Title
Resolution to Approve a Professional Services Agreement with Stantec Consulting, Inc to Conduct a Cost of Services Study for Water and Wastewater - RFP 991 ($256,975.00)
Memorandum
It has been over 10 years since the City of Ann Arbor has evaluated the basis for developing its water and wastewater rates. The American Water Works Association and the Water Environment Federation, the two professional associations that develop best practices for the water and wastewater industries, have determined that the cost of service study is a generally accepted practice for well-managed utilities. Given the length of time since the last cost of service study, questions of rate equity and affordability raised by City Council members, and significant capital needs for the drinking water system, it is an appropriate time to reassess the current rate structure for the City's water and wastewater customers.
In October 2016, The City issued a request for proposals from qualified firms to conduct a cost of service study. The proposed scope of services includes:
1. Rate Design Development - ensuring revenue sufficiency as well as equitable distribution of costs. This includes affordability as a component of analysis with in-depth tailoring to Ann Arbor's demographics.
2. Public Engagement - engaging customers and stakeholders to set objectives and build understanding of proposed rate structures and models.
3. Evaluation and recommendation - providing the city with a financial model that can be utilized for future rate setting with varying parameters (such as debt issuance, operating changes, capital improvement plan changes, etc.).
The City received five proposals from: Arcadis Consulting, Black and Veatch, Ltd., Jones & Henry Engineers, Ltd., Raftelis Financial Consultants, Inc., and Stantec Consulting, Inc. A selection committee comprised of Public and Financial Services staff reviewed all of the proposals. The selection committee identified two of the five firm...
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