City of Arroyo Grande Department of Public Works REQUEST FOR PROPOSAL WATER AND WASTEWATER RATE STUDY UPDATE
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1 I. INTRODUCTION City of Arroyo Grande Department of Public Works REQUEST FOR PROPOSAL WATER AND WASTEWATER RATE STUDY UPDATE The City of Arroyo Grande, California (the City ) was incorporated as a general law City in 1911 and is located in San Luis Obispo County along the Arroyo Grande Creek and provides water to a 5.45 square mile service area serving a population of approximately 17,300. Water service and sewer service are accounted for separately as enterprise funds and are operated as water and sewer utilities. The water utility obtains its water supply from eight wells and from surface water obtained from the Lopez Reservoir Project. Six of the City s wells extract water from the Paso Robles Formation of the Arroyo Grande Plain, Tri-Cities Mesa (AGP-TCM) subbasin of the Santa Maria Ground Water Basin. Based on an agreement with other agencies pumping groundwater from the AGP-TCM basin, the City is allocated an annual basin extraction from these wells of 1,323 ac-ft. The remaining wells extract water from the Pismo Formation, a separate basin. These wells are capable of extracting 160 ac-ft per year. The City also receives an allocation of 2,290 ac-ft of surface water from the Lopez Reservoir project through a 1966 agreement with the San Luis Obispo Flood Control District. This allocation amount represents percent of the total amount of water purchased from the reservoir. Surplus water from the reservoir may also be purchased by the City when such supplies are available, though it is not considered to be a firm supply for the City. Water production for the City in 2017, including surfacewater, totaled 2,194 ac-ft. The City is participating in a regional water recycling project with other local jurisdictions. The Central Coast Blue project will inject recycled water into the groundwater basin to secure a sustainable, drought resistant, local water supply. The City will receive a share of the groundwater from this project. Costs and funding opportunities are currently under review, however, future water rates will need to consider the implications of this project. Storage facilities presently include six above ground or partially buried water tanks with a storage capacity of approximately 6.7 million gallons. The transmission and distribution system includes over 88 miles of pipeline, 6,454 meters, and over 880 public fire hydrants. The sewer utility consists of a collection system of sewer pipe, lift stations, and general utility assets used to collect the City s wastewater. The collection system also includes
2 over 70 miles of sewer pipe ranging in size from 6 inch to 24 inch. The South San Luis Obispo County Sanitation District provides treatment of the City s wastewater. The City contributes approximately 1.1 mgd of wastewater to the treatment plant. II. SCOPE OF SERVICES The Water Fund and Sewer Fund rates are based on an equitable cost of service analysis to develop total revenue requirements and allocation of costs to customer classes. Historical trends should be analyzed from data showing the number of customers, water sales volumes, water sales revenues, sewer service charge revenue, and operation and maintenance expenses. Annual growth projections should also be included for the study period and revenue projections reflecting growth projections by customer class. Revenue requirements for operation and maintenance, routine capital outlays, existing and proposed debt requirements, cash financed capital improvement projects, and additions to operating reserves should be included. Changing conditions such as additional facilities, recognition of growth, and non-recurring maintenance expenditures need to be addressed including inflation for on-going expenditures as well as capital improvement projects. The City of Arroyo Grande has completed water and wastewater rate studies in 1999, 2003, 2005, 2009 and Task 1 Review Current Water and Wastewater Fees and Rates The first step in determining the long-term revenue requirement of each utility is to identify all capital improvements including annual replacements, additions and improvements and extensions to the system: 1.1 Review master planning reports and other available information regarding needed replacements, improvements, and expansions of the water and wastewater systems. 1.2 Maintain the reserve Water fund balance estimated at 90 days of operating and maintenance expenses plus a capital project allocation of $500,000 on an annual basis and one year of debt service. 1.3 Maintain the reserve Sewer fund balance estimated at 90 days of operating and maintenance expenses plus a capital project allocation of $500,000 on an annual basis and one year of debt service. Task 2 - Revenue Requirement Projections The objective of this task is to project revenue needs for the five-year study period for each utility. Revenues will be projected based upon existing rates and fee schedules.
