Item #05 Approval of Increase to Public Resources Management Group Budget for Revenue Sufficiency Model Study •
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AGENDA ITEM COVER SHEET
Meeting Date: November 2, 2010
Item # 5
Reviewed By:
Contact Name: Charles K. Smith, P.E _ Department Director: Charles K. Smi
Contact Number: 407 - 905 -3159 City Manager: Robert Frank ' ",�J7'
Subject: Increase to Public Resources Management Group Budget for Revenue Sufficiency
Model Study
Background Summary:
On January 16, 2007, Commission approved the awarding of RFQ # 0702 to Public Resources Management
Group (PRMG) for the Utilities Revenue and Expenditure Sufficiency Study. The original approval included a
study funding authorization of $50,000. The study developed a revenue /expense model that includes but is not
limited to: past expenditures, present and future volumetric usages, historical and planned maintenance, existing
and future debt encumbrances, and impacts resulting from the Capital Improvement Plan. When completed, the
study will provide a timeline for predicted revenues /anticipated expenses and annual funding levels for the
department's R &R (repair and replacement) program and provides future bonding support.
Since the original development of the study, staff has compiled the Utilities Department budget in more detail,
which includes ten (10) year schedules for: maintenance programs for lift stations, wastewater, reclaim and water
facilities, staffing levels, and vehicle /equipment replacement schedules. The economy has also had significant
changes since the development of the original study which have affected population projections, and this has
caused a revenue shortfall due to the reduction in the number of connection fees collected and the reduction in
potable water consumption. In addition, the success of the City's reclaim systemexpansion has decreased
potable water and sanitary sewer revenues but has been slightly mitigated by an increase reclaim revenues. The
update of the study will take the above into account and shall address the current Capital Improvement Plan and
provide discussion of funding opportunities.
Issue:
Should Commission increase the original approved project budget and also authorize the City Manger to execute a
work order for the Revenue Sufficiency Model Study Update with Public Resources Management Group?
Recommendations
Motion to authorize City Manager to execute a work order with Public Resource Management Group to complete
the Revenue Sufficiency Model Update in the amount of $30,000; and increase the original Commission - approved
(January 16, 2007) contractual project budget from $50,000 to $65,000.
Attachments:
Public Resources Management Group, Inc's Revenue Sufficiency Model Update Scope of Services.
Financial Impact:
The original authorization for PRMG in Fiscal Year 2006/2007 was for $35,000 with approval for up to $50,000.
$1,046.07 is remaining from the initial $35,000 purchase order and in Fiscal Year 2009/2010 $15,000 was
approved but went unspent. This request will utilize the unspent 2009/2010 funds which were carried forward and
also include $15,000 from "Miscellaneous Professional Services" (401- 531 -00 -3128) included within the
2010/2011 Fiscal Year budget for a total work order amount of $30,000.
Type of Item: (please mark with an "x")
Public Hearing For Clerk's Dept Use:
Ordinance First Reading ✓ Consent Agenda
Ordinance Second Reading Public Hearing
Resolution Regular Agenda
X Commission Approval
Discussion & Direction
✓ Original Document/Contract Attached for Execution by City Clerk
v Original Document/Contract Held by Department for Execution
Reviewed by City Attorney N/A
Reviewed by Finance Dept. did¢}' N/A
Reviewed by ( ) N/A
Ill
1
' Public Resources Management Group, Inc.
AI Utility, Rate, Financial and Management Consultants
October 8, 2010
Mr. Charles Smith
Director of Utilities
City of Ocoee — Utility Division
1800 A.D. Mims Road
Ocoee, FL 34761
Subject: Revenue Sufficiency Model Update
Dear Mr. Smith:
On behalf of the City of Ocoee (the "City ") you have recently requested that Public Resources
Management Group, Inc. (PRMG) provide a proposal to the City for a revenue sufficiency model
update. PRMG has previously been retained to provide a Utility Revenue Sufficiency Analysis
pursuant to a professional services agreement dated February 2, 2007 (the "February 2007
Agreement "). PRMG has completed the development of the initial Utility Revenue Sufficiency
Analysis and presented these initial results to City staff on September 29, 2009. Recently,
PRMG personnel met with the City and its consultants on September 28, 2010 to discuss the
refunding of outstanding City utility debt and the funding of future capital improvements.
During this meeting and subsequent conversations, PRMG proposes the following:
Phase 1: Update the previous projections and alternatives completed from the prior year
with a presentation to City staff.
Phase 2: Provide minor revisions to Phase 1 based on the results of the staff presentation,
and prepare briefing documentation and presentation to the City Commission regarding
utility capital financing options.
Depending on the Commission direction at the conclusion of Phase 2, the City may require a
utility rate study to design rates to fund the capital plan and ongoing utility needs.
