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SR-20080513-8A (2)~~r ~;tYof City Council Report Santa Monica City Council Meeting: May 13, 2008 Agenda Item: ~~ To: Mayor and City Council From: Joan L. Akins, Acting. Director - Environmental and Public Works Management Carol Swindell, Director of Finance Subject: Five-Year Rate Schedules for Water and Wastewater Recommended Action Staff recommends that the City Council: 1. approve afive-year plan to increase water rates; 2: approve afive-year plan to increase wastewater rates; 3. approve a revision of the rate structure for both water and wastewater to a commodity-only structure to promote water efficiency and conservation; 4. approve a discounted low income customer water rate for the first tier usage of water; 5. approve a discounted low income customer wastewater rate for usage corresponding to the first tier water consumption; 6. approve enhanced funding levels for capital, operating, and rate stabilization reserve funds for both water and wastewater; and 7. adopt a resolution setting a public hearing on July 8, 2008, in accordance with Proposition 218, to consider water and wastewater-rate increases. 1 Executive Summary At a study session with Council on April 22, 2008, staff presented updated financial projections and alternate scenarios for water and wastewater rates. Slx options were presented for water rates and five options were presented for wastewater rates. The discussion focused on staffs recommended option, with and without aone-time cash infusion from the MtBE settlement funds. Council directed staff to return with what was reflected as option 5 for water and option 4 for wastewater, which preserved the MtBE settlement funds, changed the rate structure to be all commodity use based, built a reserve over time and continued the pay-as-you-go capital financing model. Following this direction, the recommended rates are as follows: WATER FY 08/09 FY 09/10 FY 10/11 FY 11/12 FY 12/13 Presented A ril 22 11.5 10.5 10.5 10.5 9 Corrected 11.0% 10.5% 10.5% 10.0% 10.0% WASTEWATER FY 08/09 FY 09/10 FY 10111 FY 11/12 FY 12/13 Presented A ril 22 18 18 15 8 5 Corrected 18.0% 18.0% 15.0% 9.0% 4.0% It should be noted that these rates are slightly different than the percentages shown in the April 22 report. The attached consultant reports on April 22 included the correct tables. Background In a City Council study session on May 17, 2005, staff presented information addressing the status of the fund balances for the Water and Wastewater funds. Specifically, expenditures in both of these funds were outpacing revenues. Options were provided in the study session to balance expenditures and revenues. A subsequent report to Council on June 21, 2005, provided additional information regarding expenditures and revenues for the Water fund and presented additional options for bringing expenditures and revenues into balance. Staff indicated in the June 21, 2005 report that consideration of wastewater rate adjustments could be deferred until FY 2006- 2007 or FY 2007-2008 depending on actual costs and revenues during the ensuing period. 2 Council direction to staff received on June 21, 2005 included: • Implement a 6% increase to water rates for FY 2005-2006 that would balance revenues and expenditures for one year only; • Conduct a water rate study to finalize the additional rate increase amounts required to balance the fund, including examining a restructuring of the tiered system to provide a conservation incentive to reward customers who voluntarily conserve water; • Utilize a cost of service approach. in any new rate design; and • Review practices and procedures to assess efficiencies throughout the operational functions of the Division. Concurrent with the commissioning of a water rate study in 2007, staff also commissioned a wastewater rate study to review the revenue requirements necessary to meet required wastewater operating and capital expenditures as well as existing debt service obligations. Existing Wastewater Rates Established pursuant to a 1996 rate study, the existing wastewater rate structure comprises a fixed service charge plus a commodity charge. The rate structure has remained unchanged since 1996; however, an annual CPI-based rate increase has been in effect since 2001. The fixed service charge component is assessed to-each customer account based on water meter size, and the commodity charges are based on estimated wastewater flows during the bi-monthly billing period. A discharge factor is applied to the metered water consumption to represent the portion of water usage returned to the wastewater system. The discharge factors range from 51 % for single family residential accounts, to 95% for multi-family residential accounts with more than 4 units. Typically, single family residential users exhibit the greatest level of outdoor water usage which is not returned to the wastewater system. All non-residential customers are assigned a discharge 3 factor of 89%. Commodity charges for non-residential customers vary depending on type of business. In a study session with Council on May 8, 2007, staff presented various options for both water and wastewater rate and structure modifications. A five year plan was presented for each, with water rate increase recommendations by staff comprising an 11% annual rate increase for water, and a wastewater rate increase plan of 30%, 25%, 20%, 10%, and 0%. Structural modifications for each were also suggested. Council was informed that alternative information was pending at the time and that staff would return with updated information, and very likely lower rate increase options at a later date. At a follow-up study session with Council on April 22, 2008, staff presented updated financial projections and alternate scenarios for water and wastewater rates. Two updated options each were presented for water and wastewater rates (each presented with and without a one time cash infusion alternate). A change to a commodity-only rate structure was recommended, in addition to a recommendation for enhanced reserve levels in order to provide increased flexibility in the event of unforeseen financial challenges. Council directed staff to return with the recommendation to approve Option 5 for water and Option 4 for wastewater, as described in detail herein, with the proposed change to a commodity- only rate structure and the enhanced reserve levels. Existing Water Rates The City provides water service to three customer types: single-family, multi-family and non-residential. The current water rate structure was adopted in 1996 to provide equity between customer types. and among customers within a class. There were no rate changes in 1997 or 1998. In 1999, a resolution to annually increase rates by the actual Consumer Price Index (CPI) increase was adopted and has been implemented with each annual budget. A 6% increase was approved by Council for FY 2005/06. 4 The existing water rate is structured so that every single family, multi-family and non- residential customer pays a bi-monthly service charge based on the size of the water meter. The rates do not differ by customer class. Customers are also charged a commodity, or usage rate based on the quantity of water used in each two-month billing period. There are three levels, or tiers, of the commodity rate, the purpose of which is to provide financial incentives for water conservation. As an example, for single family customers, Tier 1 rates are charged on the first 13 hundred cubic feet (HCF: each HCF represents 748 gallons of usage). Tier 2 rates are charged for usage from 14 to 126 HCF, and Tier 3 rates are charged on any usage above 127 HCF, which very few customers reach. Discussion Water Rate Study A water rate study was conducted for the city by The Reed Group, Inc. (Attachment A) Among the objectives of the study were to present a strategy for meeting the utility's financial obligations for the five year planning period (FY 2007-2008 through FY 2011- 2012) and to assess changes to the rate structure in keeping with the city's sustainability goals to encourage water conservation. The study confirmed that the cost of operating and maintaining the water system and replacing and upgrading existing facilities exceeds current and projected revenues. The current practice of applying an inflation-only (CPI) rate increase annually will result in all reserve funds being depleted by FY 2008-2009. Exhibit I summarizes the major categories of cost within the water utility based on the FY 07-08 budget. The two largest cost categories are Metropolitan Water District (MWD) imported water purchase costs and labor costs. Both cost categories have exceeded the pace of inflation. Furthermore, the third largest category of cost (capital improvement projects) should not be correlated to inflation, but to the long-term replacement needs of the water system which greatly exceed the ongoing inflation rate, particularly due to construction cost increases in recent years. The 15% shown for capital improvement projects in Exhibit I represent current planned annual replacement of the water system and miscellaneous 5 other projects. Amore in-depth examination of long-term water infrastructure upgrade and replacement CIP needs is planned to be conducted during FY 2007-2008. Water Fund costs also includes funding for programs to increase water efficiency and water re- use by residents, businesses and institutions within Santa Monica. The analysis confirms that rate increases above the CPI factor are necessary to balance revenues and expenses, and to maintain adequate reserve fund balances over the five year planning period. Exhibit I Water System Costs, Capital and Operating, by Category 30% 25% 20% 15% 10% 5% 0% c~~~5 y~5 o~~G~ zc~y GoywS a ~ ~Oe Q°~~ o'`e~ aye c~~~ 4 e ~~~ wee ewe z~~~ ~°a Q~~~ as ~~ ~o° ~' i.~~ gJQ zt O~Q\o~~ 9 Q~\\~Q~e`~a \~`yt~2 ~~yG Q~G` O Ga ~ P~ 5 J~Q~ ~~~y OJ ~'~ s`¢y Q-~°~ acs' a JQ t ~~` c a~~ oa~~ Sync ati~~ Q-~e~ ~J o``e 4r~ G~2 ~~`~ e` -la`a Jeri G~~ Financial Strategy Options -Water As an enterprise fund, the City's water utility is expected to be financially self sufficient. Generally, revenues should match annual expenditures. Additionally, the city has to date maintained target levels for reserve funds to meet unforeseen operating expense cash flow needs (operating reserve: $1.3 million target level = 10% of O&M), to provide a buffer in the event of a drought or other water supply emergency circumstance which might have adverse affects on revenues (rate stabilization reserve: $1.0 million target 6 level), and to provide a buffer for the variability of capital program expenses (capital reserve: $1.275 million target level). As further discussed below, target reserve levels have since been revised. With the goal of maintaining financial reserves at acceptable levels throughout the planning period, four rate options were initially developed as alternates to the baseline scenario of continuing with inflation only increases. These options were presented at the May 8, 2007 Council study session. The following options are summarized in Table 1: • Baseline -apply an annual inflation-only (CPI) rate increase; reserve funds are exhausted and fund balance goes negative ih FY 2008-2009. • Option 1 -apply annual increases in .water rates to cover all financial obligations and maintain all reserves at or above target levels each year of the planning period. • Option 2 -utilize the $1 .0 million rate stabilization reserve to offset a portion of required rate .increases and provide additional time to correct the financial imbalance. The rate stabilization reserve will be reestablished to the minimum target level by the end of the planning period. Use of the rate stabilization reserve in this manner is consistent with its intended purpose. • Option 3 -utilize the $1.0 million rate stabilization reserve and a portion of the $1.275 million capital reserve to offset required rate increases, providing additional time to correct the financial imbalance. The rate stabilization reserve and the capital reserve are restored to minimum target levels by the end of the planning period. Use of the capital reserve may limit flexibility in accomplishing capital program objectives during this period; however, the size of the present capital program contributes to the projected deficit so the use of the capital reserve would be consistent with its intended purpose. • Option 4 -equalize annual rate increases; rate increases will be consistent across the planning period. All reserves will be reestablished to target levels 7 at the end of the planning period. This option also utilizes the rate stabilization and capital reserves, but to a lesser extent than Option 3 thereby providing additional financial flexibility to respond to unanticipated occurrences during the next five years. TABLE 1 -WATER RATE INCREASE OPTIONS Water Rate Increases Use of Reserves Jul. 2007 Jul. 2008 Jul. 2009 Jul. 2010 Jul. 2011 Baseline Ratesincreased~byCPIonly. 