Agmt24 HF&H Consultants, LLC Amendment No.2

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REV: 10-09-24 MI program, and any relevant master plans. Consultant shall prepare the financial plan as an Excel spreadsheet model to provide the City with a means to edit the model when annual budgets and capital expenditures change each year. Consultant shall develop the models to be as simple as possible and with input from the Public Works Director or their designee(s) to ensure that they meet the City’s needs. Models shall have no licensing restrictions. For specific elements: •Expenses: Consultant shall tailor expense calculations to reflect variations in staffing levels, salaries, operating expenses and other City requested inputs. Analysis shall include San Francisco Public Utilities Commission (SFPUC) cost to purchase water, taking into consideration SFPUC projected increases, recent drought conditions, reduced water allotment from SFPUC, and potable water use reduction and conservation goals identified in the City’s Urban Water Management Plan. Expenses shall also include debt service and software. •Revenues: Consultant shall calculate and project rate revenue based on the current rate structure and projected growth in units of service (e.g., hundred cubic feet (hcf), service connection size). •Reserves: Consultant shall integrate current reserve funds into the model and evaluate existing policies, as well as the need for adding, deleting, or redefining the funds. Consultant shall confirm the reserve level rules for modeling the rate increases, which will either reflect current policies or recommended policies. Consultant shall assess the City’s reserve and consider creating a new reserve target and potential rate stabilization fund. •Capital Improvement Projects: Consultant will generate a 10-year capital improvements schedule based on City staff information to determine the annual cash-funded capital expenditures per fiscal year. •Future Considerations: Consultant shall evaluate and account for changes in accounts due to growth and water demand pattern fluctuations, such as from water shortage concerns and new development. City staff shall be able to adjust future assumption inputs in this model. Deliverables: Consultant shall provide a 10-year water and recycled water financial model that includes revenue requirement, reserves, reserve policies, debt service coverage, and forecasted revenues. Consultant may also consider creating a new reserve target and potential rate stabilization fund. Task 6c. Cost-of-Service Analysis Consultant shall prepare a cost-of-service analysis so that revenue requirements are distributed among the customer classes (which includes, but is not limited to, single family, commercial, ADUs, fire service connections, and construction meters) and conform to the rate structures identified for each customer class. Consultant shall identify the unit costs of service and proportionate share of the overall revenue requirement for each class. Prior to preparing the cost-of-service analyses, Consultant shall present up to three alternative rate structures for the consideration of the Public Works Director or their designee(s). In presenting these alternatives, Consultant shall confirm whether the City’s customer billing system has the ability to charge the rates. ATTY/AGR.2024/Amend. No. 2/HF&H Consultants, LLC (Water Rate and Capacity Fee Study) (Page 5 of 13)