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<br />Consulting Services Agreement between City of San Leandro and Last revised August 15, 2024 <br />Bartle Wells Associates for Sewer Fee Rate Study Page 6 of 6 <br />4. Develop 10-Year Financial Projections & Evaluate Scenarios <br />Develop 10-year cash flow projections showing the financial position of the wastewater utility <br />over the next 10 years. The cash flow will project fund balances, revenues, expenses, and <br />debt service coverage, and will incorporate the forecasts developed with staff input. After <br />developing a base-case cash flow scenario, we can model alternatives for additional <br />evaluation such as capital improvement alternatives, project financing alternatives, the <br />impacts of various levels of water demand, etc. During this phase, BWA will work closely with <br />the project team to evaluate financial and rate projections under alternative scenarios. <br />5. Evaluate Rate Increase Options <br />Based on the cash flow projections, determine future annual revenue requirements from rates and <br />project the overall level of required rate increases. Evaluate rate adjustment alter natives, such as <br />gradually phasing in required rate increases over several years. If appropriate, evaluate different levels <br />of rate increases and their impacts on the City’s ability to fund future operating and capital needs. <br /> <br /> <br /> <br />Task C. Cost of Service Rate Design <br />1. Identify Rate Structure Alternatives <br />Review the City’s current wastewater rate structures and discuss advantages and disadvantages <br />compared to other rate approaches. Identify potential alternatives and modifications that could help <br />improve rate equity, address City concerns, or help achieve other City objectives. Discuss pros and <br />cons of different rate structure options and their general impacts on different types of customers. Rate <br />structure options can be refined as the study progresses based on input from the project team. <br />2. Conduct Survey of Regional Utility Rates <br />Review and summarize utility rates of other regional agencies. Summarize results in tables and charts. <br />3. Analyze Consumption & Utility Billing Data <br />Analyze current and historical usage and utility billing data to determine reasonable and conservative <br />estimates of wastewater demand to use in developing financial projections and rates. Water use can <br />fluctuate from year to year depending on various factors such as weather and local and regional <br />conservation efforts. Ideally, we would prefer to analyze multiple years of utility billing data to determine <br />slightly conservative demand projections and evaluate sewer demands under various normal year and <br />water shortage scenarios. <br /> <br />4. Cost of Service Rate Derivation <br />BWA has helped many agencies develop utility rates designed to reflect the costs of providing service, <br />be fair and equitable to all customers, and comply with Proposition 218 and other legal requirements. In <br />recent years, we have worked collaboratively with several legal experts to ensure our recommendations <br /> <br />Summary of 10-year capital improvement plans and/or key alternatives <br />Evaluation of financing alternatives for capital improvements <br />Minimum fund reserve target recommendations <br />10-year financial projections with supporting tables <br />Evaluation of alternative financial scenarios as needed <br />Evaluation of rate increase options <br />Meet with the City’s project team to present findings, discuss alternatives, and gain input <br />Phase 2 Deliverables Include: <br />Docusign Envelope ID: 1C386315-7640-416F-B286-F4A8443FDDE6