REPORT TO THE CITY COUNCIL FROM: BROCK D. BUCHE, PE, PLS, Director Department of Public Utilities BY: PAUL AMICO, PE, Assistant Director Department of Public Utilities - Administration SUBJECT ..Title Approve the Second Amendment to the Consultant Services Agreement with Pavletic Consulting LLC., (formerly Municipal Financial Services, a sole proprietorship) to extend the term through December 31, 2027, and increase the compensation by $75,000, for a total contract amount not to exceed $219,000, and authorize the Director of Public Utilities, or designee, to execute the Second Amendment to the Consultant Services Agreement. (Citywide) ..Body RECOMMENDATION Staff recommends that City Council approve the Second Amendment to the Consultant Services Agreement (Amendment) with Pavletic Consulting LLC., (formerly Municipal Financial Services, a sole proprietorship) to extend the term of the agreement through June 30, 2027, and increase the compensation by $75,000, for a total contract amount not to exceed $219,000, and authorize the Director of Public Utilities, or designee, to execute the Amendment. EXECUTIVE SUMMARY Routinely assessing and evaluating revenue and expenditure projections, and specifically analyzing the rates charged for utility service, is vital to prevent revenue shortfalls that could lead to disruptions or cuts in service. Common practice is for municipalities to evaluate rate-generated revenue annually to determine whether and when rate updates are needed to cover increases in operating costs. The City's practice is to evaluate revenues and expenses and the adequacy of the current rate structure annually during the budget process. The Department of Public Utilities (DPU) executed an agreement with Municipal Financial Services, a sole proprietorship - now Pavletic Consulting LLC., - (Consultant) in 2022 to provide rate analysis services for the Water and Wastewater Divisions. The City and Consultant entered into the First Amendment to Agreement on December 16, 2024, to extend the term of the Agreement to June 30, 2025. DPU now desires to amend the agreement to extend the time of work to June 30, 2027, and increase the compensation by $75,000, for a total compensation not to exceed of $219,000. BACKGROUND Routinely assessing and evaluating revenue and expenditure projections, and specifically analyzing the rates charged for utility service is vital to prevent revenue shortfalls that could lead to disruptions or cuts in service. Common practice is for municipalities to evaluate rate-generated revenue annually to determine whether and when rate updates are needed to cover increases in operating costs. The City's practice is to evaluate revenues and expenses and the adequacy of the current rate structure annually during the budget process. On February 1, 2022, the City of Fresno entered into an agreement with Consultant, to provide professional utility rate planning consulting services in an amount not to exceed $144,000. The City and Consultant entered into the First Amendment to Agreement on December 16, 2024, to extend the term of the Agreement to June 30, 2025, to allow the Consultant to continue to provide rate consulting services for the Water and Wastewater Management Divisions' Business Managers. DPU now desires to amend the agreement to extend it to June 30, 2027, and increase the compensation by $75,000, for a total compensation of $219,000. All work performed by the Consultant to date has been completed to DPU's satisfaction in a timely and professional manner. The City Attorney's Office has reviewed and approved as to form The Second Amendment to the Agreement. Upon approval by the City Council, the Second Amendment will be executed by the Director of Public Utilities, or designee. ENVIRONMENTAL FINDINGS By the definition of the California Environmental Quality Act (CEQA) Guidelines Section 15378, this is not a "project" for the purposes of CEQA. LOCAL PREFERENCE Local preference was not implemented because this is an amendment to an existing consultant services agreement. FISCAL IMPACT Funding for the amendment is included in the FY 2026 Water and Sewer/Wastewater Enterprise Fund operating budgets. Attachments: Second Amendment to Agreement First Amendment to Agreement Agreement