3.2% 2.5% 2.8% 2.6% 2.4% Maintain minimum target Optionl reserves throughout planning 15.0% 9.0% 9.0% 9.0% 6.0% period. Utilize rate stabilization reserve to defer needed rate increases, re- Option 2 establish minimum target reserve 13.0% 9.0 % 9.0 % 11.0 % 11.0% by end of planning period. Utlize rate stabilization and capital reserves to defer needed Option3 rate increases, re-establish 10.0% 10.0% 11.0% 13.0% 13.0% minimum target reserves by end of Tannin eriod. Implement uniform rate increases (of 11%) per year. Rate Opflon 4 stabilization and capital reserves 11.0 % 11.0% 11.0 % 11.0 % 11.0 are used, but are fully replenished b end of lamiin eriod. Option 4 had been recommended as the preferred alternative at the May 8, 2007 Study Session. Subsequently, in light of revised financial information and a review of industry stahdards regarding reserve level targets, the water rate consultant was requested to revise the previously recommended option to address a revised planning horizon and revised reserve fund levels. The revised reserve levels include the following: • An operating reserve of 25% of the water utility operating budget, exclusive of the capital improvement program and transfers to other funds (increase from 10%) • A capital reserve of 50% of annual capital program expenditures (change from a flat $1,275,000) 8 • A rate stabilization reserve of $1,000,000 (no change) In addition, in March 2008, MWD, from which the City purchases approximately 85% of its water, approved a 14% increase in treated water delivery rates effective January 1, 2009. This increase is necessary for MWD in order to purchase additional water supplies in response to a 30% reduction in State Water Project deliveries to Southern California due to court-ordered pumping restrictions in the Sacramento-San Joaquin Delta on top of a long term drought on the Colorado River. Two additional options were developed for water rate enhancements. In option 5, the revised reserve levels were incorporated, along with the recent information concerning the increase in MWD water rates. Option 5a is similar to Option 5, with the added consideration of a one time cash infusion of $2.5 million into reserves. This is a one time cash supplement, and not an ongoing demand. The resulting Options 5 and 5a, presented at the April 22, 2008 Study Session, are detailed in Table 2. Table 2 -Water Rate Increase Options 5 and 5a Use of Reserves July 2008 July 2009 July 2010 July 2011 July 2012 Implement updated reserve level targets; Rate stabilization and Option 5 capital reserves are 11.5% 10.5% 10.5% 10.5% 9.0% used, but aze fully replenished by the end of the Tannin eriod Same as option 5 above, but with one- Option Sa time $2.5 million cash 9.5% 9.5% 9.5% 9.0% 9.0% infusion to reserves in the first year. It should be noted that the percentage increases presented in Tables 1 and 2 address the increases necessary to meet revenue requirements even if the existing rate 9 structure is maintained. The rate study also takes into account the City's sustainability goals and ongoing water conservation efforts. Additionally, all increases indicated in Tables 1 and 2 for FY 2008/2009 are inclusive of the planned CPI increase of 3.7% for FY 08/09. As detailed in the following section, however, a structural modification to the rates is also proposed. At the April 22, 2008 study session, Council discussed the merits of options 5 and 5a and provided direction to staff to return May 13, 2008 with a final recommendation to adopt option 5. Subsequently, staff has determined that the numbers presented for option 5 did not match the numbers .presented in the consultant's rate report. Accordingly, the corrected numbers for option 5 are presented in Table 2a below, and in subsequent Tables 3, 3a, and 4. Table 2a -Water Rate Increase Option 5 (corrected) Use of Reserves July 2008 July 2009 July 2010 July 2071 July 2012 Implement updated reserve level targets; Option 5 Rate stabilization and (corrected) capitalreservesare 17.0% 10.5% ]0.5% 10.0% 10.0% used, but are fully replenished by the end of the plannin eriod Rate Structure Modifications The proposed rate restructuring eliminates the bi-monthly fixed service charge so that the water bill will be entirely based on actual water usage, thereby improving the water conservation incentive at all levels. For residential customers, the existing three tier structure is replaced with a four tier structure. For non-residential customers, a uniform commodity rate is established, applicable to nearly all water use. A second tier for non residential customers applies at the high end of consumption, in order to provide a strong disincentive for excessive water use. 10 The proposed rate structure: • Improves the water conservation incentive. A customer can directly reduce their water bill amount by reducing water consumption. • Continues to protect the affordability of basic levels of water use, even as water rates increase. • Reflects the cost of providing water service to each group of customers. • Maintains rate equity between customer classes and among customers within a class. Recommended Option and Rate Impacts The options presented in Table 1 (not including the baseline) were prepared in advance of reserve fund level enhancements and before considering the impacts of the MWD rate increase in March 2008. When the impacts of the enhanced funding levels and the MWD increases are included, the rate impacts are as indicated in Table 2. As directed by Council, Option 5 (corrected) is recommended for adoption. In Table 3, option 5 (corrected) in combination with the revised commodity-only rate structure, results in a variation of water charge impacts within each customer group proposed for FY 2008/2009. Rather than a uniform increase to all customers, the actual percentage increase will be less for lower consumption users and more for higher consumption users. This is true for the first year only, due to the change in rate structure. In subsequent years, all customer classes will see the same percentage increase in charges. Table 3a demonstrates this uniform percentage increase for all customer classes in the following year (FY2009/2010). 11 Table 3 Proposed Water Rates, FY 2008/2009 Option Bi-monthly Current. 5(corrected), $ meter water use, Rates & w/ Proposed Changer~~ Changer~1 Customer size HCF Structurert~ Stnicfiire notes Single family, annUBl avera a use 3/4" 35 $75.37 $74.89 -$0.48 -0.64% avera e Multi-family, 8 DUs @ avera euse 1 1/2" 80 $181:97 $181.04 -$0.93 -0.51% 10HCF/DU Non-residential, annU81 avera euse 1" 37 $80.19 $86.89 $6.70 8.36% avera e Non-residential, annual avera a use 2" 193 $344.86 $453.25 $108.39 31.43% avera e Non-residential, annual avera euse 4" 709 $1,290.50 $1665.04 $374.54 29.02% avera e (1) U8/U9 CUrfem Structure Wlth GF'I-Only rate increase (2) $ change, % change from current to option 5 (corrected) Table 3a Proposed Water Rates, FY 2009/2010 Bi-monthly $ % meter water use, FY 09/10 ChangerZ~ Changer2~ Customer size HCF FY 08/09rft Pro osed notes Single family,. 10 5% annual avera a use 3/4" 35 $74.89 $83.13 $8.24 . avera e Multi-family, 10.5% 8 DUs @ avera a use 1 1/2" 80 $1$1.04 $200.95 $19.91 10HCF/DU Non-residential, 10 5% annual avera a use 1" 37 $86.89 $96.45 $9.56 . avera e Non-residential, " 10 5% annual avera euse 2 193 $453.25 $503.11 $49.86 . avera e Non-residential, 10 5% annual average use 4" 709 $1665.04 $1848.19 $183.15 . average (1) From Table 3 (2) $ change, % change from FY 08/09 to FY 09/10 Water rate comparison with neighboring communities Table 4 summarizes bi-monthly water bills under the City of Santa Monica's proposed water rates and the current water rates of several neighboring communities. The bill comparison is based on a'/d' water meter and 35 HCF of bi-monthly water usage. The 12 proposed bi-monthly rate of $74.89 compares favorably the current average rate of the other communities surveyed. It should be noted that some of the other communities are considering rate increases in the near future. Table 4 Comparison of Current Single Family Water Bills Bi-Monthly Water Billstti Effective Date City of Beverly Hills $125.66 July 2008 proposed Golden State Water (Culver City) $119.30 January 2008 City of Los Angeles DWP $98.22 Nov -Apr July 2008 proposed $103.40 May -Oct July 2008 proposed City of Glendale $93.77 July 2007 City of Santa Monica $74.89~Zi July 2008 proposed City of Pasadena $73.19 Oct -Mar July 2007 $77.21 Apr -Sep July 2007 City of Burbank $71.61 July 2007 Avera e of Cities Surve ed ts> $95.92 Notes: ~'~ Assumes 3/4" meter and 35 HCF used during atwo-month period cz) Option 5 (corrected) ~s~ Excludes Santa Monica from the average Low Income Provisions The City of Santa Monica currently offers qualified low income customers a discount on water bills by waiving the fixed service charge. With. elimination of the service charge proposed as part of rate restructuring, a new approach to the low income discount is warranted. It is recommended that in place of waiving the service charge, qualified low income customers receive a discount in the first tier rate of the commodity-only rate structure of $0.69 per HCF. For the average low income single family customer with an average consumption of 14 units of water bi-monthly, this proposed discount yields a bi- 13 monthly charge for water of $13.44. This is equal to the charge under the present rates and structure (adjusted for. inflation). Usage beyond the first tier would .not be discounted since these apply to more discretionary uses of water rather than basic water needs; as such the conservation incentive can be preserved. MTBE Treatment Project In late 2006, the City entered into a settlement agreement with three major oil companies that resulted in the payment of $131,000,000 to the City to pay for all current and future costs associated with the design, construction and operation of a treatment facility to clean methyl tertiary-butyl