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HomeMy WebLinkAbout2008 02 25 Consent 206 Agreement with Public Resource Management Group (PRMG) RFQ#003/08/KLCOMMISSION AGENDA ITEM 206 February 25, 2008 Meeting CONSENT X INFORMATIONAL PUBLIC DARING REGULAR MGR /DEPT ~~/` Authorization REQUEST: Utility Department Requesting Authorization to Enter into an Agreement with Public Resource Management Group (PRMG) to conduct a Utility Rate Study as the top ranked firm responding to RFQ #003/08/KL -Utility Rate Study for the City of Winter Springs PURPOSE: The purpose of this Agenda Item is to award RFQ #003/08/KL to PRMG of Maitland to conduct a Utility Rate Study at a cost of $60,400. CONSIDERATIONS: This agenda item is needed to retain a consultant to conduct an analysis of the rates, fees and charges for water, sewer and reclaimed services. The Utility Enterprise Fund is fiscally sound; however, the significant capital improvements required to implement the reuse augmentation plan necessitates a thorough review of all rates with particular attention being paid to the reclaimed water rate and structure. The last rate study was performed and codified in 2002. The scope of services for the rate study was advertised in December 2007 as RFQ #003/08/KL. Four firms submitted qualification packages by the January 23, 2008 RFQ deadline. The Utility Director, Finance Director, and General Services Director each reviewed and ranked the four submittals. Public Resource Management Group (PRMG) of Maitland was the unanimous top ranked firm. The rankings were: 1. Public Resource Management Group -Maitland 2. Burton & Associates - St. Augustine 3. MuniFinancial -Orlando 4. Crowe -Lakeland 022508_COMM_Consent 206_Utility_Rate_Study Consent Agenda Item 206 February 25, 2008 Page 2 After notifying PRMG of their top ranking and reviewing the scope of work, staff then solicited a price proposal. The price proposal of $60,400 for the scope of work (attached) was received and found acceptable by staff. In addition to the traditional reviews of utility rates, fees and charges done in rate studies, there were several specific tasks included in the scope of work. These include; • Develop the rates (and alternatives) necessary to support the Lake Jesup Reuse Augmentation plant and associated distribution system expansion. With limited reclaimed customers, it is likely that all the costs can not be supported by reclaimed water rates. • Develop reclaimed water rates specifically for the golf courses including how to credit the augmentation well owned by Tuscawilla Golf Course. • Develop rates relative to the wholesale water and sewer agreement with Seminole County. Develop for consideration what potable water rates would be required to improve the water quality by adding packed towers at the three water plants. Packed towers remove hydrogen sulfide thereby reducing the amount of chlorine needed and cutting taste and odor complaints. FUNDING: The rate study was budgeted at $25,000 in line code 3600-53180. A supplemental appropriation of $36,400 from Utility Enterprise Fund balance will needed to fund this study. RECOMMENDATION: It is recommended that authorization be granted for the City Manager to execute the letter agreement with Public Resource Management Group for a Utility Rate Study at a cost of $61,400 payable from Utility line code 3600-53180. A supplemental appropriation of $36,400 from Utility Enterprise Fund balance is needed to fully fund the study. ATTACHMENTS: 1. Public Resource Management Group Letter Agreement COMMISSION ACTION: 022508_COMM Consent_206_Utility_Rate_Study Public Resources Management Group, Inc. Utility, Rate, Financial and Management Consultants DRAFT February 18, 2008 Mr. Kipton D. Lockcuff, P.E. Utility/Public Works Director City of Winter Springs 110 N. Flamingo Avenue Winter Springs, FL 32708 Subject: Agreement to Provide Utility Consulting Services Dear Mr. Lockcuff: Public Resources Management Group, Inc. (PRMG) is pleased to submit this letter agreement (the "Agreement") to the City of Winter Springs (the "City") to develop a comprehensive water and wastewater utility rate and charge study. Specifically, the Agreement identifies the firm's direct hourly billing rates to be charged to the City for services provided, a summary of the scope of services anticipated for the engagement, and certain other contractual terms (e.g., price) for the City's consideration. Based on our discussions regarding the needs of the City, we propose the following: PROJECT TEAM AND BILLING RATES With respect to the performance of the engagement, Mr. Jack Burgiel will be the project manager for the daily activities relative to the development of the rate model and financial forecast required for the fee evaluation. In addition to Mr. Burgiel, PRMG may use other employees as necessary to complete the engagement. Included on Exhibit A is a summary of the direct labor rates by project team title which will be used by PRMG to invoice the City for services rendered in association with the engagement. SCOPE OF SERVICES The scope of services to be provided by PRMG is summarized on Exhibit B to this Agreement. COMPENSATION AND BILLING Based on the scope of service delineated on Exhibit B and the direct hourly billing rates identified on Exhibit A, both of which are made a part of this Agreement, PRMG proposes anot- to-exceed contract price to perform the utility consulting services in an amount of $60,400. This cost estimate includes i) the direct labor cost to be incurred on the project and ii) an allowance for other direct costs. A detailed cost estimate summarizing the projected not-to-exceed contract price is included in Exhibit C. Other direct costs include the cost of travel, communication, and delivery charges. Such costs will be billed either at standard rates used by PRMG for such G:\DM\Ltrs\Pend'g Agmts\Winter Spgs Ltr Agmt.doc ,.11 ~It)I"1'FI l~1r~! (I_:.~:R~I~) ,1~'I~t ll:: -- ~t I I'I=? 30{J R't.%1I~'I.:ANI), l~L, 3<751 `I'I.I,IPH(.)NIs: (~{)7} (i?`i-2{~()0 • I~;'1X: (~{}7) f7?~-Ztl{) • I~O~~.~tII,: PR'~I{it~t;PIZ(1.1:4'ri~~c:.i;i»~t Mr. Kipton D. Lockcuff, P.E. City of Winter Springs February 18, 2008 Page 2 DRAFT expenses or at the actual cost incurred. A summary of the standard rates used by PRMG for the billing of the other direct costs also included on Exhibit A. PRMG will bill monthly for the services rendered to the City which will be the sum of i) the direct labor costs incurred by PRMG personnel on the project based on the Direct Labor Billing Rates referenced herein; ii) the other direct labor rates as identified herein; and iii) the cost of subconsulting services, if any, required to perform any tasks, including additional services, as directed by the City. We appreciate the opportunity to provide utility consulting services on behalf of the City. If this Agreement is acceptable, please either i) acknowledge below the acceptance of the general terms and conditions outlined in this Agreement or ii) utilizing the information contained herein regarding the direct labor and standard cost rates and scope of services, develop a separate contract to be executed by both parties. If the City uses this agreement as the contract vehicle, please send us a copy of the executed agreement for our files and records. Again, thank you for the opportunity to provide utility consulting services on behalf of the City and we look forward to working with you in the near future. Very truly yours, ACCEPTED BY: Public Resources Management Group, Inc. City of Winter Springs, Florida Julian J. Burgiel Associate Authorized Signature Title Date JJB/dlm Attachments C:\DM\Ltrs\Pend'g Agmts\Winter Spgs Ltr Agmt.doc 1'1~ ,111: EXHIBIT A DRAFT PUBLIC RESOURCES MANAGEMENT GROUP, INC. SCHEDULE OF DIRECT LABOR HOURLY RATES AND COST RATES DIRECT HOURLY RATES Project Team Title Principal Associate Managing Consultant Supervising Consultant Senior Consultant Rate Consultant Consultant Senior Rate Analyst Rate Analyst Analyst Assistant Analyst Administrative Direct Labor Hourly Rates [*] $160.00 $125.00 $115.00 $110.00 $105.00 $ 95.00 $ 85.00 $ 75.00 $ 65.00 $ 55.00 $ 45.00 $ 48.00 [*] Direct labor hourly rates effective twelve months after the date of execution of the Agreement; rates will be adjusted by not more than the net percentage change in the Consumer Price Index -Urban Consumers per annum (rounded to the nearest dollar) or as mutually agreed between parties for invoices