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HomeMy WebLinkAboutRESPONSE - RFP - P1003 COST OF SERVICESP A T H W A Y S T O L A S T I N G S 0 L U T 1 0 N S REBDAK CONSULTING • A DIVISION OF MALCOLM PIRNIE December 12, 2005 Ms. Opal Dick City of Fort Collins 215 North Mason Street, 2nd Floor Fort Collins, CO 80524 Re: Cost of Service Study — RFP P-1003 Dear Ms. Dick: Red Oak Consulting is pleased to submit this proposal to the City of Fort Collins (City). Our proposal addresses the requirements as set forth in your request for proposal. The objective of this study is to conduct a cost of service and rate design study for the City. The City wants its consultant to have the technical knowledge to conduct this study and the communication skills to clearly explain study procedures and findings to all stakeholders. Based on our experience with the City, as well as with numerous municipal utilities located throughout Colorado, the west and the entire country, we have assembled a team that addresses these requirements. We are pleased to present a senior team of utility rate specialists with over 100 years of experience who have collectively performed nearly 1,000 utility rate and investment fee studies. Our team includes Mr. Rick Giardina, Project Officer, and Mr. Todd Cristiano, Project Manager, who are presently assisting the City with a water, wastewater, and stormwater financial plan and plant investment fee study. As part of that study, Mr. Cristiano developed financial planning models for the City which will be an excellent vehicle for developing cost of service rates for the water and wastewater utilities. Mr. Cristiano's and Mr. Giardina's history with the City coupled with our team's experience with Colorado utilities such as the City of Fort Collins, make us an excellent candidate for this study. Red Oak commits its full resources to this study for the City of Fort Collins to meet the scheduled January 2006 project kickoff date. We also commit to you that our completion of this study will be objective, highly insightful, timely, and sensitive to the needs of the City and its customers. Thank you for consideration of our team for this critically important study and we look forward to your favorable review of this proposal. Please contact me at (303) 369-3535 if you have any questions regarding this proposal or to schedule an interview. Very truly yours, RED OAK CONSULTING A Division of Malcolm Pirnie, Inc. Richard D. Giardina, CPA Vice President 3300 South Parker Road -Suite 305 -Aurora, CO 80014 •T 303-369-3535 F 303-369-3540 •www.redoakconsulting.com Mr. Cristiano is a financial analyst experienced in providing financial consulting services, primarily for water and wastewater utilities. He has performed comprehensive studies of revenue requirements, cost -of - service allocations, rate analysis, and system development charges. He specializes in computer -based analysis of utility billing, budgeting, and fixed asset records. ■ City of Fort Collins: Water, Wastewater, and Stormwater Financial Plan and Plant Investment Fee Study / CO. The City of Fort Collins requested a review and update of their plant investment fees (PIF) to ensure growth was paying its own way. The City developed a master plan through 2040 that outlined the growth trends for each utility. Analyzed each utility's asset base and growth -related projects to determine the future value of the backbone system. Several investment fee methodologies were reviewed including: system buy -in, incremental, and the hybrid method. Based on the available capacity in each system, the buy -in method was selected for water and stormwater, the hybrid method was selected for the wastewater utility. Also included in the PIF was a review and update of the fee schedule. Due to recent changes in water usage and peak demands, the fee schedule for water was updated to include current customer class peak day demands to improve the equitability of the fees. The wastewater fee schedule was updated to include an allowance for peak flows as a result of infiltration and inflow. The existing stormwater utility basin -by -basin fee structure was simplified to a uniform fee structure for all basins. Also included in this study was a financial plan review. Performed a detailed billing analysis, revenue projections, and revenue requirement projections for a 5-year study period. Revenue projections for the water utility involved an extensive analysis of historical water use for the periods 2001 through 2004 to determine a representative projection of future water use incorporating continued water conservation from the water customers. ■ City of Greeley: Water and Wastewater Plant Investment Fee and Rate Study / CO. The City requested a full rate study including a financial plan, cost -of -service analysis, rate design, and a plant investment fee analysis for their water and wastewater utilities. Drought conditions and water conservation had affected water sales revenue projections, which reduced reserves in the water fund. The effects of the drought also had an impact on their capital improvement program and TODD CRISTIANO Consultant Red Oak Consulting a Division of Malcolm Pirnie, Inc. BS Chemical Engineering University of Tulsa 1995 MBA Business Administration University of Colorado, Denver 2003 Fundamentals of Engineering Malcolm Pirnie, Inc. 2005 to present Black & Veatch Corp. 1998 to 2005 Fluor Daniel 1996 to 1998 ACG, Inc. 1995 to 1996 A537701/NCA Pathways to Lasting Solutions �r the City of Fort Collins with information and knowledge of the many Red Oak provides the innovative practices in the industry. This is a fresh, independent and following spectrum of experienced "look" that we bring to the City and this project. Extensive Local Knowldege. Our Colorado -based project team financial services: from Red Oak Consulting has provided utility financial services to Rate and Charge Studies over 100 Colorado municipalities including virtually all of the major Cost of Service Studies Front Range cities. We have eight regionally -based professionals Plant Investment Fee with combined experience of 100 years that specialize in developing Analysis utility financial models and cost of service rate studies. Over many years, during hundreds of utility financial analyses, we have - Financial and Strategic employed a successful process for the thoughtful and efficient Business Planning development of financial management services and utility rate Feasability Studies studies. This process centers on our ability to deliver our services Capital Asset Funding effectively and efficiently with Deal -time financial decision support Studies modeling utilizing experienced staff. Our team understands the - Utility Valuations financial dynamics of utilities and the political realities under which Revenue Bond Issues; utilities must operate. Please see Section 2 - Key Personnel of this Consulting Engineer proposal for a more comprehensive description of our professionals' Reports qualifications. - Optimization of Utility Financial Functions Malcolm Pirnie / Red Oak personnel are primary authors of industry texts regard- ing issues facing water and wastewater utilities and have authored chapters in related publications. Experience in Involving and Educating our Clients. Our depth and breadth of experience coupled with our proven interactive approach to rate setting will help involve, educate, and inform the stakeholders in the rate setting process, and will form a foundation to help stakeholders make informed, thoughtful decisions. Proof of our dedication and ownership in doing our part to further the success of the water and wastewater utility industry, Red Oak and Malcolm Pirnie personnel have authored many books that communicate the challenges that utilities face today and in the future. Some of these include: "Management Innovation in U.S. Public Water and Wastewater Systems" - Seidenstat, Nadol, Kziplan & Hakim AWWA "The Evolving Water Utility" - 2003 WERF: "Efficient and Effective Practices for Utilities" - 1999 NWRI - Utility Leadership Workshop - 1999 AWWA "The Changing Water Utility" - 1998 CBI: "Contracting for Services" - 1997 American City and County: "A Benchmark Approach" - 1996 Pathways to lasting Solutions A537701/NCA The study also included a wastewater cost -of -service analysis and rate design to ensure that each customer class' revenue was adequately recovering the cost to provide service. The study included a detailed billing analysis, projection of revenues and revenue requirements. Performed "what -if" scenarios on the cash flows to determine the appropriate mix of debt and equity to assist in financing the capital improvement program, all while minimizing that rate impact to customers. ■ City of Montrose: Water, Wastewater, and Solid Waste Rate Study / CO. The City of Montrose required a cost -of -service analysis for its water, wastewater, and solid waste utilities. Developed a cost -of -service analysis for the water and wastewater utilities to develop rate structure(, that wound simplify the City's current billing schedule. The approved water rate structure was designed to promote water conservation. The City was provided interactive water and wastewater models to perform in-house "what -if" scenarios. ■ City of Pueblo: Computer Rate Model Update / CO. The City of Pueblo requested an update of its 2002 rate model to incorporate changes to the city's capital improvement program and operating and maintenance costs. The study Included a detailed billing analysis, an eleven -year financial plan, and cost -of -service allocation. Following review of the City's asset listing and capital improvement program, designed sanitary sewer connection and plant investment fees. The rate model was delivered to city wastewater utility officials, allowing them to draft "what -if" scenarios under a variety of financial conditions. ■ Cheyenne Board of Public Utilities: System Development Fee Review / WY. The Cheyenne Board of Public Utilities requested a review the existing system development fees and propose recommendations to improve equitability of the fees. Our study included a detailed water and wastewater system asset analysis and development of asset replacement costs. The study also included a detailed usage analysis to determine equivalent residential taps, which served as a basis for the system development fee. ■ Cheyenne Board of Public Utilities: Water and Wastewater Rate Study / WY. The Cheyenne Board of Public Utilities authorized a study to develop water and wastewater financial plans and rates to coincide with the 2O-year master plan developed by Black & Veatch Corporation. Performed this study which included detailed billing analyses, projecting revenues based on drought conditions experienced by the City, A537701/NCA Pathways to Lasting Solutions �r the City of Fort Collins with information and knowledge of the many Red Oak provides the innovative practices in the industry. This is a fresh, independent and following spectrum of experienced "look" that we bring to the City and this project. Extensive Local Knowldege. Our Colorado -based project team financial services: from Red Oak Consulting has provided utility financial services to Rate and Charge Studies over 100 Colorado municipalities including virtually all of the major Cost of Service Studies Front Range cities. We have eight regionally -based professionals Plant Investment Fee with combined experience of 100 years that specialize in developing Analysis utility financial models and cost of service rate studies. Over many years, during hundreds of utility financial analyses, we have - Financial and Strategic employed a successful process for the thoughtful and efficient Business Planning development of financial management services and utility rate Feasability Studies studies. This process centers on our ability to deliver our services Capital Asset Funding effectively and efficiently with Deal -time financial decision support Studies modeling utilizing experienced staff. Our team understands the - Utility Valuations financial dynamics of utilities and the political realities under which Revenue Bond Issues; utilities must operate. Please see Section 2 - Key Personnel of this Consulting Engineer proposal for a more comprehensive description of our professionals' Reports qualifications. - Optimization of Utility Financial Functions Malcolm Pirnie / Red Oak