The Water Rate Cost of Services Study will be conducted in 8 tasks. Each task is detailed below.

Transcription

1 Scope of Services The Water Rate Cost of Services Study will be conducted in 8 tasks. Each task is detailed below. Task 1: Orientation and Management HEC will provide a written data request with information necessary to conduct the study. Using the City-provided data, HEC will thoroughly review the City s water enterprise fund including revenue and cost information for all operations, maintenance, administration, general expenses, short and long term liabilities, as well as capital and reserve expenditures. The water fund financial review will establish the historical and current financial health of the water enterprise fund, generally describing components of annual revenue, and characterization of expenses. Following this base analysis, key factors of the study will be discussed at an orientation meeting held with all appropriate City staff. Financial goals and policy objectives will be reviewed as they will shape key inputs to the water rate model and recommendations of the study. HEC will also provide project management under this task. Staff Support: Gather necessary data, meet with HEC and GoodStanding. HEC Deliverables: Written data request and brief memorandum summarizing orientation. Task 2: Cost Classification and Customer Profiling HEC will discuss with City staff the appropriate cost allocations between customer, capacity, and consumption for the ten-year Study period. Customer profiling is necessary for determining usage tier levels by customer class in Task 4. HEC will use the past 60 months of historical demand and billing data to provide customer usage profiles by customer type. This task is essential for understanding of historical consumption by customer class and recommending a well-designed rate structure. Staff Support: Provide asset inventory (for cost allocation) and metered water use data (for customer profiling). HEC Deliverables: Memorandum summarizing cost classifications and customer characteristics. Task 3: CIP Financing Strategy and Fees/Charges Calculations HEC will summarize the ten-year CIP and financing strategy presented in the 2012 Water Master Plan. The Excel model will be able to evaluate the impact of the funding options (such as low interest loans, bond sales and so forth) for capital improvements on customer rates. HEC will utilize the system development charges (SDCs) developed by the City s financial consultant for inclusion in estimated revenue generation by new development. Other charges for services, such as new hookups and disconnections, shall also be reviewed and updated under this task. City of Ashland Water Rate Cost of Services Study

2 Staff Support: Provide ten-year CIP, existing debt documentation, and cost data for service charges. HEC Deliverables: Memorandum with strategy for funding CIP, including system development charges calculations and other water services charges. Task 4: Cost of Service and Rates Analysis The cost of service and rates analysis is based on the projection of revenue requirement. Revenue requirement is the revenue necessary to fully cover all operating and non-operating expenditures net of revenues. Methodologies to project expenses will be discussed with staff and stakeholders. Non-operating cost considerations, such as an operating reserve, rate stabilization fund, or additional funds to meet debt service coverage requirements will be incorporated. Non-operating revenues, such as interest revenue, will be included as credits in the analysis so that the revenue requirement is not over-estimated. A projection of revenue deficiency will be conducted by comparing the existing level of revenues with projected annual expenditures. The revenue requirement is allocated to user groups based on cost classification (customer or capacity costs, which are recouped with flat monthly charges, and consumption costs which are recouped with usage charges) and customer usage characteristics (water demand patterns for average and peak monthly usage). The customer usage factors are determined based on the customer profiling exercise in Task 2. HEC incorporates the effect of price-elasticity into the future water demand projection. In addition, potential effects of water conservation programs will be factored into the analysis. Potential alternative rate structures will be evaluated carefully, with consideration to any developed policy objectives in terms of operations, the impact to large users, and affordability. Specific rate-design issues to be addressed include separate charges for pumping zones and recovery of energy costs, and incentivizing water conservation. In particular, the effectiveness of reaching water conservation targets through rates will be analyzed in detail (additional tiers and seasonal water pricing). Recommendations to improve fiscal stability will be provided; they may include creating a rate stabilization fund, shifting costs collected through base and use charges, and so forth. Provision of an emergency rate structure will be discussed and formulated based on operating scenarios under drought conditions or other interruptions in water supply. A projected cash flow for the water fund will be presented to ensure sufficiency of funding through the ten-year plan period, demonstrating adequate debt service coverage and reserve levels are met. Staff Support: Local or regional price-elasticity estimates (if available), cash balances of operating and capital funds. Input on rate design alternatives and billing software compatibility. HEC Deliverables: Memorandum with projected revenue requirements, findings of the cost of service analysis, discussion of rate alternatives explored, water conservation City of Ashland Water Rate Cost of Services Study