ether (MTBE) from drinking water at the City's Charnock well field. These funds are also being used to pay for all City replacement water costs resulting from the contamination as well as for groundwater monitoring, testing and other costs associated with the project. It is expected that all of these funds will need to be expended over the next several years to successfully complete the Charnock MTBE cleanup. Wastewater Rate Studv The City provides wastewater service through operation and maintenance of an extensive wastewater collection system. Wastewater treatment services are provided by contract agreement with the City of Los Angeles. Santa Monica is one of 28 subscribing agencies to Los Angeles, receiving wastewater treatment services at Los Angeles' Hyperion Treatment plant. Under the terms of the agreement with Los Angeles, the City pays a proportionate share of the operations and maintenance expenses, as well as capital charges, of the Hyperion treatment and collection system. Raftelis Financial Consultants, Inc. was retained by the city to conduct a wastewater rate study (Attachment B). Among the objectives of the study were to review the revenue requirements of providing wastewater service, provide alternative financial plans to address costs during the five year planning period, and evaluate alternative 14 rate structures considering the city's sustainability goals and to seek consistency in the rate structure with the proposed revised water rate structure design. The study confirmed that. the cost exceed current and projected revenues. The study also noted-that the current practice of applying an inflation-only (CPI) rate increase annually would result in all reserve funds being depleted by FY 2009-2010. Exhibit 2 summarizes the major categories of cost within the water utility based on the FY 07-08 budget. Capital and operating expenditures for the Hyperion system are beyond the scope of the City's control since they are stipulated in an agreement between the City of Los Angeles and a number of Hyperion contract agencies, including Santa Monica. These costs represent more than one-half of the city's total Wastewater budget. Another 15% of the budget is related to debt service payments for a capital bond that was issued a number of years ago to pay for previous Hyperion capital costs. Santa Monica's local capital improvement program has remained modest, comprising limited main replacements, fleet improvements, street repairs, and technology improvements. Since the 1994 Northridge Earthquake, a significant portion of the City's wastewater collection system was repaired and/or replaced with the aid of FEMA financing. Wastewater Fund costs also include funding of water efficiency and wastewater reduction efforts aimed at various categories of Santa Monica customers. In recent years, with only a CPI increase in rates being applied and with continually rising capital costs from Los Angeles, available reserves have been applied as a short term response to plug the gap between revenues and expenditures. As outlined in the wastewater rate study, wastewater system expenses including collection system O&M and capital, debt coverage on an existing capital bond and other expenses have outpaced the revenue derived principally from wastewater service charges collected on a bi-monthly basis from the city's customers. Accordingly, the wastewater rate study addresses options to reestablish acceptable reserve levels, maintain compliance with minimum debt coverage requirements, and meet customer equity objectives. 15 Exhibit 2 Summary of Wastewater System Costs, Operating and Capital, by Category (FY 06-07) Financial Strategy Options -Wastewater As an enterprise fund, the City's wastewater utility is expected to be financially self sufficient. Revenues must match annual expenditures; otherwise subsidies from other funds are required. Additionally, the City maintains target levels for reserve funds as follows: • Operating Reserve to meet. unforeseen operating expense cash flow needs ($1.4 million target level = 10% of O&M), • Rate Stabilization Reserve to provide a buffer in the event of a drought or other water supply emergency circumstance which might have adverse affects on revenues ($2.0 million target level), • Capital Reserve to provide a buffer for the variability of capital program expenses ($2.08 million target level). As further discussed below, target reserve levels have since been revised. 16 With the goal of maintaining financial reserves at acceptable levels throughout the planning period, the study identified three alternate approaches to meeting revenue requirements as alternates to the baselihe scenario of continuing with inflation only increases. The following options were presented at the May 8, 2007 Council study session. • Full Capital Funding Debt Scenario -projected capital expenditures are funded through two bond issues: a $17.7 million FY 2008-2009, and a $22.0 million bond issue in FY 2010-2011. Intermediate Capital Funding Debt Scenario -projected capital expenditures for FY 2008-2009 and FY 2009-2010 are funded through a $17:7 million bond issue in FY 2008-2009, while rate adjustments and available cash are utilized to fund remaining capital expenditures during the final two years of the planning period. • "Pay as You Go" Funding Scenario - no debt will be issued during the planning period and all capital expenditures over the next five years will be funded through wastewater rate adjustments and available cash. The rate increases, as presented May 8, 2007 resulting from each of the financing alternatives are indicated in Table 5. Table 5 Rate Increases for Alternate Financina Scenarios* FY FY FY FY FY FY FY FY FY FY 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Option Full Capital 1 Funding Debt 13% 10% 9% 8% 5% 35% 6% 6% 4% 2% Scenario Option Intermediate 2 Capital Funding 17% 17% 17% 16% 16% 4% 0% 0% 0% 0% Debt Scenario Option Pay as You Go 30% 25% 20% 10% 0% 0% 0% 0% 0% 0% 3 Funding " Rate increases identified for FY 2013 to FY 2017 are based on assumed O&M and capital charges from the City of Los Angeles since official estimates from Los Angeles are only available through FY 2012. In those years where a 0% increase is indicated it is estimated that a CPI only rate increase will be sufficient 17 Due to the fact that Santa Monica's Hyperion capital payment obligations are not expected to diminish significantly after the next five years neither of the debt funding rate scenarios is recommended by staff as the subsequent rate increases required in years six through ten and beyond would be higher than would be required with the "pay as you go" approach. Staff recommended on May 8, 2007 to go with the pay as you go. Subsequently, in light of revised financial information and a review of industry standards regarding reserve level targets, the wastewater rate consultant was requested to revise the previously recommended option to address a revised planning horizon and revised reserve fund levels. The revised reserve levels include the following: • An operating reserve of 25% of the wastewater utility operating budget, exclusive of the capital improvement program and transfers to other funds (increase from 10%) • A capital reserve of 50% of annual capital program expenditures except Hyperion Capital Payment which has a 16.7% reserve level (change from a flat $2, 079,100) • A rate stabilization reserve of $2,000,000 (ho change) Two additional options were developed for wastewater rate adjustments. The revised reserve levels were incorporated. Option 4a is similar to Option 4, with the added consideration of a one time cash infusion of $3.0 million into reserves. This is a one time cash supplement, and not an ongoing demand. The resulting Options 4 and 4a are detailed in Table 6. 18 Table 6 Wastewater Rate Increases for Alternate Financing Scenarios FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Option 4 Pay as You Go 18% 18% 15% 8% 5% 3% 3% 3% 3% 3% Funding Option Pay as You Go 4a Funding with one 15% 15% 15% 9% 9% 4% 3% 3% 3% 3% time $3.OM cash infusion Rate increases identified for FY 2013 to FY 2017 are based on assumed O&M and capital charges from the City of Los Angeles since official estimates from Los Angeles are only available through FY 2012 At the April 22, 2008 study session, Council discussed the merits.of options 4 and 4a and provided direction to staff to return May 13, 2008 with a final recommendation to adopt option 4. Subsequently, staff has determined that the numbers presented for option 4 did not match the numbers presented in the consultant's rate report. Accordingly, the corrected numbers for the five year plan for Option 4 are presented in Table 6a below, and in subsequent Tables 7, 7a, and 8. Table 6a -Wastewater Rate Increase Option 4 (corrected) FY FY FY FY FY FY FY FY FY FY 2008 2009 2010 -2011 2012 2013 2014 2015 2016 2017 Option 4 pay as You Go 18% 18% 15% 9% 4% 3% 3% 3% 3% 3% (corrected) Funding . Rate Structure Modifications After consideration of alternate rate structures for wastewater charges, a modified rate structure is proposed which is consistent with modifications to the water rate structure. In the proposed structure, the bi-monthly service charge is eliminated and 100% of the revenue requirements are recovered through the commodity rates determined for various residential and non-residential customer classes. This structure is consistent with the City's sustainability objectives, and is also consistent with the. regulatory requirement of the California State Water Quality Control Board to base rates on quantity and strength of wastewater discharges. 19 Recommended Option and Rate Impacts Although Table 6a presents information over a ten year period, the rate adjustments presented herein for consideration and subsequent adoption are for the five year period through FY 2012/2013. The rate increase projections presented in this report represent maximum increases. As directed by Council, Option 4 (corrected) for wastewater is recommended for adoption. Option 4 (corrected) combined with the proposed commodity-only based rate structure, results in the projected wastewater charges for FY 2008/2009 presented in Table 7. Rather than a uniform increase to all customers, the actual percentage increase varies among customer classes. This is true for the first year only, due to the change in rate structure. In subsequent years, all customer classes will see the same percentage increase in charges. Table 7a demonstrates this uniform percentage increase for all customer classes in the following year (FY 2009/2010). Table 7 Proposed Wastewater Rates, FY2008-2009 Bi- Option monthly Current 4(corrected), Discharge water Rates & w/ Proposed $ Customer factor use, HCF Structure~'~ Structure Changet2~ Changei2~ notes Single family, average use Multi-Family, average use Non-residential, average use Non-residential, moderate use Non-residential, high use annual 51% 36 $44.24 $53.98 $9.74 22.02% avera e 8DUs@ 95% 80 $185.66 $223.44 $37.78 20.35% 10 HCF/DU General commercial, 89% 37 $89.26 $88.25 -$1.01 -1.13% 1" meter medium strength, 2" 89% 193 $503.77 $553.10 $49.33 9.79% meter high strength, 4" 89% 709 $2571.68 $2593.45 $21.77 0.85% meter (t) 08!09 current structure with CPI-only rate increase (2) $ change, % change from current to option 4 (corrected) Table 7a LV Proposed Wastewater Rates, FY2009-2010 Bi- monthly Discharge water FY FY 09/10 $ Customer factor use, HCF 2008/2009t'~ Proposed Changet2~ Changet2~ notes Single family, average use Multi-Family, average use Non-residential, average use Non-residential, moderate use Non-residential, high use (1) From Table 7 (2) $ change, % change from FY 08/09 to FY 09/10 Wastewater rate comparison with neighboring communities Table 8 summarizes bi-monthly wastewater charges for a single family residence under the City's proposed wastewater rates and the current wastewater rates of several neighboring communities. The bill comparison is based on a 3/<" water meter and 35 HCF of bi-monthly water usage. The proposed bi-monthly rate of $53.98 compares favorably with the average rate of the other communities surveyed. It should be noted that some of the other communities are considering rate increases in the near future annual 51 % 36 $53.98 $63.70 $9.72 18% avers e 8 DUs @ 95% 80 $223.44 $263.66 $40.22 18% 10 HCF/DU General commercial 89% 37 $88.25 $104.14 $15.89 18% , 1" meter medium strength, 2" 89% 193 $553.10 $652.66 $99.56 18% meter high strength, 4" 89% 709 $2593.45 .