HomeMy WebLinkAboutBozeman MT_Utility Rate Consulting & Financial Analysis_WilldanCITY OF BOZEMAN
MONTANA
Proposal
Utility Rate Consulting and
Financial Analysis
800.755.6864 І fax: 888.326.6864 І 3190 S. Vaughn Way, Suite 550, Office 523, Aurora, CO 80014 І www.willdan.com i
a) Letter of Transmittal
August 24, 2023
Ms. Melissa Hodnett via email: Agenda@Bozeman.net
Finance Director
City of Bozeman
PO Box 1230
Bozeman, Montana 59711
Re: Proposal to Conduct a Utility Rate Consulting and Financial Analysis for the City of Bozeman
Dear Ms. Hodnett,
Willdan Financial Services (“Willdan”) appreciates this opportunity to present our proposal to conduct a Utility Rate
Consulting and Financial Analysis for Water, Wastewater, and Stormwater services on behalf of the
City of Bozeman (“City”).
The Willdan project team our team includes subject matter experts who will provide a fresh perspective and approach
to the planning and ratemaking process and is committed to working with the City to develop a comprehensive
financial and rate model, as well as evaluating the financial plan and rate alternatives.
Our ability to focus on the financial aspects of operating publicly owned utility systems is coupled with recognized
leadership in strategic planning and operations, enabling us to bring unmatched value to our clients. Our team brings
a set of nationally recognized qualifications and experts that set us apart, as detailed below.
Recent Experience with Projects with Goals and Objectives Similar to the City of Bozeman — Willdan team
members have recently completed highly successful comprehensive studies throughout the US with goals and
objectives similar to those of the City of Bozeman, including the City and County of Denver, CO Wastewater and
Storm Drainage Rate Study; City and County of Broomfield, CO Comprehensive Water, Wastewater and
Reclaimed Water Rate Study; Little Thompson Water District, CO Water Rate Study; Cave Creek, AZ
Water and Wastewater Study; Gilbert, AZ Water, Wastewater, Solid Waste and Environmental Compliance
Study; El Mirage, AZ Water, Wastewater and Sanitation Rate Study; Sedona, AZ Wastewater Rate Study;
Lake Havasu City, AZ Water and Wastewater Rate Study; and Kingman, AZ Water and Solid Waste
Rate Study.
Experienced Team — For this engagement, Willdan has assembled a Project Team of senior level consultants that
possess the requisite experience and qualifications to perform the requested services. Willdan is a team of nearly 80
professionals who provide essential financial consulting services throughout the United States. Willdan has provided
the requested services to municipal clients for over two decades; and is the only firm providing these types of
consulting services that also has a long history of providing contract staff support to public agencies for the
delivery of municipal services. This direct experience as “agency staff” provides us with firsthand understanding
of City operations and is uniquely useful in determining the full effort associated with service delivery.
Unique Approach — Our approach to utility rate development has been carefully honed over the past two decades.
Unlike individual engineering and financial firms that may specialize in one area or the other, Willdan combines
unsurpassed utility rate modeling and financial planning (Willdan’s specialty) with proven operational and economic
analysis. We will work collaboratively with City staff to carefully assess and understand the unique utility system
concerns and issues, and develop a tailored, rather than a “cookie-cutter,” approach.
Willdan’s interactive approach will result in a customized Microsoft Excel financial model that is easy to use, and that
the City will retain. The model and accompanying documentation will provide a focused and tailored analysis of the
City’s current rates, revenues, capital project and operational expenditures, debt commitments, reserve funding, and
other financial data. The culmination of our analyses will be a comprehensive financial management plan that
develops projected system operating results for the next 10 fiscal years and allows for alternative rate plans.
Ms. Melissa Hodnett, Finance Director
City of Bozeman, MT
Proposal to Conduct a Utility Rate Consulting and Financial Analysis
August 23, 2023 | Page ii
We will employ our proven interactive approach, supported with advanced financial modeling techniques, to develop
a sophisticated and flexible financial model to help us guide the City through operating and financial scenarios, while
evaluating the impact of policy assumptions, and performing sensitivity analysis on utility rate and financial strategies.
Communicating the Results — Sound technical analysis is only one element of this process. To gain political and
community acceptance, it will be equally important to effectively communicate results and implications of the
proposed rate structure(s) to City staff, City Commission, key stakeholders and, ultimately, to those that will be subject
to the new rates. Willdan typically works with clients to develop educational materials, bill inserts, and changes to
information provided on utility bills to help educate stakeholders. For this particular engagement, Willdan is committed
to preparing an outreach strategy to engage and collect buy-in from various audiences.
We are excited about this opportunity to use our skills and expertise to serve the City of Bozeman. To discuss any
aspect of this submittal, please contact Principal Consultant Mr. Kevin Burnett directly. We look forward to hearing
from you.
Contact Information
Primary Contact
Kevin Burnett, MA
Principal Consultant
Tel#: (303) 990-4616 | Email: kburnett@willdan.com
Sincerely,
WILLDAN FINANCIAL SERVICES
Chris Fisher
Vice President / Director
Utility Rate Consulting and Financial Analysis iii
City of Bozeman, Montana
Table of Contents
a) Letter of Transmittal ............................................................................................................................... i
b) Project Description and Approach .................................................................................................. 1
Project Understanding .............................................................................................................................................. 1
Project Approach ...................................................................................................................................................... 1
Project Methodology ................................................................................................................................................. 6
Work Plan ................................................................................................................................................................. 7
Project Schedule ..................................................................................................................................................... 14
c) Project Team............................................................................................................................................ 15
Resumes ................................................................................................................................................................. 15
Kevin Burnett, MA ................................................................................................................................................... 16
Jeffrey McGarvey .................................................................................................................................................... 17
Tara L. Hollis, CPA, CVA, MBA .............................................................................................................................. 18
Michael Cronan ....................................................................................................................................................... 19
Quality Control Procedures ..................................................................................................................................... 20
d) Related Experience .............................................................................................................................. 22
Firm Profile .............................................................................................................................................................. 22
Utility Rate Experience ........................................................................................................................................... 23
References .............................................................................................................................................................. 25
Similar Completed Projects .................................................................................................................................... 27
e) Cost Proposal ......................................................................................................................................... 28
Utility Rate Consulting and Financial Analysis ....................................................................................................... 28
Utility Rate Consulting and Financial Analysis 1
City of Bozeman, Montana
b) Project Description and Approach
This section provides an overview of our approach to this project, and how elements will help achieve the goals of
the project. More specifically, this overview is intended to also demonstrate our understanding of the project and how
we will address the items outlined.
Project Understanding
Bozeman provides Water, Wastewater, and Stormwater service to residents and businesses within the City, as well
as surrounding areas outside the city limits.
The City seeks the services of an outside consultant to conduct a comprehensive utility rate study for Water,
Wastewater, and Stormwater services. The intent of the study is to independently evaluate the current utility rates
and develop a comprehensive financial plan and updated schedule of rates that are simple, equitable, and most
importantly, structured to meet the future financial needs of the water, wastewater, and stormwater utilities.
Project Approach
The following project approach and scope of services is based on
Willdan’s current understanding of the City of Bozeman’s (“City”) needs
and objectives for a Rate Study Update (“Study”). A final scope and
schedule will be determined following further discussions with the City
staff. The specific services requested by the City include:
▪ Development of a comprehensive analysis and resulting recommendations for fees, rates and charges for water,
wastewater, and stormwater services.
▪ Evaluate all current water, wastewater and stormwater fees and rates, and provide recommendations for fee and
rate structures to meet the cost and revenue requirements for the City’s next rate cycle.
▪ Compliance with the policies established by the City and those found within Montana Statutes.
▪ Detailed recommendations of rates for each utility that accomplishes the requirements of each utility while
respecting an overarching goal of affordability.
Willdan welcomes this opportunity to provide a fresh perspective and approach to the planning and rate-making
process, and to work with the City to develop a comprehensive financial and rate model, evaluate the financial plan
and rate alternatives.
Review of Historical Financial Performance
In preparing our response to the City’s RFP, we took the opportunity to
review some historical financial metrics for the Water and Sewer Funds.
The financial review indicates primary Key Performance Indicators (“KPIs”)
including such things as debt service coverage ratio, operating ratio, and
liquidity (e.g., days cash on hand) have been relatively strong in recent
fiscal years.
It is important to note that this information was derived from the City’s Annual
Comprehensive Financial Reports (“ACFR”). Willdan has not reviewed
these analytics with the City or with its financial advisor. Such a review may
result in these metrics being revised.
Willdan’s approach includes
analyzing not only user rates but
the financial strength of the utility
and making recommendations
that enhance fiscal integrity, meet,
or exceed the City’s established
goals and policies, and create a
plan for maintaining a favorable
financial position.
Our objective is to provide the City
with the information it needs to fully
understand the utility’s current and
projected financial condition, evaluate
options for moving forward, and make
informed decisions.
Utility Rate Consulting and Financial Analysis 2
City of Bozeman, Montana
Water Fund
Operating Ratio
(excl. Dep)
A measure of utility’s ability to
cover operating expenses,
excluding consideration for
capital replacements, has
fluctuated from 1.42 to 1.60.
