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4. Contract - Water, Sewer, Stormwater & Street Rate Study Update201 1"'Avenue East, P.O. Box 1997, Kalispell, MT 59903 Plione (406)758-7720— Fax (406)758-7831 www.kalispelt com REPORT TO: Mayor and City Council FROM: James C. Hansz, P.E., Director of Public Works SUBJECT: Award Contract — 2009 Water, Sewer, Stormwater & Street Rate Study Update MEETING DATE: June 15, 2009 BACKGROUND: In 2001 Kalispell completed a significant facility planning effort that identified major improvement needs for its water, sewer, wastewater treatment and storm drainage systems. A Capital Improvement Plan was adopted outlining these needs and a projected timetable for their implementation. In 2002 the City conducted a comprehensive cost of service rate study for its utilities. The recommendations of this study were adopted and as a result the Capital Improvement Plan has largely been completed. The largest single project on that plan, the expansion of the WWTP, is nearing completion. The City Council recently adopted a fresh update of the facility plans for water, sewer, storm drainage and also transportation. A revised Capital Improvement Plan with many new capital needs was adopted as well. A fresh examination and update of the City's water, sewer, storm drainage and street maintenance rate structures is needed to ensure the City has a financial system adequate to conduct its on- going daily operations, and one that is sufficient to fund the capital needs identified in the Capital Improvement Plan. The objectives of this effort are to devise and maintain cost -based rate structures that are fair, equitable and easy to understand. The FY 08/09 budgets for the water, sewer, storm drainage and street maintenance include funding for a rate study update. Five firms responded to the City's request for qualifications to perform this update. All were carefully evaluated by a five member committee. The three highest ranked firms were invited for interviews. The firms interviewed were FCS Group of Redmond, WA, Camp Dresser & McKee (CDM) of Helena, and HDR Engineering of Bellevue, WA. Following the interviews the committee reviewed the results of their reviews of the statements of qualifications and the interviews. The committee concluded that few differences were apparent in the stated abilities of the firms to perform the basic analysis required for the rate study update. However, the committee was unanimous in its conclusion that one company was far superior in its ability to communicate the complex information and recommendations resulting from the detailed financial analysis. As a result, the committee unanimously recommended that the staff initiate negotiations with the firm of HDR Engineering to update the City of Kalispell water, sewer, storm drainage and street maintenance rates. The City has completed negotiated with HDR to define a detailed scope of the work and fee for the services provided. A copy of the resulting scope of work and fee proposal is attached. Staff believes it is a reasonable and complete proposal and therefore recommends award of the contract to HDR. ACTION REQUESTED: AT CITY COUNCIL MEETING OF JUNE 15TH, MOTION TO AWARD OF THE CONTRACT TO UPDATE WATER, SEWER, STORM DRAINAGE AND STREET MAINTENANCE RATES TO HDR ENGINEERING OF BELLEVUE, WA. FISCAL EFFECTS: Total expenditure of $85,590.00, with this total divided between the 2008/2009 Water, Sewer, Storm Drainage and Street Maintenance budgets. ALTERNATIVES: As suggested by the City Council Respectfully su I AR Jars Hansz, P.E. eQebb Director of Public Works / i ngineer lifterim City Manager Attachment: HDR Scope of Services and Financial Proposal June 1, 2009 Mr. Jim Hansz, P.E. Public Works Director City of Kalispell 201 First Avenue East Kalispell, MT 59903-1997 Re: Proposed Scope of Services for Professional Financial Services and Rate Setting Dear Jim: Attached please find our scope of services, time schedule and budget for the City of Kalispell's (City) water and sewer utility system and storm drainage and street maintenance fund financial and rate study. I have developed this proposed scope of services based upon our understanding of the City's needs. Please review this attached scope of services, time schedule and budget and let me know how well this matches the City's needs. Please call or email me regarding any adjustments or refinements that the City may need. I can be reached at (425) 450- 8386. If this is acceptable, we will need to place it in the context of a contract or agreement between HDR and City. Thanks again for being selected to conduct this study and we look forward to working with you and the rest of the City's project team on this study. Sincerely, HDR ENGINEERING INC. 1�90/1" Tom Gould Vice President National Technical Director of Finance and Rates HDR Engineering, Inc. 50010811, Ave NE I P: 425.450.6200 Suite 1200 I F: 425-453-7107 Bellevue, WA 99004 www.hddnc.com u Scope of Services HDR Engineering, Inc. (HDR) proposes to provide comprehensive rate studies for the water, and sewer utility systems and financial planning for the storm drainage and street maintenance funds for the