HomeMy WebLinkAbout60-96 RESOLUTIONRESOLUTION NO. 60-96
A RESOLUTION AWARDING RFP 96-3 TO BLACK &
VEATCH ENGINEERS, IN AN AMOUNT NOT TO EXCEED
$59,500, TO PERFORM A WATER AND SEWER
OPERATIONS STUDY AND A WATER AND SEWER RATE
STUDY.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
,Section 1. The City Council hereby awards RFP 96-3 to Black & Veatch Engineers,
in an amount not to exceed $59,500, to perform a water and sewer operations study and a water
and sewer rate study; and authorizes the Mayor and City Clerk to execute same. A copy of the
contract is attached hereto marked Exhibit "A" and made a part hereof.
PASSED AND APPROVED this 7th day of May , 1996.
ATTEST:
By:
7cat'd
Traci Paul, City Clerk
" /
41/4:- I 4, Aid
/
4 1
APPROVED:
By:
F e
Hanna, Mayor
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Agreement
for
Consulting Services
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1. Black & Veatch (Consultant) shall provide to the City of Fayetteville, Arkansas
(Client), the Services described in Attachment A, Scope of Services, related to the
Report on Operations of the Water & Sewer System, and Report on Revenue
Requirements, Cost of Service, and Rates for Water & Sewer Service.
2. Client shall pay Consultant for services provided in accordance with the following:
Partner
Project Manager
Project Engineer
Project Staff
Technical Support
Stenographic
Hourly Billing Rate
170.00
120.00
95.00
85.00
65.00
39.00
Plus direct out-of-pocket expenses at cost, including but not
limited to: travel and subsistence away from consultant's office;
long distance telephone; computer operating time at established
rates; document printing and reproduction at established rates;
and other expenses directly chargeable to the project.
Charges will be invoiced to Client at the end of each of Consultant's standard
monthly accounting periods based upon the above fee schedule and the direct time
and expense charges to the project during the preceding accounting period All
invoices are due upon receipt and if not paid within 30 days will accrue interest at the
lessor of 1-1/2 percent per month or the maximum rate allowed by law. The
maximum amount billed under this Agreement shall not exceed $59,500 unless
authorized in writing by Client.
The maximum fee includes one presentation to the City Council. If additional
presentations to the City Council are desired, a flat fee of $1,500 for each such
presentation is proposed.
Consultant shall exercise the same degree of care, skill, and diligence in the
performance of the Services as is ordinarily possessed and exercised by a professional
Consultant under similar circumstances. Consultant shall reperform the Services
which fail to satisfy this standard of care. No warranty, express or implied, is
included in this Agreement or in any report or opinion produced pursuant to this
Agreement.
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4. Consultant's total liability under this Agreement shall not exceed Consultant's
compensation under paragraph 2.
5. Consultant and Client waive all rights against each other and their respective directors,
officers, partners, commissioners, officials, agents, subcontractors, consultants and
employees for damages covered by any type of property insurance during and after
the completion of the Services.
Client shall have the right to terminate this Agreement for Client's convenience upon
written notice to Consultant, and Consultant shall terminate performance of Services
on a schedule acceptable to Client. In the event of termination for Client's
convenience, Client shall pay Consultant for all Services performed and termination
expenses. The provisions of paragraph 4 shall remain effective following any
termination of this Agreement.
7. This Agreement shall be governed by the laws in the state of Arkansas.
8. Nothing in this Agreement shall be construed to give any rights or benefits to anyone
other than Client and Consultant.
9. Except as otherwise provided herein, documents prepared by Consultant as part of the
Services shall become the property of Client, provided, however, that Consultant shall
have the unrestricted right to their use. Consultant shall retain its rights in its
standard data bases, computer software, and other proprietary property. Rights to
intellectual property developed, utilized, or modified in the performance of the
Services shall remain the property of Consultant.
IN WITNESS WHEREOF, Client and Consultant have executed this Agreement, the effective
date of which shall be Mot/ 71 /99
City of F etteville Client) Black & Veatch (Consultant)
By By 62/the e:SerCZCZ---
Title
Mayor
Date 579C
Title rho?
