Utility Expense & Cost Consultant Selection
D~~~E
~</4.-~
MEMORANDUM
I-""'~
July 11, 2006
TO:
The Honorable Mayor and City Council Members
FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Consultant Selection for the Utility Expense and Cost Analysis
City Engineer Gus Psihoyos is recommending the selection of Springsted, Inc. for the
Utility Expense and Cost Analysis.
The City of Dubuque franchise agreements with the gas and electric utilities provide for
a franchise fee of 2% of the gross receipts derived from the utility's sale of its services
to its customers in the City.
The Iowa Supreme Court in Kragnes v. City of Des Moines held that an Iowa city has
the authority to assess a franchise fee expressed as a percentage of the gross receipts
derived from the utility's sale of its services to the public, so long as the charge is
reasonably related to the reasonable costs of inspecting, licensing, supervising, or
otherwise regulating the activity that is being franchised. The Supreme Court also said
that, "In fixing upon the fee, it is proper and reasonable to take into account, not the
expense merely of direct regulation, but all the incidental consequences that may be
likely to subject the public to cost in consequence of the business licensed. In some
cases, the incidental consequences are much the most important, and indeed, are what
are principally had in view when the fee is decided upon... And all reasonable
intendments must favor the fairness and justness of a fee thus fixed; it will not be held
excessive unless it is manifestly something more than a fee or regulation."
I concur with the recommendation and respectfully request Mayor and City Council
approval.
(f2~1 fu~ /J1J~
Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Gus Psihoyos, City Engineer
DU'~~E
~ck~
MEMORANDUM
July 10, 2006
FROM:
Michael C. Van Milligen, City Man;i. ~e!
Gus Psi hoyos, City Engineer ~ ~-:::>/
Consultant Selection for the Utility Expense and Cost Analysis
TO:
SUBJECT:
INTRODUCTION
The purpose of this memorandum is to request that you recommend Springsted, Inc. to the
City Council for the Utility Expense and Cost Analysis and that you request City Council
authority to negotiate an agreement, subject to City Council approval, with Springsted, Inc. for
the Utility Expense and Cost Analysis.
BACKGROUND
The City of Dubuque franchise agreements with the gas and electric utilities provides for a
franchise fee of 2% of the gross receipts derived from the utility's sale of its services to its
customers in the city.
The Iowa supreme court in Kragnes v. City of Des Moines held that an Iowa city has the
authority to assess a franchise fee expressed as a percentage of the gross receipts derived
from the utility's sale of its services to the public, so long as the charge is reasonably related to
the reasonable costs of inspecting, licensing, supervising, or otherwise regulating the activity
that is being franchised. The supreme court also said that, "In fixing upon the fee, it is proper
and reasonable to take into account, not the expense merely of direct regulation, but all the
incidental consequences that may be likely to subject the public to cost in consequence of the
business licensed. In some cases, the incidental consequences are much the most important,
and indeed, are what are principally had in view when the fee is decided upon. . . And all
reasonable intendments must favor the fairness and justness of a fee thus fixed; it will not be
held excessive unless it is manifestly something more than a fee or regulation."
The City issued an RFP to qualified professional consulting firms to conduct the Utility
Expense and Cost Analysis (Analysis) for the City of Dubuque to determine whether the City's
utility franchise fees are consistent with the Kragnes decision. The Analysis will identify the
City's administrative expenses in exercising its police power in regulating the utilities as well as
all incidental consequences that may be likely to subject the publiC; to cost in consequence of
the business licensed.
The Analysis will account for negative disruptions of economic and transportation activities, as
well as any adverse environmental impact of public right-of-way work zones. The public is
entitled to timely and cost-effective completion of preventative maintenance, replacement, or
renovation paid for by the intruding party. The Analysis will include degradation, repair,
disruption, and administnMive management activities such as planning, record-keeping,
issuance of permits, enforcement and inspections of right-of-way construction.
It is anticipated that the time frame for the Analysis will be approximately ten weeks following
the signing of an agreement with the consultant selected. The selected consultant will be
expected to complete the scope of work within the specified time frame, under the general
direction and coordination of the City of Dubuque Engineering Department.
DISCUSSION
In response to the RFP, the City received four proposals:
1. Ashpaugh & Sculco (Winter Park, FL);
2. Seidman College of Business (Grand Rapids, MI);
3. Maximus, Inc. (Dallas, TX); and
4. Springsted, Inc. (SI. Paul, MN);
The selection committee comprising Barry Lindahl, City Attorney; Ken TeKippe, Finance
Director; Dawn Lang, Budget Director; Gus Psihoyos, City Engineer; Don Vogt, Public Works
Director; and Steve Sampson Brown, Project Manager, reviewed the proposals and
interviewed each firm.
Following the interviews, the committee determined that Springsted, Inc. has the experience
and expertise to best meet the objectives of the Analysis for the City of Dubuque.
RECOMMENDATION
Based on the review of the proposals, presentations, and interviews the review committee
recommends that the City negotiate a contract with Springsted, Inc. to conduct the Analysis.
BUDGET IMPACT
Springsted, Inc.'s fee proposal is approximately $85,000. The fee includes approximately
$5,000 for out-of-pocket incidental expenses such as travel, copies, and overnight deliveries.
Also, $2,500 is included for a software program so the City of Dubuque will be able to update
the Analysis.
The funding for this study would come from the $289,000 available in the Eagle Point Rock
Bluff Stabilization Capital Improvement Program budgeted item.
ACTION REQUESTED
I respectfully request that you recommend Springsted, Inc. to the City Council for the Utility
Expense and Cost Analysis and that you request City Council authority to negotiate an
agreement, subject to City Council approval, with Springsted, Inc. for the Utility Expense and
Cost Analysis.
Prepared by Steve Sampson Brown
cc: Barry Lindahl, City Attorney
Dawn Lang, Budget Director
Ken TeKippe, Finance Director
Don Vogt, Public Works Director
Steve Sampson Brown, Project Manager