STAFF REPORT. Date: January 7, From: Jennifer Davis, Conunuhity Development Directo~~ ~D. By: Daren Grilley, PE, City Enginee~ Subject:

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1 STAFF REPORT Community Development Department Date: January 7, 2014 To: Steven A. Preston, FACP, City Manager From: Jennifer Davis, Conunuhity Development Directo~~ ~D By: Daren Grilley, PE, City Enginee~ Subject: Second Amendment to Professional Services Agreement with Raftelis Financial Consultants, nc. for Additional Work on Sewer User Fee Study SUMMARY Staff recommends that the City Council move to approve the Second Amendment to the Professional Services Agreement with Raftelis Financial Consultants, nc. (RFC) for professional services related to implementing a citywide sewer user fee and approve increasing the purchase order with RFC by $38,975 to a total amount not to exceed $91,205.. BACKGROUND The City of San Gabriel operates a municipal sewer collection system that serves all residents and businesses in the City. The system is showing signs of age, as evidenced by the 2009 Sewer Master Plan which concluded that $30 million in capital repairs and upgrades were needed. n addition to these large capital needs, the Master Plan recommends a funding level of $350,000 annually for operations and routine maintenance. The City operates the sewer system under a state-issued Waste Discharge Order that prescribes numerous requirements intended to protect public health and water quality. Failure to meet the waste discharge requirements exposes the City to administrative penalties including flnes from the Regional Water Quality Control Board or third party lawsuits under the federal Clean Water Act. San Gabriel is one of few California cities not charging customers for sewer service. As a result, the City has no dedicated funding source for sewer operations or capital improvements. All

2 Second Amendment to Services Agreement with Raftelis Financial Consultants, nc. for Sewer User Fee Study January 7, 2014 Page 2 sewer capital improvements identified in the Engineering portion of the CP are currendy unfunded and Public Works is only able to perform a fraction of the necessary operations and maintenance work in other words, the City is not meeting the mandated provisions. With a dedicated source of revenue to the sewer utility, Public Works and Engineering could better protect the community from damaging overflows and reduce potential liability by meeting the waste discharge requirements. Furthermore, the general fund monies that are being used for sewer maintenance could be used for other much needed projects and servlces. On June 19, 2012, Council authorized an Agreement in the amount of $46,230 with Raftelis Finaneial Consultants (RFC) to develop a [manei,al plan and identify potential user fee rate alternatives to fund the operations and capital needs of the sewer utility. Such a fee would help bridge the sewer system funding gap and to stop the diversion of general funds to sewer operations. On June 4, 2013, Council approved the First Amendment to the Agreement with RFC to allow for additional financial analysis and meetings "\vith staff and City Council.. ANALYSS Following the presentation of the Sewer User Fee Study findings at the Study Session on August 20,2013, Council directed staff to make refinements to the proposed and return to Council in early 2014 for authorization to proceed with the Proposition 218 process. The attached Second Amendment to the Professional Services Agreement extends the time of the agreement and increases the budget by $38,975 to cover the additional costs anticipated to make the revisions requested by Council, prepare the Engineer's Report and property owner notices required under Proposition 218, and additional services needed to implement the Sewer User Fee if approved by property owners and the Council. The amended contract shall not exceed $91,205. Funds for this amendment are available from the Sewer mpact Fee and Sewer Master Plan budgets (Account for $29,754 and for $9,221).. RECOMMENDATON Staff recommends that the City Council: 1. Approve the Second Amendment to the Professional Services Agreement with Raftelis Financial Consultants, nc. and authorize the City Manager to execute the Second Amendment; and 2. Approve a purchase order change of$38,975, for a total amount of$91,205. Attachment: Second Amendment to the Professional Services Agreement \\SGCH-FS\DATA\COMMUNlTY DEVELOPMENlENGNEERNG\ENGNEERNG\COUNCL TEMS\2014\AMEND AGRMT RFC O0713\RFC-AMENDMENT 2 FOR SEWER USER FEE_STAFF REPORT O0714.DOCX

3 SECOND AMENDMENT TO THE PROFESSONAL SERVCES AGREEMENT BETWEEN THE CTY OF SAN GABREL AND RAFTELS FNANCAL CONSULTANTS, NC. This Second Amendment ("Amendment") to the Professional Services Agreement between the City of San Gabriel ("CTY") and Raftelis Financial Consultants, nc. ("CONSULTANT") is made by and between the CTY and CONSULTANT as of, CTY and CONSULTANT are hereinafter collectively referred to as the "parties". RECTALS WHEREAS, the parties entered into a Professional Services Agreement ("Agreement") dated July 1,2012, for the purpose of providing professional services associated with evaluating options for a possible Sewer User Fee Study Project ("Project"); and WHEREAS, the parties executed the First Amendment to the Agreement on June 4, 2013 extending the contract through December 31,2013 and increasing the amount of the contract from $46,230 to $52,230 for additional services associated with Project, including evaluating additional financial scenarios and additional meetings with staff and Council; and WHEREAS, the City Council at the August 20, 2013 Study Session approved the staff recommendation to pursue a parcel owner vote on the proposed Sewer User Fee and directed staff to make additional revisions to the proposed fee calculations; and WHEREAS, the CTY now wishes to amend the Agreement to extend the duration and increase the contract amount to provide the additional services described in Exhibit A. NOW, THEREFORE, the parties hereto agree as follows: AGREEMENT 1. Section of the Agreement is revised to show completion of services by December 31, Section V of the Agreement, as amended by the First Amendment to the Agreement provides for the CTY to pay CONSULTANT a sum not to exceed $52,230. This amount shall now read "$91,205." Page 1 of 2