3 incentives, recommended rate design(s) for City and stakeholder consideration, and cash flow. Task 5: Survey of Rates and Fees, Affordability Analysis HEC will update the 2012 water user rate comparison with other southern Oregon cities. HEC will also compare current and proposed rates with an affordability index. Staff Support: Input on most relevant affordability measurements. HEC Deliverables: Memorandum of discussion and findings regarding affordability and comparison with other southern Oregon cities. Task 6: Implementation Support HEC and GoodStanding will work closely with the City and stakeholders in planning public outreach strategies and recommendations. These will include strategy, messaging, media relations, public noticing, and other educational materials as appropriate. HEC will suggest modifications to City ordinances to implement recommended rate and fee schedule changes. Staff Support: Review modified ordinances and resolutions. Produce any published materials (such as bill inserts). HEC Deliverables: Modified ordinances and assistance with resolutions. Content and design of educational materials. Task 7: Prepare Report HEC will prepare a report with an executive summary that provides comprehensive documentation of the work conducted. Up to six (6) hard copies will be provided. All final electronic files (Word, Excel, PDF) will be provided. Staff Support: Review and comment on the draft report. HEC Deliverables: Draft and final reports. Task 8: Presentations / Meetings This scope of services provides for up to ten (10) trips to Ashland. HEC and GoodStanding may conduct more than one meeting on each trip. Presentations will be made at City Council and with community/stakeholder groups. HEC may also utilize teleconference and Skype meetings to discuss items of the scope of services as needed. Materials may include PowerPoint, handouts, and so forth. Staff Support: Review and comment on presentation materials. Coordinate dates and times of meetings with consultants and stakeholders. HEC Deliverables: Prepare presentation / meeting materials. City of Ashland Water Rate Cost of Services Study

4 Schedule An estimated schedule is shown in Figure 1. The schedule provides for a draft Cost of Service and Water Rate Study within 6 to 8 months of project start. Figure Estimated Schedule City of Ashland Water Rate Cost of Services Study

5 Fee for Services The budget authorization for the Water Rate Cost of Services Study is $60,000. The itemized cost estimate is shown in Table 1 on the following page. Cost Assumptions: The presentations cost estimate includes six (6) trips to Ashland for Catherine Hansford and four (4) trips for Marlene Olsen. Note that more than one presentation/meeting can occur each trip (for example, one meeting with City staff, and one or two meetings with community groups). Direct costs include travel costs, lodging, meals (for trips to Ashland), additional insurance premium, printing of reports, and postage costs. HEC does not mark up any direct costs. Estimated direct costs are approximately $2,200 for travel reimbursement, $1,500 for insurance premium, $1,000 for lodging, $300 for printing and postage, and $300 for meals and other miscellaneous project-related costs. A contingency of $10,500 is included in the budget authorization for up to four (4) additional trips to Ashland and/or other costs associated with tasks included in the Scope of Services. The contingency is not to address additional items to the authorized Scope of Services unless agreed to by both the City and HEC. The City will only be billed for the work completed up to the authorized budget amount. HEC reserves the right to move budget between tasks, should one task be completed under the estimated amount, and another task be completed over the estimated amount. Invoices are issued monthly and are due on receipt. Monthly progress reports describing completed work and any issues accompany invoices. If additional work or additional presentations/meetings are requested by the City beyond the original scope of services, HEC will request authorization for additional budget. HEC will not commence on any additional work outside of the original scope of services without the express direction of the City, with additional budget authorization. Fee Schedule Staff hourly rates are $150 per hour for Catherine Hansford and $135 per hour for Marlene Olsen. Travel time is billed at $75 per hour, as is time for project management and administrative/clerical support. Rates are subject to change January 1 st each year. Mileage reimbursement is at the Federal rate ($0.56 per mile for 2014), flights at actual cost (economy fare) and meals at the Federal per diem rate or actual cost, whichever is less. City of Ashland Water Rate Cost of Services Study

6 Table 1 Authorized Budget Travel & Task/Item Description Hansford Olsen Clerical Hourly Billing Rates $150 $135 $75 Total Estimated Cost 1 Orientation and Management $2,010 2 Cost Classification and Customer Profiling $5,250 3 CIP Financing Strategy $1,440 4 Cost of Service and Rates Analysis $11,640 5 Affordability and Comparisons $2,160 6 Code Modifications & Implementation Support $6,780 7 Prepare Report $2,690 Subtotal Staff Costs $31,970 8 Presentations (6) $12,230 Total Staff Costs $44,200 Reimbursable Expenses Estimate $5,300 Total Estimated Cost $49,500 Contingency for Additional Meetings (4) / Other $10,500 Total Budget Authorization [1] $60,000 [1] HEC reserves the right to move budget between tasks as necessary to complete the scope of work up to the authorized budget amount. City of Ashland Water Rate Cost of Services Study