Days Cash on Hand
(excl. Investments)
Represents the number of days
a utility can continue to pay its
operating expenses with
available cash and has ranged
from 918 days to 1,106 days.
Debt Service Coverage
Measures ability to pay total
debt service with operating
revenue; DSC has ranged from
1.58 to 2.11.
Utility Rate Consulting and Financial Analysis 3
City of Bozeman, Montana
Net Cash Flow and Investments
From our review of available public documents, we noted the City’s net cash flow and investments from Water Fund
to be as shown below in the chart. As shown in the chart, the water system has experienced a decline, but still
remains positive.
Utility Rate Consulting and Financial Analysis 4
City of Bozeman, Montana
Sewer Fund
Operating Ratio
(excl. Dep)
A measure of utility’s ability to
cover operating expenses,
excluding consideration for
capital replacements, has
fluctuated from 1.56 to 1.70.
Days Cash on Hand (excl.
Investments)
Represents the number of days
a utility can continue to pay its
operating expenses with
available cash and has ranged
from 259 days
to 532 days.
Debt Service Coverage
Measures ability to pay total
debt service with operating
revenue; metric has ranged from
1.20 to 2.42.
Utility Rate Consulting and Financial Analysis 5
City of Bozeman, Montana
Net Cash Flow and Investments
From our review of available public documents, we noted the City’s net cash flow and investments from the Sewer
Fund to be as shown below in the chart. As shown in the chart, the sewer system has seen a decrease in net cashflow
and investments over the last five fiscal years.
Utility Rate Consulting and Financial Analysis 6
City of Bozeman, Montana
Project Methodology
As described herein, our approach to this utility rate study is built around three key elements:
Key Elements
Working collaboratively with the
City of Bozeman to develop the
comprehensive financial plan
and model for the utilities
Using the model to develop
and evaluate various rate,
financial and capital funding
scenarios
Arriving at a final plan and set of
recommended rates that have a
clear and transparent
rationale and basis
We propose to conduct this process in a way in which staff and stakeholders gain understanding throughout the
process of how the plan is developed, and how policy and financial decisions affect it, so that we can clearly
communicate the process and results to the City Commission and the community. The communication part of the
process is critical in gaining acceptance and understanding of the broader community. Our rate study analyses will
include comprehensive financial management plan alternatives for the next ten fiscal years to support the proposed
rate plan.
As part of the analyses, Willdan will develop a comprehensive financial analysis which incorporates the following:
▪ Revenue requirements such as operating expenses, transfers, and reserve requirements;
▪ Major and operating capital expenses;
▪ Review of Capital Improvement Program with projected cash and debt-funding for major capital expenditures,
along with existing annual debt service expenses;
▪ Adequate funding of designated reserves including operating and existing debt service, and other reserves as
outlined in the City’s financial policies; and
▪ Functional cost breakdown consistent with American Water Works Association (AWWA) and Water
Environment Federation (WEF) rate-making standards.
The culmination of the revenue requirements analysis, which will include a capital project financing plan and cost of
service allocations, will be alternative rate plans which will provide sufficient revenue to meet the ongoing funding
needs of each system, while recovering costs from customers in a manner which is fair, equitable, and within
reasonable customer impact parameters.
During this project, we will utilize our Microsoft Excel-based model, with its interactive dashboard, as a comprehensive
financial tool to allow for planning and reviewing of variable inputs and assumptions, thereby creating a thorough
analysis of revenue requirements. These analyses are then seamlessly integrated with the rate development
component of the model to demonstrate and project various rate design alternatives, and the effects they would have
on the City’s financial outlook.
The model is used in meetings, in order to efficiently cycle through rate scenarios and establish the most viable rate
plans for the City. During these interactive meetings, we invite City staff to participate in scenario planning / “what-if”
sessions, where we use the dashboard to demonstrate and evaluate the financial/rate impact of alternative data (CIP,
operating costs, etc.) and assumptions (interest rates, customer growth, cost escalation, etc.) in real-time to focus on
the most critical drivers of the analysis. This ensures the resulting rate plan alternatives are viable from a financial,
operational, managerial, and political perspective.
To the extent revenues are not projected to be sufficient to meet requirements (including operating expenses, debt
service payments and coverage requirements, planned capital expenditures and targeted operating reserves) the
model can be used to evaluate variable outcomes and alternatives, providing basis for meaningful discussions with
elected officials and stakeholders well in advance of the actual rate increase process.
Utility Rate Consulting and Financial Analysis 7
City of Bozeman, Montana
Work Plan
The following proposed work plan is intended to capture the goals and objectives of the City. We are confident our
proposed work plan will effectively meet project objectives. A final scope and schedule will be determined based on
further discussions with staff.
Willdan’s work plan will culminate in the successful development of ten-year financial rate plans and the education of
staff and key stakeholders.
Task 1 – Real-Time Financial Modeling
The goal of financial forecasting is to provide clear vision regarding the potential financial outcomes of current
management decisions. Our goal is to help you mold the existing knowledge base of the City into a viable financial
management and rate plan. At Willdan, the development and use of real-time financial models in an interactive,
collaborative manner is an integral part of the model development.
Model Updates as Part of the Consulting Process
Both the City’s existing model and the updated models will contain the following elements:
▪ Graphical dashboard to clearly show the results of various scenarios to the user;
▪ Easily reviewed and modified assumptions, constraints, inflators, plans, and budgets (current and future
operational costs);
▪ Validated data tables generated from the City’s financial and operational information; and
▪ A powerful calculation engine.
Each model is “baselined” after an initial meeting with staff to ensure that we have the correct data and a basic
understanding of the financial dynamics of your systems. We will then conduct interactive financial planning sessions
with City staff. After validating our data, calculation approach, and baseline assumptions, we will explore creative
alternative scenarios, examining constraints and varying a number of assumptions and financial planning techniques:
▪ Rate increase magnitude and timing (exploring various rate increase implementation strategies);
▪ Alternative timing of capital projects and asset replacement;
▪ Alternative financing options (alternative combinations of pay-as-you-go, revenue bond debt and SRF debt, for
example);
▪ Alternative growth/demand forecasts and other “what if” analyses such as the impact of a loss of one or more
service areas or significant customers; and
▪ Effect of increases in other sources of funds.
Given any combination of cost requirements (both operating and capital), non-rate sources of funds, and forecast
assumptions, Willdan will work with the City’s team to model a rate revenue increase plan that:
▪ Meets specified reserve targets;
▪ Fully fund capital expenditures using specified financing techniques; and
▪ Meets legal, policy and contractual requirements that are financially measurable, such as debt service coverage
on revenue bonds.
Alternatively, the user can specify rate increases and then examine the results to determine if the desired/required
parameters and key performance metrics are met.
Subsequent to careful development and validation of the baseline forecast, a series of alternative forecasts or
problem-solving alternatives will be prepared illustrating various results in the following general categories:
What if things turn out differently? These alternatives will demonstrate the sensitivity of the forecast to the
significant assumptions used. This results in a sound understanding of areas where a conservative forecast approach
is warranted.
What happens when we try this? This series of alternatives focuses on different financial management approaches.
For example, the use of different financing techniques such as pay-as-you-go, long-term debt, and interim short-term
financing may be explored. We will also explore cost constraints, the impact of maximum annual increases or inflators
that are politically feasible and publicly acceptable or any other variables that the City wants to explore.
Utility Rate Consulting and Financial Analysis 8
City of Bozeman, Montana
What can we do to make it better? This approach to forecasting identifies the factors that might cause significant
rate increases in a given year and explores alternatives. For example, if a large capital project in a single year is the
culprit, we would work with staff to determine whether this project could be phased or delayed.
How will any adjustments affect our customers? In examining rate structure alternatives, we will demonstrate and
discuss how users in various categories or classifications will be impacted. Willdan team members will use our rate
design model to explore the impact of various rate structures on bills for each customer class over the relevant
consumption range.
What if growth changes? We understand the City has experienced population growth of approximately 43% since
2010. We will start with the City’s Community Plan 2020 and data from the City’s development & permitting and
planning departments as the base plan for growth projections over 10 years. We will work with City staff to accelerate,
increase, and reduce growth projections to conduct a sensitivity analysis on the financial plans and projections of
utility revenues. If annual growth projections exceed the increased cost of operating the utilities necessary revenue
adjustments may be “hidden” until growth slows down. Similarly, rapid growth may result in costs increases
(chemicals, electricity, staff) over and above annual inflation to meet the demands of additional customers. Through
the sensitivity analysis we will explore different scenarios to provide the City with a more well-rounded financial plan.
To summarize, rate model development is a natural part of the Willdan consulting process, and one in which staff
and other stakeholders, City Commission, and the public, (at the City’s discretion) play a collaborative part.
Consequently, upon completion of the analysis, the model will be completely customized to emulate the precise
financial dynamics of the City. The use of interactive workshops will help develop an effective, efficient working
relationship among the participating stakeholders, and resolve questions and concerns, which will carry forward into
future rate-setting processes.
