E3. Water & Sewer Rate StudyKalispell Public Works Department
201 1st Ave E, Kalispell, MT
Kalispell.com
TO: Doug Russell, City Manager
FROM: Susie Turner, P.E., Public Works Director
SUBJECT: Recommendation for Professional Services — Water and Wastewater Cost of Service and
Rate Study
MEETING DATE: February 4, 2019
BACKGROUND: The City is completing or has recently completed detailed utility water, wastewater
system, wastewater treatment plant (WWTP) facility plans that outline planning requirements for
maintaining, operating, upgrading and developing the water, wastewater conveyance, and wastewater
treatment plant utility systems. Public Works has planned and allocated funds to perform a cost of service
analysis and develop corresponding rate structures to generate adequate funds to maintain the same
quality of service and fund capital projects to meet the current and future utility needs of our dynamic
growing community.
In December 2018 and January 2019, the City advertised a request for Statements of Qualifications from
Professional Firms to perform a Utility Rate Study. The City received four Statement of Qualification
submittals.
REQUIRED SERVICES: Provide a detailed utility cost of service study, revenue requirement, and a
rate design analysis that will provide justifiable and equitable methodologies for appropriate user fees that
are adequate to fully fund the expenses including, operations, equipment repair, maintenance,
rehabilitation, replacement, debt service, capital, etc. associated with the water, wastewater system, and
the wastewater treatment plant. In general, the consultant will:
• Participate in City Council workshops and public information meetings.
• Assist the City in developing financial policies to be applied in the rate development analysis.
• Perform a complete revenue requirement analysis, cost of service analysis (COSA), and rate design
analysis. Provide COSA model that is user friendly and can be updated annually by City staff.
• Recommend a system of rates, charges and fees for operations, maintenance, replacements and
system development that reflect the cost of service, proper allocation of costs, capital expenditure and
debt service requirements for currently identified needs and future capacity/growth related needs.
• Prepare draft/final reports and informative communication packages on the outcome of the analysis.
RECOMMENDATION: Staff is recommending HDR Engineering be awarded the project based on their
qualifications which includes technical expertise and knowledge of Kalispell's utility systems including
water, wastewater conveyance, and WWTP, their contract approach /management, experience and
performance criteria.
ACTION REQUESTED: Motion to select HDR Engineering as the Professional Consultant for the
Water and Wastewater Cost of Service and Rate Study.
FISCAL EFFECTS: FY 18/19 funding for a water and sewer utility rate analysis is allocated in the
following line items: Water Fund - 5210-447-430550-356, Sewer Fund — 5310-454-430630-356, and
WWTP Fund 5310-455-43640-358
ALTERNATIVES: As suggested by the City Council.