7 HANSFORD ECONOMIC CONSULTING & Water Rate Cost of Services Study (Project No ) Proposal for the Submitted: March 4, 2014 HEC Project #140136

8 HANSFORD ECONOMIC CONSULTING PO Box Truckee, CA Phone: March 4, 2014 Ms. Betsy Harshman, Public Works Administrative Supervisor City of Ashland 51 Winburn Way Ashland, OR Subject: Water Rate Cost of Services Study; Project No Dear Ms. Harshman: Thank you for the opportunity to submit a proposal to prepare a Water Rate Cost of Services Study (Study) for the City of Ashland (City). This study will serve as an essential cornerstone in planning for the City s water utility operations, supporting continuation and expansion of excellent services to its customers. Hansford Economic Consulting (HEC) and its Principal, Catherine Hansford, brings more than sixteen years of experience in public finance with specialization in the water industry. HEC is teaming with GoodStanding to bring you this comprehensive proposal. GoodStanding, led by Marlene Olsen, is a public involvement and outreach firm that will provide an important supporting role in community outreach. With a proven track record of completed projects and references listed herein, HEC and GoodStanding together bring the skill sets for successful execution of the Study in a straightforward manner. As a result of work performed the City will receive: A five-year financial plan to ensure systems cost recovery through rates and provide for timely completion of capital improvement plans, Rate design analysis demonstrating the impacts to certain customers and/or customer classes under different rate structures, A recommended five-year schedule of rates that meet Oregon s legal requirements, including modified rate structures if warranted, Updated water connection fees, and other water service charges as studied, A detailed report providing recommended rate schedules with methodology and rate and fee calculations, Assistance communicating the need for rate adjustments with customers, Assistance in modifying the City s water ordinances and resolutions adopting changes, Professional presentations to City Council and stakeholders, and Excel financial models and staff training in their use, if desired. As a sole proprietor carrying a project from start to finish, HEC is intimate with all project details. HEC s personal approach to projects is desirable when working with sensitive issues, a divergent customer base and/or multiple interests of stakeholders. HEC works with clients to find the best solutions for their own unique circumstances. This ability to listen and work with clients rather

9 Page 2 of 2 March 4, 2014 than prescribing what we think is best for the client sets HEC apart from other utility rate consultants and is why we think HEC is best qualified to perform the services contained herein. HEC appreciates the challenge of balancing equity, feasibility, and customer acceptance goals when approaching utility rate and fee changes. HEC will strive to help the City to operate the utility system to meet all regulatory requirements with affordable, reasonable rates and charges that help sustain a vibrant economy. HEC is prepared to begin work on this proposed scope of services immediately and work to a schedule that meets the needs of the City. We look forward to having the opportunity to discuss our qualifications and proposal with the City in greater detail. You can reach Catherine at (530) or catherine@hansfordecon.com, and Marlene at (775) or marlene@goodstandingoutreach.com. Sincerely, Catherine R. Hansford HANSFORD ECONOMIC CONSULTING Prepared by HEC letter with signature

10 Proposal Contents Section Page Letter of Introduction / Title Page Proposal 1. Project Understanding and Approach 1 2. Project Team and Resources 3 3. Work Breakdown and Schedule / Responsiveness 5 4. Proposed Budget (provided in separate, sealed envelope) Exhibit A Proposal Form City Proposal Form Resumes Related Project Experience / References Insurance and Financial Stability Exhibit B Certificate of Compliance City of Ashland Water Rate Cost of Services Study Page i

