HDR Engineering Inc 3/26/2020 - Laserfiche WebLink

City of Everett 12020 Water,Filtration,Sewer,and Stormwater Rate Study 1.Project Approach necessary. As a part of the meeting, HDR will also review the City's current rate models and the need for any modifications, changes or updates to those models. Task 1 Assumptions: • A two hour kick-off meeting with the HDR project manager and task leads at the City's offices. • The City will provide the data necessary to complete the requested analyses. Task 1 Deliverables: • Electronic version of the written data request. Task 2: Financial Benchmarking Analysis As a part of the 2016 comprehensive rate study, a high level financial benchmarking analysis was provided. The following financial performance indicators for business operations were reviewed in the prior study: ✓ Debt Ratio ✓ Return on Assets(%) ✓ Cash Reserves (Days) ✓ Debt Service Coverage Ratio ✓ Operating Ratio (%) ✓ Bond Rating This study will use the same financial performance indicators (benchmarks)as the prior rate study and update the information. This will help determine any changes in cost patterns or financial health of the utilities since the prior rate study. HDR will review the benchmarking analysis with the City and develop a technical memorandum summarizing our findings and conclusions. Task 2 Assumptions: • The same financial indicators will be used as identified in the 2016 study. Task 2 Deliverables: • A draft and final electronic technical memorandum summarizing the financial benchmarking findings and conclusions. Task 3: Revenue Requirement Analysis A revenue requirement analysis projects the revenues and expenses of each utility and determines the overall level of rate adjustments needed for each utility. The analysis considers the prudent and adequate funding of the operating and capital needs of each utility, while also incorporating the City's financial planning criteria (e.g., minimum reserves, debt service coverage, capital improvement funding from rates, etc.). The revenue requirement analyses will be developed and summarized on a stand-alone basis for each utility and also presented on a combined utility basis. As a part of the last comprehensive rate study, the revenue requirement portion of the rate model was developed fora 10-year period. However, the focus of the revenue requirement was for the projected five-year time period of 2017—2021 and rates were adopted for the four-year period of 2017—2020. For this study, a similar approach will be utilized. For each utility, the focus will be on the next five-year revenue requirement analysis (2021 —2025), with proposed Page 2