City of Kalispell (City). A comprehensive rate study provides the basis for evaluating each utility's financial requirements, while establishing rates that are equitable and cost -based. A detailed discussion of the scope of services for the City is provided below. R ,. !, r° * 1, HDR has developed a detailed scope of services that is intended to meet the specific goals and objectives of the City. In developing the scope of services, two items should be noted. First, it is assumed that each of the analyses (water, sewer, storm drainage, and street maintenance) will be conducted simultaneously. The second item to note is that the general approach used to conduct the analyses is assumed to be essentially identical, except where noted. Task 1—Initial Project (Kick -Off) Meeting Task Objective: Bring the HDR project team, City management and staff together, at the start of the project, to assure that all parties have a mutual understanding of the goals, objectives, issues and concerns related to the study. It is proposed that the initial project meeting be approximately 2 hours in length. This meeting will take place after the City has received the written data request in Task 2 in order that some data can be provided to HDR at the meeting, and data constraints can be identified and discussed. Expected City Staff Support for Task 1: For this task, the City will be expected to: Have their key management/project team members attend a 2 - 3 hour planning meeting. Deliverables as a Result of Task 1: From the work accomplished above, the deliverables will be as follows: Identification of objectives, issues and concerns by both parties. Confirmation of the City's goals and objectives. Identification of any data constraints. Task 2—Data Collection Task Objective: Provide a written data request detailing the data required to complete the study. Review and assess the City's existing water, sewer, storm drainage, and street maintenance data. HDR will provide a written data request to the City prior to the initial kick-off meeting so that it can be discussed at the meeting and any problem areas quickly resolved. The data and information requested for this study should be, for the most part, readily available information (e.g., financial, statistical, customer, etc.). For those areas where the data is not readily available, or will require significant labor and expense on the City's part to provide, HDR and the City will determine the "sensitivity" or "importance" of the data required and if alternative data sources are available. As with any study, it is imperative that the City provide a timely response for the data requested. Expected City Staff Support for Task 2: For this task, the City will be expected to: lulCity of Kalispell - Scope of Services for the Comprehensive Rate/Fee Study 2 Gather the data requested in the written data request provided by HDR. (Note: typically requires 40 - 60 hours of total staff time to provide). Deliverables as a Result of Task 2: From the work accomplished above, the deliverables will be as follows: An initial written data request to the City. Task 3—Review of Existing Financial/Rate Setting Policies, Indicators and Practices Task Objective: Review the City's existing financial and rate setting policies and financial indicators to determine if any adjustments are necessary. As appropriate, recommend additional policies/practices. As a part of this task, HDR will review the existing financial and rate policies that HDR developed and helped the City adopt as part of the 2002 rate study. Part of those policies states that the financial/rate setting policies should be reviewed every three to five years. This review will determine overall conformance with those policies, as well as address any areas where the policies may need to be strengthened or adjusted. The analyses developed as a part of this study will conform to the City's financial and rate policies. At the same time, recently the Government Financial Officers Association (GFOA) has developed a new framework and principle guidelines. This new framework and principle guidelines will also be considered during HDR's review of the City's existing financial and rate setting policies. Expected City Staff Support for Task 3: For this task, the City will be expected to: Gather existing written policies and provide to HDR. Discuss any existing financial/rate philosophies or practices. As needed, provide clarification of existing policies. As needed, assist HDR is developing recommended policies for possible adoption. Deliverables as a Result of Task 3: From the work accomplished above, the deliverables will be as follows: Review of the existing financial/rate setting policies and practices of the City. Develop additional policies/practices to help provide financial stability to the utilities and street maintenance funds and aid in streamlining long-term financial planning and rate setting. A revised set of financial policies, as necessary. Task 4—Revenue Requirement Analysis Task Objective: Using a "generally -accepted" rate setting methodology, develop the City's water, sewer, storm drainage, and street maintenance fund revenue requirements