The proposed not -to- exceed budget is $30,000 based on the following breakdown:
Phase 1 $20,000
Phase 2 $10,000
Total $30,000
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341 NORTH MAITLAND AVENUE - SUITE 300 - MAITLAND, FL 32751
TELEPHONE: (407) 628 -2600 • FAX: (407) 628 -2610 • EMAIL: PRMG@PRMGinc.com
Mr. Charles Smith
City of Ocoee — Utility Division
October 8, 2010
Page 2
PROJECT TEAM AND BILLING RATES
With respect to the performance of this engagement, Tony Hairston will be the project manager
and primary contact with the City, and will be assisted by Felipe Salcedo. Other analysts and
administrative personnel will be utilized during the course of the engagement as needed.
Attachment A summarizes the direct labor hourly billing rates relative to this engagement.
SCOPE OF SERVICES
A detailed scope of services relative to this project is included herein as Attachment B.
COMPENSATION AND BILLING
Based on the direct hourly labor billing rates as identified in Attachment A, the Scope of Services
summarized in Attachment B (both of which are consistent with the February 2007 Agreement),
the not -to- exceed budget is $30,000 for the project, based on the two phases outlined at the
beginning of this letter. The project budget amount includes the direct cost of personnel
anticipated to be assigned to the project as well as any other direct costs such as travel, telephone,
and copying, printing, and shipping charges based on the Standard Costs or reimbursement
schedule as reflected on Attachment A. It is proposed that PRMG will bill monthly for services
relative to this engagement based on the hourly amount of time spent by the project team
members, the other direct costs incurred, and the pass- through of any subconsulting costs that
may be required for the engagement. No additional services above the cost estimate will be
performed without the prior written authorization of the City.
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Mr. Charles Smith
City of Ocoee — Utility Division
October 8, 2010
Page 3
TERMS AND CONDITIONS
Standard terms and conditions, that are made part of this Agreement, are set forth in
Attachment C.
We are providing two copies of this agreement for your approval. If this agreement is acceptable
to you, please execute both copies and return one to us. The other copy is for your records. We
appreciate the opportunity to continue providing utility rate consulting services to the City of
Ocoee.
Very truly yours, ACCEPTED BY:
Public Resources Management Group, Inc. City of Ocoee, Florida
Henry L. Thomas Name
Vice President and Principal
Title Date
Attachments
ATTEST:
FOR USE AND RELIANCE ONLY BY
THE CITY OF OCOEE, FLORIDA
APPROVED AS TO FORM AND LEGALITY ON
this day of , 2010. Beth Eikenberry, City Clerk
FOLEY & LARDNER LLP (SEAL)
By:
City Attorney
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ATTACHMENT A
CITY OF OCOEE, FLORIDA
UTILITY REVENUE MODEL UPDATE
SCHEDULE OF DIRECT LABOR HOURLY RATES AND STANDARD COSTS
• DIRECT HOURLY RATES
Direct Labor
Project Team Title Hourly Rates [ *]
Principal $150.00
Associate $125.00
Managing Consultant $110.00
Supervising Consultant $100.00
Senior Consultant $ 90.00
Rate Consultant $ 80.00
Consultant $ 70.00
Rate Analyst $ 60.00
Analyst $ 45.00
Assistant Analyst $ 35.00
Administrative $ 45.00
[ *] Direct labor hourly rates effective to December 31, 2010; rates will be
adjusted by not more than five percent (5 %) per annum (rounded to the
nearest dollar) or as mutually agreed between parties for invoices
rendered after October 1 of each year thereafter until project completion
or termination of the agreement.
STANDARD COST RATES
Expense Description Standard Rates [ *]
Mileage Allowance — Personal Car Use Only $0.420 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
$12.00 — Lunch
$25.00 — Dinner
Subconsultant Services Actual Cost plus 5.0%
Other Costs for Services Rendered Actual Cost
[ *] Standard cost rates effective to December 31, 2010; rates will be adjusted by not more
than five percent (5 %) per annum (rounded to the nearest dollar) or as mutually agreed
between parties for invoices rendered after October 1 of each year thereafter until
project completion or termination of the agreement.
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ATTACHMENT B
CITY OF OCOEE, FLORIDA
UTILITY REVENUE MODEL UPDATE
SCOPE OF SERVICES
The following represents the scope of services to be performed by Public Resources Management
Group, Inc. (PRMG) as it relates to the performance of a utility revenue sufficiency analysis
update for the City of Ocoee, Florida (the "City "). The tasks included in the scope of services are
described below:
Phase 1, Task 1 — Kick -off Meeting /Data Acquisition: This task includes a kick -off meeting or
teleconference in order to coordinate the project update, recent events, scheduling, and data
collection. This task includes the preparation of a data request for updated data and information.
