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HomeMy WebLinkAboutAgreement_General_08/29/2013 1 ARCADIS ARCADIS U.S., Inc. Infrastructure • Water Environment Buildings 2081 Vista Parkway West Palm Beach Florida 33411 Tel 561 697 7000 Village of Tequesta Fax 561 697 7751 g q www.arcadis - us.com 345 Tequesta Drive Tequesta, FL 33469 Attn: Michael Couzzo, Village Manager Re: Utility Financial Evaluation WATER RESOURCES Dear Mr. Couzzo: Enclosed, as discussed, are three copies of the work authorization to cover Date: the referenced project. As you are aware, the intent of this effort is to evaluate and August 29, 2013 determine the ability of the utility system rate structure to support pending R &R projects, including but not limited to, replacement of asbestos cement pipe within the Contact: distribution system. Essentially, the intent will be to integrate the previously William D. Reese, PE completed Equipment Condition Assessment with the financial ability to support the Phone: recommended improvements (and if necessary, alter and re- prioritize the initially 561.697.7069 developed scheme). Email: If acceptable, please execute and return two copies. Due to potential timing will iam.reese @arcadis- considerations related to AC Pipe matters and to the Jupiter Inlet Colony project we us.com have notified PRMG, Inc. of the need to reach an initial discussion point with Our ref: urgency. They are prepared to expedite their initial work accordingly. Should you have questions or require anything further at this point, please Florida License Numbers call. Engineering EB00007917 Very truly yours, Geology GB564 ARCADIS U.S., Inc. Surveying LB7062 William D. Reese, PE Vice President encls. Imagine the result g:\aprojects \wr \rf projects \correspondence (e) \wp60\ proposal\ tequesta \couzzo_u.f.e._08292013.doc I VILLAGE OF TEQUESTA WATER SYSTEM AND GENERAL UTILITY /CIVl[L PROJECTS WORK AUTHORIZATION Utility Financial Evaluation This Work Authorization authorizes ARCADIS G &M, Inc. to perform the work set forth herein and is issued pursuant to the "Professional Engineering Consulting Services Agreement for Water System and General Utility /Civil Projects ", dated November 17, 2005. All terms and conditions of said agreement shall be applicable to this Work Authorization. SCOPE The work performed under this authorization will be primarily performed by the rate consultant used for prior similar projects for the Village. The scope of work is as set forth in the sub - consultant's (PRMG, Inc.) documentation, attached as Appendix A to this authorization. The Engineer will supply the required engineering documentation (cost estimates, project prioritization, etc.) to support PRMG's work effort. COMPENSATION For the scope of services as set forth herein the Engineer shall be paid a lump sum amount of thirty five thousand five hundred dollars ($35,500). TIME OF PERFORMANCE The Engineer will complete Scope within 120 days of the receipt of an executed authorization, exclusive of delays beyond the control of the Engineer. This authorization can be cancelled with or without cause by the Village with 30 days written notice. Should said cancellation occur, the Engineer will be paid for all services performed through the cancellation date. Page 1 of 2 ACCEPTED BY: Village of Tequesta (Utility Financial Evaluation) Michael R. Couzzo, Village Manager Date: ARCADIS G &M, Inc. (Utility Financial Evaluation) William eese, P.E., Vice President Date: 8 29 /3 Page 2 of 2 ATTACHMENT A PUBLIC RECOUSRCES MANAGEMENT GROUP, INC. SCOPE OF SERVICES - UTILITY FINANCIAL EVALUATION The scope of services to be performed by PRMG, as a subconsultant to ARCADIS, will include the following tasks: Task 1 — Data Acquisition and Review: Based on information complied by the Village, PRMG will request and evaluate specific information as it relates to the System necessary to complete the financial forecast. Information to be requested from the Village will include, but not be limited to: i. Customer statistical information as it relates to the service area needs by franchise or specific service area component; ii. Bill frequency information required to develop a detailed revenue model for rate estimation purposes; iii. Information regarding the operating expenses of the Water System; iv. Information regarding the funds availability by type of fund; V. Information regarding potential changes in service area needs due to the expiration of franchise agreement as well as extension of service to other areas; A. Capital improvement program as estimated by both the Village and ARCADIS, including the recognition of the capital needs identified in the Assessment Report; and vii. Other relevant information (e.g., consumer price index for price index rate adjustments, etc.) as deemed necessary by PRMG to prepare the financial evaluation of the System. PRMG will prepare a date request for response by both the Village and ARCADIS to initiate the data compilation efforts and will also attend a kick - off/data review