personnel are primary authors of industry texts regard- ing issues facing water and wastewater utilities and have authored chapters in related publications. Experience in Involving and Educating our Clients. Our depth and breadth of experience coupled with our proven interactive approach to rate setting will help involve, educate, and inform the stakeholders in the rate setting process, and will form a foundation to help stakeholders make informed, thoughtful decisions. Proof of our dedication and ownership in doing our part to further the success of the water and wastewater utility industry, Red Oak and Malcolm Pirnie personnel have authored many books that communicate the challenges that utilities face today and in the future. Some of these include: "Management Innovation in U.S. Public Water and Wastewater Systems" - Seidenstat, Nadol, Kziplan & Hakim AWWA "The Evolving Water Utility" - 2003 WERF: "Efficient and Effective Practices for Utilities" - 1999 NWRI - Utility Leadership Workshop - 1999 AWWA "The Changing Water Utility" - 1998 CBI: "Contracting for Services" - 1997 American City and County: "A Benchmark Approach" - 1996 Pathways to lasting Solutions A537701/NCA i Mr. Giardina's extensive managerial and financial experience includes RICHARD GIARDINA many organizational studies and over 200 rate and financial studies serving both the private and public sector. His experience covers technical areas and industries such as utility cost -of -service and rate structure studies, litigation support, economic feasibility analyses, privatization feasibility and implementation studies, impact fee studies, Principal Consultant management and operational audits, reviews of policies and procedures Red Oak Consulting a Division of and operating practices, mergers and acquisitions, valuation services, Malcolm Pirnie, Inc. and rate filing and reporting. 26 ■ City of Fort Collins: Water, Wastewater and Stormwater Utilities Plant Investment Fees Financial Plan / CO. As Project Officer, BA Business Administration Western State College of Colorado 1978 currently reviewing and updating the City's plant investment fees (PIFs) to ensure growth is paying its own way. The City developed a master plan through 2040 that outlined the growth trends for each utility. Red Oak is Certified Public Accountant analyzing each utility's asset base and growth -related projects to determine the future value of the backbone system. Board Member, East cherry Creek ■ City and County of Denver: Storm Drainage Financial Planning / CO. Valley Water & Sanitation District (2001-2002) Conducted a financial planning study for storm drainage in several Rates and Charges Committee, phases: American Water Works Association • Reviewed the city's ordinances and regulatory materials concerning Financing and Charges Task Force, the storm drainage utility and the storm drainage capital project's Water Environment Federation six -year and long-term needs. Assessed the cost of services for Board Member, National Impact Fee maintaining and operating the storm drainage utility, including the Roundtable current and projected financial requirements of operating the utility and the planned capital projects. American Institute of Certified Public • Prepared a plan of finance, including projections of storm drainage Accountants fees, which supported completion of the planned capital projects. American Water works Association, ■ City of Aurora: Rate and Financial Studies / CO. Examined user Rocky Mountain Section Arizona Water & Pollution Control charges and impact fees as part of a water, wastewater, and storm water Association rate and financial study. Developed automated financial plans and cash Government Financial Officers flow statements for each utility, further segregated into operation and Association system development. Examined several alternatives for determining Water Environment Federation, Rocky Mountain Section appropriate transfers from the city's utility operations to the General Fund. Subsequently worked with the city to update impact fees and rates Malcolm Pirnie, Inc. 2004 to present and develop a rate structure in response to a drought. Developed a Rick Giardina & Associates, Inc. 1995 to financial plan to provide the city with reasonable assurance that its costs 2004 would be funded with a combination of rate revenue and existing Raftelis Environmental Consulting unrestricted cash. Conducted an update for the city utility's financial Group 1993 to 1995 plans evaluating alternative user fee and impact fee methodologies, and Ernst &Young 1984 to 1993 stone & Webster, Inc. 1981 to 1984 developed a reclaimed water pricing policy/structure. State of Colorado Public utilities Commission 1978 to 1981 A537701/NCA Pathways to Lasting Solutions �r the City of Fort Collins with information and knowledge of the many Red Oak provides the innovative practices in the industry. This is a fresh, independent and following spectrum of experienced "look" that we bring to the City and this project. Extensive Local Knowldege. Our Colorado -based project team financial services: from Red Oak Consulting has provided utility financial services to Rate and Charge Studies over 100 Colorado municipalities including virtually all of the major Cost of Service Studies Front Range cities. We have eight regionally -based professionals Plant Investment Fee with combined experience of 100 years that specialize in developing Analysis utility financial models and cost of service rate studies. Over many years, during hundreds of utility financial analyses, we have - Financial and Strategic employed a successful process for the thoughtful and efficient Business Planning development of financial management services and utility rate Feasability Studies studies. This process centers on our ability to deliver our services Capital Asset Funding effectively and efficiently with Deal -time financial decision support Studies modeling utilizing experienced staff. Our team understands the - Utility Valuations financial dynamics of utilities and the political realities under which Revenue Bond Issues; utilities must operate. Please see Section 2 - Key Personnel of this Consulting Engineer proposal for a more comprehensive description of our professionals' Reports qualifications. - Optimization of Utility Financial Functions Malcolm Pirnie / Red Oak personnel are primary authors of industry texts regard- ing issues facing water and wastewater utilities and have authored chapters in related publications. Experience in Involving and Educating our Clients. Our depth and breadth of experience coupled with our proven interactive approach to rate setting will help involve, educate, and inform the stakeholders in the rate setting process, and will form a foundation to help stakeholders make informed, thoughtful decisions. Proof of our dedication and ownership in doing our part to further the success of the water and wastewater utility industry, Red Oak and Malcolm Pirnie personnel have authored many books that communicate the challenges that utilities face today and in the future. Some of these include: "Management Innovation in U.S. Public Water and Wastewater Systems" - Seidenstat, Nadol, Kziplan & Hakim AWWA "The Evolving Water Utility" - 2003 WERF: "Efficient and Effective Practices for Utilities" - 1999 NWRI - Utility Leadership Workshop - 1999 AWWA "The Changing Water Utility" - 1998 CBI: "Contracting for Services" - 1997 American City and County: "A Benchmark Approach" - 1996 Pathways to lasting Solutions A537701/NCA establishment of rates. Recommendations for development fees were given to the city using the evaluation of alternative calculation and assessment methodologies. ■ City Council of Salt Lake City: Water Rate Pricing / UT. Led the council through a process of identifying and ranking water rate or pricing objectives. This effort resulted in the adoption of a seasonal ratE. approach (the existing method was a uniform rate). On the basis of the most recent rate study, the city has adopted a combination fixed -block rate for its residential accounts and a customer -specific block approach for nonresidential accounts. This approach was the result of a comprehensive evaluation of rate options using a 20-member citizen committee. Also assisted the City Council in developing financial policies and leading a discussion regarding pay-as-you-go versus debt financing for capital projects, and in providing a detailed analysis of a bonding proposal. The work included general fund activities as well as water, sewer, and storm drainage operations. Analyzed such issues as alternative financing vehicles (including impact fees) and custorer/taxpayer impact analyses. Completed a rate alternative workshop with the City Council which led to the implementation of a seasonal (replacing a uniform) water rate structure. ■ City of San Jose: Impact Fee and Rate Study / CA. Served as Project Director to conduct a customer class cost -of -service study using a conservation rate approach, and developed impact fees to recover costs associated with major facilities required to serve new development in thE, city's service area. Developed a methodology for determining amounts to be transferred annually to the city's General Fund. Developed a micro computer rate and financial planning model in order to project rates over a five-year time frame. Public input on both the user charges and impact fees were considered when developing our final recommendations. ■ City of Santa Rosa: Water and Wastewater Rate Study / CA. As Project Manager, developed water rates for a five-year period and wastewater rates for a twenty-year period. Evaluated the city's existing methodology for developing demand or development fees for both utilities and calculated the appropriate fee for the study period. This in- depth analysis was accomplished through development of an automated rate model which has been used by the city to conduct updates. Rates adopted by the city reflected a conservation feature which was strongly supported by the community. Evaluated the potential for a "life -line" rate structure to assist low-income water users. Because the city was a regional provider of wastewater treatment service, the cost -of -service A537701/NCA Pathways to Lasting Solutions �r the City of Fort Collins with information and knowledge of the many Red Oak provides the innovative practices in the industry. This is a fresh, independent and following spectrum of experienced "look" that we bring to the City and this project. Extensive Local Knowldege. Our Colorado -based project team financial services: from Red Oak Consulting has provided utility financial services to Rate and Charge Studies over 100 Colorado municipalities including virtually all of the major Cost of Service Studies Front Range cities. We have eight regionally -based professionals Plant Investment Fee with combined experience of 100 years that specialize in developing Analysis utility financial models and cost of service rate studies. Over many years, during hundreds of utility financial analyses, we have - Financial and Strategic employed a successful process for the thoughtful and efficient Business Planning development of financial management services and utility rate Feasability Studies studies. This process centers on our ability to deliver our services Capital Asset Funding effectively and efficiently with Deal -time financial decision support Studies modeling utilizing experienced staff. Our team understands the - Utility Valuations financial dynamics of utilities and the political realities under which Revenue Bond Issues; utilities must operate. Please see Section 2 - Key Personnel of this Consulting Engineer proposal for a more comprehensive description of our professionals' Reports qualifications. - Optimization of Utility Financial Functions Malcolm Pirnie / Red Oak personnel are primary authors of industry texts regard- ing issues facing water and wastewater utilities and have authored chapters in related publications. Experience in Involving and Educating our Clients. Our depth and breadth of experience coupled with our proven interactive approach to rate setting will help involve, educate, and inform the stakeholders in the rate setting process, and will form a foundation to help stakeholders make informed, thoughtful decisions. Proof of our dedication and ownership in doing our part to further the success of the water