for a multi year period. The analysis will utilize the City's capital infrastructure planning documents (e.g., Capital Plan/Master Plan), while ensuring adequate funds for operating and capital needs. The revenue requirement analyses will establish the cost -based `level' of revenue to be collected from rates/fees and, if necessary, a plan to transition rates/fees to cost -based levels. The development of the water, sewer, storm drainage, and street maintenance revenue requirement analyses task considers the prudent and proper funding for 0&M and capital expenditures for each utility or fund, and determines the need for any rate/fee adjustments over falCity of Kalispell - Scope of Services for the Comprehensive Rate/Fee Study 3 +r A the time period selected. A more detailed discussion of the various steps involved in developing the City's revenue requirements for each utility is provided below. STEP 1 - SELECTION OF A TEST PERIOD - A "test period" refers to a time frame of reference for the accumulation of revenues, expenses and consumption data. In this case, it would seem to be appropriate to review costs over the five year period of 2010 - 2014. This extended time frame allows the City to determine if any major rate or fee impacts are on the horizon and potentially take steps today to help minimize future impacts (e.g. rate adjustment transition, accumulation of capital reserves, etc.). STEP 2 - METHOD OF ACCUMULATING COSTS - The method of accumulating costs that the City has historically used is the "cash basis" methodology. This is the methodology HDR would recommend to establish revenue requirements for the City. STEP 3 - ACCUMULATION OF REVENUES AND EXPENSES Once the test period and method of accumulating costs has been determined, HDR in conjunction with City management and staff will develop the test period revenue requirements for each utility or fund. Revenue requirements are composed of two major types of costs; operational and capital expenses. The operational costs are generally projected from historical or budgeted costs, using assumed escalation factors, and adjusted for any known changes in operations (e.g., additional personnel, growth/expansion, etc.). The City's operational costs appear to be composed of 0&M expenses and administration and billing costs. A review of the City's most recent year historical expenses and current year budgeted expenses will be undertaken and a determination made as to the basis for the escalation of 0&M expenses for the projected time period under review. While the projection of the operational costs is typically fairly straightforward, the capital cost projections are generally the focus of the analysis, and require more planning and analysis. Within this study, the starting point for projecting capital costs (expenditures) will be the City's capital improvement plans for each utility/fund, or any other relevant capital planning and capital budgeting documents. Once the draft revenue requirements are developed, HDR always will meet with the City's project team review the draft results of the analysis. The objective of this meeting is to review the overall methodology, while discussing and reviewing the various inputs and assumptions to the model. In this way, City staff will review with HDR the inputs and key assumptions that went into the draft revenue requirement analyses. One issue of interest to the City is the potential movement to monthly utility billing for the water and sewer utility. HDR will develop a technical memorandum outlining the advantages and disadvantages of moving to monthly billing. At the same time, HDR will estimate the financial/rate implications of this change. HDR will discuss with City staff the changes needed and potential costs associated with monthly billing. Following the internal project review of the revenue requirements with City project team members, HDR will meet with the City Council to present the draft revenue requirements of the street maintenance fund. This will serve to inform the Council of the street maintenance financial needs. We will also explore what that means in terms of the existing assessment fee and whether Council is willing to look at other fee options or increases to the existing fee. This is an important milestone as it will determine whether any cost per unit fees are evaluated in cost of service analysis and the level of effort for street maintenance in rate design analysis. Depending upon the policy guidance from the City Council, at this point, the study of the street maintenance fund may be complete, or the City Council may request HDR to further explore alternative options. City of Kalispell - Scope of Services for the Comprehensive Rate/Fee Study 4 m In summary, a revenue requirement analysis will be developed for each utility and fund to determine the overall funding/financing requirements. The final revenue requirements will be developed which appear to best meet the City's goals and objectives for each utility/fund, while attempting to minimize rates/fees and costs over time. Expected City Staff Support for Task 4: For this task, the City will be expected to: Provide "as needed" assistance