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Attachment 1 <br /> EXHIBIT A <br /> Scope of Consultant's Services <br /> A. General <br /> The City is requiring you to perform a detailed water, sewer, and recycled water rate <br /> study including a recycled water connection fee study. Your firm will be required to <br /> comply with all Proposition 218 requirements establishing fair and equitable rates <br /> consistent with legally supported industry standards based on your evaluation of the <br /> City's water and sewer enterprise fund finances, infrastructure and operations. The <br /> recommended rates will be developed to ensure a fiscally sound City water and <br /> sewer enterprise that is able to deliver reliable water services in a financially <br /> responsible manner to its customers. <br /> B. Cost of Services <br /> The cost of services analysis will determine the cost characteristics for providing <br /> reliable services. The cost of services analysis will be used to ensure that cost are <br /> equitably distributed to ratepayers in compliance with Proposition 218 and to ensure <br /> that established rates adequately cover costs to provide reliable service. <br /> Calculations used in the cost of services analysis will include administrative <br /> overhead, operations, maintenance, and enhancements or new projects to comply <br /> with new or revised regulations to ensure system reliability. Emphasis will be placed <br /> on clearly distinguishing between fixed and variable costs. <br /> C. Financial Analysis <br /> The financial analysis will build from the cost of services analysis and analyze the <br /> existing financial status of the enterprise (potable water, recycled water and sewer <br /> system), including current reserve levels and recent use of reserves, to determine <br /> appropriate reserve levels and funding mechanisms to ensure the ability of the City <br /> to complete projects required to ensure system reliability. <br /> D. Proposed Rates <br /> During this phase, you will develop proposals s for the potable water rates, drought <br /> rates and penalties, recycled water rates, recycled connection fees and sewer rates <br /> that are in compliance with Proposition 218 (California Constitution Articles XIII C & <br /> D). You will also update and make recommendations related to any other <br /> miscellaneous water and sewer related fees and charges imposed by the City. <br /> You will be expected to provide options and analysis for recovery of cost of services <br /> considering that the sales of potable and recycled water can fluctuate from year-to- <br /> year. Also, the analysis will include consideration of the need to recover fixed costs <br /> as the City implements conservation measures to comply with the Water <br /> 6 � Page <br />