rendered after each anniversary date of each year thereafter until project completion or termination of the Agreement between the parties STANDARD COST RATES Expense Description Standard Rates [*] Mileage Allowance -Personal Car Use Only $0.485 per mile Reproduction (black and white) (in house) $0.05 per page Reproduction (color) (in house) $0.25 per page Reproduction (contracted) Actual Cost Computer Time $0.00 per hour Telephone Charges Actual Cost Delivery Charges Actual Cost Lodging/Other Travel Costs Actual Cost Meals Not to exceed per PRMG Employee: $8.00 -Breakfast $ l 2.00 -Lunch $25.00 -Dinner Subconsultant Services Actual Cost plus 5.0% Other Costs for Services Rendered Actual Cost [*] Standard cost rates effective twelve months after the date of execution of the Agreement; where applicable, rates will be adjusted by not more than the net percentage change in the Consumer Price Index -Urban Consumers per annum (rounded to the nearest dollar) or as mutually agreed between parties for invoices rendered after each anniversary date of each year thereafter until project completion or termination of the Agreement between the parties. G:\DM\Ltrs\Pend'g Agmts\Winter Spgs Ltr AgmLdoc A-1 1'IC ~~~I: EXHIBIT B DRAFT CITY OF WINTER SPRINGS COMPREHENSIVE WATER AND WASTEWATER UTILITY RATE AND CHARGE STUDY SCOPE OF SERVICES The Scope of Services to be performed by the personnel of Public Resources Management Group, Inc. (PRMG) relative to this project is summarized below by task: Data Request and Kickoff Meeting -PRMG will interview staff members, collect financial, customer, capital and planning documentation, and schedule field visits such that sufficient information can be compiled to perform the study. Information to be obtained will include population projections, persons per household statistics, land use and building information, capital improvement plans, inventory of existing facilities, development ordinances and policies, financial information (such as loan documents, debt service schedules, and fund balances), operating budgetary data, staffing requirements, customer billing and usage data, annual audits, monthly operating and financial reports, and other related information. Additional research and data analysis may be required by City staff based on data review and rate study needs. 2. Customer Usa e Analysis -PRMG will conduct an analysis of the customer usage or sales requirements based on detailed bill frequency and customer accounting information provided by the City. This task will include a review of historical customer and usage statistics (by class based on data availability), development of a five-year forecast, and providing assistance to the City in the development of a bill frequency computer run. PRMG will provide the parameters necessary for the preparation of the bill frequency analysis so that changes in rate structure (e.g., modification to water conservation rates) can be modeled and implemented. PRMG will review detailed customer statistics and billing histories. Development of Revenue Requirements -PRMG will summarize the most recent historical fiscal years (up to three complete fiscal years) to review recent trends in utility expenditures, cost relationships, and rate covenant compliance. PRMG will prepare afive- year projection of the revenue requirements of the utility system using the Fiscal Year 2008 approved budget as the Test Year for financial projection purposes. This task will also include the development of a revenue model based on the City's existing rates and the customer forecast developed in Task 2 above, the evaluation of operating expenses, and assistance in the preparation of a funding plan for the City's capital improvement program. A review of revenues from other sources and the requirement for working capital reserves G:ADMVLtrs\Pend'g Agmts\Winter Spgs Ltr AgmLdoc B-I ~~, a1~~ EXHIBIT B DRAFT will also be conducted. The net effect of this task is to develop the target expenditure and net funding requirements to be recovered from monthly water and sewer rates and user fees. Special emphasis will be made to identify the contractual costs associated with the operations of the utility by the City's approved contractor. 4. Capital Finance Anal - As part of the development of the revenue requirements from rates, PRMG will assist the City in developing afive-year capital funding analysis. It is expected that this analysis will recognize both capital expenditures associated with growth or expansion as well as the performance of renewals and replacements of the system. As part of the study, PRMG will assist the City in identifying potential rate impacts as a result of designing and constructing utility system packing towers. If additional indebtedness is identified as a capital funding option, PRMG will review rate covenant requirements necessary for the issuance of long-term bonds. 5. Design of Monthly Water System User Rates and Charges - PRMG will classify the water system revenue requirements in order to recover costs appropriately from the various users of the system. This task will include the development of equivalent billing units recognizing cost differentials among rates to specific users, allocation of costs among the utility customers based on a cost analysis to promote equity, review of water conservation based rates while recognizing price elasticity adjustments, and the consideration of the phasing of rate structure changes, during the ten year financial forecast. For the purposes of this scope, it is expected that no more than two rate design scenarios will be performed based on data availability. 6. Design of Monthly Sewer System User Rates and Charges - PRMG will classify the sewer system revenue requirements in order to recover costs appropriately from the various users of the sewer system. This task will include the development of equivalent billing assets recognizing cost differentials among rates of specific customers, review of maximum billing threshold for residential accounts, allocation of costs among the utility customers based on a cost analysis to promote equity, and the consideration of the phasing of rate structure changes, during the five-year financial forecast. 7. Design Reclaimed Water Rates -The demand for reclaimed water has increased over the years and reuse water has become a commodity. In the past reclaimed water service was largely viewed as an effluent disposal mechanism rather than a water supply resource and as such, the costs for reclaimed water service were recovered through water and wastewater system rates. With the growing demand for reclaimed water for irrigation purposes, the City needs to review the cost allocation process used to allocate the costs of reclaimed water service among the utility systems and determine the proper level of cost to recover from reclaimed water rates. In addition to monthly rates for service, the project team will develop a proposed cost recovery method for providing reclaimed water in existing and G:ADM\Ltrs\Pend'g Agmts\Winter Spgs Ltr Agmt.doc B-2 I ~~ ~~11 EXHIBIT B DRAFT new neighborhoods anticipated to commence receiving reclaimed water service once such service is made available by the City. Rate Impact Analysis - A comparison of the potential effects of the rates developed during the above-referenced tasks will be performed to illustrate customer bill impacts. Additionally, comparisons of the recommended rates with other neighboring utilities will be prepared to assist the City in the evaluation of the proposed rates. 9. Develop Capital Recovery Charges (Impact Fees -PRMG will develop capital recovery charges for the recovery of capital costs from new users of the water and sewer systems. This task will include a review of level of service standards used by the City, the identification of existing plant capacity allocable to growth, review of future capital projects which may change the cost recovery strategy of the City, and the design of the fees based on the cost of capacity relationships associated with the monthly user fees discussed above. 10. Design of Other Capital and Miscellaneous Charges -PRMG will review the current cost recovery requirements of the other capital charges, miscellaneous fees, and the installation fees, which are currently included in the City's rate ordinance. The review will be based on the current rate policies of the City and will address the recovery of both direct and indirect costs of providing service. 