Sarasota County

Sarasota, Florida, United States

Raftelis (previously Public Resources Management Group, Inc. (PRMG)) has been serving the utility and solid waste enterprise departments for more than fifteen years on a variety of rate, financial, and business consulting projects. The County’s Utility System provides: i) retail water service to approximately 88,000 accounts which translates to over 114,000 Equivalent Residential Connections (ERCs); and ii) retail wastewater service to approximately 82,000 accounts which equates to approximately 106,000 ERCs. The Utility also provides wholesale water and wastewater service to local governments and private utilities. The County’s Solid Waste System disposes of approximately 400,000 tons of waste annually and serves over 149,000 residential units and commercial establishments. Raftelis has developed detailed financial and business models for the two enterprise funds, evaluated rates for services, assisted in system financings and has provided other on-going financial and business support projects.

Raftelis has provided a wide variety of utility rate, financial, and management consulting services on behalf of Sarasota County. These services were primarily focused on assessing the utilities’ financial condition, ability to fund utility expenditure needs and bond covenants, implementation of business strategies to improve financial position, regionalization of the service area and to meet increasing regulations and other County objectives. The following is a brief summary of the services provided by Raftelis to the County.

Utility Financial, Rate, and Business Consulting Services

Raftelis has prepared several water and wastewater rate studies and financial forecast updates since 2003, and were most recently updated in 2020 to support the issuance of additional revenue bonds. The water and wastewater rate studies included developing a rate and financial model, developing a five-year financial forecast and cost recovery plan, modifications to the County’s utility rate structure, review of water and wastewater impact fees, capacity reservation charges and miscellaneous service charges.

Raftelis continues to assist the County in updating the financial forecast and business model to monitor results, changes in market conditions, increases in cost from wholesale water and wastewater providers, and modifications to the capital finance plan.

Interim Utility Finance Director

Raftelis staff served as the interim financial utility director for the Environmental Service Business Enterprise for a period of approximately one year. During this time frame, Raftelis was involved in the daily aspects of utility operations, primarily focusing on development of a financial plan for the utility, evaluation of a capital improvement program and funding analysis or needs assessment, evaluation of sludge hauling contractual relationships, and assisting in the daily decision-making process in order to meet the overall needs of the utility system.

Bond Feasibility Disclosure Reports and SRF Loan Assistance

Raftelis prepared bond feasibility disclosure reports in support of the issuance by the County: i) in the aggregate principal amount of $54.49 million of Utility System Revenue Refunding Bonds, Series 2005A; ii) in the aggregate principal amount of $48.65 million aggregate principal amount of Utility System Revenue Bonds, Series 2007; iii) in the aggregate principal amount of $46.66 million aggregate principal amount of Utility System Revenue Bonds, Series 2010 (Federally Taxable – Build America Bonds – Direct Subsidy); iv) in the aggregate principal amount of $17.86 million Utility System Revenue Refunding Bonds, Series 2011A, and Utility System Revenue Refunding Bonds, Series 2011B; v) in the aggregate principal amount of $35.60 million Utility System Revenue Bonds, Series 2011; vi) in the aggregate principal amount of $43.02 million Utility System Revenue Refunding Bonds, Series 2016B; and vii) in the aggregate principal amount of $45.76 million Utility System Revenue Refunding Bonds, Series 2019A. Raftelis is currently engaged in a bond feasibility study for the issuance of the proposed Series 2020 Additional Revenue Bonds.

Raftelis’ services included the preparation of a five-year historical rate covenant compliance and “flow of funds” trend analysis; development of a detailed financial forecast of utility operations and cash flow for bond resolution compliance purposes, preparation of 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 utility’s financial position to the credit rating agencies.

Raftelis has assisted the County in the overall development and review of a capital finance plan associated with securing several low-interest loans from the State Revolving Loan Fund administered by the Florida Department of Environmental Protection (FDEP). PRMG reviewed documents prepared by its outside consultants and engineers, assisted in the development of the financial projections associated with the capital finance plan, and reviewed the documentation for the submittal of the application before the FDEP.