This approach helps ensure that the thinking of all parties involved is aligned throughout the project, that the process,
rationale, and methodologies are clearly communicated and transparent, and that opportunities for feedback and
adjustment are available at key project milestones; all of which help ensure adherence to project objectives, facilitate
development of creative and practical solutions, provide for consideration of various constraints at appropriate points
in the development of the model and financial plan.
Willdan’s Interactive Financial Modeling Approach
A key to success is a robust, real-time financial forecasting model, customized to simulate each utility’s financial
dynamics. Our interactive utility financial model includes the following key components:
▪ Financial planning
(various scenarios)
▪ Cost-of-service allocation
(including levels of service)
▪ Rate Design
(customer classes and consumption tiers)
Our state-of-the-art utility financial model allows us to provide interactive consulting services to our clients. We can
evaluate multiple scenarios, incorporating multiple alternative assumptions/datasets, with the City in a real-time
setting. If selected to interview, we intend to demonstrate the power of this approach in such a setting with a live-
model demonstration. The interactive model also includes an integrated cost-of-service and rate design functionality
so each alternative under consideration can be evaluated in a manner which incorporates the entirety of the analyses.
This allows us to test alternatives and quickly understand the impact of various assumptions on the multi-year utility
financial plan; the utility cost of service analysis; specific utility rates and charges; and model funding alternatives.
Because our interactive model will be populated with specific data from the City, including billing data, each alternative
reviewed in real-time, interactive client meetings will be done with a complete understanding of the customer impact
of each rate structure for each customer class.
Features:
▪ Excel-based open architecture;
▪ Modular design that allows for maximum design flexibility;
▪ Easy to update − open architecture and modular design equate to easy annual data updates;
▪ Automatic data transfer links between utility sub-funds;
▪ Automated calculation engine that optimizes the financial plan based on user-set constraints;
▪ Navigation features to quickly move around within the model;
▪ Side-by-side scenario analysis comparison; and
▪ A large existing (and expandable) listing of user defined assumptions that can be customized to meet the
City’s needs.
Utility Rate Consulting and Financial Analysis 9
City of Bozeman, Montana
The modular design concept allows our models to accommodate institutional changes without a complete redesign.
While the open architecture concept allows our models to integrate outputs and data from other models or the City’s
models into decision processes. The modular design and open architecture features allow our interactive utility
financial model to be customized to simulate the precise financial dynamics specific to the City.
Interactive, “What-If” Model Capability
Our Excel-based rate model has the elements necessary to conduct a full
financial planning analysis and rate study. The comprehensive analysis model
allows us to develop various scenarios regarding such things as:
▪ Capital financing alternatives;
▪ Debt service coverage tests;
▪ Liquidity tests (cash reserves); and
▪ Modeling of rate structure alternatives to test “what-if” scenarios, to address such questions that may arise
during project team meetings with staff or elected officials.
This process helps to gain consensus regarding the rate and financial plan which best addresses your needs.
Features of the analysis model include the ability to incorporate line-item data and assumptions that are then
summarized in a graphic dashboard to show key financial indicators for the utility system. The sample dashboard,
shown below, illustrates how we can summarize data, assumptions, and calculations into an easy-to-understand
graphical interface that updates with each alternative scenario evaluated.
To summarize, rate model development is an integral part of the Willdan consulting process, and one in
which staff and other stakeholders play a collaborative role in developing a rate structure for the City.
At the completion of the analyses, the model will be customized to generate the financial metrics and targets desired
by the City. Also, an Excel-version of the model will be provided to the City for use by staff. The ultimate goal is to
develop an effective, efficient, and interactive working relationship that will carry forward into future rate-setting
processes.
An Excel version of the model
will be provided to the City for
internal use by staff.
Utility Rate Consulting and Financial Analysis 10
City of Bozeman, Montana
Task 2 – Cost-of-Service Analysis
Willdan will perform a cost-of-service analysis to ensure that the costs associated with utility operations are allocated
equitably to each customer class (identifying differences in cost to serve as a basis for rate design in Task 3), to
support the development of cost-based rates, and to aid in the development of financial plans for the future. The cost-
of-service activities will be coupled with the revenue sufficiency and rate modeling tasks, so that the impact of changes
in capital expenditures, O&M expenditures, growth projections, and other parameters on the cost of service can be
determined.
This analysis will include gathering cost information associated with water, wastewater, and stormwater, the allocation
of costs by function, classification and to each existing customer class.
Classification of Costs
Operating and non-operating costs will be classified into functional components. Classification of costs into functional
components will allow costs (including general and administrative costs) to be allocated between:
Costs for each utility may be further allocated to customers based on:
▪ Number of customer and peaking factors (peak day and peak hour) for water;
▪ Conservation costs;
▪ Impact of development impact fees on construction costs;
▪ Impact of future supply costs from cash-in-lieu water rights;
▪ Number of customers and strength of discharge for wastewater; and
▪ Number of customers and impervious area/runoff for stormwater.
Task 3 – Rate Design Analysis
This task will involve modeling several alternative rate structures using the City’s financial data and billing statistics
to demonstrate the resulting customer impacts and to identify key issues associated with the new rates and charges.
Basic standards for rate design accepted by the industry are:
Revenue sufficiency – rate revenue should provide sufficient income so that, when combined with other sources of
funds, total system costs are covered.
Fairness and equity – based on cost responsibility as reflected in cost-of-service allocations, in accordance with
industry standards.
Resource Conservation – under conditions of scarcity, the pricing of water as a commodity should promote
voluntary conservation and discourage unnecessary water use.
Administrative simplicity – so that rates are understandable to customers and efficiently administered by staff.
Customer acceptance – customers understand the rates, view them as fair, and consider them to be reasonable
compared to other costs and other utilities.
Public health and welfare – rates are structured so that essential domestic water usage is encouraged through
affordability.
A detailed discussion of Willdan’s approach to developing a conservation rate structure is described within. Objectives
such as equity and cost recovery are a given in this type of analysis, but additional items such as customer
acceptance and simplicity are often key concerns for stakeholders. While there are many common objectives, some
objectives vary by utility, due to different operating conditions, such as previous responses to rate increases,
customer class demographics, resource availability, growth pressures and socioeconomic conditions. Our analysis
will help the City align rates in support of overall goals.
▪ Each service
(water, wastewater, and stormwater);
▪ Functional components within
each service; and
▪ Each customer class.
Utility Rate Consulting and Financial Analysis 11
City of Bozeman, Montana
Low Income/Low Volume Users Affordability Rate Analysis
Low income/low volume users often do not place significant “peak demand” on the system and may be a lower cost
customer to serve. We will review the impact of any proposed rates will have on low volume customers as a
component of the rate design process.
Wastewater Considerations
We will work with the City to determine if the existing 6 wastewater rate categories are still appropriate or if they
should be expanded or consolidated. Number of customers and variation in strength factors may be considerations
for refinements to the rate structure.
Stormwater Considerations
We will review the existing flat, variable and credit approach to assessing fees and will make recommendations for
changes as appropriate.
Development of Rate Comparison
Willdan will develop a comparison of existing and proposed rates that will set forth the financial impacts on the various
customer classes at different consumption/usage levels. Willdan will prepare a comparison of rates currently being
charged by the City to the rates proposed as a result of this engagement. A survey will be prepared of a representative
number of water, wastewater, and stormwater systems in the area to gather information regarding rates charged for
similar services. We will then develop a table and graph representing a comparison of the rates charged by the
comparable systems to the existing and proposed rates of the City. We will work with City staff during this process
so that the selected cities/agencies ensure meaningful comparisons.
Task 4 – Summary of Recommendations
Upon completion of the analysis elements, Willdan will work in conjunction with departmental and other City staff to
develop final recommendations. The recommendations will include a summary report that discusses the analyses
undertaken during the study and the benefits of the recommended plan.
Preliminary Draft Report. A draft report will be developed to address the study findings and the proposed
recommendations. Contents will also include assumptions relied upon for the projection of customers and usage
characteristics (if applicable), revenue requirements, revenues, operating results, and any proposed adjustments to
the utility rates. Upon completion, an electronic PDF copy of the draft report will be provided to staff for review.
Final Report. Based on comments received from staff and other participants during the presentation of the
Preliminary Draft Report, the Final Report will be revised to incorporate the agreed upon changes. Upon completion,
an electronic PDF copy of the Final Rate Study Report, as well as the dashboard model (in Excel format) will be
provided to the City. All information provided to the City, up to and including the final report and analysis model, will
be the property of the City.
Upon Commission adoption of the financial plan and rates, Willdan will provide hands on training of the Excel-based
model (financial plan and cost of service) to City staff. The training will focus on updating the model, adjusting
assumptions to run “what-if” scenarios and conducting sensitivity analysis.
Task 5 – Meetings & Presentations
The most challenging component of a rate study is often the communication of findings and results. Thorough analysis
and recommendations can be undermined if they are not adequately presented to stakeholders (elected officials and
the public). Our Team is proud of our outreach to the public and engagement with stakeholders to provide clear
communications of the process, findings, and recommendations. With communication in mind, we have identified
common meetings below which will be refined with Staff upon selection for the rate study.