to clarify the City's data and information as it relates to developing the revenue requirements. Provide "as needed" data refinements or additional data needs as determined during the process of developing the revenue requirements. Attend a one day project meeting to review the draft revenue requirement analysis. Deliverables as a Result of Task 4: From the work accomplished above, the deliverables will be as follows: A projected water, sewer, storm drainage, and street maintenance revenue requirement analysis for a projected five-year period that considers the necessary operating and capital needs of each utility/fund, including analysis of cost. Technical memorandum discussing the advantages, disadvantages, costs and financial/rate impacts of monthly utility billing in water and sewer. A capital financing plan within the revenue requirement analysis, utilizing the City's comprehensive plans or capital budget, which attempts to maximize capital expenditures, while minimizing the rate and fee impacts to customers over time. If needed, a transition plan to "phase in" any needed rate adjustments. Recommendations regarding key financial indicators (debt service coverage, capital funding/replacement through rates, reserve levels, etc.). Task 5—Cost of Service Analysis Task Objective: Develop an average embedded cost of service study to equitably allocate the revenue requirements of the water and sewer utilities to the customers served by those utilities. HDR intends to develop a complete a cost of service analysis for the water and sewer utilities. The storm drainage and street maintenance funds assessment fees will be addressed within the rate design phase of the study. Unit costs for these two funds will be developed, as necessary and appropriate, based on input from staff and Council. In simplified terms, a cost of service study attempts to equitably allocate the revenue requirements of each utility between the various customer classes of service (e.g., residential, multi -family, commercial, etc.). As a starting point, the methodology used in the City's previous comprehensive water and sewer cost of service (rate) study will be utilized and then updated for current conditions and costs. A brief discussion of the major steps associated with a water and sewer cost of service analysis is provided below. STEP 1- SELECTION oFTEsTPER►oD - The first step of a cost of service is to select a time period for the allocation of costs. In the City's case, allocating the 2010 revenue requirements for each utility, for cost of service purposes, appears appropriate. STEP2 - FUNCTiONALIZATION AND CLASSIFICATION OF EXPENSES - The next step in the cost of service analysis is to functionalize the data. HDR will functionalize the cost data into its basic cost falCity of Kalispell - Scope of Services for the Comprehensive Rate/Fee Study 5 categories (e.g., for the water utility, source of supply/production, treatment, transmission, distribution, etc.). Given functionalized costs, HDR will then classify costs into their various cost components. For the water utility, classification involves determining whether each specific cost or account item was incurred to meet a consumer's base (average demand needs) or extra capacity (demands over and above average demands), fire protection, or customer related needs. In contrast, for a wastewater utility, classification involves determining whether each specific cost or account item was incurred to meet a consumer's volume, strength, or customer -related need. As a part of the analysis, a review of the various types of costs that the City incurs for each utility will be undertaken and specific cost classifiers developed. Classification will be based upon generally accepted cost of service techniques. For storm drainage, cost allocation is based on the impervious area and customer number. As a result, the cost of service is more of a "unit cost basis" of developing the cost -based rates. Similarly, if the Council chooses to have HDR develop optional assessment fees for street maintenance, HDR will review road miles, traffic units, and other appropriate measures to develop a cost per unit for street maintenance. If the study moves into an in-depth analysis on alternative street maintenance fees, an amendment to the scope of services will likely be necessary. STEP 3 - DETERMINATION OF CLASSES OF SERVICE -The process of establishing classes of service is to group customers into homogeneous groups. That is, customers with similar usage and/or facility requirements. HDR will first discuss this issue with the City to determine the City's overall objectives. Given that understanding, HDR will then review the data and information that is available for each utility on the various customer classes of service to determine final classes of service for cost allocation purposes. These will be based upon grouping customers with similar facility requirements and usage patterns for each customer group (e.g. residential, multi -family, commercial, etc.). Likewise, HDR will review the categories within the City's impact fee assessments to determine if additional categories are needed within the rate