and wastewater utility industry, Red Oak and Malcolm Pirnie personnel have authored many books that communicate the challenges that utilities face today and in the future. Some of these include: "Management Innovation in U.S. Public Water and Wastewater Systems" - Seidenstat, Nadol, Kziplan & Hakim AWWA "The Evolving Water Utility" - 2003 WERF: "Efficient and Effective Practices for Utilities" - 1999 NWRI - Utility Leadership Workshop - 1999 AWWA "The Changing Water Utility" - 1998 CBI: "Contracting for Services" - 1997 American City and County: "A Benchmark Approach" - 1996 Pathways to lasting Solutions A537701/NCA Mr. Lockridge has over 29 years' experience in local government, the last 10 of which have been spent specifically in financial consulting, primarily in the area of water and wastewater revenue sufficiency analyses, rate/cost of service studies, impact fee studies, and special assessment studies. He has supervised the preparation of numerous financial feasibility reports for revenue bonds and other forms of financing. Mr. Lockridge has served in local government as a Management Analyst, Assistant City Auditor, Deputy City Manager, City Auditor, and Finance Director. His awards include the Government Finance Officers' Association awards for Distinguished Budget Presentation and Excellence in Financial Reporting. Mr. Lockridge has presented papers and conducted seminars in rate -setting for such organizations as the American Water Works Association and the Florida Water Resources Conference. He has done pioneering work in rate -setting for reclaimed water service and potable water conservation rates. ■ City of Reno: Cost of Service and Rate Study/NV. As project manager, responsible for the development of a financial forecast model, followed by evaluations of revenue sufficiency, cost of service, connection fees, and, lastly, assisted in the design of a rate structure that aligned with Reno's needs and financial objectives. ■ Town of Buckeye: Water & Wastewater Rate Study / AZ. Served as technical advisor for comprehensive water and wastewater rate study. Reviewed technical approach, reviewed and validated interactive rate model develooed during the project, and assisted in identification and development of alternative scenarios for review and presentation. ■ St. Johns River Water Management District: Evaluation of the Impact of Conservation Rates on Water Consumption / Palatka FL. Evaluated the impact of conservation rates on water consumption for a sample of utilities within the District. Study used basic financial information, customer composition, and rate structures for each utility and applied elasticity factors to determine the effect of various conservation rate structures. Also prepared preliminary study to determine the general effect on utility rates within the District resulting from use of alternative water supply sources. ■ Pinellas County Utilities: Financial Management Plan/ FL. Developed long-range financial management plan, cost of service allocations, and 30-year financial forecast for planned 24 MGD reclaimed water treatment, transmission, and distribution system. This system, when completed, will be the largest in the State and possibly in the nation. Allocated costs among customer classes (residential, multi -family ROBERT LOCKRIDGE Senior Consultant Red Oak Consulting Division of Malcolm Pirnie BA Liberal Arts Mercer University 1969 Government Finance Officers' Association awards for Distinguished Budget Presentation and Excellence in Financial Reporting. American Water Works Association Malcolm Pirnie, Inc. 2003 to present Burton and Associates 1993 to 2003 City of Lake Maury FL 1989 to 1993 Eppley, Guerin & Turner 1985 to 1989 City of Gainesville FL 1980 to 1985 City of Dallas TX 1975 to 1980 Fulton County GA 1974 to 1975 A537701/NCA Pathways to Lasting Solutions �r the City of Fort Collins with information and knowledge of the many Red Oak provides the innovative practices in the industry. This is a fresh, independent and following spectrum of experienced "look" that we bring to the City and this project. Extensive Local Knowldege. Our Colorado -based project team financial services: from Red Oak Consulting has provided utility financial services to Rate and Charge Studies over 100 Colorado municipalities including virtually all of the major Cost of Service Studies Front Range cities. We have eight regionally -based professionals Plant Investment Fee with combined experience of 100 years that specialize in developing Analysis utility financial models and cost of service rate studies. Over many years, during hundreds of utility financial analyses, we have - Financial and Strategic employed a successful process for the thoughtful and efficient Business Planning development of financial management services and utility rate Feasability Studies studies. This process centers on our ability to deliver our services Capital Asset Funding effectively and efficiently with Deal -time financial decision support Studies modeling utilizing experienced staff. Our team understands the - Utility Valuations financial dynamics of utilities and the political realities under which Revenue Bond Issues; utilities must operate. Please see Section 2 - Key Personnel of this Consulting Engineer proposal for a more comprehensive description of our professionals' Reports qualifications. - Optimization of Utility Financial Functions Malcolm Pirnie / Red Oak personnel are primary authors of industry texts regard- ing issues facing water and wastewater utilities and have authored chapters in related publications. Experience in Involving and Educating our Clients. Our depth and breadth of experience coupled with our proven interactive approach to rate setting will help involve, educate, and inform the stakeholders in the rate setting process, and will form a foundation to help stakeholders make informed, thoughtful decisions. Proof of our dedication and ownership in doing our part to further the success of the water and wastewater utility industry, Red Oak and Malcolm Pirnie personnel have authored many books that communicate the challenges that utilities face today and in the future. Some of these include: "Management Innovation in U.S. Public Water and Wastewater Systems" - Seidenstat, Nadol, Kziplan & Hakim AWWA "The Evolving Water Utility" - 2003 WERF: "Efficient and Effective Practices for Utilities" - 1999 NWRI - Utility Leadership Workshop - 1999 AWWA "The Changing Water Utility" - 1998 CBI: "Contracting for Services" - 1997 American City and County: "A Benchmark Approach" - 1996 Pathways to lasting Solutions A537701/NCA m Table of Contents f Mr. Rheem has experience in several utility sectors including telecommunications, energy, water and wastewater. His experience ANDREW RHEEM spans numerous financial and technical areas and most recently include experience assisting in the development of financial plans, cost of service studies, and alternative rate designs for municipal utilities. ■ City of Aurora: Financial Planning and Cost -of -Service Study/Aurora CO. Lead analyst and project manager for an on -going financial planning study that calculates multi -year water, sanitary sewer and storm sewer user charges and development fees required to fund a series of capital projects, funded through bond issues and cash in meeting the desired level of service. Also developed cost -of -service models utilizing the base -extra capacity method and the cash needs approach for water, reclaimed and sanitary sewer user charges. ■ City of Longmont: Storm Drainage Rate Study/Longmont CO. Lead analyst and project manager for a study that evaluated the City's current Storm Drainage Utility operations, including capital improvement needs and 0&M expenses in updating user charges and capital improvement fees. A multi -year financial plan and rate increases required to meet financial planning targets was developed and delivered to the client. ■ City of Thornton: Water Allocation and Tiered Rate Analysis/Thornton CO. Lead analyst during two annual reviews of the historical water usage in projecting utility rate revenue and analyzing the effectiveness of the tiered rate structure in encouraging conservation while meeting the utility revenue requirements. ■ City of Thornton: Water and Sewer Tap Fee Update/Thornton CO. Lead analyst for a study that updated the City's water and sewer tap fees using the buy -in fee method. ■ Lake Havasu City: Wastewater Expansion Financial Feasibility Analysis/Arizona. Lead analyst for three annual studies that updated and enhanced a multi -year financial planning model related to a major 10-year sewer expansion project. The model is used to calculate rate increases required in meeting bond covenants in support of annual bond issues funding the majority of the expansion project. ■ City of Kingman: Revenue and Fee Study/Arizona. One of three analysts for a study that developed Police, Fire, Parks and Recreation, General Government, Transportation and Storm water investment or Consultant Red Oak Consulting a Division of Malcolm Pirnie, Inc. 6 BBA Finance University of Michigan 1999 Malcolm Pirnie, Inc. 2004 to present Rick Giardina & Associates, Inc 2003 to 2004 Ajilon Finance 2002 to 2003 ISPhone, Inc 1999 to 2001 McLagan Partners 1999 to 1999 A537701JNCA Pathways to Lasting Solutions �r the City of Fort Collins with information and knowledge of the many Red Oak provides the innovative practices in the industry. This is a fresh, independent and following spectrum of experienced "look" that we bring to the City and this project. Extensive Local Knowldege. Our Colorado -based project team financial services: from Red Oak Consulting has provided utility financial services to Rate and Charge Studies over 100 Colorado municipalities including virtually all of the major Cost of Service Studies Front Range cities. We have eight regionally -based professionals Plant Investment Fee with combined experience of 100 years that specialize in developing Analysis utility financial models and cost of service rate studies. Over many years, during hundreds of utility financial analyses, we have - Financial and Strategic employed a successful process for the thoughtful and efficient Business Planning development of financial management services and utility rate Feasability Studies studies. This process centers on our ability to deliver our services Capital Asset Funding effectively and efficiently with Deal -time financial decision support Studies modeling utilizing experienced staff. Our team understands the - Utility Valuations financial dynamics of utilities and the political realities under which Revenue Bond Issues; utilities must operate. Please see Section 2 - Key Personnel of this Consulting Engineer proposal for a more comprehensive description of our professionals' Reports qualifications. - Optimization of Utility Financial Functions Malcolm Pirnie / Red Oak personnel are primary authors of industry texts regard- ing issues facing water and wastewater utilities and have authored chapters in related publications. Experience in Involving and Educating our Clients. Our depth and breadth of experience coupled with our proven interactive approach to rate setting will help involve, educate, and inform the stakeholders in the rate setting process, and will form a foundation to help stakeholders make informed, thoughtful decisions. Proof of our dedication and ownership in doing our part to further the success of the water and wastewater utility industry, Red Oak and Malcolm Pirnie personnel have authored many books that communicate the challenges that utilities face today and in the future. Some of these include: "Management Innovation in U.S. Public Water and Wastewater Systems" - Seidenstat, Nadol, Kziplan & Hakim AWWA "The Evolving Water Utility" - 2003 WERF: "Efficient and Effective Practices for Utilities" - 1999 NWRI - Utility Leadership Workshop - 1999 AWWA "The Changing Water Utility" - 1998 CBI: "Contracting for Services" - 1997 American City and County: "A Benchmark Approach" - 1996 Pathways to lasting Solutions A537701/NCA �.'r V Mr. Burnett has been involved in environmental projects serving both the private and public sectors. His experience spans numerous technical KEVIN BURNETT areas and industries and most recently includes significant experience in the development of financial plans, cost of service studies, and alternative rate design for