Loading...
HomeMy WebLinkAboutItem 2n: Authorize a contract change order to Raftelis Financial Consultants, Inc. to prepare a Tiered Water Rate Study in the amount of $12,000 OF ARC ti r /J 51 a- � Au.u. !, IN! � STAFF REPORT �maaity of µ o w Public Works Services Department DATE: December 7, 2010 TO: Mayor and City Council FROM: Tom Tait, Public Works Services Director fr Prepared by: Ken Herman, Deputy Public Works Services Director SUBJECT: AUTHORIZE A CONTRACT CHANGE ORDER TO RAFTELIS FINANCIAL CONSULTANTS, INC. TO PREPARE A TIERED WATER RATE STUDY IN THE AMOUNT OF $12,000 Recommendation: Approve SUMMARY In December 2009, the City Council awarded a Professional Services Agreement in the amount of $45,357 to Raftelis Financial Consultants (RFC) to prepare a Tiered Water Rate Study. For the past several months, staff, along with RFC, has been gathering and analyzing data on the City's water operation to determine the best rate structure to enhance water conservation measures to meet new state mandates and to continue to generate sufficient revenue to fund continued operations and maintenance activities and maintain a reserve fund in case of a catastrophic event. At the November 2, 2010, City Council Study Session, Council directed staff to proceed with the Study and include a three -tier inclining block rate structure. During preparation of the tiered water rate study, staff requested additional meetings with the consultant and variations of the tiered water rate structures, which were not identified in the original Request for Proposal (RFP). Additionally, staff asked the consultant to revise the financial plan in order to show different water rate scenarios to be presented to the City Council that were not included in the original scope of work. In order to include the additional work necessary to further evaluate and prepare the tiered water rate structure, staff recommends that the City Council authorize a change order to the Professional Services Agreement (PSA) with Raftelis Financial Consultants, Inc. in the amount of $12,000. BACKGROUND Three consecutive dry years, low reservoir storage, restrictions on pumping and reduced Colorado River supplies have triggered the first statewide drought declaration in 16 years. In February 2008, Governor Schwarzenegger introduced a seven -part Page 1 of 3 Mayor and City Council December 7, 2010 comprehensive plan for improving the Sacramento -San Joaquin Delta. As part of this effort, the Governor directed state agencies to develop a plan to reduce statewide per capita urban water use by ten percent (10 %) by 2015 and by twenty percent (20 %) by the year 2020. This directive led to the passage of the Water Conservation Act of 2009, also known as Senate Bill SB7. Also conservation pricing of water is one of 14 Demand Management Measures identified by the State Department of Water Resources as an effective tool in reducing per capita' water use and meeting the goals of the Water Conservation Act. The most common form of conservation pricing used by water suppliers is a tiered water rate structure. DISCUSSION In December 2009, the City Council awarded a Professional Services Agreement to Raftelis Financial Consultants (RFC) to conduct a Tiered Water Rate Study in the amount of $45,357. On November 2, 2010, the City Council directed staff to proceed with a three -tier inclining block water rate structure. The original scope of work assigned to RFC included the development of a tiered water rate structure. However, it became apparent that additional time and effort would be needed to develop an equitable tiered water rate structure that incentivized conservation. For instance, staff requested additional meetings with the consultant to go over various tiered water rate structures, which were not identified in the original Request for Proposal (RFP). Additionally, staff asked the consultant to revise the financial plan in order to show different water rate scenarios to be presented to the City Council that was also not included in the original scope of work. Therefore, staff considers the following additional scope of work as necessary to sufficiently analyze the most effective rate structure and financial plan: 1. Develop alternative rate structure scenarios to be considered 2. Revise tier thresholds to reflect the variant cost to provide water 3. Additional workshops with City Council and staff In order to further evaluate and prepare the tiered water rate structure, staff recommends that the City Council authorize a change order to the Professional Services Agreement (PSA) with Raftelis Financial Consultants, Inc. in the amount of $12,000. FISCAL IMPACT Originally $65,000 was budgeted for the Tiered Water Rate Study. Therefore, sufficient funds for this study have been budgeted in the Water Operating Budget. Page 2 of 3 Mayor and City Council December 7, 2010 RECOMMENDATIONS Authorize a contract change order to Raftelis Financial Consultants, Inc. to prepare a Tiered Water Rate Study in the amount of $12,000. Approved by: Donald Penman, City Manager TT:KH:jb Page 3 of 3