Brea's Water System
Brea's water system service area includes the City of Brea, with a population of more than 45,600. Growth from development within the City limits as well as from annexation of underdeveloped property, is expected to increase the water demand with a projected population growth to approximately 49,250 by 2030. Brea has roughly 212 miles of potable water pipeline, seven storage reservoirs (67.5 million gallons storage capacity), five booster stations, 94 pressure reducing stations, six supply connections serving 13,437 customers and delivered more than 10 acre-feet of water in Fiscal Year 2020-21. But for a very small amount of well water used for golf course/park irrigation, Brea imports 100% of its water and receives wholesale treated water from California Domestic Water Company and from the Metropolitan Water District.
Brea's Water Rates
Brea's last completed water rate study was performed in 2015. The current rate structure was adopted on February 16, 2016. Due to Council foresight and staff support, water rates have not increased since July 1, 2017. Brea has been able to keep rates flat due to strategic bond refinancing, as well as purchasing water rights. Also, forthcoming will be the need to pass a resolution that will enable Brea to pass through water rate increases from Brea's wholesale distributors. Lastly, it is staff's intent to address drought rate alternatives in this study. The anticipated (or lack of) rainfall for the upcoming winter/spring season will play a crucial role in the City's water rates. Staff will most likely request the City Council to adopt water rates based on our current usage levels as well as drought rate alternatives that could be implemented so the water financial plan can easily adjust to drought conditions and conservation mandates.
Brea's Sewer Rates
The last completed sewer rate study was conducted in 2006. The adopted resolution allowed for annual CPI (Consumer Price Index) adjustments. CPI increases have been applied consistently since the adoption of these rates. A Sewer Master Plan study has been recently conducted and Public Works Staff plans to have this adopted by the City Council in November 2021. This document identifies the need for ongoing mainteance of the City's existing sewer infrastructure, thus, there is a need to included the costs as part of the updated sewer rates.
Water and Sewer Impact Fees
The City's last Water Impact Fee Study was performed in December 2002 by Boyle Engineering. Water Impact Fees are typically paid by developers that are adding to the City's water infrastruture. The adopted 2003 resolution allowed for annual CCI (Constructions Cost Index) adjustments. CCI increases have been applied consistently since the adoption of these rates. Since it has been several years since these fees were reviewed, it is important to ensure that new developments are paying their fair share. Brea does not currently have a Sewer Impact Fee and based on the recently completed Sewer Master Plan, it appears that Sewer Impact Fees are not required However, the NewGen study will review and verify this information.
Request for Proposal to Provide Water, Wastewater, Storm and Surface Drainage, Solid Waste and Street Sweeping Rates and Development Impact Fees Study
On May 10, 2021, the City of Brea requested proposals from qualitied consultants to conduct a comprehensive Water, Wastewater, Storm and Surface Drainage, Solid Waste and Street Sweeping Rates and Development Impact Fees Study. The City received three (3) proposals on June 14, 2021 and all three (3) firms were invited to present their proposal and respond to questions from a selection committee comprised of Administrative Services and Public Works staff. The initial intent was to have all six (6) of the studies performed simultaneously to gain efficiency, but staff realized the Storm and Surface Drainage, Solid Waste and Street Sweeping Rates are not ready to be reviewed based upon current studies and/or contracts that are occurring. Staff informed the proposers that the City will not be pursuing these studies at this time. However, when ready, staff will reach out and allow the proposers to adjust their numbers, if needed. Staff realizes that the proposed rates may have factored in economies of scales. For the puposes of this report, only the applicable fees (Water, Wastewater, and Impact Fees) related to this specific contract will be discussed.
