HomeMy WebLinkAbout13 PRIVATIZE WATER 07-07-98AGENDA
DATE: JULY 7, 1998
NO; 13
7-7-98
Com(
TO:
FROM:
SUBJECT:
WILLIAM A. HUSTON, CITY MANAGER
PUBLIC WORKS DEPARTMENT/ENGINEERING DIVISION
CONSULTANT SERVICES AGREEMENT TO EVALUATE PRIVATIZATION
OPPORTUNITIES FOR THE CITY'S MUNICIPAL WATER SYSTEM
SUMMARY
The proposed ConsUltant SerVices Agreement with Bookman-Edmonston Engineering, Inc., will initiate a study
] that will determine and evaluate privatiZation opportunities for the City of Tustin' s Municipal. Water System.
RECOMMENDATION
It is recommended that the City Council authorize the Mayor and City Clerk to execute a Consultant SerVices
Agreement with Bookman-Edmonston Engineering, Inc., subject to City. Attorney's approval, to prepare a study
entitled "Privatization Opportunities for the City of Tustin' s Municipal Water System", for a not to exceed fee of
$74,756.
FISCAL IMPACT
Funds for this project in the amount of $112,000 have been budgeted in the FY98-99 Water Operating Fund. The
remaining funds will be available for future phases of the project including preparation of the RFP and selection of
a contractor if warranted.
BACKGROUND
During 1997, the City received several preliminary proposals from various firms expounding the potential
economic benefit to the City through privatization of the Municipal Water System. Generally, these proposals
involved the City entering into an agreement with a private entity for the sale, lease or operation of the water
system.
In response to these inquires a Request for Proposal to assist the staff in determining the potential value to the City
of privatizing any or all elements of the City's water system was prepared. The proposal was structured in three
phases and sent to nine firms experienced in the evaluation of the financial, engineering, and operation aspects of
Municipal Water Systems. Phase I of the proposal is intended to provide a level of assessment of the existing
water operation that will determine if proceeding with a privatization option is warranted. Phase I will be
completed within 90 days of authorization to proceed. Phases II and III will then involve a preparation of an RFP
for any privatization option selected and the resulting evaluation of the responses.
Subsequently, four proposals were received from the firms of Psomas and Associates, Bucknam and Associates,
Stetson Engineering, and Bookman-Edmonston Engineering, Inc. The proposals were evaluated by a panel
consisting of the City Manager, the Assistant City Manager, the Finance Director, the Public Works Director and
the Water Services Manager. Based on the firm's experience with this type of project, experience of the project
Consultant Services Agreement To Evaluate Privatization Opportunities For The City's Municipal Water
System
July 7, 1998
Page 2
team, proposed work plan, oral interview, and references, the panel selected Bookman-Edmonston Engineering,
Inc., as the preferred contractor.
DISCUSSION
Bookman-EdmonstonEngineering, Inc., will perform the tasks specified in Phase I of the Request for Proposal for
a not to exceed fee of $74,756. These tasks include analyzing the system's present condition, analyzing revenue
and expenditures over a fifteen~year time frame, establishing a growth rate, and evaluating the rate structure.
Additionally, Bookman-Edmonston will identify and evaluate operations that may be operated in a more cost
effective manner, review the status of other municipal privatization efforts and compare them to the Tustin system,
and ultimately recommend a specific option based on their analysis. At the completion of Phase I, it is intended
that any opportunities for privatization are clearly understood and that all current and future impacts to the City and
the ratepayers have been carefully analyzed and quantified. If a decision to proceed with Phase II ($30,176)' and
Phase III (6856) is reached, this agreement will be amended and returned to Council for approval.
Tim D. Serlet
Director of Public Works, City Engineer
Gary Vee..
Water Services Manager
TDS:ccg:CSA Bookman eval
CONSULTANT SERVICES AGREEMENT
THIS AGREEMENT FOR CONSULTANT SERVICES, is made and entered into this
day of ,19m, by and between the CITY OF TUSTIN, a municipal corporation,
hereinafter referred to as "City", and Bookman-Edmonston Engineering, Inc. a California
corporation, hereinafter referred to as "Consultant". .~
RECITALS
WHEREAS, City requires the services of a consultant to furnish the necessary
engineering Services for study of"Privatization Opportunities for the Ci_ty of Tustin's Municipal
Water System" hereinafter referred to as '~Proj eot"; and
WHEREAS, Consultant has submitted to City a propOsal dated March 20, 1998, a copy
of which is attached hereto, marked as Exhibit "A" and is by this reference incorporated into this
Agreement; and
WHEREAS, Consultant is qualified to provide the necessary services for the Project and
desires to provide said services; and
WHEREAS, City desires to retain the services of Consultant for said Project.
NOW, THEREFORE, for the consideration and upon the terms and conditions
hereinafter set forth, the parties agree as follows:
AGREEMENT
Section 1: Scope of Consultant's Services.
Consultant shall perform all work necessary to complete in a manner satisfactory to City,
the services set forth in the City's Request for Proposal dated February 18, 1998, a copy of
which is attached hereto, marked as Exhibit "B" and is by this reference incorporated into this
Agreement. Consultant shall also perform all the services set forth in Exhibit "A".
Section 2: Order of Precedence.
In the event of a conflict between or among any of the documents comprising this
Agreement, the following order to precedence shall govern the provision in question:
1. This Agreement
2. City's Request for Proposal (Exhibit "B")
3. Consultant's Proposal (Exhibit "A")
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Section 3: Time for Completion.
The time for completion of the work to be performed by Consultant is an essential
condition of this Agreement. Consultant shall prosecute regularly and diligently the work of this
Agreement according to reasonable schedules established by the City for various items described
and as outlined within Consultant's proposal. Consultant shall not be accountable for delays in
the progress of its work caused by any condition beyond its control and without the fault or
negligence of Consultant. Delays shall not entitle Consultant to any additional compensation
regardless of the party responsible for the delay.
Section 4: Compensation.
m.
The compensation to be paid under this Agreement shall be as set forth in Exhibit "A",
not to exceed a total cost of $74,756.00 for Phase I.
Bo
Consultant shall submit detailed invoices, based upon the actual work performed
accompanied by backup documentation as requested by the City.
C.
Progress payments for work completed shall be paid by City as the work progresses,
within thirty (30) days of the date of Consultant's invoice.
D.
Consultant shall provide City with a monthly itemization of all work performed, and the
fees accrued thereon, in complete and sufficient detail to fully apprise City thereof.
Section 5: Independent Contractor.
Consultant's relationship to City in the performance of this Agreement is that of an
independent contractor. Consultant's personnel performing services under this Agreement shall
at all times be under Consultant's exclusive direction and control and shall be employees of
Consultant and not employees of City. Consultant shall pay all wages, salaries and other
amounts due its employees in connection with this Agreement and shall be responsible for all
reports and obligations respecting them, such as social security', income tax withholding,
unemPloyment compensation, workers' compensation and similar matters.
Section 6: Indemnification.
Consultant agrees to indemnify, defend and hold City, its officers, agents, employees,
successors and assigns harmless from any loss, damage, injury, sickness, death, or other claim
made by any person and from all costs, expenses and charges including attorney's fees caused by
or arising out of Consultant's, its officers', agents', subcontractors', or employees' negligent,
acts, negligent errors, or negligent omissions or willful misconduct.
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Section 7: Insurance.
to
B.
Consultant shall maintain in full force and effect during the term of this Agreement
policies of comprehensive general liability, personal injury and automobile liability
insurance with limits of at least $1,000,000 combined single limit coverage per
occulTence.
..
Consultant shall maintain in full force and effect during the term of this Agreement a
policy of professional liability insurance coverage with limits of at least $500,000
combined single limit coverage Per claim or per occurrence. If Consultant provides
claims made profesSional liability insurance, Consultant shall also agree in writing either
(1) to purchase tail insurance in the amount required by this Agreement or to cover
claims made within five (5)years of the completion of Consultant's service under this
Agreement, or (2) to maintain professional liability insurance coverage with the same
carrier or with an equivalent carrier meeting the requirements of Subsection D in the
amount required by this Agreement for at least 'five (5) years after completion of
Consultant's services under this Agreement. Consultant shall also provide evidence to
the City of the purchase of the required tail insurance or continuation of the professional
liability policy by executing the attached Letter Agreement on Consultant's letterhead.
C.
Consultant shall carry and pay for such .compensation insurance as is necessary to fully
protect Consultant and its employees under California Worker's Compensation Insurance '
and Safety Laws, and shall relieve the City from all responsibility under said laws in
connection with the performance of this Agreement.
O.
All insurance reqUired pursuant to this Section shall be issued by a company admitted in
the State of California and rated A, VII or better by the latest edition of Best's Key
Rating Guide.
E.
Upon execution of this Agreement, Consultant shall provide to City certificates of
insurance on the City's form evidencing the required insurance. If self-insured for
worker's compensation, Consultant shall submit to City a copy of its certification of self-
insurance issued by the Department of Industrial Relations.
Section 8: Termination of Agreement.
t.
CitY shall have the right to terminate any or all of the serVices covered by this Agreement
at any time for any reason by giving written notice to Consultant.
Bo
Upon termination of this Agreement, Consultant shall be paid for services rendered by
the effective date of the termination.
C.
Upon termination of this Agreement or completion of the Project, all documents relating
to the Project shall become the sole property of City. Should City terminate this
Agreement pursuant to subparagraph A. of this Section, Consultant shall, within ten (10)
business days of receipt of notice of termination, provide City with all documents within
..
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Consultant's possession relating to this Agreement and the Project, including but not
limited to all completed documents and all drafts of uncompleted documents.
Section 9: Notices
Any notice allowed or required to be given shall, be effective upon personal delivery
thereof, or upon depositing thereof in the United States Postal Service, certified mail, return
receipt requested, postage prepaid, addressed as follows:
To City:
City of Tustin
Atto: Director of Public Works
300 Centennial Way
Tustin, CA 92780
To Consultant:
Bookman-Edmonston Engineering, Inc.
' Attn: Mr. Harold V. Morgan
225 W. Broadway, Suite 400
Glendale, CA 92304-1331
Section 10: Miscellaneous Provisions.
Ao
Consultant shall proceed immediately and diligently to perform the services provided for
in this Agreement upon receipt of notice from City to proceed therewith.
Bo
No part of this Agreement may be assigned by Consultant without the prior written
approval of City.
C°
This Agreement shall extend to and be binding upon and inure to the benefit of heirs,
executors, administrators, successors and assigns of the respective parties hereto.
D.
Consultant shall perform ali services required under this Agreement using that degree of
care and skill ordinarily exercised under similar conditions in similar localities, and shall
be responsible for all errors and omissions for services performed by Consultant under
the terms of this Agreement.
E.
Consultant certifies that there shall be no discrimination against any employee who is
employed in the work covered by this Agreement, or against any application for such
employment, because of race, religion, color, sex or national origin including but not
limited to, the following: employment, upgrading, demotion or transfer, recruitment, or
recruitment advertising, lay-off or termination, rate of pay or other forms .of
compensation, and selection for training, including apprenticeship.
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IN WITNESS WHEREOF, this Agreement was executed by the parties on the day and
year first above written.
"CITY"
CITY OF TUSTIN
By
Thomas R. Saltarelli, Mayor
ATTEST:
Pamela Stoker, City Clerk
APPROVED AS TO FORM:
Lois E. Jeffrey, City Attorney
"CONSULTANT"
Boolcman-Edmonston Engineering, Inc.
By
Signature
(Print Name / Title)
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EXHIB IT A
BOOKMAN- EDMONSTON
ENGINEERING
Specialists in Water Resources
March 20,1998
Mr. Tim Serlet
Director of Public Works
City of Tustin
300 Centennial Way
Tustin, CA 92780
Subject:.' Privatization Opportunities Study
Dear Mr. Se_rlet
In response to your request, Bookman-Edmonston Engineering, Inc. (B-E) is pleased to
submit this proposal to provide a study of the privalization opportunities for the' City
of Tustin water system. We propose to do the assignment On a time and expense basis
with a budget estimate of $75,000 for Phase L Phases. H and III are preliminarily
estimated at $30,000 and $7,000 respectively, for a total project cost of $112,000.