11 1. Project Understanding and Approach Background In 2012 The City of Ashland (City) adopted a Water Master Plan (WMP) which documents shortterm water system facility needs for the next 10 years and long-term facility needs for the next 20 years. With a total short-term cost of at least $30 million, the City needs a financial plan that maintains revenue sufficiency (or neutrality) for the water fund through the plan period. In addition, the City has not performed a full cost of service study for water service in about 20 years. Water rates must be studied on a routine basis to ensure that the water enterprise fund is achieving revenue sufficiency in the most equitable fashion among different user groups. This study has 4 main objectives: 1. Review user classifications and cost allocations 2. Project the necessary rate increase(s) to reach revenue sufficiency 3. Determine the most suitable rate structure to meet City water operations goals 4. Ensure growth pays for its fair share of system extensions HEC primarily works in California where proportionality of rates is required to be demonstrated to meet California s legal requirements to change water rates. HEC has also performed extensive research on affordability of water rates in both California and Nevada is familiar with the current water rate structure of the City. This study will: Ensure rates and charges recover the revenue required to operate the utility in a safe manner and in compliance with existing and anticipated regulations including ongoing operations and maintenance, completion of major rehabilitation and new capital improvement projects, and debt service payments. Document the cost projections and cost allocation methodologies. Recommend any adjustments to rate structure as a result of the cost of service analysis, with input and direction from staff and stakeholders. Provide a financing plan for timely completion of planned capital improvements. Calculate ten years of rates that will ensure financial stability of the water fund during normal and drought conditions and promote efficient use of water. Calculate system development charges and other water service charges/ fees that ensure growth pays its fair share of system improvements. Deliver a financial model that can be maintained by City staff in the future if desired. Methodology The analysis will focus on revenue stability, equity, the responsible use of precious water resources, customer acceptance and affordability. HEC s approach is to maintain contact and solicit feedback from City staff and other stakeholders at important junctures in the analysis, such as confirmation of key assumptions to be used in the model, verification of capital costs, and allocation of costs between existing and future customers. City of Ashland Water Rate Cost of Services Study Page 1

12 HEC s methodology focuses on all parties paying their fair share of system costs so that one customer group is not subsidizing another. HEC will examine financial equity and how to minimize costs to current and future users of the water system. HEC anticipates that fairness of rates will be closely scrutinized; standard industry practices will be followed in the rate-setting process. GoodStanding knows that better decisions are made when the public is involved. We will bring all parties to the table to make informed decisions and to increase the understanding and knowledge of the water system so that financial decisions are understood, even if they are not favored. HEC customizes rate and fee models for each client s needs. HEC will craft a financial model in Microsoft Excel, giving the ability to test various key assumptions such as operating reserve levels, different capital financing scenarios, and rate structures. The Excel-based model includes an Index worksheet which provides instruction on how to use the model and how to update charts and figures. All assumptions used in the model are clearly defined, and tables are presented in an easily understandable format. The model may include several scenarios; all scenarios will be defined and a baseline scenario will be developed, which will serve to evaluate the impact of changes to any key model assumptions. HEC will provide staff training on use of the model if desired. Any recommended increases must be robust in determination and clearly understood by the public. HEC and GoodStanding will work closely with the City to communicate effectively with the customer base the reasons for rate and/or fee adjustments, including any proposed change in rate structure. As a former water utility employee, Catherine understands how critical this step is in the process of adopting revised rates and fees. City Responsibilities HEC will rely on the City to provide all the primary data to be used in the analysis, including customer billing data, water asset inventories and book values. All financial data including capital improvement costs will be furnished by the City and all related materials pertinent to the study, such as agreements to temporary water supplies and conservation measures shall also be provided. Other tasks that may be required of the City include coordination of land use projections and growth rate assumptions. Beyond this initial data and information gathering, City staff will need to review work products and assist in setting up meetings; however, this time is anticipated to be minimal and not interfere with typical work duties. City of Ashland Water Rate Cost of Services Study Page 2

13 2. Project Team and Resources HEC Hansford Economic Consulting (HEC) is a contract professional services business established in 2005 in Truckee, CA. Owned by Catherine Hansford, this sole proprietorship provides planning, economic and financial services for small to regional-scale projects. HEC specializes in water utilities public finance and enjoys a reputation for timely delivery of high quality work products. HEC endorses forward planning and understands that plans are useful only if they are comprehensive, relevant to the specific local conditions, and lead to implementation. HEC s services include: Infrastructure Networks Analysis Economic and Business Impact Analysis Public Facilities and Services Financing Plans Special Financing District Formation Development Impact Fees Nexus Studies Fiscal Impact Studies Real Estate Feasibility Analysis Agency Governance and Mergers Water and Wastewater Utilities: Demand Analysis and Projections Income Surveys Rate and Fee Studies State and Federal Low-Interest Loan and Grant Program Applications Catherine Hansford Catherine is a practitioner of financial, economic, and resource sciences offering a unique set of skills to this project. As a professional for more than 16 years, Catherine has built a reputation for creative problem solving, excellent speaking skills and written products. Catherine has a passion for the water industry. She has worked in both the public and private sectors on water resource and finance issues. Catherine offers a fresh perspective, having training and experience in both economics and finance and continually looks for creative strategies to meet utility revenue needs. Relevant Experience: In the public sector Catherine worked on integrating water supply and demand management programs with appropriate pricing signals, and communicating plans and rate adjustments to stakeholder groups at Truckee Meadows Water Authority (TMWA). Catherine was responsible for the water rate model, pricing of water rights, billing of wholesale contracts, and updates of the rules. In the private sector Catherine worked for Economic and Planning Systems (Sacramento office) helping clients with municipal bond sales, financing plans, fiscal studies, formation of special districts, fee nexus studies and utility studies. At ECO:LOGIC engineering (now Stantec) Catherine specialized in water and wastewater public financing. At City of Ashland Water Rate Cost of Services Study Page 3

