HomeMy WebLinkAboutRES2026-005 GovRates Inc - Water Rate StudySponsored by: Sorensen
CITY OF SEWARD, ALASKA
RESOLUTION 2026-005
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA,
AUTHORIZING THE CITY MANAGER TO ACCEPT THE PROPOSAL FROM
GOVRATES, INC FOR THE WATER AND WASTEWATER RATE STUDY AND
CLASSIFICATION PLAN IN AN AMOUNT NOT TO EXCEED $50,000 AND
APPROPRIATING FUNDS
WHEREAS, the City of Seward operates the public water and wastewater utility systems which
are responsible for providing essential services to its customers; and
WHEREAS, the City of Seward must ensure that the rates and charges for water and wastewater
services generate sufficient revenue to cover the costs of operations, maintenance, capital
improvements, and debt service, while remaining fair and proportionate to the cost of service for
each customer class; and
WHEREAS, the City of Seward is required by the State of Alaska Department of Environmental
Conservation (DEC) to submit a comprehensive rate study that demonstrates the financial viability
of the utility project; and
WHEREAS, this study will provide background, recommendations, and conclusions for the City
of Seward's water and wastewater systems regarding user rates and miscellaneous charges; and
WHEREAS, GovRates, Inc produced a prior rate study which was delayed during covid. They
possess the specialized experience and technical competence to provide such service at the best
value for the City of Seward; and
WHEREAS, Seward City Code 6.10.120A (8) exempts professional services including
accounting, architectural, appraisal, engineering, land surveying, and other specialized service
from the otherwise applicable provision of the Title requiring competitive procurement procedures.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
SEWARD, ALASKA:
Section 1. Authorize the City Manager to accept the proposal with GovRates, Inc to provide
consulting services for a comprehensive classification plan and water and wastewater rate study.
Section 2. Funding in the amount of $50,000 is hereby appropriated from the Lowell Point Lagoon
account 18325-0000-7009 Contracted Services Expense Account.
Section 3. This resolution shall take effect immediately upon its adoption.
APPROVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA THIS 12TH
DAY OF JANUARY 2026.
CITY OF SEWARD, ALASKA
RESOLUTION 2026-005
Page 2 of 2
Sue McClure, Mayor
AYES: Crites, Calhoon, Barnwell, Draper, Osenga, Warner, McClure
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
Kris Peck
City Clerk
City Council Agenda Statement
Meeting Date: January 12, 2026
To: City Council
Through: Kat Sorensen, City Manager
From: Doug Schoessler, Public Works Director
Subject: Resolution 2026-005: Authorizing the City Manager to Accept the Proposal
from GovRates, Inc for the Water and Wastewater Rate Study and
Classification Plan Project in an Amount Not to Exceed $50,000 and
Appropriating Funds
Background and justification:
The State of Alaska, Department of Environmental Conservation (DEC) loan requirement analysis
of the City's wastewater utility has determined that revenue from current charges will not be
sufficient to meet future expenses, thereby necessitating a utility rate study.
The DEC — Clean Water Fund provided funding to the City of Seward for a rate study to address
ongoing revenue shortfalls in the water and wastewater enterprise funds and to ensure adequate
and prudent funding for operations, maintenance, and essential capital improvements.
The City's five-year budget projections show expenditures outpacing revenues, raising concerns
about long-term financial sustainability and the City's ability to meet current and future State
Revolving Fund (SRF) loan obligations.
To address projected budget shortfalls and strengthen long-term fiscal stability, the DEC loan
required the City to conduct a comprehensive rate study in conjunction with project initiation.
This study should evaluate current financial conditions and ensure that any necessary rate
adjustments are implemented.
While the fully subsidized loan offers the City a valuable opportunity to invest in critical
wastewater treatment improvements that might otherwise be financially unattainable, without
proactive fiscal measures to improve financial resilience, the SRF program may face increased
risk of loan default on existing or future obligations.
