That the La Habra Utility Authority:
A. Approve to 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 $72,865 to review and revise, as necessary, the Utility Authority's five-year Water and Sewer Fund Financial Plans and rate structure.

The City of La Habra's current municipal water and sewer rate structures were approved and adopted by the City Council and Utility Authority in December 2019.  The rate structures went into effect January 1, 2020 and will continue through December 31, 2021.

The proposed Fiscal Year 2021-2022 Utility Authority Budget identifies increases to imported water costs, water production costs with respect to electricity and chemical treatment, as well as increases in materials used in the repair and maintenance of the City's water and sewer systems.  Staff recommends executing a professional services agreement with Raftelis to evaluate the impact of these increases in conjunction with proposed capital improvement projects, bond obligations, staffing costs, and reserve requirements, with the goal of developing and updated proposed water and sewer rate structure that would be sufficient to support current and future operations and capital improvements. 

Raftelis has provided financial services to more than 500 public utilities across the nation, including 138 utilities in California.  Raftelis has previously assisted La Habra on two recent rate impact studies that resulted in rate structures consistent with Proposition 218 regulations and, as a result, has a thorough understanding of complex imported water rates and local water production capacity unique to the City of La Habra.  Furthermore, the project team at Raftelis has extensive working knowledge of the Authority's current rate model, which will minimize the need to develop or construct a new model.  

Staff recommends that the Authority Directors make exception to bidding requirements per LMC 4.20.080(B), which states that "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 retain Raftelis to review and revise the Utility Authority's five-year financial plan, and make recommendations for potential modifications to existing water and sewer rate structures.

There will be no impact to the General Fund.  The fee proposal submitted by Raftelis to conduct the proposed water rate study is $72,865 and there are sufficient finds in the Utility Authority's adopted Water and Sewer Fund budget to pay for the cost of this proposal.