TO: LINDA REICH, CITY MANAGER
FROM: HYE JIN LEE, DIRECTOR OF PUBLIC WORKS
SUBJECT
title
Professional Services Agreements - Raftelis Financial Consultants, Inc.
end
RECOMMENDATION
recommendation
1) Approve a Professional Services Agreement with Raftelis Financial Consultants, Inc., a North Carolina corporation, for a Domestic Water, Recycled Water, and Sewer Rate Study in an amount not to exceed $95,755; 2) appropriate $52,347.50 to the Sewer Fund (Fund 530); 3) approve a Professional Services Agreement with Raftelis Financial Consultants, Inc., a North Carolina corporation, for a Storm Drain Utility Rate Study in an amount not to exceed $153,421; 4) appropriate $153,421 to the Storm Drain Fund (Fund 540); and 5) authorize the City Manager to execute all necessary documents on behalf of the City.
body
FISCAL IMPACT
Requires appropriations from the following two funds: the Storm Drain Fund (Fund 540) for $153,421 and the Sewer Fund (Fund 530) for $52,347.50. Sufficient funds are available in both fund balances to award this contract.
|
Water, Sewer, & Storm Drain Funding Allocation |
|
Fund |
Additional Appropriation |
Cost |
|
520 - Water Fund |
$0 |
$43,407.50 |
|
530 - Sewer Fund |
$52,347.50 |
$52,347.50 |
|
540 - Storm Drain Fund |
$153,421.00 |
$153,421.00 |
|
Total Cost |
$249,176.00 |
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above further the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
• Financial Stability
• Responsible Long-Range Planning
• Exemplary Leadership
|
Revenue: |
Expenditure: 5207300-43650, 5307320-43650, 5407350-43650 |
|
Transfer In: |
Transfer Out: |
BACKGROUND
In October 2022, the City of Chino entered into an agreement with Raftelis Financial Consultants, Inc. to conduct utility rate studies for water, wastewater (sewer collection), and solid waste and recycling services. Although the agreement was amended twice to extend its term, initial efforts focused on the solid waste and recycling components. During the term of the agreement, the City also experienced organizational and leadership transitions, and the water and sewer components of the rate study were not fully completed. The original contract from 2022 was managed by Finance Department.
In addition, recycled water and storm drain services were not comprehensively evaluated as part of the original 2022 utility rate study effort. While the City provides recycled water service to support irrigation, conservation, and long-term water supply reliability, the City has never formally established recycled water rates based on a cost-of-service methodology. Recycled water costs have historically been charged only based on Inland Empire Utility Agency’s volumetric charges and domestic water meter rates. Staff recommend performing a comprehensive recycled water rate study in compliance with the Prop. 218 costs of service rates including City’s staff time, maintenance costs and future Capital Improvement project investment costs. The recycled water system is more than 30 years old and is approaching effective service life of PVC pipes and other appurtenances.
Similarly, the City’s storm drain fee structure has not been updated since the 1990s. Since that time, regulatory requirements, maintenance standards, and capital infrastructure needs related to stormwater management have increased significantly. The City’s storm drain system now supports compliance with State and Regional water quality regulations, flood control, system rehabilitation, and long-term asset management; however, the existing fee structure does not reflect current service levels, operational costs, or long-term capital funding needs.
To address these deficiencies and ensure the City’s utility rates are comprehensive, equitable, and aligned with current operations, staff recommend entering into two new professional services agreements with Raftelis Financial Consultants, Inc.: (1) a storm drain rate analysis, and (2) domestic water, recycled water, and sewer rate studies. The proposed agreements build upon prior work and expand the scope to address both incomplete elements of the original effort and newly identified needs. The analyses will evaluate operating and maintenance costs, capital improvement needs, reserve funding, customer classifications, and rate design alternatives, and will provide a defensible, Proposition 218-compliant framework for future rate adjustments.
ISSUES & ANALYSIS
Staff recommend approval of two sole source professional services agreements with Raftelis Financial Consultants, Inc. based on the firm’s prior engagement with the City and its familiarity with the City’s utility systems, financial data, and existing rate structures.
Raftelis was originally retained in October 2022 to conduct utility rate studies for water, wastewater, and solid waste and recycling services. While portions of that work were completed, the water and sewer components were not fully finalized, and additional utility areas, specifically recycled water and storm drain services, were subsequently identified as requiring evaluation. The proposed agreements build upon Raftelis’ prior work and expand the scope to address both incomplete elements of the original effort and newly identified needs through: (1) a storm drain rate analysis, and (2) domestic water, recycled water, and sewer rate studies.
Retaining a different consultant for either agreement would require duplicative data collection, revalidation of assumptions, and redevelopment of cost-of-service models, resulting in unnecessary additional costs, inefficiencies, and potential schedule delays. Utilizing the same consultant for both agreements ensures methodological consistency across utility rate structures and allows the City to leverage existing datasets, institutional knowledge, and prior analyses.
Raftelis’ specialized expertise in public-sector utility rate studies and Proposition 218-compliant cost-of-service methodologies, combined with its familiarity with the City’s operations, positions the firm to complete both efforts in a consistent, efficient, and cost-effective manner. Awarding the agreements on a sole source basis avoids duplication of effort, reduces costs passed on to ratepayers, and allows the City to complete the utility rate studies in a timely manner that serves the public interest. As a result, staff determines that awarding both agreements on a sole source basis is in the best interest of the City.
Therefore, it is Staff’s recommendation that the City Council approve two sole source professional services agreements with Raftelis Financial Consultants, Inc., in a combined amount not to exceed $249,176, to complete the City’s utility rate studies.
Attachment: Agreement - Storm Drain Study
Agreement - Sewer & Water Study