REQUEST FOR PROPOSALS DATED THIS 3 RD DAY OF JANUARY 2019

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1 Town of Wellington 3735 Cleveland Avenue P.O. Box 127 Wellington, CO Town Hall (970) Fax (970) REQUEST FOR PROPOSALS DATED THIS 3 RD DAY OF JANUARY 2019 TOWN OF WELLINGTON COST OF SERVICE AND RATE STUDY OF WATER, WASTEWATER, AND STORM DRAINAGE ENTERPRISE FUNDS Sealed proposals, including five (5) paper copies and one (1) digital copy in PDF format on CD or USB drive, will be received by the Town of Wellington until 2:00 PM local time on Friday, January 25, 2019 (closing date and time). Other key dates and times are indicated below. Proposals received after the closing date and time will not be accepted and will be returned to the sender unopened. Proposals shall be received in a sealed envelope plainly marked, Wellington Cost of Service and Rate Study and delivered to the following address: Wellington Town Hall ATTN: Pete Brandjord, Finance Director 3735 Cleveland Avenue Wellington, Colorado, Introduction Request for Proposal Announcement... Thursday, January 3, 2019 Pre-Proposal Meeting... None Questions/Inquires Closed... Tuesday, January 22, 2019, 10:00 AM Last Addenda Issued... Tuesday, January 22, 2019, 5:00 PM Proposal Deadline... Friday, January 25, 2019, 2:00 PM Anticipated Contract Negotiations... Mid-February 2019 Anticipated Notice to Proceed... April 1, 2019 The Town of Wellington (Town) is requesting proposals from qualified Consultants to conduct a comprehensive cost of service and rate study of the Town's water, wastewater, and storm drainage enterprise funds. The Town owns and operates a water treatment plant, water distribution system, wastewater collection system, wastewater treatment plant, and stormwater drainage system. The Town desires to have its rates and rate structure, including impact fees (tap, raw water contribution, plant investment, storm drainage) for these utility systems, reviewed, evaluated, and updated. Page 1 of 8

2 Background Wellington has a population of approximately 9,950 and is located in northern Colorado on the Interstate 25 corridor. The Town has experienced significant growth in population, and the trend is expected to continue. Refer to census data at the following link: The Town provides water, wastewater, and stormwater services to its residents. In addition, it provides bulk water sales to commercial and residential customers. For utility billing purposes, the Town's water, wastewater, and storm drainage customers are divided into two billing classes, residential and commercial, with the approximate number of customers in each class as follows: Residential (single family and multi-family)...3,420 Residential (outside Town limits)...2 Commercial The current billing rates for residential water connections are as follows: $18.86 (base rate) $37.22 (base rate) 2 Plex $75.44 (base rate) 4 Plex $ (base rate) 6 Plex $ (base rate) 8 Plex $ (base rate) 12 Plex $3.65 per 1,000 gallons for the first 15,000 gallons; $3.93 per 1,000 gallons for 15,001 to 16,000 gallons; and, $4.95 per 1,000 gallons for 16,001 and over. The current billing rates for commercial water connections are as follows: 1-inch meter, base rate of $45.07 $3.65 per 1,000 gallons for each increment of 15,000 gallons The wastewater service base rate for residential and commercial classes is $ Wastewater billing Levels are based on an account s average water usage for the months of January, February and March. Level 1 usage is the base rate of $20.64, and Level 2 is the base rate plus $6.50 per 1,000 gallons of average water usage. The storm drainage share is $5.00 per month for residential accounts and $9.25 for commercial accounts. There is an additional charge of $6.33 per residential account that the Town collects for the regional Stormwater Authority. The Stormwater Authority charge for commercial accounts is based on customers areas of impervious surface. The Town 's bulk water sales rate is $6.25 per 1,000 gallons. Fire hydrant meters are rented out by the water department for special projects. Page 2 of 8