$3060.27 $466.82 18% meter 21 Table 8 Comparison of Current Sin le Famil Wastewater Bills Bi-Monthly Wastewater Char a c+> Effective Date Culver City $122.71 January 2008 July 2008 City of Beverly Hills $73.97 proposed City of Los Angeles $54.90 July 2007 July 2008 City of Santa Monica $53.98~2~ proposed City of Glendale $39.52 July 2007 City of Burbank $35.96 July 2007 Avers e of Cities Surve ed l3> $65.41 Notes: "~ Assumes 3/4" meter and 36 HCF used during atwo-month period t2~ Option 4 (corrected) c3> Excludes Santa Monica from the average Low Income Provisions The City currently offers qualified low income customers a discount on wastewater bills by waiving the fixed service charge. With elimination of the service charge proposed as part of rate restructuring, a new approach to the low income discount is warranted. It is recommended that in place of waiving the service charge, qualified low income customers receive a discount of the commodity-only rate. structure rate of $1.52 per HCF for the first 14 units only. For the average low income single family customer with an average consumption of 14 units of water bi-monthly, this proposed discount yields a bi-monthly charge for wastewater of $10.14. This is equal to the charge under the present rates and structure (adjusted for inflation). Usage beyond. 14 units would not be discounted since such usage represents more discretionary uses of water rather than basic water needs; as such the conservation incentive can be preserved. 22 Efficiency and Service Improvements Water and Wastewater operations are conducted so as to provide public services as efficiently as possible. Since the 1996 rate increases, staff additions have been very modest. No new positions have been added in water treatment, distribution, or O&M functions even though growth in the city continues to add new customers and accounts. In wastewater operations, four positions have been added to address environmental and sustainability objectives including enhanced catch basin maintenance, and O&M for the city's Santa Monica Urban Runoff Recycling Facility (SMURRF). The SMURRF operating costs are reimbursed 50% by the City of Los Angeles. In an era of rapidly advancing technology, many of the improvements to operational practices address information technology and customer service improvements. • Implementation of a geographically based (GIS) mapping and information system to better manage the water storage and distribution system • Implementation of an automated maintenance management system to better track hours and costs of work by City Water and Wastewater staff ^ Commencement of a pilot program to study the electronic reading of water meters that could potentially save significant staff time (currently underway) ^ Redesign of the utility bill to provide customers with detailed information about their water use and rates • Addition of new bill payment options for customers such as payment via the Internet, telephone payments, direct debit, recurring credit card payments, and a drop-off box located at City Hall • Opening Water operations and administrative offices to service customers five days per week every week ^ Performing water sample collection and analysis in-house with staff Water Chemists to expedite testing and control costs ^ Establishment of an expanded water contamination prevention or "cross- connection" control program to better guarantee the safety and security of City water supplies 23 • The USEPA required annual Water Quality Report that is mailed to 55,832 Santa Monica residents and businesses uses the same formatting and artwork each year and the photos are taken by City employees to reduce production costs Nexus Study In September 2007, the City hired HF&H Consultants, LLC to prepare a nexus study, which analyzed the cost of environmental programs that were charged to other funds to ensure that the City sets new fees in compliance with Proposition 218, which requires that the costs charged be related to the cost of delivering service to properties.. The study was completed in December, 2007, and resulted in a reallocation of the environmental programs costs, reducing the charges to the Wastewater and Water funds by $539,000 and $32,000, respectively. The reallocation also increased the amount charged to the General and/or other funds by $286,000. The Nexus study is included as Attachment C. Implementation Schedule Following council approval, Proposition 218 requirements dictate a public notice of proposed changes to rates be made to all property owners in the affected area. A 45 day notice/ response period will be in effect from the date of approval of new rates (with a few days allowance for mailing). Absent a majority protest, City Council may then approve the final adoption of the rates at a public hearing. In this time frame, final Council adoption of rates can be made at a meeting in July, with rates most likely effective August 1, 2008. It should be noted that delaying action on rates beyond this time frame will result in adverse impacts on the financial forecasts and rates. 24 Financial Impact & Budget Actions The FY2008-09 proposed budget includes an annual CPI increase of 3.7 percent. Upon approval, these rates will need to be reflected in the budgeted revenues as follows: • Account 25671.402310, Water Commercial Sales, will increase by $910,897 • Account 31661.401650, Sewer Service Charges, will increase by $1,554,450 The Water and Wastewater rates proposed herein will be assessed annually as part of the financial forecasting process. Any increase above these proposed rates would invoke additional public notice requirements under Proposition 218. Staff does not anticipate that these rates will require upward adjustments. Prepared by: Gil Borboa, P.E., Water Resources Manager Approved: ~~ Joa L. Akins, Acting Director, Environmental and. Public Works Management Forwarded to Council: Approved: C~ I ~ ~~Z ~~C.. SV~JA/f(.~ Carol Swindell, Director of Finance Attachments: A -Water Rate Study B -Wastewater Rate Study C -Nexus Study Resolution 25 April 14, 2008 Gil Borboa City of Santa Monica 1212 Fifth Street Santa Monica, CA 90401 .Subject: Summary of Water Rate Alternatives for FY 08-09 through FY 12-13 Dear Mr. Borboa, The Reed Group, Inc. has worked with the City of Santa Monica s Water Resources Division on water and wastewater issues since 1996. In recent years, we have assisted the City with identifying, evaluating, and recommended financial strategies and rate structure alternatives for the City's water utility. In particular, we have performed water rate studies to: (1) to present a strategy for meeting the water utility's projected revenue needs consistent with the City's flve- year financial forecasts, and (2) to develop recommendations regarding alternative water rate structured. Over the past year, the City's Finance Department and the Water Resources Division have reviewed and revised financial reserve policies for the water and wastewater utilities and updated the five-year financial forecast to cover the period from FY 08-09 through FY 12-13. In recent months, The Reed Group, Inc. has worked with staff to update water rate recommendations based on the latest financial forecast and reserve policies, and with the previously proposed water rate structure changes. This letter summarizes recommendations developed in consultation with City staff for gradually increasing water rates over the next five years to meet the water utility's revenue needs and implementing proposed water rate structure changes. Two financial strategies are presented for the City Council's consideration. Both strategies include implementing rate structure changes in FY 08-09. The water rate structure changes are intended to: (1) improve the water conservation incentive embodied. in the water rate structure, (2) help maintain the affordability of basic water usage for residential customers, and (3) reflect the cost of providing 1 Major work products in recent years have included the City of Santa Monica Wafer Rate Study Final Report, June 2005 and the City of Santa Monica 2007 Water hate Study, March 2007. 3053 Freeport Boulevard #158 • Sacramento, CA 95818-4346 • (916) 444-9622 • www.TheReedGroup.org -~,. -Gn.BORBOA AER[[.14, 2008 PAGE2 service to each group of customers and thereby maintain equity between customer classes and among customers within a class. Summary of Recommendations Current (FY 07-OS) water rate and other water utility revenues are about $2.0 million less than annual operating and maintenance costs and planned annual capital program expenditures. While the Utilities Division has taken steps to control costs, this financial deficit has persisted because annual inflation-based rate increases have been insufficient to close the gap between revenues and expenses. Recent water rate studies have focused on developing a financial strategy for closing this gap. While water rates will need to be increased at a rate higher than inflation, the proposed strategies involve gradually adjusting the rates to required levels over a five-year period. The City has also determined that it is prudent to change its financial reserve policies for the water utility. Revised financial reserve policies include the following: • Increase the operating reserve to 25 percent of the water utility operating budget, exclusive of the capital improvement program and transfers to other funds (increase from 10 percent) • Increase the capital reserve to 50 percent of average annual capital program expenditures (increase from a flat $1,275,000) • Maintain a xatestabilization reserve of $1,000,000 (no change). The City recently received new information on Metropolitan Water District's (MWD) water rates for 2009. The cost of water purchases is the water utility's largest single cost item, and the information from MWD affects the water utility's financial forecast. The financial plan and rate model has been updated to reflect these changes and proposes rate adjustments to cover estimate operating, maintenance, and capital program costs through FY 12-13. The estimated overall level of water rate increases needed to cover costs and meet reserve policy requirements by the end of the five-year planning period are summazized below as Option 1. Under Option 1 the water utility would utilize a portion of the rate stabilization reserve during the five-year planning period. All target reserve levels would be