Project Kick-Off Meeting. An initial kick-off meeting will be scheduled with City staff at the start of the project to
discuss project requirements, finalize project scheduling/milestones and reporting requirements, and receive overall
project direction. This meeting will provide the opportunity to review current water, wastewater and stormwater rates
and discuss rate structure issues with staff. The meeting will help ensure that the project objectives are clearly defined
and understood by all parties.
Utility Rate Consulting and Financial Analysis 12
City of Bozeman, Montana
Financial Plan Review Meeting. Willdan will facilitate a financial review meeting with City representatives. During
this meeting, we will review financial goals and objectives, the baseline modeling results and interactively test various
“what-if” scenarios to ensure that the model reflects the City’s future financial position under the most realistic
assumptions.
Rate Design Workshop. A workshop often requires a full day to explore various rate structures, with morning and
afternoon sessions to reach consensus on a recommended rate structure, including a review of the pros and cons of
potential rate structures.
Project Progress Web Conferences. During the course of the project, and prior to meetings with the City
Commission, team web conferences will be scheduled to present the progression of the analysis to staff in order to
obtain input and feedback associated with any rate adjustments that may be presented. These web meetings will
assist in the completion of rate design and guide the development of the draft report.
Work Session. We will attend a work session with the City Commission to present findings and study results. The
meeting will provide the City Commission with the opportunity to ask questions and provide feedback on the
recommendations being made.
Public Hearing. The results of the study will be presented to the City Commission during a regular Public Hearing,
where the water, wastewater, and stormwater rates are to be considered for adoption. Willdan will address any
questions or concerns raised during the hearing prior to action being taken by the City Commission.
Stakeholder Outreach. Taking a proactive role in communicating with stakeholders increases trust in the utility
provider, improves the stakeholders’ understanding of utility operations and services, and establishes a foundation
for future positive relations within the community.
Willdan envisions an outreach program that utilizes an effective combination of communication tools, reaching
numerous people with a message that accurately reflects the City’s goals. We will develop presentation formats
specifically tailored to the needs of the audience, and present findings at up to 3 public outreach meetings to solicit
feedback. We stress clear, concise presentation of findings, using easily understandable terminology and clear,
colorful graphics. Assigned staff is trained, skilled and experienced in managing difficult presentation environments
at all organizational levels in a manner that results in the satisfaction of the audience’s need for information. We
recognize that the presentation of recommendations for rate increases and significant changes in rate structure can
be difficult and must be managed with tact, confidence, and honesty.
City Staff Responsibilities
Willdan recommends that the City of Bozeman assign a key individual as project manager. As our analysis is
developed, it is expected that the City’s appointed project manager will:
1) Coordinate responses to informational requests;
2) Coordinate review of work products; and
3) Identify appropriate staff members for participation in meetings and facilitate in scheduling.
We will ask for responses to initial information, follow-up requests and comments on reports within five business days
or otherwise agreed upon timetable. If there are delays, the co-project managers will follow up with the parties
involved to establish an estimated date for the delivery of information and/or feedback.
To ensure continued progression, the co-project managers will reconvene with the rest of Willdan to identify tasks
that can be started while waiting for requested data.
We will rely on the validity and accuracy of the City’s data and documentation to complete our analysis. We will rely
on the data as being accurate without performing an independent verification of accuracy, and that we will not be
responsible for any errors that result from inaccurate data provided by the client or a third party.
Utility Rate Consulting and Financial Analysis 13
City of Bozeman, Montana
Municipal Advisor Project Disclaimer
The City of Bozeman further represents, acknowledges, and agrees that:
(i.) The City uses the services of one or more municipal advisors registered with the U.S. Securities and Exchange
Commission (“SEC”) to advise it in connection with municipal financial products and the issuance of municipal
securities;
(ii.) The City is not looking to Willdan to provide, and City shall not otherwise request or require Willdan to provide,
any advice or recommendations with respect to municipal financial products or the issuance of municipal
securities (including any advice or recommendations with respect to the structure, timing, terms, and other
similar matters concerning such financial products or issues);
(iii.) The provisions of this proposal and the services to be provided hereunder as outlined in the scope of services
are not intended (and shall not be construed) to constitute or include any municipal advisory services within the
meaning of Section 15B of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and
the rules and regulations adopted thereunder;
(iv.) For the avoidance of doubt and without limiting the foregoing, in connection with any revenue projections, cash-
flow analyses, feasibility studies and/or other analyses Willdan may provide the City with respect to financial,
economic or other matters relating to a prospective, new or existing issuance of municipal securities of the City,
(A) any such projections, studies and analyses shall be based upon assumptions, opinions or views (including,
without limitation, any assumptions related to revenue growth) established by the City, in conjunction with such
of its municipal, financial, legal and other advisers as it deems appropriate; and (B) under no circumstances
shall Willdan be asked to provide, nor shall it provide, any advice or recommendations or subjective
assumptions, opinions or views with respect to the actual or proposed structure, terms, timing, pricing or other
similar matters with respect to any municipal financial products or municipal securities issuances, including any
revisions or amendments thereto; and
(v.) Notwithstanding all of the foregoing, the City recognizes that interpretive guidance regarding municipal advisory
activities is currently quite limited and is likely to evolve and develop during the term of the potential engagement
and, to that end, the City will work with Willdan throughout the term of the potential Agreement to ensure that
the Agreement and the services to be provided by Willdan hereunder, is interpreted by the parties, and if
necessary amended, in a manner intended to ensure that the City is not asking Willdan to provide, and Willdan
is not in fact providing or required to provide, any municipal advisory services.
Utility Rate Consulting and Financial Analysis 14
City of Bozeman, Montana
Project Schedule
Willdan understands time is of the essence for the City to begin this engagement, we will request timely cooperation of City staff. Delays in responding to our
requests for data and review will likely result in corresponding delays to the project schedule.
4 11 18 25 2 9 16 23 30 6 13 20 27 4 11 18 25 1 8 15 22 29 5 12 19 26
Task 1 – Real Time Financial Modeling ①
Task 2 –Cost-of-Service Analysis ②
Task 3 – Rate Design Analysis ③
Task 4 –Summary of Recommendations ④
Task 5 – Meetings & Presentations ⑤⑥
Deliverables
❶Kick off meeting ❺Work Session
❷Review Preliminary Financial Findings ❻Public Hearing
❸Conduct Rate Design Workshop Draft and final reports
❹Review Preliminary Rates with Staff
City of Bozeman
Utility Rate Study
Proposed Project Timeline
FebruarySeptemberScope of Services January.2024DecemberOctoberNovember
Utility Rate Consulting and Financial Analysis 15
City of Bozeman, Montana
c) Project Team
Willdan has assembled a senior project team of subject matter experts who support public clients across the United
States. We are confident that our team possesses the depth of experience that will successfully fulfill the desired
work performance.
We believe that the experienced team assembled for this project will provide an unmatched ability to develop
scenarios that meet the City’s needs and are easy for stakeholders to understand. While it is important to have a
consulting team that makes the necessary recommendations to support the City’s future financial stability, it is equally
important that the recommendations can be implemented. Our team combines experience working with clients across
the country; our team has worked both on the technical side of utility service charges as well as on the
recommendation and implementation side. One of the many benefits of Willdan is that we possess experience making
recommendations, as well as an understanding of how to present the results in an easily understandable manner
and implement them.
Outlined below are the project roles and responsibilities for each proposed Willdan Team member.
City of Bozeman Project Team
Team Member Project Role Engagement Responsibilities
Kevin Burnett, MA
Principal Consultant
Project Manager
Water & Wastewater Lead
▪ Model development
▪ Produce key elements of the analyses
▪ Responsible for project deliverables
▪ Project oversight
▪ Report preparation
▪ Stakeholder outreach
▪ Meeting and presentation attendance
Jeffrey McGarvey
Managing Principal /
Vice President
Rate Structure Advisor
& QA / QC
▪ Rate alternative guidance
▪ Quality assurance and control
▪ Bring additional perspective to financial plan
and rate alternatives
Tara Hollis, CPA, CVA, MBA
Principal Consultant
Lead Project Consultant
Stormwater Lead
▪ Collect, interpret, and analyze key data
▪ Assistance with model development
▪ Report preparation
▪ Meeting and presentation attendance
Michael Cronan
Project Manager Financial Analyst
▪ Collect, interpret, and analyze key data
▪ Assistance with model development
▪ Report preparation
▪ Meeting and presentation attendance
Resumes
Resumes for each proposed team member have been provided on the pages that follow.
Utility Rate Consulting and Financial Analysis 16
City of Bozeman, Montana
Kevin Burnett, MA
Project Manager, Water and Wastewater Lead
Mr. Kevin Burnett is a Principal Consultant with 23 years of utility analysis experience. Mr. Burnett
maintains extensive experience with utility rate and cost of service studies for retail and wholesale
use. His project experience includes water, wastewater, reuse, stormwater, and solid waste rate
studies using state-of-the-art utility financial planning tools. He has developed both short and long-
term financial plans for utilities of all sizes – including regional water authorities and regional
sewer providers with individual wholesale service contracts.
