BPM006379_Solicitation_Attachment_10_-_Experience_and_Capacity_Response_Water_Finance_Assistance.docx

Attachment 10 – Experience and Capacity Response

THE STATE MAY DETERMINE YOUR PROPOSAL NON-RESPONSIVE IF YOU DO NOT FULLY RESPOND.

The Offeror shall provide a narrative response to each section that demonstrates their understanding of the Scope of Work requirements and describes the company’s overall experience and capacity in providing the Services stated in this Solicitation. If there is a section that is not applicable to the Services required by the Scope of Work, you may mark it “N/A”.

Offeror shall provide a response either after each section or in a separate document entitled: “Attachment 10 - Experience and Capacity Response.” If a separate document is used, please clearly designate each section and double-check to ensure that each question has been answered. If any information provided is considered CONFIDENTIAL by Offeror, the information must be specifically included in the Confidential Information Designation Attachment and related documentation to be assessed for confidential treatment under A.A.C. R2-7-103.

1.0 Company Profile. The Offeror must include a narrative description of its organization. The narrative must include the following:

1.1 Date Established and ownership (public, partnership, subsidiary, etc.);

1.2 Is the Offeror a national or local company;

1.3 Address of “Main Office” (e.g. Corporate Headquarters and any satellite offices responsible for performance of proposed tasks;

1.4 Brief overview of business operations, with an emphasis on experience in regards to the Scope of Work (limit the response to this question to one page, font size 10 pt or greater);

1.5 Offeror's organizational chart relevant to the Contract, specifically identifying the key point of contact for all questions related to the submitted Offer. In addition, identify key point of contact for Task Order Offer Requests.

1.6 Full disclosure of any potential conflict of interest between the Offeror and any State employee who functions or has responsibilities in the review or approval of the undertaking or carrying out of the Contract;

1.7 A Statement of whether, in the last five (5) years, the Offeror has filed (or had filed against it) any bankruptcy or insolvency proceeding, whether voluntary or involuntary, or undergone the appointment of a receiver, trustee, or assignee for the benefit of creditors, and if so, an explanation providing relevant details and current status;

1.8 A Statement of whether there are any pending Securities Exchange Commission investigations involving the Offeror, and if such are pending or in progress, an explanation providing relevant details and an attached opinion of counsel as to whether the pending investigation(s) may impair the Offeror’s performance in a Contract under this Solicitation;

1.9 A Statement documenting all open or pending litigation initiated by Offeror or where Offeror is a defendant or party in any litigation that may have a material impact on Offeror’s ability to deliver the contracted Services;

1.10 A Statement documenting all open or pending litigation initiated by Offeror or where Offeror is a defendant or party in any litigation with a public sector client;

1.11 Full disclosure of any public sector contracts terminated for cause or convenience in the past five (5) years;

1.12 Full disclosure of any criminal or civil offense.

Offeror Response:

1.0 Company Profile of Water Finance Assistance

1.1 Water Finance Assistance was founded on March 20, 2019 in Graham, North Carolina. The firm is privately owned by Glenn Barnes.

1.2 Water Finance Assistance is a national company providing services in multiple states across the country and to Tribal Nations in six EPA regions.

1.3. Our main office is located at 209 Forest Drive, Graham, North Carolina 27253. Our satellite office is located at 3678 Thackary Drive, Powder Springs, Georgia 30127. Glenn Barnes works out of the main office in North Carolina, and Elora Arnette works out of the satellite office in Georgia.

1.4 Overview of the Operations of Water Finance Assistance

Water Finance Assistance was founded in 2019 with a goal of improving the long-term sustainability of water systems and the communities that rely on them. Our approach to improving long-term sustainability is to increase the financial and managerial expertise of utility employees, and our work largely focuses on the issues and needs of small, rural, and Tribal communities. We also provide interactive training programs for utility staff, boards, and volunteers on a variety of financial and managerial issues with water utilities, including rate setting, affordability, financial health assessments, workforce development, asset management, and promoting household water conservation. All our work is rooted in data analysis. We take data the small community has in its possession and analyze it in unique ways to help the staff understand their utility and community better. We also analyze data that are publicly available such as data from the US Census. Our recommendations are more objective because they are based on data. We do not have a “standard” or “typical” recommendation for rate changes that we give to every community we assist—every community is unique, and no two rate studies we have conducted have been the same as a result. Many small communities have challenging demographics, including aging or shrinking populations and incomes that are rising slower than inflation. It would be foolish for us to recommend a significant rate increase that would cause many customers to be unable to pay their bills on time and in full. Instead, we meet communities where they are and make tailored recommendations that are appropriate for their financial circumstances and demographics.

