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BACKGROUND The City awarded a contract to Raftelis, Inc. in September 2019 to conduct water and sewer rate studies. City staff and Raftelis, Inc. were expecting to complete the rate studies in summer 2020 but decided to delay the study because of the pandemic and the City's desire to have water rate models include new capital and operating costs associated with Per- and polyfluoroalkyl substances (PFAS) in the City's groundwater supply which were not expected to be known until spring 2021. On September 1, 2020, City Council approved the first amendment to extend the contract date and increase the scope of work to include new capital and operating costs associated with PFAS in the City's groundwater supply. On June 15, 2021, the City Council received a presentation on the Basis of Design Report (BODR) prepared by Carollo Engineers and approved finalizing the project design. The project is estimated to cost $46 million of which $3.3 million has already been allocated from the Water Operating Fund to cover design costs leaving $42.7 million to be funded. At the June 15, 2021 City Council meeting, Council directed staff to prepare a funding plan for the unfunded portion of the estimated project cost and bring that plan to City Council for review and approval. On September 7, 2021, City Council approved a PFAS funding plan after which staff and Raftelis restarted the water and sewer rate study. DISCUSSION The scope of work for the original contract with Raftelis did not include drought rates, which staff believes should be included in the water and sewer rate study. The City has also not updated water and sewer connection fees for more than 30 years. Raftelis has experience conducting water and sewer connection fee studies and is willing to conduct that study. The current scope of the Raftelis, Inc. contract needs to be amended to increase the scope to include drought rates and water and sewer connection fees. The proposed third amendment with Raftelis, Inc. accomplishes those objectives. Jointly Submitted by: Approved by: \L:k.\\ L\L /4r4 /71('' Kathleen Yurchak Tina Olson Brian Dolan Director of Operations and Director of Finance Interim City Manager Water Utilities Attachments: 1. 3rd Amendment to Professional Services Agreement with Raftelis 2. Raftelis Proposal for Water and Sewer Connection Fee and Drought Rate Study Page 2 of 2