meeting with both parties to evaluate trends of the Water System as well as review the compiled data necessary for project completion. Task 2 — Customer Statistical and Revenue Forecast: Based on an up -to- five -year historical trend of customer forecast statistics by primary service area and/or franchise, PRMG will prepare a five - year customer forecast of the Water System. The Test Year for the forecast will be the Fiscal Year 2014 and the forecast period will consist of the Fiscal Years ending September 30, 2014 through 2018 (the "Forecast Period "). PRMG will work with the Village and ARCADIS to identify potential growth the existing service area, changes in the service area due to incremental utility extensions required of the Water System, as well as reduction in service area due to the expiration of franchise and other service agreements that may occur during the Forecast Period. PRMG will conduct a corresponding evaluation of the utility rate revenues from existing rates based on the customer forecast delineated above, recognizing increases rates due to the application of the annual price index rate adjustment as currently allowed by utility ordinance. The customer and -1- corresponding revenue forecast will serve as the basis for the review of net margins and availability in the overall evaluation of the Water System. Task 3 — Development of Revenue Projections from Existing This task involves the development of projections of utility rate revenues for the Forecast Period from existing rates recognizing: i.) the results of the customer and sales forecast performed in Task 2; and ii.) the Village's existing rates for service. Additionally, this task will involve a rate - revenue "reasonableness" test (reconcile model results to reported amounts on Village financial statements) to ensure that the revenue model and billing determinants are reasonable relative to the modeling process. This task will also involve the projection of other operating revenues, interest income earned on unrestricted fund balances as defined in the bond resolution for the utility system and revenues derived from other utility transactions (e.g., customer service charges). Task 4 — Development of Operating Expense Projections: This task involves the development of the estimated amount of operating expenses required to be funded from water rates for the Forecast Period. PRMG will work with both the Village and ARCADIS to identify changes in utility operations that may result due to changes in service demographics as well as any revisions to the facilities which are currently in place due to anticipated capital improvement program for the Village. PRMG projections will be based on recent historical trends and changes in cost of providing service, estimates provided by the Village and ARCADIS as it relates to ongoing operations, and the recognition of inflationary allowances for the general cost of operations. The operating expense analysis will be performed to identify the net revenue margins to the utility that are critical in meeting the debt compliance requirements of the Water System as well as identification of fund availability for repayment of debt and capital funding. Finally, other operating expenses such as inter -fund transfers, administrative allocations, contingency reserves, insurance needs, and other expenses will be evaluated to ensure that the full recovery of costs are reflected in the rate sufficiency analysis. Task 5 — Capital Improvement and Funding Analysis: This task involves a detailed review of the Village's five -year or applicable capital improvement program and other engineering planning documents such as the Assessment Report, and the performance of a funding analysis to identify available sources of funds for financing of the capital improvement program and the estimated impact on utility rate revenues associated with the capital funding program for the Forecast Period. This task will include the development of the estimated fund balance by individual fund/account and the development of a flow of funds analysis for liquidity evaluation purposes. Task 6 — Other Revenue Requirement Identification and Management Dashboard: In order to meet the financial obligations of the Village's utility systems, PRMG will review the financial aspects of the Village's utility systems in order to potentially recognize other revenue requirements that may need to be allocated or included in the rate analysis and program updates to the financial forecast model. This task will include assistance in the development of fiscal policies in terms of working capital maintenance, the funding of capital re- investment for long -term planning needs, the funding of other departmental capital or maintenance reserves for items such as vehicles and equipment, and the recognition of any other transfer requirements that may be associated with the utility system. As part of this task, PRMG will develop a "management dashboard" to allow for the review of the financial position of