Item No. 1.
| MEETING DATE: 05/01/2023 |
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| TO: | HONORABLE CHAIR AND DIRECTORS |
| FROM: | JIM SADRO, EXECUTIVE DIRECTOR By: Elias Saykali, Public Works Director |
| SUBJECT: | APPROVE AN AGREEMENT WITH RAFTELIS FINANCIAL CONSULTANTS, INC. IN THE AMOUNT OF $72,425 TO CONDUCT A WATER AND SEWER RATE IMPACT FEE STUDY
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RECOMMENDATION:
That the Utility Authority:
A. Waive formal bidding requirements per the La Habra Municipal Code, Section 4.20.080(B) when a service firm has established such a successful past history of work with the City that it is clearly in the public interest not to negotiate with any other source; and,
B. Approve and authorize the Executive Director to execute a professional services agreement with Raftelis Financial Consultants, Inc., in an amount not to exceed $72,425 to review and revise, as necessary, the Utility Authority's five-year Water and Sewer Fund financial plan and rate structure.
B. Approve and authorize the Executive Director to execute a professional services agreement with Raftelis Financial Consultants, Inc., in an amount not to exceed $72,425 to review and revise, as necessary, the Utility Authority's five-year Water and Sewer Fund financial plan and rate structure.
DISCUSSION:
The City of La Habra's current municipal water and sewer rate structures were approved and adopted by the City Council and the Utility Authority in December 2021. Based on those approved rates, a two-year water and sewer rate structure was placed into effect on January 1, 2022, and will continue through December 31, 2023.
The Utility Authority is preparing its Fiscal Year 2023-2024 budget and has identified increased costs related to imported water, electricity, chemical treatment, personnel expenses, contractual services, and capital expenditures, as well as increased costs for the materials used in the repair and maintain the City's water and sewer systems. In order to have sufficient cash flow to fund water and sewer operations, staff recommends that the Authority Board approve the Executive Director to enter into a professional services agreement with Raftelis to evaluate the impact of rising operational and capital costs, along with bond obligations and reserve requirements, with the goal of developing an updated five-year water and sewer rate model, sufficient to support current and future operations, as well as capital improvements. If approved by the Board, the results of the Raftelis study will be presented to the City Council and Utility Authority at a future meeting for discussion and action.
Raftelis has provided financial services to more than 500 public utilities across the nation, including 138 utilities in California. Raftelis has assisted the Authority to conduct the three past consecutive rate impact studies that have resulted in defensible rate structures compliant with Proposition 218 regulations. Their prior work on with the Authority provides them with a significant understanding of the City's imported water sources and rate tiers, along with local water production capacity unique to La Habra. Staff is recommending that the Utility Authority authorize the Executive Director approve a professional services agreement with Raftelis to conduct a updated water and sewer rate impact study.
The Utility Authority is preparing its Fiscal Year 2023-2024 budget and has identified increased costs related to imported water, electricity, chemical treatment, personnel expenses, contractual services, and capital expenditures, as well as increased costs for the materials used in the repair and maintain the City's water and sewer systems. In order to have sufficient cash flow to fund water and sewer operations, staff recommends that the Authority Board approve the Executive Director to enter into a professional services agreement with Raftelis to evaluate the impact of rising operational and capital costs, along with bond obligations and reserve requirements, with the goal of developing an updated five-year water and sewer rate model, sufficient to support current and future operations, as well as capital improvements. If approved by the Board, the results of the Raftelis study will be presented to the City Council and Utility Authority at a future meeting for discussion and action.
Raftelis has provided financial services to more than 500 public utilities across the nation, including 138 utilities in California. Raftelis has assisted the Authority to conduct the three past consecutive rate impact studies that have resulted in defensible rate structures compliant with Proposition 218 regulations. Their prior work on with the Authority provides them with a significant understanding of the City's imported water sources and rate tiers, along with local water production capacity unique to La Habra. Staff is recommending that the Utility Authority authorize the Executive Director approve a professional services agreement with Raftelis to conduct a updated water and sewer rate impact study.
FISCAL IMPACT/SOURCE OF FUNDING:
There will be no impact to the General Fund. The fee proposal submitted by Raftelis to conduct the proposed water and sewer rate study is $72,425 and there are sufficient funds in the Utility Authority's adopted FY 2022-2023 Water and Sewer Fund budget to pay for the cost of this proposal.
GENERAL PLAN RELEVANCE/CITY COUNCIL GOALS & OBJECTIVES:
ED 9.1 Balanced Fiscal Practices
ED 9.2 Long-term Infrastructure Viability
Goal 2 - Management of Public Revenues and Fiscal Assets
ED 9.2 Long-term Infrastructure Viability
Goal 2 - Management of Public Revenues and Fiscal Assets
Objective A - Closely monitor revenues, expenditures, and fiscal trends to ensure the Authority's long-term financial stability.