municipal utilities. ■ City of Bullhead City: Wastewater Rate Study / Bullhead City AZ. Served as senior analyst in conducting a wastewater rate and capacity fee study. IN City of Chandler: Development Review / Chandler AZ. Participated in the update of a previous RGA study to analyze the costs associated with the Development Review Process. ■ City of Lake Havasu City: Water Rate Study / Lake Havasu AZ. Lead analyst in conducting a cost of service water rate study. The objectives of this study included: • provide adequate revenues to provide a stable and predictable source; • examine the funding of a reserve to purchase additional water in the event of a drought; • examine the impact of a water development fee. ■ Town of Prescott Valley: Rate Model User's Manual / Prescott AZ. Created a User's Manual to provide documentation supporting the Utility rate model developed for the Town. The model was designed to project cash flow results for a 20-year period, and is used to complete a cost of service analysis, and design rates for the projected years of the study period. ■ City and County of Broomfield: Rate Study / Broomfield CO. Served as lead analyst to evaluate and prepare a tiered/surcharge rate for the City. This effort included specific rate structure recommendations for tiered or drought -related rates that the City could implement. ■ City and County of Denver: Storm Drainage Financial Planning Study / Denver CO. Assisted in conducting a storm drainage financial planning study for the City. The engagement was completed in several phases: 1) reviewed the City's ordinances and regulatory materials concerning the storm drainage utility, including the Denver revised municipal code, wastewater policies and procedures related to the assessment and collection of storm drainage fees within the City. The storm drainage capital projects 6-year and long term needs were reviewed and the costs of services for maintaining and operating the storm drainage utility, A537701/NCA Pathways to Lasting Solutions Consultant Malcolm Pirnie, Inc. 5 BA Economics University of Waterloo 1999 MA Economics/Finance State University of New York at Buffalo 2000 Malcolm Pirnie, Inc. 2004 to present Rick Giardina & Associates, Inc 2000 to 2004 �r the City of Fort Collins with information and knowledge of the many Red Oak provides the innovative practices in the industry. This is a fresh, independent and following spectrum of experienced "look" that we bring to the City and this project. Extensive Local Knowldege. Our Colorado -based project team financial services: from Red Oak Consulting has provided utility financial services to Rate and Charge Studies over 100 Colorado municipalities including virtually all of the major Cost of Service Studies Front Range cities. We have eight regionally -based professionals Plant Investment Fee with combined experience of 100 years that specialize in developing Analysis utility financial models and cost of service rate studies. Over many years, during hundreds of utility financial analyses, we have - Financial and Strategic employed a successful process for the thoughtful and efficient Business Planning development of financial management services and utility rate Feasability Studies studies. This process centers on our ability to deliver our services Capital Asset Funding effectively and efficiently with Deal -time financial decision support Studies modeling utilizing experienced staff. Our team understands the - Utility Valuations financial dynamics of utilities and the political realities under which Revenue Bond Issues; utilities must operate. Please see Section 2 - Key Personnel of this Consulting Engineer proposal for a more comprehensive description of our professionals' Reports qualifications. - Optimization of Utility Financial Functions Malcolm Pirnie / Red Oak personnel are primary authors of industry texts regard- ing issues facing water and wastewater utilities and have authored chapters in related publications. Experience in Involving and Educating our Clients. Our depth and breadth of experience coupled with our proven interactive approach to rate setting will help involve, educate, and inform the stakeholders in the rate setting process, and will form a foundation to help stakeholders make informed, thoughtful decisions. Proof of our dedication and ownership in doing our part to further the success of the water and wastewater utility industry, Red Oak and Malcolm Pirnie personnel have authored many books that communicate the challenges that utilities face today and in the future. Some of these include: "Management Innovation in U.S. Public Water and Wastewater Systems" - Seidenstat, Nadol, Kziplan & Hakim AWWA "The Evolving Water Utility" - 2003 WERF: "Efficient and Effective Practices for Utilities" - 1999 NWRI - Utility Leadership Workshop - 1999 AWWA "The Changing Water Utility" - 1998 CBI: "Contracting for Services" - 1997 American City and County: "A Benchmark Approach" - 1996 Pathways to lasting Solutions A537701/NCA INTRODUCING RED OAK CONSULTING Red Oak Consulting, the management consulting division of Malcolm Pirnie, Inc., focuses on the unique financial, management, organizational and information technology needs of our clients. Red Oak consultants advise organizations on how to respond to continually evolving challenges using practical, feasible approaches to address issues in the context of their unique organization. As a division of Malcolm Pirnie, Red Oak Consulting has the resource support and experience of one of the country's foremost independent environmental engineering firms. Synergy between Red Oak Consulting and Malcolm Pirnie ensures that our clients receive the highest quality, expertise and project deliverables. We work with organizations to create lasting solutions that provide value-added services for their customer base. The essence of Red Oak Consulting comes from our dynamic blend of over 180 professionals whose focus is to help our clients identify and achieve their goals and objectives. One of the most unique, value -adding aspects of Red Oak is a team of financial consultants with expertise in rate studies, cost of service analyses, asset management, financial modeling, and strategic planning, over 9 of which are based in our local Colorado offices. WHY SELECT RED OAK? WE KNOW THE CITY. Mr. Rick Giardina, Project Officer, and Mr. Todd Cristiano, Project Manager, have had the privledge of working with the City on water, wastewater and stormwater financial plan and Plant Investment Fee Studies. Mr. Cristiano is thoroughly versed or the City's rate models and is familiar with the data required and the format in which the data will be used. In addition, Mr. Giardina and Mr. Cristiano have the opportunity to work with their Water Board members and City Council. A Fresh/National Perspective. Our project team includes nationally recognized financial experts who are experienced in all aspects of rate setting, and who are involved in the formulation of rate making policy at the national level. Our experience and industry leaderhip offer exposure to the latest trends in rate design and will provide Red Oak can assist the City of Fort Collins in meeting their long-term financial objectives by. leveraging our prior City experience to meet milestones introducing new approaches to financial planning and rate design to simplify updates in the future taking ownership in the City's path to meeting their utility's goals by developing a long-term relationship By selecting the Red Oak team, the City of Fort Collins will be assured of a comprehensive, technically sound performance for this important project. A537701/NCA Pathways to Lasting Solutions �r the City of Fort Collins with information and knowledge of the many Red Oak provides the innovative practices in the industry. This is a fresh, independent and following spectrum of experienced "look" that we bring to the City and this project. Extensive Local Knowldege. Our Colorado -based project team financial services: from Red Oak Consulting has provided utility financial services to Rate and Charge Studies over 100 Colorado municipalities including virtually all of the major Cost of Service Studies Front Range cities. We have eight regionally -based professionals Plant Investment Fee with combined experience of 100 years that specialize in developing Analysis utility financial models and cost of service rate studies. Over many years, during hundreds of utility financial analyses, we have - Financial and Strategic employed a successful process for the thoughtful and efficient Business Planning development of financial management services and utility rate Feasability Studies studies. This process centers on our ability to deliver our services Capital Asset Funding effectively and efficiently with Deal -time financial decision support Studies modeling utilizing experienced staff. Our team understands the - Utility Valuations financial dynamics of utilities and the political realities under which Revenue Bond Issues; utilities must operate. Please see Section 2 - Key Personnel of this Consulting Engineer proposal for a more comprehensive description of our professionals' Reports qualifications. - Optimization of Utility Financial Functions Malcolm Pirnie / Red Oak personnel are primary authors of industry texts regard- ing issues facing water and wastewater utilities and have authored chapters in related publications. Experience in Involving and Educating our Clients. Our depth and breadth of experience coupled with our proven interactive approach to rate setting will help involve, educate, and inform the stakeholders in the rate setting process, and will form a foundation to help stakeholders make informed, thoughtful decisions. Proof of our dedication and ownership in doing our part to further the success of the water and wastewater utility industry, Red Oak and Malcolm Pirnie personnel have authored many books that communicate the challenges that utilities face today and in the future. Some of these include: "Management Innovation in U.S. Public Water and Wastewater Systems" - Seidenstat, Nadol, Kziplan & Hakim AWWA "The Evolving Water Utility" - 2003 WERF: "Efficient and Effective Practices for Utilities" - 1999 NWRI - Utility Leadership Workshop - 1999 AWWA "The Changing Water Utility" - 1998 CBI: "Contracting for Services" - 1997 American City and County: "A Benchmark Approach" - 1996 Pathways to lasting Solutions A537701/NCA SELECT PROJECT EXPERIENCE On the following pages, we have identified some project descriptions completed by consultants at Red Oak who are assigned to your project. This experience demonstrates our team's ability to carry out the scope of services outlined in the City's proposal. Table 3-1 highlights additional financial project experience. City of Fort Collins, CO: System Development Charge Study (Ongoing) ✓ ✓ ✓ City of Greeley. CO: Water and Wastewater Rate and Charge Studies ✓ ✓ ✓ ✓ ✓ City of Aurora, CO: Water and Wastewater Rate and Charge Studies ✓ ✓ ✓ ✓ ✓ City of Broomfield, CO: Water and Wastewater Rate and Charge Studies ✓ ✓ ✓ ✓ ✓ City of Thornton, CO: Water and Wastewater Rate and Charge Studies ✓ ✓ ✓ ✓ City of Cheyenne, WY: Water and Wastewater Rate and Charge Studies ✓ ✓ ✓ ✓ ✓ City of Loveland, CO: Water and Wastewater Rate and Charge Studies ✓ ✓ ✓ ✓ ✓ City of Littleton. CO: Wastewater Rate Studies ✓ ✓ ✓ ✓ ✓ City of Englewood, C0: Water and Wastewater Rate and Charge Studies ✓ ✓ ✓ ✓ City of Longmont CO: Water and Wastewater Rate and Charge Studies ✓ ✓ ✓ ✓ ✓ City of Pueblo, CO: Water and Wastewater Rate and Charge Studies ✓ ✓ ✓ ✓ ✓ City of Lakewood. Co: Water and Wastewater Rate and Charge Studies ✓ ✓ ✓ ✓ ✓ Crestview Water and Sanitation District (Adams County. CO): Water and Wastewater Rate and Charge Studies ✓ ✓ ✓ ✓ ✓ Lakehurst Water and Sanitation District, CO: Water and Wastewater Rate and Charge Studies ✓ ✓ ✓ ✓ Willows Water District (Centennial. CO): Water Rate Studies ✓ ✓ ✓ ✓ Town of Lyons. Co: Water Rate Study ✓ ✓ ✓ Town of Berthoud, CO: Water Rate Study ✓ ✓ ✓ ✓ ✓ Town of Estes Park, Co: Water and Electric Rate and Connection Charge Studies ✓ ✓ ✓ ✓ ✓ City of Golden. Co: Water and Wastewater Rate and Charge Studies ✓ ✓ ✓ ✓ ✓ City of Colorado Springs, CO: Water and Wastewater Rate and Charge Studies ✓ ✓ ✓ ✓ ✓ Town of Erie. CO: Water and Wastewater Rate and Charge Studies ✓ ✓ ✓ ✓ ✓ A537701/NCA Pathways to Lasting Solutions Red Oak is currently reviewing and updating the City's plant investment fees (PIFs) to ensure growth is paying its own way. The City developed CONTACT INFORMATION a master plan through 2040 that outlined the growth trends for each Terri Bryant Finance and Budget Manager utility. Red Oak is analyzing each utility's asset base and growth -related Ft. Collins Utilities projects to determine the future value of the backbone system. 