Comprehensive and Strategic Plan Consistency Information
This legislation is consistent with (citation listed):
Comprehensive Plan: 13.1 Water & 13.2 Wastewater
Strategic Plan:
Other:
2025-2026 Capital Improvement Plan
Total amount of funds listed in this legislation:
This legislation (✓):
Creates revenue in the amount of:
Creates expenditure in the amount of:
Creates a savings in the amount of:
Has no fiscal impact
Funds are (✓):
Budgeted Line item(s):
Not budgeted
Not applicable
Affected Fund (✓):
General
Boat Harbor
Motor Pool
Available Fund Balance
SMIC
Parking
Other
Electric
Water
Wastewater
Healthcare
Note: amounts are unaudited
Finance Director Signature:
Yes
Attorney Signature:
Not applicable Comments:
Attorney Review
Administration Recommendation
Adopt Resolution
Other:
For the City of Seward, Alaska
PROPOSAL:
ADVISOR
WATER AND SEWER
RATE STUDY
t.
a-
a s
Utility, Financial, Rate, and Management
Consultants for Governments
'
Contact: Bryan Mantz, President
bmantz@govrates.com
Phone and Fax: (833) GOV-PLAN
GovRates
Utility, Financial, Rate, and Management
Consultants for Governments
www.govrates.com
November 14, 2025
Mr. Doug Schoessler
Public Works Director
City of Seward
P.O. Box 167
434 6th Avenue
Seward, AK 99664
Subject: Proposal to Perform Water and Sewer Rate Study
Dear Mr. Schoessler:
GovRates, Inc. ("GovRates" or the "Consultant") greatly appreciates the opportunity to submit
this proposal to provide utility rate consulting services to the City of Seward, Alaska (the "City").
This proposal provides a scope of services and not -to -exceed budget for performing a water and
sewer rate study (the "Project").
Scope of Services
The following is a detailed overview of the major tasks to be performed for the Project. Many of
the tasks are interrelated and will be performed concurrently.
Task 1: Administration and Coordination with the City
The Consultant will work with the City staff to initiate the Project; review compiled information;
finalize management goals and objectives for the Project; establish financial policies and targets;
recognize key issues to be addressed during the analyses; and identify primary staff members to
interview as part of the financial planning process. We will discuss with the City staff any legal,
operational, economic, or political constraints that may exist.
The Consultant uses Microsoft Teams and other virtual platforms to provide real-time review of
our financial / rate models and Project deliverables with clients. Teams sessions:
➢ Are very cost-effective, as they eliminate travel time and expenses.
➢ Can be scheduled with minimal lead time.
GR
* �M MSROREGISTERED
* MUNICIPAL
CERTIFIED CERTIFIED GOVERNMENT III ADVISOR
MANAGEMENT CONSULTANT FINANCW MANAGER
Page 1 of 12 .
GovRates
Utility, Financial, Rate, and Management
Consultants for Governments
www.govrates.com
Allow the working group to have more frequent meetings to communicate results, ideas,
plans, and strategies as well as to address issues and help keep the Project on schedule and
within budget.
We will establish a shared Project folder via Microsoft Teams to enable working group members
to share files (e.g., data and deliverables). All of the data will be organized in the shared Project
folder so that working group members can see what has been provided.
Forty (40) hours of the Project Manager's time have been budgeted for meetings that may
include:
Meeting with the City staff.
Meeting with the City Council.
Meeting with stakeholders or other interested parties.
Other meetings for the Project are anticipated to be conducted virtually via Microsoft Teams or
another virtual platform.
Task 2: Data Collection and Review
To perform the rate study as efficiently as possible, the Consultant will collect as much
information as possible at the beginning of the study process. A detailed data request will be
prepared for the City staff to compile information pertaining to the operation of the utility
systems. This information will include customer and sales statistics, budgets, the multi -year
capital improvement program, fund / cash balances, monthly operating reports / treatment
information, debt repayment schedules and corresponding debt agreements, etc. We anticipate
that follow-up data requests may be required during the course of the study. We will review
compiled information as soon as it is received to identify current issues. One of our fundamental
goals is to ensure that the Project is performed efficiently and cost-effectively and that we make
the best use of City staff time during onsite and virtual meetings. As previously mentioned, we
will organize the data in a shared Project folder.
