Collier County

Raftelis (previously Public Resources Management Group, Inc. (PRMG)) has provided water, wastewater, and solid waste rate and financial consulting services to Collier County since 2001. The Collier County Water-Sewer District (District) serves approximately 67,000 accounts representing a population of approximately 200,000. Since 2001, Raftelis has assisted the County in a multitude of utility and other rate and financial services.

Water and Wastewater Revenue Sufficiency and Rate Design

Raftelis prepares detailed evaluations of the ability of the utility rates to fund the expenditure and financial requirements of the County. As part of the studies, Raftelis developed an interactive financial model that encompasses a six‑year forecast period. Attributes include:

• Preparation of a detailed billing frequency to identify customer class water and wastewater usage characteristics and demands
• Prepared a multi-year capital funding plan recognizing commercial paper loans, State Revolving Fund (SRF) loans administered through the Florida Department of Environmental Protection (FDEP), utility revenue bonds, and internal funding sources (impact fees, rates, etc.)
• Evaluated financing alternatives for the capital improvement program concurrently with the County’s master planning process
• Developed benchmarks for financial management to maintain a strong fiscal position and promote operational sustainability
• Designed rates to provide for the full cost recovery by customer class

In support of the County’s ongoing utility management program, Raftelis updates the financial forecast as necessary to evaluate the overall revenue sufficiency and financial position of the District and has assisted the County in updating and implementing rate recommendations to assure proper cost recovery.

Water and Wastewater Impact Fees

Raftelis has reviewed the impact fees charged to new customer growth to assure proper capital cost recovery. The fees recognized the requirements of the Florida Impact Fee Act and were reviewed by the County’s legal counsel for consistency with case law. As part of the impact fee evaluations, Raftelis:

• Functionalized existing system assets in service (installed costs) and capital projects to identify appropriate costs to be recovered in fee calculations
• Identified contributed capital and credits in the determination of the net capital costs recognized in the fees; Analyzed the level of service necessary for the apportionment of capacity
• Calculated proposed impact fee to be applied to new development
• Developed Allowance for Funds Prudently Invested (AFPI) fees to recover the carrying cost for “holding” capacity until it is reserved by development

As part of each impact fee study prepared by Raftelis, a presentation of the findings before the Collier County Productivity Committee and the Developmental Services Advisory Committee (DSAC) was made in order to discuss the rational nexus provisions of the fees, the methodology used in determination of the fees, and other components related to the overall fee process.

Irrigation Quality (IQ) Water User Rate Services

Raftelis assisted the Water-Sewer District in the development of policies and rates for its irrigation quality (IQ) (reclaimed water) system. Specifically, Raftelis assisted the District in:

• Preparing a reclaimed water policy that provided, among other things, the attributes for providing services (e.g., guiding principles, definitions, identification of customers’ class/services, capacity entitlement provisions for major users, etc.)
• Updating the agreements for major and basic user service
• Updating the IQ Ordinance which provided, among other things, the codification of the IQ policy terms and conditions, service requirements, responsibilities of the parties, etc.
• Developing a detailed customer usage profile to identify system and major user service characteristics in support of the development of the capacity entitlement threshold and the effects on customers

In addition to the development of the policies, agreements and ordinances, Raftelis has also prepared IQ water user rate studies for the District. As part of these studies, Raftelis:

• Prepared multi-year financial forecasts of the IQ water operations and capital funding requirements
• Developed a detailed customer billing frequency and database to identify IQ water use patterns and to accurately reflect the potential effects on revenues associated with various rate structures. (the analysis also included developing IQ water “take-or-pay” allocations for wholesale IQ water customers)
• Identified specific customer classes and allocated costs to such service classes by type of service (low pressure, high pressure, etc.), and designed rates based on the allocation cost of service

Bond Feasibility Disclosure Reports

Raftelis prepared bond feasibility disclosure reports in support of the issuance by the District of: i) $13.72 million of Taxable Water and Sewer Refunding Revenue Bonds, Series 2003A, and $33.63 million of Water and Sewer Refunding Revenue Bonds, Series 2003B; and ii) $110.2 million aggregate principal amount of Water and Sewer Revenue Bonds, Series 2006. Raftelis’ services included the preparation of a 5-year historical rate covenant compliance and “flow of funds” trend analysis, development of a detailed financial forecast of District operations and cash flow for bond resolution compliance purposes, prepared the additional bonds test required for the issuance of additional parity bonds, prepared a comprehensive feasibility disclosure report which included financial projections and the evaluation of rate covenant compliance, and assisted the County and its Financial Advisor with the presentation of the District financial position to the bond rating agencies.

Other Utility Rate Services

Raftelis has also assisted the County with the following utility services:

• Development of wholesale water rate evaluations for service to other public utilities and providing assistance in the drafting of wholesale service agreements
• Prepared water rate evaluations for the Goodland Water District, which was recently consolidated into the District
• Reviewing impact fee collection policies
• Reviewing line extension policies and procedures
• Reviewing miscellaneous service charges
• Developing policies for the District’s annual transfers to the County’s General Fund (e.g., Payment-in-Lieu-of-Taxes)

Solid Waste Services

Raftelis has prepared a financial forecast and revenue sufficiency analysis of the County’s Solid and Hazardous Waste Division, which includes both disposal and collection services. The financial forecast has been updated periodically to evaluate ongoing changes in financial position, support the development of collection and disposal fee rates for service, and analyze the need for ongoing capital re-investment. The financial forecast is based on a model that encompasses a ten‑year planning horizon. Study tasks have included:

• Compilation of historical solid waste deliveries received by the County, by waste type, and the projection of solid waste tonnage to estimate tipping fee revenues
• Preparation of forecast of residential/dwelling unit, commercial customer growth, and waste generation rates to estimate solid waste collection revenues as well as the delivery of municipal solid waste to the County disposal facilities
• Projection of operating expenses, including contractual fees
• Operation of the landfill and other disposal facilities
• Providing collection services by the County’s contractors
• Development of a capital funding plan, including the funding of a landfill replacement reserve (new landfill) for future disposal requirements; and
• Development of financial model documentation for County staff internal use

Parks and Recreation Services

Raftelis has assisted the County in a cost-of-service study for over 300 fees offered by the Parks and Recreation Division. As an outcome of the study, Raftelis identified that most or all the fees do not recover full cost (i.e., subsidized by General Fund or other sources), which is common practice within the industry since many recreation amenities may be offered at no charge. Recognizing that establishing fees below the full cost of service is a function of policy, Raftelis recommended that the County develop a Cost Recovery Policy (Policy). The Policy is intended to provide for, among other things, a methodology to calculate the cost recovery for a fee based on the alignment of the underlying service(s) to the benefit provided to the community and the County’s overall values and strategic plan. The Policy also incorporates consideration for market factors in development of the fees such as demand for services. The study included surveys with other parks, recreation departments, and private providers to assess the reasonableness of charges and competition with private providers in the County. The Board of County Commissioners approved the findings and recommendations of the study, and a formal Cost Recovery Policy to provide guidelines to allow staff to adjust fees in a programed manner based on cost, participation, and need/benefit characteristics.