11. Master Meterin Policy -The need for this policy is related to the Hacienda Village mobile home park where the City provides service through a master meter; however, based on historical circumstances, the City is responsible for maintenance of the facilities beyond the meter. Also, it is our understanding that the mobile home park has installed individual meters beyond the master meter for purposes of rebilling for water service. The problem with this situation is that the City only receives a monthly base facility charge for one master meter while incurring costs associated with multiple on-site facilities. We believe this problem can be addressed in a number of ways, which include: i) developing a policy forbidding master metering in the future and where individual meters have already been installed by the property owner, the City could purchase those facilities (or assume the ownership in the form of acontribution-in-aid-of-construction) as a condition of continued service, particularly in light of the on-site maintenance considerations; ii) discontinuing the maintenance of the on-site facilities beyond the master meter and treating Hacienda Village consistent with other master metered customers; and iii) developing an ERU-based rate that would collect base facility charges for the equivalent number of units beyond the master meter. Our rate design scope already contemplates consideration of an ERU-based rate for master meter accounts. G:\DM\Ltrs\Pend'g Agmts\Winter Spgs Ltr Agmt.doc B-3 I'IC L11~#~ EXHIBIT B DRAFT 12. Review of Retail Rate Revenue Adequacy in Area of City Provided Wholesale Service by Seminole County -PRMG will review the adequacy of City retail rates in recovery of the costs of providing water and wastewater in an area of the City provided wholesale service by Seminole County. PRMG will perform an analysis of such revenue adequacy and make recommendations to the City with respect to implementing rate schedules adequate to recover total costs incurred by the City. 13. Prepare Comprehensive Water and Wastewater Utility Rate and Charge Report -Based on the results of the above-referenced tasks, PRMG will prepare a draft water and sewer rate study for the City's review and presentation to the Board of City Commissioners at a public hearing. Prior to submittal of the draft report to the Board, comments will be received from City staff and incorporated in the report. After presentation to all parties, ten (10) copies of the comprehensive report will be issued. 14. Review of Rate Ordinance -PRMG will review the revised rate ordinance prepared by the City Attorney or staff to provide consistency to the recommendations reflected in the Comprehensive Water and Wastewater Rate Study report. 15. Client Meetings -Based on the scope of work discussed above, PRMG will attend meetings as necessary with the utility and other parties in order to prosecute and present the water and sewer rate study. DELIVERY SCHEDULE After being given notification to proceed by the County, PRMG will complete the study for presentation by September 1, 2008. This assumes that the City will provide the required data necessary to PRMG in sufficient time to perform the rate evaluation on a timely basis. ADDITIONAL SERVICES During the course of the study, the City may request additional services from PRMG. Such services will not be conducted until authorized by the City as mutually agreed between the City and PRMG. The City will be billed for such additional services based on the hourly rate schedule of PRMG members as shown in this Agreement or some other basis as mutually agreed between the City and the Project Team. Although no additional services are anticipated for this engagement, examples of additional services may include, but not be limited to, the following: Compiling detailed customer billing statistics due to lack of computer billing program capability. G:\DM\Ltrs\Pend'g Agmts\W inter Spgs Ltr Agmt doc B-4 1'1 X111. EXHIBIT B DRAFT 2. The receipt of inaccurate or incomplete data from City which was relied upon the analysis of rates and which must be revised due to such inaccuracies or must be re-evaluated due to the lack of data. 3. Delays in the project schedule which may have impacts on analyses performed which would affect the budget for the scope of services reflected herein. 4. Preparation of a project feasibility report in support of the issuance of utility revenue bonds. (Remainder of page intentionally left blank) G:ADM\Ltrs\Pend'g Agmts\Winter Spgs Ltr Agmt.doc B-S Exhibit C City of Winter Springs, Florida Preliminary Job Cost Estimate for Water and Wastewater System Rate Analysis Public Resources Management Group, Inc. Line Senior Rate Rate No. Activity Principal Associate Consultant Consultant Analyst Administrative Totals Project Billing Rates ($per hour) $160.00 $125.00 $105.00 $95.00 $65.00 $48.00 Development of Revenue Requirements 1 Data Acquisition/Review/Kick-off Meeting (I Meeting) 0 4 0 0 0 2 6 2 Identification of Fiscal Policies and Objectives 2 2 0 0 0 0 4 3 Compilation of Historical Customer Statistics 0 2 0 0 16 0 18 4 Development of Customer Usage ForecastiBill Frequency 0 4 4 0 16 0 24 5 Development of Revenue Projections from Existing Rates 0 4 0 12 0 0 16 6 Funetionalization of Utility Operating Budget 0 4 0 0 16 0 20 7 Development of Operating Expense Projections 2 4 0 12 0 0 18 8 Capital Improvement and Funding Analysis 2 8 6 2 0 0 18 9 Other Revenue Requirement Identification 0 2 4 4 0 0 10 10 Development of Net Revenue Requirements 0 2 4 4 0 0 10 11 Compliance Analysis 0 2 4 4 0 0 10 12 Meetings with Staff (1 Meeting) 0 4 0 4 0 2 ]0 13 Total Hours 6 42 22 42 48 4 164 14 DvectLaborCost $960 $5.250 $2,310 $3,990 $3,120 $192 $15,822 Design of Retail Water, Wastewater and Reuse Rates 15 Development of Equivalent Billing Units 0 4 8 8 0 0 20 16 Allocate Net Revenue Requirements 0 4 4 8 0 0 16 17 Design Retail Water Rates 2 6 8 0 0 0 ]6 18 Design Retail Sewer Rates 2 6 8 0 0 0 16 19 Design of Reclaimed Water Fees 2 8 8 4 0 0 22 20 Design of Impact Fees 2 8 16 8 0 0 34 21 Design of Miscellaneous Charges 0 8 16 8 0 0 32 22 Design of Other Miscellaneous Charges 0 16 24 24 0 0 64 23 Retail Rate Impact Comparison Analysis 0 0 0 2 8 0 10 24 Retail Rate Compazisons with Other Utilities 0 0 1 2 12 0 I S 25 Meetings with Staff (I Meeting) 0 4 0 0 0 4 8 26 Total Hours 8 64 93 64 20 4 253 27 Direct Labor Cost $1.280 $8,000 $9,765 $6,080 $],300 $192 $26,617 Water Audi[ Preparation 28 Prepare Water Audit 0 2 0 6 0 0 8 29 Total Hours 0 2 0 6 0 0 8 30 Direct Labor Cost $0 $250 $0 $570 $0 $0 $820 Master Metered Customer Cost Analysis 3I R'epare Cos[ Analysis of Hacienda Village Snvice Area 0 6 4 0 4 2 16 32 Individual Meter Customer Analysis 0 6 0 0 4 0 10 33 Total Phase VII Activities -Hours 0 IZ 4 0 8 2 26 34 Direct Labor Cost $0 $L500 $420 $0 $520 $96 $2,536 Retail Rate Analysis of Wholesale Service Area 35 Allocate Net Revenue Requirements 0 4 4 4 0 0 12 36 Design utility Rates 0 6 4 2 6 0 18 37 Total Phase VII Activities -Hours 0 10 8 6 6 0 30 38 Direct Labor Cost $0 $1.250 $840 $570 $390 $0 $3,050 Public Information and Presentations 39 Report Preparation 2 24 16 0 0 30 72 40 Workshop/Public Hearings (Attend Two [2] Hearings) 12 12 8 0 0 4 36 4I Review Rate Resolution 0 4 0 0 0 0 4 42 Total Hours I4 40 24 0 0 34 112 43 Direct Labor Cost $2,240 $5.000 $2,520 $0 $0 $1,632 $11,392 44 Total Activity Hours -All Tasks 28 170 151 118 82 44 593 45 Total Direct Labor Cost-All Tasks $4,480 $21,250 $15,855 $11,210 $5,330 $2,112 $60,237 46 Average Hourly Billing Rate $0 Allowance for Indirect Costs 47 Delivery Charges (2 Express Mail Deliveries (ry $25.00) $50 48 Miscellaneous (Telephone, Fax, Copy, etc.) 113 49 Total Allowance for Indirect Costs 163 50 Total Estimated Cost of Service Study Project Cost (*) $60.400 (*) Amount shown inclusive of all computer modeling for ultimate submittal to the County for subsequent sensitivity analyses. Ga~,p~ 2.06 2-/a.s/~ g Pubic Resources Management Group, Inc. Utility, Rate, Financial and Manngement Consultants February 21, 2008 Mr. Kipton D. Lockcuff, P.E. Utility/Public Works Director City of Winter Springs 110 N. Flamingo Avenue Winter Springs, FL 32708 Subject: Agreement to Provide Utility Consulting Services Dear Mr. Lockcuf£ Public Resources Management Group, Inc. (PRMG) is pleased to submit this letter agreement (the "Agreement") to the City of Winter Springs (the "City") to develop a comprehensive water and wastewater utility rate and charge study. Specifically, the Agreement identifies the firm's direct hourly billing rates to be charged to the City for services provided, a summary of the scope of services anticipated for the engagement, and certain other contractual terms (e.g., price) for the City's consideration. Based on our discussions regarding the needs of the City, we propose the following: PROJECT TEAM AND BILLING RATES With respect to the performance of the engagement, Mr. Jack Burgiel will be the project manager for the daily activities relative to the development of the rate model and financial forecast required for the fee evaluation. In addition to Mr. Burgiel, PRMG may use other employees as necessary to complete the engagement. Included on Exhibit A is a summary of the direct labor rates by project team title which will be used by PRMG to invoice the City for services rendered in association with the engagement. SCOPE OF SERVICES The scope of services to be provided by PRMG is summarized on Exhibit B to this Agreement. COMPENSATION AND BILLING Based on the scope of service delineated on Exhibit B and the direct hourly billing rates identified on Exhibit A, both of which are made a part of this Agreement, PRMG proposes anot- to-exceed contract price to perform the utility consulting services in an amount of $60,400. This cost estimate includes i) the direct labor cost to be incurred on the project and ii) an allowance for other direct costs. A detailed cost estimate summarizing the projected not-to-exceed contract price is included on Exhibit C. Other direct costs include the cost of travel, communication, and delivery charges. Such costs will be billed either at standard rates used by PRMG for such G:\DM\Ltrs\Pend'g Agmts\Winter Spgs Ltr Agmtdoc 341 NORTH MAITLAND AVENUE SUITE 300 •MAITLAND, FI. 32751 TELEPHONE (407) 628-2600 FAX (407) 628-2610 Mr. Kipton D. Lockcuff, P.E. City of Winter Springs February 21, 2008 Page 2 expenses or at the actual cost incurred. A summary of the standard rates used by PRMG for the billing of the other direct costs also included on Exhibit A. PRMG will bill monthly for the services rendered to the City which will be the sum of i) the direct labor costs incurred by PRMG personnel on the project based on the Direct Labor Billing Rates referenced herein; ii) the other direct labor rates as identified herein; and iii) the cost of subconsulting services, if any, required to perform any tasks, including additional services, as directed by the City. We appreciate the opportunity to provide utility consulting services on behalf of the City. If this Agreement is acceptable, please either i) acknowledge below the acceptance of the general terms and conditions outlined in this Agreement or ii) utilizing the information contained herein regarding the direct labor and standard cost rates and scope of services, develop a separate contract to be executed by both parties. If the City uses this agreement as the contract vehicle, please send us a copy of the executed agreement for our files and records. Again, thank you for the opportunity to provide utility consulting services on behalf of the City and we look forward to working with you in the near future. Public Resources Management Group, Inc. Very truly yours, ACCEPTED BY: City of Winter Springs, Florida J ian J. B giel i ~ ` ~ _ _ ssocia thorized Signa e " C 1 7~-1 r'y1 ~ rV~ G C/r Title ~-~S' -~ ~ Date JJB/dlm Attachments G:\DM\LUS\Pend'g Agents\Winter Spgs Ltr Agmt.doc EXHIBIT A PUBLIC RESOURCES MANAGEMENT GROUP, INC. SCHEDULE OF DIRECT LABOR HOURLY RATES AND COST RATES DIRECT HOURLY RATES Direct Labor Project Team Title Hourly Rates [*] Principal $160.00 Associate $125.00 Managing Consultant $115.00 Supervising Consultant $110.00 Senior Consultant $105.00 Rate Consultant $ 95.00 Consultant $ 85.00 Senior Rate Analyst $ 75.00 Rate Analyst $ 65.00 Analyst $ 55.00 Assistant Analyst $ 45.00 Administrative $ 48.00 [*] Direct labor hourly rates effective twelve months after the date of execution of the Agreement; rates will be adjusted by not more than [he net percentage change in the Consumer Price Index -Urban Consumers per annum (rounded to the nearest dollar) or as mutually agreed between parties for invoices rendered after each anniv ersary date of each year thereafter until project completion or lamination ofthe Agreement between the parties STANDARD COST RATES Expense Description Standard Rates [*] Mileage Allowance -Personal Car Use Only $0.485 per mile Reproduction (black and white) (in house) $0.05 per page Reproduction (color) (in house) $0.25 per page Reproduction (contracted) Actual Cost Computer Time Telephone Charges Delivery Charges Lodging/Other Travel Costs Meals Subconsultant Services Other Costs for Services Rendered $0.00 per hour Actual Cost Actual Cost Actual Cost Not to exceed per PRMG Employee: $8.00 -Breakfast $12.00 -Lunch $25.00 -Dinner Actual Cost plus 5.0% Actual Cost [*] Standard cost rates effective twelve months after the date of execution of the Agreement; where applicable, rates will be adjusted by not more than the net percentage change in the Consumer Price Index -Urban Consumers per annum (rounded to the nearest dollar) or as mutually agreed between parties for invoices rendered after each anniversary date of each year thereafter until project completion or termination of the Agreement between the parties. G:\DM\Ltrs\Pend'g Agmts\Winter Spgs Ltr Agmt.doc A-1 rrz ~x~~ CITY OF WINTER SPRINGS COMPREHENSIVE WATER AND WASTEWATER UTILITY RATE AND CHARGE STUDY SCOPE OF SERVICES EXHIBIT B The Scope of Services to be performed by the personnel of Public Resources Management Group, Inc. (PRMG) relative to this project is summarized below by task: 1. Data Request and Kickoff Meeting -PRMG will interview staff members, collect financial, customer, capital and planning documentation, and schedule field visits such that sufficient information can be compiled to perform the study. Information to be obtained will include population projections, persons per household statistics, land use and building information, capital improvement plans, inventory of existing facilities, development ordinances and policies, financial information (such as loan documents, debt service schedules, and fund balances), operating budgetary data, staffing requirements, customer billing and usage data, annual audits, monthly operating and financial reports, and other related information. Additional research and data analysis may be required by City staff based on data review and rate study needs. 2. Customer Usa e Anal. -PRMG will conduct an analysis of the customer usage or sales requirements based on detailed bill frequency and customer accounting information provided by the City. This task will include a review of historical customer and usage statistics (by class based on data availability), development of a five-year forecast, and providing assistance to the City in the development of a bill frequency computer run. PRMG will provide the parameters necessary for the preparation of the bill frequency analysis so that changes in rate structure (e.g., modification to water conservation rates) can be modeled and implemented. PRMG will review detailed customer statistics and billing histories. 3. Development of Revenue Requirements -PRMG will summarize the most recent historical fiscal years (up to three complete fiscal years) to review recent trends in utility expenditures, cost relationships, and rate covenant compliance. PRMG will prepare afive- year projection of the revenue requirements of the utility system using the Fiscal Year 2008 approved budget as the Test Year for financial projection purposes. This task will also include the development of a revenue model based on the City's existing rates and the customer forecast developed in Task 2 above, the evaluation of operating expenses, and assistance in the preparation of a funding plan for the City's capital improvement program. A review of revenues from other sources and the requirement for working capital reserves G:\DM\LtIS\Pend'g Agmts\Winter Spgs Ltr Agmt.doc B- I rrt ,~u~ EXHIBIT B will also be conducted. The net effect of this task is to develop the target expenditure and net funding requirements to be recovered from monthly water and sewer rates and user fees. Special emphasis will be made to identify the contractual costs associated with the operations of the utility by the City's approved contractor. 