Mr. Burnett is currently on the committee updating the AWWA M1 Manual of Practice.
Select Relevant Experience
City and County of Denver, CO – Sanitary Sewer and Storm Drainage Rate, Connection Fee
and Bond Feasibility Study: Mr. Burnett served as project manager and lead analyst for a six-
year financial analysis of the City’s Wastewater Enterprise Fund. The study included projection of
rate increases to maintain the financial viability of the Enterprise Fund. Mr. Burnett worked closely
with City staff and the City’s financial advisor to conduct a bond feasibility analysis in support of
a $50 million revenue bond debt issuance to refund a prior debt issue and provide new money for
future capital needs. The City’s sanitary sewer connection fees were reviewed and updated to
reflect the City’s cost of providing new infrastructure to provide service to new connectors.
City and County of Broomfield, CO — Water, Sewer and Reclaimed Water Rate and License
Fee Study: Served as project manager for the City and County’s rate study. The objectives of
this analysis were to develop a tiered rate structure for customers that: 1) generate sufficient
revenues to meet operating and capital expenses associated with water in response to the rising
cost of purchased water; 2) technically defensible and equitable across the customer classes;
and 3) updated license fees to adhere to the growth pays for growth Council objective.
Town of Gilbert, AZ – Water, Sewer, and Environmental Services Cost of Service Rate
Study: Mr. Burnett served as project manager and lead analyst for a comprehensive cost-of-
service rate study for the Town’s water and sewer utility as well as environmental services. The
study represented the first time the Town had adjusted utility rates in nine years. In addition to
identifying revenue increase needs, changes in customer class distribution and usage patterns
were analyzed with recommendations made to modify the rate structures to better match how the
systems are used and to be more in line with industry trends. The project involved public outreach
meetings (four) to provide education of why the rate revenue increases were needed and why the
changes to the rate structures were being proposed.
City of Lake Havasu City, AZ – Water and Sewer Rate Study: Mr. Burnett served as co-project
manager on the City’s most recent water and sewer rate study. Several rate options were
developed and presented to staff and City Council for consideration. Mr. Burnett also participated
in community outreach forums to present proposed findings to members of the public to solicit
their feedback. Major goals of the study included developing rates to mitigate the loss of revenue
from the Irrigation and Drainage District and rates that encouraged conservation.
City of El Mirage, AZ – Water, Sewer, and Solid Waste Rate Study: Served as lead analyst on
a study to update the City’s water, sewer and solid waste financial plans and recommended
changes to the existing rate structures. The study examined the cost of recharging the State
aquifer through the City’s sewer system and determined an appropriate cost allocation between
the water and sewer utilities. The implementation of a recycling program in addition to the solid
waste collection service was explored.
City of Dinuba, CA – Water, Sewer, and Solid Waste Rate Study: The City had undergone a
period of declining net revenues and an inability to fully fund capital repair and replacement needs.
In the role of lead consultant, Mr. Burnett worked with City Staff to update the rate structures to
ensure class cost of service-based water rates that promote conservation and adhere to
Proposition 218 requirements.
Education
Master of Arts,
Economics, State
University of
New York, Buffalo
Bachelor of Arts,
University of
Waterloo, Ontario
Areas of Expertise
Financial Planning
Cost of Service Studies
Rate Design
Impact Fees
Bond Feasibility
Affiliations
American Water Works
Association
Additional
Qualifications
Municipal Advisor
Representative (Series 50)
23 Years’ Experience
Utility Rate Consulting and Financial Analysis 17
City of Bozeman, Montana
Education
Bachelor of Science,
Finance, University of
Central Florida
Areas of Expertise
Alternatives Analysis
Strategic Planning
Rate Studies
Cost of Service
Studies
Revenue Bonds
Feasibility Analyses
Capital Funding
Acquisitions
Valuation Analyses
Affiliations
American Water
Works Association
The Water
Environment
Federation
The Utility
Management
Conference
The WateReuse
Foundation
30 Years’ Experience
Jeffrey McGarvey
Rate Structure Advisor, Quality Assurance/Control
Mr. Jeffrey McGarvey is a Managing Principal and Vice President in Willdan’s Financial
Consulting Services group, and for more than 30 years has provided professional consulting
services to municipal water, wastewater, solid waste, electric, and natural gas utilities throughout
the country. He possesses a broad range of municipal utility system experience, including special
expertise in complex alternatives analyses; utility rate analyses; utility valuations and acquisitions;
regionalization and consolidation studies; debt issuance support; capital financing analyses;
strategic planning; rate and regulatory assistance; and instituting financial mechanisms to provide
the sufficient recovery of operating and capital costs.
Rate and Cost of Service Studies: Mr. McGarvey has extensive experience in utility rates and
cost of service studies for water, wastewater, solid waste, stormwater, electric and natural gas
systems. This experience generally relates to performing budget analyses, customer and usage
analyses, development of revenue requirements, cost of service allocations and sensitivity
analyses related to the implementation of rate structures designed to promote desired usage
characteristics.
Revenue Bonds, Feasibility Analyses and Capital Funding: Mr. McGarvey has been involved
in the preparation of capital financing plans and feasibility studies associated with the issuance of
several hundred million dollars in municipal revenue bonds and bond anticipation notes (BANs).
The funding proceeds have been utilized for such purposes as utility acquisitions, expansion of
facilities and various other capital improvement needs. In addition, Mr. McGarvey has developed
capital funding strategies utilizing various combinations of bonds, bank loans, government
assistance loans (i.e., State Revolving Funds) and grants.
Business and Strategic Planning: Mr. McGarvey has experience developing complex financial
and economic evaluation models for water, wastewater, solid waste, electric and natural gas
systems throughout the country. Such experience generally relates to the development of
business and strategic plans as well as performing structured alternatives analyses and sensitivity
analyses related to the evaluation and implementation of system modifications.
Acquisitions and Valuation Analyses: Mr. McGarvey has been involved in numerous
acquisitions and valuation analyses for utility systems. He has performed valuation analyses
utilizing various generally accepted methodologies including cost approach (value of the cash
flows generated by the system), original cost less depreciation (book value), comparable sales
(actual transactions for other systems), replacement cost new less depreciation and reproduction
cost new less depreciation (value of system assets).
Select Relevant Experience
City of Flagstaff, AZ – Water, Wastewater and Reclaimed Water Rate Study: Mr. McGarvey
served as the technical advisor of the City of Flagstaff’s utility rate analysis. In the wake of six
water main breaks, the City was faced with decreasing revenues and increasing capital and
operational costs. The proposed rates developed by Willdan reversed the City’s trajectory of a
falling operating reserve and provide the City with sufficient revenue to cover existing and future
operations, maintenance, and debt service
City of Durango, CO – Water and Wastewater Rate Study: Mr. McGarvey led the preparation
of a long-term financial plan, cost of service-based rates and updated plant investment fees. The
City needed to perform $50 million in improvements to the wastewater treatment plant to comply
with State wastewater treatment standards and to provide available capacity for new growth. A
balanced financial plan was developed incorporating rate increases and anticipated debt to fully
fund requirements and minimize customer impact.
City of Brentwood, TN – Water and Sewer Rate Study and Fee Update: Mr. McGarvey served
as principal-in-charge for this engagement, which included a comprehensive review of water and
sewer rates as well as updating the City’s water and sewer development charges (tap-on fees).
One of the project objectives included maintaining their high bond rating, as such, the initial phase
of this engagement involved assisting the City develop best management practices with regard
to the financial management of the utility, including fund reserves, debt service coverage targets,
and the frequency of future bond issues.
Utility Rate Consulting and Financial Analysis 18
City of Bozeman, Montana
Tara L. Hollis, CPA, CVA, MBA
Lead Project Consultant, Stormwater Lead
Ms. Tara Hollis is a Principal Consultant with Willdan Financial Services and has over 23 years
of experience consulting throughout the southeast and across the country. Ms. Hollis has provided
utility rate, financial, economic, and capital planning services for water, wastewater, stormwater,
reclaimed water, solid waste and electric utility systems. She specializes in rate and cost-of-
service studies, capital planning, feasibility and financial reports, debt structuring analyses for the
issuance of utility indebtedness, and valuation studies for mergers or acquisitions.
Establishment of Stormwater Utility Rates – Ms. Hollis has been involved in numerous
stormwater utility projects and her experience encompasses the following: development of
policies and goals; evaluation of alternative rate structures; review and evaluation of billing and
collection alternatives; public information programs; preparation of preliminary budgets; detailed
cost-of-service analysis and rate design; billing integration; grant and cost share project funding;
and development of ordinances and rate schedules.
Rate and Cost-of-Service Studies – Ms. Hollis has extensive experience specific to utility rates
and cost-of-service studies, having prosecuted more than 140 studies. Such experience generally
relates to performing budget analyses, customer and usage analyses, development of revenue
requirements, cost-of-service allocations and sensitivity analyses related to the implementation of
rate structures designed to promote desired usage characteristics. It should also be noted that
Ms. Hollis has prosecuted over 35 system development fee (capacity fee) studies throughout the
course of her career.