classifications. This is particularly important for the storm drainage rate where different classifications within the storm drainage impact fee schedule have created some confusion in assessing the storm drainage assessment fee. This issue will be reviewed when determining appropriate customer classes for the storm drainage utility. The City's existing rate classes will be the starting point for this analysis. During the review of the existing classes of service any modifications or concerns will be discussed with City staff and any agreed upon changes will be included in the cost of service analysis. STEP 4 - ALLOCATION OF EXPENSES - The next analytical process involved in each of the cost of service analyses is the allocation of the classified plant in service and expenses to each of the customer classes of service. Once the classes of service have been determined, the process of developing allocation factors is undertaken. In developing the allocation factors, HDR will develop factors that are "equitable" to all customers, and rely upon City -specific data, when available. STEP 5 - SUMMARY of THE Corr of SERVICE - Given the development of all the allocation factors, the final task allocates the expenses to each class of service. From this process, a summary page of the cost of service study for each utility is provided. The summary page for the cost of service study compares the difference between the current level of rate revenues received from each class of service, and the allocated cost of service for each class. The cost of service will also provide average unit costs, or cost -based rates for each utility, which are important to the development of final rate designs. In summary, the development of average falCity of Kalispell - Scope of Services for the Comprehensive Rate/Fee Study 6 unit costs will provide "cost of service" based water and sewer rates for all classes of service for the City. At the conclusion of the development of the draft cost of service analysis HDR will meet with City staff to review the results of the analysis. During the review of the draft cost of service analysis, HDR will explain the methodology and assumptions of the analysis the will determine the cost based rates for the City's water and sewer utilities. For storm drainage the cost per unit will be provided. Expected City Staff Support for Task 5. For this task, the City will be expected to: Attend a one day project meeting (or conference call meeting) to review the findings and results of the cost of service analyses for water and sewer. Provide any "as needed" data refinements or additional data needs as determined during the process of developing the cost of service analysis Deliverables as a Result of Task 5: From the work accomplished above, the deliverables will be as follows: Review of the current customer classes of service for each of the utilities and determine any revisions for cost allocation purposes. An "equitable" allocation of the revenue requirements to the various classes of service for the City's water and sewer utilities. A unit cost analysis for the storm drainage fund. A summary of the average unit costs (cost -based rates) for the various customer classes of service for each of the utilities. Task 6—Rate Design Analysis Task Objective: Utilize the cost information developed as a part of the previous tasks and develop water, sewer, storm drainage, and street maintenance (if appropriate) rate design options for possible adoption by the City. Review alternative rate designs that meet the City's rate design goals and objectives. A starting point for the rate design process is to gain an understanding of the rate design goals and objectives the City is striving for in this study. These objectives may include ease of administration, revenue stability, efficient use (conservation), equity, simplicity, etc. Understanding the City's rate design objectives will assist HDR in the development of any rate design alternatives. As a part of this task, the City's present rate designs for each utility/fund will be reviewed to ensure that they conform to contemporary rate -setting practices and with the City's rate design goals and objectives. In designing the rate options for each utility, the cost of service information and average unit cost information for each utility/fund will be utilized as a starting point. HDR will provide up to two (2) rate alternatives for each utility that are designed to meet the City's goals and objectives. For each rate design developed, a bill comparison and graph will be provided that shows a comparison between the present bill and the proposed bill at various levels of usage. Bill comparisons are useful in assessing the potential impacts to a wide variety of customers. Any rate alternatives will be reviewed with City staff and the final proposed rate will be presented to the City Council for adoption. A cost -based wholesale rate design for Evergreen will be developed as part of the analysis for the sewer utility. An evaluation of the rate categories for the storm drainage fund will be undertaken as a part of this study. This evaluation will likely highlight the need for further