Title
[Contract Amendment] Raftelis Financial Consultants INC. - Water and Wastewater Rate Implementation: Rate Study and Public Outreach Strategy
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FileID
File ID: 2026-01464
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Location
Location: Citywide
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Recommendation
Recommendation: Pass a Motion: 1) authorizing the City Manager or designee to execute Contract Amendment No. 1 to City Agreement PRC003382 with Raftelis Financial Consultants INC. for the Water and Wastewater Rate Study and Public Outreach Strategy through June 30, 2027, for an amount not to exceed $60,625, bringing the agreement’s total not-to-exceed amount to $273,785; and 2) resetting the City Manager or designee’s authority to issue any additional contract amendments for City Agreement No. PRC003382.
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Contact
Contact: Dalia Fadl, Director, (916) 808-3765, dfadl@cityofsacramento.org; Chuong (Ryan) Pham, Business Services Manager, (916) 808-8995, rpham@cityofsacramento.org; David Levine, Program Manager, (916) 808-6213, dlevine@cityofsacramento.org; Department of Utilities
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Presenter
Presenter: None
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Attachments
Attachments:
1-Description/Analysis
2-Contract Amendment PRC003382-01
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Description/Analysis
IssueDetail
Issue Detail: The City of Sacramento (City), Department of Utilities provides water, wastewater, and storm drainage utility services that are fully funded by ratepayer service charges. Utility funds cannot legally be used to pay for other City services, like parks, police, or fire. The City uses a "Cost of Service” model to ensure rates are proportionate to the costs of service and comply with state law (Proposition 218). This means each customer pays their proportionate share of the costs based on the demands they place on the system.
To ensure the accuracy of the analysis, in February 2025, the City entered into a two-year agreement with Raftelis Financial Consultants, INC, an independent consulting firm with more than 30 years of experience in utility rate studies, to design and perform a rate study and public outreach strategy for water and wastewater rate adjustments and long-range funding plans.
The initial terms included an original not-to-exceed amount of $213,160 and were intended to run through February 18, 2027. The initial contract did not require Council approval as Sacramento City Code (SCC) 3.56.080 authorizes the City Manager to execute a contract for less than $250,000.
During the study, additional work was necessary within existing tasks identified in the original scope of work to ensure that the financial plans and proposed rates achieved operational and affordability objectives and complied with Proposition 218. This work included:
1. Developing a second financial plan and cost of services analysis with lower revenue requirements and rates for each fund to compare to the original financial plan.
2. Restructuring the residential and multi-family wastewater flat rate to conform to current industry standards.
3. Creating enhanced customer outreach toolsets including an online bill calculator, which will allow ratepayers to see the total impact of the proposed rate changes on their utility invoice.
4. Conducting additional reviews and revisions of the rate study report and Proposition 218 notice to build a legally defensible administrative record to explain the validity of the rates.
The table below summarizes the total costs associated with contract PRC003382:
Contract’s original not-to-exceed amount $ 213,160
Net change by Amendment 1 $ 60,625
New not-to-exceed amount, including all amendments $ 273,785
Staff is also recommending an increase in the agreement’s time of performance through the expected rate implementation of June 30, 2027 to document and adjust rates, if necessary, should City Council approve amounts outside of staff’s recommendation.
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PolicyConsiderations
Policy Considerations: The proposed contract amendment supports the City’s compliance with Article XIII-D, Section 6 of the California Constitution, which governs increases in property-related fees and charges.
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EconomicImpacts
Economic Impacts: Not applicable.
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EnvironmentalConsiderations
Environmental Considerations:
California Environmental Quality Act (CEQA): This action is not a project that is subject to CEQA because it is an organizational or administrative activity that will not result in direct or indirect physical changes in the environment. (CEQA Guidelines §15378(b)(5) and §15060(c)(3)).
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Sustainability
Sustainability: Not applicable.
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Commission/Committee Action
Commission/Committee Action: Not applicable.
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RationaleforRecommendation
Rationale for Recommendation: This amendment will allow Raftelis to complete all remaining tasks outlined in the scope of work for the water and wastewater rate study and public outreach strategy.
Raftelis has specialized knowledge of laws governing property-related fees, utility regulatory requirements, and financial industry-standard methodologies/best practices for examining complex financial, regulatory, and engineering data, then allocating costs and determining rates that are fair and equitable by customer class (residential, commercial, and multi-family). Utility rates are highly scrutinized and having the work performed by consultants, like Raftelis, ensures the outcomes are independent and without bias, which increases City accountability and builds public trust. Both are critical to the adoption of utility rates that meet stringent state law and provide sustainable financial resources for continued utility systems operations and maintenance of infrastructure that ensure public health and safety.
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FinancialConsiderations
Financial Considerations: This amendment will increase the existing contract’s not-to-exceed amount by $60,625, bringing the agreement’s total not-to-exceed amount to $273,785. There are sufficient funds in the Fund Level Program’s (14001041) Water Fund (Fund 6005) and Wastewater Fund (Fund 6006) operating budgets to execute this contract amendment.
There are no impacts to the General Fund.
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LocalBusinessEnterprise
Local Business Enterprise (LBE): Not applicable.
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