the utility and the ability to perform sensitivity analyses in order to finalize the financial forecast. -2- Task 7 — Compliance Analysis: This task will be conducted in order to satisfy the rate covenant requirements and the flow of fund requirements as defined in the governing bond resolution that authorized the issuance of the outstanding utility system revenue bonds. The compliance analyses will be performed for the Forecast Period to maintain the financial integrity of the utility system. Task 8 — Rate Comparison with Neighboring Utilities: As part of the evaluation of the sufficiency of rates, PRMG will prepare a rate comparison of the Village's existing water rates with other neighboring utilities and illustrate the potential customer impact on any recommended rate adjustment associated with the development of the financial forecast and rate evaluation. Task 9 — Development of Net Revenue Requirements and Rate Impact Analyses and Staff Presentation: Based on the aforementioned tasks, PRMG will prepare a summary of the total net revenue requirements of the Water System and the accompanying rate requirements for each fiscal year of the Forecast Period. A meeting by not more than two representatives of PRMG will be held with both the Village staff and ARCADIS in order to present the results of the initial study findings and results. Based on the results of the staff meeting, PRMG will make modifications to the analysis prior to the presentation of the evaluation to the Village Council. Task 10 —Report Preparation and Presentation: PRMG will prepare a technical memorandum or report in support of the evaluation of the sufficiency of rates to meet the expenditure requirements of the Water System, which encompasses the financial plan and capital improvement plan funding analysis. The report prepared by PRMG will include delineation of the assumptions and analysis used to prepare the financial forecast, the available or identified funding sources that meet the overall capital improvement program needs of the Water System, and any other aspects of the Water System (i.e., action plan items based on noted trends and the attainment of certain financial targets for the System). This task will include a presentation of financial ratios and targets to illustrate the overall financial position of the Water System in relation to the funding needs, especially as it pertains to the capital improvement program requirements. Task 11 — Meetings: During the course of the project, it is anticipated that PRMG will attend a total of three (3) on -site meetings with the Village and ARCADIS and attend two WebEx meetings to present ongoing results with Village staff and/or ARCADIS. Attendance of the on -site meetings will be by not more than two (2) employees of PRMG. The on -site meetings in this scope of services include the following: Description Meetings Kick- OffMata Review 1 Development and Review of Financial Forecast 1 Presentation of Final Report to Council 1 Total Meetings —3 PROJECT SCHEDULE Upon notification to proceed as provided by the Village, PRMG would complete the Project within one hundred and twenty (120) days after being given notification to proceed as defined below for presentation to the Village Council at a public workshop, the date of which has yet to be determined. The completion of the analysis would be subject to the availability of information -3- provided to PRMG from both ARCADIS and the Village that would be necessary to conduct our financial analysis. ADDITIONAL SERVICES During the course of this engagement, the Village may request that PRMG perform additional services as a subconsultant to ARCADIS on behalf of the Water System. Although no additional services are anticipated by PRMG at this time, any additional services as requested by the Village will be performed by PRMG upon written authorization by the Village and as mutually agreed between the three parties. Examples of additional services that could be performed by PRMG may include, but not be limited to, the following activities: 1. Attendance of meetings to what is contemplated in the scope of services. 2. Performance of a detailed utility rate study to design proposed rates to meet the financial requirements of the Water System. 3. Development of a project feasibility report associated with any financing activities (debt service issuance) necessary to fund the identified capital improvement program. 4. Negotiations with third parties associated with franchise agreements, provisions for services, or other related activities. 5. Performance of substantial changes in the financial forecast due to the receipt of inaccurate information as provided by the Village or due to delays in the Project that were not caused by PRMG. 6. Performance of any anticipated update to the overall financial forecast after substantial completion of such forecast at the request of the Village, including the preparation of additional financial forecast scenarios. (Remainder of page intentionally left blank) -4-