4. Capital Finance Analysis - As part of the development of the revenue requirements from rates, PRMG will assist the City in developing afive-year capital funding analysis. It is expected that this analysis will recognize both capital expenditures associated with growth or expansion as well as the performance of renewals and replacements of the system. As part of the study, PRMG will assist the City in identifying potential rate impacts as a result of designing and constructing utility system packing towers. If additional indebtedness is identified as a capital funding option, PRMG will review rate covenant requirements necessary for the issuance of long-term bonds. 5. Design of Monthly Water System User Rates and Charges -PRMG will classify the water system revenue requirements in order to recover costs appropriately from the various users of the system. This task will include the development of equivalent billing units recognizing cost differentials among rates to specific users, allocation of costs among the utility customers based on a cost analysis to promote equity, review of water conservation based rates while recognizing price elasticity adjustments, and the consideration of the phasing of rate structure changes, during the ten year financial forecast. For the purposes of this scope, it is expected that no more than two rate design scenarios will be performed based on data availability. 6. Design of Monthly Sewer System User Rates and Charges -PRMG will classify the sewer system revenue requirements in order to recover costs appropriately from the various users of the sewer system. This task will include the development of equivalent billing assets recognizing cost differentials among rates of specific customers, review of maximum billing threshold for residential accounts, allocation of costs among the utility customers based on a cost analysis to promote equity, and the consideration of the phasing of rate structure changes, during the five-year financial forecast. 7. Design Reclaimed Water Rates -The demand for reclaimed water has increased over the years and reuse water has become a commodity. In the past reclaimed water service was largely viewed as an effluent disposal mechanism rather than a water supply resource and as such, the costs for reclaimed water service were recovered through water and wastewater system rates. With the growing demand for reclaimed water for irrigation purposes, the City needs to review the cost allocation process used to allocate the costs of reclaimed water service among the utility systems and determine the proper level of cost to recover from reclaimed water rates. In addition to monthly rates for service, the project team will develop a proposed cost recovery method for providing reclaimed water in existing and G:\DM\Ltrs\Pend'g Agmts\Winter Spgs Ltr Agmtdoc B-2 PR .111: EXHIBIT B new neighborhoods anticipated to commence receiving reclaimed water service once such service is made available by the City. As part of this analysis, PRMG will assist the City in the development of acost-effective reclaimed water rate to provide such service to the Tuscawilla Golf Course that would be agreeable to both parties. 8. Rate Impact Analysis - A comparison of the potential effects of the rates developed during the above-referenced tasks will be performed to illustrate customer bill impacts. Additionally, comparisons of the recommended rates with other neighboring utilities will be prepared to assist the City in the evaluation of the proposed rates. 9. Develop Capital Recovery Charges (Impact Fees) -PRMG will develop capital recovery charges for the recovery of capital costs from new users of the water and sewer systems. This task will include a review of level of service standards used by the City, the identification of existing plant capacity allocable to growth, review of future capital projects which may change the cost recovery strategy of the City, and the design of the fees based on the cost of capacity relationships associated with the monthly user fees discussed above. 10. Design of Other Capital and Miscellaneous Charges -PRMG will review the current cost recovery requirements of the other capital charges, miscellaneous fees, and the installation fees, which are currently included in the City's rate ordinance. The review will be based on the current rate policies of the City and will address the recovery of both direct and indirect costs of providing service. 11. Master Metering Policy -The need for this policy is related to the Hacienda Village mobile home park where the City provides service through a master meter; however, based on historical circumstances, the City is responsible for maintenance of the facilities beyond the meter. Also, it is our understanding that the mobile home park has installed individual meters beyond the master meter for purposes of rebilling for water service. The problem with this situation is that the City only receives a monthly base facility charge for one master meter while incurring costs associated with multiple on-site facilities. We believe this problem can be addressed in a number of ways, which include: i) developing a policy forbidding master metering in the future and where individual meters have already been installed by the property owner, the City could purchase those facilities (or assume the ownership in the form of acontribution-in-aid-of-construction) as a condition of continued service, particularly in light of the on-site maintenance considerations; ii) discontinuing the maintenance of the on-site facilities beyond the master meter and treating Hacienda Village consistent with other master metered customers; and iii) developing an ERU-based rate that would collect base facility charges for the equivalent number of units beyond the master meter. Our rate design scope already contemplates consideration of an ERU-based rate for master meter accounts. G:\DM\Ltrs\Pend'g Agtnts\W inter Spgs Ltr Agmtdoc }3-3 1 R' .NI' EXHIBIT B 12. Review of Retail Rate Revenue Adequacy in Area of City Provided Wholesale Service by Seminole County -PRMG will review the adequacy of City retail rates in recovery of the costs of providing water and wastewater in an area of the City provided wholesale service by Seminole County. PRMG will perform an analysis of such revenue adequacy and make recommendations to the City with respect to implementing rate schedules adequate to recover total costs incurred by the City. 13. Prepare Comprehensive Water and Wastewater Utility Rate and Charge Report -Based on the results of the above-referenced tasks, PRMG will prepare a draft water and sewer rate study for the City's review and presentation to the Board of City Commissioners at a public hearing. Prior to submittal of the draft report to the Board, comments will be received from City staff and incorporated in the report. After presentation to all parties, ten (10) copies of the comprehensive report will be issued. 14. Review of Rate Ordinance -PRMG will review the revised rate ordinance prepared by the City Attorney or staff to provide consistency to the recommendations reflected in the Comprehensive Water and Wastewater Rate Study report. 15. Client Meetings -Based on the scope of work discussed above, PRMG will attend meetings as necessary with the utility and other parties in order to prosecute and present the water and sewer rate study. DELIVERY SCHEDULE After being given notification to proceed by the County, PRMG will complete the study for presentation by September 1, 2008. This assumes that the City will provide the required data necessary to PRMG in sufficient time to perform the rate evaluation on a timely basis. ADDITIONAL SERVICES During the course of the study, the City may request additional services from PRMG. Such services will not be conducted until authorized by the City as mutually agreed between the City and PRMG. The City will be billed for such additional services based on the hourly rate schedule of PRMG members as shown in this Agreement or some other basis as mutually agreed between the City and the Project Team. Although no additional services are anticipated for this engagement, examples of additional services may include, but not be limited to, the following: Compiling detailed customer billing statistics due to lack of computer billing program capability. G:\DM\Ltrs\Pend'g Agmts\W inter SP6+s Ltr Agmt.doc B-4 rrz ,~~c~ EXHIBIT B 2. The receipt of inaccurate or incomplete data from City which was relied upon the analysis of rates and which must be revised due to such inaccuracies or must be re-evaluated due to the lack of data. 3. Delays in the project schedule which may have impacts on analyses performed which would affect the budget for the scope of services reflected herein. 