Task 3: Water and Sewer User Rates
Historical Customer Statistical Compilation
The Consultant will compile historical customer statistics for 2024 and 2025 based on reports
generated from the City's billing system to evaluate trends in customer growth; billed
consumption / sales / flow; and the average billed usage or flow per customer. The Consultant
will apply the customer statistics to the City's rates for the historical period to derive revenue
totals. If the revenues reconcile within the acceptable limits, the Consultant will have assurance
GR
* ccfm
CERTIFIED CER-MILD GOVERNMENT
MANAGEMENT CONSULTANT DNANCNL MANAGER
III
Page 2 of 12
MSR6REGISTERED
MUNICIPAL
ADVISOR
GovRates
Utility, Financial, Rate, and Management
Consultants for Governments
www.govrates.com
that the detailed financial model would provide a reasonable platform from which to make
customer and revenue projections.
Projected Customer Statistics, User Rate Revenues, and Other Operating Revenues
The Consultant will prepare a forecast of customers and usage requirements by class for the City's
water and sewer systems. The forecast will include the current budget year and extend up to 10
additional years (collectively, the "Forecast Period").
Based on the detailed customer billing information and corresponding forecast of customer
growth and use, the Consultant will develop user rate revenue projections for the Forecast
Period. The revenue forecast will also include projections of operating revenues other than user
rate revenues and interest income (both unrestricted and restricted based on statutory and case
law and as defined in documents associated with the City's anticipated debt).
The financial model will have the flexibility to automatically adjust the rate / revenue projections
based on changes in rates, consumption, and customer accounts.
Development of Projected Revenue Requirements
The Consultant will prepare a financial projection of the net revenue requirements for the water
and sewer systems that represent the funding requirements to be recovered through the user
fee revenues. The Consultant will consider:
Recent historical financial operations.
Budgeted operations and maintenance expenses.
Any expected cost trends or incremental operating expenses anticipated, such as pay studies
or due to upgrades as a result of regulatory requirements and other investments included in
the multi -year capital improvement plan.
Multi -year capital improvement program and projected funding sources.
Any other funding criteria as provided by the City.
Other non -operating revenue requirements such as interfund transfers, debt service, and
renewal / replacement funding requirements.
The financial models will have the flexibility to automatically adjust the financial forecast and
projected rate adjustments based on changes identified by the City staff such as:
New facilities / infrastructure improvements and vehicle replacements.
Staffing changes.
Adjustments to capital needs.
The Consultant will work with the City staff to evaluate and recommend minimum reserve fund
balances and policies related to financial performance.
CR� MSR[YA[DISTERED
MUNICIPAL
CERTIFFIED MIMED GOVERNMENT I ADVISOR
MAMACRIERCIED CONSULTANT *CUM
MANAGER II
Page 3 of 12
GovRates
Utility, Financial, Rate, and Management
Consultants for Governments
www.govrates.com
Additional details regarding this task:
Operating Expense Projections — Operating expense projections will be performed in sufficient
detail to capture the driving factors behind each expenditure and to recognize any incremental
operating expenses as mentioned previously. The operating expenses are anticipated to be
projected in budgetary format. Major cost categories include personnel salaries and benefits,
utilities, and chemicals.
Capital Improvement Program Funding Analysis — This analysis involves i) reviewing in detail
the multi -year capital improvement program and other engineering planning documents for
the utility systems; and ii) performing a funding analysis to identify available sources of funds
for financing of the capital improvement program and the estimated level of utility rate
revenues needed throughout the Forecast Period. The analysis will also include an evaluation
of the City's bonding capability and the development of a flow of funds analysis to evaluate
cash flow balances in each specific fund of the utility systems and to estimate interest income
earned on unrestricted and restricted fund balances.
A component of the capital improvement program funding analysis will be the identification of
a renewal and replacement funding policy or funding plan for the Forecast Period which will be
included as i) a component of the revenue requirements to be recovered from rates; and ii) a
source of funds for the capital improvement program funding analysis. The ultimate funding
level reflected in the revenue sufficiency analysis will depend on a variety of factors, including
but not limited to i) compliance with the rate covenants pursuant to documents associated
with outstanding and anticipated debt; ii) rate impacts; iii) overall capital program needs; and
iv) current asset service lives.