Select Relevant Experience
City of DeLand, FL – Stormwater Rate Study: Reviewed stormwater utility budgets, CIP, and
proposed debt as project manager. Current billing data was reviewed as well, it was correlated to
the Volusia County Property Appraiser data for all parcels within the City limits to confirm
ownership of the property as the fee is billed differently if the owner is not the occupant of the
property. Using an interactive computer model, projections of annual revenue requirements for
system O&M, capital projects, debt service, and required reserves were developed and the final
report was prepared and presented to the City Commission for adopted for FY 2021 through 2025.
City of Oviedo, FL – Stormwater Utility Rate Study: Served as the project manager for the rate
and financial services study for the City’s Stormwater utility rate study. She developed the rates
and model which fully recovered the stormwater system’s revenue. She also worked with the City
to revise the timing and magnitude of certain capital projects to better align with annual cash flows
and to mitigate the impact to customers.
City of Eustis, FL – Downtown Master Stormwater Facilities Project Funding: Assisted the
City with generating capital for its $7 million Downtown Master Stormwater Facilities Project
through various entities. Completed a grant application for $1,000,000 in total maximum daily
loading (TMDL) grants through the Florida Department of Environmental Protection (FDEP), and
through continuous efforts was successful in helping the City obtain the full $1,000,000.
City of Polk City, FL – Stormwater Utility Rate Update: Ms. Hollis worked with the City of Polk
City to update the City’s monthly stormwater charge. The City had not updated its stormwater
utility charges for quite some time. The established Stormwater Utility has a provision for a fee to
be billed monthly on the water bill. As part of the analysis, it was recommended that the City
escalate its rate to account for the impacts of inflation. This resulted in an increase of
approximately 33% ($1.50 to $2.00 per month).
City of Lexington, NC – Stormwater Utility Rate Study: Ms. Hollis assisted the City of
Lexington in developing and establishing fees for the stormwater utility system to address
management costs related to planning and implementing water quality improvements resulting
from State and federal regulatory drivers. In addition to workshop presentations to the City
Council, Ms. Hollis participated in community outreach and education meetings regarding the
need for a stormwater system and the development and implementation of the proposed
stormwater fee.
Education
Master of Business
Administration,
University of Central
Florida
Bachelor of Science,
Business
Administration,
University of Central
Florida
Certifications
C.P.A. Florida, No. AC-
0031100
Certified Valuation
Analyst
Areas of Expertise
Business & Financial
Analysis
Dynamic Computer
Modeling
Utility Rate and Cost
Studies
Feasibility and
Financial Analysis and
Reporting
Debt Structuring
Analyses
Expert Witness
Testimony and
Litigation Support
Assessment Programs
Acquisition, Valuation
and Divestiture
Services
Equity Recapture
Strategies
Utility Optimization
Services
Utility Regulatory
Services
23 Years’ Experience
Utility Rate Consulting and Financial Analysis 19
City of Bozeman, Montana
Michael Cronan
Senior Analyst
Mr. Michael Cronan is a Project Manager with seven years of experience within Willdan’s
Financial Consulting Services group. His primary function is to support project managers with
utility rate studies. He specializes in analysis for a variety of clients, including municipalities, water
districts, and public utilities.
Select Relevant Experience
City and County of Denver, CO – Sanitary Sewer and Storm Drainage Benchmarking and
Storm Drainage Impact Fee Study: Mr. Cronan served as the lead analyst on a benchmarking
study to review and compare the City’s current rate structures to those of other front range and
national utilities. The intent of the study was to identify potential areas for refinement to the City’s
current rate structures. Mr. Cronan also served as lead analyst for developing and recommending
first time storm drainage impact fees for the agency.
City of Lake Havasu City, AZ – Water and Wastewater Cost of Service Analysis and Rate
Study: Mr. Cronan provided analytical support to the project manager and principal consultant for
the City’s water and wastewater cost of service analysis and rate study. Willdan worked with the
City on their first rate study since 2008.
City of College Station, TX – Electric Rate Study: Mr. Cronan was the analyst for the City’s
electric retail rate and cost-of-service study.
City of Pinole, CA – Sewer Utility Rate Study: The City retained Willdan to prepare a sewer
rate analysis that included a new sewer rate schedule. Mr. Cronan provided analytical support for
this engagement, gathering and verifying necessary data, and assisting in the development of the
model and the completion of the report.
McKinleyville Community Services District, CA – Water and Sewer Utility Rate Study:
Willdan was retained to update the financial models, develop the CSD’s water and sewer rates
and assist with the required Proposition 218 noticing process. Mr. Cronan provided analytical
support to the project’s senior team.
City of Claremont, CA – Sewer Rate Study: Mr. Cronan provided analytical support for the City’s
sewer rate study. He gathered and verified data for the project manager and principal consultant.
City of Twentynine Palms, CA – Sewer Treatment Facility Fair Share and Sewer Rate
Analysis: Mr. Cronan provided analytical support in the development of a model to support the
project’s senior team assigned to the City of Twentynine Palms’ sewer treatment facility fair share
analysis. This study also included a sewer rate study, specific to the new treatment plant and its
customers.
City of La Palma, CA — Water and Wastewater Utility Rate Study: Mr. Cronan was assigned
to the La Palma engagement as the lead financial analyst. He worked directly with staff at the City
to conduct financial analysis, which included the evaluation of alternatives for rate adjustments
that incorporated different capital funding scenarios and operating budget assumptions, as well
as the preparation of reports and Prop 218 documents. He was also instrumental in the
development of the financial model.
GRU/Gainesville, FL – Combined Utility Rate Project: Mr. Cronan assisted senior project staff
for a combined utility rate project conducted for Gainesville Regional Utilities, in Gainesville,
Florida. The analysis included a comprehensive revenue requirement, cost of service analysis,
and rate design for their electric, water, wastewater, and natural gas utility systems.
City of Oviedo, FL – Utility System and General Financial Services: Mr. Cronan provides
analytical support to the project team members serving the City’s on-call engagements for Utility
System and Financial Services.
Education
Bachelor of Arts and
Science; University of
Central Florida
Areas of Expertise
Utility Rate Studies
User Fee Studies
Financial Forecast
Modeling
7 Years’ Experience
Utility Rate Consulting and Financial Analysis 20
City of Bozeman, Montana
Quality Control Procedures
Project Management Approach
Mr. Kevin Burnett, proposed Bozeman Project Manager, will employ
Willdan’s Project Management Process/Approach. This approach
ensures projects are completed on time, within budget and most
importantly yield results that coincide with the City of Bozeman’s
expectations and objectives. Utilizing this method, Mr. Burnett has
successfully conducted and managed projects in 4 US states.
We will document discussions leading to important policy decisions and/or the choice of critical assumptions used in
constructing the analysis and model. Following key stakeholder discussions, we will schedule a call to summarize
findings and direction with City staff, to make certain that we are in agreement with stated objectives, and that
feedback is incorporated as appropriate. Through the process of providing regular updates and conducting status
conference calls, potential issues will be highlighted, discussed, and resolved. Any deviances from the project timeline
will be identified and plans will be developed for course corrections.
Project Management
Define the Project Plan the Project Manage the
Project
Review the
Project
Communicate
the Project
▪ Identify the project
scope, set
objectives, list
potential constraints,
document
assumptions.
▪ Define a course of
action and develop
an effective
communication plan.
▪ Provide a forum for
applying the team’s
collective expertise
to solving difficult
analytical issues that
arise in complex
projects.
▪ Collaborate with
the project team
and client staff and
agree upon
timeline to meet the
estimated project
timeline.
▪ Assign workload
functions to
appropriately
qualified staff to
ensure milestones
are met, on time.
▪ Pre-schedule
quality control
meetings with the
project team to
maintain the
progressive motion
of the project.
▪ Manage the
execution of the
project.
▪ Direct existing and
upcoming project
tasks.
▪ Control and
monitor work in
progress.
▪ Provide feedback
to client and
project team.
▪ Identify and
resolve deviances
from project
timeline.
▪ Review all work
products and
deliverables.
▪ Utilize structured
quality assurance
process involving
up to three levels
of review at the
peer level, project
manager level.
▪ Procure executive
officer level
review.
▪ Communicate with
the client regarding
work status and
progress.
▪ Ensure client is in
receipt of regular
status updates.
▪ Schedule regular
conference calls to
touch base.
▪ Inform client of
roadblocks, work
outside of
projected scope.
The team presented within this proposal
has worked collectively on numerous
projects, such as the one requested by the
City of Bozeman; an established work
practice between the team members has
been forged, this proven long-standing
system has benefited our clients.
Utility Rate Consulting and Financial Analysis 21
City of Bozeman, Montana
Quality Assurance / Quality Control Process
Our quality control program is incorporated as a required element of Willdan’s day-to-day activities. There are three
levels of reviews incorporated for our deliverables:
1) Peer review;
2) Project Manager review; and
3) Final quality assurance manager
review.