rate categories in the stormwater fund. falCity of Kalispell - Scope of Services for the Comprehensive Rate/Fee Study 7 Exhibit A Scope of Services Expected City Staff Support for Task 6. For this task, the City will be expected to: Discuss the City's rate design goals and objectives with HDR. Review rate design alternatives for appropriateness. Deliverables as a Result of Task 6. From the work accomplished above, the deliverables will be as follows: Review of the City's current water, sewer, storm drainage rates. Develop up to two (2) rate design alternatives per utility, as necessary Cost -based wholesale sewer rates for Evergreen. IM Review and evaluation of the rate categories for the stormwater utility. Bill comparisons and graphs for the rate design alternatives developed. Task 7—Written Report of Findings and Recommendations Task Objective: Provide a written report to summarize the findings, conclusions, and recommendations of the water, sewer, storm drainage, and street maintenance fund rate studies. Upon completion of the rate analysis, HDR will develop a draft written report of the rate study which is intended to be comprehensive in nature and document our findings, conclusions and recommendations. Within all of our reports, HDR provides technical appendices of all the technical analyses undertaken. HDR will provide an electronic copy of the draft final report to the City for review and comment. This draft report will be used for the last two City Council/public meetings. Comments, suggestions or corrections from the City concerning the draft final report will be incorporated into the final report. Ten (10) bound copies and one unbound copy of the report will be provided to the City. In addition, a PDF version of the final report will be provided to the City. Expected City Staff Support for Task 7. For this task, the City will be expected to: Review and comment on the draft final written report Deliverables as a Result of Task 7: From the work accomplished above, the deliverables will be as follows: An electronic copy of the draft final report. Ten (10) bound copies, one unbound copy and an electronic version (PDF) of the final written report. Task 8—Meetings/Public Presentations Task Objective: Provide effective public presentations of the findings, results and recommendations of the study. Throughout this project, HDR will schedule, as appropriate, project meetings and conference calls with the City staff to keep them abreast of the progress of the study and to assure that the assumptions and methodology used within the study are consistent with the City's thinking. HDR will undertake to provide as much educational services to the City's staff members as possible. HDR has budgeted for five (5) meetings with the City Council to gain policy direction, and to provide opportunity for public review and input. These meetings are listed below: 1. Review of financial policies and any recommended modifications or adjustments. At this meeting a review of the purpose and process the rate study will undertake will also be presented. laqCity of Kalispell - Scope of Services for the Comprehensive Rate/Fee Study 8 Exhibit A 2. Review the results of the street maintenance fund revenue requirement for 2010 through 2014. The results will indicate the adequacy of the assessment fee in funding operations and necessary capital. The meeting will provide an opportunity for the Council to determine if they would like to explore an alternative fee approach. If not, then the street maintenance analysis and discussion will essentially be complete for purposes of this study's scope of services. 3. Review of the revenue requirement and cost of service results for the water, sewer and storm drainage utilities. The City Council will be presented with the results, the necessary rate adjustments, a rate transition plan, and as appropriate, any policy guidance for the rate design phase of the project. 4. Review the final rate design options with Council to determine the final rate designs to be presented at the public hearing. 5. Conduct a public hearing on the rate study process and the proposed rates for each utility and fund. HDR will be responsible for developing all presentation materials. HDR will provide a copy of the proposed presentations to City staff and management for review and comment prior to the Council meetings. These presentations will be provided electronically. The City will be responsible for providing adequate copies of the presentations for the meetings. If additional public meetings beyond the five (5) budgeted meeting, they can be provided on a time and materials basis. Expected City Staff Support for Task 8: For this task, the City will be expected to: Review and comment on any proposed handouts for the City Council meeting. Arrange and schedule all City Council meetings related to reviewing the rate study results. IN Provide copies of all handout materials for the meeting Deliverables as a Result of Task 8: From the work accomplished above, the deliverables will be as follows: Five (5) public presentations to the City Council to present the results of the comprehensive water, sewer, storm drainage, and