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HomeMy WebLinkAboutItem 3a: Agreement with Raftelis Financial Consultants, Inc. to Conduct Tiered Water Rate StudySTAFF REPORT Public Works Services Department DATE: December 15, 2009 TO: Mayor and City Council FROM: Pat Malloy, Assistant City Manager /Public Works Services Direc or Prepared by: Tom Tait, Deputy Public Works Services Director SUMMARY BACKGROUND tit SUBJECT: AUTHORIZE THE CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT WITH RAFTELIS FINANCIAL CONSULTANTS, INC. TO CONDUCT A TIERED WATER RATE STUDY IN THE AMOUNT OF $45,357 Recommendation: Approve In response to a third consecutive year of drought and the need to protect and grow California's economy while protecting the environment, Governor Schwarzenegger recently signed into legislation a comprehensive water package which included the mandate to reduce California's urban per capita water use by 20 percent by December 31, 2020. In order to achieve this goal, Public Works Services included in this fiscal year's budget a Tiered Water Rate Study. Due to the wide array of property sizes in Arcadia and the need to account for their water use, a consultant who is experienced in water rate structures will study the feasibility of a tiered water rate structure that includes equity and encourages efficient water use while maintaining adequate funding to ensure continued water delivery services. Therefore, staff recommends that the City Council authorize the City Manager to execute a Professional Services Agreement with Raftelis Financial Consultants, Inc. to conduct a Tiered Water Rate Study in the amount of $45,357. Depending on local climate conditions, Arcadia meets roughly 70 percent of the City's annual demand with local groundwater. The remaining annual water supply is imported from the Colorado. River Aqueduct system and the California State Water Project through Metropolitan Water District (MWD). However, due to the drought, local groundwater tables in the Raymond Basin and Main San Gabriel Basin have lowered significantly, thus the City has had to rely on more costly imported water from MWD. Mayor and City Council December 15, 2009 Consequently, due to the statewide drought and the court ordered pumping restrictions on the State Water Project to protect endangered species of fish, MWD's allocation of water has been significantly reduced. For these reasons, MWD has increased rates for imported water significantly. Three consecutive dry years, low reservoir storage, restrictions on pumping, and reduced Colorado River supplies have created the perfect storm of challenges that has triggered the first statewide drought declaration in 16 years. California Governor Schwarzenegger proclaimed a statewide drought on June 4, 2008 and later escalated the drought to a state of emergency in February 2009. In response to the current water crisis, a comprehensive water package was passed by the California Legislature in November 2009. Included in this package was the Governor's plan to achieve a 20 percent reduction in per capita water use statewide by 2020 (and the interim 2015 target of 10 percent). DISCUSSION Tiered water rates have been determined to be an effective tool to encourage efficient water use in communities. Due to the wide array of single family property sizes in Arcadia, the City's water consumption behavior must be evaluated by a consultant that is familiar and experienced with this type of study. The goal of the Tiered Water Rate Study is to develop a potential rate structure that is equitable, practical and easy to understand and implement. Maintaining the current rate structure, without the implementation of mandatory water conservation measures as detailed in the City's Municipal Code, would make it very difficult to achieve the state mandate of reducing per capita water consumption by 20 percent by the year 2020. Tiered water rates are meant to discourage water wasting and encourage customers to conserve water. More importantly, implementation of a tiered water rate structure will allow the City to be eligible to receive grants from the State. Request for proposals were solicited in November. Four (4) proposals were received, reviewed and evaluated accordance with Chapter 10 of the California Government Code, Section 4526 -4529. The top three (3) firms were interviewed by staff as well and ranked as follows: RANK FIRM LOCATION COST 1 Raftelis Financial Consultants, Inc. Pasadena, CA $45,357 2 Black & Veatch Los Angeles, CA $49,930 3 Willdan Financial Services Temecula, CA $28,500 4 Glenn M. Reiter & Associates* San Diego, CA $64,335 *Following the initial evaluation of the proposals received, this firm was not invited to participate in the personal interview process. Mayor and City Council December 15, 2009 Each firm was ranked according to ability, qualification, experience, past success and responsiveness to the RFP's criteria. Although Willdan submitted the lowest cost proposal, they do not have enough experience and knowledge with individualized water budgets. During their interview, Willdan also indicated that they were just beginning to provide rate study services. Due to the uniqueness of Arcadia's single family properties, staff feels it is necessary to retain a consultant who has vast experience and knowledge to recommend viable and equitable solutions to increase water use efficiency. RFC has extensive experience with conducting tiered water rate studies in addition to developing water budgets. Staff believes water budgets will be the most equitable method of charging for water while encouraging conservation. They have a proven track record of successfully establishing tiered water rates and water budgets for a number of large and small water agencies in Southern California, especially in this region. Staff believes their expertise in this field will be extremely beneficial to the City of Arcadia and its goals of encouraging water use efficiency to ensure long term water availability. FISCAL IMPACT Sufficient funds for this study have been budgeted in the Water Operating Budget for FY 2009 -10. RECOMMENDATIONS PM:TT 1. Award a Professional Services Agreement to Raftelis Financial Consultants, Inc. to conduct a Tiered Water Rate Study in the amount of $45,357. 2. Authorize the City Manager and City Clerk to execute a contract in a form approved by the City Attorney. Approved by: ..1 aao.P --J Donald Penman, City Manager