for City Council Meeting
ONSITE MEETINGS AND VIDEO CONFERENCING MEETINGS
RCS will utilize our Zoom account, or any video conferencing platform of the City’s choosing, to facilitate all working meetings. Our experience has determined that the use of video conferencing is more flexible in scheduling meetings, permitting City staff to quickly access reports and files on their computers, and allowing everyone to view and discuss the same documents at the same time. Department meetings will be 30 minutes to two hours each. We would be on-site to present the report at all City Council meetings.
CLIENT INPUT
RCS will make every effort to advise, seek input from and, in general, explain the work as it is being performed. For a project to be completed successfully, we depend on dedicated and engaged staff participation. Most of the staff participation is to attend working meetings with RCS. There will be no “homework” to be completed and returned to us.
The City should also designate a Project Coordinator for the fee study who will:
1) Identify key City staff and coordinate the kick-off meeting(s) 2) Assist in obtaining requested information
3) Coordinate the review of draft reports, and
4) Provide project direction if needed