The actual cost of the work will be determined, in large part, by the extent and
availability of information with respect to financial and system records. If the city has
extensive organized records and prior studies on system condition and other areas, the
study cost will probably approach the estimate as currently proposed. If, however,
records are poorly organized or nonexistent, and the extent of Phase TI and TIT tasks are
greater than anticipated (which in some cases are out of our control to estimate hours),
it is anticipated that the study cost will exceed the budget estimate. Other factors
influencing the budget include the mount of legal time necess .aTy for review of
privatization alternatives, and the potential need to establish a market value range for
an outright sale of the water system to the private regulated marketplace (which latter
need is not envisioned to be required by the City at'this time). Consequently, the
bUdget as developed in this proposal is subject to refinement depending on B-E
gaining a greater understanding of the system, its records, and the extent of the task
assignments as envisioned by the City.
In order to accomplish this study in a timely manner, we have assembled a team of
professionals with extensive experience in utility valuation and privatization studies.
Mr. Harold Morg-an is a spedalist in utility valuations and related studies and has
determined water and wastewater system values for about 60 utilities (which prior
A D ! v I $ I o I,,,, OF
RE$OU-RCE MANAGEMENT INTERNATiONAl., INC.
225 ~l. BRO.~DW.~y, SUITE 400 - GLEND:~LE, CA 91204-1331 . (818) 244-0117. Fax (818) 242-0480
B.x~r ~.~r.:u~, CA G~.I xo~! I:. CA O~1 ~:, L"T I'.o~ax, AZ -~c~:,xx~t:xqo, CA W,~s...'~ox, DC'
Mr. 2-un Serlet
March 20,1998
Page 2
work also includes the extensive review of the 1980 purchase of the Tus0n water
system by the City together with a field review of the Tustin system conducted by City
operating staff). He is a registered Civil Engineer and licensed Real Estate Broker in
California Mr. Morgan will be the project manager for this assignmenL Mr. Ruben
Zubia has many years Of experience in the design and operations of waterworks
projects and systems. Mr. Zubia will be responsible for system analysis and review of
system conditions. Mr. David Swank has over 20 years of experience in all aspects of
utility rate setting, financial planning, and economic analysis work relating to utility
management and operation. Mr. Swank will conduct rate impact analysis and provide
economic evaluation support on this project.
On behalf of Bookman-Edmonston, I thank you for the opportunity to submit this
proposal. We look forward to working with you on this interesting project.
Endosure
Sincerely,
Richard W. Atwater
President
PROPOSAL
FOR
EVALUATION OF PRIVATlZATION OPPORTUNITIES
FOR THE
CITY OF TUSTIN MUNICIPAL WATER SYSTEM
Prepared for
CITY OF TUSTIN, CALIFORNIA
Prepared by
BOOKMAN-EDMONSTON
ENGINEERING, INC.
PROPOSAL
GITY OF TUSTIN
EVALUATION OF
P RI VAT'iZATI O N
OPPORTUNITIES
TABLE OF CONTENTS
A
B
.C
D
E
PRIVATIZATION EVALUATION OF
CITY OF TUSTIN WATER SYSTEM
INTRODUCTION.., ................................................................ ~..i 1
SCOPE OF SERWCES ................................. : ........................... A-1
PROJECT TEAM ORGANIZATION ........................................ B-1
RELEVANT EXPERIENCE ...................................................... C-1
PROPOSED BUDGET ............................................................. D-1
SCHEDULING ....................................................................... E-1
KEY PROJECT TEAM RE..qUM~ ............................. APPENDIX A
~Y OF B-E APPRA~AL EX?ERmNCE ....... 'APPENDD( B
FEE SCHEDULE ..................................................... APPENDIX C
PROPOSAL
CITY OF TUITIN
EVALUATION OF PRIVATIZATION OPPORTUNITIES
INTRODUCTION
ABOUT THE FIRM
Bookman-Edmonston Enginee_dng, Inc (B-E) has earned recognition as one of the foremost
water resources engineerir~ firms in the western United States. We have Comprehensive
experience in all aspects and levels of water resources engineering fr°m basic concept
development to feasibility planning, design, and .construction supervision of major
conveyance and'distribution works. In .addition, B-E is one .of the premier firms in
California in the performance of utility valuations, due diligence investigations, and system
condition appraisals as they relate to the sale and acquisition of water systems, wastewater
fadlities and water rights.
Since its inception .in 1959 in Glendale, California, B-E 'has established a proven record of
serving a broad client base in government, business, and industry, including water
.districts, municipalities, utilities, regional water supply entities, and water purveyors. B-E
maintains specialized expert~ in hydraulics, project economics, financial analyses,
hydrology, groundwater management, right-Of-way engineering, facilities design and
construction supervision, including pipelines, canals, dams and .diversion works, pumping
plants, power systems, well% and other water resources management facilities. The range
of B-E's expertise enables us to approach every assignment with the flexibility required to
meet each client's specific needs.
EXPERIENCE AND QUALIFICATIONS
The technical and managerial capabilities of B-E encompass an extensive array of munidpal-
and utility services including:
Water and WaStewater System Condition
Assessments
Rate Studies and Cost of Service 'Studies
[;3 Project Planning and Evaluation
[] Utility ApPraisals, Valuations and Acquisitions
Civil, Mechanical and Electrical Design
[] Water Quality Management
[3 Water Rights and Water Allocations
[] Water Marketing, Transfers, and Exchanges
Project Economic and Financial Feasibility
Evaluation
[] Due Diligence Investigations
[] Groundwater Well Design and Inspection
[] Construction Inspection and Management
[] Groundwater Management
[] Environmental Analysis
[] Conservation and Efficiency Studies
[] Wastewater Reclamation
B-E draws on a highly skilled and experienced staff of engineers, geologists, hydrologists,
and economists, many of whom previously held top management positions in major
national and local government water resource agencies. The capabilities of B-E's
professionals are strengthened by access to computer and communication fadlities.
Introduction
PROPOSAL
CITY OF TUSTIN
EYALUATION OF PRIVATIZATION OPPOR~TUNITIE~
Supp~ these services are word processing, database' management, computer-aided.
design systems, computer-assisted graphic design, state-of-the-art GIS, and report
production fa~lities.
OFFICE LOCATION
The work for this assignment will be performed out of B-E's Glendale office. The address
for the B-E Glendale office is listed below:.
BOOKMAN-EDMONSTON ENGINEERING, INC.
225 West Broadway, Suite 400
Glendale, CA 91204-1331
Telephone: 818/244~117
Fax: 818/242-0480
RESOURCE MANAGEMENT INTERNATIONAL, INC.
Resource Management International, Inc. (RMI) is a national engineering, economic,
environmental, and management consulting firm serving the water, energy, and waste
management industries from headquarter offices located in Sacramento and nine other
locations throughout the United States. RMI is an associated company with B-E as both
firms are subsidiaries of Metzler Group, Inc. One of the project team members proposed for
this study, Mr. Dave Swank, is an employee of ~ Also, selected references in Section C
are for projects completed jointly by B-E and R.MI.
2 Introduction
PROPOSAL
C;iTY OF TUITIN
EVALUATION OF PRIVATIZATI'ON OPPORTUNITIES
SCOPE OF SERVICES
A. PHASE !
1. Review and evaluate the City,s water utility including but not limited to
the system's present condition, service area, operating revenues and
expenditures, administrative and .operation functions (personnel, facilities,
billing, meter reading), annual.maintenance .and.repair needs, and anticipated
capital impro vements~
TaSk t -~-OIf Meeting and Data Base Development
Within five business days of notification'to proceed with this assignment, B-E will
submit a detailed data xequest to the City outlining the initial, information required for
the completion of this study. Data requested .is anticipateCt to include financial data,
fa~lity records, operating data, rate and capital improvement studies and projections,
operating and maintenance expenses records, organization charts, personnel job
descriptions, business, or management operating plans, and other records.
B-E will schedule and participate with the City in a kick-off meeting to review the
information requested, discuss the objectives of the study, and clarify any questions
that exist. Following this kick-off meeting, B-E will conduct a field visit to observe the
condition of the system.
Task 2 - System Analysis
B-E will perform a field visit and conduct a review .of current operations and condition
of the water system. Based on these evaluations, conclusions will be reached with
respect to capital improvement requirements resulting from deferred maintenance or
system conditions. In conducting this analysis, B-E will undertake the following tasks:
TASK 2.A FIELD VISIT TO INSPECT FACIUTIES
A field vistt ~ be made of the water system to review the cu~ent condition and
operation of the fad]ities. Tt is anticipated tl~ field visit w~ be made with assistance
from the City' o]~_~atLrt§ personnel. In ackLttion to ~ewing the fac~ties and gaLnLrt§ an
understandLn§ of system operations from ~te~_ew~g; City sta~, the Reid visit wilt also
~dude renew of the exLsting and potential sez~ce a:eas for the pmTose of assessing;'
the locatic~t, types, and potential g~ow~ of system customers.
TASK 2.B WATER QUALITY EVALuATIoN
Water q_ua~ty data for su?pl;es ?~chased and ?roduced by the Tust~ s¥$tem'w~ be
collected and evaluated. Ln conjunction with ~s data, Lrffo:~ation obtained dud~g; a
meeting; to be scheduJed with the Ca]Lfo~a De?artment of ~ealth 5e~ces (DO~L~)
A-t
Section A
Scope of Services
PROPOSAL
C~ITY OF TUSTIN
EVALUATION OF PRIVATIZATION OPPORTUNITIES
will be considered to assess the system's ability to comply with existing water quality
standards and to determine if any health-related cancems exist among regulatory
personnel. 'In addition to' assessing current supplies and their conformance with
existing standards, an assessment will also be made of potential capi~ improvements
required to meet drinking water standards anticipated to be implemented in the near
future, including addressing such potential concerns as high levels of arsenic, reduced
allowable concentrations for trihalomethanes, and the presence of radon.
TASK 2.C RESOURCE EVALUATION
~ /n~esti§atio~ will be made o[ ~ avaJJab/1/ty o£ wa~er supp]/es in o~der ~o ~L~ly
se~e the antidpated m~m~,~, o_~ waf~ customers 'within t~e se~rice area at the end
~ffeen yearn TI~ antici?ated ~elatiYe decadence o~ /repoSed supplies
~om~dwater produd-~on ~o~ A~e a~T~ deliYedes ~ also be reviewed.
t~sk ~ indude a review o£ ~ ~t sfa~ and co~]/tion o£ ~o~dwater p~m§
~dlities and impo~ea water ~outs, as well as the ~eed ~o~ Producfio~ ~a~]ity
improYements or additions.
TASK 2.D WATER SYSTEM ANALYSIS
A~ e~a]uatio~ ~ be made o~ the exist§ ~a~er $¥$f~m to de~~
supp1 .)~§ cu~enfl¥ requked system demands and ~e flows as welt as the abfl/~/o£
ex/s~ facilities ~o meet .~tu~e ~o~ A ~e~ew ~ ~e made o£ the system desi~
and exis~-~§ opera, OhS in o~der'to iden~ potential deficiencies, such as inade~mte
fi~e hydrant spade§,/~deq_uate maJ~ loopin§, subsfa~dar~ pipeline sizes o~ other
'system desi~ de~dendes. TI~' a.l~lysis wilt also take into accoum the ~ of
maf~H_a]s used/1~ ~ ~a~er $¥$~em consb'ud~ol~ A~ evakmtion ~ be made o£ the
abfl/ty o£ the waf~ system ~o mee~ peak flows an~ to Pro~/de adequate s~o~a§e u~der a
~an§e of operatL~§ co~tio~. A ~e~ew ~ also be made to def~m~e ff any ~e
hydran~ p~essu~e de~de~c/es ex/st, and other potential Problems with
me~tio~ed.abo~e, co,fad ~ also be made with the Slate DOIqS in o~der to
~e~Ta~ory co, ce_ms, ff any. ?a_d~cular attention ~ ~e paid ~o consumer complaints
Press~e defidendes o~ other co~cm-~ with water system ~ce. A review w/l] be
made o~ CUl~en~ capifal ~proYemen~ ~lans and recen~ e~ence with ma~~ce
and repa/~ ~es. Co~clusio~ ~'De ~eached .regar~L~§ capital ~pro~emen~ ~eeds
as a ~esul~ of system con~tio~ and the potential co$~ to cu~e system de~dendes
$ig~ficant deleted ~imenance. $¥$~em maps, maJmenance ~eco~ds, and system dafa
~ be requested {o~ ou~
TASK 2.E ADMINISTRATIVE AND MANAGEMENT OPERATIONS
A ~e~'iew o~ aYaJ]ab]e docu~enfatio~ and ~~ews with selected pe~o~el ~ be
underake~ in o~der to u~dersfa~d the T~/n Wa~er Depa_,-t~en~' o~§a,T~zatio~,
billirtg and meter reading. B-E will 'also investigate the Water Department practices
with regard to leak detection, water usage audits, energy.use audits, customer surveys,
meter testing and. repair practices, valve maintenance, and other administrative or
management practices. Also in this *~sk will be an identification of key' administrative
Section A
Scope of Services
PROPOSAL
CITY O~F TUITIN
EVAI. UAT1ON OF PRIVATI~'ATION OPPORTUNITIEI
.parameters (such as the number of Water Department management personnd) which
will be utilized in the benchmarking task described below.
