Martin County

Stuart, Florida, United States

Raftelis (previously Public Resources Management Group, Inc. (PRMG)) has been serving the County’s utility enterprise departments for over 20 years on a variety of rate, financial, and business consulting projects. The County’s Utility System provides: i) water service to approximately 34,000 accounts which translates to over 47,000 Equivalent Residential Connections (ERCs); and ii) wastewater service to approximately 25,000 accounts which equates to approximately 32,000 ERCs. The Utility System was established through a series of private utility acquisitions, ongoing development, and through the extension of services to existing development funded through assessment and cost sharing programs in order to consolidate water and wastewater treatment plant facilities and create a regionalized utility that provides efficient service for the benefit of the County’s customers and the environment. Raftelis has assisted the County with its regionalization efforts and the consolidation of the Utility System into a single enterprise fund by providing the following services:

Utility Rate Consulting Services

Raftelis’ initial project with the County was to prepare a utility consolidation and revenue sufficiency report and the design of consolidated rates for utility service. Prior to the study, the County had three separate utility service Districts with different rates and utility service characteristics. Study activities included: i) the development of a rate and utility budget consolidation plan to create a single utility enterprise fund; ii) the preparation of a detailed billing frequency and customer demand forecast for all of the utility districts (individually and consolidated); iii) development of a consolidated five-year projected revenue requirement analysis on an individual and consolidated basis, including the development of a capital funding plan; and iv) the design of consolidated water and wastewater utility rates to provide full cost recovery based on the demand characteristics of the consolidated system customer classes. Because of the consolidation of the utilities, a customer impact analysis by district was presented to the Board of County Commissioners. The project also included a presentation of the rationale for consolidation. The basic rate structure developed in the study is still in effect and recognized: i) water conservation rates for the residential and irrigation customer classes; ii) multi‑family residential base facility rate structure based on units served and corresponding capacity relationships; iii) commercial class base charges based on meter size adjusted for demand contributions; and iv) implementation of maximum sewer billing thresholds for residential wastewater use.

In order to implement the utility consolidation and to fund the capital improvements identified for the region, Raftelis assisted the County in the issuance of the aggregate principal amount of $32,850,000 Consolidated Utilities System Refunding and Improvement Revenue Bonds, Series 1994, to allow for the consolidation of the separate district bond resolutions into a single authorizing resolution, refinance existing debt for interest rate savings, and to fund needed capital improvements to the systems to promote regionalization (such as District system interconnects capacity expansion).

Most recently, Raftelis assisted the County in the development of an annual ten-year financial forecast of the sufficiency of utility revenues to fund the expenditures and reserve requirements of the system to maintain utility operating margins for ongoing capital re-investment and to promote a strong financial position for the system.

Utility Acquisition Services

Raftelis has assisted the County in the financial review and evaluation of eight separate utility transactions, including the sale of a portion of the County’s service area to a public utility system. Responsibilities included:

  • Performance of a financial evaluation of the utility (debt capacity, going concern, payback analysis and comparable sale analyses for determination of a reasonable value for utility) for acquisition and sales (price) purposes
  • Providing assistance to staff in the determination of the overall acquisition price and contract terms for the transfer of utility assets
  • Providing assistance in contract negotiations for the purchase of the utility system or service area between the utility owners and the County
  • Review of purchase and sales agreement and other related acquisition documents
  • Prepared presentation materials and presentations to the Board of County Commissioners associated with the public interest hearing (public hearing) as required by Chapter 125, Florida Statutes
  • Assisted in transition activities of the utilities to public ownership (accounts receivable verification, drafting of notices, etc.)

