city of newport â finance 169 sw coast highway ... AWS
CITY OF NEWPORT – FINANCE 169 SW COAST HIGHWAY NEWPORT, OR 97365
To:
Spencer Nebel, City Manager
From:
Mike Murzynsky, Finance Director
Date:
December 27, 2017
Re:
Rate Study process and upcoming Council presentation
Spencer, As you know, we are ready for the presentation to City Council on the results of the Utility Rate Study as presented by FCS. The history of the project is as follows. A RFP for Utility Rate Study was noticed and released to the public on October 4, 2016 with responses due back to the City October 25, 2016. On October 25th at the close we received three proposals for review by the committee consisting of City Manager Spencer Nebel, Public Works Director Tim Gross, Finance Director Mike Murzynsky and, Assistant Finance Director Linda Brown. The committee reviewed the three and agreed unanimously FCS Group would be the finalist and contractor to complete the City’s Utility Rate Study. Work began December 1, 2016 with the City sending the Utility Meter Billing data to FCS. On December 22, 2016, FCS and City staff met via a telephone conference to review the data previously sent and to discuss the contract scope of service. Policy issues; fiscal and rate structure, were discussed along with an implementation strategy. Revenue requirements were discussed, namely operational needs, debt coverage requirements, and so on. FCS requested of the City the Master Plans related to the Utility System and Public Works was tasked with this request. Also requested was the Debt Service Schedules along with any bonding projections. It was decided that FCS would be ready to present first study with Council on February 6, 2017. Debt Service Schedules were sent to FCS the first of January 2017 along with updated meter data were sent to FCS for their use and review. Revised and final customer data along with meter files were sent to FCS. February 6, 2017, FCS presented preliminary data and talked with City Council about the scope of the project and what the Council would like to see in the final results. Fixed and variable rates plus the City
structure was discussed along with other items, which will be part of the final presentation. Council discussed Bob Gazewood’s bonding requirement spreadsheets and FCS requested them for review. The Gazewood spreadsheets were located and sent to FCS shortly after the Council presentation. The next meeting was scheduled for March 29, 2017. Prior to this meeting, I had numerous phone calls with FCS where they confirmed certain data, which was sent by the City. At the March 29, 2017 meeting, the new Stormwater program was discussed what kind of process would be used and ESU (impervious surface) will be followed. The creation of ESU data (impervious surface area for the lots) was requested. In addition, additional projects were requested by FCS. Also at the March 29 meeting, Water debt coverage ratio was discussed along with a water analysis for the related Water Revenue. The Public Works CIP listing was requested by FCS to compare with the Master Plan data. This, I believe was the first time we discussed the Taite Appraisal because the capital asset allocation of the Water Plant was called into question. Thus, the search for this appraisal began. The requested data was sent shortly thereafter with the exception of the ESU data and the Taite Appraisal. The next few months we reconciled capital asset data and grant data for FCS to use in the model being created for the City. In addition, we reconciled the data being used for the final step, COSA also known as Cost of Service analysis. On July 18, 2017, another conference call was held and the COSA was discussed in detail. The CIP for each program was reviewed and discussed. Methodology for the rate structures for the water, wastewater and stormwater were discussed. Infrastructure fee and its use plus where it belong was discussed. Final discussions on the CIP for each program was discussed. On August 14, 2017, a conference call was held to discuss the COSA for each program. The allocation factors for Water COSA was discussed….customer, meters, base, peak and fire protection. The “how to allocate” was discussed, use task orders, industry guidelines or assets. Assets was the decided to be a key factor for the allocations. Pumps were reviewed and the City needs to confirm which pumps are for fire protection along with the related tanks. The storage allocation was discussed and a question was raised on how to do this allocation….use industry standards (AWA M1) or the City’s Master plan. Three approaches to the transmission and distribution were discussed, assets first with fire protection last and what standard should be used…AWWA minimum standard or replacement cost basis or proportional approach – demand on pipe. Requests from the Water COSA discussion were BM14 from the 1988 Taite Appraisal, costs of storage melded (4) where are they charges. Finally look at how fish plant affect the flow. Next was the Sewer COSA discussion with many questions coming during the discussion. What is the plant designed to do? It is designed for Flow, BOD and TSS. How is Utility Billing paid for (distributed) within the Water and Wastewater funds? A charge for service is collected each month, calculated at budget time. FCS came up with 11 meters for the fish plants, how many meters are there? The actual number of meters is four. Is there a “pre-treatment” process? Yes, grease traps and BOD strength. The Taite appraisal was finally located in September and reviewed of the data commenced. The data was sent to FCS in late October and the COSA was revised.
At this time, FCS sent a notice that the contract amount was used up and an amendment would be needed to complete the project. On December 14, 2017, a conversation was held with FCS to discuss where we were with the project. Water and Sewer were ready and Storm Water was still a work in process…the ESU data was needed. The City would provide what we could and FCS would use what was already derived to finish the Stormwater. A timeline was discussed to finish , it was decided that the next Council presentation would be February 5, 2018. The contract amendment was discussed. It was agreed and approved by City Manager late December. On January 10, the first draft of the presentation was received from FCS. The City Manager and Finance Director reviewed the draft presentation; comments were sent back and forth, which lead to two revisions. As of February 1, 2018, we are at version three preparing for the February 5th presentation.