14 HEC, Catherine has assisted clients with financing strategies for water systems and helped secure SRF and USDA financing for capital projects. Customer Outreach/Communications Experience: During employment at TMWA, Catherine served as liaison / chair between TMWA and various customer groups. These included a Rates Customer Outreach Group, Rate Making Review Committee, and Landscape Subcommittee. Catherine served on the Advisory Committee on Conservation for the Washoe County Regional Water Planning Commission from 2001 through 2004 and as its Chair from 2003 through GoodStanding GoodStanding, established 1983, is a public involvement and outreach practice focused on water and land resources. GoodStanding is a certified DBE in Nevada and California, WBE and WOSB and is owned by Marlene Olsen. GoodStanding s home office is located in Reno, Nevada and staff work remotely based on project needs. As public involvement and outreach experts with thorough understanding of the Open Meeting Laws, GoodStanding has been communication counsel to TMWA, northern Nevada s largest water purveyor, since In addition, they advise the City of Reno on watershed protection; oversee communications for northern Nevada s watershed fund; and developed the statewide Integrated Source Water Protection Plan for the Nevada Division of Environmental Protection which will be implemented in all 17 Nevada counties. GoodStanding s other water resource clients have included: Water Management Commission of Washoe County, Department of Water Resources for Washoe County, Truckee River Fund, Western Regional Water Commission, South Truckee Meadows General Improvement District, City of Chino Hills, California and Truckee Meadows Community Forestry Coalition. Marlene Olsen Over time, by being transparent, truthful, responsive, consistent and committed to the public process, Marlene has helped build trust for clients with their customers. Marlene and Catherine have successfully collaborated on projects together for the past 12 years. Relevant Experience: Marlene has over 30 years of experience in communications and public water and environmental issues. From program development to messaging, Marlene s expertise has guided water communication decisions in northern Nevada and many larger water issues statewide. In 1985 the first Drought Management Plan was introduced to the community through the Regional Water Board of Washoe County. Marlene spearheaded a community public service campaign that introduced the concept of mandatory conservation. The campaign resulted in community acceptance and compliance of twice a week watering in the area. Since then, western water issues have been the main interest in her work. Marlene currently leads all of the projects for Truckee Meadows Water Authority (all communications) including rate adjustments and increases, Nevada Department of Wildlife (Aquatic Invasive Species Education) and Nevada Department of Transportation (Storm Water Management Plan Outreach). City of Ashland Water Rate Cost of Services Study Page 4

15 3. Work Breakdown and Schedule Scope of Services The Water Rate Cost of Services Study will be conducted in 8 tasks. Each task is detailed below. Task 1: Orientation and Management HEC will provide a written data request with information necessary to conduct the study. Using the City-provided data, HEC will thoroughly review the City s water enterprise fund including revenue and cost information for all operations, maintenance, administration, general expenses, short and long term liabilities, as well as capital and reserve expenditures. The water fund financial review will establish the historical and current financial health of the water enterprise fund, generally describing components of annual revenue, and characterization of expenses. Following this base analysis, key factors of the study will be discussed at an orientation meeting held with all appropriate City staff. Financial goals and policy objectives will be reviewed as they will shape key inputs to the water rate model and recommendations of the study. HEC will also provide project management under this task. Staff Support: Gather necessary data, meet with HEC and GoodStanding. HEC Deliverables: Written data request and brief memorandum summarizing orientation. Task 2: Cost Classification and Customer Profiling HEC will discuss with City staff the appropriate cost allocations between customer, capacity, and consumption for the ten-year Study period. Customer profiling is necessary for determining usage tier levels by customer class in Task 4. HEC will use the past 24 months of historical demand and billing data to provide customer usage profiles by customer type. This task is essential for understanding of historical consumption by customer class and recommending a well-designed rate structure. Staff Support: Provide asset inventory (for cost allocation) and metered water use data (for customer profiling). HEC Deliverables: Memorandum summarizing cost classifications and customer characteristics. Task 3: CIP Financing Strategy and Fees/Charges Calculations HEC will summarize the ten-year CIP and will present a financing strategy, including long-term debt financing, to ensure the facilities are completed in a timely fashion, while minimizing the impact to rates and fees. HEC will allocate CIP costs between existing and future customers based on City information. The Excel model will be able to evaluate the impact of several funding options (such as low interest loans, bond sales and so forth) for capital improvements. City of Ashland Water Rate Cost of Services Study Page 5