re-established by the end of the planning period.. Ovtionl Ovtion2 July 2008 11.0% 9.5% July 2009 10.5% 9.5% July 2010 los°i° 9s°i° July 2011 1o.o°r° 9.o°i° July 2012 lo.o% 9.o°i° GIL BORBOA AnIUL14,2008 PACE3 A second option (Option 2) has been developed in consultation with City staff. If the City is willing to provide the water utility with aone-time cash infusion of $2.5 million, then it is estimated that the .water utility could maintain minimum target reserves and have slightly lower water rates during the planning period. Proposed rate schedules under Option 1 and Option 2, respectively, are shown in Exhibits 1 and 2. The rate schedules reflect the previously recommended changes to the water rate structure The proposed water rate structure eliminates bi-monthly service charges and changes the tier structure such that all water rate revenue is obtained through water usage charges, thereby creating a stronger water conservation incentive and giving customers more opportunity to save money through lowering their water usage. Extlibit 1 City of Santa Hbnica -Water Utility Pmnnsad Wafor Ratee Schululuc . [1PTIf1N 1 Tler Nloc. Commodi Rates (f/HC~ (5) July 2008 July 2009 July 2010 Juty 2011 Juty 2012 (HCF/2-mos.) Single Family (2) 1st Tier $ 1:65 $ 1.82 $ 2.01 $ 2.21 $ 2.43 o-1a HCF 2nd Tier $ 2.47 $ 2.73 $ 3.01 $ 3.32 $ 3.65 15-40 HCF 3rd Tier $ .3.70 $ 4.09 $ 4.52 $ 4.97 $ 5.47 41-148 HCF 41h Tier $ 5.78, $ 6.39 $ 7.06 $ 7.76 $ 8.54 1as+HCF Multi-Family (3) 1st Tier $ 1.65 $ 1.82 $ 2.01 $ 2.21 $ 2.43 0-4 HCF/DU 2nd Tier $ 2.47 $ 2.73 $ 3.01 $ .3.32 $ 3.65 s-9 HCF/o0 3rd Tier $ 3.70 $ 4.09 $ 4.52 $ 4.97 $ 5.47 to-zo HCF/DU 4th Tier $ 5.78 $ 6.39 $ 7.06 $ 7.76 $ 8.54 zt+HCF/DU Non-Residential (4) 1st Tier $ 2.35 $ - 2.60 $ 2.87 $ 3.15 $ 3 47 . varies (see below) 2nd Tier $ 5.78 $ 6.39 $ 7.06 $ 7.76 $ 8.54 Recyded Water Unif. Rate $ 2.22 $ 2.45 $ 2.71 $ 2.98 $ 3.28 All water use Non-Residential Tier Albcations (HCF/2-coos) - Meter Size 1st Tier 2nd Tier Meter Size 1st Tier 2ntl Tier Up to 1" 0-270 HCF .221+ HCF 3" 0.1,700 HCF 1,707+ HCF 71/2" 0-465 HCF 465+HCF 4" 0- 2,550 HCF 2 ,557+HCF . 2" 0-870 HCF 871+ HCF 6" & Larger 0- 5,280 HCF 5 ,281+ HCF Private Fire Service-Charges ($2-coos.) Meter S'ne July 2006 July 2009 Juty 2010 July 2011 July 2012 2" ~ $ .62.67 $ 69.25 $ 7652 $ 84.17 $ .92.59 3" $ 711.63 $ 123.35 $ 736.37 $ 749.94 $ 164.93 4" $ 781.60 $ 200.66 $ 221.73 $ 243.91 $ 266.30 6" $ 356.48 $ 393.91 $ 435.27 $ 478.79 $ 526.67 8" $ 566.37 $ 625.83 $ 697.55 $ 760.70 $ 836.77 70" $ 877.23 $ 896.41 $ 990.54 $ 1,089.59 $ 1,198.55 „(1) Rate restructuring occurs in July 2006. Subsequent rate increases are to meet revenue needs. (2) Includes single family homes and tluplexes. (3) Includes multi-family complexes with 3 or more units, includin9individuallycoetered complexes. (4) Includes commercial, industrial, insfitutional, and irrigation accounts. (5) 1 HCF = 100 cubic feet= 746 gallons >~.:> GIL BORBOA APRIL 14, 2008 PA~E4 lxhibit 2 City of Santa Monica -Water Utility Proposed Water Rates Schedules -With 52.5 Million Cash Infusion in FY 07-08 -OPTION 2 Tier Alloc. Commodi Rates $/HC 5 Jul 2008 Jul 2009 Ju 2070 Ju 20'17 Jul 2072 (HCF/2-mos.) Single Family.(2) 1st Tier $ 1.62 $ 1.78 $ 1.95 $ 2.12 $ 2.31 0-14 HCF 2nd Tier $ 2.44 $ 2.67 $ 2.92 $ 3.18 $ 3.47 15-4o HCF 3rd Tier $ 3.65 $ 4.00 $ 4.38 $ 4.77 $ 5.20 47-148 HCF 4th Tier $ 5.70 $ 6.24 $ 6.83 $ 7.45 $ 8.12 149+HCF Multi-Family (3) 1st Tier $ 1.62 $ 1.78 $ 1.95 $ 2.12 $ 2.31 0-0 HCF/DU 2nd Tier $ 2.44 $ 2.67 $ 2.92 $ 3.18 $. 3.47 5-9 HCF/DU 3rd Tier $ 3.65 $ 4.00 $ 4.38. $ 4.77 $ 5.20 10-2o HCF/DU 4th Tier $ 5.70 $ 6.24 $ 6.83 $ 7.45 $ 8.12 21+HCF/DU NorrResidential (4) -1st Tier $ 2.32 $- 2.54 $ 2.78 $ 3.03 $ 3.30 vanes (see below) 2nd-Tier $ 5.70 $ 6.24 $ 6.83 $ 7.45 $ 8.12 Recycled Water Unif. Rate $ 2.19 $ 2.40. $ 2.63 $ 2.86 $ 3.12 all water Use Non-Residential Tier Allocations (HCF/2-mos.J Meter Size 1st Tier 2nd Tier Meter5ize 1st Tier 2nd Tier Up to 1" 0-210 HCF 227+HCF 3" 0-1,700 HCF 1, 701+HCF 11/2" 0-065 HCF 465 +HCF 4" 0-2,550 HCF 2, 551+HCF 2" 0-870 HCF 871 +HCF 6" & Larger 0-5,280 HCF 5, 287+HCF Private Fire Service Charges ($/2-mos.) Meter5ize July 2008 July 2009 Juty 2070 Ju ty 2011 July 2012 2" $ 61.82 $ 67.70 $ 74.13 $ 80.80 $ 88.07 3" $ 110.12 $ 120.59 $ -132.04 $ 143.93 $ 156.88 4" $ 179.14 $ 796.76 $ 214.80 $ 234.13 $ 255.20 6" $ 357.66 $ 385.07 $ 421.65 $ 459.60 $ 500.96 - 8" $ 558.77 $ 611.79 $ 669.91 $ - 730.20 $ 795.92 10" $ 800.27 $ 876.30 $ 959.54. $ 1,045.90 $ 1,140.03 naes~ (1) Rate restructuring occurs in July 2008. Subsequent mte increases are to meet revenue needs. (2) InGudes single family homes and duplexes. (3) InGUdes multi-family complexes with 3 or more units, inGUQing intlividualty metered complexes. (4) InGUdes commercial, intlustriai, institutional, and irrigation accounts. (5) 1 HCF = 700 cubic feet= 748 gallons , Exhibits 3 and 4 summarize how various customers may be affected by the new rates for July 2008 under Option 1 and Option 2, respectively. The change to any iridividuat customer's water bill will be a function of customer class, meter size, and water usage. Under the proposed rate restructuring, low-volume residential customers may see a slight reduction in bi-monthly water bills, and average-volume residential customers may see smaller increases than without a rate structure change. High- and very high-volume residential customers would see larger increases in water bills. As shown in Exhibits 3 and 4, the difference between Option 1 and Option 2 for the average single family water users is about $1.01 per month (with lower water bills under Option 2). By FY 12-13, the average single family water bill would be about $5.39 per month (4.9 percent) lower under Option 2: ' GIL BORBOA APRn 14, 2008 PAGE5 FxM1ibit3 City of Santa Monica--Water Utility - Comparison of Typical Water Bills Under Current and Pro used Rate Structures -OPTION 7 Bi-Monthly Water Bills Bi-Monthly FY 07-08 FY 06-09 Meter Water Water Current Proposed Customer Size Use HC Rates Structure Structure Usa eNOtes Single Family Low Use 3/4" 21 $ 41.18 $ 45.71 $ 40.32 Winer median Average Use 3/4" 35 $ 72.82 $ 80.83 $ 74.89 Annual average High Use 3/4" 54 $ 115.76 $ 128.49 $ 139.08 Summer 75th percentile Very High Use 3/4" 78 $ 170.00 $ 188.70 $ 227.95 Summer 90th percentile Multi-Family Low Use 1 1!2" 64 $ 739.62 $ 154.98 $ 131.67 8 DUs @ S HCF/DU Average Use 7 1/2" 80 $ 775.78 $ 795.72 $ 181.04 8 DUs @ 10 HCF/DU " High Use 1 1/2" 104 $ 230.02 $ 255.32 $ 269.92 8 DUs @ 13 HCF/DU Ve Hi h Use 7 1/2" 136. $ 302.34 $ 335.60 $. 388.42 8 DUs 17 HCF/DU Non-Residential Low Use 7" 15 $ 35.74 $ 39.67 $ 35.23 Winter median Aveage Use 1" 37 $ 77.48 $ 86.00 $ 86.89 Annual average High Use 1" 52 $ 111.38 $ 123.63 $ 722.12 Summer 75th percentile Ve Hi h Use 1" 94 $ 206.30 $ 228.99 $ 220.75 Summer 90th ercentile Non-Residential Low Use 2" 76 - $ 127.14 $ 147.13 $ 178.48 Winter median Average Use 2" 193 $ 333.04 $ 369.67 $ 453.25 Annual average High Use 2" 287 $ 545.48 $ 605.48 $ 674.00 Summer 75th percentile Very High-Use 2" 570 $ 1,185.06 $ 1,315.42 $ 1,338.67 Summer 90th percentile Non-Residential _ Low Use 4" 347 $ 486.31 $ 539.80 $ 814.91 Winter median Aveage USe 4" 709 $ 7,247.24 $ 1,384.44 $ 1,665.04 Annual average High Use 4" 1,008. $ 7,922.98 $ 2,134.51 $ 2,367.23 Summer 75th percentile Very High USe 4" 1,653 $ 3,380.68 $ 3,752.55 $ 3,881.97 Summer 90th percentile Notes: (1) Overall average ate increases for July 2008 is 11.0 percent. Exhibit4 City of Santa Monica --Water Utility Comparison of Typical Water Bills Under Current and Pro osed Rate SVUCtures --OPTION 2 Bi-Monthly Water Bills Bi-MOnthN t-l' 07-08 FY 08-09 Meter Water Water Current Proposed Customer Size 'Use HCF Rates Structure Structure Usa eNOtes Single Family Low Use 3/4" 21 $ 41.18 $ 45.09 $ 39.78 W nter median Average Use 3/4" 35 $ 72.82 $ 79.74 $ 73.88 Annual average High Use 3/4" 54 $ 175.76 $ .126.76 $ 137.21 Summer 75m percentile Ve Hi h Use 3/4" 78- $ 170.00 $ .186.15 $ 224.69 Summer 90th ercentile Multi-Family Low Use 1 1/2" 64 $ 139.62 $ 152.88 $ 129.90 8 DUs @ 6 HCF/DU Average Use 1 7/2" 80 $ 175.78 $ 792.48 $ 178.61 8 DUs @ 10 HCF/DU High Use 1 1/2" 104 $ 230.02 $ 251.87 $ 266.30 8 DUS @ 13 HCF/DU Ve Hi h Use 1 1/2" 136 $ 302.34 $ 331.06 $ 383.21 8 DUS 17 HCF/DU Non-Residential Low USe 1" 15 $ 35.74 $ 39.14 $ 34.75 Winter median Average Use - 1" 37 $ 77.48 $ 84.84 $ 85.72 Annual average High Use - 1" 52 $ 771.38 $ 121.96 -$ 120.48 Summer 75th percentile Very High Use 1" 94 $ 206.30 $ .225.90 $ 217.79 Summer 90th percentile Non-Residential Low Use 2" 76 $ 127.14. $ 739.22 $ 176.08 Winter median Average Use 2' 193 $ 333.04 $ 364.66 $ 447.16 Annual average High Use 2' 287 $ 545.48 $ 597.30 $ 664.95 Summer751h percentile Very High Use T' 570 $ 1,185.06 $ 1,297.64 $ 1,320.63 Summer 90th percentile Non-Residential Low Use 4" 347 $ 486:37 $ 532.51 $ 803.96 Winter median - Average Use 4" 709 $- 1,247.24 $ 1,365.73 $ 1,642.67 Annual average ' High Use 4" 7,008 $ 1,922.98 $ 2,105.66 $ 2,335.42 Summer 75th percentile Very High Use 4" 1,653 $ 3,380.68 $ 3,707.84 $ 3,829.8T Summer 90th percentile Notes: (1) Overll average rate increases for July 2008 is 9.5 percent. ~,,. GIL BORBOA AnRii.14, 2008 PAGnb Exhibits 5 and 6 summarize the financial plans for the water utility during the planning period under Option 1 and Option 2, respectively. Under Option 1, reserve target levels are maintained throughout the planning period, with the exception of the Rate Stabilization Reserve. About one-third of the Rate Stabilization Reserve is used during the planning period, and then replenished by the end of the planning period. Using the Rate Stabilization Reserve in this way makes it possible to smooth required rate increases over the planning period. This planned use of the Rate Stabilization Reserve is consistent with its purpose. Without it, water rate increases would need to be higher in initial years of the planning period. Under Option 1, at the end of the.plamlirtg period water utility revenues would exceed annual expenses and transfers by about $600,000, and smaller rate increases may be possible beyond FY 12-132. - Exhibits City of Santa Monira -Water Utility Water Utility Five-Yazr Financial Plan (t1-OPTION 7 WATER FUND (28) FY 06-07 FY 07-08 FV 08.09 FY 09-10 FY 70-11 FY tt-02 ' FY 72-73 Water Rate lnereazea 3.4% 11.0% 10.5°k 10.5% 70.0°h t0.0°i Beg/nning-of--Year Balance $ 11703,757 $ 10,904,875 $ 8,847,872 $ 7,537,174 $ 6,596,478 $ 6,059,736 $ 6,031,072 Revenues and Transfers In - WaterSales $ 12,945,325 S. 13,tZ0,000 $ 74,350,000 $. 15,540,000 $ 18,880,000 S 18,200,000 S 19,840,000 Interest Earnings $ 660,000 $ 440,000 $ 380,000 $ 340,000 $ 304,000 $ 313,000 $ 309,000 Water Capital Facilities Fees $ 2W,000 $ 200,000 $ . 