To:
Spencer Nebel, City Manager
From:
Mike Murzynsky, Finance Director
Date:
December 27, 2017
Re:
Rate Study process and upcoming Council presentation
Spencer, As you know, we are ready for the presentation to City Council on the results of the Utility Rate Study as presented by FCS. The history of the project is as follows. A RFP for Utility Rate Study was noticed and released to the public on October 4, 2016 with responses due back to the City October 25, 2016. On October 25th at the close we received three proposals for review by the committee consisting of City Manager Spencer Nebel, Public Works Director Tim Gross, Finance Director Mike Murzynsky and, Assistant Finance Director Linda Brown. The committee reviewed the three and agreed unanimously FCS Group would be the finalist and contractor to complete the City’s Utility Rate Study. Work began December 1, 2016 with the City sending the Utility Meter Billing data to FCS. On December 22, 2016, FCS and City staff met via a telephone conference to review the data previously sent and to discuss the contract scope of service. Policy issues; fiscal and rate structure, were discussed along with an implementation strategy. Revenue requirements were discussed, namely operational needs, debt coverage requirements, and so on. FCS requested of the City the Master Plans related to the Utility System and Public Works was tasked with this request. Also requested was the Debt Service Schedules along with any bonding projections. It was decided that FCS would be ready to present first study with Council on February 6, 2017. Debt Service Schedules were sent to FCS the first of January 2017 along with updated meter data were sent to FCS for their use and review. Revised and final customer data along with meter files were sent to FCS. February 6, 2017, FCS presented preliminary data and talked with City Council about the scope of the project and what the Council would like to see in the final results. Fixed and variable rates plus the City
structure was discussed along with other items, which will be part of the final presentation. Council discussed Bob Gazewood’s bonding requirement spreadsheets and FCS requested them for review. The Gazewood spreadsheets were located and sent to FCS shortly after the Council presentation. The next meeting was scheduled for March 29, 2017. Prior to this meeting, I had numerous phone calls with FCS where they confirmed certain data, which was sent by the City. At the March 29, 2017 meeting, the new Stormwater program was discussed what kind of process would be used and ESU (impervious surface) will be followed. The creation of ESU data (impervious surface area for the lots) was requested. In addition, additional projects were requested by FCS. Also at the March 29 meeting, Water debt coverage ratio was discussed along with a water analysis for the related Water Revenue. The Public Works CIP listing was requested by FCS to compare with the Master Plan data. This, I believe was the first time we discussed the Taite Appraisal because the capital asset allocation of the Water Plant was called into question. Thus, the search for this appraisal began. The requested data was sent shortly thereafter with the exception of the ESU data and the Taite Appraisal. The next few months we reconciled capital asset data and grant data for FCS to use in the model being created for the City. In addition, we reconciled the data being used for the final step, COSA also known as Cost of Service analysis. On July 18, 2017, another conference call was held and the COSA was discussed in detail. The CIP for each program was reviewed and discussed. Methodology for the rate structures for the water, wastewater and stormwater were discussed. Infrastructure fee and its use plus where it belong was discussed. Final discussions on the CIP for each program was discussed. On August 14, 2017, a conference call was held to discuss the COSA for each program. The allocation factors for Water COSA was discussed….customer, meters, base, peak and fire protection. The “how to allocate” was discussed, use task orders, industry guidelines or assets. Assets was the decided to be a key factor for the allocations. Pumps were reviewed and the City needs to confirm which pumps are for fire protection along with the related tanks. The storage allocation was discussed and a question was raised on how to do this allocation….use industry standards (AWA M1) or the City’s Master plan. Three approaches to the transmission and distribution were discussed, assets first with fire protection last and what standard should be used…AWWA minimum standard or replacement cost basis or proportional approach – demand on pipe. Requests from the Water COSA discussion were BM14 from the 1988 Taite Appraisal, costs of storage melded (4) where are they charges. Finally look at how fish plant affect the flow. Next was the Sewer COSA discussion with many questions coming during the discussion. What is the plant designed to do? It is designed for Flow, BOD and TSS. How is Utility Billing paid for (distributed) within the Water and Wastewater funds? A charge for service is collected each month, calculated at budget time. FCS came up with 11 meters for the fish plants, how many meters are there? The actual number of meters is four. Is there a “pre-treatment” process? Yes, grease traps and BOD strength. The Taite appraisal was finally located in September and reviewed of the data commenced. The data was sent to FCS in late October and the COSA was revised.
At this time, FCS sent a notice that the contract amount was used up and an amendment would be needed to complete the project. On December 14, 2017, a conversation was held with FCS to discuss where we were with the project. Water and Sewer were ready and Storm Water was still a work in process…the ESU data was needed. The City would provide what we could and FCS would use what was already derived to finish the Stormwater. A timeline was discussed to finish , it was decided that the next Council presentation would be February 5, 2018. The contract amendment was discussed. It was agreed and approved by City Manager late December. On January 10, the first draft of the presentation was received from FCS. The City Manager and Finance Director reviewed the draft presentation; comments were sent back and forth, which lead to two revisions. As of February 1, 2018, we are at version three preparing for the February 5th presentation.