Other Revenue Requirements — To meet the financial obligations of the water and sewer utility
systems, the Consultant will review the various financial aspects of the systems to potentially
recognize other revenue requirements that may need to be allocated or included in the
financial forecast. We will assist in the identification of financial benchmarks and policies /
practices (in addition to those identified in the City's current fiscal policies or practices) in terms
of:
➢ Working capital maintenance.
➢ Funding of deposits to the renewal and replacement fund (or capital fund equivalent).
➢ Compliance with the rate covenants as defined in documents associated with outstanding
debt.
➢ Funding of departmental capital for items such as vehicles and equipment.
➢ Any General Fund or other transfer requirements that may be associated with the water
and sewer systems.
-GR
CERTIFIED
MANAGEMENT CONSULTANT
*CGRA
�- MSPRAEGISTERED
* MUNICIPAL
CERTIFIED GOVERNMENT III ADVISOR
FINANCIAL MANAGER
Page 4 of 12
GovRates
Utility, Financial, Rate, and Management
Consultants for Governments
www.govrates.com
Based on the preceding tasks and for each scenario that the City would like to explore, the
Consultant will prepare for the City's consideration a summary of the total net revenue
requirements of the water and sewer systems and the associated revenue levels and
recommended adjustments — expressed as a percentage above the revenues produced from the
existing rates — for each year of the Forecast Period.
The financial models will contain a sources and uses of funds tab. The projected sources of funds
will equal the uses of funds for each scenario.
Rate Covenant Compliance Review — This task will be conducted to satisfy the rate covenant
requirements and the flow of fund requirements as defined in documents associated with the
outstanding and anticipated / projected utility system debt. The compliance analyses will be
performed for the Forecast Period to promote the financial integrity of the utility systems. It is
advisable to establish debt service coverage targets above the minimum coverage required to
provide net revenues after the payment of debt service for pay-as-you-go reinvestment in the
utility systems.
The Consultant will prepare a management dashboard as part of the financial model
development to allow the City to analyze the forecasted financial position of each utility system,
to evaluate funding and rate scenarios, and to determine potential risks and business strategies.
The management dashboard will graphically represent financial and operational metrics that add
value to the presentation of the financial forecast results for each scenario that the City would
like to explore. The graphs may include projections of:
Revenue requirements.
Debt service coverage.
Cash position such as Days Cash on Hand.
Cash balances by fund.
Capital improvement program funding sources.
Outstanding debt and debt service payments.
Outstanding debt -to -net assets.
Outstanding debt per customer and per capita.
Operating ratio or margin.
Affordability based on median household income.
Any other financial or operational metrics which add value to the presentation of the results.
Cost -of -Service Analysis, Rate / Fee Designs, and Customer Impact Analysis
For each applicable year of rate design, the Consultant will classify the various revenue
requirements among the customer classes and rate structure components to assist in the
CR
CERTIFIED
MANAGEMENT CONSULTANT
* �� --'- MSRBAFGiSTFRFD
* MUNICIPAL
MIMED GOVERNMENT III ADVISOR
FINANCIAL MANAGER
Page 5 of 12
GovRates
Utility, Financial, Rate, and Management
Consultants for Governments
www.govrates.com
evaluation of cost -based rates and overall cost recovery strategies. The Consultant will design
rates for service based on:
D. Customer class / service type.
➢ Cost classification analyses / unit cost and customer class costs.
➢ Cost classifications by rate structure component.
➢ Consideration of historical rate form.
➢ Customer impact.
• City goals and objectives regarding pricing policy.
Some other key considerations for the rate designs are competitiveness and the avoidance of
"rate shock." For any proposed rate design, the Consultant will prepare a customer impact
analysis (e.g., effect on monthly bills for each customer class / service type) as well as pros and
cons of the alternative.
The Consultant will work with the City staff to possibly develop an updated indexing or automatic
rate increase provision to annually adjust the monthly user rates for inflation without the need
for a public hearing.