16 Water system development charges will be assessed for adequacy in light of projected costs to increase capacity for new development growth potential. New development should pay for both a buy-in for existing facilities they benefit from and their share of new facilities costs. Other charges for services, such as new hookups and disconnections, shall also be reviewed and updated under this task. Staff Support: Provide ten-year CIP, existing debt documentation, and cost data for service charges. HEC Deliverables: Memorandum with strategy for funding CIP, including system development charges calculations and other water services charges. Task 4: Cost of Service and Rates Analysis The cost of service and rates analysis is based on the projection of revenue requirement. Revenue requirement is the revenue necessary to fully cover all operating and non-operating expenditures net of revenues. Methodologies to project expenses will be discussed with staff and stakeholders. Non-operating cost considerations, such as an operating reserve, rate stabilization fund, or additional funds to meet debt service coverage requirements will be incorporated. Non-operating revenues, such as interest revenue, will be included as credits in the analysis so that the revenue requirement is not over-estimated. A projection of revenue deficiency will be conducted by comparing the existing level of revenues with projected annual expenditures. The revenue requirement is allocated to user groups based on cost classification (customer or capacity costs, which are recouped with flat monthly charges, and consumption costs which are recouped with usage charges) and customer usage characteristics (water demand patterns for average and peak monthly usage). The customer usage factors are determined based on the customer profiling exercise in Task 2. HEC incorporates the effect of price-elasticity into the future water demand projection. In addition, potential effects of water conservation programs will be factored into the analysis. Potential alternative rate structures will be evaluated carefully, with consideration to any developed policy objectives in terms of operations, the impact to large users, and affordability. Specific rate-design issues to be addressed include separate charges for pumping zones and recovery of energy costs, and incentivizing water conservation. Recommendations to improve fiscal stability will be provided; they may include creating a rate stabilization fund, shifting costs collected through base and use charges, and so forth. Provision of an emergency rate structure will be discussed and formulated based on operating scenarios under drought conditions or other interruptions in water supply. A projected cash flow for the water fund will be presented to ensure sufficiency of funding through the ten-year plan period, demonstrating adequate debt service coverage and reserve levels are met. Staff Support: Local or regional price-elasticity estimates (if available), cash balances of operating and capital funds. Input on rate design alternatives and billing software compatibility. City of Ashland Water Rate Cost of Services Study Page 6

17 HEC Deliverables: Memorandum with projected revenue requirements, findings of the cost of service analysis, discussion of rate alternatives explored, water conservation incentives, recommended rate design(s) for City and stakeholder consideration, and cash flow. Task 5: Survey of Rates and Fees, Affordability Analysis HEC will prepare a user rate comparison for the City that will measure the current and proposed rates for the City with those charged in other southern Oregon cities, as selected or approved by the City. A comparison of system development charges will also be provided. HEC will compare current and proposed rates with an affordability index. Staff Support: Assistance with selection of comparison cities. Input on most relevant affordability measurements. HEC Deliverables: Memorandum of discussion and findings regarding affordability and comparison with other southern Oregon cities. Task 6: Implementation Support HEC and GoodStanding will work closely with the City and stakeholders in planning public outreach strategies and recommendations. These will include strategy, messaging, media relations, public noticing, and other educational materials as appropriate. HEC will suggest modifications to City ordinances to implement recommended rate and fee schedule changes. Staff Support: Review modified ordinances and resolutions. Produce any published materials (such as bill inserts). HEC Deliverables: Modified ordinances and assistance with resolutions. Content and design of educational materials. Task 7: Prepare Report HEC will prepare a report with an executive summary that provides comprehensive documentation of the work conducted. Reports are provided electronically unless otherwise requested. Staff Support: Review and comment on the draft report. HEC Deliverables: Draft and final reports. Task 8: Presentations / Meetings This scope of services provides for up to six (6) trips to Ashland. HEC and GoodStanding may conduct more than one meeting on each trip. Presentations will be made at City Council and with community/stakeholder groups. HEC may also utilize teleconference and Skype meetings to discuss items of the scope of services as needed. Materials may include PowerPoint, handouts, and so forth. Staff Support: Review and comment on presentation materials. Coordinate dates and times of meetings with consultants and stakeholders. City of Ashland Water Rate Cost of Services Study Page 7