2_ Document and analyze the revenues and expenditures necessary to
support the Municipal Water System for a fifteen-year time frame along with
the impacts on the rate structure. This will involve establishing a growth rate
along with estimating future water purchases, groundwater coSts, and
energy costs.
Task 3- Rate inq)act Projectkms
The Consultant will review the latest water utili~ revenue requirements studies, as
well as Financial data generated in Task 1 (both historic and current ,operating revenues
and ~tures, debt repayment obligations, and capital improvement requirements).
This forecast will take into account operating impacts/rom growth, and escalation of
significant cost factors including .energy, groundwater production expenses and water
purchases.' B-E will then prepare a baso]irte financial ~orecaSt of the water system's
operations for a fifteen-year period'based on continued ownership and operation by the
City. This baseline forecast will 'be later compared to a forecast of future financial
results based on potential cost savings identified 'in the benchmarking analysis
described below, and terms and conditions ,contained in each privatization alternative
identified. The results of these comparisons will provide the City with an indication of
- the rate impacts associated with each alternative and a common ground by which to
evaluate the financial implications of the different proposals. These comparisons will
focus on the potential cost savings because of the reduction in the operating costs for
labor and O&M, as well as changes in administrative practices. ·
3. Identify and evaluate alternative methods, of-operating any or all
portions of the water system that will be more cost-effective than current
operations and may provide other benefits to the City. This shall include:
a. An analysis .of options for improving the effectiveness of current
operations and methods to reduce costs.
b. An analysis of options specifically~ for contracting out any portion or
afl'of the existing water services to the private sector or to an :existing
water utility.
c. Ail options evaluated in the preceding sub-tasks a and b shall be
evaluated and quantified for.their legal and organizational feasibility,
set-up costs, effect on employees and benefit/cost .ratio. Categories of
costs may include contract expense, set-up expenses, operating costs,
etc. Categories of benefits may include long-term rate stability and net
revenues available to the, City.
A-3 Section A
Scope of Services
PROPOSAL
CITY OF TUSTIN
EVALUATION OF PRIVAT1ZATION OPPORTUNITIES
Task 4- Benching St.dy
In order to evaluate the potential cost savings from privatization, it is first necessary to
evaluate the comparative level of performance of the City's Water Department with the
private sector. The B-E Team's approach in condu 'cting this study will be structured to
diagnose the City's water supply performance (based on analysis of .performance
measures, comparative benchmarking, examination of City records, and' interviews
with City personnel), identify areas where there are opportunities for improvement,
and evaluate privatization opportunities that will reduce costs and improve service.
The B-E Team proposes to perform a benchmarking study of operations and
management procedures which will cover four subject areas: administration, customer
service, engineering/operations, and maintenance.
The goal of the benchmarking study will be to determine if any Of the Studied operating
procedures or any other internal workings of the City Water Department are inefficient,
improvident, or imprudent~ The Consultant will use these determinations to identify
privatizafion opportunities.
It is anticipated that a significant number of the benchmark comparative analyses
already developed by B-E in a similar assignment for the City of Palo Alto will be
applicable. The City of Palo Alto has a water supply and distribution system that
provides service to 19,000 customers. Comparative benchmarking data for that analysis
were obtained from six other California water purveyors of comparable size including a
California-regulated water utility. In addition, the benchmark analysis included using
Water Industry Data Base: Utility Profiles published by the American Water Works
AssoCiation Research Foundation. All of these benchmarldng data are currently in
electronic format for easy access and analysis. It is also recognized that supplemental
data from substitutions for comparative analysis may have to be developed in view of
the unique economic environment of Orange County.
Task 5- Analysis of Privatization Options
Based on all of the above tasks, the B-E Team will develop a list of potential
privatization opportunities to evaluate. Each option identified will be 'evaluated
according to its financial and rate impacts compared to the base condition, legal and
organizational feasibility, initial set-up costs, and impacts on current City employees. A
benefit/cost ratio will be determined based on identification of associated costs and
benefits.
4. Review the status of other municipal water system privatization efforts
and compare them to the Tustin system. Document any issues/problems that
have occurred.
In 1995 B-E/RMI negotiated and prepared (with legal assistance) a private party
operation and maintenance contract for the City of Rio Rancho, New Mexico, involving
a municipal water system serving approximately 14,000 residential, commercial and
A-4
Section A
Scope of Services
PROPOSAL
CITY OF TUITIN
EYALUATION OF PRIVATIZATION OPPORTUNITIES
indus~al customers. Since that time a major southwest privat~ operator has been
managing the Rio Rancho system under a four-year operati!~ contract.
In addition, 'several Czlifomia communities have implemented private/public
partnerships to either manage their water systems or provide other utility services.
These include the City of Bakersfield (20,800 connections) which pays a private operator
a monthly fee per connection in addition to receiving assistance in capital improvement
planning and water resources issues, the City of Hawthorne. (6,000 connections) which
has granted a 15-year lease to a private operator in exchange for an upfront and annual
payments, and the dties of Menlo Park (4,000 connections) and CUpertino (4,200
connections) which have private party contracts for system operations.
B-E proposes to review the status of these projects to identhCy issues and problems. In
the case of Bakersfield and Rio Rancho, in view of their large size and' length of
operating experience, it is planned to make office visits in order to thoroughly
interview .City representatives and obtain status information. Both smaller referenced
cities can probably be interviewed by telephone to receive status reports and request
additional information. As indicated in Section C below, the City of Cupertino
previously retained B-E to appraise its water system as part of an initial effort to
evaluate a potential lVrivatization asset sale. Contact will also be made with the City of
Westminster to identify issues encountered with the City's attempt to lease its water
system to a private sector company. Even though the City's.voters ended the project,
the experience gained by the City until the project was suspended would still be
instructive.
B-E also proposes to interview one or mOre large California priVate water companies
experienced in municipal water system privatization contracts in order to receive inputs
on issues from an operator's perspective.
5. Recommend specific options based on the preceding analysis. Identify
financial and legal issues and procedures necessary to implement any
recommendation.
Task 6- Recommended Options
Based on the results of the Task 5 analysis, B-E will make specific reCommendations for
the City's consideration to privatize all or a portion of the water system management
and operations. Naturally, it is possible that the recommendation may be made to
retain current City operations without significant change. As requested, each
recommended option will be accompanied by identification of any finandal and legal
issues, as well as procedures outlined to implement individ~_~_al options. The scope of
work for any legal review and its assodated cost will need to be made at the time of
identifying recommended options. B-E has contact with several attorneys qUalified to
make such reviews. The proposed budget' contained in Section D does not contain the
cost of legal review at this time.
Section A
Scope of Services
PROPOSAL
CITY OF TUSTIN
EVALUATION OF PRIVATIZATION OPPORTUNITIES
i
6. If privatization options are recommended, identify a list of qualified
.private companies and water purveyors that have the experience and
available resources necessary to respond to a proposal based on the
zec°mmen, ded options.
Task 7 - idenUfication of Cordractors '
Based on the cra-rent privatization project B-E is implementing on behalf of the City of
West Covina, as well as other business experience B-E has gained over many decades in
dealing with major California water purveyors and private companies, a list of
qualified Operators capable of responding to a privatization proposal will be prepared.
In addition to having management contact, B-E is also extensively familiar with the
operating experience and abilities of most of these potential operators.
PHASE ! PRODUCT
A comprehensive technical report to be provided as folloWS: Five (5) screen
copies for City review and comment, fifteen (15) final copies and one (1)
.reproducible.
Task 8- Report Preparation
The results of the study will be carefully narrated in a bound report Supporting data
and benchmarking graphs will be included in the report as necessary to dearly support
the study recommendations. Included with this task would be a meeting with the City
in order, to present the results of the study. Within ten business days following
submittal of the draft report, B-E will meet with representatives of the City to present
the study findings and answer any questions related to the study. Within five business
days fonowing the presentation of the draft report, B-E will submit its final report.
B. PHASE II
1. If the City Council determines to proceed with Phase II, draft an RFP
for the portion of or all of existing water services recommended for operation
by the private sector.
Task I - Preparation c~ RFP
B-E and RMI have recentlY prepared RFPs on behalf of the cities of Rio Rancho and
West Covina for either qualifications to provide water semrice and operate the
municipal system, or submittals of purchase offers. An RFP for the privatization option
selected by the -City of Tustin would be prepared focusing on the specific goals of the
privatizatiort
A-6 Section A
Scope of Services
PROPOSAL
CITY OF TUSTIN
EVALUATION OF PRIVATIZATION OPPORTUNITIES
Prepare criteria for the evaluation of each ~RFP.
Task2-~ ~ ~
'To date, B-E has evalUated West Covina's received Statements of Qualifications in
response to the City's RFP. In order to make the service evalUation for these utilities,
criteria were developed in three basic overall areas: utility management experience,
utility operation experience, and customer complaints. For the overall area' of water
utility management experience, specific areas were evaluated.including the subjects of
engineering, system design, capital improvements and replacements, water quality
management, bendxmarking, rate management, water resources and water rights, and
recycled water experience.
For the overall subject area of water utility .operation experience, the subject areas of
repair and maintenance, emergency response capability, safety and risk management,
water and energy conservation, and customer satisfaction surveys Were individually
evaluated and compared. In the subject area of customer complaints, an evaluation was
performed' on pressure complaints per 1,000 connections, water quality complaints per
1,000 connections, and leaks/outages complaints per 1,000 connections. Similar criteria,
including financial criteria, would be developed for evalUating proposals received by
the City of TusfirL
3. Evaluate each of the proposals received based upon the established
criteria.'
Task 3 ' Proposal Evaluation
Again, using a similar approach as utilized in' the West Covina project, for each subject
area, a numerical grade relative to each utility within the group was given depending
on all of the information received and reviewed in the SOQs as submitted. Grades
ranged from 0 to 5 (either no experience or very poor performance, up to very extensive
experience or excellent performance). For example, for the evaluation of the subject area
of engineering, taken into account were the relative size, range and experience of the
engineering staff; its ability to design and manage routine and cOmplex facilities; the
reliance on consultants; the use of CAD (computer assisted drafting), hydraulic models,
and other technology; the quality of engineering staff as reflected by submitted
resumes; and any other submitted informatiofi. Based on numerical grading for each
subject area, a total score was then derived which provided a relative letter grade in the
overall evaluation area for each utility.
Financial evaluations would be assessed differently depending on the criteria'
developed. Most likely, typical analyses using annual cost savings, benefit/cost ratios,
and net present worth would be employed.
A-7
Section A
Scope of Services
PROPOSAL
CITY OF TUSTIN
EVALUATION OF PRIVATITATION OPPORTUNITIES
4.. Prepare a technical memorandum identifying issues associated with
each proposal and rank the proposals based upon the established financial
and operational criteria.
Task 4- Ranking of Pmposab
Based on the work performed in Task 11, proposals would be ranked in order of the
desirability of selection as a privatization contractor. A technical memorandum would
be prepared to support the conclusions of this ranking including a discussion of
associated issues.
5. Prepare questions for interviewing the top firms and participate on the
interview panel.
Task 5- Proposer Interviews
~As requested, B-E would prepare a list of interview questions for interviewing the top
selected firms and participate in the interviews.
pHASE ill
1. After selection of a preferred private sector operator; assist in drafting
and negotiating agreement with selected company.
Task I - Assistance with Preparation and Nego~ation of Agreemm~
The B-E Team has experience in providing assistance with both contract drafting .and
contractor negotiating associated with operator agreements in the cities of Santa Fe and
Rio Rancho, New Mexico. Contracts for both of these projects would be available as a
starting format.