Task 4: Review of Miscellaneous Service Charges
With respect to the utility's miscellaneous service charges, the Consultant will:
Work with the City staff to determine miscellaneous service charges which should be updated
as well as potential additional fees for service (revenue enhancement).
For all applicable fees, identify the costs of providing service by component including (but not
limited to) labor and time, vehicle and equipment use, parts and materials, customer service
related costs, etc.
Determine appropriate indexing provisions to annually adjust the miscellaneous service
charges for inflation without the need for a public hearing.
Based on data availability, prepare a comparison of the existing and proposed miscellaneous
service charges with those of other Alaska utilities.
Perform a general review of the utility tariffs to determine if the City may want to modernize
any current policies.
Prepare a report with our findings and recommendations.
Provide assistance with the miscellaneous service charge resolution / tariff and staff
memorandum.
CR
CERTIFIED
MANAGEMENT CONSULTANT
*,
MIRBREGISTERE0
* MUNICIPAL
CERTIFIED GOVERNMENT III ADVISOR
NNANCLLL MANAGER
Page 6 of 12
GovRates
Utility, Financial, Rate, and Management
Consultants for Governments
www.govrates.com
Task 5: Report and Presentation
The Consultant will prepare a comprehensive report documenting our assumptions, analyses,
and primary data sources. The Consultant strongly believes in the principles of full disclosure in
all of our deliverables. Detailing our assumptions, methodologies, and findings will help the City
staff reconcile projected vs. actual results and will provide assurance that all relevant operational
and financial considerations were incorporated into the financial forecast. We will review the
rate resolutions or tariffs prepared by the City staff or attorney in association with the Project as
well as the executive summaries prepared by the City staff for consistency with the
recommendations.
The Consultant will prepare briefing documents (PowerPoint presentations) as applicable to
summarize the Project results for presentation to the City Council and public. The Consultant will
provide multiple drafts of the briefing documents for City staff review and comment prior to
finalization of the briefing documents.
LIST OF PROJECT DELIVERABLES
The anticipated deliverables to be provided during the study include the following items:
Initial data request for information compilation.
High-level financial and rate worksheet — drafts and final.
Rate schedule and comparison of existing and proposed rates with those of neighboring or
other Alaska jurisdictions.
Comprehensive rate study report providing the assumptions, findings, and conclusions of the
study — drafts and final.
Briefing document for presentation of study results to the City Council and public — drafts and
final.
Not -to -Exceed Budget for Project
For our level of experience and expertise, the Consultant offers top value for the services we
provide. We propose to establish a not -to -exceed budget for the Project of $37,000, reflecting a
level of service of up to 312 hours to complete the Project. Since the Consultant is very
experienced, the Project would be completed efficiently and cost-effectively.
A breakdown of this not -to -exceed budget starts on the following page. The not -to -exceed
budget is proposed to be billed on a monthly basis based on the actual hours worked on the tasks
applied to the hourly billing rates.
6R
CERTIFIED
MANAGEMENT CONSULTANT
*C+ MSRRAEGISTERED
* MUNICIPAL
CERTIFIED GOVERNMENT III ADVISOR
FINANCIAL MANAGER
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GovRates
Utility, Financial, Rate, and Management
Consultants for Governments
www.govrates.com
On behalf of GovRates, Bryan Mantz, CMC, CGFM will serve as the Project manager for this
engagement and will be the primary contact for GovRates. Mr. Mantz will be responsible for
ensuring that the Project is performed as efficiently as possible, that all Project deadlines are
met, that all scope of services requirements are fulfilled, and that the City's expectations are
exceeded.
Other employees of GovRates may be utilized during the Project. The proposed schedule of
hourly labor rates for the Consultant professionals is as follows:
Description Hourly Billing Rate
Principal -in -Charge / Project Manager $145.00
Senior Consultant $90.00
[*] Rates will be applied to actual hours worked on the Project subject to
the not -to -exceed budget.
The not -to -exceed budget does not include reasonable travel costs, which will be billed to the
City based on the actual reimbursable expenses. Please see the following section of this
proposal.