We are a small firm of two full-time employees, which allows us to form deep relationships with the communities we assist that can last for years. We take on lower cost projects with small communities that can be completed in 100 to 150 hours, and our focus on finance and management allows us to do the majority of our work remotely.

Our business approach has focused on forming partnerships with other entities working with utilities. This includes state agencies as well as technical assistance providers that receive federal funds to work with small communities. We partner with engineering firms conducting technical reviews of systems so that we can provide a more accurate financial assessment of the system than they may have the expertise to provide internally. This has this approach has allowed Water Finance Assistance to have a significant reach across the United States in spite of being a tiny firm.

We also believe we have in a role to build up the financial and managerial knowledge of other technical assistance providers who assist small and rural communities. We have a long-standing partnership with RCAP, the Rural Community Assistance Partnership, to provide services directly to small communities, but more so to provide training to RCAP's network of almost 400 field staff working on the ground in every state and territory in the United States, including Arizona. We have written guidebooks for RCAP on rate setting and financial management and contributed to the revised EPA STEP Guide on rate setting for small communities. We wrote the chapter on utility finance for the Sac State guidebook on utility management. We have developed training curricula for RCAP on rate setting and for AWWA on affordability. We have strong relationships with the Environmental Finance Center Network, National Rural Water Association, and Moonshot Missions. Our staff are frequent presenters at regional and national conferences. These partnerships allow us to share our subject matter expertise more broadly and to increase our impact in individual communities. We have our own approach when providing technical assistance to small communities, but we share that approach through our outreach efforts to other consultants and technical assistance providers so that there can be greater impact across the water sector. Small water systems have a greater volume of needs than the technical assistance providers can currently meet. The more we can share our good ideas and best practices with others, the better these communities will be served.

1.5 Organizational Chart

Water Finance Assistance is a simple, two-person partnership:

Director

Associate Director

Glenn Barnes is the main point of contact for Task Order Offer Requests.

1.6 Water Finance Assistance does NOT have any potential conflict of interest between the Offeror and any State employee who functions or has responsibilities in the review or approval of the undertaking or carrying out of the Contract.

1.7 Water Finance Assistance has NOT, in the last five (5) years, filed (or had filed against it) any bankruptcy or insolvency proceeding, whether voluntary or involuntary, or undergone the appointment of a receiver, trustee, or assignee for the benefit of creditors.

1.8 There are NO pending Securities Exchange Commission investigations involving Water Finance Assistance.

1.9 Water Finance Assistance has NO open or pending litigation initiated by us or where we are a defendant or party in any litigation that may have a material impact on our ability to deliver the contracted Services.

1.10 Water Finance Assistance has NO open or pending litigation initiated by us or where we are a defendant or party in any litigation with a public sector client.

1.11 Water Finance Assistance has had NO public sector contracts terminated for cause or convenience in the past five (5) years.

1.12 Water Finance Assistance has NO criminal or civil offenses.

2.0 Company Experience

2.1 If Offeror is proposing to provide services for Item #3 - Capacity Development Training (technical, managerial, financial), from Table 1, on page 3, Offeror shall respond to the following question #1:

Question 1:

ADEQ offers technical, managerial and financial training through its Capacity Development program. Does your company have experience providing training, in person and/or virtual, on topics of water system operations and management? What subject matter are you offering to train on and what is the level of expertise of the proposed trainer(s)?

Offeror Response:

Glenn Barnes and Elora Arnette have extensive experience developing and delivering training to water and wastewater professionals. Each has at least 1,000 hours of training experience working with utility staff, boards, town managers, clerks, budget staff, volunteers, and anyone else who supports the operations of small water systems including providing training to small, non-governmental water systems. Both Mr. Barnes and Ms. Arnette focus on building the financial and managerial capacity of small water systems, and the vast majority of their technical assistance work is with small, rural, Tribal, and disadvantaged communities. Water Finance Assistance has provided in-person training as well as virtual training. All our trainings are highly interactive, with discussions and hands-on exercises.