Selection of NewGen Strategies & Solution, LLC
As mentioned, three (3) qualified firms responded: NBS Government Finance Group (NBS), NewGen Strategies & Solutions (NewGen), and Raftelis Financial Consultants, Inc. (Rafetelis).
| |
NBS |
NewGen |
Raftelis |
| Water/Sewer Studies |
$65,950 |
$50,620 |
$57,821 |
| Impact Fees |
$21,400 |
Included |
$15,795 |
| Out of Pocket Expenses |
No mention |
$4,000 |
$6,997 |
| Proposition 218 Notice |
Included |
$3,570 |
$2,760 |
| |
|
|
|
| Total |
$87,350 |
$58,190 |
$83,373 |
| |
|
|
|
| Additonal Public Outreach |
|
|
$23,244 |
NewGen submitted the lowest responsible proposal. After each proposer met with the selection committee, Adminstrative Services staff followed up with additional questions for all three (3) of the proposers and felt that NewGen was the most responsive. The selection team also felt that proposed NewGen Team is more compatible with the Brea Team and that NewGen could perform the more narrowed scope of studies. Lastly, the team recognized that it would be beneficial for another firm to review the City Water and Sewer rates. Rafetlis has provided the City with its last two (2) water rate studies. Staff then followed up with NewGen's references and confirmed that NewGen stayed consistent with their contracted prices unless the client requested additonal services. All references had no concerns with deliverables from the NewGen Team (formally MFSG). The NewGen Team that is being proposed for Brea has a favorable track record with past clients. Finance staff were also impressed with the rate models that will be provided to City. All references noted their satisfaction and ease of use of the rate models.
Additional Services
Staff requested that each proposer clarify their response to the following:
- Does your proposed fee include drought rates?
- Should the City Council request additional meetings than what was proposed initiallly. What is the per meeting cost?
- Does your propsed fee include drafting of the Proposposition 218 hearing notice? If not, please provide the cost.
The responses to the above questions were as follows:
| |
NBS |
New Gen |
Raftelis |
| Drought Rate Options |
$2,900 |
Included |
Included |
| Additional In-Person Meeting |
$3,750 |
$3,250 |
$1,435-$4,488 |
| Prop. 218 Notice Preaparation (per notice) |
Included |
$3,570 |
$2,883 |
City Water Usage
The topic of City water usage has come up in a number of budget meetings. City water usage is related to water used at City facilties, parks, fire hydrants, etc. The adopted water rates do not directly charge rate payers for City used water. In other words, the current rates are set based upon total system consumption; however, City water usage utimately affects cash reserves. As indicated to City Council in the past, the City's water/sewer operation does not pay for certain costs that might otherwise be incurred if the water/sewer services was a separate entity from the City. These include costs such as the use of land owned by the City for water/sewer facililties (reservoirs, pump stations, etc.), use of City streets or business space to accomodate utility billing and public works staff and equipment. Staff requested NewGen to provide a quote to identify and document these costs. The cost of this City Demand Fee Study is $10,800.
Contracted Cost
The value of the proposed contract is $70,482. This includes the Water, Wastewater User Rate and Water Impact Fees Studies ($54,620) which is also inclusive of certain out-of-pocket expenses of ($4,000). Staff is requesting a 10% contingency ($5,062) of the base contract - $50,620. This contingency could be used for additional information requested by staff or City Council. Please note any additonal staff or City Council meeting requests beyond what was quoted (three remote and four in person meetings) will be charged at $3,250 per meeting. Lastly, at the option of City Council, NewGen will perform the City Demand Fee Study for $10,800.
Next Steps
After this contract has been finalized, staff, along with NewGen will establish a goal setting/prioritization meeting with the City Council. Some of the topics that will be covered at this meeting are Pricing Objectives, Industry-wide Issues, Cost of Service Processes, Methodology, Project Timeline, etc. This meeting is currently scheduled for Tuesday, October 19, 2021. In addition, staff plans to conduct a Citizens Outreach for interested parties as an educational and informational forum. This outreach is intended to be conducted on Thursday, November 4. This forum will be facilitated by City staff; however, the rate consultant will be available to provide additonal feedback and information.
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