200,000 $ -2W,000 $ 200,000 $ 200,000 $ 200,000 01her Water Revenues $ 1,6W,635 $ 1,506,8ffi $ 1,530,856 $ 1,543,250 $ 1,566,534 $ 1590,726 $ 1,630,494 Non-0ept. Transfers In $ 500,000 $ 223,4]8 $ 233,630 $ 242,9]5 $ 252,694 $ 262,802 $ 269,372 Balance Sheet Transfers In $ - $ - $ - $ $ - $ _ $ _ Total Revenues antl Transfers in $ 15,961;960 $ 15,490,360 $ 16,694,486 $ 17,B6G,225 $ 19,183,228 $ 20,5%,528 $ 22,048,866 Expenditures antl Trans/ers OUt Salaries antl Wages $ 4,993,593 $ 5,132,311 $ 5,367,665 $ 5,630,527 $ 5,893,035 $ 6,171,160 $ 6294,583 Supplies and Expenses $ `4,213,825 $ 3,824,193 $ 3,990,002 $ 4,127,678 $ 4,274,451 $ 4,425,341 $ 4,513,848 MWD Water COSts (net of reimb.) $ 3,944,939 $ 4,254,270 $ 4,521,058 $ 4,873,148 $ 5,248,818 $ 5,649,314 $ 6,185,999 Capital Outlay $ 51,871 $ 62,600 $ 62,600 $ 62,600 $ 62,600 $ 62,600 $ 63,652 Tansfers Out to Other FUnds $ 1,774,400 $ 1,501,425 $ 1486,825 $ 1,546,163 $ 1607,848 $ 1,671,973 $ 1,705,412 Capital lmprov.Projects $ 10,182,215 $ 2,772,564 '$ 2,577,034 $ 2,566,804 $ 2,633,2111 $ 2614,804 $ 2,667,100 Thal Fxpentlilures $ 25,160,843 $ 11547,363 $ 16,D0.5,t84 $ 18,806,921 $ 19719970 $ 20595192. $ 21430794 End-of-Year Balance $ 8,5W,875 S 8,847,872 $ 7;537,174 S 8,596,478 $ 6,059,736 $ b,031,072 $ 6,649,143 Operating Reserve(25%of 08M) $ 1,320,423 $ 3,318,344 $ '3,485,331 $- 3,673,486 $ 3,869,726 $ 4,071,104 $ 4,264,571 Rate Stabilization Reserve $ 1,000;000 $ 1,000,000 $ 1000,000 $ 1,000,000 $ 873,401 $ 646,566 $ 9,000,000 Capdal Reserve (50%of CIP) $ 1,275,000 $ 1,386,282 $ 1,288,517 $ 1,283,402 $ 1,316,609 $ 1 307,402 $ 1,333,550 Unccmmittetl Balance $ 4,909,452 $ 3,143,246 $ 1,763,325 $ 639,568 $ - $ - $ St.023 Notes: (1). eased on'Water Forecast FY07-12(update)"erterMed through FV 12-13. Beginning balance for FY OY08 increased by 52.4 million peremal nom A. Morales on 2114/2008. MWDxater purtl~ase costs uptlatetl basetl on calalMions by J. Higbees on 3l1t12008.~ Under Option 2 (Exhibit 6), a cash infusion of $2.5 million in FY 07-08 would provide sufficient funds to maintain all reserves above minimum target levels for the entire planning period. Lower water rates would also be possible and the uncommitted fund balance would be 2 The additional revenue is needed in order to bring the rate stabilization reserve back to the $1 million target level. !~,, GI[. BORBOA Arlin 14,2008 PAGE? gradually lowered during the five-year planning period. In FY 12-13, water rate revenues under Option 2 would be about five percent lower than under Option 1, and water utility revenues would be about $300,000 less than estimated expenses and transfers. As a result, modest rate increases may need to continue beyond FY 12-13 until utility revenues fully cover expenses and transfers. It is recommended that the City continue to monitor the water utility's financial condition on an annual basis, as a number of factors could change and actual results could differ from any forecast. Exhibit6 Water Rate Increase-> 3.4% 9.5% 9.6% 9.5% 9.0% 9.0% Beginningof•YearBa/ance $ 17,703,757 $ 10,904,8]5 $ 71,347,872 $ 9,961,174 $ 8,781,478 $ 7,809,736 $ 7,125,072 Revenues and Trdnslers In Water Sales $ 72,945,325 $ 13,720,000 $ 70.760,000 $ 75,190,000 $ 76,330,000 $ 17,470,000 $ 78,690,000 Interes[Eamings $ 660,000 $ 440,000 $ 494,000 $ 451,000 $ 399,000 $ 387,000 $ 340,000 Waler Capital Facildies Fees $ 250,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 Other Water Revenues $ 1,606,635 $ 1,506,882 $ 1,530,856 $ 1,543,250 $ 1,566,534 $ 1,590,726 $ 1,630,494 Non-Dept TransFers In $ 500,000 $ 223,478 $ 233,630 $ 242,975 $ 252,694 $ .262,802 $- 269,3]2 Balance Sheet Transfers In $ - - $ 2,500,000 $ - $ $ - $ _ $ _ Total Revenues antl Transfers ln. $ 15,961,960 $ 17,990,360 $ 16,618,486 $ 1],627,225 $ 18,748228 $ 19,910,526 $ 21,129,866 Expenditures and Trans/ers Out Salaries and Wages $ 4,993,593 $ 5,732,371 $ 5,367,665 $ 5,630,527 $ 5,893,035 $ 6,171,160 $ 6,294,583 Supplies antl Expenses $ 4,213,825 $ 3,824,193 $ 3,990,002 $ 4,727,678 $ 4,274,451 $ 4,425,341 $ 4,513,848 MWD Water COSts (net of reimb.) $ 3,944,939 $ 4,254,270' $ 4,521,058 $ 4,873,148 $ 5,248,878 $ 5,649,314 $ 6,185,999 CapOal Outlay $ 51,877 $ 62,600 $ 62,600 $ 62,600 $ 62,600 $ 62,600 $ 63,852 Tansfers Ou[to Other Funtls $ 1,774,400 $ .1,501,425 $ 1,486,825 $ 7,546,163 $ 7,607,848 $ 1,6]1,973 $ 7,705,412 Capital lmprov. Projects $ 10,162,215 $ 2,772,564 $ 2,577,034 $ 2,566,804 $ 2,633218 $ 2,614,804 $ 2,667,100 Total ExpendiWres $ 25,160,843 $ 17,547,363 $ 16,005,784 $ 18,806,921 $ 19,719,970 $ 20,595,792 $ 21,430,794 Endof--Year Balance - $ 8,504,875 $ 77,347872 $ 9,961,774 $ 8,787,478 $ 7,809,736 $ 7,725072. $ 6,624,143 Operating Reserve (25%of 0&iv>). $ 1,320,423 $ 3,318,344 $ 3,485,337 $ 3,673,488 $ 3,869,726 $ 4,077,104 $ 4,264,571 Rate Stabilization Reserve $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 7,000,000 Capilai Reserve (50%of CIP) $ 1,275,000 $ 7,386,282 $ 1,288,577 $ 1,283,402 $ 1,316,609 $ 1,30],402 $ 1,333,550 One-Time Cash Infusion $ - $ 2,500,000 $ - $ $ - $ - $ Unmmmittetl Balance $ 4,909,452 $ 3,143,246 $ 4,187,325 $ 2,824,568 $ 7,623,401 $ 740,566 $ 226,023 wxfandM rnRrii~n FV ~~.~a ao~~n,.~,r;.nau,~,~oe.. cv mlrR ~~..e~~en n„a~e m;n;,.., „e. dm~n r.,..,, A. Morelos on 2/742008. MWD water pu¢hase costs uptlated based on calwlafions by J. Higbee's on 3/11/2008. Analysis The analysis that follows is based on the financial plan and water rates presented under Option 1. Similar analyses have been performed for Option 2, but are not included in this letter report for brevity. The financial plan update and water rate calculations are consistent with previous analyses as described in the 2007 Water Rate Update Study dated March 5, 2007. The rationale and explanation of the proposed water rate structure changes are described in that report, and are not repeated herein. The proposed water rate structure changes have the following benefits: • Improve water conservation incentive embodied in the rate structure: o Elimination of fixed service charges increases the marginal cost of water service across the entire spectrum of water use. GII. BORBOA APRii 14, 2008 PAGE8 o Significant increases in the marginal cost of water occur in the first and third tier use ranges under the proposed rates. o Residential customers will more likely move in and out of various tiers as usage varies: throughout the year, thereby providing a more effective price signal across the range of typical usage. o A higher rate for base usage applies to majority of non-residential customers that had previously'had all or most water at the low initial tier. o Maintains the water shortage cost rate for the last 2 percent of water use within each customer group, including non-residential customers (by meter size). • Protect the affordability of basic water usage: o Elimination of the fixed service charge means customers only pay for water they use. Fixed service charges are a disproportionately large portion of bills for low volume users. o Low and. moderate volume residential customers will have lower water bills under the proposed rate structure, relative to the current structure. o The City's current low-income discount program would be continued, though in a different form. • Maintain equity for all customers o Average rate paid for water use within a customer group is the-essentially the same across each user group. This helps maintain the equity across groups. o Average rate paid by non-residential customers is the same, except for usage in the last 2 percent (second tier). This corrects an inequitable imbalance created by applying a tier structure across a diverse use profile. The proposed changes to the City's water rate structure should help the City to better achieve rate setting objectives. Making the rate structure changes should also help mitigate the impact of the proposed rate increases for most customers. The financial plan model is based on the City's five-year. financial forecast for the water utility. The version used for this analysis was received in May 2007 with the file name "Water Forecast FY07-12 (update).xls". Operating and maintenance costs; capital program costs, and non-rate revenues are consistent with the City's financial forecast. The financial plan and rate model was changed to; reflect the proposed rate increases (rather than inflation-only increases) that are necessary to meet reserve minimums3. At the City's request, the financial plan and rate model was extended by an additional year to cover the period through FY 12-13. For the extra year, water utility expenditures and most non- rate revenues were assumed to increase by 2.5 percent from FY 11-12 to FY 12-13. Water capital facilities fee revenues were assumed to be unchanged in FY 12-13 and interest earnings for FY a Interest earnings also change from the Cit}~s forecast due to higher fund/reserve balances that result from the proposed rate increases. Gn.BORaoA AniuL 14, 2008 PAGE 9 12-13 are estimated based on a 5.0 percent interest rate and. FY 12-13 fund/reserve balances. Recently, the Finance Department also provided updated information. related to the FY 07-08 beginning-of-year fund balance. The revised amount reflects actual results from FY 06-07, with adjustments for capital projects carried over into FY 07-08. The beginning-of-year fund balance for FY 07-08 is about'$2.4 million higher than in previous analyses. Finally, the Utilities Department recently provided information on MWD's newly adopted water rates for 2009, as well as revised water purchase cost estimates based on the .new rate information. That information has also been incorporated into the financial plan and rate model A number of water rate updates have been prepared over the past several years. Until recently analyses have relied upon customer account and water usage data from the utility billing system that was. provided in Apri12005. The water rate calculations presented herein have been updated with customer account data from October 20074. Exhibit 4 summarizes the number of customer accounts by meter size and customer class as of October 2007. We have long assumed no new customer growth in rate analyses. The number of accounts in Exhibit 4 is only 116 more than the previous data from April 2005 (0.7% growth in 2.5 years). This appears to validate our previous no-growth assumption. The 17,200 accounts shown in Exhibit 4 are used in rate analyses for July 2008 and in the financial plan model through FY 12-13. While we obtained updated information on the number of accounts in October 2007, we cohtinue to rely on water usage data from Apri12005 (water usage from CY 2004). Water usage data from the billing system in 2004 and estimates for future years are summarized in Exhibit 5. Water usage from 2004-has been reduced to reflect estimated water conservation savings since 2004. The reduction in annual usage from CY 2004 to FY 06-07 is estimated to be 2.63 percent. Exhibit 4 City of Santa Monica -Water Utility Summary of Customer Accounts User Group Dwelling/ eus. units 3!4" 1" No. of Active Accounts by Meter Size 1172" 2". 3" 4" 6" 8" 10" Total No. of Meters Single Family 8,726 4,207 2,668 954 66 8,095 SF Low lnwme 174 125 31 5 161 Multi-Family 40,907 1,188 7,304 2,328 474 51 21 9 1 5,376 MF Low Income 36 16 2 1 19 Non-Residential 3,647 777 594 636 408 125 54 27 2 2,617 Recyded Water 10 1 5 4 - 10 Fire Services 1,021 41 54 564 202 57 4 922 54,521 6,313 4,799 3,925 994 230 643 232 60 4 17,200 Notes: (1) From Active Account Billing Count Report (UBROB4) tlatetl 10/2/200]. Financial antl rate analysis assumes no new cuslamer growth. This information was provided to The Reed Group, Inc. for the Water System Capital Facilities Fee Update, and has now been incorporated into the water rate model. ~.:. Exhibit 5 City of Santa Monica --Water Utility Gn:BbRSOA ArruL 14, 2008 PAGE 10 Summary of Estimated Water Use CY 2004 Actual (1) FY 05-07 Estimate (2) FY 07-08. Estimate (3) . FY 08-09 Estimate (4) Summary of Water Sales (HCF) Single Family 1,688,000 1,644,000 1,611,000 1,586,000 Multi-Family 2,390,000 2,327,000 2,280,000 2,245,000 Non-Residential 3/4" meter 106,000 103,000 101,000 99,000 1"meter 123,000 120,000 118,000 116,000 1.1/2" meter 355,000 346,000 339,000 334,000 2" meter 447,000 435,000 426,000 419,000 3" meter 283,000 276,000 270,000 266,000 4" meter 216,000 210,000 206,000 203,000 6" meter 248,000 241,000 236,000 232,000 Recycled Water 24,000 23,000 23,000 23,000 Total 5,880,000 5,725,000 5,810,000 5,523,000 Total in AF 13,499 13,143 12,879 12,679 Summary of Water Production (5) mgd 13.00 12.80 AF 14,557 14,333 Unacct.forLosses -11.5% -11.5% Notes: (1) Based on utility billing system data for CY 2004.