700 wood Street Fort Collins, CO 80522 Several investment fee methodologies are being reviewed including Office (970) 221-6524 system buy -in, incremental, and the hybrid. Based on the available Fax (970) 221-6619 capacity in each system, the buy -in method was selected for water and stormwater, and the hybrid method was selected for the wastewater utility. Due to recent changes in water usage and peak demands, the fee schedule for water was updated to include current customer class peak RELEVANT FEATURES day demands to improve the equitability of the fees. The wastewater Innovative plant investment fee schedule was updated to include an allowance for peak flows as a fee method result of infiltration and inflow. The existing stormwater utility basin- Financial plan assistance by -basin fee structure was simplified to a uniform fee structure for all basins. Red Oak its also reviewing the water and wastewater utilities financial plans. This review includes a detailed billing analysis, revenue projections, and revenue requirement projections for a 5-year study period. Revenue projections for the water utility involved an extensive analysis of historical water use for the periods 2001 through 2004 to determine a representative projection of future water use incorporating continued water conservation from the water customers. Red Oak professionals developed a rate model for both utilities to allow City officials to perform "what -if" scenarios on a variety of financial conditions. A537701/NCA Pathways to Lasting Solutions Prior to joining Red Oak Consulting, Mr. Gallagher and Mr. Cristiano performed a full rate study including a financial plan, cost -of -service CONTACT INFORMATION analysis, rate design, and plant investment fee study for the City of Jon Monson Director, Water and Sewer Dept. Greeley's water and wastewater utilities. 1100 Tenth Street, 3rd Floor Greeley, CO 80631 Drought conditions and water conservation affected water sales (970)350-9820' revenue which reduced water fund reserves. The effects of the drought also had an impact on their capital improvement program and water demand projections. Mr. Cristiano assisted in developing a financial plan which included a detailed billing analysis, revenue requirement projections, review of the capital improvement program and RELEVANT FEATURES reassessment of propsed debt service issues for both utilities. Rate model for client use Drought resistance rates The water cost -of -service analysis incorporated capital improvement Plant investment fees' changes, debt service adjustments, demand projections, as well as a recalculation on the utility's rate of return. The resulting rate design captured the changes in the utility and served as a mechanism to stabilize water sales revenue. The cost -of -service analysis and rate design for wastewater helped realign their existing rate structure, last designed in 1997, to better recover service revenue. Plant investment fees for both utilities were designed to capture future expansion costs and improve the equitability of their fee structures. A detailed analysis of their current backbone related assets and growth related projects were analyzed, along with customer account projections. Using the hybrid method, revenue from the proposed plant investment fees provided adequate revenue to fund growth related projects through 2013. Mr. Cristiano developed a rate model for both utilities to allow City officials to perform "what -if" scenarios on a variety of financial conditions. The City of Aurora (Colorado's 3rd largest city) serves a population of nearly 300,000 in a semi -arid region that has average rainfall of less CONTACT INFORMATION than 16 inches per year. The City's source of supply is primarily surface Mr. Peter-Binney Utilities Director water but also includes ground water and an expanding reuse system. (303)7347378 ` In 1987 Rick Giardina & Associates (acquired by Malcolm Pirnie in 2004) performed a water, wastewater and stormwater rate and financial study. Both user charges and impact fees were examined during this study. Automated financial plans and cash flow statements were developed for each utility and further segregated into operation and system development. This was necessary to recognize the City's objective RELEVANT FEATURES relating to growth paying its share. During this study we also examined ' Rate and financial study several alternatives for determining appropriate transfers from the , Development of water budget rate structure City's utility operations to the General Fund. In 2002 and 2003 our professionals worked with the City to update impact fees, rates, and develop a rate structure in response to the current drought situation. This structure is based on a total system water allocation that is further allocated to various customer classes. For the residential class the allocation was based on historical indoor use per household with a fixed irrigation allotment. The financial plan was developed to reasonably assure the City that its costs would be funded with a combination of rate revenue and existing unrestricted cash. Our professionals also updated the City's utility financial plans, evaluating alternative user fee and impact fee methodologies and developed a reclaimed water pricing policy/structure. Red Oak is continuing to work with the City on developing a multi -year rate plan that balances user fees and impact fees as financing tools to drought harden the system for current users and provide needed capacity for future growth. s a RED), K CONSU LT1 Nt A. •krtsrow or MALCOLM rfwwec CITY OF FORT COLLINS, COLORADO Water and Wastewater Cost of Service Study DATAIINFORMATION REQUEST Date Resp. Format Data Request Re 'd Recv'd Person (1) Comments Revenues 1. Schedule of current user charges, plant investment fees, and On file other miscellaneous fees and charges. 2. Basis and methodology for current user charges and fees. Previous reports and models, analyses supporting fees and charges. City Council memorandum and Staff studies regarding fees, fee adjustments, and assessment policies within the last 3 to 5 years. 3. Individual account data, by month, for a 24-month period. On file. Review for updates Include for each account: • rate code/class • meter size • # of units • monthly water use 4. Historical and projected miscellaneous operating revenue. On file. Review for updates 5. Previous 2 years' Comprehensive Annual Financial Reports On file; request 2004 CAFR. (CAFR). 6. Anticipated growth rates for the utility and various customers On file. Review for updates classes, if available. (1) Format HC - Hard Copy December 12, 2005 E — Electronic Page 1 The City of Longmont provides water and wastewater service to the City of Longmont (population 80,000) and one wholesale water customer CONTACT tNFORMATION outside the City. Lynne Wegley Administrative Services Manager Professionals within Red Oak have provided consulting services to the 303.651-8348 City's Water and Wastewater Utilities for more than a decade. Red Oak recently completed a comprehensive evaluation of the City's Storm Drainage Utility operations. As part of the evaluation, a multi -year financial plan was developed and user charge and capital investment fee increases were proposed and adopted. A second RELEVANT FEATURES component of the evaluation related to the staffing, operations and • Stormwater financial regulatory compliance was conducted by Camp Dresser & McKee, Inc. planning model (CDM). • Wastewater billing analysis - Red Oak is currently involved in two projects for the City of Longmont. ' Mixed use customers " The first project is to evaluate the effect of a proposed change in the wastewater billing methodology on projected rate revenue and proposed rate increases throughout a ten-year financial plan. The second project is to evaluate establishing a separate mixed use customer classification and the user charge and development fees for this class. Rick Giardina and Associates, now acquired by Red Oak Consulting, conducted a comprehensive utility financial planning and system CONTACT INFORMATION development or impact fee study. The utility financial plan, covering Greg Derek© a five-year horizon, provided the City with revenue and expense Finance Director projections for the City's water, sewer and reclaimed water funds, (303) 438-b313 including debt service coverage, cash position and fund balance information. The plan encompassed the results of a CIP review, miscellaneous or specific service charge analysis, and system development fees. System development charges for water and sewer operations were designed to approximate the capital cost of serving a RELEVANT MATURES new customer. Financial plan' The project also included an evaluation of issues associated with Water conservation rate structure development funding storm drainage capital and 0&M requirements, as well as System development charges potential organizational alternatives. Additionally, water pricing structures designed to achieve the goals and objectives of the City Storm ureter O&M and capital analysis were evaluated. These included rate and revenue stability, equity and conservation. The new water pricing objectives involved a change from a uniform rate structure to an inverted block rate structure with fixed blocks, or blocks that varied based on AWC or Tap equivalents. Under the tap equivalent approach the thresholds for the usage blocks increased as the number of tap equivalents associated with the meter increased. The Board of Public Utilities of the City of Cheyenne (Board) provides CONTACT IWQR1 ATION water and wastewater service to the City of Cheyenne (population Mr. Tim Wilson 53,000), Warren Air Force Base, a large industrial customer and a water Director and sewer district outside the City. Board of Public Utilities - City of Cheyenne Prior to joining Red Oak Consulting, Mr. Cristiano completed a 2100 Pioneer Avenue P.O. Box 1469 comprehensive water and wastewater rate study for the Board. The Cheyenne, WY 82003 study was conducted in conjunction with water and wastewater master Office (307) 637-6460 plans and included long-range financial plans and design of rates. Several public hearings were held before City Council and the proposed rates were adopted. The water utility was experiencing decreased water usage as a result of conservation measures and high volume surcharges imposed on RELEVANT FEATURES the rates. Mr. Cristiano analyzed multi -year data sets to project future 0 Financial planning model consumption patterns among the various classes. This information was • Water and Wastewater Cost: used in developing an 4-tiered increasing block structure to further of Service encourage conservation yet provide stability to water sales revenues. • Rate Design Mr. Cristiano also prepared a report on several rate structure " Conservation' Rates alternatives for the water utility to assist the Board in selecting a rate ' Water and Wastewater System Develop-ment Fees- structure most appropriate for their needs. Mr. Cristiano updated the Board's water and wastewater system development fees. Using the equity buy -in method, the unit cost included an analysis of assets at replacement costs, growth -related capital improvements, and incorporating debt to achieve net system equity. Based on a detailed billing analysis, Mr. Cristiano estimated the number of residential equivalents served by the system in order to arrive at a unit cost for each utility. • Cost of Service Analysis. The City is requesting a full cost of service study for the water and wastewater utility. Red Oak will apply general accepted practices as set forth by the American Water Works Association (AWWA) and Water Environment Federation (WEF) in iew ol s ` developing the cost of service analysis. Mr. Giardina is in leadership aplrIi om w4h the nwt roles for the rate and charge committees of both organizations. • Rate Design. City Staff is currently working with Council in MC0t fit ftlW11411 Md reviewing pricing strategies to develop a rate structure that meets ttti J*nt th"S ,'meat f each utilities financial goals. These pricing strategies include So hot tadhi•the revenue stability, class equity, and conservation. Red Oak with work with Staff to incorporate these strategies (and potentially others, li Wnd'ruairift to nwO the e.g., affordability, ease of administration, customer understanding) CttyC lrttvil into the rate design for each utility. Red Oak understands rates will be implemented for the 2007 fiscal year. • Internal Cost of Service Review. The City is requesting a review of their internal cost of service models for the water and wastewater utilities. Red Oak will conduct an analysis of the adequacy of the assumptions and methodologies used. • Schedule. The City wishes to proceed on this cost of service study as early as January 2006. Mr. Cristiano has extensive knowledge of the City's financial planning models and is familiar with the City's billing data, capital improvement and asset data. This knowledge will be critical to completing the project in the required time frame. Wholesale Customers. The City wishes to develop a cost of service ftd Gee& istttty methodology that will readily and easily identify costs associated 1 sluthg 0"Wr Wow with wholesale customers. Customers identified may include, Fort lt! Collins -Loveland District, the Grove Sanitation District, West Fort Collins Water District, and Anheuser Busch. Red Oak has significant S *W, boat experience in wholesale rate analysis. Mr. Giardina has developed room and tu4 dty wholesale rates for many utilities including El Paso, Texas. He has also served as an arbitrator in several wholesale rate disputes.