4. Preparation of a project feasibility report in support of the issuance of utility revenue bonds. (Remainder of page intentionally left blank) G:\DM\Ltrs\Pend'g Agmts\W inter Spgs Ltr Agmt.doc B-5 Exhibit C City of Winter Springs, Florida Preliminary Job Cost Estimate for Water and Wastewater System Rate Analysis Public Resources Management Group, Inc. Line Srnior Rate Rate No. Activity Principal Associate Consultant Consultant Analyst Administrative Totals Project Billing Rates ($ per hour) $160.00 $125.00 $105.00 $95.00 $65.00 $48.00 Development of Revenue Requirements I Data AcquisitioNReview/Kick-off Meeting (1 Meeting) 0 4 0 0 2 Idrntification of Fiscal Policies and Objectives 2 2 0 0 3 Compilation of Historical Customer Statistics 0 2 0 0 4 Development of Customer Usage Forecast/Bill Frequency 0 4 4 0 5 Developmrnt of Revenue Projections from Existing Rates 0 4 0 12 6 Functionalization of Utility Operating Budget 0 4 0 0 7 Development of Operating Expense Projections 2 4 0 12 6 Capital Improvement and Funding Analysis 2 8 6 2 9 Other Revrnue Requirement Identification 0 2 4 4 10 Development of Net Revenue Requirements 0 2 4 4 I I Compliance Analysis 0 2 4 4 12 Meetings with Staff (I Meeting) 0 4 0 4 13 Total Hours 6 42 22 42 14 Direct Labor Cost $960 $5,250 $2,310 $3,990 Design of Retail Water, Wastewater and Reuse Rates 15 Development of Equivalrnt Billing Units 0 4 8 8 16 Allocate Net Revrnue Requirements 0 4 4 8 17 Design Retail Water Rates 2 6 8 0 18 Design Retail Sewer Rates 2 6 8 0 19 Design of Reclaimed Water Fees 2 8 8 4 20 Design of Impact Fees 2 8 16 8 21 Design of Miscellaneous Charges 0 8 16 8 22 Design of Other Miscellaneous Charges 0 16 24 24 23 Retail Rate Impact Comparison Analysis 0 0 0 2 24 Retail Rate Comparisons with Other Utilities 0 0 I 2 25 Meetings with Staff(1 Meeting) 0 4 0 0 26 Total Hours 8 64 93 64 27 Drect Labor Cost $1,280 $8,000 $9,765 $6,080 Water Audit Preparation 26 Prepare Water Audit 0 2 0 6 29 Total Hours 0 2 0 6 30 Direct Labor Cost $0 $250 $0 $570 Master Metered Customer Cost Analysis 31 Prepare Cost Analysis of Hacirnda Village Service Area 0 6 4 0 32 Individual Meter Customer Analysis 0 6 0 0 33 Total Phase VII Activities -Hours 0 12 4 0 34 D'vect Labor Cost $0 $1,500 $420 $0 Retail Rate Analysis of Wholesale Service Area 0 2 0 0 16 0 16 0 0 0 16 0 0 0 0 0 0 0 0 0 0 0 0 2 48 4 $3,120 $192 0 0 0 0 0 0 0 0 8 12 0 0 0 0 0 0 0 0 0 0 0 20 $1,300 6 4 18 24 16 20 IS 18 10 10 10 164 $15,822 20 I6 16 16 22 34 32 64 10 IS 4 253 $192 $26,617 0 0 0 0 $0 $0 4 2 4 0 8 2 $520 $96 35 Allocate Net Revenue Requirements 0 4 4 4 0 0 36 Design Utility Rates 0 6 4 2 6 0 37 Total Phase VII Activities -Hours 0 10 8 6 6 0 38 Drect Labor Cost $0 $1,250 $840 $570 $390 $0 Public Information and Presentations 8 8 $820 16 10 26 $2,536 I2 18 30 $3,050 39 Repon Preparation 2 24 16 0 0 30 72 40 Workshop/Public Hearings (Attend Two [2] Hearings) 12 12 6 0 0 4 36 41 Review Rate Resolution 0 4 0 0 0 0 4 42 Total Hours 14 40 24 0 0 34 112 43 Direct Labor Cost $2,240 $5,000 $2,520 $0 $0 $1,632 $11,392 44 Total Activity Hours -All Tasks 28 170 IS I I I6 82 44 593 45 Total Direct Labor Cost-AIITasks $4,480 $21,250 $IS,SSS $11,210 $5,330 $2,112 $60,237 46 Average Hourly Billing Rate $0 Allowance for Indirect Costs 47 Delivery Charges (2 Express Mail Deliveries (w, $25.00) $SO 48 Miscellaneous (Telephone, Fax, Copy, etc.) 113 49 Total Allowance for Indirect Costs 163 50 Total Estimated Cosl of Service Study Project Cost (') $60,400 (') Amount shown inclusive of all computer modeling for ultimate submittal to the County for subsequent sensitivity analyses. Ga~,p~ 2.06 2-/a.s/~ g Pubic Resources Management Group, Inc. Utility, Rate, Financial and Manngement Consultants February 21, 2008 Mr. Kipton D. Lockcuff, P.E. Utility/Public Works Director City of Winter Springs 110 N. Flamingo Avenue Winter Springs, FL 32708 Subject: Agreement to Provide Utility Consulting Services Dear Mr. Lockcuf£ Public Resources Management Group, Inc. (PRMG) is pleased to submit this letter agreement (the "Agreement") to the City of Winter Springs (the "City") to develop a comprehensive water and wastewater utility rate and charge study. Specifically, the Agreement identifies the firm's direct hourly billing rates to be charged to the City for services provided, a summary of the scope of services anticipated for the engagement, and certain other contractual terms (e.g., price) for the City's consideration. Based on our discussions regarding the needs of the City, we propose the following: PROJECT TEAM AND BILLING RATES With respect to the performance of the engagement, Mr. Jack Burgiel will be the project manager for the daily activities relative to the development of the rate model and financial forecast required for the fee evaluation. In addition to Mr. Burgiel, PRMG may use other employees as necessary to complete the engagement. Included on Exhibit A is a summary of the direct labor rates by project team title which will be used by PRMG to invoice the City for services rendered in association with the engagement. SCOPE OF SERVICES The scope of services to be provided by PRMG is summarized on Exhibit B to this Agreement. COMPENSATION AND BILLING Based on the scope of service delineated on Exhibit B and the direct hourly billing rates identified on Exhibit A, both of which are made a part of this Agreement, PRMG proposes anot- to-exceed contract price to perform the utility consulting services in an amount of $60,400. This cost estimate includes i) the direct labor cost to be incurred on the project and ii) an allowance for other direct costs. A detailed cost estimate summarizing the projected not-to-exceed contract price is included on Exhibit C. Other direct costs include the cost of travel, communication, and delivery charges. Such costs will be billed either at standard rates used by PRMG for such G:\DM\Ltrs\Pend'g Agmts\Winter Spgs Ltr Agmtdoc 341 NORTH MAITLAND AVENUE SUITE 300 •MAITLAND, FI. 32751 TELEPHONE (407) 628-2600 FAX (407) 628-2610 Mr. Kipton D. Lockcuff, P.E. City of Winter Springs February 21, 2008 Page 2 expenses or at the actual cost incurred. A summary of the standard rates used by PRMG for the billing of the other direct costs also included on Exhibit A. PRMG will bill monthly for the services rendered to the City which will be the sum of i) the direct labor costs incurred by PRMG personnel on the project based on the Direct Labor Billing Rates referenced herein; ii) the other direct labor rates as identified herein; and iii) the cost of subconsulting services, if any, required to perform any tasks, including additional services, as directed by the City. We appreciate the opportunity to provide utility consulting services on behalf of the City. If this Agreement is acceptable, please either i) acknowledge below the acceptance of the general terms and conditions outlined in this Agreement or ii) utilizing the information contained herein regarding the direct labor and standard cost rates and scope of services, develop a separate contract to be executed by both parties. If the City uses this agreement as the contract vehicle, please send us a copy of the executed agreement for our files and records. Again, thank you for the opportunity to provide utility consulting services on behalf of the City and we look forward to working with you in the near future. Public Resources Management Group, Inc. Very truly yours, ACCEPTED BY: City of Winter Springs, Florida J ian J. B giel i ~ ` ~ _ _ ssocia thorized Signa e " C 1 7~-1 r'y1 ~ rV~ G C/r Title ~-~S' -~ ~ Date JJB/dlm Attachments G:\DM\LUS\Pend'g Agents\Winter Spgs Ltr Agmt.doc EXHIBIT A PUBLIC RESOURCES MANAGEMENT GROUP, INC. SCHEDULE OF DIRECT LABOR HOURLY RATES AND COST RATES DIRECT HOURLY RATES Direct Labor Project Team Title Hourly Rates [*] Principal $160.00 Associate $125.00 Managing Consultant $115.00 Supervising Consultant $110.00 Senior Consultant $105.00 Rate Consultant $ 95.00 Consultant $ 85.00 Senior Rate Analyst $ 75.00 Rate Analyst $ 65.00 Analyst $ 55.00 Assistant Analyst $ 45.00 Administrative $ 48.00 [*] Direct labor hourly rates effective twelve months after the date of execution of the Agreement; rates will be adjusted by not more than [he net percentage change in the Consumer Price Index -Urban Consumers per annum (rounded to the nearest dollar) or as mutually agreed between parties for invoices rendered after each anniv ersary date of each year thereafter until project completion or lamination ofthe Agreement between the parties STANDARD COST RATES Expense Description Standard Rates [*] Mileage Allowance -Personal Car Use Only $0.485 per mile Reproduction (black and white) (in house) $0.05 per page Reproduction (color) (in house) $0.25 per page Reproduction (contracted) Actual Cost Computer Time Telephone Charges Delivery Charges Lodging/Other Travel Costs Meals Subconsultant Services Other Costs for Services Rendered $0.00 per hour Actual Cost Actual Cost Actual Cost Not to exceed per PRMG Employee: $8.00 -Breakfast $12.00 -Lunch $25.00 -Dinner Actual Cost plus 5.0% Actual Cost [*] Standard cost rates effective twelve months after the date of execution of the Agreement; where applicable, rates will be adjusted by not more than the net percentage change in the Consumer Price Index -Urban Consumers per annum (rounded to the nearest dollar) or as mutually agreed between parties for invoices rendered after each anniversary date of each year thereafter until project completion or termination of the Agreement between the parties. G:\DM\Ltrs\Pend'g Agmts\Winter Spgs Ltr Agmt.doc A-1 rrz ~x~~ CITY OF WINTER SPRINGS COMPREHENSIVE WATER AND WASTEWATER UTILITY RATE AND CHARGE STUDY SCOPE OF SERVICES EXHIBIT B The Scope of Services to be performed by the personnel of Public Resources Management Group, Inc. (PRMG) relative to this project is summarized below by task: 1. Data Request and Kickoff Meeting -PRMG will interview staff members, collect financial, customer, capital and planning documentation, and schedule field visits such that sufficient information can be compiled to perform the study. Information to be obtained will include population projections, persons per household statistics, land use and building information, capital improvement plans, inventory of existing facilities, development ordinances and policies, financial information (such as loan documents, debt service schedules, and fund balances), operating budgetary data, staffing requirements, customer billing and usage data, annual audits, monthly operating and financial reports, and other related information. Additional research and data analysis may be required by City staff based on data review and rate study needs. 2. Customer Usa e Anal. -PRMG will conduct an analysis of the customer usage or sales requirements based on detailed bill frequency and customer accounting information provided by the City. This task will include a review of historical customer and usage statistics (by class based on data availability), development of a five-year forecast, and providing assistance to the City in the development of a bill frequency computer run. PRMG will provide the parameters necessary for the preparation of the bill frequency analysis so that changes in rate structure (e.g., modification to water conservation rates) can be modeled and implemented. PRMG will review detailed customer statistics and billing histories. 3. Development of Revenue Requirements -PRMG will summarize the most recent historical fiscal years (up to three complete fiscal years) to review recent trends in utility expenditures, cost relationships, and rate covenant compliance. PRMG will prepare afive- year projection of the revenue requirements of the utility system using the Fiscal Year 2008 approved budget as the Test Year for financial projection purposes. This task will also include the development of a revenue model based on the City's existing rates and the customer forecast developed in Task 2 above, the evaluation of operating expenses, and assistance in the preparation of a funding plan for the City's capital improvement program. A review of revenues from other sources and the requirement for working capital reserves G:\DM\LtIS\Pend'g Agmts\Winter Spgs Ltr Agmt.doc B- I rrt ,~u~ EXHIBIT B will also be conducted. The net effect of this task is to develop the target expenditure and net funding requirements to be recovered from monthly water and sewer rates and user fees. Special emphasis will be made to identify the contractual costs associated with the operations of the utility by the City's approved contractor. 4. Capital Finance Analysis - As part of the development of the revenue requirements from rates, PRMG will assist the City in developing afive-year capital funding analysis. It is expected that this analysis will recognize both capital expenditures associated with growth or expansion as well as the performance of renewals and replacements of the system. As part of the study, PRMG will assist the City in identifying potential rate impacts as a result of designing and constructing utility system packing towers. If additional indebtedness is identified as a capital funding option, PRMG will review rate covenant requirements necessary for the issuance of long-term bonds. 5. Design of Monthly Water System User Rates and Charges -PRMG will classify the water system revenue requirements in order to recover costs appropriately from the various users of the system. This task will include the development of equivalent billing units recognizing cost differentials among rates to specific users, allocation of costs among the utility customers based on a cost analysis to promote equity, review of water conservation based rates while recognizing price elasticity adjustments, and the consideration of the phasing of rate structure changes, during the ten year financial forecast. For the purposes of this scope, it is expected that no more than two rate design scenarios will be performed based on data availability. 6. Design of Monthly Sewer System User Rates and Charges -PRMG will classify the sewer system revenue requirements in order to recover costs appropriately from the various users of the sewer system. This task will include the development of equivalent billing assets recognizing cost differentials among rates of specific customers, review of maximum billing threshold for residential accounts, allocation of costs among the utility customers based on a cost analysis to promote equity, and the consideration of the phasing of rate structure changes, during the five-year financial forecast. 7. Design Reclaimed Water Rates -The demand for reclaimed water has increased over the years and reuse water has become a commodity. In the past reclaimed water service was largely viewed as an effluent disposal mechanism rather than a water supply resource and as such, the costs for reclaimed water service were recovered through water and wastewater system rates. With the growing demand for reclaimed water for irrigation purposes, the City needs to review the cost allocation process used to allocate the costs of reclaimed water service among the utility systems and determine the proper level of cost to recover from reclaimed water rates. In addition to monthly rates for service, the project team will develop a proposed cost recovery method for providing reclaimed water in existing and G:\DM\Ltrs\Pend'g Agmts\Winter Spgs Ltr Agmtdoc B-2 PR .111: EXHIBIT B new neighborhoods anticipated to commence receiving reclaimed water service once such service is made available by the City. As part of this analysis, PRMG will assist the City in the development of acost-effective reclaimed water rate to provide such service to the Tuscawilla Golf Course that would be agreeable to both parties. 8. Rate Impact Analysis - A comparison of the potential effects of the rates developed during the above-referenced tasks will be performed to illustrate customer bill impacts. Additionally, comparisons of the recommended rates with other neighboring utilities will be prepared to assist the City in the evaluation of the proposed rates. 9. Develop Capital Recovery Charges (Impact Fees) -PRMG will develop capital recovery charges for the recovery of capital costs from new users of the water and sewer systems. This task will include a review of level of service standards used by the City, the identification of existing plant capacity allocable to growth, review of future capital projects which may change the cost recovery strategy of the City, and the design of the fees based on the cost of capacity relationships associated with the monthly user fees discussed above. 