4 3. All other terms and conditions in the Agreement shall remain in full force and effect to the extent they are not in conflict with this Amendment. N WTNESS WHEREOF, the Parties have executed this Amendment on the day and year first above written. CTY OF SAN GABREL RAFTELLS FNANCAL CONSULTANTS, NC. STEVEN A. PRESTON, CTY MANAGER SUDHR PARDWALA VCE PRESDENT ATTEST: APPROVED AS TO FORM: ROBERT KRESS, CTY ATTORNEY Exhibit "A": Proposal & Fee Page 2 of2 \\SGCH-FS\DATA\COMMUNTY DEVELOPMENT\ENGNEERNG\ENGNEERNG\COUNCL TEMS\2014\AMEND AGRMT RFC \AMENDMENT NO 2 TO SERVCE AGREEMENT RFC DOCX

5 201 S. Lake Avenue Phone Suite 301 Fax Pasadena, CA EXHBT A November 27,2013 Mr. Darren Grllley, P.E. City Engineer City of San Gabriel PO Box 130 San Gabriel, CA Subject: Amendment for Preparation of Wastewater Service Charges on Tax Roll Dear Ms. Grilley: Raftelis Financial Consultants, nc. (RFC) is pleased to submit this scope of services to finalize the wastewater charges to be included on the tax roll for FY for the City of San Gabriel (City). The scope of services is summarized in detail below. Scope ofservices TASK 1- PRESENT AT PUBLC MEETNG RFC will present the results of the study and recommended rates for approval at a Public Meeting of the City Council. RFC will be available to answer any questions from the Councilor Public. City Council will approve the issuance of the Proposition 218 notice at this hearing. One (1) Public Meeting Deliverables: Public Meeting presentation materials TASK 2 - PREPARE ENGNEER'S REPORT RFC will finalize the engineers report that details the methodology, assumptions and results of the wastewater rate study. The engineer's report will include a listing of all the parcels within the City, Deliverables: Draft Engineer's Report

6 Scope of Services for Wastewater Rate Study City 0/San Gabriel TASK 3 - PREPARE PROPOSTON 218 NOTCE RFC will draft the required Proposition 218 Notice that will explain the rate structure, the purpose of the rates (what will the rates fund), the time and place ofthe public hearing, and a description of the protest proceedings for review by City Counsel. Although RFC will prepare the required Proposition 218 Notice, the notice will not be considered final until the City Attorney reviews and approves the notice. RFC will also facilitate the printing, processing, and mailing of the Prop. 218 notices to all affected parcels. Deliverables: Proposition 218 draft and final notice TASK 4 - ATTEND PUBLC HEARNG RFC will present the results of the study and the proposed fees at the Public Hearing to adopt the recommended rates and will be available to answer any questions from the Councilor Public. Our Project Manager, Sudhir Pardiwala has vast experience in making City Council presentations and has a successful track record in having rates adopted. One (1) Public Hearing meeting Deliverables: Proposition 218 draft and final notice TASK 5 - PCK UP COUNTY TAX ROLLAND HANDLE FALLOUTS RFC will obtain from the County Assessor a listing of parcels within the boundaries ofthe City. Subsequently, RFC will generate a list of fallouts of parcels on the county roll that do not appear on the City master file and vice versa. Fallouts are parcels included on the assessment list which do not exist on the County Assessor Tax Roll and parcels which the County that shows as taxable properties which do not appear on the City's list. RFC will update the master file for changes advised by the City. RFC will prepare the County tax roll to be submitted to the County by August 10, RFC will research any fallouts that the County reports are not on the tax roll in August of 2014 and send the revisions to the County to be included in the property tax bills. Deliverables: TASK 6 - FNALZE ENGNEER'S REPORT WTH LATEST TAX ROLL PARCEL DATA RFC will finalize the engineers report with the most recent parcel data obtained in Task 4. Deliverables: Final Engineers Report Page 2

7 Scope of Services for Wastewater Rate Study City 0/ San Gabriel Fees and Hours RFC proposes to complete the scope of work outlined above on a time-and-materials basis with a not-toexceed cost of $38,975 which includes related mailing expenses for the Proposition 218 notices and the obtaining the tax roll data. The following work plan provides a breakdown of the estimated level of effort required for completing each task described and the hourly billing rates for the personnel scheduled to complete the project. Task Descriptions PREPARATON OF COUNTY TAX ROLL PROPOSED HOURS and FEES Project Expenses Total Fees ~ r~--r ~--~ & 1 Present at Public Meeting 6 2 $ 2,130 2 Prepare Engineer's Report $ 4,510 3 Prepare Proposition 218 Notia $12,000 for mailing/printing $ 16,030 i. 4 Attend Public Hearing $ 2,130 5 Pick up County Tax Roll and Handle $2,000 for tax roll $ 12,490 i 6 Finalize Engineer's report with final tax roll data $ 1,685 ~ HOURLY RATES $275 $165 $70 TOTAL ESTMATED MEETNGS HOURS i PROFESSONAL FEES [$10,175 $12,870 $560 $23,605 i! i Total Professional Fees, $23,605 SP =Sudhir Pardiwala Estimated Expenses $15,370 i FC = Bryan Lim TOTAL FEES & EXPENSES $38,975 PROJECfFEE! $38,975 We look forward to completing the Study and assist the City implement the wastewater rates. f you have any questions or need additional information, please contact me at (626) This amendment may be used to form an agreement by Signing and returning a copy for our records. Respectfully submitted, Raftelis Financial Consultants, nc. Accepted by: City of San Gabriel By: Sudhir Pardiwala, PE Exec Vice President By: Title: Date: -~.~ ~~- Page 3