Date Ofr5/9
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ATTACHMENT A
The proposed scope of services is presented in two parts: Part I - Report on Operations of
the Water & Sewer System; and Part II - Report on Revenue Requirements, Cost of Service,
and Rates for Water & Sewer Service. Because the financial analysis portion of the report
on operations (Part I) is virtually identical to the revenue requirements portion of the rate
study (Part II), the studies will be conducted concurrently to achieve cost savings.
Part 1 - Report on Operations of the Water & Sewer System
Task Series 100 - Initial Meeting and Data Collection
The initial project component includes preparation of a data request and a meeting with City
representatives to identify and discuss key project objectives and major points of interest and
concern, collect and discuss data pertinent to the study, and schedule interviews and on-site
surveys. Specific tasks anticipated are to:
Task 101 Prepare and submit an initial request for financial and operational data
needed for the study. A summary description of field observations and
operations personnel interviews required for the evaluation of system
operations and maintenance will also be provided.
Task 102 Meet with City representatives to identify major items of interest and
concern and to discuss principal objectives and policies.
Task 103 Obtain and review financial and operational data and information.
Task 104 Identify personnel to be interviewed and facilities to be observed, and
establish schedules for interviews and onsite observational tours.
Task Series 110 - Engineering Evaluation
The engineering evaluation will include interviews of key water and wastewater utility
personnel, observational tours of selected major water and wastewater system facilities,
review of operation and maintenance policies and procedures, and review of major capital
improvement programs.
Black & Veatch recognizes that the wastewater treatment plant and major lift stations are
operated under contract, and anticipates that the City will elicit the contractor's cooperation
for interviews and observational tours.
Specific tasks to be performed by Black & Veatch are to:
Task 111 Conduct interviews with key water and wastewater utility personnel
regarding policies and procedures utilized to achieve safe, efficient and
economical operation.
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Task 112 Review operation and maintenance record keeping practices, records and
techniques to evaluate the impact on facility performance, maintenance,
and reliability.
Task 113 Review operation and maintenance techniques and policies regarding
scheduled maintenance, emergency maintenance, adequacy of staffing and
equipment, adequacy of funds, and availability of spare parts and
replacement items.
Task 114 Conduct onsite observational tours of selected above ground or observable
water and wastewater facilities to determine the general condition of
structures, improvements and equipment; and the adequacy of maintenance
policy and procedures.
Task 115 Review the major capital improvement programs for the water and waste-
water utilities to evaluate the adequacy of planned future facilities to meet
projected service requirements.
Task Series 120 - Financial Analysis
The objective of this project component is to forecast revenue and revenue needs for the
water and sanitary sewer utilities based upon existing rates and fee schedules. The adequacy
of each utility's forecasted revenues to meet future revenue requirements shall be analyzed
to determine the level of revenue adjustments and debt financing, if either is required, to meet
forecasted revenue requirements on a sound utility financial basis. This study component
shall include the following subtasks prepared for a five year study period and separately for
each utility:
Task 121 Forecasts of water and sewer utility accounts and volumes will be made
for the study period by considering historical growth trends, climatological
patterns, local economic conditions, the potential for adding/losing major
utility customers, and changes in customer class usage patterns over time.
The volume projections will be made based on projected number of utility
accounts and a usage per account analysis to differentiate the historical
effects of account growth and increased (decreased) usage by existing
customers.
Task 122 Forecasts of water and sewer utility revenues under existing rates for the
study period will be developed recognizing projected accounts, volumes,
and usage patterns by customer class. Future revenues from miscellaneous
sources such as interest earnings, service installation charges, late payment
penalties, and service initiation fees will also be estimated.
Task 123 Study period revenue requirements for the water and sewer utilities will be
developed based on an analysis of historical, currently budgeted, and
projected needs. The revenue requirements will be projected on a yearly
basis, taking into account expected operational changes, changes in staffing
or operating expenditures for new facilities, system growth by new
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development, anticipated extraordinary expenses, and allowances for
inflation. Revenue requirements will include:
• Operation and maintenance expenses, including purchased water and
contract operations of the wastewater treatment plant.