A-8
Sectio~ A
Scope of Services
PROPOSAL
CITY OF TUSTIN
EVALUATION OF PRIVATIZATION OPPORTUNITIES
PROJECT TEAM ORGANIZATION
B-E proposes to perform this assignment with a key thr~ person team highly
experienced in utility valuations, utility management and operations, rate impact
analyses, and operations contracting. The following is a brief overview of the roles and
relevant capabilities and experience of the team members. In addition, Richard Atwater,
President of B-E, would be available' for executive 'oversight and .participation in selected
assignments, and Richard Anderson would provide key staff supporL
Harold Morgan, Executive Princ~'pal .Engineer, is a registered civil engineer in the State of
California. He is also a licensed California Real Estate Broker and a registered. New Mexico
Real Estate Appraiser with eXperience in business and income properties. Mr. Morgan is a
specialist in utility valuations and has determined water and wastewater system values for
60 utility systems in several western states in connection with' sales, condemnation
proceedings, bond sales, bankruPtcY proceedings, tax assessments, title insurance
requirements, water service disputes and contract negotiations. Mr. Morgan has
represented many municipal clients in privatization valuations. He has been involved with
every appraisal assignment listed in Appendix B. He was also project manager in a B-E
assignment to conduct a benchmarking study of the City of Palo Alto's water and
wastewater systems to identi~] potential operational improvements and cost savings.
Mr. Morgan.will be the Project Manager for this assignment, supervise the study tasks,
design the benchmarking analysis, participate in conducting many of the tasks, and
supervise preparation of the written reports. Mr. Morgan will.also attend City Council
meetings, public hearings and other meetings; as well as participate in' negotiations.
Recently, Mr. Morgan represented the City of Santa Fe in a key negotiating role in the
City's successful effort to acquire the Sangre De Cristo Water Company from Public Service
Company of New Mexic°.
Ruben Zubia, Principal Engineer, has over 13 years of e. xperience in the design and
operations of waterworks projects and systems. During his previous employment with the
Los Angeles County-Waterworks Districts, Mr. Zubia served as the Systems Manager for 18
waterworks districts, varying, in size from 300 to 45,000 service connections. His duties
included the management of the day-to-day operations and maintenance of the systems,
and the planning and design of required system improvements. More recently, through
employment with consulting firms, Mr. Zubia has been involved in the master planning
and design of water and reclaimed water system improvements, and in the valuation of
water systems for acquisition and system mergers. Mr. Zubia will be responsible for the
water system analysis and review of system conditions, as well-as participate in other tasks
of this assignmenL
Section B
Project TeaTM organization
PROPOSAL
CITY OF TUITIN
EVALUATION OF PRIVATIZATION OPPORTUNITIES
David Swank, Execu~ve Consultant, is an analyst with almost 20 years of exp~ence in the
ufflity industry. He specializes in the preparation of financing, user fee, economic, and
plarming studies for electric, water, natural gas, and waste management clients. Mx. Swank
has authored several papers on rates and finan~ issues confronting .the utility industry.
Mx. Swank was responsible for negotiating on behalf of the City of Rio Rancho in its
successful efforts to acquire the water and wastewater sys~ms from United Water
Resources. Mr. Swank will play a key role in preparing a financial projection of the City .of
Tusfin's water.system revenues and expenses, and a projection of future rate impacts from
current operations. Other assignments in which MX. Swank will play a key role include
financial evaluation of privatization alternatives..
Richard W. Atwater, President of B-E, has more than 20 years of experience in water
resources management and plarmin, g. He has served as.General Manager for the West Basin
Municipal Water District and the Central Basin MuniCipal Water District in southern
California These two water districts, although separate entities, have one administrative
staff. Combined, these water districts served a population of more than 2.3 million along
the coastal plain of Los Angeles County and included 41 incorporated cities. Mr. Atwater
has pioneered many award-winning programs that balance the multiple uses and demands
of water and meet today's high standards for quality, reliability and cost-effectiveness. As
manager of the Central and West Basin MWDs, MX. Atwater has gained considerable
experience with contract negotiations and third party operations. He will provide support
to key team members as needed and become involved where spedalized expertise is
required.
Richard C. Anderson, Associate Engineer, is a registered civil engineer with over 7 years of
experience in water resources engineering. Mx. Anderson has provided significant staff
support in the recent valuations B-E has Performed on behalf of the cities of West Covina,
Modesto, Tucson, Santa Fe and Rio Rancho.
Resumes for these individuals are included as Appendix A to this proposal. Other staff
members will be utilized on a lirrrited basis under the supervision of the above.key
individuals as needed.
Section B
Project Team Organization
PROPOSAL
CITY OF TU~TIN
EVALUATION OF PRIVATIZATION OPPORTUNITIEI
RELEYANT EXPERIENCE
Detailed below r ~ a selected project summary of the B-E Team's experience in
performing similar projects conducted within California and other western states,
including the key individuals in these projects, pro~ect costs, and the r~mes and phone
numbers for client references.'
CrlT OF WE~'T .COVi2qA: PRIVATIZATION OF WAIT, R $1~$TEM. The Cjty o£ West Covina (City)
Owns a water system serving customers in the C. ity ancl adjacent City of Walnut. The City
.system distributes over 6,000 acre-feet of water per year through an infrastructure that
includes approximately 84 miles of transmission and distribution mains providing service
to approximately 7,000 connections.
The City is examining the potential to divest itself .of its munidpally owned water system
through a multiple-step process. The first .step involved receiving Statements of Interest
and Statements of Qualifications from qualified buyers capable of providing a high quality
of utility water service to City residents. Based on the responses received, the City
evaluated each interested buyer's qualifications in order to select a limited number of
potential buyers from which a request may be made by the City to submit Offers to
Purchase, containing the offered price, terms, and other financial-considerations. The
request for offers from a few selected highly qualified purchasers, and evaluation of those
offers will involve the second step of the sale process.. Finally, following the City Council's
selection'of a preferred buyer, a vote will be taken by the customers of the water system
residing in the City of West Covina in order to confirm the sale of the water system to the
selected buyer.
AS part' of the potential sale evaluation, the City retained B-E to initially perform a
valuation study of the City's water system. Based on B-E's analysis, the estimated original
cost new less depreciation amount of the City system as of June 30,1996 is estimated to be
approximately $13.7 million. .
Following the valuation study, B-E prepared the Request for Statements of Interest and
Statements of Qualifications (SOQ), and distributed it to major California water utilities.
B-E acted as the point of contact on behalf of the City to answer potential buyers' questions.
Subsequently, B-E prepared criteria by which to evaluate the S(X~, followed by
performing the service qualifications evaluation on each of the statements received. B-E has
made recommendations to the Ciby Council to assist it in selecting a smaller group of
potential.buyers from which to request Offers to Purchase~ B-E at the request of the City
has just completed the Request for Offers to Purchase for the City's review. It is antidpated
B-E will continue to assist the City through the completion or suspension of the Sale
process.
C-t
Section C
Relevant Experience
PI~OPOSAL
C~ITY OF TU,TIN
EVALUATION OF PI~IYATI2~ATION OPPOI~TUNITIE,
Pat Glover, Acting City Manager
Phone~ 626/814-8401
Key staff:. Harold Morgan; Richard Anderson
Cos/: $40,000 (to date)
CFtr OF PALO ALTO: B~C2tMARK~G STUDY AND ORG~T~ON,~ RE'VIE'W. ~E ~d ~,
~ ~s~afion ~ ~o~ coming ~, prepped a ~~~~ study ~d ~
org~afi0~ ~~ of ~e Ci~ of P~o ~to's wa~, w~tewat~, ~~ gm ~d de~c .
s~c~. ~E w~ r~p~ible for condu~g ~e ~~~g s~dy of ~e G~'s wat~
~d w~t~at~ sedco. ~e s~dy for ~e Ci~'s p~ble wa~ s~c~ ~duded
comp~ ~e Ci~'s wat~ u~ to ~v~ wat~ p~eyors w~& ~duded bo~ p~c
~d p~va~ u~fi~ of ~~ s~e l~ted ~ no~~ ~d sou~ C~o~a. S~~y,
~E comp~ed ~e u~fi~ ~ ~ ~e~ of s~ce ~d se~ce lev~, syst~ o~afiom ~d
m~t~ce, s~~ stor~, recor~ ~d eq~pm~t, com~on ~d ~a~g
auto~fio~ o~a~g ~o~a~on, ~d~ ~o~afio~ billin~ ~tom~ s~ce ~ w~
~ g~ s~c~ ~d a~~afion. ~e r~ffi~, w~e ~o comp~e~ to ~e dam
ga~ed ~ou~ ~ ~~~ Wat~ Wor~ ~sodafion R~e~ Fo~dafion. ~E ~o
p~dpated ~ ~ or~afion~ renew of ~e wat~ u~ dep~~t ~ we~ ~
re~~g s~ pra~cm ~d approa&~ ~ ~e ~ of smd~ds ~d mat~,
m~t~ce ~d o~afiom pro~~, ~~~ sys~ c~ol, re~o~ pl~ ~d
o~ ~om. ~ s~dy wm ~fomed ~ 1~6.
Reference:
Ms. Rosenm_ry Ralston
Phone: 415/329-2522
Key staff:. Harold Morgan; Richard Anderson
Cos~z $35,000
CITY OF C1ZPERTINO: PRIVATIZATION OF WATER SYSTEM. In March 1996, B-E performed an
evaluation of the range of fair market value of the water system facilities of the City of
Cupertino to assist the City in assessing potential privatization. This analysis was
performed to provide the City with a range within which B-E believed a specific fair
market value opinion would be reached if a thorough appraisal were performed. Based on
the results of this study, the City made the decision to not sell the water system to a private
buyer. However, the City ultimately privatized the system through a long-term lease
concession w/th a large regulated utility.
Referencez
Bert J. Viskovich
Director of Public Works
Phone: 408/777-3291
Key staff: Harold Morgan, Ruben Zubia
Cos~ $7,500
G-2
Section C
Rdevant Experience
PROPOSAL
(2ITT OF TUSTIN
EVALUATION OF PRIVATiZATION OPPORTUNITIES
CITY.OF DALLAS, TEXAS - WALLACE AND TIERNAN, INC.: EXPERT TESTIMO~ ON THE STATUS
OF PRIVATIZa220N. In 1995, B-E was retained by the law tirm of Davis and Wilkerson to
provide extve_rt testimony on the status of privatization trends and projects on a local,
regional, national and international perspective related to' litigation between the City of
Dallas, Texas and the fLrm of Wallace and Tiernan~ Inc_ over a water system equipment
dispute. The purpose of the testimony focused on the question as to the possibility and
probability of the City privatizing its water system (the answer which would ultimately
bear on the level of potential monetary damages). B-E reviewed privatization projects,
institutional issues, contract arrangements, opportunities for privatizing municipal
services, and privatization trends on a global scale. Considerable review was made of the
.substantial privatization of water systems occurring over the last decade throughout the'
United Kingdom, South America, and other selected international areas. Other areas of
focus included California, Texas, Indiana and New York. Mr. Morgan presented expert
testimony in Dallas, Texas Superior Court on the results of this research.
Reference:
Steve Wood, Esq.
Davis and Wilkerson
Phone: 512/482-0614
Key staff:. Harold Morgan; Richard Anderson
CITY OF LONG BEACH: PRIV.4TIZATION OF GROIINDWATER R/GHTS. On behalf of the City of
Long Beach Water Department, B-E has just completed an evaluation of a finandal
proposal from J.P. Morgan Securities, Inc. (J'PM) proposing a lease of City groundwater
fights to JPM for a one-time up-front payment, which rights would then be leased back to
the City for its use over the term of the lease for specified annual payments. The proposal
envisions .operational changes which would generate savings in water production
expenses, which in turn would offset the need to increase water rates in order to provide
for annual lease payments to amortize the initial capitalized payment from J'PM.
In order to perform the analysis, B-E reviewed' institutional issues; operational alternatives
and impacts; sources and costs of alternative water supplies (including the projection of
imported water costs, and escalation of power and chemical expenses for groundwater
production and treatment). In order to assess'the economic validity of the JPM proposal,
B-E recalculated the projected and proposed water supply payments; calculated the
internal rate of return resulting from the project proposal; and derived th~ resulting cash
flow savings using carefully revised rate projections. Based on these analyses, B-E issued
an opinion to the City on the viability of the proposal.