10. Design of Other Capital and Miscellaneous Charges -PRMG will review the current cost recovery requirements of the other capital charges, miscellaneous fees, and the installation fees, which are currently included in the City's rate ordinance. The review will be based on the current rate policies of the City and will address the recovery of both direct and indirect costs of providing service. 11. Master Metering Policy -The need for this policy is related to the Hacienda Village mobile home park where the City provides service through a master meter; however, based on historical circumstances, the City is responsible for maintenance of the facilities beyond the meter. Also, it is our understanding that the mobile home park has installed individual meters beyond the master meter for purposes of rebilling for water service. The problem with this situation is that the City only receives a monthly base facility charge for one master meter while incurring costs associated with multiple on-site facilities. We believe this problem can be addressed in a number of ways, which include: i) developing a policy forbidding master metering in the future and where individual meters have already been installed by the property owner, the City could purchase those facilities (or assume the ownership in the form of acontribution-in-aid-of-construction) as a condition of continued service, particularly in light of the on-site maintenance considerations; ii) discontinuing the maintenance of the on-site facilities beyond the master meter and treating Hacienda Village consistent with other master metered customers; and iii) developing an ERU-based rate that would collect base facility charges for the equivalent number of units beyond the master meter. Our rate design scope already contemplates consideration of an ERU-based rate for master meter accounts. G:\DM\Ltrs\Pend'g Agtnts\W inter Spgs Ltr Agmtdoc }3-3 1 R' .NI' EXHIBIT B 12. Review of Retail Rate Revenue Adequacy in Area of City Provided Wholesale Service by Seminole County -PRMG will review the adequacy of City retail rates in recovery of the costs of providing water and wastewater in an area of the City provided wholesale service by Seminole County. PRMG will perform an analysis of such revenue adequacy and make recommendations to the City with respect to implementing rate schedules adequate to recover total costs incurred by the City. 13. Prepare Comprehensive Water and Wastewater Utility Rate and Charge Report -Based on the results of the above-referenced tasks, PRMG will prepare a draft water and sewer rate study for the City's review and presentation to the Board of City Commissioners at a public hearing. Prior to submittal of the draft report to the Board, comments will be received from City staff and incorporated in the report. After presentation to all parties, ten (10) copies of the comprehensive report will be issued. 14. Review of Rate Ordinance -PRMG will review the revised rate ordinance prepared by the City Attorney or staff to provide consistency to the recommendations reflected in the Comprehensive Water and Wastewater Rate Study report. 15. Client Meetings -Based on the scope of work discussed above, PRMG will attend meetings as necessary with the utility and other parties in order to prosecute and present the water and sewer rate study. DELIVERY SCHEDULE After being given notification to proceed by the County, PRMG will complete the study for presentation by September 1, 2008. This assumes that the City will provide the required data necessary to PRMG in sufficient time to perform the rate evaluation on a timely basis. ADDITIONAL SERVICES During the course of the study, the City may request additional services from PRMG. Such services will not be conducted until authorized by the City as mutually agreed between the City and PRMG. The City will be billed for such additional services based on the hourly rate schedule of PRMG members as shown in this Agreement or some other basis as mutually agreed between the City and the Project Team. Although no additional services are anticipated for this engagement, examples of additional services may include, but not be limited to, the following: Compiling detailed customer billing statistics due to lack of computer billing program capability. G:\DM\Ltrs\Pend'g Agmts\W inter SP6+s Ltr Agmt.doc B-4 rrz ,~~c~ EXHIBIT B 2. The receipt of inaccurate or incomplete data from City which was relied upon the analysis of rates and which must be revised due to such inaccuracies or must be re-evaluated due to the lack of data. 3. Delays in the project schedule which may have impacts on analyses performed which would affect the budget for the scope of services reflected herein. 4. Preparation of a project feasibility report in support of the issuance of utility revenue bonds. (Remainder of page intentionally left blank) G:\DM\Ltrs\Pend'g Agmts\W inter Spgs Ltr Agmt.doc B-5 Exhibit C City of Winter Springs, Florida Preliminary Job Cost Estimate for Water and Wastewater System Rate Analysis Public Resources Management Group, Inc. Line Srnior Rate Rate No. Activity Principal Associate Consultant Consultant Analyst Administrative Totals Project Billing Rates ($ per hour) $160.00 $125.00 $105.00 $95.00 $65.00 $48.00 Development of Revenue Requirements I Data AcquisitioNReview/Kick-off Meeting (1 Meeting) 0 4 0 0 2 Idrntification of Fiscal Policies and Objectives 2 2 0 0 3 Compilation of Historical Customer Statistics 0 2 0 0 4 Development of Customer Usage Forecast/Bill Frequency 0 4 4 0 5 Developmrnt of Revenue Projections from Existing Rates 0 4 0 12 6 Functionalization of Utility Operating Budget 0 4 0 0 7 Development of Operating Expense Projections 2 4 0 12 6 Capital Improvement and Funding Analysis 2 8 6 2 9 Other Revrnue Requirement Identification 0 2 4 4 10 Development of Net Revenue Requirements 0 2 4 4 I I Compliance Analysis 0 2 4 4 12 Meetings with Staff (I Meeting) 0 4 0 4 13 Total Hours 6 42 22 42 14 Direct Labor Cost $960 $5,250 $2,310 $3,990 Design of Retail Water, Wastewater and Reuse Rates 15 Development of Equivalrnt Billing Units 0 4 8 8 16 Allocate Net Revrnue Requirements 0 4 4 8 17 Design Retail Water Rates 2 6 8 0 18 Design Retail Sewer Rates 2 6 8 0 19 Design of Reclaimed Water Fees 2 8 8 4 20 Design of Impact Fees 2 8 16 8 21 Design of Miscellaneous Charges 0 8 16 8 22 Design of Other Miscellaneous Charges 0 16 24 24 23 Retail Rate Impact Comparison Analysis 0 0 0 2 24 Retail Rate Comparisons with Other Utilities 0 0 I 2 25 Meetings with Staff(1 Meeting) 0 4 0 0 26 Total Hours 8 64 93 64 27 Drect Labor Cost $1,280 $8,000 $9,765 $6,080 Water Audit Preparation 26 Prepare Water Audit 0 2 0 6 29 Total Hours 0 2 0 6 30 Direct Labor Cost $0 $250 $0 $570 Master Metered Customer Cost Analysis 31 Prepare Cost Analysis of Hacirnda Village Service Area 0 6 4 0 32 Individual Meter Customer Analysis 0 6 0 0 33 Total Phase VII Activities -Hours 0 12 4 0 34 D'vect Labor Cost $0 $1,500 $420 $0 Retail Rate Analysis of Wholesale Service Area 0 2 0 0 16 0 16 0 0 0 16 0 0 0 0 0 0 0 0 0 0 0 0 2 48 4 $3,120 $192 0 0 0 0 0 0 0 0 8 12 0 0 0 0 0 0 0 0 0 0 0 20 $1,300 6 4 18 24 16 20 IS 18 10 10 10 164 $15,822 20 I6 16 16 22 34 32 64 10 IS 4 253 $192 $26,617 0 0 0 0 $0 $0 4 2 4 0 8 2 $520 $96 35 Allocate Net Revenue Requirements 0 4 4 4 0 0 36 Design Utility Rates 0 6 4 2 6 0 37 Total Phase VII Activities -Hours 0 10 8 6 6 0 38 Drect Labor Cost $0 $1,250 $840 $570 $390 $0 Public Information and Presentations 8 8 $820 16 10 26 $2,536 I2 18 30 $3,050 39 Repon Preparation 2 24 16 0 0 30 72 40 Workshop/Public Hearings (Attend Two [2] Hearings) 12 12 6 0 0 4 36 41 Review Rate Resolution 0 4 0 0 0 0 4 42 Total Hours 14 40 24 0 0 34 112 43 Direct Labor Cost $2,240 $5,000 $2,520 $0 $0 $1,632 $11,392 44 Total Activity Hours -All Tasks 28 170 IS I I I6 82 44 593 45 Total Direct Labor Cost-AIITasks $4,480 $21,250 $IS,SSS $11,210 $5,330 $2,112 $60,237 46 Average Hourly Billing Rate $0 Allowance for Indirect Costs 47 Delivery Charges (2 Express Mail Deliveries (w, $25.00) $SO 48 Miscellaneous (Telephone, Fax, Copy, etc.) 113 49 Total Allowance for Indirect Costs 163 50 Total Estimated Cosl of Service Study Project Cost (') $60,400 (') Amount shown inclusive of all computer modeling for ultimate submittal to the County for subsequent sensitivity analyses.