SR-505-002-01
EPWM:GB:JH:wtr-ww award
Council Meeting: June 26, 2001 Santa Monica, California
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Professional Services Contract with The Keese Company and The Reed
Group, Inc. for Water and Wastewater Rate/Fee Studies
Introduction
This report recommends that the City Council authorize the City Manager to negotiate
and execute a professional services contract with The Keese Company and The Reed
Group, Inc., in an amount not to exceed $53,995 for the preparation of water and
wastewater rate/fees studies and approve $8,100 in contingency funds.
Background
The City of Santa Monica funds its water and wastewater operations through revenue
generated by water and wastewater rates and other fees. The current water and
wastewater rate structures were adopted in 1996. An annual consumer price index
(CPI) increase on water rates and fees was adopted in July 1999 and water rates have
been adjusted accordingly. Wastewater rates have not been revised since 1996.
In addition to addressing the rate structures, the water and wastewater capital facility
fees, adopted in 1990 and 1991 respectively, also will be included in the study. Capital
facility fees are charged to new system users for increases in demand on the water and
wastewater systems. Capital facility fees are designed to provide funding for capital
costs involved in providing water and wastewater service to new users.
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Discussion
Staff is pursuing rate studies at this time to address issues facing the water and
wastewater funds. The study will evaluate the impact of water purchasing decisions
prompted by the Metropolitan Water Districts? new strategic plan and rate restructure,
and a financing method for the payment of the wastewater fund?s ongoing capital
payments to the City of Los Angeles related to the Hyperion operations.
The goals of the rate/fee studies are to analyze:
1. Contract amount for water purchases from Metropolitan Water District, in
accordance with its proposed strategic plan and rate restructure.
2. Domestic and fire line water rates.
3. Water and Wastewater capital facility fees.
4. Financing options for Hyperion operation and maintenance and capital
improvement projects.
5. A five-year expenditure and revenue forecast based on the proposed rate
and fee structure.
The rate/fee studies will include appropriate recommendations for consideration by the
City Council. A public participation process will be developed to ensure that the
concerns of the community are addressed in the final rate recommendations.
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Request for Proposals
In April 2001, a Request for Proposals (RFP) was issued to nine qualified consulting
firms for the water and wastewater rate studies. On May 14, 2001, proposals were
received from four firms.
A selection committee consisting of the Utilities Manager, Utilities Business Supervisor,
Assistant City Treasurer, and the Senior Administrative Analyst from EPWM?s
Administrative Services Division was formed to evaluate the proposals.
The selection criteria requirements included the firm?s understanding of the project?s
scope; direct experience on previous similar projects and approach to work; technical
competence and qualifications of the proposed staff; the ability to meet the desired time
frames; and cost of services and innovative design alternatives.
Staff recommends The Keese Company and The Reed Group, Inc. to perform the
studies because of their familiarity with the City of Los Angeles? Hyperion contract
terms, creative approach to structuring the capital facility fees, and experience in utility
financial planning. In addition, The Keese Company and the Reed Group, Inc.,
developed the City?s current water and wastewater rates in 1996 and have an
established in-depth knowledge of the water and wastewater operations and customer
base.
Budget/Financial Impact
Funds required for the water and wastewater rate/fee studies are as follows:
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Contract?????..??????????? $53,995
Contingency??????????????.. $ 8,100
TOTAL FUNDS REQUIRED: $62,095
Funds are available in Account Nos. 31661.555060 and 25671.555060.
Recommendation
Staff recommends that the City Council:
1. Authorize the City Manager to negotiate and execute a professional
services contract with The Keese Company and The Reed Group, Inc., in
an amount not to exceed $53,995 and approve $8,100 in contingency
funds for the contract; and
2. Authorize the Utilities Manager to issue any necessary modifications to the
contract to complete additional work within budget authority.
Prepared by: Craig Perkins, Director of Environmental and Public Works
Gil Borboa, Utilities Manager
Jean Higbee, Utilities Business Manager
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