Laserfiche WebLink
EXHIBIT B <br /> COMPENSATION <br /> The following Scope of Work(SOW)identifies the activities that FCS GROUP will perform for the City of Everett's <br /> Water,Sewer,and Stormwater Rate&Charge Study.Major factors impacting this study include: <br /> ❑ Long-term utility fiscal health/future debt load <br /> ❑ Revenue stability <br /> ❑ Metering program and transition from flat to metered rates <br /> ❑ Loss of major industrial customer(impact to retail/wholesale) <br /> ❑ Addition of a new wholesale sewer customer(City of Snohomish) <br /> ❑ Addition of a new wholesale water customer(Tulalip Tribes) <br /> ❑ Addition of a new water rate class for groundwater irrigation <br /> ❑ New model for 10-year cash flow,cost of service and rate design <br /> Task 1:Data Collection/Kick-off Meeting <br /> Attend a kick-off meeting with City staff to discuss key issues and objectives,and review readily available <br /> information.In particular any customer equity concerns will be discussed that could result in revisions to cost <br /> allocation methodologies for retail and wholesale customers.Provide a written data request list to the City in advance <br /> of the kick-off meeting.Review,analyze,and validate data as necessary for use in conducting the technical analyses. <br /> Follow up with City staff(via telephone/email)for any additional items or explanations as necessary. <br /> Task 2:System.Plans Review/Wholesale Service Agreements <br /> Review current system plans to gain an understanding of system design criteria,demands,and service arrangements <br /> to be used as the basis for the cost allocation methodology for water/sewer retail and wholesale customers.Review <br /> service agreements between the City and its existing and new water/sewer wholesale customers to evaluate current <br /> and expected service arrangements and basis for cost assignment and recovery through the wholesale rates. <br /> Task 3:Financial Benchmarking Analysis <br /> Perform a financial benchmark analysis to evaluate the fiscal health of the utilities and update financial policies <br /> consistent with industry practice.Analysis will be performed for each utility function—water distribution, <br /> transmission and filtration and sewer collection and treatment and storm drainage as well as the utility as a whole. <br /> The fiscal health review will include an analysis of industry financial performance indices such as debt to equity <br /> ratios,operating ratios,liquidity ratios,return on fixed assets,etc.The financial policy review will include evaluation <br /> and recommendation for incorporating revised or new financial policies into the rate setting process in order to <br /> maintain long-term financial health of the utilities.Policies will include cash reserves(operating,capital,debt <br /> reserves),system reinvestment funding,debt service coverage,and debt management. <br /> Task 4:Capital Financial Planning Analysis <br /> Develop capital funding strategies to fund identified water,sewer,and stormwater capital needs over the next 10- <br /> year period.Consider funding sources from current revenue streams(e.g.,rates,connection charges,and capital cash <br /> reserves)and potential feasible revenue resources such as system reinvestment funding from rates, <br /> grants/contributions,low-interest loans,and/or revenue bonds.Working from the capital projects lists,incorporate <br /> annual capital projects and associated costs for the study period.Forecast future costs using inflationary factors. <br /> Develop alternative capital funding strategies based on varying levels of CIP and/or alternative approaches to <br /> funding capital needs. The budget provides for up to two(2)discrete capital funding scenarios for each utility. <br /> Task 5:Revenue Requirement Analysis <br /> Evaluate total revenue needs for the water,sewer,and stormwater utilities over the study period and identify a rate <br /> adjustment strategy to recover total financial obligations for each utility.This task will include the following: <br /> ❑ An Operating Forecast to identify annual non-capital costs associated with operation,maintenance,and <br /> administration of the water,sewer,and stormwater systems over the study period.The City's current operating <br /> budgets will be relied upon as the baseline.Incorporate planning growth forecasts and establish economic factors for <br /> cost escalation.Integrate additional O&M expenses,if any,resulting-from the-current CIPS and any other known <br /> changes in operational requirements.It is anticipated that the meter install program will be conducted in-house,with <br /> Page 11 <br /> (Form Approved by City Attorney's Office January 7,2010) <br /> 36 <br />