Memorandum

City of Lawrence

Utilities Department

TO:	David L. Corliss - City Manager Casey Toomay - Assistant City Manager Diane Stoddard - Assistant City Manager Brandon McGuire- Assistant to the City Manager
FROM:	Mike Lawless – Deputy Director of Utilities
CC:	Dave Wagner - Director of Utilities Bryan Kidney – Director of Finance Beth Krishtalka - Assistant to Director
Date:	June 15, 2015
RE:	June 23, 2015 Agenda Item – Authorize the City Manager to Execute a Professional Services Agreement with Raftelis Financial Consultants, Inc.

Background

The Lawrence Department of Utilities currently uses a computer model to help determine the appropriate cost of service rates for water and wastewater services. The model was developed in conjunction with the 2004 Water and Wastewater Rate Study. Each year staff has updated the financial and capital project information in the rate model to determine funding needs. However, the model has not had a thorough review and update after the completion of the 2012 Master Plan. Due to the complexity and detail associated with the rate model, there are many aspects of the model that can change as customer use characteristics change. In addition, a thorough review of the Department’s funding plan by a qualified financial consultant and recommendations for financial strategies are prudent for sustaining the current Capital Improvement Plan.

Project History

The City Commission approved advertising of RFP R1417 for rate model and financial services at the December 16, 2014 City Commission Meeting. Five firms submitted proposals including Black & Veatch, Burns & McDonnell, Raftelis Financial Consultants, Inc., Springsted Incorporated, and Burton and Associates. A review panel consisting of Utilities and Finance Department staff reviewed and evaluated each of the proposals. Project knowledge and approach, firm qualifications and experience, and key project staff and their experience were used to evaluate the proposals. Staff contacted references and other clients and received positive reports. The review panel unanimously chose Raftelis Financial Consultants as the best qualified and experienced to meet the needs of the Department.

On March 31, 2015, the City Commission authorized staff to negotiate a professional services agreement with the most qualified respondent Raftelis Financial Consultants, Inc.

Current Status

Staff has negotiated an appropriate scope and fee for project. The scope of work includes:

· Review of existing financial condition, rates and the rate model

· Determination of revenue requirements and development of a financial plan

· Cost of service analysis

· Rate design

· Development of financial and rate models

· Development of system development charges

The new rate model will provide the ability to compare multiple planning scenarios as well as multiple rate structures. Completion of the project will take four to five months.

Funding

The funding for this item is included in the Department of Utilities 2015 Operations and Maintenance Budget.

Action

Authorize the City Manager to Execute a Professional Services Agreement in the amount of $99,460 with Raftelis Financial Consultants, Inc. for the Water and Sewer Rate Model Update, Project UT1429.