Reference:
John ~, Controller
Long Beach Water Department
Phone: 562/570-2366
Key staff. Harold Morgan; Richard Atwater
Cost: $15,000
SANTA FE, NEW MEXICO: APPRAISAL OF WATER SYSTEM; FINANCIAL PROJECTIONS; AND
PRrVATE PARTY OPERATION AGREEMENT. R]V[I was retained by the City of Santa Fe, New
0-3 Section C
Relevant Experience
PROPOSAL
CITY OF TUSTIN
EVALUATION OF PRIVATIZATION OPPORTUNITIEI
Mexico (City) ~o Provide an appraisal of the value of the ~ de Cristo Water Company
· (Company) and' assist in flue friendly negotiation of a purchase agreement for City
ownership of fl~ Company. Sangre de CrisCo is an operating division of the Public Service
Company of New Mexico (FNM) and provides retail water service to approximately 20,000
customers in and around'the City. Due to changes in PNM's .strategic bUSiness plan, a
decision was made to sell the Company. As a result of PNM financial considerations, the
valuation of the Company and negotiation of a purchase agreement was to be Completed
within approximately 60 days of the notice to proceed with the assignment.
B-E undertook a detailed evaluation of the physical condition of the water system,
including its surface and groundwater resources. Comprehensive analyses were
undemken with respect to future capital improvement requirements and the need to
correct problems resulting/rom deferred maintenance of the water system. The books and
records of the Company were evaluated by B-E and a range of appraisal values developed
based on ~apitalized earnings, market sales, and reproduction cost new less depreciation
methodologies. In addition, RMI performed a detailed breakeven analysis to assess the
level of financial commitment the City could reasonably undertake_ Based' on these
analyses, a firm purchase offer was made to PNM. Within two weeks fonowing its initial
offer, an agreement in principle was reached between the City and PNM on the sale of the.
Company. RMI/B-E assumed a lead role in these negotiations and in assisting the City in
the preparation of sales documents, a contract with the Company for an operating
agreement, filings with the state Public Utility Commission, development of a transition
plan, financing of the acquisiti°n' and other activities.
Reference:
Joseph S. Gonzales
Utilities Rate Specialist
Utilities Department
City of Santa Fe
Phone: 505/984-6621'
Key staff:. Harold Morgan; David Swank
Section C
Relevant Experience
PROPOSAL
CITY OF TUSTIN
EVALUATION OF PRIVATIZATION OPPORTUNITIES
PROPOSED BUDGET
The proposed services would be provided on a time and material basis with a
negotiated not-to-exceed budget estimate~ Pursuant to the requirements, of the RFP, a
table which presents B-E's assessment of the man-hour allocation and budget needs of this
project is included in this Section (Table 1). Table 1 follows the task outline of the Scope of
Work and is broken downby hours for assigned personnel. The table provides a summary
of the estimated man-hours and respective estimates of cost by tasks. A Schedule of Fees
for B-E is included in Appendix C.
The rounded budget estimate for phase I Tasks is. $75,000. The rounded budget estimates
for Phases H and IH are $30,000 and $7,000 respectively. The total proposed budget estimate
for all three phases listed in the Scope of Work is rounded to $112,000.
Not included in these budget estimates are potentially needed hours for legal review. It is
not possible at this time to estimate this cost without identifying specific legal issues which
may need to be addressed.
Section D
Proposed Budget
PROPOSAL
C~ITY OF TUSTIN
EVALUATION OF PRIVATIZATION OPPORTUNITIES
SCHEDULING
t 'is envisioned' the Phase I assignment will require up to 90 days from notice to
proceed to submission ora final repo~ B-E will-attempt to perform this study in as
short a time frame as practicable. Assuming a negotiated contract between the City and
is executed by the end of April, the completion of Phase I is projected to occur on or before
July 29,1998.
The following Figure 1 presents an anticipated schedule for completion of task
assignments. Figuxe 1 also presents a possible schedule for follow-on ~a~sk assignments
without speci_fic dates. As the City is aware, the schedule ~or subsequent tasks is very
uncertain due to the many factors outside the consultant's control (e.g., the time it ~lces for
the City Council to decide whether or not to privatize system operations).
Section E
Scheduling.
APPENDIX
KEY PROJECT TEAM RESUMES
HAROLD V. MORGAN
Mr. Morgan 'is a Registered Civil Engineer with over 25 years of experience in water resources planning and
management, particularly in issues related to water quality, reclaimed water use, environmental impacts evaluation
and regulatory compliance, and institutional issues.
Mr. Morgan is also a licensed Real Estate Broker and registered Real Estate Appraiser, and is a highly recognized
expert in the valuation and appraisals of public and private utilities and water rights, both surface and-ground water.
Mr. Morgan has appraised about 50 water and sewer utility systems of which about one-half are regulated utilities in
connection with potential or actual condemnation proceedings (values from $16,000 to over $50 million); others are
related 1o bond sales, federal bankruptcy proceedings, potential or actual sales and acquisitions, legal proceedings in
water service disputes, and' in testimonial support, in conjunction with the many utility appraisals Mr. Morgan has
performed, he has investigated water and wastewater utility operations and conditions, revenues and expenses,
rates of retum, comparable rates for service and potential rate impacts from change of ownership..Mr. Morgan has
acted as expert witness on water system valuations and rate issues before both the Public Utilities Commission and
Superior Court; on local, national and international privatization 'trends in Dallas, Texas Superior Court; on water
issues before the Regional Water Quality Control Board and State Water Resources Control Board; and supported
valuation testimony before the Tax Assessment Appeals Board. He has also performed negotiations with regulatory
agencies and between water system buyers and sellers.
EDUCATiON
M.S., Environmental Engineering, Loyola
University, Los Angeles, 1975
B.S., Civil Engineerbg, Oregon State
University, Corvallis, 1969 ·
B.S., Business Administration, Oregon
State University, Corvallis, 1969
CertifiCates in Real E.stae Faience,
Marketing, and General Practice,
University of Califomia Extension, Los
Angeles, 1972
CONTINUING EDUCATION
Disposal of Residues on Land, National
Conference, St. Louis, 1976
Design of Water Quality Monitoring
Networks, Colorado State University,
1982
California Environmental Regulation,
California Business Law Institute, 1984
Ground Water 'Professional as an Expert
Wi'mess Seminar, National Water Well
Assn., 1.985
Sampling Toxics in Ground Water,
Califomia State University, Fresno, 1987
Treatment Technology for Contaminated
Ground Water, National Water Well
Assn., 1989
Containment of Ground Water
Contamination, 'National Water Well
Assn., 1989
Groundwater Pollution and Hydrobgy,
Groundwater Assodates of Princeton,
1990 Water System Aucr~ng and Losses,
AWWA, 1994
REPRESENTATIVE PROJECT EXPERIENCE
Water System 'Appraisals And .Economic Evaluations'
Mr. Morgan was responsible for water and sewer system evaluation, economic
analysis, and market data formulation for the .following on behalf of public agencies,
investor-owned utilites and private parties.
· City of West Covina municipal water system, valuation at $12 million
· City of San Jose municipal water systems, valuation confidential
· Rio Rancho Utilities Corporation, water and wastewater systems,
New Mexico, combined valuation in excess of $50 million.
· Silver Lake Water Company, Reno, Nevada, valuation confidential
· Santa Teresa wastewater system, Dona Ana County, New
Mexico, valuation confidential
· Washoe County, Nevada, public owned water systems (12.
separate systems), combined valuation in excess of $6 million
[] Azusa Valley Water Company, valuation at $8 million
· Del Este Water Company, serving Modesto, California, valuation
confidential
· Sangre De Cristo Water Company, serving Santa Fe, New
Mexico, valuation overS40 million
· Citizens 'Ufilites Company of California (Niles District), valuation
at $1.3 million
· North Los Altos Water Company, valuation at $850,000
· Washington Water and Ught Company, valuation at $2.6 million
· La Quint• Water Company, valuation at $225,000
· Calumet Water Company, valuation at $16,000
· Northeast Gardens Water Company, valuation at $25,000
[] Gorman community water system, valuation confidential
· Kavanagh Vista Water Company, valuation at $225,000
· Park Water Company, Vandenberg Water Division, valuation at $1.7 million
· Southern California Water Company, La Quint• water system, valuation at
$83o,ooo
· Fitch Mountain Water Company, valuation at $50,000
Appendix A
Resumes
HAROLD V. MORGAN
Pub. inc., 1995
Privatizatbn of Water Utilities, AWWA,
1997
PROFESSIOflAL HISIORY
Real 'Estate Investment Brokerage Firm,
Owner, 1971:1972
City of Los Angeles, Assistant Civil
Engineer, 1970-1971
REGISTRATIONS
Registered Civil or Professional Engineer,
and New Ymk
Licensed'Reai Estate Broker, Caifomia
Registered Real Estate Appraiser, New
PROFESSIONAL MEMBERSHIPS
American Water Works Association
National Water Well Association
PUBLICATIONS AND PRESENTATIONS
Municipal Ownership of Water and
Wastewater Utilities, presented at City d
Apache Junction Bus~..ss Leaders
Seminar, Wickenburg, Arizona, 19~5.
Replenishment Using Reclaimed
Wastewater b the Cereal and West
Coast Basins of Los Angeles County,
published and presented at the annual
meeting of the Geological Society of
America, Cordilleran Section, Los
Angeles, California, March 1986.
Monitoring of Surface and Ground Water
Supplies in the Central Basin, 'presented
at the Central Basin water Association
meeting, Vemon, California, March 1989.
Water Ouar~ Mana~nt Activities in
Central and West Coast Basins,
presented at the West Coast Basin Water
Association Meeting, Redondo Beach,
California, December 1
Recharge in Central and West Coast
Rhone, Proceed'~gs of the 1
Specialty Conference, Environmental
Enginee~g Division of the American
Society of CMl Engineers, Reno,
Valuation of Ground and Surface Water
Rights, presented at lhe annual mee'dng
of the State Bar Eminent Domain
· Camp Meeker Water Company, valuation confidential
· Orleans community water system, valuation at $225,000, for bankruptcy
proceedings on behalf of the U.S. Department of Agriculture.
· Anoosh;Van Water Company, valuation at $60,000
· Sea Ranch Water Company, valuation confidential
· .Palm Springs Water Company, Arizona, valuation at $1 million
· Arizona Water Company, Apache Jurction System,. valuation at $4 million
· Soulhem Califomia Water Company, Clearlake and Bay Districts, valuations
· Citizens UtililJes Company, Montara and Guemeviile Districts, combined
valuations in excess of $4 million
Conducted two separate appraisals of investor-owned sewer systems for the City of
Simi Valley and 'Vandenberg Community Services District. to support sale
negotiations and eminent domain .proceedings.
Reviewed .appraisal calculations .of Napa Sanitation District's sewer system for
contract buyout negotialions on behalf of ~ City of American Canyon.
PrePared :an appraisal Df a water system owned by a public agency to assist
negotiations and legal proceedings by a competing water district and cities in a water
service dispute.
Supervised 'the engineering study on the valuation of the water system assets, and
revenues and expenses in support of 'bond sales for acquis'~Jon of California-
American Water Company's National City system by Southbay Irrigation District.
Conducted a study of water uUlity .privatizafion trends on global, national, and
regional levels on behalf of a water system equipment manufacturer and made a
presentation in Dallas, Texas Superior Court.
Evaluated the feasibility of municipal ownership of investor-owned utilities in Washoe
County, Nevada, including water se~ces to the c'~es of Reno and Sparks; also the
privatization option for two public-owned systems. Upper range of acquisition costs
for assets of eight water companies was valued at over $450 million. ·
Mr. Morgan was responsible for valuation and appraisals of water rights in Los
Angeles, Kern and San Bemardino Counties, including:
· On three separate occasions valued the acre-foot value of adjudicated
rights in the West Coast Basin of the Los Angeles coastal plain, for
industrial users in support of hearings before the Tax Assessment Appeals
Board:
· Prepared appraisal of 1,229 acre-feet of water rights in the Central Basin of
Los Angeles County on behalf of the City of South Gate to support
condemnation proceedings. The fair market value was approximately
$600,O00.
· On behalf of the Metropolitan Water District of Southern Califomia,
performed a study on the market values of ground water pumping rights in
all Southern California adjudicated basins.
