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Home My WebLink AboutAgenda Report - December 16, 2015 C-13TM CITY OF LODI COUNCIL COMMUNICATION AGENDA ITEM &13 AGENDA TITLE: Adopt Resolution Authorizing City Manager to Execute Amendment No. 1 to Task Order No. 3 with The Reed Group, Inc., of Sacramento, for Water Utility Financial Planning and Rate Setting Assistance ($20,000) MEETING DATE: December 16, 2015 PREPARED BY: Interim Public Works Director RECOMMENDED ACTION Adopt resolution authorizing City Manager to execute Amendment No. 1 to Task Order No. 3 with The Reed Group, Inc., of Sacramento, for water utility financial planning and rate setting assistance, in the amount of $20,000. BACKGROUND INFORMATION: On October 6, 2010, City Council approved Task Order No. 3, with The Reed Group, Inc., for water utility financial planning and rate setting services, in the amount of $75,000. Task Order No. 3 has been used to assist staff through the course of the water meter program and the conversion from flat to usage -based water billings. Amendment No. 1 to Task Order No. 3 will provide additional funds for continued assistance in financial planning, cost of service, and rate setting. Other areas of assistance within this amendment include evaluation of water usage characteristics and the impact of state mandated water use reductions, assistance with utility billing issues that arise with the transition to the new billing system, assisting staff with assessing the water utility's financial condition and ability to meet capital improvement needs, and debt service obligations. These services for Amendment No. 1 are provided on a time -and -material basis. FISCAL IMPACT: Funds are included yearly in the Water Utility budget. FUNDING AVAILABLE: Water Administration Operating (56052001) CES/RAY/tdb Attachment Jordan Ayers Deputy City Manager/Internal Services Director Charles E. Swimley, Jr. Interim Public Works Director APPROVED: p - n Schwa K:\WP\COUNCIL\2015\CReedGroupAmendT03 docReedGroupAmendT03.doc City Manager 12/1/2015 AMENDMENT NO. 1 THE REED GROUP TASK ORDER NO. 3 — WATER UTILITY FINANCIAL PLANNING AND RATE SETTING ASSISTANCE THIS AMENDMENT NO. 1 TO PROFESSIONAL SERVICES AGREEMENT, TASK ORDER NO. 3, made and entered this day of December, 2015, by and between the CITY OF LODI, a municipal corporation (hereinafter "CITY"), and THE REED GROUP (hereinafter "CONTRACTOR"). WITNESSETH: 1. WHEREAS, CONTRACTOR and CITY entered into a Professional Services Agreement, Task Order no. 3, on October 18, 2010, as set forth in Exhibit 1; and 2. WHEREAS, CITY requested to amend said Agreement to expand the scope and fees as set forth in Exhibit 2; and 3. WHEREAS, CITY requested to increase the cost $20,000; and 4. WHEREAS, CONTRACTOR agrees to said amendment. NOW, THEREFORE, the parties agree to amend the scope of services and fees as set forth in the Exhibit 2, and increase the cost of services $20,000. IN WITNESS WHEREOF, CITY and CONTRACTOR have executed this Amendment No. 1 on , 2015. CITY OF LODI, a municipal corporation THE REED GROUP Hereinabove called "CITY" Hereinabove called "CONTRACTOR" STEPHEN SCHWABAUER ROBERT REED City Manager President Attest: JENNIFER M. FERRAIOLO, City Clerk Approved as to Form: JANICE D. MAGDICH #.,/ City Attorney Task Order No. 3 City of Lodi if Water Utility Financial Planning, Rate Setting Services The Reed Group, Inc. Exhibit 1 RECEIVED OCT 20 2010 CITY OF LODI PUBLIC WORKS DEPARTMENT In accordance with the Task Order Agreement for Professional Services between the City of Lodi (Client) and The Reed Group, .inc, (Consultant), Consultant is authorizecd.to . ; complete the work scope defined In the T,esic Order according to the schedule and ,;,•, ,. ;pi budget defined herein. The mutually agreeable terms and conditions for the above referenced agreement shall prevail. WORK SCOPE The scope Includes financial plan development, wastewater rate calculations, wastewater capacity charge calculations, project management/coordination, and presentationslirnplementation tasks in accordance with the attached proposal dated September 13, 2010. BUDGET The costs for Consultants services as defined herein shall not exceed $75,000. COMPENSATION Compensation shall be in accordance with the provisions of the Task Order Agreement between Client and Consultant and the billing rate schedule contained in the attached letter proposal. pCHEPULE The work will be completed in accordance with the attached letter proposal. KANI LMUTYJRAT&SlwWM1R•sdffekOrtNr9.0x 1011402010 'f. THE REED GROUP Signature Robert Reed Printed Name CITY OF LODI Signature ,:75 President interim City Mananer Tide Title C4 t� Date Date - City Clerk. APPROVED AS TO FORM: D. 5 TRtigN $ ' TIWA : A R City Warn y K: itir1UTYftimiew_VuwanerarkOroar9.doo 10/142010 'TFIE 'REnv GROU•P,'1NC'.'' September 13, 2010 Wally Sandelin City of Lodi 221 West Pine Street P.O. Box 3006 Lodi, CA 952414910 Subject: Task Order No. 3 - Water Utility Financial Planning and Rate Setting Assistance Dear Wally, We are pleased to offer this proposal to perform additional assistance with respect to the City's water utility in the areas of financial planning and rate setting. In response to your recent e-mail message, below is a list of the areas of additional assistance requested by the City. • Financial analyses related to water treatment plant financing • Five years of monitoring the water rate revenue stream, including the transition to usage -based water rates • Cost of service and rate design analysis to establish equity within the non- residential water rate structure, and otherwise meet the City's rate setting objectives • Assistance in evaluating potential water meter installation charges and associated revenues • Preparation of quarterly water model updated based on cost/revenue experience and changes in operations and/or capital improvement plans within the water utility • Other services