3 A more complete billing schedule, rate summary history, and impact fee structure are available for review upon request. The Town presently uses Caselle Connect for its billing and financial software. Project Objectives Major objectives of this study involve addressing the following items: cost of service; rates and rate structure; conservation incentives; additional billing classes; impact fees (tap, raw water contribution, plant investment, and storm drainage); bulk water sales rates; adequate funding for anticipated infrastructure replacements; population growth; and, a financial model for future forecasting. A goal of the Town is to initiate any proposed rate changes, particularly for its water enterprise funds, during Therefore, the analysis of the town s water enterprise funds should be prioritized. More detailed topics that should be examined within the scope of this project are presented as follows: Cost of Service Analysis Long term capital investment funding setting impact fees (tap, raw water contribution, plant investment, storm drainage, etc.). Existing customer categories to track water trends or to allocate different costs of service to each category. Allocation of costs to various customer classes served. Appropriate base rates to cover fixed costs. Variable costs and commodity costs. Consideration of how impact fees are allocated on multi-family units. Rate Design Strategies Rates and rate structure for water, sewer, storm drainage, and water sales stations. Rate structure options for commercial customers. Seasonal rates, tiered rates, or a combination thereof to encourage conservation. Rates and impact fees for potable irrigation. Surcharge rates for wastewater customers based on BOD or TSS concentration. Peak-hour considerations. Consideration of mixed-use rates and best practices thereof. Comparisons of proposed rates to surrounding municipalities. Financial Model Creation of a financial model to forecast costs, revenues, and rates. Training of Town staff in the use of the financial modeling package or software. Incorporation of automatic rate increases triggered by wholesale cost increases. Scope of Services The Consultant's scope of work shall consist of the following general tasks. The Consultant may propose alterations to the scope of work with additions, deletions, or modifications as desired to highlight the Consultant s approach to this study. Each proposal should include the Consultant's detailed scope of work. Page 3 of 8

4 Task 1: Scoping and Project Meetings A scoping meeting shall be held early in the project schedule to familiarize all parties with the scope of the project as well as obtain and provide input and information to and from the Town. The meeting will be used to discuss study objectives and other project management items. The scoping meeting location and time shall be coordinated with the Town Finance Director. Additional project meetings may be conducted to facilitate project activity coordination and to keep the Town staff and all affected parties informed of progress. The Consultant should expect several informal meetings with Town staff during the course of the study. The Consultant shall be responsible for setting and conducting all meetings in coordination with the Town Finance Director. The Consultant shall prepare all needed materials, provide materials to the Town Finance Director in advance of the meetings, and prepare all meeting records. Task 2: Information Review The Consultant shall collect and review existing water, wastewater, and storm drainage rates and develop a general familiarity with the Town's utility billing system as well as review financial and other pertinent information needed to complete the study. The Town will provide past relevant studies, analyses, and data sets that are available. The Consultant shall coordinate with the Town to identify and determine other data which may need to be collected for review. Task 3: Cost of Service Analysis The cost of service analysis involves the allocation of costs to the Town s various customer classes served (residential, commercial, etc.) corresponding to the level of service provided. Topics expected to be analyzed in this task should include, but not be limited to, the project goals stated above. The cost of service analysis should provide justification explaining the manner in which costs are assigned. Revenue requirements should be developed as the basis for the cost of service analysis and can include the amount of revenue required to meet annual expenditures such as operating, capital, changes in reserves, debt service, etc. The Consultant shall customize the analysis to account for the Town s specific requirements and shall base its cost allocation process on the industry standard methodologies published by the AWWA s Manual M1, Principles of Water Rates, Fees, and Charges and the WEF s Manual of Practice No. 27, Financing and Charges for Wastewater Systems. As part of this task, the Consultant shall conduct a complete evaluation of the Town s existing water and wastewater impact fees, including its methodologies and fee structure, compare those to industry-accepted methodologies, and provide a recommendation on what approach will best meet the Town s needs. These fees should recover the costs of capacity required to serve new customers as well as growth related costs at the time a new tap is requested. These costs should include inplace capital improvement plans which may be identified in the Town s master planning process, including water and wastewater treatment facilities and other anticipated major water, sewer, and storm drainage projects. Task 4: Rate Design This task involves the design of water, sewer, and storm drainage rates to collect the desired level of revenues based on the results of the revenue requirements, the cost of service analysis, and to Page 4 of 8