· Valued 4,200 acre-feet of export pumping rights in the Bunker Hill Basin of
San Bemardino County on behalf of the City of Riverside.
Negotiations And Institutional Studies
On behalf of the City of Palo Alto, conducted a benchmarking study on the
operations of the municipal water and wastewater systems to evaluate efficiency of
operations. Participated in interviews of key city operalJons and engineering staff as
part of organizational review and idenlflcation of issues for benchmarking.
A. key member 'of the City of Santa Fe team nego~alJng with the Public Service
Company of New Mexico for the acquisition of the Sangre de Cristo water system.
Responsible for presenting the City's position on fair market value of the ufility's
I.
A-2 .A_~dix .,4_
HAROLD V. MORGAN
asse~. An agreed sales price was reached at $4825 million.
On behalf of the C~y of Az. usa, presented the fair market value opinion of ~ million
to the Board of Directors of the Azusa Valley Water Company.
Negotiated with the California Regional Water Quality Control Board and lhe State
Water Rel~enishment Distri.'ct.of Soulhem California.
A member of the .joint agency committee to negotiate with ~ Environmental
Protection Agency on the mitigation and monitoring of ground water contamination in
the WhitlJer Narrows threatening the Central Basin from lhe San Gabriel Valley.
On behalf of Montebello Land "and Water Company negotiated a permit for a
domestic watersupp!y well with the State Department of Health Services.
On several occasions, negotiated .with the Regional Water Quality Control Board on
the terms of the Montebello Fombay monitoring program on behalf of the Water
Replenishment District of Southern Califomia.
For ff~e U.S. Gypsum Company, evaluated institutional alternatives for domestic
water service in the Ocotillo area of Imperial County including evalualion of various
forms of public agencies, investor-owned utility, mutual water company, water
wholesaler, and an AB 3030 management plan.
On behalf of the Sea Ranch Homeowners Associalion, evaluated public agency
alternatives for water system ownership, including Community Services District,
County Water Distfi~ Public Ulility District, and Municipal Water District. Also
reviewed LAFCO review process and characteristics of a mutual water company.
Participated in a water management study for the City of Claremont, including the
evaluation of the benerff, s and disadvantages of ~'iity water service under private
ownership compared to municipal ownership, and an assessment of institutional
alternatives available for increasing city involvement in water management.
A.3 Appendix A
Resumes
DAVID SWANK
.
Mr. Swank is a f~nancial and rate analyst with over 20 years of experience in the utility industnj. He has prepared
over 40 retail and wholesale rate studies for water, wastewater, electric, and natural gas utilities. This rate
experience ranges from conventional financial planning and embedded cost-of-service studies to the assessment of
pric'mg meChanisms to promote conservation and peak demand objectives. He has developed innovative cost
allocation procedures for use in utility cost-of-service studies and has designed a wide variety of incentive rate and
customer rebate-programs to encourage changes in customer usage patterns. Mr. Swank also has an extensive
background in utility fin.ancings, having condUcted financial studies and developed consultant's reports in support of
more than $6 billion of short- and long-term debt financings, in addition, his experience includes financial studies
associated with facility acquisitions, system rehabilitations, and new capital projects; assessment of mechanisms to
ensure finandal performance; and development of complex computer models to simulate flow of funds under
alternative financing structures.
REPRESENTATIVE PROJECT EXPERIENCE
EDUCATION
B.S. - Business Administration
Oregon State Univemity, Cowallis
PROFESSIONAL HISTORY
Resource Management International, Inc.
Financial Analyst
R.W. Beck & Associates
Pr~c~
Pacific power & Light Company
PUBLICATIONS
"Retail Ratemaking,' presented at the
Missouri Basin Municipal Power A~ncy
Retail Rate Seminar, August 1982.
'An Overview of Electric Ratemaking,'
presented to the Minnesota Municipal
Utility Association, 1983 Fall Meeting,
1964 Fall Meeting, and 1987 Surr~er
Meeting.
'Introduction to Retail FMemaking,'
seminar presented to the Moorhead,
Minnesota, Water Rate Task Force and
Moorhead, Minnesota, Electric Rate Task
Force.
'Financing Demand-Side Management
(DSM) investments,' DSM Ouarterly,
Winter 1992. Coauthor.
'Jo~ Action for DSM,' Pubr~ Power,
July-August 1992, Coauthor
Prepared an assessment of institutional alternatives available to local govemments
to improve the coordination and quarej of local water service. The study included
identification .and screening of potential institutional alternatives, assessment of
related financing requirements, analysis of fiancial impacts to the region's water
users, examination of unresolved issues of relevance to each institutional altemative,
a ranking of the aitematves based on quantitative and qualitative factors, and
formulation of an implementation plan.
Directed a financial assessment of the Silver Lake Water Distribution Company on
behalf of Westpac Lltiraes in Nevada. The study inclUded an assessment of the fair
market value of the ulirej, an evaluation of impacts the acquisition would have on
Westpac's future water rates, an estimate of the federal tax impact of the acquisition
on Westpac, and an evaluation of the likely treatment of the acquis'~on by state utility
regulators.
Directed a financial assessment of the p.roposed acquisition of a private developer-
owned water utility by the Sea Ranch Homeowners Assodation in California. This
assessment included an estimate of annual revenue requirements under public and
private ownership, derivation of the break-even acquisition price that could be paid
by the homeowners' association, and calculation of the rate impacts on water users
at a range of acquisition values. Also evaluated the total financing requirements
associated with the acquisition and options for securing the financing.
Participated in an acquisition of the Sangre de Cristo Water Company by the d~y of
Santa Fe, New Mexico. Responsibilities included evaluating future revenue
requirements under public ownership and alternative acquisition prices, assessing of
acquisition financing requirements, assisting with the drafting of a purchase
agreement and third-party operating agreement, and developing fiancing
documents. Also participated in the preparation of written testimony submitted to the
state regulatory commission.
Directed consulting and engineering services in support of the city of Rio Rancho's
acquisition of water and wastewater systems owned by Rio. Rancho Utilities
Corporatibn in New Mexico. Activities included a feasibility assessment of the
acquis'~on, valuaton of the water and wastewater systems, participation in
condemnation efforts undertaken by the city, and partidpation in settlement
negotiations with the company. Also provided assistance with formation of a utility
board, retaining a third-party operator of the utility systems, preparation of a
management transition plan, and fiancing of the acquisition.
Prepared .an analysis of financial impacts associated with a Southern California
municipal water system's proposed acquisition of a neighboring water utility. The
analyses included developing estimated revenues under existing and alternative
rates, estimates of annual revenue requirements including water production and
purchase costs, and calculating the break-even financing capability associated with
II
A-4 Appendix A'
Resumes
DAVID SWANK
Prepared several feasibility assessm~ regarcr~ the acquisition of existing electric
utiaies in Oregon, Ca,mia, and Arizona. These studies included an evaluation of
power suppliers and costs, estimates of annual revenues and operating costs,
forecasts of financing requimmenls, and development of pm forma operating results.
Managed an evaluation of financial impacts on regional water users associated with
a Nevada utility's acquisition of county-owned water ulir~aes. The study focused on
the estimated value of the county-owned utilities, expected costs of operating these
systems in the futura, and overall impact of the acquisition on regional water costs.
Also included was an impact assessment of timse acquisitions on regional water
supply planning and development and the likely obstacles to the acquisitions.
Prepared studies to assess the financial feasibility of acquiring existing water utilities
for numerous utilities throughout the United States. Studies included an evalualJon
of the adequacy of existing water supply, treatment, and conveyance facir~ies;
assessment of potential financial impacts of recent federal and state water quality
regulations; and abi~ to meet annual revenue requirements under existing rate
lariffs. , Potential acquis'~on costs were evaluated under a range of scenarios,
including negotiated sales and condemnation proceedings.
Prepared studies to assess the tinancial feasibility of forming a new natural gas utility
and acquiring existing natural gas utilities. These studies focused on estimated
construction/acquisition costs, total financing requirements, alternative sources of
natural gas supplies and transportation services, and abii',y to establish rates that
provided necessary revenue recovery while being competitive with existing or
alternative energy suppliers.
For a Nevada water advisory beard, evaluated the impacts on regional water supply
costs resulting from alternative arrangements for the ownership, operation, and
management of the region's water purveyors.
Appendix A
Resumes
RUBEN ZUBIA
Mr. Zubia has over 14 years of experience in various aspects of water and sewer works and oh/il engineering
projects. Particular significant recent experience includes program and project management experience including
the development and implementation of Capital Improvement Programs for potable water, recycled water and sewer
systems. His level of involvement in these .programs has extended froTM managing the initial planning studies, design
of improVements, assisting in developing community involvement programs, and construction management. Mr.
Zubia has also Conducted many special studies including 'water. supply management studies, hydraulic analyses,
water and wastewater treatment, planning studies, feasibility and design reports, pipeline alignment studies, urban
water management plans, water system appraisals (valuation), system reliability studies, water and sewer rate'
studies, pumping plant efficiency studies and environmental compliance studies.
REPRESENTATIVE PROJECT EXPERIENCE ..
Program/Project Management
Managed the planning and design of over 250 miles of pipeline including potable
water, recycled water and sewer pipeline systems. For approximately half of/hese
pipeline systems,-Mr. Zubia was also directly involved all levels of the construction
management activities..Pipeline diameters have varied from 6-lo 78-.inches.
Recent projects include 1he design of over 30 maes of lmnsmission and clistribution
pipelines and 10 pumping pianls for the Semitropic Water Storage District, 5 miles of
pipeline and a 55 cfs pumping plant for Imperial Irrigation District, 60 miles of
reclaimed water pipeline for Central Basin Municipal Water District's Century and Rio
Hondo Reclaimed Water Programs; 4 miles of sewer main replacement and one
sewer lift station for the City of Loma Uncle, over 20 fi~iles of reclaimed water pipeline
for the City of Glendale Verdugo Canyon Reclaimed Water Program; over 10 miles
of transmission and distribution water mains and 10 miles of sewer mains for Shea.
Development Corporation in Rowland Heights; and over 5 miles of potable water
pipelines, 4.5 miles sewer mains and 4 miles of storm drains for the Porter Ranch
Development Corporation in the city of Los Angeles and the retrofit and upgrading of
10 sewer lift stations for the Los Angeles County Department of Public Works. The
value of the projects that Mr. Zubia has managed the design for exceeds $250
million and the value of the projects for which Mr. Zubia has managed the
construction of exceeds $120 million.
Capital Improvement Programs
Managed the development and implementation of Capital Improvement Programs
(tiPs) for potable water, recycled water and wastewater facilities for municipalities
and for developers. Mr. Zubia has been involved in the preparation of over 30 CIPs.
His. involvement has been in the inventory and assessment of existing facilities,
. conservation and efficiency studies, development of growth' projections, source
supply investigations, siting studies, feasibility stuclies, economic evaluations,
operations and bench marking studies, reliability analysis, financial plans, and
extensive pipe network and modeling using various computer modeling and
simulation software. Mr. Zubia is proficient in the use of most of the computer
modeling software currently available. Mr. Zubia's involvement in ClPs include
programs for the following agencies:
· Long Beach Water Department;, Recycled Water System Expansion
program
· Calleguas Municipal Water District;, Potable and Recycled Water Systems
· City of Loma Unda, Sewer System
· City of Apple Valley (Jess Ranch); Sewer System
· Los Angeles County Deparlment of Public Works; Sewer Uft Stations
~ · City of Arcadia, sewer System
· Central Basin Municipal' Water District, 2 Recycled Water Systems
· Los Angeles County Waterworks Districts, 8 Potable Water Systems
EDUCATION
B.$.- Civil Engineering, University of
Texas, [] Paso
PROFESSIONAL HISTORY
ASL Consulting Engineers, Program /
Project Manager
City of Los Angeles, Bureau of
Sanitation, Project Manager/Solid Waste
Management Task Force
Los Angeles County Department of
Public Works, Waterworks and Sewer
Uaintenance Division Civil Engineer '
REGISTRATIONS
Registered Civil Engineer, California
PROFESIONAL MEMBERSHIPS
American Waer Works Association
American Society of Civil Engineers
Southern Califomia Water Utilities
Association
A-6
Appendix A
Resumes
RUBEN ZUBIA
II
· Yorba l. inda Water District, Potable Water System
[] City of Glendale, Recycled Water System
· City of Ontario, Potable Water and Sewer System
Water Management Plans
· Completed and assisted in the implementation of water management plans for
various water agencies. Involvement included the development of water
consenration programs, leak detecl~on programs, irrigation policies, water rate
structures as a conservation tool, and other water resource management programs.