3 Each utility's ability to meet projected revenue requirements will be analyzed. The level of revenue adjustments and additional financing requirements will be shown. The following subtasks will be completed: 2.1 Estimate revenues under current rate and fee levels based upon the projected number of customers and service requirements. Historical growth trends, quantity of service provided, and patterns in customer service characteristics should be considered. 2.2 Review and project revenue from miscellaneous sources such as interest earnings, miscellaneous service fees, or other sources. 2.3 Develop annual revenue requirements of the water and wastewater utilities recognizing historical data, current year's budgets, and anticipated future system service requirements and operational changes. Revenue requirements to be based on projected inflation and to include at least the following items: Operation and maintenance expenses. Major capital expenditures. Effects on revenue projections from water conservation program impacts. Debt service on existing and any proposed new financing methods including appropriate reserves. Other cash obligations. 2.4 Develop future cash flow analyses for a five-year study period for each utility, showing application of revenue under existing rate levels to meet the annual revenue requirements, as determined under Task 1.2 and Tasks 2.1 through 2.3 above. Cash flows to be developed to maintain reserve fund balances and to meet debt service coverage requirements for each utility. Determine and present proposed water and sewer rates for a five-year period. 2.5 Prepare a survey of water and sewer rates charged by other public agencies in San Luis Obispo County for the purposes of cost comparison. 2.6 Present water and sewer rate recommendations. 2.7 Consultant shall provide recommended strategies to minimize the potential impact of conservation on revenue. Cost of Service and Rate Design For each utility, the projected revenue requirements (costs of service) for a representative test year within the study period should be allocated to customer classifications. Distribution of costs will reflect cost-causative concepts in accordance with generally accepted utility practices.
4 Task 3 - Allocation of Costs 3.1 Allocate the costs of service to the various costs of service components which constitute a functional classification of the different types of service the City provides. For water, functional cost components will include base or volume related costs, extra capacity costs, fire protection costs, and customer costs. For wastewater, cost components include volume and customer costs. 3.2 Distribute the costs by functional components to the various customer classifications on the basis of the relative responsibility of each customer classification for the service provided, as determined from the customer classification units of service and the application of unit costs of service to the respective units. 3.3 Compare revenue under existing rates by each customer class with the allocated cost of service. Determine the adequacy of present revenue levels for each class to meet cost of service and determine the indicated adjustment in rates required. 3.4 Consider City policy, procedures, and all currently known federal, state, and local rules, regulations, and guidelines applicable to charges for water and wastewater service for determining rates. Task 4 Analyze and Update the Lopez Charges The cost of water supply also includes expenses associated with the Lopez reservoir and dam, which is operated and maintained by the San Luis Obispo County Flood Control and Water Conservation District (County). Charges to the City include a proportional share (50.55%) of debt service, operation and maintenance expense, and capital outlay. These charges are incorporated into current water rates. Consultant will review and update the projected costs and recommend water rates that ensure adequate funding for payments made to the County for the water entitlement to cover the debt service for the existing bond and a Revolving State Loan (SRF). Task 5 Determine a Storm Sewer Fee for Mandated Stormwater Regulations Review and calculate all City expenses related to compliance with the National Pollutant Discharge Elimination System (NPDES) and State Water Resources Control Board regulatory mandates for storm water protection measures. The intent for collection and analysis of the City s related expenses is to prepare a recommendation for a potential fee to be paid by current and future rate payers to offset these mandated expenses. Specifically, the consultant will:
5 5.1 Itemize and calculate all City expenses for storm water protection measures including but not limited to; annual report preparation, storm water inspection costs, storm water preventative maintenance activities, related consultant costs and other related city expenses. This information will be provided to the consultant by City staff. 5.2 Prepare a proposed Storm Sewer fee be paid by current and future rate payers to offset the City s annual expenses for storm water protection regulatory measures. The potential Storm Sewer fee shall be determined on a basis that takes into consideration differences in impacts on storm water such as parcel size. The consultant will propose and discuss the fee determination methodology in advance of the draft report. Task 6 Meetings The consultant should schedule and attend four on-site meetings with the City as well as other telephonic or remote meetings as needed. These meetings are intended to provide communication, discuss findings, and make decisions regarding rates that meet the requirements of the City. The meeting/presentation dates depend upon receipt of data requested and timely review of the draft and final reports by the City. Meeting 1. Initial meeting with City staff/data collection and scheduling. Consultant is to organize and lead a kick-off meeting to include all identified project participants. The purpose of the meeting will be to identify the Project Committee, verify needs, schedules, and goals of the work to take place. Consultant shall define all targets, meetings, reviews, and deliverables on a master schedule. Consultant will report to the City s Project contact. The Consultant shall prepare and distribute minutes of all meetings and shall prepare a Master Project Schedule for review and approval by the City. Consultant shall base the initial schedule upon information developed by Consultant and provided by the City. Consultant shall then be responsible for maintaining and updating the schedule during the course of the project. Meeting 2. Two interim meetings with City staff to discuss the draft report and preview rate study. Meeting 3. Prepare slide show and present preliminary findings and recommendations at an evening Public Workshop. Meeting 4. Present Final Report to City Council.