related to the water utility, as requested by the City. It is proposed that these services be performed on a time and expense basis, subject to a not -to -exceed budget limit. Because of the nature of services being requested, as well as the time period to be covered, it is not possible to provide a fine estimate of the total costs that might be involved. My best guess is that costs may range from $10,000 to $25,000 annually. I suggest that Task Order No. 3 include a budget of $75,000, which should be sufficient to get us well into the five-year period requested. WALLY SANDELIN SEPTEMBER 13,2010 PAGE 2 My 2010 hourly billing rate is $225 and it is subject -to change each January. In 2011, I anticipate the rate will increase to $240 per. input, gther InFpgeses related to my work for the City are nominaL As you know, it is our practice to bill clients no more frequently than monthly for actual time and expenses incurred since the prior invoice. Payment is due within 30 days. If you have any questions regarding this Task Order No. 3, please call me at t216444- 9622.. I appreciate being of continued service to the City. Sincerely, cp_ Robert Reed The Reed Group, Inc. L • 1 0.• r s't 1• • .1, • :;)!“?-11;1 I !1.1, • 113 • '1.01 . ; 11.1 : )! IJft',trill • ?f, . • ". !)' : "Y $.; • )1,,---!":•!,, :rA • "..; •••,q •• ;it '3s5n • tC. 10 1?',; • ' ! - '.„fl..";i• THE REED GROUP, INC. November 18, 2015 Charles Swimley City of Lodi 221 West Pine Street P.O. Box 3006 Lodi, CA 95241-1910 Subject Amendment to Task Order No. 3 - Water Utility Financial Planning and Rate Setting Assistance Exhibit 2 Dear Charlie, As you know, in August 2008 the City of Lodi and The Reed Group, Inc. entered into a Task Order Agreement to provide services related to the City's water and wastewater financial plans and user rates. Since that time we have provided a variety of services related to both water and wastewater. At present, the budget for Task Order No. 3, related to water financial planning and user rates, is nearing its limit. Current work to update the City's water rates will be completed under the existing budget authorization, however any additional assistance in 2016 and beyond will require additional funding. Based on recent discussions, at this time I respectfully request an amendment to Task Order No. 3 to support additional assistance with respect to the City's water utility in the areas of financial planning, cost of service, and rate setting. Below is a list of the areas of continued assistance suggested for the City. • Continue to assist City staff with the evaluation of water usage characteristics including the impact of state -mandated water use reductions and the rebound in water demand once drought conditions end • Continue to assist City staff with assessing the water utility's financial condition and ability to meet capital improvement needs and debt service obligations • Assist staff in periodically updating and evaluating the multi-year financial plan for the wastewater utility; at some point a comprehensive update (and re- creation) of the financial planning model will be warranted • Assist staff with utility billing issues that may arise with the transition to the new billing system • Other services related to the water utility, as requested by the City. 17( CHARLES SWIMLEY NOVEMBER 18, 2015 PAGE 2 These services would continue to be performed on a time and expense basis, subject to a not -to -exceed budget limit. Because of the ongoing nature of services being provided, it is not possible to provide a firm estimate of the total costs that might be involved. My best guess is that costs may range from $10,000 to $20,000 annually. At your suggestion, it is requested that Task Order No. 3 be amended to include additional $20,000. My 2016 hourly billing rate will remain unchanged at $275 although it is subject to change each January. Other expenses related to my work for the City are nominal. As you know, it is our practice to bill clients no more frequently than monthly for actual time and expenses incurred since the prior invoice. Payment is due within 30 days. If you have any questions regarding this amendment to Task Order No. 3, please call me at (916) 444-9622. I appreciate being of continued service to the City. Sincerely, Robert Reed The Reed Group, Inc. RESOLUTION NO. 2015-225 A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING THE CITY MANAGER TO EXECUTE AMENDMENT NO. 1 TO TASK ORDER NO. 3 WITH THE REED GROUP, OF SACRAMENTO, FOR WATER UTILITY FINANCIAL PLANNING AND RATE SETTING ASSISTANCE WHEREAS, on October 6, 2010, the City Council approved Task Order No. 3, with The Reed Group, Inc., for water utility financial planning and rate setting services, in the amount of $75,000; and WHEREAS, Task Order No. 3 has been used to assist staff through the course of the water meter program and the conversion from flat to usage -based water billings; and WHEREAS, Amendment No. 1 to Task Order No. 3 will provide additional funds for continued assistance in financial planning, cost of service, and rate setting; and WHEREAS, staff recommends executing Amendment No. 1 to Task Order No. 3 with The Reed Group, Inc., of Sacramento, for utility financial planning and rate setting assistance. NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby authorize the City Manager to execute Amendment No. 1 to Task Order No. 3 with The Reed Group, of Sacramento, California, for utility financial planning and rate setting assistance, in an amount not to exceed $20,000. Dated: December 16, 2015 hereby certify that Resolution No. 2015-225 was passed and adopted by the City Council of the City of Lodi in a regular meeting held December 16, 2015, by the following vote: AYES: COUNCIL MEMBERS — Johnson, Kuehne, Nakanishi, and Mayor Chandler NOES: COUNCIL MEMBERS — None ABSENT: COUNCIL MEMBERS — Mounce ABSTAIN: COUNCIL MEMBERS — None J NIFER . FERRAIOLO City Clerk 2015-225