Water management Hans. completed to date include plans for the following agencies:
· Calleguas Municipal Water District
· Central Coast Water Authority
· ' City of Alhambra
· City of El Monte
· Rowland Water District
· City of South Pasadena
· City of Monterey Park
· City of Monrovia
System Appraisal. (Valuation)
Mr. Zubia has completed or has assisted in the completion of over 30 utility system
appraisals which includes water and sewer system ranging in size from 250 to 55,000
service connections. Mr. Zubia's extensive experience in system planning, design,
construction and operation of both water and sewer systems provides him a needed
knowledge and understanding of the administmlive aspects of municipal water and
wastewater engineering, provides him with the specialized sidlls required to prepare
~lity appraisals and reliability studies. Valuations prepared to date include appraisals
of both regulated and nonregulated water systems. Recent appraisals have included:
· Washoe County, 4 Sewer Systems
· City of San Jose; Water System
· City of Apple Valley;, Water and Sewer Systems
· Dona Aha County, New Mexico; Sewer System
· City of Rio Rancho, New Mexico; Water System
· Los Angeles County Waterworks Districts; 5 Water Systems
· City of El Monte Water System, Water System
[] Cedar Avenue Mutual Water System
Rate Studies/Financial Plans
Mr..Zubia has completed several rate studies for various water and wastewater
agencies, including the develOPment of rate schedules for both connection and
service charges for water and sewer systems. Recent rate stud',~s have included
studies for the following agencies:.
· City of Nhambra, Water and Sewer Rate Study
· City of South Pasadena, Water and Sewer Rate Study
· Rowland Water District, Water Rate Study
· City of Camarilio, Water and Sewer Rate Study
· City of El Monte, Water Rate Study
Mr. Zubia has had substantial invOlvement in developing financial plans for various
utilities including engineering reports used for securing federal and state funding
assistance and for the formation of Mello-Roos districts, assessment districts, and
county improvement districts.
A-7 Appendix A
Resumes
RICHARD C. ANDERSON
Mr. Anderson is a Registered Civil Engineer with over 7 years of experience in the field of water supply and water
quality evaluation. He has evaluated the economics of water treatment technologies, prepared water quality
monitoring reports; and has created, managed and maintained an extensive .groundwater quality database for the
southern portion of Los Angeles County. He has also participated in many municipal water system appraisal projects.
.EDUCATION
B.S. - Civil Engineering, California
Polytechnic State University, S~ Luis
Obispo
PROFESSIONAL HISTORY
Bookman-~nston Engineering, inc.
PROFESSIONAL MEMBERSHIPS
American Water Works Association
REGISTRATIONS
Professional Engineer, California
REPRESENTATIVE PROJECT EXPERIENCE
Economic Analysis
Assisted in the economic analysis of the replacement of sea water barriers 'for the
Water Replenishment District of Southern California.
Water Resour=es Planning and aanagement
Performed modeling of salin'~j of Carffomia State Water Project and Westlands
Water Districts for the Metropolitan Water District of Southern California.
Performed stream flow profiles for the Gualala River based on rainfall and. stream
flow records for The Sea Ranch.
As part of the San Gabriel River Watermaster's.Annual Report, :performed .analysis
of surface and subsurface 1tow of water through the Whittier Narrows.
Westewater, Water Ouality and Waste Management
Assisted in the prepa~on of an engineering background .rePort for a health effects
study on the potential impacts of reclaimed water in the Coastal Plain groundwater
supply for the Water Replenishment District of Southern California-
Assisted in the preparation of the Engineering Report for the recharging of reclaimed
water in the Montebello Forebay.
Water System Valuations and Appraisals
Assisted in valu~on studies of water systems for the cities of West Covina,
Modesto, Tucson, and Rio Rancho. He has also assisted in valuation, studies
performed onseveral systems owned by Washoe County, Nevada.
Assisted in the benchmarking study of both the water and wastewater systems for
the City of Palo Alto L~'lities Department.
Environmental Services
Assisted in the evaluation of the nature and extent of subsurface contamination at
landfills and hazardous waste sites in the Montebello Forebay.
Performed a test review of a leaking underground storage tank and solid waste
assessment for the Water Replenis~nt District of Southern California.
As part of a wellhead treatment study to pump volatile organic compounds,
performed an economic and feasibility analysis of various treatment technologies for
the Water Replenishment District of Southern California-
Oversaw drilling and installation of multiport wells for water quality analysis for the
Water Replenishment District of Southern California.
Water Resources and Water Quality Management
Oversaw drilling and installa~on of a production' well for Souff~ Montebello Irrigalion
District.
Performed data entry, mar[agement, and maintenance of a groundwater quality
database for the Water Replenishment District of Southem California.
Performed groundwater sampling, prepared an annual water quality, monitoring
report, and collected water quality data for the Water Replenishment District of
Southern California.
·
Appendix A
· Resumes
RICHARD W. ATWATER
Mr. Atwater has over 20 years of experience in water resources management and planning. He has sewed as
General Manager for two large water districts, which served a combined population of over 2.3 million. Mr. Atwater
has pioneered many award-winning programs that balance 'the multiple uses and demands of Water and meet
today's high standards for quality, reliability and cost-effectiveness. During the past 15 years, Mr. Atwater has
participated in creative solutions to solve water problems throughout the wastem arid states, including the Colorado
River, Missouri, Columbia River watersheds and has assisted in formulation of national water policies for the Western
Governors Association and the U.S. Department of the Interior. He'has testifed extensively before the U.S.
Congress on western water issues.
EDUCATION
B.S.- Geology, Stanford Univemity
M.S.- Urban and Regional Planning,
University of Southern California
PROFESSIONAL HISTORY
Central Basin Municipal Water District,
General Manager
West Basin Municipal Water District,
General Manager
Metropolitan Water Distdct of Southem
California, Manager- Resources Division
Bureau of Reclamation, Assistant t~ the
Commissioner
Nevada MX l.~cal Oversight Committee,
Executive Director
Clark County, Nevada,' Manager of Clean
Water 208 Areawide Water Plan
REGISTRATIONS
American Institute of Certified Planners
PROFESSIONAL MEMBERSHIPS
City of La Canada-Rintridge Planning
Commission, American Planning
Association (AICP), American' Water
Works Association, Association of
Metropolitan Water Agencies,
Association of. California Water Agencies
(Board of Directors 1990-1994), Urban
Water Institute (Board of Directors), and
Western Urban Water Coalition (Board of
Directors 1992-1996).
AWARDS
Secretanj of the Interior, Bruce Babbitt,
awarded Richard Atwater the
Conservation Sewice Award of the
Deparlment of the Interior (the highest
award in the federal government for
natural resources management) in
November, 1994.
HONORS
Gorden Whilnall Award as Outstanding
Student at USC (1976)
REPRESENTATIVE PROJECT EXPERIENCE
Mr. Atwater was General Manager of the West 'Basin Munidpal Water District and
the Central Basin Municipal Water District (1990-1996). These two water Districts,
although separate entities, have one administrative staff. The Districts' service areas
are the coastal plain of Los Angeles County and include 41 incorporated cities with a
combined popul~on of approximate~ 2.3 million.
The Districts have received statewide awards and national recognition for their
innovative water conservation and fL=cycling projects. They have implemented a
number of cooperative consewation programs with 1he cities within their service
area, and also have under construction the largest water'recycling project in the U.S.
(total capital cost is $350 million). The Clinton Administration declared the water
recycling projects to be a Presidential Pr/ority lnvestme~ Initiat/ve. Governor
Wilson awarded .the Districts his "Environmental and Economic Leadership Award"
in 1994.
16' addition, Mr. Atwater is the Executive Secretary to the West Basin Water
Association and the CentraJ Basin Water Association. The two Associations
represent all the ground water fights holders in these two adjudicated basins (about
40 pement of the drinking water supply).
Previous project experience includes manager of the reSources division, Metropolitan
Water District of Southern California (1986-1990). In this capacity, Mr. Atwater was
responsible for the water and power contracts for the Colorado River, State Water
Project, and local water resource management programs (groundwater and water
recycling). From 1981 to 1985, Mr. Atwater worked for the U.S. Bureau of
Reclamation as assistant to the Commissioner. He was responsible for directing the
Bureau~ water policies, Congressional and western states govemmentai affairs
activities, and managing the Bureau"s day-to-day Washington, D.C. office activities.
SELECTED PUBLICATIONS
Water Marketing in Southern Ca//fomla, M. Hoburt, Richard Atwater, T. Ouinnl Journal of
AWWA, March, 1988
Using Wholesale Rates to Encourage Groundwater Conjunc~ve Use, ASCE, February, 1990
Building ~ Largest Water Recyc#ng Project in lhe U.S., presentation at Water-Environment
Federation, Toronto, Canada, July, 1991
WatarR~gin CaJfom~, ~ lo~'~e Mhistnj of Water Resources, China, May, 1995
'Electric Deregulation Impacts on Water and Wastewater Agencies, Urban Water Institute,
June, 1995
Innovative Parlnerships to Conserve and Recycle Water, presentation to Sydney Water
Corporation, Sydney, Australia, July, 1995.
Privat~ation ~riences at WBMWD/CBMWD, U.S. Conference of Mayors, Washington
D.C., September, 1995
Rnancing Water Recyc~g Projects, paper presented to Association of Metropolitan Water
Agencies, San Francisco, CaJifomia, October, 1995
Water Conservation Pract/ces in ff~e West, Conserv '96, Orlando, Florida, Januanj 1996
Numerous panel presentations at Association of Car~fomia Water Agencies, Urban Water
Institute, AWWA, California Water Association, California Water Resources Association, and
Colorado River Users Association.