Peer reviews involve one analyst
reviewing the work of another, while
project manager reviews are
conducted prior to delivery to the
quality assurance manager. The
quality assurance manager then
performs a final review. This assures
that our final product has been
thoroughly evaluated for potential
errors; thus, providing quality client
deliverables, and high levels of integrity and outcomes.
The primary mission of our quality control plan is to provide staff with the technical and managerial expertise to plan,
organize, implement, and control the overall quality effort, thereby ensuring the completion of a quality project within
the time and budget established.
Quality Assurance Goals
Goal Lead Task
Quality Assurance /
Control Process Jeff McGarvey
▪ Establish a set of planned and systematic actions for
maintaining a high level of quality in the professional
services performed;
▪ Emphasize quality in every phase of work;
▪ Ensure efficient use of resources;
▪ Establish a consistent and uniform approach to the services
performed; and
▪ Implement appropriate quality control measures for each
work task of the project.
Quality Control Plan Kevin Burnett &
Jeff McGarvey
▪ Contract deliverables;
▪ Specific quality control procedures;
▪ Special quality control emphasis;
▪ Budget and manpower requirements;
▪ Overall project schedule and budget; and
▪ Project documentation requirements;
Utility Rate Consulting and Financial Analysis 22
City of Bozeman, Montana
d) Related Experience
Firm Profile
Willdan Financial Services is an operating division within
Willdan Group, Inc. (WGI), which was founded in 1964 as an
engineering firm working with local governments. Today, WGI
is a publicly traded company (WLDN). WGI, through its
subsidiaries, provides professional, technical and consulting
services that ensure the quality, value and security of our
nation’s infrastructure, systems, facilities, and environment.
The firm has pursued two primary service objectives since its
inception—ensuring the success of its clients and enhancing
its surrounding communities.
A financially stable company, Willdan has approximately 1,500
employees working in more than a dozen states across the
U.S. Our employees include a number of nationally recognized
subject matter experts for all areas related to the broadest
definition of connected communities—four of whom are
committed to contribute their expertise throughout the
duration of the engagement.
Willdan has solved economic, engineering and energy
challenges for local communities and delivered industry-
leading solutions that have transformed government and
commerce. Today, we are leading our clients into a future
accelerated by a change in resources, infrastructure,
technology, regulations, and industry trends.
Willdan Financial Services
Established on June 24, 1988, Willdan Financial Services, is a national firm and one of the largest public sector
economic and financial analysis consulting firms in the United States. Over the past 35 years, we have helped over
800 public agencies successfully address a broad range of infrastructure challenges.
Our staff of nearly 80 full-time employees support our clients by conducting year-round workshops and on-site training
to assist them in keeping current with the latest developments in our areas of expertise.
Willdan assists local public agencies by providing the services listed in the table below.
Willdan Financial Services
Services
▪ Utility rate and cost of service studies
▪ User fee studies
▪ Cost allocation studies
▪ Real estate economic analysis
▪ Property tax audits
▪ Economic development strategic plans
▪ Municipal advisory services
▪ Development impact fee establishment & analysis
▪ Feasibility studies
▪ District administration services
▪ Tax increment finance district formation &
amendment
▪ Arbitrage rebate & continuing disclosure services
▪ Debt issuance support
▪ Long-term financial plans and cash flow modeling
Utility Rate Consulting and Financial Analysis 23
City of Bozeman, Montana
Utility Rate Experience
For over two decades, Willdan has provided professional consulting services, which entail financial planning; rate
and cost-of-service studies including wholesale analysis; alternative and feasibility analyses; and operational and
management studies for water, reclaimed water, wastewater, solid waste, and stormwater utility clients across the
United States.
Additionally, Willdan team members are involved with the development of the rate-
setting methodologies set forth in the American Water Works Association
(AWWA) M1 manual “Principles of Water Rates, Fees and Charges,” and the
AWWA M29 manual, “Water Utility Capital Financing.” Willdan is nationally
recognized for its expertise with team members frequently being called upon to
speak or instruct on utility financial matters, as subject matter experts, including at the AWWA Utility Management
conference.
Willdan team members are experienced in a broad range of utility planning services and therefore understand the
importance of an approach that integrates elements of utility planning, engineering, and finance. Team members
possess considerable experience in utility rate and cost-of-service studies and have performed these services for
hundreds of utilities throughout the country. Our team includes staff with public sector experience spanning 30 years,
and staff on the forefront of utility ratemaking and rate-modeling. In addition, team members have held positions as
finance directors, deputy city managers, and auditors, and therefore understand the financial, operational, and
political realities faced by governmental staff and management; we craft solutions which are sensitive to this.
Willdan Financial Services
Utility Experience and Expertise
▪ Retail and wholesale rate studies
▪ Revenue sufficiency analyses
▪ Utility management and policy assistance
▪ Connection fee / tap fee studies
▪ Miscellaneous fee and charge studies
▪ Renewal and replacement sufficiency analyses
▪ Comprehensive alternatives analyses
▪ Capital project funding studies
▪ Interactive rate model development with dashboards
showing key performance indicators
▪ CIP financial scenario planning
▪ Rate ordinance drafting
▪ Billing system validation/rate testing
▪ Bond feasibility reports
▪ Valuation/divestiture studies
▪ Life Cycle Costs Analyses
Willdan will work with the City to identify and prioritize operational and
fiscal objectives, and match these to specific rate attributes; and use
this information throughout the engagement to develop a
comprehensive financial plan and design utility rates that effectively
meet these goals. The culmination of our analyses will be rate policies
that guide the rate setting process, and a financial management plan
that develops projected system operating results for the utilities for the
forecasted period. Willdan will employ its proven interactive approach,
coupled with advanced financial modeling techniques to design rates
and a financial plan that meet established goals and performance
criteria. These modeling techniques serve as a powerful decision-
making tool and provide the City with genuine business solutions and
recommendations as to the strategic direction of its utilities.
During rate and financial planning projects we employ tools and
techniques which focus on consensus building among stakeholders to
ensure the team understands the future financial implications of current
management decisions. Our extensive project expertise is bolstered by
our unique interactive financial planning process and model.
At present Mr. Burnett is
involved in the current
update to the M1 manual
Utility Rate Consulting and Financial Analysis 24
City of Bozeman, Montana
National and International Presence
For 35 years, Willdan’s professional staff has provided utility rate, financial, economic, management, and capital
planning consulting services to utilities and governmental entities across the country. A representation of Willdan’s
geographical client presence is depicted in the graphic below. Our client base extends from the south shores of
Florida to the inside passage of Alaska, and for five sovereign nations.
Utility Rate Consulting and Financial Analysis 25
City of Bozeman, Montana
References
Representative project descriptions are provided below. We are proud of our reputation for customer service and
encourage you to contact these clients with regard to our commitment to completing the projects within budget and
agreed upon timelines.
City and County of Denver, CO
Sanitary Sewer and Storm Drainage Rate, Connection Fee and Bond Feasibility Study
Mr. Burnett served as project manager and lead analyst for a six-year financial analysis of the City’s Wastewater
Enterprise Fund. The study included a projection of rate increases to maintain the financial viability of the Enterprise
Fund. Mr. Burnett worked closely with City staff and the City’s financial advisor to conduct a bond feasibility analysis
in support of a $50 million revenue bond debt issuance to refund a prior debt issue and provide new money for future
capital needs. The City’s sanitary sewer connection fees were reviewed and updated to reflect the City’s cost of
providing new infrastructure to provide service to new connectors.
Recently Willdan completed a benchmarking and storm drainage impact fee study for the City. The benchmarking
study entailed a comparison of the City’s approach to billing for sanitary sewer and storm drainage to other Front
Range entities as well as to other large national entities. The storm drainage impact fee study identified first time
potential storm drainage impact fees the City could implement to help offset the cost of capital needs attributable to
new development.
We have been re-engaged by the City to complete a wastewater municipal code review with respect to
promoting the financial health of the utility.
Client Contact: Mr. Peter Spanberger, Director of Accounting
Department of Transportation and Infrastructure
201 W. Colfax Ave, Dept 608, Denver, CO 80202
Tel #: (303) 446-3447 | Email: peter.spanberger@denvergov.org
City and County of Broomfield, CO
Comprehensive Water, Wastewater and Reclaimed Water Rate Study
Willdan was engaged by the City and County of Broomfield to complete a comprehensive water, wastewater, and
reclaimed water rate study. The City’s existing water and wastewater rate structures were reviewed and updated to
reflect changes in the cost of serving each class with an emphasis on conservation-oriented water rates and rates
specific to each class rather than a uniform rate for all classes.
An analysis of the City’s license fees (impact fees) was undertaken to ensure that new development was paying its
proportionate share of system costs. An open house with rate calculators was provided to allow customers the
opportunity to compare their bill under current and proposed rates.
Client Contact: Ms. Brenda Richey, Finance Director
1 DesCombes Dr, Broomfield, CO 80020
Tel #: (303) 438-6537 | Email: brichey@broomfield.org
City of Brighton, CO
Non-Potable Water Rate Study
Willdan completed a project with the City of Brighton to identify the cost of providing non-potable water to customers.