Bond Feasibility Disclosure Reports and SRF Loan Assistance

Raftelis prepared bond feasibility disclosure reports in support of several debt financings on behalf of the County for capital improvement funding, the acquisition of utility systems, and the restructuring of debt. Specifically, PRMG has assisted the County in the issuance in the aggregate principal amount of $158.910 million in debt financings as summarized below:

  • $32,850,000 Consolidated Utilities System Refunding and Improvement Revenue Bonds, Series 1994
  • $2,530,000 Water and Wastewater System Revenue Bonds (Martin Downs System), Series 1996
  • $25,000,000 Utilities System Revenue Bonds, Series 2001
  • $40,450,000 Utilities System Revenue Bonds, Series 2003
  • $3,345,000 State Revolving Fund Loan through the Florida Department of Environmental Protection (2004)
  • $36,665,000 Utilities System Revenue Bonds, Series 2009A, and Series 2009B
  • $72,385,000 Utilities System Refunding Revenue Bonds, Series 2016A, and Series 2016B

Raftelis’ services included the preparation of five‑year historical rate covenant compliance and “flow of funds” trend analysis, development of detailed financial forecasts of utility operations and cash flow for bond resolution compliance purposes, preparing the additional bonds test required for the issuance of additional parity bonds, preparing comprehensive feasibility disclosure reports which include financial projections and the evaluation of rate covenant compliance, and assisted the County and its Financial Advisor in the structuring of the debt service to match rate and capital funding needs and with the presentation of the utility’s financial position to the credit rating agencies. Raftelis also assisted the County in the development of amendments to the authorizing Bond Resolution to modernize the definitions, flow of funds, and the rate covenant and additional bonds test provisions. Additionally, Raftelis assisted the County in securing a low-interest loan through the State Revolving Fund loan program administered by the Florida Department of Environmental Protection (FDEP). Raftelis reviewed documents prepared by its outside consultants and engineers, assisted in the development of the financial projections associated with the capital finance plan, reviewed the documentation for the submittal of the application before the FDEP, and presented such plan to the Board of County Commissioners.

Other Utility Services

Raftelis has assisted the County with the following utility services:

  • Developed Irrigation Quality rates, recognizing customer capacity entitlements and demands, and the allocated cost for irrigation service
  • Prepared capacity facility charges (impact fees) recognizing the existing functionalized utility plant in service, projected expansion‑related capital expenditures to serve new growth, and level of service considerations
  • Developed financial and cost analysis of a bio-solids process change to evaluate costs and savings and effects on rates and to compare such analyses to evaluations provided by the contractor for the proposed process modification; the analysis included a review of contract service documents and a presentation of the analysis to both the County and the contractor to evaluate the overall financial benefits and strategic issues
  • Development of miscellaneous service charges
  • Prepared financial and capital funding plan in support of the Utilities Department’s wastewater septic tank elimination program, including the development of a capital assessment and customer impact evaluation
  • Development of Price Index rate adjustment methodology and rate resolution revisions
  • Prepared a comprehensive ten-year financial forecast and revenue sufficiency analysis for the County’s solid waste management program
  • Assisted in preparing a bid (Raftelis responsible for customer service component) on behalf of the Utilities Department to the County in support of a managed competition/privatization bid, which was won by the County
  • Assisted the Utilities Department in the design and implementation of wholesale water and wastewater rates for corresponding transmission and treatment services with the neighboring City of Stuart, a capacity sharing agreement between the two entities to allow for facility regionalization, and the deferral of individual utility plant expansion expenditures
  • Developed an expenditure classification analysis to identify cost-based rates
  • Presented the analysis to both the City and the County for comment
  • Developed a Memorandum of Understanding identifying all of the general terms and conditions for service between the two entities
  • Assisted with the design of low pressure reclaimed water (irrigation quality or IQ) service rates. Raftelis’ responsibilities included:
    • The review and allocation of the expenses and capital costs for IQ water service
    • The development of the rate application process (based on a take-or-pay per capacity entitlement basis) and the design of rates for the development
    • Assist in the development of standard IQ water agreements
    • Responsibilities also included the performance of financial evaluation and due diligence analyses regarding the systems