6 Task 7 Reports (Deliverables) The consultant shall deliver the following; 1. Five (5) hard copies of the draft Water and Wastewater Rate Study update report for comment and review prior to final printing. 2. Five (5) hard copies of the final Water and Wastewater Rate Study update report. 3. Electronic copy of the final report in Adobe PDF format. 4. Presentation materials or power point used at the City Council for the Final Update Report. Consultant will provide in advance, a copy of the Council presentation for review. All written and electronic documents, including but not limited to data compilations, studies, and reports which are prepared in the performance of this Project, shall remain the property of City of Arroyo Grande and will be delivered before final payment to Consultant. III. SCHEDULE OF EVENTS The following are the anticipated schedule of events for this project: Issue RFP... Friday, October 26, 2018 Proposals due to the City by 5:00 p.m.... Thursday, November 29, 2018 Consultant Ranking and Selection... Friday, December 14, 2018 Finalize Contract Negotiations... Tuesday, January 8, 2019 City Council Awards Contract... Tuesday, January 22, 2019 City Issues Notice to Proceed... Friday, January 25, 2019 City Council Final Update Report Presentation... Tuesday, June 25, 2019 IV. PROPOSAL REQUIREMENTS AND PROCESS A. FORM AND CONTENT OF TECHNICAL PROPOSAL The Proposal shall be limited to 10 pages, with the exception of resumes and project lists, and include as a minimum the following: 1. Scope of Services Present your understanding and Scope of Services for the project. 2. Schedule Include a performance schedule for each stage of the project detailing the length of time for completion of each task as defined in the Scope of Services. Include milestone dates and processing time for review by the City. 3. Personnel Identify and define the experience of the Project Manager and provide their individual resume. The designated Project Manager shall be the primary contact with the City during the contract period and shall function in that capacity while employed by the firm.
7 Identify the individual(s) responsible for each service, or subconsultant, and provide their individual resume(s). 4. References Provide three municipal references for projects of similar scope and nature performed within the last five years. List the client s name, address, and a description of the tasks performed. Include the name and telephone number of the client s key contact on the project. 5. Cost Summary Identify the proposed basis for fees and charges as appropriate with hourly rates of individuals that could be assigned. The fee will be submitted in a format to include a separate cost of each of the tasks and sub-tasks listed above. The actual fee will be negotiated after selection of the successful applicant. The City also reserves the right to eliminate individual tasks or sub-tasks due to budgetary constraints. 6. Signature The proposal shall be signed by an official authorized to bind the firm and shall contain a statement to the effect that the proposal is valid for ninety (90) days. 7. Submittal Requirements Three copies of the complete proposal shall be submitted in a sealed envelope with the firm s name printed on the outside clearly marked with the words Proposal for Water and Wastewater Rate Update. Proposals received after the deadline will not be considered. Hand deliver or mail the proposal to ensure receipt on or before 5:00 PM, Thursday, November 29, 2018 to: City of Arroyo Grande Attention: Kelly Wetmore, City Clerk 300 East Branch Street Arroyo Grande, CA B. REQUESTS FOR INFORMATION The selected consultant shall formally submit clarifications or requests for additional documentation to City staff for review. The City shall forward a written response to the consultant within five (5) working days. All inquiries to this RFP shall be submitted to: City of Arroyo Grande Public Works Department 300 East Branch Street Arroyo Grande, CA Attention: Shane Taylor, Utilities Manager Telephone: (805)
8 C. SELECTION PROCESS AND EVALUATION CRITERIA Each proposal will be reviewed by a Selection Committee to determine if the minimum proposal requirements outlined herein are met. The City of Arroyo Grande may reject any proposal that fails to meet the requirements set forth in this RFP. Proposals meeting the RFP requirements will be evaluated and ranked by the Selection Committee utilizing the following criteria: FINAL COMMENTS Understanding of the work to be performed Experience with similar assignments Assigned Project Manager/team Ability to complete the project on schedule Overall value to the City The City reserves the right to reject any and all proposals, cancel all or part of this RFP, waive any minor irregularities and to request additional information from proposing consultants. By requesting proposals, we are in no way obligated to award a contract or pay expenses of the proposing consultants in connection with the preparation or submission of a proposal. The decision to award a contract will be based many factors including but not limited to service, cost, experience, and innovation. No single factor, such as cost, will determine the final decision to award. We appreciate the efforts all the consultants and their respective staffs have put forth in responding to the Request for Proposal.
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