The study involved developing a rate for existing customers as well as developing a model to project rates into the
future based on assumptions of new customer projections by year.
The model was turned over to the City at the completion of the study for staff to update in the future as information
changes.
Client Contact: Mr. Scott Olsen, Assistant Director of Utilities
500 S 4th Ave, Brighton, CO 80601
Tel #: (303) 655 2136| Email: soldsen@brightonco.gov
Utility Rate Consulting and Financial Analysis 26
City of Bozeman, Montana
Town of Gilbert, AZ
Water and Wastewater Rate and Capacity Fee Study
Willdan was engaged by the Town of Gilbert to prepare a comprehensive water and wastewater cost of service study.
This included forecasting operating and capital costs for a five-year period. The primary objectives of the study also
included developing and promoting water conservation policy and revenue stability, particularly for the wastewater
utility. The Town has been experiencing rapid growth, which significantly influenced both the capital improvement
needs, and the revenue forecasts.
The Town Council reviewed alternative rate scenarios developed by the project team and adopted a five-year plan
based on one of the alternatives. The rate plan remains in effect today.
Client Contact: Mr. Eric Braun, Assistant Public Works Director
50 E. Civic Center Drive, Gilbert, AZ 85296
Tel #: (480) 503-6892 | Email: eric.braun@gilbertaz.gov
City of Lake Havasu City, AZ
Water and Wastewater Rate Study
Willdan recently completed a water and wastewater rate study for Lake Havasu City (the "City"), resulting in the
preparation of ten-year financial plans with a focus on utility rates for the first five years. The City serves residents
and businesses within the City limits, as well as surrounding areas outside their limits. The water utility was facing a
revenue shortfall primarily resulting from the sunsetting of a dedicated property tax from a special district established
within the City’s water service boundary.
Water rates were designed by Willdan to encourage conservation, as well as provide greater equity between full-time
and part-time residents. While the wastewater rates were re-designed to eliminate the then current average winter
consumption approach which provided a disadvantage to full-time residents, compared to part-time summer
residents.
Client Contact: Mr. Anthony Kozlowski, Assistant to the City Manager
2330 McCulloch Blvd N, Lake Havasu City, AZ 86403
Tel #: (928) 412-5275 | Email: kozlowskia@lhcaz.gov
City of Sedona, AZ
Wastewater Rate & Fees Study
Willdan assisted the City of Sedona with a comprehensive wastewater rate and capacity fee study. While the
wastewater rate study was placed on hold during the pandemic, new capacity fees were adopted in mid-2021. The
new capacity fees were based on a new assessment approach whereby residential development capacity fees were
based on fixture units rather than meter size.
Client Contact: Ms. Cheria White, Financial Services Director
102 Roadrunner Drive, Sedona, AZ 86336
Tel #: (928) 282-7207 | Email: cwrightcwhite@sedona.gov
City of Oviedo, FL
Stormwater Utility Rate Study
Willdan provides a broad range of rate and financial services to the City of Oviedo, Florida, including the development
of comprehensive plan to provide revenues sufficient to fund the ongoing operating and capital needs of the city’s
stormwater system. Willdan developed rates and charges that fully recovered the stormwater system’s revenue
requirements including operating expenses, capital expenses (minor and major), debt service requirements (including
a provision for debt service coverage, transfers out and the maintenance of reserves at appropriate levels. These
rates and charges were established to meet the specific financial and operational management goals of the system.
The study included a forecast of both short-term and long-term capital expenditures. Willdan worked with the city to
revise the timing and magnitude of certain capital projects to better align with annual cash flows and to mitigate the
impact to customers.
Client Contact: Mr. Jerry Boop, Finance Director
400 Alexandria Boulevard, Oviedo, FL 32765
Tel #: (407) 971-5544 | Email: jboop@cityofoviedo.net
Utility Rate Consulting and Financial Analysis 27
City of Bozeman, Montana
Similar Completed Projects
The table below provides an abbreviated listing of regional projects that are similar in nature to those being requested
by the City, completed from the Aurora office since 2016, or are now in progress.
Willdan Financial Services
Utility Rate and Cost of Service Studies
Year Agency / Client Project
In
progress City of Lake Havasu City, AZ Water and Sewer Rate Study
In
progress City and County of Denver, CO Wastewater Municipal Code Review – Sewer and Storm
Drainage Study
2023 City of Commerce City, CO Impact Fee Study
2023 City of Kingman, AZ Water Rate Study
2022 City and County of Broomfield, CO Water and Sewer Rate Study
2022 City of Brighton, CO Non-potable Water Rate Study
2022 Town of Cave Creek, AZ Water and Sewer Rate Study
2021 Town of Gilbert, AZ Water and Solid Waste Financial Plan and Rate Analysis
2021 City of Sedona, AZ Sewer Cost of Service and Capacity Fee Study
2021 Town of Cave Creek, AZ Water and Sewer Cost of Service and Capacity Fee Study
2020 City of Bullhead City, AZ Impact Fee Audit
2020 City of Bullhead City, AZ Revenue Bond Feasibility Study
2020 City of Bullhead City, AZ Debt Issuance Support
2020 City of Lake Havasu, AZ Water and Wastewater Cost of Service Analysis and Rate Study
2019 City and County of Denver, CO Sanitary Sewer and Storm Drainage Rate, Connection Fee and
Bond Feasibility
2019 City of Kingman, AZ Sanitation Rate Study
2018 City of Brighton, CO Utility Rate and Fee Study
2018 City of El Mirage, AZ Water, Wastewater, and Solid Waste Rate Study Update
2018 City of Fruita, CO Sewer Rate Study
2018 Town of Huachuca City, AZ Water and Sewer Financial Planning Study
2018 City of Sedona, AZ Wastewater Rate and Capacity Fee Study
2018 City of Bullhead City, AZ Sewer Rate Study
2017 Town of Cave Creek, AZ Sewer and Water Rate Study Services
2017 Town of Gilbert, AZ Water and Wastewater Cost of Service Rate Study
2017 City of Kingman, AZ Comprehensive Water and Wastewater Rate Study
2016 Widefield Water and Sanitation
District (Colorado Springs, CO) Water and Sewer Utility Rate Study
2016 City of Durango, CO Water and Wastewater Rate and Tap Fee Study
Utility Rate Consulting and Financial Analysis 28
City of Bozeman, Montana
e) Cost Proposal
Utility Rate Consulting and Financial Analysis
Willdan will perform the tasks described within our scope of services, for the fixed fee of $66,090. The table below
provides a breakdown of this fee by task and team member.
Notes:
▪ The fee denoted above includes attendance at up to six (6) meetings. Attendance at additional meetings will be
billed at a rate of $2,400 for onsite meetings and $1,250 for virtual.
▪ The City will be invoiced on a monthly percentage-completion basis. Invoices will include a description of services,
as well as a summary of costs to date by task.
▪ We will perform additional tasks, outside our scope of services, as requested and authorized by the City for an
additional fee using our current hourly rate schedule. Hourly rates are noted below.
▪ The City shall reimburse Willdan for any costs Willdan incurs, including without limitation, copying costs, digitizing
costs, travel expenses, employee time and attorneys' fees, to respond to the legal process of any governmental
agency relating to the District or relating to this particular project. Reimbursement shall be at Willdan's rates in
effect at the time of such response.
▪ Willdan will rely on the validity and accuracy of the City’s data and documentation to complete our analysis.
Willdan will rely on the data as being accurate without performing an independent verification of accuracy, and
that we will not be responsible for any errors that result from inaccurate data provided by the client or a third
party.
Hourly Rates
Additional services may be authorized by the District and will be billed at our then-current hourly overhead consulting
rates. Our current hourly rates are listed below.
Willdan Hourly Rate Schedule
Position Hourly Rate Position Hourly Rate
Group Director $250 Managing Principal $240
Principal Consultant $210 Senior Project Manager $185
Project Manager $165 Senior Project Analyst $135
Senior Analyst $125 Analyst II $110
K. Burnett
Project Manager
J. McGarvey
QA/QC
T. Hollis
Project Consultant
M. Cronan
Analyst
$210 $240 $210 $165 Hours Cost
Task 1 – Real Time Financial Modeling 16.0 6.0 8.0 24.0 54.0 10,440$
Task 2 –Cost-of-Service Analysis 28.0 4.0 8.0 20.0 60.0 11,820$
Task 3 – Rate Design Analysis 22.0 4.0 8.0 32.0 66.0 12,540$
Task 4 –Summary of Recommendations 24.0 4.0 8.0 18.0 54.0 10,650$
Task 5 – Meetings & Presentations 48.0 4.0 8.0 48.0 108.0 20,640$
Total Utility Rate Study 138.0 22.0 40.0 142.0 342.0 66,090$
City of Bozeman
Utility Rate Study
Fee Proposal
Total
Scope of Services
3190 South Vaughn Way, Suite 550 Office 523
Aurora, CO 80014
Phone: 303.990.4616
www.willdan.com