- (2) Estimate based on FY 06-07 estimated rate revenue, FY 06-07 rates, Oct. 2007 customers, and CY 2004 water usage adjusted for 2.63% conservation. (3) Assumes no customer growth and 2.00% conservation (4) Assumes no customer growthand 1.54% conservation. (5) Production volumes from City's 5-Year Water ForArast model. To estimate this conservation savings we started with the estimated actual water rate revenue from FY 06-07, as reported in the City's water forecast model. From that total revenue, estimates of private fire service charge revenue and water service charge revenue were subtracted. Those estimates are based on the account information in Exhibit 4 and the service charges applicable during FY 06-07. The remaining water rate revenue is assumed to be from water usage charges. The FY 06-07 water usage tier rates were applied to theaggregate water usage from CY 2004 and a water conservation factor applied until the calculated rate revenue equaled the estimate derived by subtracting service charge revenue from the estimated actual total rate revenue. The resulting 2.63 percent conservation savings from CY 2004 to FY 06-07 seems reasonable. GIL BORBOA AERn 14,2008 . ~ PAGE 11 For FY 07-08 and FY 08-09 annual water usage was estimated based on assumptions contained in the City's water forecast model. For FY 07-08 water conservation savings of 2.00 percent was assumed and for FY 08-09 water conservation savings of 1.54 percent was assumed. The- bottom portion of Exhibit 5 summarizes water production (water demand) assumptions reflected in the rate analysis. The production volumes were obtained from the City's water forecast model. The difference between water production and water sales is estimated to be about 11.5 percent. This unaccounted for water loss rate appears consistent with prior estimates for the City. Exhibit 6 presents the calculation of water rates for FY 08-09 (to be adopted in July 2008). These water rates are based on the revenue requirements for FY 08-09 using on the financial plan model, excluding revenue from. private fire service charges, as summarized below. Bi-monthly private fire service charges should be adjusted by the percentages shown for overaIl rate increases, as shown at the top of page 2 and in Exhibit 1. FY 08-09 Revenue Rqmt. from Financial Plan $14,348,000 Less Private Fire Service Charge Revenue - 747 000 Net Revenue Rqmt. from Water Usage Charges $13,501,000 The distribution of water sales into each of the water usage tiers is based on analysis of CY 2004 water usage data for each customer class and by meter size for non-residential customers, Even though water demand is assumed to decline as a result of water conservation savings, the distribution of sales across tiers is assumed to be the same (i.e., water conservation savings occurs across all tiers). Fxhibit6 City of Santa Monica -Wale Utility m r~ury z wa First Tier Secontl Tler Thirtl Tier Fourth Tier m ~ Total Water FY 00-09 Break Break 'Break Usage ItserGrou Water USe Rate Revenue Point Rafe Revenue Pohrt Rate Revenue PoirR Rate Revenue Revenues (HCF) ($MCF) ($) (HCF) ($/HCF) ($) (HCF) ($]HCF) ($) (HCF) ($MCF) ($) ($) Single Family Resitl. 1,586,000 $ 165 $ 9W,02o 14 $ 2.4] $ 1,51],084 40 $ 3.]0. S 1,319,453 148 $ 5]8 $ 184,382 S 3,900,925 Wafer Vae by Tier-> 3]% 39% ]2% 2% Mu10.Family Resid 2,245,000 $ 165 $ 1,452,835 4 $ 24] $ 2,130,488 9 $ 3.]0 $ i,fi63 fi56 20 $ 5.78 $ 289,380 $ 5,536,339 Water USe try Ter-+ 39% 38% 20% 2% I, NonResitlentlal 1,869,000 $ 2.35 $ 3,842,12fi Varies $ 5]6 $ 190,550 $ 4,[02,6]8 j Watrr USe by Tier-> ~ 90% 2/ ~',. Rerycletl Water 23,000 $ 2.22 $ 51,080 $ 51,Ofi0 Totals 5,523,000 6,306,04] 3,fi4T,5T2 $ 2,8 ,109 $ 664,2]3 13,611 ,OOo (1) Wa[er rafts calculaleJ based on FY 08A9,evenoe,equirement, exclutling revenues from pmafefre service cM1argm. i _ GIL BORBOA Aniu[,14, 2008 PAGE 12 Other information regarding the proposed water rate structure changes, as well as other assumptions used in the analyses, was presented in previous reports and correspondence. In particular, City staff may wish to review the 2007 Water Rnte Study and its discussion on rate structure recommendations and implicarions. Please give me a call at 916-444-9622 if you have any questions regarding this letter or related analyses. Sincerely,.. Robert Reed The Reed Group, Inc. ATTACHMENT B City of San to Monica, California rii~ ~~ ~a~~ ~~~~~~~ WASTEWATER RATE STUDY FINAL REPORT April, 2008 ALE F ~~T SECTION L• Executive Summary ...................................................................................................1-3 1.1 Customer Classes and Loadings ..................................................... .....:...:............................... 1-4 1.2 . Review of Revenue Requirements .................................................. ...................................:...:. l-4 1.3 Alternative Financing Plans ............................................................ :........................................ 1-5 1.4 Altemative Rate Structures ............................................................. ......................................... l-6 1.5 Cost of Service ......................:..................................................:...... ..........:........................:..... l-6 1.6 Proposed Rate Structure /Rate Design ..............:.....................:...... ......................................... l-7 1.7 Customer Rate Impacts .............:..................................................... ........................................:1-7 SECTION 2: Introduction .................................:..................................... .........................................2-1 2.1 Background ...............................:....:............:................................... ......................:..................2-1 2.2 . Existing Rate Structure .............................:............:........................ ......................................:..2-2 2.2.1 Bi-Monthly Service Charges .................:................:...............:......... ..........................................:r2=2 2.2.2 CommodiTyRates ............................................................................. .:.....................................:....2-3 2.3 Objectives ..............:.................................................:...................... ....:....................................2-4 2.4 Scope ..............:................................................................................. .......................................:2-5 SECTION 3: Customer Classes and Loadings ............:..................................................................3-1 3.1 Wastewater Flow Estimation ...............................................:........... ........................................3-1 3.2 BOD and SS Strength Assignments ......................:.......................... .................................:......3-2 SECTIO N 4: Revenue Requirements .....:..................................................:.....................................4-1 4.1 Assumptions ...............:....::............................................................... ........................................4-1 4.2 System Revenues ......:.............:.............................:.......................... ...................:....................4-2 4.3 System Expenditures :....................................................:.................. ..................:.....................4-2 4.3.1 Operating and Maintenance Expenses ............................:.............:... ............................................ 4-2 4.3.2 .Capital Expenditures ........:............................................................... ........................................:...4-3 4.4 Alternative Financing Plans ......................................:..................:... ........................................4-4 SECTIO N 5: Cost of Service Calculation ..................:...........................:........................................5-i 5.1 Cost Allocation to Wastewater Parameters .:...........................:........ ......................:................. 5-1 5.2 Unit Cost of Service ..................................:..................................::.. .....................................:.. 5-2 SECTION 6: Rate Design.: ...:.............:..................................................... ......:................................:6-1 6.1 Altemative Rate Structures ......................................................:....... ........................................6-1 1-1 6.1.1 Alternative A: Current Structure ......................................................................:....... ..........:......... 6-1 6.1.2 Alternative B: Reduced Bi-Monthly Service Charge .............................................. .................... 6-1 6.1.3 Altemative C: 100% Commodity Rate .................................................................... .................... 6-2 6.1.4 Alternative D: Flat SFR Service Charge and 100% Commodity Rate ...........:........ .................... 6-2 6.2 Proposed Rate Structure ..:.....................................................:................................ .................. 6-2 6.3 Customer Impact Analysis ...:.............:......:......................::.................................... ..................6-4 6.3.1 SFRImpacts ............................................................................................................. ....................6-4 6.3.2 MFR Impacts .............................................:..................................................:........... .................... 6-4 6.3.3 Non-Residential Impacts .......................................................................................... .................... 