Phase 1, Task 2 — Update of Customer and Sales Forecast: This phase includes the update of
the water, wastewater, and reclaimed water customers and sales projections.
Phase 1, Task 3 — Review of Capital Improvement Program and Capital Funding Analysis: This
phase involves an update of the City's capital improvement program and an analysis to identify
all sources of funds applicable to the capital improvement program.
Phase 1, Task 4 — Revenue Requirements Analysis (Financial Forecast Model): This phase
estimates the amount of revenues to be recovered from utility system rates. Specifically, this
component of the study will include an estimate of net revenue requirements of each utility
system. A five -year financial forecast will be the basis for the development of the net revenue
requirements from rates, capital improvement funding, and cost recovery strategies. The
following are the major subtasks anticipated within this task:
• Projection of Utility Operating Expenditures
• Projection of Miscellaneous Utility Revenue
• Identification of Other Utility Funding Requirements
— Funding of Reserves
— General Fund Transfers
— Reclaimed Water Cost Allocation
— Other Costs
• Projection of Water Revenue Sufficiency
• Projection of Wastewater Revenue Sufficiency
• Debt Service Coverage Analysis
Phase 1, Task 5 — Preparation of the Revenue Sufficiency Analysis: The results of the various
study phases will be summarized in a staff level final revenue sufficiency analysis, and such
analysis will be presented to staff during a scheduled meeting.
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Phase 2, Task 1 — Minor Forecast Adjustments: Based on the results of the staff presentation,
minor adjustments to the financial forecast may be required. This task provides for minor
adjustment such as adjustments to escalation factors, minor changes in the capital costs or timing,
or clarification of certain data inputs. This task does not include the inclusion of additional
options or scenarios.
Phase 2, Task 2 — Development of Draft Report and Presentation Materials: The analytical
results will be summarized in a draft letter report and briefing document to be submitted to City
staff. A final report and briefing document will be provided prior to the first Commission
workshop.
Phase 2, Task 3 — Presentation to City Commission: The results will be presented to the
Commission for up to two (2) workshops. The purpose of the workshops is to present the
financial forecast results and options to the Commission and to obtain policy direction. The
workshops are not intended as rate hearings or to justify rate adjustments.
MEETINGS
A number of informal presentations will be made to City staff throughout the course of the study.
The meetings anticipated in this scope of services are summarized below:
Number of
Meetings
Working Group /Staff Presentation (Phase 1) 1
Presentation of Updated Analysis with Staff (Phase 1) 1
Two Council Workshops (Phase 2) 2
Total Number of Meetings 4
ADDITIONAL SERVICES
During the course of this study, the City may request that PRMG perform additional services
relative to this engagement. The following is an example of additional services that PRMG
considers being in addition to what was described in the above Scope of Services:
1. Additional presentation of results to the City Commission beyond the two (2) outlined
above.
2. An update to historical information or projections after completion of Phase 1.
3. Design of potable water, wastewater, or reclaimed water rates to meet projected revenue
requirements. While the analysis will indicate overall rate levels on a system -wide basis
and average rate adjustments needed, the scope does not contemplate any proposals to
change the actual rate structure or level;
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4. Development of detailed capital financial scenarios above what is contemplated in the
scope of services, including the performance of detailed research (e.g., meeting with
regulatory agencies, preparation of filing applications, etc.) for the securing funds;
5. Development of a feasibility report required by the issuance of a loan or debt on behalf of
the utility;
6. Development of miscellaneous charges (turn-on fees, deposits, etc.);
7. Costs incurred due to substantial delays in the duration of the project by the utility or major
changes in policy as directed by the utility which is different from what is implied in the
scope of services; and
8. Review and design of impact fees or similar capital recovery fees.
DELIVERY SCHEDULE
PRMG will complete the Phase 1 by January 31, 2011 contingent on the City providing
substantially complete data by November 15, 2010. PRMG will complete Phase 2 based on the
City's schedule, but no more than 90 calendar days after the completion of Phase 1.
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PUBLIC RESOURCES MANAGEMENT GROUP, INC. ATTACHMENT C
STANDARD TERMS AND CONDITIONS
I. SCOPE 1. Comprehensive general liability insurance,
Public Resources Management Group, Inc. (PRMG) including personal injury liability, blanket
agrees to perform the utility consulting services contractual liability, and broad form property
described in the agreement that incorporates these damage liability. The combined single limit for
standard terms and conditions. Unless modified in bodily injury and property damage shall be not
writing by the parties hereto, the duties of PRMG shall less than $1,000,000.
not be construed to exceed those services specifically 2. Automobile bodily injury and property damage
set forth in the agreement. liability insurance covering owned, non - owned,
rented, and hired cars. The combined single limit
II. COMPENSATION for bodily injury and property damage shall be not
The Client, as defined in the agreement, agrees to pay less than $1,000,000.
for the services as billed within thirty (30) days of
receiving the invoice. Amounts paid after thirty (30) 3. Statutory worker's compensation and employers'
days may be subject to interest charges. liability insurance as required by state law.