street maintenance rate studies. Electronic copies of the draft and final presentations. Task 9—Computer Models Task Objective: Provide a copy of the models developed as a part of this study. The financial/rate models developed for the City will be provided at the end of the study. The model will be developed using Excel. It has been assumed that no user manual or training should be included within the scope of services or budget. Expected City Staff Support for Task 9: For this task, the City will be expected to: IN None Deliverables as a Result of Task 9. From the work accomplished above, the deliverables will be as follows: A copy of the computer spreadsheet models used to develop the City's study. This concludes the proposed scope of work for the City. This scope of work and approach has been developed based upon our understanding of the City's goals and objectives for this study. HDR can modify these services to meet the City's specific needs during the scoping of this project. lalCity of Kalispell - Scope of Services for the Comprehensive Rate/Fee Study 9 Exhibit B Project Time Schedule Project Time Schedule The project time schedule for this study recognizes that two individual and unique activities are occurring at the same time. The water, sewer and storm drainage rate studies and the street maintenance fund (a non -enterprise fund) fee assessment study. The analyses for these studies will run concurrently. Based on our past experience with the City and on other rate studies of this complexity HDR has developed a proposed time frame for the project. This proposed time schedule is presented below. ■ = Staff Meeting A&= Council Meeting/Public Meeting HDR will make every reasonable effort to meet this time schedule. If the City has particular scheduling needs, this can be discussed at the initial project meeting. HDR will attempt to accommodate scheduling and timing needs of the City, as possible. All meetings will be scheduled at the mutual convenience and availability of HDR and the City. FDCity of Kalispell - Project Time Schedule for the Comprehensive Rate/Fee Study 10 Exhibit ' Project e 4 The fees for the City's study are based upon the scope of services previously presented in Exhibit A. These fees have been developed using HDR's hourly billing rates for 2009 for the staff anticipated to provide these services to the City, and the number of hours estimated to complete the scope of services (Exhibit A). Hourlyit i Rates The following hourly billing rates were used to establish the project fees for this study. Individual Tom Gould, Project Manager Cil Pierce, Task Manager Shawn Koorn Craig Caprara John Maxwell Judy Dean Kristina Larkey Others - Project Clerical Support 2009 Hourly Rate $245.00/hour 155.00/hour 165.00/hour 185.00/hour 245.00/hour 145.00/hour 85.00/hour 90.00/hour Should other HDR individuals be required for this project, they will be billed at their standard hourly billing rate. Should additional services be requested by the City, the hourly billing rates shown above will apply for 2009. The hourly rates used to develop this fee estimate will remain in effect through December 31, 2009. The estimated fee is provided below. IaRCity of Kalispell - Project Fees for the Comprehensive Rate/Fee Study 11 Labor. Task 1: Initial Project Meeting Task 2: Data Request Task 3: Financial Policies Review Task 4: Revenue Requirement Task 5: Cost of Service Task 6: Rate Design Analysis Task 7: Written Reports Task 8: Public Presentations (5) Task 9: Computer Models Total -Labor Expenses. Airfare, Hotel, Car Rental, Mileage Printing, Copies, Phone, etc. Misc. and Technology Charge Total Expenses Exhibit C Proiect Fees $900 $900 $900 $680 $3,380 450 450 400 410 1,710 1,290 1,240 1,140 1,140 4,810 5,500 4,500 3,500 3,445 16,945 6,000 5,250 0 1,960 13,210 5,200 5,200 440 3,910 14,750 1,930 1,600 1,350 1,505 6,385 4,100 4,100 3,950 3,600 15,750 N/C N/C N/C N/C N/C $25,370 $23,240 $11,680 $16,650 $76,940 $1,450 $1,450 $1,200 $1,400 $5,500 300 300 250 300 1,150 550 550 450 450 2,000 $2,300 $2,300 $1,900 $2,150 $8,650 GRAND TOTAL FEES $27,670 $25,540 $13,580 $18,800 $85,590 Should other HDR individuals be required as the project unfolds, their hours and cost will be provided at the standard hourly billing rate in effect at that time. If the City requests additional services beyond those identified within Exhibit A, those services will be provided on a time and materials basis or at a cost agreed to by both parties in advance of completion of any additional work. Method of Billing For this study, HDR proposes that the City be billed on a fixed fee, lump sum basis. Total estimated fee of $85,590 be divided into six equal payments of $14,265.00 and be billed on a monthly basis. The final payment would be made by the City when the final reports are delivered to the City. The City will not unreasonably withhold the final payment from HDR. Along with each monthly invoice the City's Project Manager will receive an update of the various aspects of the study undertaken during the prior month and any issues or concerns related to the study. faCity of Kalispell - Project Fees for the Comprehensive Rate/Fee Study 12