5 meet the town s financial and capital improvement requirements. Topics expected to be examined should include, but not be limited to, the project goals stated above. The Consultant should identify the volume (variable) and customer-related (fixed) costs to be recovered through rates. Water volume-related costs recover the costs to treat, store, and distribute water to customers. Sewerrelated costs recover the costs to collect, treat, and discharge treated wastewater. Customer-related costs typically include meter reading, maintenance, and administrative costs. For all of the utilities, the Consultant shall develop a typical bill survey for the Town s existing and proposed rate structures and compare those to surrounding communities. The Consultant may utilize existing customer categories to track and discern trends or to allocate different costs of service to categories. Rate structure options for residential and commercial customers should be examined in terms of promoting water conservation by using seasonal rates, tiered rates, or a combination thereof. Separate rates for irrigation water usage and surcharge rates for wastewater customers based on BOD or TSS concentration shall also be considered. The Town s bulk water sales station shall be examined in terms of its fees, function, operational costs, and location. Task 5: Financial Model This task will be completed in parallel with preceding tasks and involves the creation of a financial model for the Town to help forecast costs, revenues, and rates as related to the water, sewer, and storm drainage facilities. The financial model shall be used to evaluate the projections of rates and other revenues and their ability to meet annual expenditures while meeting debt service coverage and reserve targets. In preparation of model development, the Consultant should review and project customer billing data, develop rate revenue projections, identify the timing and level of bond issues, and project budgeted operating and capital expenditures. Building on any of the Town s existing water, sewer, and storm drainage financial planning models, a minimum 10-year planning horizon shall be assumed for each utility. The structure of the financial model should allow users to conduct what-if scenarios using an easy to manage interface. The model shall be inclusive of items such as the projection of accounts, usage, and rate revenue; grants and bonds; debt service; operating expenses; capital expenditures; and, rate revenue adjustments. The model may include cash flow charts, capital spending, annual revenue adjustments, or other parameters required by the Town. The Consultant shall include training of Town staff in the use of the financial modeling package or software. Task 6: Preliminary Report and Presentation For the purpose of project scheduling, the Consultant shall submit four (4) hard copies of a preliminary report describing the results of work completed in this study and a tentative rate structure no later than September 27, One (1) CD or USB drive copy containing the preliminary report in Adobe Acrobat (PDF) format will also be provided. The PDF version shall be assembled into one stand-alone file and be exactly the same version as the hard copies. After submittal of the preliminary report, the Consultant shall present the preliminary findings of the study to the Board, precise date to be determined. Information and materials to be presented at the public meeting shall be developed by the Consultant after coordination with the Town Finance Director. Page 5 of 8