Other Consulting 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
  • Raftelis assisted the County in the initiation of its water supply contract negotiations between both Manatee County and the Peace River/Manasota Regional Water Supply Authority (Raftelis’ assistance focused primarily on the business aspects of water resource planning and the contractual terms associated with securing long-term water supply from these entities)
  • Prepared an Interconnect and water service agreement between the County and the City of North Port
  • Prepared a Cash Flow Model for the County’s Transportation Program to evaluate funds availability to meet the cost and to fund the capital program and prepared an analysis of the interdepartmental billing method of the Fleet Services (vehicle and equipment) used by other County departments

Franchise Utility Rate Consulting Services

The County regulates the rates of private utilities located in the County; this jurisdiction does not rest with the Florida Public Service Commission. Raftelis has served the Utility’s regulatory rate consultant and has assisted the County in all rate applications and filings by the franchised utilities since 2004. Raftelis assisted the County in the evaluation of a utility rate filings submitted by Aqua Utilities of Florida, Inc., Pluris South Gate Utilities, Inc., Siesta Key Utilities Authority, Inc., Bee Ridge Utility Corporation, and Lake Forest Utility, LLC. Activities included:

  • Review of Minimum Filing Requirements for compliance and sufficiency when compared to the County Franchise Ordinances (to accept the filing), including: i) performing analyses to validate the information contained in the rate filing by the private utility (“company”); ii) attested to the revenues being generated against the customer billing statistics of the private utility system; iii) reviewed accounting records and other financial/source documents to confirm the information reflected in the company rate filing; and iv) performed other analyses to substantiate the rate filing information and financial results
  • Evaluated utility plant in service and contributed capital to determine rate base (utility investment), including conducting a field review of the plant in service additions, retirements, and ending plant balances and the evaluation of used and useful analyses on functionalized plant based on capacity utilization
  • Reviewed capital structure (rate of return)
  • Analyzed trends in operation and maintenance expenses, including allocated corporate overhead expenses and management expenses, acquisition adjustments and extraordinary property loss adjustments
  • Evaluated revenue requirement cost allocation, designed recommended rates based on determination of appropriate costs to be recovered, and evaluated customer bill impacts
  • Prepared a report documenting review, all proposed adjustments to company rate filing, and basis for recommendation of proposed rates for utility service
  • Assisted in rate settlement negotiations with franchise utility representatives and provided testimony to present the rate evaluation results before the Hearing Officer and the Board of County Commissioners (and during public information programs before the affected rate payers for each specific rate filing)

Septic Tank Replacement Program

Raftelis prepared a detailed financing plan in support of a septic tank replacement program for approximately 15,400 parcels. Working with the County’s consulting engineers, Raftelis developed a funding plan recognizing the use of infrastructure surtax funds, impact fees, rates (net increases in operating margins), capital surcharges, and property assessments, and debt financing (both parity bonds and low-interest state revolving loan funds) to fund the capital program. The plan covered a ten-year period and also included: i) early discount incentives to connect; ii) adoption of mandatory connection policy; and iii) development of revisions to the rate ordinance to reflect new rates associated with the septic replacement program. Since the initial evaluation, Raftelis has assisted the County in evaluating the program and adjusting the financial forecast and funding plan, as necessary. The septic replacement program is currently ongoing and over 10,000 units have now been connected to the System.

Solid Waste Services

Raftelis has prepared a financial forecast and revenue sufficiency analysis and model of the County’s Solid Waste Division, which includes both disposal and collection services. The financial forecast has been updated periodically to evaluate ongoing changes in fiscal position, support the development of collection and disposal fee rates for service, and support the need for ongoing capital re-investment. The financial forecast encompassed a twenty‑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 and commercial customer growth along with 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 for
  • 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
  • Development of a Management Dashboard to allow for model interaction and present fiscal results based on model assumptions
  • Development of financial documentation model for County staff internal use

Fire and EMS Financial Consulting Services

Serving as the County’s consultant, Raftelis prepared a 10-year Fire and EMS revenue requirements study and model on behalf of Sarasota County. This model was developed to be delivered to the County and was designed with input from County staff to ensure maximum functionality and ease of usage. This customer financial model included development of a ten-year forecast of Fire and EMS revenue and operating expenses, as well as a capital expenditure projection and corresponding capital funding plan. This computer model was then delivered to the County to use on an ongoing basis for internal financial planning purposes.