Water Finance Assistance can provide trainings on the following subject matters. Each training will be led by either Mr. Barnes or Ms. Arnette who are subject matter experts on the topics and have presented on them previously:

· Rate Setting (Barnes)

· Budgeting and Financial Management (Barnes)

· Leadership Development (Arnette)

· Customer Communications (Arnette)

· Communicating Effectively with Your Board (Arnette & Barnes)

· Asset Management (Barnes)

· Water Loss Control (Barnes)

· Ethics (Arnette)

· Customer Service (Arnette)

· Emergency Response Planning & Cybersecurity (Barnes)

· Personnel Management (Arnette)

· Performance Management (Arnette)

· Technical Writing (Arnette)

Mr. Barnes has been providing trainings to small water systems across the country for the past 18 years and has led more than 100 workshops for small drinking water staff going back to his days with the Environmental Finance Center Network and with RCAP. He has provided rate setting training in Arizona in the past. Ms. Arnette was responsible for employee development at the water utilities she worked for prior to joining Water Finance Assistance. She trained internal utility staff on several topics and also offered wider professional trainings through the Georgia Association of Water Professionals. Both Ms. Arnette and Mr. Barnes are frequent speakers at regional and national conferences.

2.2 Project Descriptions:

For each deliverable from Table 1, on page 3, that the Offeror is proposing to provide:

Submit up to three (3) examples of your previous work as well as years of experience providing this deliverable. An example might cover more than one deliverable depending on the project. At the top of each page, include the deliverable “Item #(s)” and “Deliverable Description(s)” title from the table below. Limit each example to one (1) page. Use font size 10 pt or greater.

Each example shall include the following information:

a. Project Name;

b. Project Location (City and State);

c. Estimated Project Cost;

d. Project Begin and End Date;

e. Brief Description of the Project; and

f. Names of the project manager and key personnel that worked on the project if they are currently employed with your firm.

Offeror Response:

Item #14: Rate studies, rate reviews, rate cases

Rate Study for Town of Spindale Spindale, NC Project cost: $22,000 Project Dates: October 2023 to ongoing

Project Description:

The Town of Spindale, NC requested a rate study in conjunction with an update to its asset management plan. The Town had failed to cover its utility costs with utility revenues for several years. The rate study included the following steps:

The proposed rate study includes the following steps:

· Assessing the Utility’s Current Financial Health: Uses utility data on revenues and expenditures to measure the financial health and sustainability of the utility, looking at trends over the past 5 years, including the utility’s ability to pay required expenditures and whether financial health is improving or declining.

· Projecting Expenses: Anticipates the utility’s expenses for the next three to five years, including day-to-day operating expenses, capital projects, debt payments, and planned contributions to utility reserve funds. The analysis comes up with a single annual financial target for the utility to reach through its rates and other revenues.

· Projecting Revenue from Sources Other Than Rates: Anticipates the utility’s revenues from sources other than rates for the next three to five years such as connection fees and rental payments. This total will then be subtracted from the annual financial target to cover expenses to determine the needed revenue from rates.

· Rate Setting Priorities: Identifies the priorities of the utility leadership and management that will be used to decide on the best rate option, such as having stable revenue each month, encouraging customer conservation, promoting economic development, and addressing affordability concerns.

· Multiple Rate Options: Designs 2 to 4 rate options for the utility that will generate the appropriate level of revenue for the utility based on projections of the number of utility customers, the volume of drinking water sold or wastewater collected, and the bill payment rate. The options could include small tweaks to the utility’s current rate structure and pricing or a significant overhaul of how rates are designed. Each option will describe the rate setting priorities achieved and the bills example customers can expect.

· Affordability: Assessing the ability of customers to afford the proposed rates, looking at the community demographics and current customer bill payment patterns.

· Presenting Results to Utility Decision Makers: Preparing a written report of findings and presenting them to utility leadership and management, with time to answer questions and make any final additions to the report based on the feedback of the leadership.

The analysis found that the low-income residents of the town were subsidizing utility service for local industry. Based on the analysis, the board voted to raise rates by 18 percent but raised rates more for industrial customers than for residential customers. Water Finance Assistance is wrapping up its final report to the town with additional recommendations for rate changes in the future and opportunities to increase utility revenue including an inter-local agreement with the neighboring town.

Glenn Barnes managed this project, and Elora Arnette worked on this project.