18 HEC Deliverables: Prepare presentation / meeting materials. Schedule and Responsiveness A preliminary schedule is shown in Figure 1. The schedule provides for a draft Cost of Service and Water Rate Study within 6 to 8 months of project start. Figure 1 Preliminary Schedule HEC has a reputation for delivering projects on schedule in a professional manner. HEC will provide monthly progress reports to the City with invoices. The monthly progress reports will show percentage completion of tasks which can be measured against an agreed upon schedule for completion of tasks. With HEC based in Truckee, CA and GoodStanding based in Reno, NV (30 miles apart), the majority of work will be conducted remotely. With the use of , Skype, Go To Meetings, and other uses of technology communications will be effective and timely. HEC and Goodstanding frequently work on projects remotely. Both Catherine Hansford and Marlene Olsen are committed to meeting client schedules and can quickly respond to City requests/inquiries. City of Ashland Water Rate Cost of Services Study Page 8

19 EXHIBIT A PROPOSAL FORM (INCLUDES RESUMES, REFERENCES, FINANCIAL/INSURANCE)

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21 Catherine R Hansford Resume Expertise Land Use and Infrastructure Financial Feasibility Catherine understands the process of land development. She has assessed the financial feasibility of real estate, determined potential revenue and expenditure impacts on local governments, and assisted crafting financing strategies that meet objectives and goals of both public and private parties. Water Resources Planning and Utility Rates Catherine s passion for water resources coupled with her education and career in economics complement one another. In this era when the link between water and economic vitality becomes more evident and stressed, Catherine draws on her experience to assist with decision making on best use of scarce resources and appropriate financial planning. Economic Development and Impact Analyses Catherine provides clients analyses of current and projected economic conditions using key social and economic indicators. She is particularly sensitive to the public process required for economic development and land reuse plans. Catherine assists public agencies to match budgets with level of service needs for public safety, transportation, and other major infrastructure anticipated to support economic development. Communications It is not simply enough to be good at your work; you have to be able to communicate with those you work for. Catherine continually strives to be an excellent communicator. She has completed media spokesperson training, as well as other courses with this goal in mind. In addition, Catherine has managed consumer outreach groups, inter-local working groups and task forces. Ms., Agricultural Economics (University of Nevada, Reno) B.S., Rural and Environmental Economics (University of Newcastle-upon-Tyne, UK) Career HEC, Principal ECO:LOGIC Engineering, Senior Economist Truckee Meadows Water Authority, Senior Water Planner Economic and Planning Systems, Senior Associate Presentations / Classes The Cost of Rectifying Over- Appropriation of Groundwater in Diamond Valley, 2014 Nevada Water Resources Assn Conference Financial Management: Understand your Cost Structure, Customer Cost- Share Responsibilities and Funding Options, 3-Hour Videoconference /class for the Nevada Rural Water Assn, November 2013 Rate Setting Fundamentals: Math or Art? 2013 Nevada Rural Water Assn What is a Reasonable Water Rate? 2011 Nevada Water Resources Assn Finding Funding for Energy Efficiency Projects, 2010 California Rural Water Assn

22 Marlene Olsen Resume Marlene s role as principal strategist is firmly rooted in her early days of research and outreach bringing northern Nevada s first wide-spread water conservation program to life. Since then, she has become a trusted advisor on water issues in the west. Her community outreach experience began at the Reno-Sparks Chamber of Commerce where she was Public Relations Manager and News Bureau Director. She learned from that experience how important water is to the development of a community. She also was involved in crisis communication with many community-wide issues. In 1985 after her firm was established, the first Drought Management Plan was introduced to the community, working with her client, through the Regional Water Board of Washoe County. Her firm was brought on to guide the agency through the public process and introduce, for the first time, the concept of mandatory conservation and limiting outdoor water use through twice a week watering schedule. The process included public meetings, public noticing, a public comment document, as well as a public service campaign. Over time, the campaign resulted in community acceptance and compliance of twice a week watering in the area. The firm represented the agency until it was disbanded because of the campaign s success in the early 90s. When the local governments agreed to purchase the water assets from Sierra Pacific Power Company in 2001, Marlene lead the communications strategy to quickly turn around a customer communications plan and public education plan. The Truckee Meadows Water Authority was formed within 90 days. From program development to messaging to survey questionnaire design, Marlene s expertise has guided all conservation communication decisions in northern Nevada and many larger water issues statewide. B.A., Journalism (University of Nevada) Conference Presentations Focus on Your Customer 2009 American Society of Civil Engineers Crisis Communication Issues 2009 City-County Communication and Marketing Association Communication Strategies through a Recession 2008 America Marketing Association Certifications Spokesperson Trainer Board Positions University of Nevada Alumni Council Reynolds School of Journalism Dean s Council Committees America Water Works Association Public Affairs Member of the Public Relations Counselor Academy Capabilities: Communications strategy, public involvement, media and community relations, messaging, crisis counsel and management.