6 Task 7: Final Report and Presentation After incorporation of the Town s review comments from both the preliminary report and presentation, for the purpose of project scheduling, the Consultant shall submit eight (8) hard copies of the final report and rate structure no later than November 22, Two (2) CD or USB drive copies containing the final report in Adobe Acrobat (PDF) format will also be provided. The PDF version shall be assembled into one stand-alone file and be exactly the same version as the hard copies. The Consultant shall also provide original source file format of the electronic financial model for the Town and provide training to Town staff on the use of the model. The Consultant shall attend and present the final findings of this study to the Board, precise date to be determined. Information and materials to be presented at the public meeting shall be developed by the Consultant after coordination with the Town Finance Director. Inquires and Addenda The Town will not be holding a formal pre-proposal meeting. However, project related questions may be presented up to Tuesday, January 22, 2019, 10:00 AM and may be submitted by , phone, or in person to the following Town staff: Pete Brandjord, Finance Director Town of Wellington 3735 Cleveland Ave. Wellington, Colorado (office) brandjpa@wellingoncolorado.gov Any addenda issued to this RFP will be distributed to all RFP holders. No addenda to this RFP will be issued by the Town after Tuesday, January 22, 2019, 5:00 PM. Information for Proposers Proposal Format: Proposals should contain the following information in the general order listed: 1. An introductory cover letter. 2. A qualification statement of the Consultant and the staff to be assigned to the project. Clearly identify the key personnel providing the work effort for the project. Resumes of each project team member shall be included in the proposal appendix. 3. A narrative describing the Consultant s understanding and approach to the project s objectives and goals. 4. A work plan for accomplishing the project, including descriptions of the tasks to be performed and a summary of the deliverables to be provided to the Town. 5. A proposed schedule for completing the required tasks. Page 6 of 8

7 6. Indicate any special services to be provided by a sub-consultant or resources outside the Consultant. 7. A fee proposal that includes total project cost and a breakdown of costs by task. Include a corporate fee schedule that indicates the hourly rates charged for individuals identified on the project team and fees for reimbursable expenses. 8. Information about other work performed by the Consultant on similar projects and at least three references from clients with whom the Consultant has performed similar services. Opening of Proposals Receipt and registration of proposals will be conducted by the Town s Finance Director. Proposals shall be opened publicly at Town Hall shortly after the closing date and time. Responses to the RFP and modifications or corrections to proposals that are received after the closing date and time will be considered late, will not be accepted, and will be returned to the sender unopened. Evaluation of Proposals Proposals will be evaluated on a combination of criteria that may include but are not limited to the following: 1. Experience, qualifications, and technical capability of Consultant and proposed staff; 2. Demonstrated understanding of the project and scope of work, project approach, and methodology; 3. Schedule and plan for managing and delivering the desired project; 4. Demonstration of relevant project experience and references; 5. Cost of service and billing rates; and, 6. Any pending or current claims or legal actions against the Consultant. The Town is not required to take the lowest priced proposal. The Town reserves the right to evaluate the proposals in the manner deemed to be in the best interest of the Town. After evaluation of proposals, the Town Board may either award a contract or resolicit the RFP to obtain additional proposals. Selection of the Consultant will be made by a selection committee with final approval by the Board of Trustees. Interviews with Consultants may be scheduled if deemed necessary. Rejection of Submissions The Town reserves the right to reject any or all proposals, to waive irregularities in the proposals received, and accept any portion of any proposal if deemed in the best interest of the Town. Non-acceptance of a proposal will mean that one or more of the other proposals were deemed more advantageous to the Town or that all proposals were rejected. The Consultants Page 7 of 8

8 whose proposal were not accepted will be notified after a binding contractual agreement between the Town and the selected Consultant is executed, or when the Town rejects all proposals. The winning proposal shall be available for viewing at Town Hall for a period of ninety (90) calendar days after the contract for this study as been awarded. Coordinate with Pete Brandjord, Finance Director. Proposal Validity Time Proposals may not be withdrawn and shall remain valid for a period of not less than forty-five (45) calendar days from closing date and time. Incurring costs The Town will not be liable for any cost which the Consultant may incur in the preparation of proposals. Proprietary Information Consultants may mark any specific information contained in their proposal that they wish considered as proprietary and not to be disclosed to the public. All proposals submitted become the property of the Town and will not be returned. Formation of Consultant Agreement After selecting the preferred proposal, the Town may conduct negotiations with the Consultant to arrive at the best final offer. Parties shall enter into a contract which will go before the Mayor and Board of Trustees for approval. A Notice to Proceed will then be subsequently issued. Page 8 of 8

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