Item #14: Rate studies, rate reviews, rate cases

Rate Setting Project for the Omaha Tribal Utilities Authority Macy, NE Project cost: $20,000 total for the two rounds of the project Project Dates: January 2020 to September 2022

Project Description:

In 2020, Water Finance Assistance was asked to provide a rate study to the Omaha Tribal Utilities Department, the small water system that serves the Omaha Nation of Nebraska and Iowa. This project is an example of how one line of inquiry—What should our rates be—turned into a larger project to improve the long-term sustainability of the utility. The Omaha Tribal Utilities Department serves a low-income community. They had been charging a flat rate for unlimited water and usage to all residential customers. The utility had installed AMI meters with federal funding and was interested in shifting their customers from a flat rate to a rate structure that included both a monthly base rate and a volumetric rate. The utility director believed that it was important to implement a volumetric rate so that customers would be more careful with their water consumption. The utility at the time was facing severe drought. Water Finance Assistance assessed the affordability of the community and found that the majority of residents were low-income households living in subsidized Tribal housing that were already struggling to meet basic necessities. Any potential rate increase would need to balance long-term financial sustainability with the economic reality of the utility’s customers. The utility granted Water Finance Assistance access to its AMI system so that usage data could be analyzed. A significant number of households likely had leaves. Several households were using between 50,000 and 100,000 gallons of water a month. households had ongoing issues of leaks. Further analysis of the usage data showed that customers were using water at much higher rates overall during the summer months. Many customers were using water for outdoor irrigation or to fill small swimming pools. Implementing a volumetric rate without first addressing these high water uses would cause many customers to have astronomically bills that they could not afford. It became clear that it would be necessary to pass a small increase in the current flat rate to keep the utility solvent but that a larger project was needed to eliminate unnecessary water use for the community. Water Finance Assistance analyzed closely the usage of every customer in the system to determine customers that likely had unnecessary water use, which can include outdoor irrigation, not repairing leaks, and having outdated toilets, shower heads, and other fixtures within the home. The goal of this project was to come up with programs for the utility to reduce household conservation before moving forward with implementing the volumetric rate. Analysis showed that all three primary drivers of unnecessary water use were present. Water Finance Assistance recommended that the utility hire a plumber to fix leaks in customer homes free of charge. The residents of this community could not afford their own plumbing services, and most were renters who did not have the authority to make such repairs even though they were paying the water bill directly. We further recommended that the utility inform customers of their actual usage every month before instituting a and to show what the usage should be for necessary water use, for example 50 to 60 gallons per person per day, based on the size of the household. They would also show customers of what their bill would be if a volumetric rate was passed. Water Finance Assistance returned to the Omaha community to present all these findings to the utility board. The simple question of how rates could be adjusted to cover future expenses under a significant household water conservation problem and several innovative programs to address household conservation.

Glenn Barnes managed this project.

Item #14: Rate studies, rate reviews, rate cases

Affordability Assessment for Opelika Utilities Opelika, AL Project cost: $20,000 Project Dates: January 2020 to September 2022

Project Description:

Water Finance Assistance worked with Opelika Utilities of Alabama starting in 2020. Opelika Utilities is not a small system. They serve about 50,000 people through 15,000 service connections. An engineering firm had been contracted to provide a rate study to Opelika Utilities, but their board was concerned about customer affordability when implementing proposed rate changes. Water Finance Assistance was asked to provide an affordability assessment. The first stage examined the demographics of the community, including household income, the number of customers who are employed, and the typical expenses incurred by a low-income household. Nothing in the demographic analysis stood out as an obvious problem. Opelika Utilities was right around state and national averages for 20th percentile income, median household income, participation in the SNAP program, participation in social safety net programs, number of customers working full-time, and other key metrics. Every community has some customers who struggle to pay their bills, but it did not seem like Opelika Utilities had a significant number of these customers.

It was odd then that the analysis also showed that one out of every six customer bills was not paid on time. Water Finance Assistance commenced an innovative analysis of customer bill payments to understand why so many were being paid late. We looked at every customer bill for a 2-year period before the pandemic to determine if it was paid on time, paid after the late notice was issued, or paid after the shutoff notice was issued and how long it took for payment to be made. Patterns emerged in the data. The analysis found that almost half of customers were late on at least one payment per year, but most paid upon receiving their late notice. Our conclusion was the biggest issue for customers at this utility was customers forgetting to pay the bill. It was recommended that the utility email or text customers when bills were due and to promote its autopay program more to customers.

The analysis did find 115 customers that were shut off multiple times per year for multiple days at a time. Our conclusion was that these customers had ongoing affordability issues. We presented the list of specific customers to the board. They had been skeptical at the beginning of the process that there was an affordability issue with their water rates, but they took that list and instructed staff to work with each customer on payment assistance. The customers were first referred to local social agencies and later to the LIHWAP program. Unlike the demographic analysis that indicates in general if customers at the utility may have issues paying their bills, this analysis produced a list of specific customers with affordability challenges.