* • Extension and Development Contracts. The City is requesting assistance on reviewing contracts associated with providing service to new service areas. Red Oak will assist in reviewing the contracts and assist in developing a rate that equitably recover the cost to provide service to these customers. • Miscellaneous Service. As part of the study, the City is requesting assistance in reviewing acquisition contracts, bulk service agreements, and other inter -local governmental agreements on an as needed basis. PROJECT APPROACH • Financial Plan and Plant Investment Fee Study. Red Oak anticipates that much of the data needed in this cost of service study can be extracted from the recent financial plan and plant investment fee study conducted by Mr. Giardina, Mr. Cristiano and City Staff. Where applicable we will use data from this study as well as the financial planning models delivered to the City to assist in streamlining the project's schedule and level of effort. • Cost of Service. Red Oak will conduct a comprehensive cost of service analysis for the water and wastewater utilities. For water systems, Red Oak has found that applying the AWWA M1 Manual provides a strong basis for developing cost of service. The cost of service analysis will incorporate the City's current policies, industry standards, and customer billing data. Working with Staff we will evaluate how costs (revenue requirements) are "functionalized" and assess this opportunity to improve or enhance this process. We will evaluate the wastewater cost of service in a similar manner by applying industry standards endorsed by the Water Environment Federation. Internal Cost of Service Review. In conducting our water and wastewater cost of service analysis, we will evaluate in tandem the City's approach to developing cost of service. As applicable, we will include aspects of the City's cost of service methodology into our analysis. Items might include costs associated with wholesale customers or bulk service customers. • Rate Design. Selecting the rate classes for cost recovery involves three primary considerations: i) usage characteristics, ii) meter size, and iii) pricing objectives. Red Oak will conduct a rigorous customer analysis to establish usage patterns, identify those customers that CAI IIUIL auiuidi uidrduensucs and incorporate tnis data into the rate structure selected by Staff and City Council ° Reporting and Communication. As detailed in the Scope of Work section, we have scheduled progress meetings at major milestones in the project to foster communication and maintain the integrity of the schedule. We will develop memorandums summarizing our findings and recommendations for each milestone task. ° Miscellaneous Services. Red Oak assists many utilities on a regular basis with reviewing and providing recommendations on service contracts with water and wastewater customers. From cost of service standpoints our analysis involves identifying and separating those costs that are unique to that particular customer and developing a rationale or methodology for a rate structure that will equitably recover the cost to provide service. SCOPE OF WORK Red Oak has outlined the tasks for completing the Scope of Work requested by the City in the RFP for this project. A preliminary data request is included at the end of this section that will help focus discussion activities during the kickoff meeting. The tasks below are in the sequence that Red Oak would complete them. TASK 1: PROJECT INITIATION AND MANAGEMENT° Red Oak will meet with the City Staff to discuss and clarify roles, Kick off Meeting, schedules, and status reporting for each component of the project. * Finalize SCOPe,of work and Sc *&Ie ° Conduct a kick-off meeting with the City Staff to finalize project * Identify COWkatlons responsibilities, due dates, progress reporting requirements and schedule, project deliverables, and other administrative issues. This meeting could include discussions with Water Board members and * Revte*currentaSsumptlons others identified by Staff, such as: Operations Managers, Public * € iscuss City rate structure Works Director, Billing System Manager, and Finance Director. Topics recommengaWns can be added based on the RFP items discussed herein, and as discussions provide further insights to the issues requiring attention in the study. Review pertinent background documents related to the water and wastewater utility operations and fee structures. Identify all support information for Red Oak to review. • Schedule periodic review and update sessions with City Council and Staff. • Formalize (implement and execute) the project communications procedures and progress reporting, including the project management process. Task 2: Financial Plan Review Red Oak will review the latest financial plan models that we delivered to the City to be used in the cost of service analysis as well as models used to for the internal cost of service development. These analyses include: Financial Plan • Review most recent operation and maintenance expenses as projected by the City for the relevant study period. • Review capital improvement funding and identify any changes that may have occurred since the most recent financial plan and plant investment fee study conducted by Red Oak for the City. — • Review non -operating revenue items and identify recurring costs and extraordinary items. • Review projected revenue adjustments for revenue sufficiency. Cost of Service • Review basis for operating and capital revenue requirements and operating and capital revenue adjustments. • Review allocations account classifications to functional cost components. • Review allocation of operation and maintenance expenses and capital costs to functional cost components. • Review system peaking factors including average day, peak day, and peak hour. • Review customer class non -coincidental demand and adjust if necessary to account for seasonal variations. Task 3: Customer Analysis Red Oak will use historical data to evaluate customer usage characteristics for water and wastewater services. Red Oak's Financial' Plan and Plant Investment Fee Study conducted for the water and * Customer usage wastewater utilities involved a detailed customer billing analyses. With distribution a0alyses and direction from Staff, Red Oak will utilize previously compiled data to recommended Customer calculate appropriate cost of service factors and usage statistics by Classes customer class for use in cost of service models. If changes from the previous study are required, the following steps will be used to analyze any new data. iRad 04ft dobfFed Red Oak will evaluate the customer characteristics using historical knowl **0tftCWW billing data. Red Oak has developed automated billing analysis #SO lh1Rlff o,M"t models that enable us to use actual billing data to obtain a clear picture of customer water demand. Two or more years of historical want feawplan a" monthly billing data are used to analyze each customer class. A Plant 1AVO t IN" detailed usage distribution analysis will be completed for seasonal and annual periods. These analyses will be used in conjunction with stnov the cost of service model to determine the best customer classes for t**%" the One n*@*d to revenue recovery purposes. We will develop average monthly, seasonal and annual usage pis i laic. statistics for use in developing alternative rates and for evaluating the winter water use based billing for the wastewater utility. Task 4 - Cost of Service Analysis Red Oak will conduct a cost of service analysis to ensure that costs associated with water and wastewater utility operations are allocated equitably to customer classes inside and outside the City, to support the development of cost -based rates, and to aide in the development of financial plans for the future. The cost of service activities will be coupled with the financial planning tasks so that impact of changes in capital expenditures, debt service requirements, 0&M expenses, growth projections, and other parameters on the cost of service can be determined. Analysis will include reviewing cost information associated with water and wastewater utility services and the functionalization, classification and allocation of costs to each existing customer class. • The allocation of costs to customer classes will be conducted to estimate the cost of serving each customer class and to enable rate restructuring, as necessary, based on the service requirements. Costs will be allocated in accordance with industry standards. The most appropriate test year(s) for completing the analysis will be determined based on discussion with City representatives. Classification of Costs. Operating and non -operating costs will be classified into functional components. Classification of costs —, into functional components will allow costs to be allocated to each customer class, based on their service characteristics. Functional components for water will likely include the following: - Source of Supply - Costs associated with the cost of supplying raw water, i.e., Colorado -Big Thompson, Poudre River Basin, and Michigan River Basin. - Water Treatment Facility - Costs associated with treating water to regulatory standards. - Distribution System - Transmission, distribution and storage costs. - Customer Costs - Meter reading, meter replacement, billing, bill collection, customer service costs and accounting costs. - Administration - Overhead costs associated with managing operation of water utility. Cost Classifications for wastewater will likely include the following: - Collection - Capital and operating costs associated with collection conveyance of wastewater. - Treatment - Costs associated with treating wastewater to regulatory standards. - Customer Costs - Costs associated with billing, bill collection, customer service costs and accounting costs. - Administration - Overhead costs associated with managing operation of wastewater utility. As necessary, expenses may also be further classified into sub- classifications to determine cost of service. • Functional Allocation of Costs. Separating operating expenditures and capital costs into activity centers provides a method of further allocating these costs to functional cost components. Functionalization allocates portions of each cost center based on the relationship that certain costs serve a specific functional service purpose in the water or wastewater system. Functional components for water and wastewater utilities are provided below: - Water Base Demand - Costs that vary with total quantity of water delivered under base load conditions. Peak Demand - Costs associated with meeting demand above the average demand. Commonly separated into maximum day and maximum hour