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Home My WebLink AboutHF&H Consultants, LLC (2)201 North Civic Drive, Suite 230 Walnut Creek, California 94596 Tel: (925) 977-6950 Fax: (925) 977-6955 hfTt-consultants.cont December 30, 2021 Oscar Antillon Public Works Director Town of Los Altos Hills 26379 Fremont Road Los Altos Hills, CA 94022 HF&H CONSULTANTS, LLC Managing Tontorroto's Resources Today Robert D. Hilton, Emeritus John W. Farnkopf, PE Laith B. Ezzet, CMC Richard J. Simonson, CMC Marva M. Sheehan, CPA Rob C. Hilton, CMC Subject: Proposal to Update the Town's Sewer Service Rate Study Oscar Antillon: HF&H Consultants (HF&H) is pleased to submit this proposal to assist the Town of Los Altos Hills' (Town) with updating its sewer service rates. In this letter, we briefly describe the project background, our proposed scope of services, staffing, budget estimate, and schedule. BACKGROUND In October 2019, the Town of Los Altos Hills, CA engaged HF&H Consultants to update the Town's sanitary sewer service charges. Working with Town staff, HF&H calculated the sewer service charges for the next five fiscal years by projecting operating and capital expenses and comparing them with projected revenue from current rates. Annual surpluses and deficits were then applied to the reserve funds and rates were adjusted so that the expenses were covered and operating and capital reserves targets were met. HF&H determined that no rate increase was necessary for fiscal year 2020-21. In May of 2020, HF&H updated the five-year rate study and concluded that no rate increase was needed in FY 2021-22. The objective of the proposed rate study is to update the revenue requirement projections to set rates that will provide the required funding for current and projected wastewater collection, treatment, and disposal activities for a five-year planning period, FY 2022-23 through FY 2026-27. SCOPE OF SERVICES Task 1. Project Initiation: We will schedule a call with Town Staff at the outset to confirm the study objectives, schedule, and scope of services. We will issue a data request in Sewer Service Charge Update December 30, 2021 Page 2 of 4 advance. Any data that can be compiled for the meeting will be reviewed to determine if any additional data is required to conduct the required analyses. Task 2. Update Revenue Requirement Projections: The revenue requirement projections indicate the annual adjustments needed in rates to generate the revenue required to cover the Town's projected operating and capital costs, as well as adequately funding reserves per the Towns policy. We will update the existing model to reflect the best available information from the Towns recently -approved budget and discussions with staff, including appropriate changes in the annual escalation factors for expense projections. We will confirm the latest cost estimates for the treatment of the Towns wastewater via agreements with the Cities of Palo Alto and Los Altos, which is typically provided to the Town each year. In addition to expenses, we will review the Town's reserves. Throughout this task, drafts of the model will be presented to staff in virtual meetings, which allows for real-time review of models from remote locations. Input from staff will be incorporated into the model until it is ready for broader review with the Towns Finance Committee. Task 3. Present Results: Upon completion of Task 2, we will present our preliminary findings to the Towns Finance Committee to review the recommended rate adjustments, before presenting to the full Council to begin the Proposition 218 process. A technical memorandum will be prepared describing the derivation of the proposed rates. The memo will be prepared in draft and final form. The memo will be presented at a Council workshop. A draft Proposition 218 notice should also be prepared for presentation to the Council when the draft memo is presented. We will assist Town staff and legal counsel in preparing a draft notice. Assuming that the Town authorizes staff to mail notices, the notice will be edited to reflect any comments from the Council and the proposed rate increases. The revised draft memo will also be edited to reflect the Council's direction. The final memo will contain a final version of the rate model. The memo should be made available for public review during the 45 -day majority protest period. At the conclusion of the 45 - day period, we will attend the protest hearing to answer questions. If needed, we can briefly summarize the rate proposal for the benefit of the public. STAFFING The project will be staffed Rick Simonson, Senior Vice President, and Geoffrey Michalczyk, Senior Associate. Rick and Geoff prepared the previous sewer rate model for the Town. We will utilize the existing model to help reduce the hours necessary to complete this Sewer Service Charge Update December 30, 2021 Page 3 of 4 0 project. We will compile background information, prepare the analyses and models that may be required, and produce a technical memorandum. This approach will allow us to complete the project in a timely manner and allow for quality control by cross checking each other's work. FEE ESTIMATE For this project, we will utilize the model we developed collaboratively with Town staff last year. Leveraging this recent work will allow us to conduct the update for a not -to - exceed fee of $14,830, as shown in Figure 1. The Town will only be billed for time spent on the project. Conversely, any hours for out - of -scope work would be billed in addition to the estimated fees. Out -of -scope work constitutes work on additional, new tasks, as well as extra time spent on existing tasks as authorized by the Town. Budget estimates can be provided at the time that additional work is requested. Fissure 1. Fee Estimate Tasks Simonson Project Manager Michalczvk Project Analyst Total Work Products Hourly rates $300 $210 Task 1 - Project Initiation Meet with Town Staff/gather data Task hours 2 2 4 Meeting; Task Fees $600 $420 $1,020 Request for data Task 2 - Update Sewer Service Charge Model Update Financial Model 2 8 10 Draft model Review Preliminary Analysis with Town Staff 2 2 4 Conf. call(s) Revise Models Accordingly 2 2 4 Revised models Bill Impacts/Bill Comparison with Other Jurisdictions 0 2 2 Task hours 6 14 20 Task Fees $1,800 $2,940 $4,740 Task 3 - Communicate Results Review Preliminary Results with Finance Committee 4 4 8 Presentation Prepare Draft Memo 2 8 10 Draft report Revise Draft Memo Accordingly 2 2 4 Revised draft report Present Final Memo to Council 4 4 8 Draft report/Presentation Task hours 12 18 30 Task Fees $3,600 $3,780 $7,380 Task 4 - Implementation Assist with Prep of Prop 218 Notice/Ord/Reso 0 2 2 Notice/Ord/Reso Preparefor Attend Prop 218 Protest Hearing 2 2 4 Presentation Task hours 2 4 6 Task Fees $600 $840 $1,440 Total Hours 22 38 60 Total Fees $6,600 $7,980 $14,580 Direct Expenses (travel, if necessary) $250 Total Fees and Expenses $14,830 Sewer Service Charge Update December 30, 2021 Page 4 of 4 SCHEDULE This work can proceed quickly once the best available data are compiled. Depending on the condition and availability of the data, 60 to 90 days should be sufficient to complete the work, allowing some time for Town review. We hope this proposal is responsive to the Town's requirements. Please let me know if any revisions are needed. I would like to thank you for requesting this proposal from us. We consider it a privilege to assist the Town with this matter. Sincerely, HF&H CONSULTANTS, LLC Rick Simonson Vice President on behalf -of the Town of Los Altos Hills this day of JCW uA ,I, ), . z� (Signature) �I r f\-( `�� (Printed Name) U� Ka A-One- (Title)