Water Finance Assistance has replicated this type of analysis for other communities including small communities. Any community with accurate billing data could receive this analysis, and it is a helpful part of a rate study. This analysis suggests the most appropriate ways for a utility to increase customer bill payments which improves utility financial health and improves connections between the utility’s staff and its customers.

Glenn Barnes managed this project, and Elora Arnette worked on this project.

Item #3: Capacity Development Training (technical, managerial, financial)

Utility Finance, Asset Management, and Water Loss Trainings Location: Phoenix, AZ and remote Project cost: $17,000 per round of training Dates: July 2022 to present

Project Description:

For the past several years, Water Finance Assistance has co-taught a multi-day workshop on utility finance, asset management, and water loss control. We are responsible for the content on asset management. The goal of the training is to help the small communities in attendance become more financially sustainable over time. The utility finance portion is divided into two days. The first day looks at the expenses of the utility, how to prepare an appropriate budget, and how to track expenses throughout the year to ensure that the budget is relatively accurate. The second day of the training looks at utility revenues, including how to structure and price rates, the impact that different rate structures have on different levels of usage, and available federal funding programs for infrastructure. On the third day of the training, we lead sessions on water loss control.

Water Finance Assistance is responsible for the development of the training content including interactive exercises, and its delivery. To make the three-day course more hands-on for attendees, Water Finance Assistance and its co-instructor developed an example small community called Grant Valley that is used in all aspects of the course. Attendees begin by looking at Grant Valley's budget and financial the course. Attendees begin by looking at Grant Valley's budget and financial statements, actual expenditures, asset inventory, rate structure, and water audit. Having a relevant example community helps attendees practice the skills being taught in the class and makes the content more relatable. Working through the exercise also gives attendees an opportunity to share how their own experiences are similar or different from Grant Valley. Any workshop put on by Water Finance Assistance under this effort would contain similar example communities.

Water Finance Assistance utilizes knowledge checks throughout the workshop to measure attendee learning. These include poll questions to ensure that attendees are understanding important terms and concepts. We also use innovative formative assessments such as an matching exercise for types of non-revenue water, a word search, and a crossword puzzle.

Attendees are asked to complete a pre-test and post-test to measure learning. Every time the course has been taught, scores in general and for each individual attendee are higher on the post-test. The course was initially taught on line during the COVID pandemic and then was moved to in-person starting in 2023. Water Finance Assistance first developed exercises that were appropriate for online delivery and then changed the exercises to be more appropriate for in-person delivery. The course continues to be improved after every session held. The instructor takes attendee feedback as well as performance on formative assessments to tweak content to make it more understandable for attendees.

This is an example of the type of training that Water Finance Assistance could provide under this contact and an example of how multiple, related finance and management topics can be blended into a single workshop, with a common example utility used throughout.

Glenn Barnes managed this effort, and Elora Arnette contributed to content creation.

Select each of the item(s) that your firm is proposing to provide from the Table 1 below:

3.0 Financial/Accounting Information

After the proposal due date, Offeror must provide evidence of financial stability and capability to fund all costs associated with providing the relevant Services throughout the term of the Contract. See details as provided in RFP Solicitation Special Instructions to Offerors, Section 7.0 Financial Stability. DO NOT submit financial information with Offer at this time.

4.0 Certificates/Licenses

Submit copies of all applicable certificates and licenses that support Offeror’s ability to provide the proposed services, including any Arizona required business license(s) to provide these services. At a minimum, this shall include all certifications and licenses referenced in the Solicitation Attachment 8 - Organization Profile.

5.0 Proposed Project Members and Organization

Offeror to complete an Attachment 6 – Key Personnel form to identify each Key Personnel.

6.0 Subcontractors

Offeror to complete Attachment 9 – Proposed Subcontractors to identify Proposed Subcontractors to be utilized to perform services within a resultant contract.

Request for Proposal

Solicitation No. BPM006379 Capacity Development/Technical Assistance to Small Public Drinking Water Systems

Arizona Department of Environmental Quality (ADEQ) 1110 W. Washington Street Phoenix, AZ 85007

Solicitation Attachment – Experience and Capacity Response | Revision No. 1 | Revised 11-22

Solicitation Attachment – Method of Approach | Revision No. 1 | Revised 11-22 image1.jpg