• Outlays for routine annual capital additions and replacements.
• Debt service and reserve requirements on existing and proposed bond
issues
• Transfers for major capital improvements financing.
• Other cash requirements.
Task 124 Forecasts of revenues and revenue requirements will be summarized into
five-year cash flow analyses for determination of revenue adequacy on an
annual basis. The cash flow analyses will identify annual revisions of
water and sewer utility revenues necessary to comply with bond covenant
requirements, good utility practice, or sound utility financing considera-
tions recognizing current City policy and planning.
Task Series 130 - Bond Ordinance Compliance
Concurrent with the engineering evaluation and financial analysis, Black & Veatch will
evaluate the utilities' compliance with certain provisions of the Bond Ordinance No. 3638 and
No. 3829 which places certain conditions and requirements on the water and sewer utilities
and which are designed to protect the interest of the bond holders. During this segment of
the study, Black & Veatch proposes to:
Task 131 Verify that the following required funds have been established and that
fund balances and reserves are in compliance with bond covenants:
Task 132
Task 133
Task 134
• Revenue Fund
• Operation and Maintenance Fund
• Bond Fund
• Renewal and Replacement Fund
• Debt Service Reserve Fund
• Construction Fund
Review insurance coverage of the water and sewer utilities.
Verify that required debt service coverage tests are being met.
Review other practices and procedures for compliance with the bond
covenants. Items to be reviewed will include, but will not necessarily be
limited to, the following:
• Required levels of bond payments are made through the designated
Paying Agent on a timely basis.
• Systems are operated on a fiscal year beginning January 1.
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• Systems are maintained in good condition and operated in an efficient
manner at reasonable cost.
• No free water service is provided.
• The City has not mortgaged or disposed of any substantial portion of
the systems.
• Required budgets have been prepared.
• No action has been taken to cause the interest on the bonds to be
subject to federal income taxes.
• Improvements authorized by the Bond Ordinances are being or have
been constructed.
Task Series 140 - Reports and Meetings
Black & Veatch considers communication with the client to be essential during all aspects
of the study. In addition to the initial meeting specified in Task Series 100 and the onsite
interviews and observation tours described in Task Series 110, Black & Veatch proposes to:
Task 141 Maintain ongoing dialogue with City representatives concerning study
progress and policy issues through written and telephone communications
and periodic meetings.
Task 142 Prepare a draft Report on Operations of the Water & Sewer Systems incor-
porating the findings, conclusions, and recommendations of all facets of
the study and submit 12 copies of the report for review by City representa-
tives. The report will cover studies under Task Series 100 through Task
Series 130.
Task 143 Prepare a final Report on Operations of the Water & Sewer Systems incor-
porating any revisions agreed upon as a result of the City's review of the
draft report.
Task 144 Meet with the City Council, if requested by the City, to present the
findings of the operations study.
Part 11 - Report on Revenue Requirements, Cost of Service, and
Rates for Water & Sewer Service
Task Series 200 - initial Meeting and Data Collection
It is anticipated that the initial meeting described in Task 102 will cover both Part I and Part
II of the proposed studies. Additional tasks which are unique to the water and sewer rate
studies are to:
Task 201 Prepare and submit an initial request for financial and operational data, in
addition to that needed for the operations study, that is needed for the rate
study.
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Task 202 Prepare instructions and provide assistance to appropriate City data
processing, billing, and accounting personnel for the development of
historical tabulations of customers' bills for water and sewer service.
Task 203 Conduct a workshop for City representatives, representatives of wholesale
customers, and retail customers to discuss the need for the rate study, the
methodology to be utilized in determining rates, and respond to issues
raised by customers. It is anticipated that this workshop will require
approximately two hours, and would be conducted during the trip for Task
102.