Travel Costs
It is possible that the Project could be completed without the need for onsite visits. The not -to -
exceed budget includes Consultant meeting time but does not include travel costs. The costs to
travel to the City are subject to significant fluctuations based on the time of year, the amount of
planning in advance (e.g., airfare is typically lower if a ticket is purchased a month before the
departure date), and economic factors. Reasonable travel costs will be billed to the City based on
the Consultant's actual reimbursable expenses and may include:
Airfare and checked bag fees.
Airport parking.
Rental car.
Hotel.
Other related expenses.
Prior to any on -site visit, the Consultant will provide the City with an estimate of the reimbursable
travel costs based on current pricing and the Consultant's travel plans. The Consultant will obtain
authorization for the cost reimbursement from the City management before the trip.
GR
CERTIFIED
MANAGEMENT CONNKTANT
* MSR6AEGISTER[D
* MUNICIPAL
CERTRIED GOVERNMENT III ADVISOR
FINANCIAL MANAGER
Page 10 of 12
GovRates
Utility, Financial, Rate, and Management
Consultants for Governments
www.govrates.com
Municipal Advisor Registration
The Project will most likely involve exploring debt financing alternatives. Rate consultants and
financial feasibility consultants are considered to be municipal advisory professionals by the
Municipal Securities Rulemaking Board (the "MSRB") since it is recognized that such firms
regularly engage in municipal advisory activities when debt financing is involved. After
September 12, 2017, all municipal advisory professionals must have passed the Municipal Advisor
Representative Qualification Examination (the "Series 50 Exam") to engage in municipal advisory
activities. Municipal advisory activities as recognized in the Securities and Exchange
Commission's Release No. 34-70462: Final Rule on Registration of Municipal Advisors include:
Evaluating available financing options to the City and providing advice / recommendations on
the structure, timing, and terms of such options.
Providing advice on whether certain rates and revenues would support debt service and meet
coverage requirements on an available financing option to the City.
Performing cash flow modeling in support of financing options.
Serving as a financial feasibility consultant for a City bond issue.
Providing financing advice / recommendations to the City's independent registered financial
advisor if the need arises (i.e., indirect advice).
The Securities and Exchange Commission (the "SEC") has provided subsequent positions that
municipal advisor registration is also required for a firm to perform the financial aspects of a State
Revolving Fund (SRF) loan application.
GovRates is registered with both the SEC and the MSRB as a Municipal Advisor. All GovRates
project managers have passed the Series 50 Exam and, as such, meet the legal requirements for
providing any debt financing support to the City. Moreover, both Jenny Mantz, the CEO of
GovRates, and Bryan Mantz, the Project Manager, are Series 54-qualified Municipal Advisor
Principals and can legally supervise other municipal advisor representatives.
Project Schedule
Based on discussions with the City staff, completion of the Project is dependent on the City's
receiving engineering cost estimates for certain capital needs. A mid-2026 completion date is
targeted so that customers can incorporate any anticipated water and sewer bill increases into
2027 budgets.
Liability Insurance
GovRates is fully insured for any rate and financial work that the City may need. The City has
copies of the GovRates ACORD liability insurance certificates.
CR
CERTIFIED
MANAGEMENT CONSULTANT
, CGFM AIM -REGISTERED
* MUNICIPAL
CERTIFIER GOVERNMENT III ADVISOR
FINANCIAL MANAGER
Page 11 of 12
GovRates
Utility, Financial, Rate, and Management
Consultants for Governments
www.govrates.com
Project Manager Contact Information
Bryan A. Mantz, CMC, CGFM
President
GovRates, Inc.
1988 Varick Way
Casselberry, FL 32707-2409
Phone and Fax: (833) GOV-PLAN; (833) 468-7526
CeII: (407) 921-9753
E-mail: bmantz@govrates.com
Acceptance of Proposal
A purchase order issued by the City or a signed agreement for the Project shall be considered an
acceptance of the proposed scope of services for the Project.
GovRates, Inc.
Jenny Mantz
Chief Executive Officer
-CR
CERTWIED
MANAGEMENT CONSULTANT
* rtfim MSR6RGISTEREO
* MUNICIPAL
CERTIFIED GOVERNMENT III ADVISOR
FINANCIAL MANAGER