Time - related charges will be made in accordance with 4. Professional liability insurance.
the billing rate referenced in the agreement. Other
indirect expenses and subcontractor services, if any, VI. ASSIGNMENT
will be billed in accordance with the standard unit cost These terms and conditions and the agreement to
rates as referenced in the agreement or if no reference which they are attached are binding on the heirs,
is provided, at cost. successors, and assigns of the parties hereto. This
agreement may not be assigned by Client or PRMG
III. RESPONSIBILITY without prior, written consent of the other.
PRMG is employed to render a professional service
only, and any payments made by Client are VII. INTEGRATION
compensation solely for such services rendered and These terms and conditions and the agreement to
recommendations made in carrying out the work. which they are attached represent the entire
PRMG shall perform analyses, provide opinions, make understanding of Client and PRMG as to those matters
factual presentations, and provide professional advice contained herein. No prior oral or written
and recommendations. understanding shall be of any force or effect with
respect to those matters covered herein. The
IV. INDEMNIFICATION agreement may not be modified or altered except in
PRMG agrees to indemnity, defend, and hold Client writing signed by both parties.
harmless from and against any liability arising out of
the negligent errors or negligent omissions of PRMG, VIII. JURISDICTION
its agents, employees, or representatives, in the This agreement shall be administered and interpreted
performance of duties set forth in Article I. under the laws of the State of Florida. Jurisdiction of
Client agrees to indemnity, defend, and hold PRMG litigation arising from the agreement shall be in that
harmless from and against any liability arising out of state. If any part of the agreement is found to be in
the negligent errors or negligent omissions of Client, conflict with applicable laws, such part shall be
inoperative, null and void insofar as it is in conflict
its agents, employees, or representatives, in the
performance of duties set forth in Article I. with said laws, but the remainder of the agreement
shall be in full force and effect.
V. INSURANCE
PRMG shall maintain during the life of the agreement
the following minimum insurance:
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PUBLIC RESOURCES MANAGEMENT GROUP, INC. ATTACHMENT C
STANDARD TERMS AND CONDITIONS
IX. SUSPENSION OF WORK This agreement to arbitrate shall be specifically
Client may suspend, in writing, all or a portion of the enforceable under prevailing arbitration law.
work under the agreement in the event unforeseen Notice of demand for arbitration shall be filed in
circumstances beyond Client's control make normal writing with the other parties to this agreement. The
progress of the work impossible. PRMG may request demand shall be made within a reasonable time after
that the work be suspended by notifying Client, in the claim, dispute or other matter in question has
writing, of circumstances that are interfering with the arisen, but in no event after the date when the
normal progress of work. PRMG may suspend work institution of legal or equitable proceedings would be
on the project in the event Client does not pay invoices barred by the applicable statute of limitations. The
when due. The time for completion of the work shall award rendered by the arbitrators shall be final and
be extended by the number of days work is suspended. judgment may be entered in accordance with
In the event that the period of suspension exceeds 90 applicable law in any court having jurisdiction.
days, the terms of the agreement are subject to
renegotiation and both parties are granted the option to
terminate work on the suspended portion of the
project.
X. TERMINATION OF WORK
Client may terminate all or a portion of the work
covered by the agreement for its convenience. Either
party may terminate work if the other party fails to
perform in accordance with the provisions of the
agreement. Termination of the agreement is
accomplished by 15 days prior written notice from the
party initiating termination to the other. Notice of
termination shall be delivered by certified mail with
receipt for delivery returned to the sender.
In the event of termination, PRMG shall perform such
additional work as is necessary for the orderly filing of
documents and closing of the project. The time spent
on such additional work shall not exceed 5 percent of
the time expended on the terminated portion of the
project prior to the effective date of termination.
PRMG shall be compensated for work actually
performed prior to the effective date of termination
plus the work required for filing and closing as
described in this Article.
XI. ARBITRATION
All claims, disputes and other matters in question
between the parties to this agreement arising out of or
relating to this agreement or the breach thereof, which
are not disposed by mutual agreement of the parties,
shall be decided by arbitration in accordance with the
Florida Arbitration Code. No arbitration arising out of
or relating to this agreement shall include any person
not a party to this agreement except by written consent
containing a specific reference to this agreement and
signed by the parties hereto and persons to be joined.
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