functional components. Customer - Costs associated with serving customers irrespective of amount of water used. This functional component typically captures a majority of the costs associated with utility billing and meter reading cost centers. Fire Protection - Costs associated with providing fire protection to customers. Can be separated into fixed (hydrants) and variable (fire flow) components. - Wastewater Volume - Costs that vary with the contributed peak and average wastewater flow. Extra Strength - Costs associated with treating extra strength loadings including biochemical oxygen demand (BOD), total suspended solids (TSS), and if appropriate, total nitrogen (TKN) and phosphorus. Customer - Costs associated with serving customers irrespective of the amount of wastewater contributed. This functional component typically captures a majority of the costs associated with utility billing and meter reading cost centers (if flow -based wastewater charges are used). Allocation of Costs to Customer Classes. Following cost classification, the expenses will be allocated to each customer class based on a review of customer -specific service characteristics that differentiate the cost of providing service to each customer class. These characteristics will be used to develop unit cost of service factors. Costs will then be allocated to each customer class based on their specific characteristics using the unit cost of service factors. Once the costs are allocated to each customer class, total and unitized estimates of the cost to serve each customer class will be developed. t P a � � s REIN)A K CONSULTING A OPYP6POM O/ MALGOLM PIAMPE CITY OF FORT COLLINS, COLORADO Water and Wastewater Cost of Service Study DATAIINFORMATION REQUEST Date I Resp. I Format Data Request R 'd Recv'd I Person (1) Comments Revenue Rpnuirempnk 7. FY 2006 operation and maintenance expense budget HC or E On file. Review for updates documents for water utility. 8. Bond ordinances or resolutions authorizing the issuance of any HC or E On file. Review for updates outstanding debt obligations for the water utility. 9. Debt service schedules for all outstanding debt and any HC or E On file. Review for updates proposed debt. Include annual principal and interest amounts. 10. Budget guidelines for general cost escalation factors: HC On file. Review for updates • Inflation • Equipment & Supplies • Salaries & Benefits • Utilities 11. 10-year (or longer) Capital Improvement Program. For each HC or E On file. Review for updates project, identify projects related to renewal and replacement and those projects related to growth. 12. If applicable, identify any projects that are anticipated to be HC or E On file. Review for updates financed through grants, debt, or other contributions. (1) Format HC - Hard Copy December 12, 2005 E — Electronic Page 2 The results of the cost of service analysis will be used to assist in the rate design evaluation. Technical Memorandum Red Oak will forward to the City preliminary cost of service tables for each utility for review before the Cost of Service Workshop. Included in i this memo will be the finalized financial plans for each utility for which the cost of service calculations are based. This will allow City officials to familiarize themselves with the preliminary results. Cost of Service Workshop At the workshop, Red Oak will present the underlying data and assumptions in the cost of service model and begin testing different alternatives. This will be accomplished by reviewing the cost of service model in real time and adjusting the separation of cost classifications and functional allocations as necessary. Task 5 Miscellaneous Services Red Oak will evaluate on an as needed basis service contracts associated with bulk water and wholesale customers. We will evaluate the water delivery, demands, and timing considerations of these customers to develop rates. • Discuss with Staff existing contracts and gain a thorough understanding of execution of these contracts. Obtain relevant customer data including demand and estimated peak flows. • Red Oak will utilize cost of service results in task 4 to develop rates for bulk water and wholesale customers. Rates and fees will be developed in a similar manner for extension and development agreements and any inter -governmental agreements. Task 6 - Rate Design Red Oak will assist the City in updating water and wastewater rates by analyzing existing rate design and incorporating the rate structures selected by City Council that are aligned with Utility needs and financial objectives. The rate structure will be developed based on the cost of service results, revenue sufficiency analysis results, and discussions with the City regarding rate structure preferences. 'cJ The rate design task will involve modeling the rate structures at the City's direction to demonstrate the resulting customer impacts and to identify key issues associates with the new rates and charges. Objectives such as equity and cost recovery are a given in this type of analysis, but additional items such as the avoidance of rate shock and simplicity are often key issues for stakeholders. While there are many common objectives, some objectives vary by utility due to different operating conditions, such as previous responses to rate increases, customer class demographics, resource availability, growth pressures, and socioeconomic conditions. Our analysis will help the Utility align rates in support of overall goals An important message to convey is the reaction of customers to changes in their monthly bills. A traditional customer impact analysis develops customer usage profiles and provides comparisons of bills before and after the rate adjustment. Such a comparison is useful for evaluating the anticipated impact of the rate changes for several classE's of "typical" or "average" customers. These traditional comparisons, however, cannot provide comprehensive data on how the large population of customers will be effected. Revenue Requirements Operation and Maintenance Treatment Utility Bulling Debt Service Capital Requirements Administration Task 6 Deliverables: Rate design workshop Water Cost of Service Rate Design Process* Functional Categories Supply Transmission Treatment Distribution Pumping Billing and Collection Meter Reading Meter Maintenance and Service Fire Protection Demand/Service Categories Base Max Hour Max Day Customer Fire Protection A similar process is used for wastewater cost of service rate design. Red Oak has developed an approach to determining customer impacts which will give decision -makers an understanding of the anticipated impacts for all customers by analyzing the impacts of each rate Technical memorandum User Charges By Class Service Charge Commodity Charge Seasonal Inverted Peak Demand Private Fire Protection Other Rates A537701/NCA Pathways to Lasting Solutions proposal on every customer class. Red Oak provides a summary of the results on charts and exhibits that are easily understood. These charts, in turn, can be used by decision makers to assess with greater precision, how their constituency will be impacted by the proposed rate structure. The table below is an example of these customer impact results. Customer Impact -Water (percent change compared to current rates) Rate of Change Residential Non -Residential )49% 5.1% 8.5% 30%-49% 7.1% 7.1% 20%-29010 10.2% 8.0% 10%-19% 21.8% 13.2% 1%-9% 36.211/o 17.8% (1%) -( 9%) 19.6% 31.0% (100/0) - (190/0) C.0% 8.9% (20%) - (29%) C.0% 2.5% (30%) - (49%) 0.0% 1.00/10 (>49%) 0 0% 2.0% Technical Memorandum Upon completion of the cost of service workshop, Red Oak with prepare preliminary rates for each utility by customer class. This data combined with supporting documents will be provided in advance of the Rate Design Workshop. Rate Design Workshop Based on comments from the Staff, the Water Board, and outcomes of the cost of service workshop, we will work with Staff to finalize rates for presentation to the City Council. Reporting A preliminary draft report (10 copies) will be prepared that documents the analyses, assumptions, and considerations of the cost of service rate study, including the financial plan results, cost of service analysis, results of the rate design, and plant investment fee calculations. Following the City's review, the draft report will be modified to reflect Pathways to lastinq Solutions A537701/NCA any comments received from City Staff and will be finalized. Red Oak will provide 20 copies of the final report to the City. Meeting Attendance In addition to Red Oak's attendance at milestones workshops described above, we will attend two (2) City Council meetings to present study findings. Proposed Meetinq Schedule t) Project hwiftlon 2) Cost Of Service workshop 3) hate b workshop 4) City Council work Session 5) city, Council Mooting 2 Red Oak is prepared to complete this study in accordance with the Citv's requirements and rate implementation deadlines. Red Oak is committed to meet the meeting and reporting milestones listed below. During the kick-otf meeting this schedule will be finalized and incorporate any final adjustments required by the City. Month 1 Month 2 Month 3 Month 4 Task I - Project Initiation and Management Task 2 Financial Plan Review Task 3 Customer Analysis Task 4 Cost of Service Analysis NI Task S - Miscellaneous Services wNww�w• Task 6 - Rate Design �w�aws Task 7 - Reporting and/or Council Attendance Ku Koff Meeting City Council Workshop/Mee6ng Workshop Meeting Draft Report Final Report FEE ESTIMATE Red Oak proposes to conduct the specified scope of work outlined in the Request for Proposal at an estimated cost of $67,000. The cost is divided between the following study components: A537701/NCA Pathways to Lasting Solutions RED OAKS COMMITMENT TO MEET SCHEDULE AND BUDGET REQUIREMENTS id Oak has a history Red Oak's program management approach, which is essentially the of meeting budgets and belief in careful upfront planning combined with close monitoring schedules for projects and ongoing communication during project execution, is a framework for project governance, decision -making, communication, and similar In nature to the accountability that builds on standards and processes considered to be City's•=This has been best practices and ensures project success. Our program management approach uses proven methods based on Project Management Institute " accomplished thro"h the (PMI) and Software Engineering Institute (SEI) standards and practices. use of our proven project Key components of our approach include effective risk and issue management and open communication throughout the project lifecycle management approach. to maintain progress and facilitate decision -making. This approach will allow us to meet the aggressive implementation schedule and to achieve successful delivery of the City's Cost of Service Project. Effective project execution depends upon establishment of baselines. Baselines are plans for execution of the project. Red Oak will facilitate the creation of a baseline schedule with the people responsible to perform the work, establishing accountability for delivery. Following baseline schedule approval, we will measure actual project progress against the baseline regularly. The baseline schedule, in conjunction with the QA/QC activities for project deliverables, makes it possible to identify variances from the planned schedule and scope of work. Regular examination of variance enables early detection of situations that result in serious problems if ignored. STAFF AVAILABILITY Red Oak ensures the full commitment and active involvement of an experienced Project Officer and Project Manager, Mr. Rick Giardina and Mr. Todd Cristiano, who, together, can (1) develop a realistic project budget and (2) enforce adherence to it by all Red Oak team members during the performance of this project. As Project Officer, Mr. Giardina also has the ability to draw from over 170 Red Oak professionals and over 1,600 Malcolm Pirnie engineers, scientists, and consultants to assist with the successful completion of this proiect, if reauired. 