City of Baltimore

Baltimore, Maryland, United States

Raftelis has been engaged by the City of Baltimore (City) on a long-term contract to provide financial and management consulting services since 2006. The services that have been provided during this period have included financial planning support, bond financial feasibility, cost of service, rate design, and a variety of management consulting services.

Financial and Rate Consulting

Raftelis has assisted the City in issuing revenue bonds in the amount of $371 million in 2014, $442 million in 2017, and $300 million in 2019 to help fund the City’s utility capital investment needs. This support included the following:

  • Development of forecasted statements of revenues, expenses, debt, and debt service coverage
  • Review and forecast of service demand projections
  • Estimation of annual revenue requirements and prepared utility rate forecasts
  • Review of fund balances with fund balance requirements
  • Preparation of an opinion of the overall financial feasibility of the issuance of debt
  • Assistance in preparation of bond official statements
  • Participation in bond rating agency presentations, including presentations to Moody’s and S&P
  • Preparation on ongoing bond disclosure documentation

In addition to the bond issuance support, Raftelis has also undertaken multiple cost of service-based rate studies to update the Bureau’s rate-setting methodology, develop rates, and provide rate structure recommendations that equitably assign costs to different customer classes. As part of the cost-of-service study, the Raftelis team examined industrial surcharge fees for industrial customers. Raftelis has also supported financial and rate negotiations with the City’s interjurisdictional customers, and provided full-time, temporary assistance on-site with the Bureau to augment annual budgeting and plan for debt issuances to fund the utility capital programs.

As part of our financial services contract, Raftelis has developed and updated miscellaneous fees and charges for the water and wastewater utility. This work has resulted in an additional engagement with the City Department of General Services (DGS) to develop additional user charges for services in building operations and maintenance. DGS believes that converting their operations to a user charge-based fee for service will help stabilize their revenue stream and insulate them from City General Fund budget cutting initiatives.

Raftelis has also supported financial and rate negotiations with the City’s interjurisdictional customers, and provided full-time, temporary assistance on-site with the Bureau to augment annual budgeting and plan for debt issuances to fund the utility capital programs.

Raftelis has provided additional support for the planning and prioritization of the Bureau’s capital program. One key to identifying the annual level of investment was a comprehensive analysis of the local impacts on customer affordability. Combining data from the US Census Bureau, Baltimore CityStats, and the financial planning models, Raftelis was able to deliver visualizations that showed anticipated impacts to customers of the City. The data also provided the context of the types of people impacted and where in the City they reside, which is being used to develop a more effective customer outreach and affordability program.

Organizational Optimization Initiative and Strategic Planning

The City of Baltimore’s Bureau of Water and Wastewater (Bureau) was interested in optimizing the operations and structure of the organization. They wanted to enhance organizational alignment and operational efficiency, identify organizational structure improvement opportunities, and establish a framework to support the Bureau leadership team’s vision for continual improvement in operational performance. To accomplish these objectives, Raftelis conducted an organizational assessment program for the Bureau, called the Organizational Optimization Initiative (or O2I).

Raftelis was charged with examining the current organizational structure of the Bureau and making recommendations to improve efficiency based on our subject matter expertise and general industry best practices. Raftelis examined the organizational structure and business operations of the Bureau’s approximately 2,000 budgeted positions in a “deep-dive” evaluation process and worked extensively with the Bureau’s senior management team to define structural and workforce modifications that would enhance the Bureau’s effectiveness and efficiency.

Raftelis provided the Bureau with a detailed O2I Plan and recommended structural enhancements to the Bureau. The Bureau is now using the plan as a guide in its implementation efforts.

As a result of this initiative, when the Bureau Head was elevated to be the Director of the Department of Public Works (DPW), Raftelis was engaged to develop a strategic plan for the DPW, and then a similar assessment of the Bureau of Solid Waste and the DPW’s 12 administrative and support services groups. This activity engaged more than 100 of the Department’s leadership staff through focus groups and facilitated sessions. Specific focus was given to the relationship between the Mayor’s City-wide goals and the DPW priorities, which resulted in a separate deliverable to demonstrate how DPW can support the City’s efforts. Strategic planning sessions were built upon the DPW’s organizational strengths, aspirations, opportunities, and desired results, in keeping with appreciative inquiry best practices.

Ultimately, DPW developed six goals to direct the organization in moving forward. These goals included Customer Satisfaction and Communications; Environment and Public Health; Financial Sustainability; Infrastructure Renewal; Organizational and Process Improvement; and Workforce Development. To further organizational performance management, Raftelis has assisted in the creation of a new Office of Strategy and Performance, the mission of which is to direct the Department’s strategic activities and implementation efforts.

Stormwater Program Development

In the past, the City used motor vehicle tax revenue to fund streets drainage maintenance. But faced with a new, more stringent NPDES permit and the high costs of compliance with the permit and the Chesapeake Bay rules, the City of Baltimore’s Bureau of Water and Wastewater was interested in developing a more stable source of revenue for its stormwater management program. The City looked to Raftelis to serve as the program manager for developing a new stormwater program and implementing an impervious area-based fee to fund the program. In addition, a state law passed in April 2012 required that the City implement the fee on a compressed time schedule, mandating that it be in place by July 1, 2013.

To begin the project, Raftelis completed a gap analysis which charted the City’s path to implementation of the fee. Raftelis provided the Bureau with comprehensive implementation services including: policy and program development, financial analysis, billing data development, billing system and customer relationship tools, business process development and mapping, standard operation procedure documentation, staff training, and public outreach assistance. Raftelis developed stormwater billing data for each of the over 220,000 parcels within the City. The fee is billed on the City’s existing water utility bill and Raftelis built an innovative, comprehensive software application to maintain and manage customer data. This application is particularly crucial because the City’s billing system lacks tools to manage the complex parcel-account associations, credits, discounts and other features of the rate structure.

With the implementation of a new fee, it has been critical to communicate the impacts of the fee to customers and stakeholders. Raftelis assisted the City with the development and implementation of a communication plan to support the overall public information program. Raftelis staff also worked with Department of Public Works attorneys to draft policies, address citizen concerns, manage relationships with larger rate-payers, and provide analyses for consideration by City Council. Raftelis consultants provided one-on-one assistance to hundreds of stormwater utility customers throughout the City. In addition, Raftelis worked extensively with the Bureau to create processes that utilize existing City resources to efficiently respond to customer needs. Through this iterative process, Raftelis and the City were able to establish a set of processes that are currently being used to effectively handle customer service concerns.

The fee went into effect on July 1, 2013 and customers received their first quarterly charges in mid-September 2013. The fee is providing the City with a stable source of revenue for its stormwater management program, and Raftelis continues to provide ongoing billing, policy and customer service support to the City, as well as support, maintenance and updates to the stormwater software application.

Raftelis Financial Consultants, Inc. is currently assisting Baltimore City Department of Public Works in an organizational optimization review. The first phase targeted the water/wastewater/stormwater utilities which is currently under implementation. The second phase consisted of review of solid waste operations, city’s energy initiatives, and departmental support groups. Staff from Raftelis were engaging and helpful with this optimization review; they have been very easy to work with and open minded.
Rudy Chow, Department of Public Works Director