23 HEC Water Utilities Clients and References Catherine has worked with many local governments on water-related utility municipal finance projects (rates and charges studies, in-lieu and development impact fee studies, CIP financing strategies for large infrastructure projects, funding applications for SRF and USDA programs, formation of special districts to fund infrastructure projects, interlocal agreements and/or contracts for service, and assistance with bond sales). As listed below, while Catherine s clients range from very small to very large, the majority of HEC s clients serve a population less than 50,000. Municipality State Water Sewer / Storm Water Reclaim / Flood Population Greater than 50,000 Truckee Meadows Water Authority NV X X Truckee Meadows Regional Planning Agency NV X X X City of Sacramento CA X X X Placer County CA X X X Fresno County CA X X X Washoe County NV X City of Turlock CA X X City of Yuba City CA X X City of Manteca CA X South Placer Municipal Utility District CA X Population Less than 50,000 City of West Sacramento CA X City of Riverbank CA X City of Livingston CA X X City of Newman CA X City of Dixon CA X X X City of Live Oak CA X X City of Williams CA X Rancho Murieta Community Services District CA X City of Colusa CA X Town of Floriston CA X Donner Summit Public Utility District CA X X Heather Glen Community Services District CA X Midway Heights Community Water District CA X Squaw Valley Public Services District CA X Eureka County NV X June Lake Public Utility District CA X Sierra Lakes County Water District CA X City of Bishop CA X San Andreas Sanitary District CA X Following are references from three clients HEC has performed municipal water comprehensive cost allocation studies for.

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26 Michael Cooke MUNICIPAL SERVICES DIRECTOR MUNICIPAL SERVICES ADMINISTRATION 156 S. BROADWAY, SUITE 270 TURLOCK, CALIFORNIA PHONE FAX February 20, 2014 LETTER OF RECOMMENDATION FOR CATHERINE HANSFORD, ECONOMIC CONSULTANT To Whom It May Concern: The City of Turlock provides potable water to approximately 70,000 customers. In 2009, the majority of the City of Turlock s water customers were paying flat rates. In response to California s AB2572 requirements to bill all customers volumetrically in 2010, the City of Turlock engaged ECO:LOGIC Engineering to prepare a Water Rate Study which developed potential metered rate structures and projected monthly bills for all customer classes. The Study included detailed reviews of available meter reading data to get a firm understanding of customer usage profiles, cost efficiency indexes to compare the City of Turlock s to other nearby jurisdictions, a presentation of alternative rate structures, and debt financing assumptions for a major Capital Improvement Plan related to a regional surface water supply project. In November 2009, City staff recommended the City Council move to an inclining block rate structure with two pricing tiers as detailed in the Water Rate Study. Although the City Council approved of the rate structure, they did not move forward with adoption of new rates because a metered pricing structure was already in place (declining block structure), the surface water supply project was still in question, and the water enterprise fund had sufficient reserves to carry annual costs. These factors made increased rates unpalatable at that time given the state of the economy. Catherine Hansford completed 100% of this Water Cost of Service Study for the City of Turlock. She also completed a Recycled Water Pricing study for the City in If you would like to contact me regarding her professional capabilities, please call me at (209) ext or me at mcooke@turlock.ca.us. Very Truly Yours, Michael Cooke Director of Municipal Services

27 Financial Stability and Professional Liability Insurance HEC conducts business in a fiscally responsible manner. Catherine Hansford uses QuickBooks to manage financial transactions. HEC employs a bookkeeper to provide periodic review of entries and to reconcile with banking institution records. Income and expenses are also provided to the Internal Revenue Service on an annual basis. Catherine Hansford has not been audited. HEC banks with the Bank of America. HEC has been fiscally solvent for the past 8 years and has no reason to believe that this would change for the duration of the contract period. HEC furnishes professional liability, general and auto insurance whenever required upon award of work. HEC has not made a claim on any insurance policy since the business was started with the filing of a Fictitious Business License in Nevada County, California in HEC s current professional liability insurance is with Markel American Insurance Company with a retroactive date of July 7, HEC s professional liability insurance has a limit of $1,000,000. If the City requires this to be increased then HEC will pay the premium to secure the additional insurance.

28 EXHIBIT B CERTIFICATE OF COMPLIANCE

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