REPORT TO THE CITY COUNCIL June 16, 2016 FROM: THOMAS C. ESQUEDA, Director Department of Public Utilities BY: JOHN WATKINS, Senior Management Analyst Department of Public Utilities SUBJECT ..Title Actions pertaining to retaining financial consulting services for the Department of Public Utilities (DPU) divisions (RFQ No. 24272) (Citywide) 1. Award a contract for an amount not to exceed $156,600 to Municipal Financial Services for financial consulting services for DPU Water Division and Wastewater Management Divisions 2. Award a contract for an amount not to exceed $113,480 for HF&F Consultants for financial consulting services for DPU Solid Waste Management Division ..Body RECOMMENDATION Staff recommends Council award contracts to Municipal Financial Services for water and wastewater rate consulting services and to HF&H Consultant for solid waste rate consulting services in order to develop the next five-year rate plans for the DPU divisions. EXECUTIVE SUMMARY DPU is seeking professional consulting services to develop five-year rate plans for its Water, Wastewater Management and Solid Waste Management Divisions. The rate plans will include FY2020 - FY2024. The current five-year water rate plan was approved by Council on February 26, 2015 and includes FY2015 - FY2019. The current five-year wastewater and solid waste rate plans were approved by Council on February 27, 2007 and included FY2007 - FY2011. There have been no new approved five-year wastewater or solid waste rate plans since FY2011. BACKGROUND A notice inviting Statement of Qualifications (SOQs) was published on PlanetBids by the City's Purchasing Division on January 25, 2016. Ten (10) SOQs were received and opened on February 22, 2016. (See Attachment 2 - List of Rate Consultants). The ten consultants were invited to interviews with the selection committee on March 15-18, 2016. Eight firms chose in-person interviews and two firms chose phone interviews. During the interviews the selection committee took notes and evaluated each consultant based on the following criteria: * Understanding of the work to be done * Consulting firm's experience with rate setting * Consultant staff qualifications * Consultant staff availability for the project * Consultant approach to client in terms of communications, responsiveness and availability The selection committee met on March 23, 2016 and April 1, 2016 to collectively discuss and evaluate the consultants based on their submitted SOQs and consultant interviews. The selection committee members were: * Phillip Hardcastle, Principal Accountant, City of Fresno, Finance Department - Debt Administration * Robert Andersen, Assistant Director, City of Fresno, Public Works Department - Capital Management * Henry McLaughlin, Business Manager, City of Fresno, Department of Public Utilities, Water Division * Cynthia Williams, Business Manager, City of Fresno, Department of Public Utilities, Solid Waste Management Division * Carla Watkins, Business Manager, City of Fresno, Department of Public Utilities, Wastewater Management Division The consultants were ranked by the selection committee. Municipal Financial Services ranked the highest for both water and wastewater rate setting and HF&H Consultants ranked the highest for solid waste rate setting. Based on these rankings, the selection committee recommends that Municipal Financial Services be selected for water and wastewater rate setting and HF&H Consulting be selected for solid waste rate setting due to their understanding of the work to be done, experience with rate setting, staff qualifications, staff availability for the project and approach to the client in terms of communications, responsiveness and availability. If there is a need for additional consultants to serve as standbys, the selection committee recommends Carollo Engineers for water and wastewater rate setting and R3 Consultants for solid waste rate setting. ENVIRONMENTAL FINDINGS This item is not a "project" for the purposes of the California Environmental Quality Act. LOCAL PREFERENCE Local preference was not implemented because no local businesses submitted a proposal. FISCAL IMPACT The expenditures will not have any impact on the General Fund since DPU and its divisions are Enterprise Funds. Adequate funding is available from the Water, Wastewater Management and Solid Waste Management Divisions' operating funds to cover these professional consulting services. Attachments: Request for Qualifications (RFQ) - Attachment 1 List of Rate Consultants - Attachment 2 Selection Committee Report - Attachment 3 Municipal Financial Services Agreement - Attachment 4 HF&H Agreement - Attachment 5