HDR Engineering, Inc. 4/10/2024 - Laserfiche WebLink

Exhibit A (Scope of Work) Cash Reserves (Days) Debt Service Coverage Ratio Operating Ratio (%) Bond Rating This study will use these same financial performance indicators (benchmarks) and update the information and calculations. This will help determine 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 3 Assumptions: The same financial indicators will be used as identified in the prior studies. Task 3 Deliverables: A draft and final electronic technical memorandum summarizing the financial benchmarking findings and conclusions. Task 4: 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 prior comprehensive rate studies, the revenue requirement portion of the rate model was developed for a 10-year period. However, the focus of the revenue requirement was for the projected five-year time period and rates were adopted for a four-year period. For this study, a similar approach will be utilized. For each utility, the focus will be on the next four-year revenue requirement analysis, with proposed rates to be developed for the next four-year time period, and the models updated and developed for a 10-year period. The analysis will identify the operating and capital infrastructure needs of each utility and provide a rate adjustment strategy (i.e. rate transition plan) to recover the total financial obligations for each utility. The analysis will be developed using the rate models developed as a part of the last comprehensive rate study for the City, and as updated per Task 2. The forecast of operating expenses for each utility will identify and project the annual non- capital costs associated with operation, maintenance, and administration of the water, filtration, sewer, and stormwater systems over the study period. The City’s current operating budgets will be relied upon as the baseline. The study will incorporate the City’s planning growth forecasts and establish escalation factors for projected cost escalation. The projections of operational expenses will incorporate changes or additional O&M expenses resulting from known or anticipated changes in operational requirements (i.e., additional personnel, changes in levels of service). The projection of the revenue requirements for each utility will include the development of a funding plan for the identified water, water filtration, sewer, and stormwater capital needs over the projected 10-year period. Working from the capital project lists provided by the City, the capital funding analysis will incorporate annual capital projects and associated costs for the