TO:
Honorable Mayor and Members of the City Council
THROUGH:
Talyn Mirzakhanian, City Manager
FROM:
Joe DeFrancesco, Interim Public Works Director
Jeff Page, Utilities Manager
SUBJECT:Title
Consideration of a Resolution Approving a Professional Services Agreement with Raftelis Financial Consultants, Inc. for Comprehensive Water and Sewer Rate Study Services at a Cost Not-to-Exceed $108,023 and Appropriating $54,011.50 from the Water Fund and $54,011.50 from the Sewer Fund for the Project (Unbudgeted) (Interim Public Works Director DeFrancesco).
A) ADOPT RESOLUTION NO. 26-0005
B) APPROVE APPROPRIATION
Body
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RECOMMENDATION:
Staff recommends that the City Council:
A. Adopt Resolution No. 26-0005, awarding a professional services agreement with Raftelis Financial Consultants, Inc. for comprehensive water and sewer rate study services at a cost not-to-exceed $108,023.
B. Approve an appropriation of $54,011.50 from the Water Fund and $54,011.50 from the Sewer Fund for the Study.
FISCAL IMPLICATIONS:
Funding for the comprehensive water and sewer rate studies is available through the Water and Sewer enterprise funds. The studies are unbudgeted due to the timing of approval for the rate studies at the May 3, 2025, regular City Council meeting and the timing of the budget approval process. The cost of the Study will be split $54,011.50 in the Water Fund and $54,011.50 in the Sewer Fund.
The selected consultant’s cost of $108,023 represents the lowest total cost proposal received and includes services that enhance community engagement and capital planning.
BACKGROUND:
The City of Manhattan Beach provides potable water through a combination of imported water purchases and local groundwater production. The City also operates a wastewater collection system that conveys flows to a regional treatment facility. Prior rate studies for the Water and Wastewater utilities were completed in 2022 and 2023, respectively. Purchasing and operational costs have since changed due to higher wholesale water costs, delayed groundwater treatment implementation, declining water demand, and increasing capital and regulatory requirements.
In May 2025, City Council approved a wholesale water cost pass-through adjustment to address unanticipated increases in imported water costs. At that time, staff advised that existing adopted rate increases would not be sufficient to fully fund operations, capital programs, and reserve requirements over the long term, and that updated water and sewer rate studies would be necessary.
DISCUSSION:
On November 5, 2025, the City issued a Request for Proposals (RFP No. 1342-26) for a Comprehensive Water and Sewer Rate Study. Three proposals were received by the December 2, 2025 deadline from:
• Raftelis Financial Consultants, Inc.
• Black & Veatch Corporation
• Baker Tilly Advisory Group, LP
Proposals were evaluated and ranked by an evaluation committee of City staff according to the following selection criteria:
• Understanding and Scope
• Firm Qualifications and Experience
• Staff Qualifications and Availability
• References
• Stakeholder Engagement
• Methodology
• Cost
Cost proposals ranged from $108,023 to $125,000.
Firm Evaluations:
Raftelis Financial Consultants, Inc. (Raftelis) submitted the lowest cost proposal and demonstrated the strongest overall alignment with the City’s needs. In addition to meeting all RFP requirements, Raftelis submitted a proposal that includes:
• Expanded community outreach efforts, including additional public engagement support; and
• A Capital Improvement Program (CIP) survey, to evaluate the City’s water and sewer capital improvement plans against asset management best practices, regulatory requirements, project risks and costs, and technology needs to ensure projects are appropriately prioritized, cost-effective, and aligned with long-term service levels and renewal targets.
Raftelis also brings other advantages, including prior completion of the City’s water rate study, a working financial model familiar to staff, strong Proposition 218 expertise, and local availability for in-person meetings.
Black & Veatch Corporation (Black & Veatch) presented a strong technical proposal with extensive engineering-based financial planning expertise and familiarity with the City through its completion of the 2023 Sewer Rate Study. Their methodology is comprehensive and well-suited to complex utilities; however, their proposal did not include the additional outreach enhancements or CIP survey offered by Raftelis and was submitted at a higher total cost.
Baker Tilly Advisory Group, LP (Baker Tilly) submitted a well-organized proposal with strong financial advisory credentials and stakeholder engagement experience. However, their proposal relied more heavily on national experience, included fewer California-specific rate study examples, and was the highest-cost proposal received.
PUBLIC OUTREACH:
The RFP was publicly advertised on the City’s website and OpenGov. Upon award of the agreement, staff will coordinate with the selected consultant to implement the enhanced outreach program, including public meetings and informational materials to ensure transparency and meaningful community engagement throughout the rate-setting process.
ENVIRONMENTAL REVIEW:
The City has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary.
LEGAL REVIEW:
The City Attorney has approved the agreement as to form.
ATTACHMENTS:
1. Resolution No. 26-0005
2. Agreement - Raftelis Financial Consultants, Inc.