Agenda Packet_2023-08-01 - Laserfiche WebLink

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Our Approach Updating your rates begins with our suite of utility rate and financial planning models that we customize to reflect the City's available funds, budgeting and actual spending, customer information, and capital program. The models are designed to: • Identify assumptions and variables • Examine historical trends and performance • Forecast financial requirements • Test alternative what -if scenarios • Calculate cost of services for each rate/service component • Determine the sufficiency of current rates to recover the cost of services • Design updated rates based on cost to provide services and influence behavior Our detailed approach and planning tools will allow our project team to work closely with City utility staff, finance staff, and City Administration to develop and get support for a long-term financial plan. We will utilize our models in interactive work sessions with City staff to review what -if scenarios and develop strategies to implement a sustainable rate and financial plan. Steps to a Successful Rate Study There are several steps to calculating cost -of -service based rates. This section describes the ratemaking process and how we will work with the City to develop rates tailored to your system dynamics, diversion initiatives, and service levels. The steps also detail interaction with City staff, administration, elected officials, and the public that are required to facilitate the desired outcomes for your study. Compile and Review Existing Information We will begin our study by scheduling a kickoff meeting with our team and City staff to discuss key issues, near and long-term goals, and metrics that you consider to be most important to your financial performance. At this meeting we will also distribute our data request, discuss the items required for our analysis, and the platform we will use for data transfer. • Share - Create Public Meetings -Outreach Rates -Implementation Fees Plan -Capital Program - Review Policies - Funding Strategy - Discuss Goals We will establish who will be involved in the process, the key members of our team and your key staff, and discuss the project schedule for interactive work sessions with your staff, meetings with your Council, and final deliverables. We will work with you to obtain all information relevant to understanding your existing operations and costs for provision of service to customers. Once we start to receive the data, we will begin an in-depth review. We will also review any other data provided and remain in contact if we need clarification prior to our first interactive work session. Revenue Sufficiency (Existing Cost of Service) SCS uses an interactive modeling approach that allows input from you as we develop customized financial solutions. We will perform a revenue sufficiency analysis to determine the long-term sustainability of your solid waste system revenues, including a 10-year financial management plan and associated plan of rate adjustments. During meetings with your staff, we display the models and work with you to test multiple "what if" scenarios that consider your financial sensitivity to changes in various variables. For example, we can test the impact of changes to your vehicle program costs and timing, and the associated impact on operating expenses and staffing requirements. For each scenario considered, we will identify the necessary revenue adjustments, including any borrowing that may be required, and the associated financial, fund balance, and customer impacts. We will also evaluate capital funding alternatives, including cash funding, debt funding, grants, or any other financing alternatives the City is considering. The results are displayed in a simple, graphical format that allows for easy comparison of scenarios. Some of the steps in this process are detailed in the following sections. Expense Protection To project your revenue requirements, we review your historical budgeted and executed operating expenses, all planned capital improvements and associated funding sources, existing debt service and coverage ratios, available i y ouncil 14 — 70 8/1/2023