6 A City of Fort Collins,, Citvof rt Collins qmwwbFo� Colorado Pathways to Lasting Solutions Welcome and Introductions Understanding Your Needs Project Approach Cost of Service Pricing Objectives and Rate Design Red Oak and the City of Fort Collins Discussion and Open Forum Notes: RHO AK CONSU FF ING (IMMism 1. a:�ul l�rr 1. uEl�n+ .ass Internal Cost of Service Review — Review City's practice on cost of service and rate design. Pricing Objectives — Rate structures commensurate with City practice and policies and industry guidelines. Renewal and Replacement Funding — Design rates to assist in funding renewal and replacement programs. Wholesale and Special Districts — Review existing contracts and develop cost of service analysis. Grove Sanitation District Cherry Hills Sanitation District West Fort Collins Anheuser Busch Schedule — Dedicated Red Oak consultants identified for this project to meet the deliverables and milestones. Final Recommendations — By June 2006 Poathww,s to Lashno Solutions Notes: 2 �r k ot� tN tart IL (Alin, err® ✓O&M and Capital Allocations ✓Functional Cost Components �� Notes: _J: �J111 r=iilS1 ✓Pricing Objectives Rate Report for the City of Fort Collins ✓Rate Structure Alternatives ✓Customer Impact Analysis _0:�T- Presentations & Interactive Sessions with Staff and Other Stakeholders '—"' 1111111117, MT"�' ®�°' Pa1Nvap s 'o Lastin I Solubons W • M*• » RED)AK CONSULTING + _ A OPWOSION or MALCOLM PI4Nt[ CITY OF FORT COLLINS, COLORADO Water and Wastewater Cost of Service Study DATA/INFORMATION REQUEST Date Resp. Format Re 'd Recv'd Data Request Person (1) Comments Water and Sewer System Assets 13. Fixed asset data for the water and sewer utility; include the E On file. Review for updates separate identification of all contributed (e.g., developer constructed/funded assets) and grant funded assets. Provide: • original cost • est. useful life • in-service date • accum./annual depreciation • functional designation -ie: source of supply, treatment, transmission, distribution, etc. 14. Inventory of public hydrants and private fire service lines by E On file. Review for updates size. 16. Inventory of transmission and distribution mains by diameter E On file. Review for updates (inches) and length (feet). Inventory of sewer collection mains by diameter and length. Operational Data 17. Schedule of maximum day, maximum hour, and average day E On file. Review for updates water demands for the total system for the most recent 2-year period. Sewer treatment plant flow data including BOD and TSS loading for the most recent 2-year period. 18. Monthly production data for the most recent 2-year period. E On file. Review for updates (1) Format HC - Hard Copy December 12, 2005 E — Electronic Page 3 UtS 04 !oyl t(ilin, U-- Rate Design Financial Plan Models PIF Study Cost of Service REMAK �'aYhways t� L.astincscituh CONSULTIN Notes: PIF Study Rate Design Cost Financial Plan of Models Service Notes: RLIUAK CONSULT I NG t;e�u Purltatllin, pathwa,s to Lasonu Solutions Notes: 6 fAO '�. 1i4'ST� tSlJt 1. S.�t lil' y Test Year Budget f Cost C,assifications Identi y 10=F nctional C st E1emants Pathvvjvs to ! astinu Solutions Notes: `/ Diuide_ costs' By Extra Capacity I� Pathwav's to Lastrnn Solutions Notes: 8 Test Year �IdentifY Cost Classifications kw, F _stteiements rinal r CS Pathways to Lasting Solutions Notes: 9 C A do t ltp to turl 4L Win- Test Year �© Budget FhaW 2S Notes: Divide Costs By Extm Strength lb lw Customer lb COSA faC10% Pattma,s to Lastin4 Sofutrons Revenue stabilit Cost of service equity Conservation oriented Peak usage reduction Legal compliance Large volume customers Customer acceptance Social equity Customer impact neutrality Parhtw, vs to Lasrinc: Solutions Notes: 6a llE4'!f )tk7' tfAll iA� Less < Notes: Z/ Existing Volume Rate zjStructure CONSERVATION ORIENTATION More AND COMPLEXITY Pathways to Uist.nq Solutions >> Existing Rates Pricing Objectives Residential and Duplex 4-tiered increasing block rate 120% volume rate differential between tiers Multi -family Seasonal • Winter (Nov -Apr) • Summer (May -Oct) 125% summer/winter volume rate differential RI WAK Co", LAING Parhwa} s 10 Lasting Solulions Notes: 13 RELY) `1�: CONSULTING s _ A Df YASIOM of MALCOLM •IAtl1E. CITY OF FORT COLLINS, COLORADO Water and Wastewater Cost of Service Study DATAIINFORMATION REQUEST Date I Resp. I Format Data Request. Person 1 (1) Comments Re 'd Recv'd Miscellaneous Data 19. Statement of City and/or utility financial policies and HC On file. Review for updates objectives. 20. Intergovernmental Agreements or Contract Including: HC a. Wholesale customers b. Anheuser Busch c. Bulk water customers d. Special districts (Fort Collins -Loveland, Grove, West Fort Collins, etc.) 21. List of cities typically used by the City in making comparisons, HC On file. Review for updates e.., utility rate surveys. 22. Copies of existing models or spreadsheets used by Staff for E financial planning and rate design purposes. 23. Utility organization chart. HC On file. Review for u dates 24. Internal telephone and e-mail list for all study contacts. HC On file. Review for u dates (1) Format December 12, 200 HC - Hard Copy 4 E — Electronic Page 4 Existing Rates i Pricing Objectives Commercial Rates vary by meter size 2-tiered summer rate 2-tiered winter rate 144% volume rate differential between tiers 125% summer/winter volume rate differential RMAK CONSULTING i Notes: 14 Increase in Customers Monthly Bill Affected > 100% 2.7% 51 % to 100% 0.7% Increased 31%to 50% 5.3% 16% to 30% 11.5% 6% to 15% 7.8% 1%to5% 7.1% Unchanged 1 0% 3.2% Fathvlat_s to f.astinc SoRrtlons Notes: National experts Local knowledge and Presence Interactive Approach Notes: Leadership in establishing industry standard rate structure methodologies Utility work experience throughout the country. Extensive finance and engineering experience in Colorado and Nationwide. 8 analysts in Aurora. Having worked for Fort Collins, we understand your needs. Project officer and project manager located in Aurora, CO. Experience in educating our clients. Actively engage stakeholders to clearly understand the impacts of cost of service and alternative rate structure approaches. Patha av, to Casbmr So lotions 16 �r 4 rvo1 tun lutfin. r Red Oak Team Extensive nationwide and local experience, including Fort Collins Ready to hit the ground running Nationally recognized project officer Demonstrated Conservation Results Multiple western clients with similar conservation goals Effective Communication We're listening! Learn from Red Oak's experience Learn from City's experience Trusted Advisor Long-term interests of City's water and wastewater utilities You can call on us! Patfnva s to Lasting Solutions Notes: 17 6a RED (,'ONS( I I I I N(-f t. I. ;I,:", -v Al A, ,, M P,RNI¢ POhMV&, S f—'l Lc?StMQ SOltitiMIS Notes: 18 A PROPOSED PROJECT TEAM We have assembled an experienced team of financial services professionals to update the water and wastewater cost of service rate and system impact fees for the City of Fort Collins. Our Colorado -based project team from Red Oak Consulting has provided utility financial services to over 100 Colorado municipalities including virtually all of the major Front Range cities. We have nine Colorado -based professionals with more than 100 years of combined experience specializing in developing utility cost of service rate and impact fee studies. The organizational chart below illustrates our project team. Full detailed resumes for all key personnel are included at the end of this section. Water and Sewer Board/ City Council Project Officer Rick Giardina, CPA Quality Assurance Project Manager Robert Lockridge Todd Cristiano Financial Analysts Andrew Rheem Kevin Burnett (Water) (Wastewater) Mr. Cristiano specializes in providing financial consulting services, primarily to water and wastewater utilities. He has performed comprehensive studies of revenue requirements, cost -of -service allocations, rate analysis, and plant investment fee charges. He also specializes in drought pricing and reclaimed water rate design. He is knowledgeable in computer -based analysis of utility billing, budgeting, and fixed asset records. Mr. Cristiano is presently assisting the City of A537701/NCA Pathways to Lasting Solutions Colorado -based Red Oak professionals routinely conduct rate studies for utilities that are similar in scope to the proposed study for the City of Fort Collins, Colorado. �r the City of Fort Collins with information and knowledge of the many Red Oak provides the innovative practices in the industry. This is a fresh, independent and following spectrum of experienced "look" that we bring to the City and this project. Extensive Local Knowldege. Our Colorado -based project team financial services: from Red Oak Consulting has provided utility financial services to Rate and Charge Studies over 100 Colorado municipalities including virtually all of the major Cost of Service Studies Front Range cities. We have eight regionally -based professionals Plant Investment Fee with combined experience of 100 years that specialize in developing Analysis utility financial models and cost of service rate studies. Over many years, during hundreds of utility financial analyses, we have - Financial and Strategic employed a successful process for the thoughtful and efficient Business Planning development of financial management services and utility rate Feasability Studies studies. This process centers on our ability to deliver our services Capital Asset Funding effectively and efficiently with Deal -time financial decision support Studies modeling utilizing experienced staff. Our team understands the - Utility Valuations financial dynamics of utilities and the political realities under which Revenue Bond Issues; utilities must operate. Please see Section 2 - Key Personnel of this Consulting Engineer proposal for a more comprehensive description of our professionals' Reports qualifications. - Optimization of Utility Financial Functions Malcolm Pirnie / Red Oak personnel are primary authors of industry texts regard- ing issues facing water and wastewater utilities and have authored chapters in related publications. Experience in Involving and Educating our Clients. Our depth and breadth of experience coupled with our proven interactive approach to rate setting will help involve, educate, and inform the stakeholders in the rate setting process, and will form a foundation to help stakeholders make informed, thoughtful decisions. Proof of our dedication and ownership in doing our part to further the success of the water and wastewater utility industry, Red Oak and Malcolm Pirnie personnel have authored many books that communicate the challenges that utilities face today and in the future. Some of these include: "Management Innovation in U.S. Public Water and Wastewater Systems" - Seidenstat, Nadol, Kziplan & Hakim AWWA "The Evolving Water Utility" - 2003 WERF: "Efficient and Effective Practices for Utilities" - 1999 NWRI - Utility Leadership Workshop - 1999 AWWA "The Changing Water Utility" - 1998 CBI: "Contracting for Services" - 1997 American City and County: "A Benchmark Approach" - 1996 Pathways to lasting Solutions A537701/NCA Mr. Lockridge will provide quality control through the review of the deliverables for the project, such as the draft and final reports, and and, technical memorandums. Mr. Rheern is involved in environmental projects serving both the private and public sectors. His experience spans numerous technical areas and industries and most recently includes significant experience in the development of financial plans, cost of service studies, and alternative rate design for municipal utilities. Mr. Rheem is presently conducting a financial analysis for the City of Longmont's water and wastewater utilities. As Financial Analyst, Mr. Rheem will be responsible for the detailed calculations for the development of the water financial plan, cost of service analysis, rate design, and plant investment fee analysis. Mr. Burnett has been involved in environmental projects serving both the private and public sectors. His experience spans numerous technical areas and industries and most recently includes significant experience in the development of financial plans, cost of service studies, and alternative rate design for municipal utilities. Mr. Burnett has recently completed an update of the City of Littleton's wastewater rates and is presently updating the system development charges for the City of Chandler, AZ. As Financial Analyst, Mr. Burnett will be responsible for the detailed calculations for the development of the wastewater financial plan, cost of service analysis, rate design, and plant investment fee analysis. A537701/NCA Pathways to Lasting Solutions