Task Series 210 - Determination of Revenue Requirements and Financial Plan
This task encompasses an evaluation of historical water and sewer utility customer accounts,
volumes, and revenues under existing rates for reasonable relationships on which to base
future revenue projections for the planning period. The historical water and sewer system
expenditures and annual budgets for all operating and capital costs will provide the basis for
projecting future water and sewer utility needs. Revenue and revenue requirements
projections will be adjusted, as applicable, to recognize any changes in utility service areas
and customers served abnormal weather conditions, general economic climate, additional
costs associated with the capital improvement programs, or anticipated extraordinary
expenses. The analyses will provide the necessary information to develop the long-range
financial plan. A comparison of projected revenues with revenue requirements and capital
program funding needs will show annual adjustments necessary in the level of water and
sewer utility revenues to maintain self-sufficient enterprise operations and to retain the City's
debt credit ratings.
Black & Veatch will contact the City's consultant regarding the Sewer System Study
currently being performed.
Revenue and revenue requirements will be forecast in Tasks 121 through 124 for the Report
on Operations. Additional tasks required for the water and sewer rate studies are to:
Task 211 Summarize the bill and usage distributions for each utility based on the
tabulation of bills provided by the City (See Task 202). These distribu-
tions will become the basis for accurately forecasting revenues under
existing and proposed rates.
Task 212 Summarize the revenue, revenue requirements, and cash flow forecasts
prepared for the Report on Operations Financial Analysis for use in the
water and sewer rate studies. Include consideration of any minor issues
or revisions that may have arisen subsequent to the completion of the
Report on Operations.
Task 213 Prepare up to three alternative financing plans for each utilities' major
capital improvement program These plans will identify the optimum
combination of cash (retained earnings) and debt financing required to
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meet total revenue requirements on a sound utility basis and recognizing
customer equity considerations.
Task 214 Conduct a workshop with City representatives, representatives of the
wholesale customers, and retail customers to review the results of the
revenue requirements and financial planning portion of the study.
Task Series 220 - Allocation of Costs of Service
This task encompasses the identification and determination of utility functional service
parameters, a detailed assignment of costs to the respective functional components, and
allocation of costs of service to customer classes. Cost -causative parameters for water service
include average day, maximum day, and maximum hour demands; meters and meter sizes;
public and private fire protection units; and number of customer bills processed. For sewer
service, similar parameters will be evaluated as well as measures of wastewater strength
including but not limited to BOD5 and total suspended solids. For each of the applicable
functional parameters, corresponding estimates of class units of service will be determined.
Costs of service will then be allocated to customer classes based on the estimated class units
of service. Specific tasks, prepared separately for the water and sewer utilities, are to:
Task 221 Estimate class service characteristics associated with each of the functional
cost elements recognizing the bill distribution analysis, data available from
the City, engineering judgement, and experience with other utility
operations with similar usage characteristics and patterns.
Task 222 Estimate major system component capacities to utilize in subsequent cost
allocations. System capacities will reflect cost causative parameters
including volume, capacity, and customer service considerations, and will
be based upon the City's fixed asset records for the water and sewer
utilities.
Task 223 Distribute costs by major system component to customer classes for each
utility, using the AWWA recommended Base -Extra Capacity cost
allocation methodology for the water utility and WEF recommended
allocation methodology for the sewer utility. This cost allocation will use
unit costs of service applicable to all system users and class units of
service to determine each class' proportional responsibility for total system
costs. The relative responsibility of each class of water and sewer utility
customers will be specifically determined based on each class' or users'
estimated service requirements.
Task 224 Class revenues under existing water and sewer utility rates will be
compared with allocated class costs of service to determine the level of
cost recovery by class, and in total, and to demonstrate any rate adjust-
ments needed to align class revenues and allocated costs.
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Task Series 230 - Design of Rates
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Rate schedules to recover total revenue requirements and allocated costs by class will be
designed to meet water and sewer utility service policies, pricing objectives, cost of service
recovery, and practical limitations. Specific tasks required are to:
Task 231 Develop schedules of water and sewer rates, based on evaluations of
existing water and sewer rate structures, that meet as many of the
following objectives as practical and consistent with City policy:
• Recover total revenues needed for utility operations.
• Recognize proportional cost recovery by customer class.
• Recognize existing contractual provisions.
• Supportable by existing recordkeeping practices.
• Defendable at public hearings and in courts of law.
