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Exhibit A -Scope of Work ^ Assist in the development of the budget projects and discuss any current cost issues or trends related to the City's system ^ Provide "as needed" assistance to explain the City's data and information as it relates to developing the revenue requirements. ^ Provide "as needed" data refinements or additional data needs as determined during the process of developing the revenue requirements. ^ Attend aone-half day project meeting to review the draft revenue requirement analysis. Deliverables as a Result of Task 1.4 -Develop Revenue Requirements. From the work accomplished above, the deliverables for this task will be as follows: ^ A projected budget for FY 2007/08. ^ A sewer revenue requirement model that has the capability of a 10-yeaz time horizon. ^ A revenue requirement analysis for a minimum three-yeaz period that utilizes the City's existing financial/rate setting policies. The revenue requirements will consider the necessary operating and capital needs of the utility. ^ A capital financing plan within the revenue requirement analysis, utilizing the City's comprehensive plans or capital budget, which attempts to maximize capital expenditures, while minimizing the impacts to customers over time. ^ A projection of key fmancial indicators (debt service coverage, capital replacement, reserve levels, etc.). Task 1.5-Develop Multi-Year Financial Plans Task Objective: From the revenue requirements developed in the previous task, consider the impacts of any proposed revisions to the City's financial/rate setting policies and develop a final proposed financial plan (revenue requirement). The final proposed fnancial plan must balance the competing needs of the utility, against the financial/rate impacts to customers. As appropriate and as needed, develop an implementation plan for the revenue requirements. The prior task will have developed a revenue requirement for the three-year period that utilizes the City's existing financial/rate setting policies. The objective of this task is to consider and quantify the impacts of revisions to the City's financiaUrate policies. These policies will have been considered in prior tasks. At this point, it is unclear what financial policies may change or the scenarios that need to be developed. However, the final financial plan typically focuses on the capital improvement plan and the adequacy of funding for renewal and replacement projects from rates. In addition, the prudent use of impact fees to minimize rates (applied against growth-related capital projects or growth-related debt service) is often a key issue. The final financial plan (revenue requirements) will balance the key financial indicators for the sewer utility. These key financial indicators of the financial plan will include, but are not limited to the following: ^ Maintenance of Minimum (Targeted) Reserve Levels ^ Minimum Funding of Capital Projects (to Fund CIP Projects) ^ Appropriate (Legal) and Effective Use of Impact Fees (Connection Charges) ^r Comprehensive Local Sewer Rate Study A-6 ~. • City of Pleasanton