A-9 Appendix A
Resumes
APPENDIX B
SUMMARY OF B-E APPRAISAL EXPERIENCE
SUMMARY OF BOOKMA~-EDMONSTON APPRAISAL EXPERIENCE
AS OF MARCH 1998
(All systems located in California unless otherwise noted)
Client Purpose of System Appraisal Services
Appraisal Amount Provided
City of West Covina Privatization. Municipal Water $12,000,000 Appraisal Report
System and Marketing
Westlvac Utilities and the Fair Market Value Twelve Water Systems In excess of Appraisal
County of Washoe, Nevada for Privatization of Washoe County $6,000,000 Report;
Economic
evaluation of
privatization
City of Cupertino Privatization Municipal Water Confidential Appraisal Report
System
City of San Jose Negotiations for San Jose Municipal Confidential Appraisal Report
.Privatization Water System
City of Modesto Sale to Adjoining Five Municipal Water Confidential Appraisal
Cities or Systems Outside City Reports
Privatization
City of Rio Rancho, Feasibility Study Rio Rancho Water and $52,500,000 Appraisal
New Mexico and Negotiations Sewer Systems Reports;
Evaluation of
Proposals for
Contract
Operation
City of Santa Fe, New Financing and Sangre De Cristo Water In excess of Negotiations;
Mexico Negotiations System $40,000,000 Written Expert
Testimony
City of Tucson, Arizona Acquisition by Oro Valley and Marana Pending Appraisal Report
Adjoining Cities (pending)
Dutchess County Water Negotiations Hyde Park Water Pending Appraisal Report
Authority, New York System (pending)
City of Santa Clarita Negotiations Santa Clarita Water Pending Appraisal Report
Company (pending)'
U..q. Dept. of Agriculture Banlcmptcy Orleans Water Sys. $225,000 Appraisal Report
Proceedings Humboldt County
County of Santa Cruz Eminent Domain Mountain Charlie Confidential Appraisal Report
Water System
Sea Ranch Homeowners Negotiations · Sea Ranch Water Confidential Appraisal Report
Associations System
County of Sonoma Negotiations Salmon Creek Water $30,000 Appraisal Report
System
Lake County Feasibility Study Clearlake Water System Confidential Appraisal Report
Sweetwater Springs Water Negotiations and Guerneville Water $3,000,000 Appraisal Report
District Eminent Domain System
County of Sonoma Eminent Domain Fitch Mountain Water Less than Appraisal Report
SIYMMARY OF BOOIOVlAN-EDMONSTON APPRAISAL EXPERIENCE
AS OF MARCH 1998
(Ail systems located in California unless otherwise noted)
Client Purpose of System Appraisal Services
Appraisal Amount Provided
. System. $100,000
City of American Canyon Contract Napa Sanitation District Confidential Review o£
Negotiations Sewer System Appraisal
Calculations
Westpac Utilities Negotiations Silver Lake Water Confidential Appraisal-Report
Reno, Nevada ' Company
County of Sonoma Negotiations Camp Meeker Water In excess of Appraisal Report
System $100,000
East Yolo Community Eminent Domain Washington Water and $2,600,000 Expert
Services District Light Co. Testimony
Apple Valley Ranchos Water Exchange Jess Ranch Sewer Confidential Appraisal Report
Company Negotiations System
Apple Valley Rancbx)s Water Exchange Apple Valley Industrial Confidential Appraisal Report
Company Negotiations Park Water System
County of Dona Arm, Negotiations Santa Teresa In excess of Appraisal Report
New Mexico Wastewater System $500,000
City of Simi Vaney Eminent Domain Simi Valley Sanitation $600,000 Appraisal Report
System
Golden Valley Municipal Financing and Gorman Community COnfidential Appraisal Report
Water District Negotiations Water System
City of Fresno Negotiations AnOOsh-Van Water $60,000 Appraisal Report
System
City of Modesto Negotiations and ' Del Este Water System Less than Appraisal
Eminent Domain $12,000,000 Report; '
Negotiations
City of Azusa Negotiations Azusa Valley Water Co. $8,000,000 Appraisal
Report;
Negotiations
Contra Costa Water Dist. Eminent Domain West Pittsburg Water Confidential Appraisal Report
System
City of Apache Junction, Feasibility Study Apache Junction and $5,000,000 Appraisal Report
Arizona Palm Springs Water
Systems
Cities of Riverside and Eminent Domain Temeseal Water $4,000,000 Expert iestimony
Corona Company and Bunker
Hill Basin pumping
rights
San Mateo County Feasibility Study Montara Water System Confidential Appraisal .Report
City of Claremont Feasibility and Pomona Vaney District $15,000,000 Appraisal Report
Water Manage- Water System
ment Study
Coachella Valley Water Eminent Domain La Quinta Water $830,000 . Expert
5~Y OF BOOKM -EDMONSTON APPRAISAL EXPERIENCE
AS OF MARCH 1998
(AH systems located in California unless otherwise noted)
C3ient Purpose of System Appraisal Services
Appraisal Amount Provided
District - System Testimony
City of Fresno Eminent Domain Kavanagh Vista, $400,000 Expert
Northeast Gardens, and Testimony
Calumet Water Systems
City of South Gate Eminent Domain Central Basin Pumping $600,000 Expert
Rights Testimony
City of Los Altos Eminent Domain North Los Altos Water $850,000 Expert
System Testimony
Vandenburg Community Eminent Domain Vandenburg Sewer and $2,400,000 Ex'pert
Services District Water Systems TestimonY
Alameda County Water . Eminent Domain Niles Water System $1300,000 Expert
District Testimony
West Coast Basin Water Tax Assessment West Coast Basin $1,000,000 Expert
Users Appeal Pumping Rights Testimony
Newhall County Water Acquisition Santa Clarita Water Co. Confidential Appraisal Report
District Feasibility
Haight, Brown & Bonesteel Legal Malpractice Spring for Bottled Approximately Expert
Litigation Water $100,000 Testimony
Calleguas Municipal Water Negotiations for Lindero Canyon Confidential Appraisal Report
District Acquisition Transmission Line,
Reservoir, and
Pumping Station
City of Torrance Negotiations West Basin MWD Confidential Appraisal Report
Service Annexation
The Metropolitan Water Contract Various MWD Pending Review of
District of Southern Negotiations on Subagency Water Capital Costs
California Stranded 'Facilities
Investments
County Sanitation Districts Inverse A portion of San Confidential Pending
of Los Angeles County Condemnation Gabriel Valley Water
Negotiations Company Service Area
A, PPENDIX C
FEE SCHEDULE
BO OKMAN-EDMONS TON ENG .INEERING , 1NC.
SCHEDULE OF FEES
CI.:ASSI~CATION
RATE PER HOUI~
Managing Executive Consultant
Principal Executive Engineer
Executive Engineer
Principal Engineer
Supervising Engineer
Senior Engineer
Senior 'Consultant
Associate Engineer
Associate _Professional
Assistant Engineer
CAD D Manager/Designer
Senior CADD Operator/Designer
CAD D Operator/Designer
Technician I
Technician 17
Technician III
Technician IV
Administrative/Clerical
$166
$150
$140
$130
$120
599
599
$81
$81
$62
$78
$66
$49
544
$49
$66
$73
544
FOR OUT-OF-POCKET EXPENSES, incIuding but not limited to plane travd, meals,
lodging, reproduction expenses, and long distance telephone at the actual cost thereof,
with computer time billed at $15 per hour, automobile mileage at the amount allowed by
IRS regulations per mile, and Xerox copies at 10 cents per, copy. SubconsuItants and
subcontractors will be billed at actual costs plus 10 percent
~For appearances before judicial or quasi-judicial bodies, including depositions - Daily Rate
(eight hours at $200 per hour). For appearances of other professionals bqfore judicial or quasi-
judicial bodies, including depositions - Daily (eight hours at $170 per hour)..
This Fee Schedule is reviewed annually and subject to change.
Effective January 1,1998.
EXHIBIT B
Public Works / Engineering
February 18, 1998
Bookman -Edmonston
225 W. Broadway, Suite 400
Glendale, CA 91204-1331
City of Tustin '
300 Centennial Way
Tustin, CA 92780
(714) 573-3150'
FAX (714) 734-8991
Request for Proposals to Evaluate Privatization Opportunities for the City of Tustin's
Municipal Water System
Dear Sir:'
The City of Tustin is requesting proposals from consultants experienced in the evaluation of the
financial, engineering and operational' aspects of municipal water systems to determine the
potential value of privatizing any or all elements of the City's. water system. The City is
interested in providing a stable rate base while continuing to meet the increasing environmental
regulations along with the capital needs of the water system. The City wishes to be certain that
any opportunities for privatization are clearly understood and that all current and future potential
financial impacts to the City and the ratepayers are carefully analyzed and quantified.
The proposed scope of work, selection process, and proposal instructions are attached as Exhibit
"A". However, the expansion of any tasks that will assist the City in making the best decision
will be considered. It is intended that Phase I will provide a level of assessment that will enable
the' City to determine if proceeding with the preparation of any RFP for privatization services is
warranted. Phase II and III will then involve the preparation of an RFP and subsequent
evaluation of the responses.
Your firm has been recommended as capable of performing this task. We look forward to
receiving your response to this request by nOt later than March 23, 1998. Please do not hesitate
to contact me in writing if you have any concerns regarding this matter.
Sincerely,
Tim D. Serlet
Director of Public Works/City Engineer
TDS:ccg:RFP Privatization of Water
Enclosures
EXHIBIT A
REQUEST FOR PROPOSAL
Privatization Opportunities for Tustin Municipal Water System
SCOPE OF SERVICES
A. Phase I
1.
.
.
'.
.
Review and evaluate the City's water utility including but not limited to the
systems present condition, service area, operating revenues and expenditures,
ad/ninistrative and operation functions (personnel, facilities, billing, meter reading),
annual maintenance and repair needs, and anticipated capital improvements.
Document and analyze the revenues and expenditures necessary to support the
Municipal Water System for a fifteen-year time frame along with the impacts on
the rate structure. This will involve establishing a growth rate along with
estimating future water purchases, groundwater costs, and energy costs.
Identify and evaluate alternative meth6ds of operating any or all portions of the
'water system that will be more cost effective' than current operations and may
provide other benefits to the City. This shall include:
ao
bo
co
An analysis of options for improving the effectiveness of current operations
and methods to reduce costs.
An analysis of options specifically for contracting 'out any. portion or all of
the existing water services to the. private sector or to an existing water
utility.
All options evaluated in the preceding sub-tasks a and b shall be evaluated
and quantified for their legal and organizational feasibility, set-up costs,
effect on employees and benefit/cost ratio. Categories of.costs may include
contract'expense, set-up expenses, operating costs, etc. Categories of
benefits may include long-term rate stability and net revenues available to
the City.
Review the status of other municipal water system privatization efforts and
compare them to the Tustin system. Document any issues/problems that have
occurred.
Recommend specific options based on the preceding analysis. Identify'financial
and legal issues and procedures necessary'to implement any recommendation.
If privatization options are recommended, identify a list of qualified private
companies and water purveyors that have the experience and available resources
necessary to respond to a proposal based on the recommended options.-
.
B,
Phase I
Product
Phase H
A comprehensive technical report to be proVided as follows:
Five (5) screen copies for City review and comment, fifteen (15)
final copies and one (1) reproducible.
o
.
.
If the City Council determines to proceed with Phase II, draft an RFP for the
portion of or all of existing water services recOmmended for operation by the
private sector.
Pr, epare criteria for the evaluation of each RFP.
Evaluate each of the proposals received based upon the established criteria.
Prepare a technical memorandum identifying issues associated with each proposal
and rank the proposals based upon the established financial and operational
criteria.
.
Prepare questions for intervie .wing the top firms and participate on the interview
panel.
C. Phase III
o
After selection of a preferred private sector operator; assist in drafting and
negotiating agreement with selected company.
H. CONSULTANT SELECTION PROCESS
The selection process will entail a comparative analysis of the professional qualifications and
experience of consultants related to the needs of the~ project. The cost associated with the'-
proposal will also be a factor in the comparative analysis. The prospective consultant must have
the qualifications and recent experience necessary to perform the required analysis including:
· Recent experience with a comparable project;
· Knowledge of applicable water system standards, criteria, and requirements;
· Knowledge of applicable 'federal, State, and local regulations, policies, and procedures.
· Knowledge of the financial aspects of operation a'municipal water system.
Upon our selection of the most .highlY qualified 'firm to provide the required services, we will
negotiate the price for individual phases in the proposed scope. If we can reach a price we deem
fair and reasonable, the contract will be awarded with the City reserving the right not to proceed
to a next phase. If we are not able to negotiate a price we deem to be fair and reasonable to the
City, we will proceed to the next most highly qualified firm to provide the requested service and
requested service and will seek' to reach a negotiated price with that company and so on.
However, the City reserves the right to reject any or all proposals.
INSTRUCTIONS TO PROPOSERS
Please limit your proposal to 20 pages, excluding resumes and copies of'brochures. Company
brochures or other forms of preprinted materials shall be minimized and separately bound.
A. Proposal Format and Contact
It is required that, at a minimum, the following-be submitted with your proposal:
.
Jk brief, list of similar types of projects that your firm has previo/asly performed,.
including scope, study cost, project construction cost, agency for whom
completed, and agency individual in responsible charge of the project.
.
Identification, resumes and titles of individuals whO will supervise and perform the
service, including any subconsulting firms fo be utilized.
.
A description of the methodology and the work programs that will be implemented
to perform the requested services.
.
A graphical.project time schedule broken down according to the tasks listed in the
detailed Scope of Work for accomplishing the project through Phase II. Phase I
shall be completed no later than 90 days following the Notice to Proceed.
The schedule should als° include a projection of anticipated man-hours broken
down by major tasks and the various titled individuals who will be assigned to
each.
.
Fee schedule indicating the proposed cost for completing each task in the Scope of
Work, and a resulting' total cost of the project, based upon the work hours, hourly
rates, and other associated costs. The proposed hourly rates and cost to complete
each task shall include the costs of all administration and overhead, project site
visits, attendance at meetings, and all reprOduction costs. The costs associated
with administration, Overhead, mailings, reproductions, phone usage, facsimile
transmissions, mileage, and other ministerial items shall be included in the hourly
rate.
e
List and description of products your firm will produce for each phase and task.
SchedUle of hourly rates for your firm's employee titles or various classifications,
and for any subconsultants.
Be
Submission and deadline for proposals
A respondent shall submit five (5) copies of their proposal to the Director of
Public Works at 300 Centennial Way, Tustin California no later than March 23,
1998. All questions concerning the proposal shall be SUbmitted in writing to Tim
Seflet, Director of Public Works and must be received by March 23, 1998. All
firms mailed copies of the RFP will be mailed answers to the questions.