• Consider the needs of low-income customers.
• Consider the impact on large system users and major industries.
• Reflect practical implementation limitations.
• Meet requirements for sewer user charges systems.
Task 232 Compare revenues expected from each customer class under proposed
water and sewer rates with allocated costs of service to ensure the
adequacy of cost recovery.
Task 233 Prepare comparisons of typical water and sewer bills under existing and
proposed rates for each customer class under various levels of water usage
and meter sizes to illustrate the impact of the proposed rates on a variety
of individual customers.
Task 234 Conduct a workshop with City representatives and representatives of the
wholesale customers to present and discuss the results of the cost
allocation and rate design portions of the study.
Task Series 240 - Reports and Meetings
A rate study report will be developed which explains our study approach, findings and
recommendations. The project report will be submitted in draft form for review by City
representatives before a final report is published and delivered. Meetings are planned at
significant stages of the study to review study progress, receive project direction, and present
draft and final report findings and recommendations. If further meetings are desired, Black
& Veatch will gladly modify the proposed work plan. In addition to:
• The meeting at the beginning of the study (Task 102).
• A workshop with City, wholesale, and retail customer representatives to
discuss the rate study methodology (Task 203).
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• A workshop with City, wholesale, and retail customer representatives to
discuss revenue requirements (Task 214).
• A workshop with City, wholesale, and retail customer representatives to
discuss cost allocation and rate design methodology (Task 234).
Specific tasks relating to rate study meetings and reports are to:
Task 241 Prepare a preliminary Report on Revenue Requirements, Cost of Service,
and Rates for Water & Sewer Service, including text and tables, and
deliver 12 copies of the report to the City. The report will include all rate
study findings and recommendations.
Task 242 Make agreed upon revisions to the preliminary Report on Revenue
Requirements, Cost of Service, and Rates for Water & Sewer Service, and
deliver 30 copies of the final report to the City.
Task 243 Meet with the City Council to present the findings of the study if
requested by the City.
Anticipated Requirements for City
In order for the Black & Veatch project team to conduct the studies outlined in this Scope
of Services section in a timely manner, it is proposed that the City would furnish required
basic data and information for the water and sewer utilities including the following items:
1. All recent financial records, audits and budgets of the water and sewer
utilities' financial operations; operational statistics; facility descriptions;
maps; reports of other consultants; available records of water sales and
wastewater volumes and strengths; and such other data as may be available
and which may be useful in the studies outlined.
2. A schedule of major capital improvements to the water and sewer systems'
facilities anticipated during the study period, including general descriptions
of each item of improvement, estimated construction costs, and anticipated
dates of construction.
3. Summary tabulations of all customer bills issued during a recent twelve
month period to all water and sewer customers. The tabulation will be
done as requested by Black & Veatch and will be by customer class.
4. Policy direction on such matters as the City considers appropriate, and
expeditious review of preliminary findings and reports to permit the timely
completion of the study.
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Black & Veatch is aware of the bond ordinance requirement that the Report on Operations
be completed by September 1, 1996, and is prepared to undertake and complete the proposed
studies within the required time frame. The proposed project scheduling is presented in a
chart on the following page.
As indicated, a single Initial Meeting will be held for the Report on Operations and the Rate
Studies (Task Series 100 and Task Series 200). In addition, Task Series 120, Financial
Analysis for the Report on Operations, will be completed concurrent with and utilized for
Task Series 210, Determination of Revenue Requirements and Financial Plan for the rate
studies. It is further proposed that presentations of final study results to the City Council, if
requested by the City, be scheduled to coincide. This proposed scheduling is designed to
produce cost savings to the City.
The proposed schedule assumes that the City provides requested data in a timely manner,
responds to Project Team inquiries promptly, reviews draft material within the indicated time
frame, and is readily available for scheduled meetings. If required, Black & Veatch will
revise the proposed schedule to reflect the final negotiated Scope of Services. We extend a
corrunitment to the City that the proposed study will be completed as contractually agreed.
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CITY OF FAYETTEVILLE, ARKANSAS
PROPOSED PROJECT SCHEDULE
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