6-4 Appendix A -Customer Strength Classification Appendix B -System Sewage Generation Factors 1-2 ~Tl~t~ ~; ~~~~1T90T~ ~n~l~~~~ In October 2006, the City of Santa Monica (City) engaged Raftelis Financial Consultants, Inc. (RFC) to conduct a wastewater rate study. The CiTy previously conducted a wastewater rate study in 1996 and has since updated its wastewater rates by applying an annual inflationary factor. During that same period, the City replaced the majoriTy of its sewer lines with funds provided primarily through the Federal Emergency Management Agency (FEMA) to rehabilitate the sewer system, which was damaged by the 1994 Northridge earthquake. Increased capital costs related to the CiTy's share of annual improvements to the City of Los Angeles (LA) Hyperion System have required the City to tap into its wastewater reserves. This. report documents the results of the study, describes the cost of service allocations and rate setting process, provides two alternative financial plans to address the five-year capital program, and proposes an alternative wastewater rate structure. The CiTy provides wastewater services to approximately 15,500 customers within an eight square mile service area. The City owns and operates a local wastewater system (local system). Wastewater flows from the local system are discharged to the Hyperion System for treatment and disposal. The City is one of 30 "Subscribing Agencies" served by the Hyperion System and the 450 million gallons per day (MGD) Hyperion Treatment Plant (HTP). Under the terms of the Hyperion Agreement, the City pays a proportionate share of the. operations and maintenance (O&M) expenses and capital charges for the Hyperion System. The City also administers the environmental programs division as part of its wastewater fund. The specific objectives of the study include: • Update flow, biochemical oxygen demand (BOD), and suspended solids (SS) loadings for all customer classes; • Confirm and/or reclassify wastewater users based on updated wastewater strength estimates in the "Assignment of Amalgamated System Sewer Generation Factors to CounTy Use Codes" applicable for users ofthe Hyperion System; • Review the overall costs (revenue requirements) of providing wastewater service and provide alternative financial plans to recover these costs during the planning period; • Determine cost of service for different customer classes; and • Evaluate alternative wastewater rate structures that are consistent with the water rate structure, considering the City's Sustainable City Program's goals to reduce demand. The executive summary highlights the principal findings and suggestions ofthe study.. The remainder of this report documents our findings relative to the objectives of the study. 1-3 1.1 Customer Classes and Loadings The City's current rate structure incorporates a residential customer class, which includes single-family residential (SFR) and multi-family residential (MFR), and anon-residential customer class which classifies all. commercial, industrial, and institutional users into nine sewage strength categories. SFR and MFR have similar strength characteristics and are therefore assumed to have. identical BOD and SS loadings. Since there is significant variability in wastewater strengths among different types of commerciaUindustrial users, the City uses different rates for different classes of non-residential users. The non-residential customer class is categorized based on the combined strength in milligrams per liter (mg/1) of BOD and SS defined by LA for users of the Hyperion System. 1.2 Review of Revenue Requirements Revenue requirements from rates are the net of all expenditures including reserve requirements, less non-rate revenues. The City's principal sources of revenue to recover operating costs include sewer user rates and charges paid by the City's customers, miscellaneous charges, interest earnings, transfers from other divisions, and payments from LA for the O&M of Moss Avenue pumping station. The City's (O&M) expenditures related to the local collection system and the administration of the environmental programs are estimated to range from $14.1 to $16.3 million between fiscal year (FY) 2009 and FY 2013. Annual capital expenditures, including debt. service and rate funded capital projects range from $8.3 to $12.5 million per year from FY 2009 to FY 2013. The Hyperion capital charges, recovered by LA for capital improvements to the Hyperion System, constitute the majority of capital expenditures included in the City's wastewater capital improvements plan (CIP) and range between $42 and $8.2 million per year over the same time period. Figure l-1 presents the annual capital expenditures, classified as local system improvements and Hyperion capital charges, which are included in the. City's wastewater CIP: 1-4 1.3 Alternative Financing Plans In order to meet projected revenue requirements, including desired operating and capital reserve fund levels, the City asked RFC to develop two alternative financing plans to evaluate the financial impacts of funding capital expenditures through various levels of reserve funds and annual rate adjustments. In addition to the two alternatives described below, RFC also reviewed debt financing alternatives at various levels of debt funding. However, ifwas decided that those alternatives were not consistent with prudent business practices. The two selected alternatives, presented below, both use rate revenues to fund capital expenses. • Alternative 1 assumes the entire- City's wastewater capital expenditures over the five-year planning period will be funded through wastewater rate adjustments and available reserves. • Alternative 2 is similar to Alternative 1 except fora $3 million of additional reserves available to finance capital expenditures in FY 2008. Table I-1 presents the alternative wastewater capital financial plans. It compares the annual revenue adjustments needed to meet financing requirements for each year of the five-year planning period, from FY 2009 to FY 2013. 1-5 )Figure 1-1: Wastewater Capital Improvements Plan Table 2-2: Alternative Capital Financing Plans FY 2009 FY 2010 FY ZOli FY 2012 FY 2013: 5-yr Tofat Alternative 1 Atternatiue 2 18.0% 15.Q% 18.0% 15.0% 15.0% IS.Q% 9.0% 9.0% - 4,0% ! 9.0% 64.0% 63:0% 1.4 Alternative Rate Structures The City requested a comparative evaluation of the currentwastewater rate structure with alternative rate stmctures that complement the City's water rate structure and more effectively address the goals of its Sustainable City Program. As part of this study, RFC considered the following wastewater rate structures: 1. Alternative A -The current rate structure: Incorporates bi-monthly service charges based on meter size and. commodity rates per hundred cubic feet (HCF) of estimated wastewater discharge that vary with the wastewater strength of different customer classes. 2. Alternative B -Modified bi-monthly service charge: Eliminate bi-monthly service charges by meter size and replace with a uniform bi-monthly service charge. Continue to charge commodity rates per HCF of estimated wastewater discharge that vary with the wastewater strength of different customer classes. 3. Alternative C -Eliminate bi-monthly service charges: Eliminate the bi-monthly service charges all together and recover 100% of the annual rate revenue requirements through the commodity rates charged per HCF of estimated wastewater discharge that vary with the wastewater strength of different customer classes. 4. Alternative D -Eliminate bi-monthly service charges and implement a flat SFR rate: Eliminate the bi-monthly service charges for all non SFR customers and recover 100% of annual rate revenue requirements for those customers through commodity rates charged per HCF of estimated wastewater discharge that vary with wastewater strength. For SFR customers, eliminate the commodity rates per HCF of wastewater flow and implement a bi-monthly flat service charge based on the average wastewater discharge and strengths for the typical SFR customer. 1.5 Cost of Service RFC updated the cost of service allocations based on the methodology approved by the California State Water Resources Control Board (SWRCB). The revenue requirements are allocated to different user classes in proportion to their use of the wastewater system. As mandated by the SWRCB, cost allocations are made to flow, BOD, and SS parameters. 1-6 1.6 Proposed Rate Structure /Rate Design Consistent with the water rate structure, the City intends to encourage conservation goals established as part of the Sustainable City Program: Implementation of a rate structure based only on commodity rate (Alternative C above) best meets the City's conservation objectives. This wastewater rate structure is also consistent with the regulatory requirements of the SWRCB, as it is based on quantity and strength of wastewater discharges. The proposed commodity rates for each of the- residential and non-residential customer classes in the City are shown in Table 1-2. The rates under the two alternatives will increase annually by the Ievel of annual revenue adjustments shown in Table 1-1 for both ahematives. Table 1-2: Proposed Commodity Rates per HCF of Wastewater for FY 2009-2010 - - Altern ative 1 Altern ative 2 Commodity Rates (HCF of wastewater) Dischar a Factor FY 2009 FY 2010 FY 2009 FY 2010 Residential Single-family residential 51.00% $ 2.94 $ 3.47 $ 2.87 $ 3.30 Individually metered condo/apartment 95.00% $ 2.94 $ 3.47 $ 2.87 $ 3.30 Duplex 80.00% $ 2.94 $ - 3.47 $ 2.87 $ 3.30 Triplex 85.00% $ 2.94 $ 3.47 $ 2.87 $ 3.30 Four Plex 90.00% $ 2.94 $ 3.47 $ - 2.87 $ 3.30 Over Fourplex 95.00% $ 2.94 $ 3.47 $ 2.87 $ 3.30 Non-Residential General Commercial 89.00% $ 2.68 $ 3.16 $ .2.61 $ 3.00 Medium Low 89.00% $ 2.79 $ 3.29 $ 2.72 $ 3.13 Medium 89.00% $ 3.22 $ 3.80 $ 3.14 $ 3.61 Medium High 89.00% $ 3.51 $ 4.14 $ 3.42 $ - - 3.93 High 89.00% $ 4.11 $ 4.85 $ 4.01 $ 4.61 Churches 89.00% $ 2.64 $ 3.12 $ 2.57 $ 2.96 School/Institutional 89.00% $ 2.64 $ 3.12. $ 2.57 $ 2.96 Misc.lndustrial 89.00% $ 3.26 $ 3.85 $ 3:18 $ 3.66 Paper Mate/Gillette 89.00% $ 2.76 $ 3.26 $ 2.69 $ 3.09 Wastewater Ratelncreases 18% 18% 15% 15% The City currently serves a few non-metered wastewater residential customers. To ensure that these customers pay their fair share, their bills should be based on the average bi-monthly water usage of j6 HCF. 1.7 Customer Rate Impacts RFC performed an analysis to evaluate the impact of the changes to the wastewater rate structure and the changes in user classification and loadings on the bi-monthly bills of different customers of the City's 1-7 wastewater system. For this analysis, we calculated bi-monthly bills under both the current and proposed rates for customers within each customer class with anticipated wastewater discharges ranging from low to high. The impacts of each of these changes among user classes and within user classes are discussed below. SFR customers with lower bi-monthly wastewater discharges will benefit from the recommended rate structure, while customers with higher wastewater discharges will be adversely impacted. The impacts on MFR customers vary because of their varying discharge factors and meter sizes. In general, Non- ' Residential customers will tend to experience adverse impacts since costs are recovered entirely through commodity rates and the burden of cost recovery is shifted to higher use customers. Some Non- Residential customers with low wastewater discharges may benefit from the new rates. Although customer impacts vary amongst different customer classes, the recommended rate structure is more consistent with the resource conservation goals of the Sustainable City Program. Tables 1-3 and 1-4 compare sample bi-monthly customer bill-impacts under the current and proposed rate structure under both financing plans. The proposed bills are calculated under Alternative C rate structure as described in Section 1.4. ' 1-8 'Fable 1-3: Sample Bi-Monthly Customer Bill Impacts -Alternative 1 Dischar e Br-monthty Bi-MOnthl Bills Difference Customer Class (Meter Size) ', g - Factor Water Use J' '. Current FY Proposed FY $ % HCF 1 '-:2008 Rafes 2009- Single Familv Residential (3/4") Low Bi-Monthly Flow 51.00% 18 $30.10 $26.99 ($3.11) -10.32% Moderate Bi-Monthly Flow 51.00% 36 $42.67 - $53.98 $11.31 26.49% High Bi-Monthly Flow 51.00% 60 $59.44 $59.96 $30.52 51.35% Multi-Familv Residential Single Duplex (t5") 95.00% 40 $127.03 $111.72 ~ - ($15.31) -12.05% Duplex (1") - 80.00% 50 $93:87 $117.60 $23.73 2528% Triplex (1.5") 85.00% 75 $162.31 $187.43 $25.12 15.48% Fourplex (2") ~ 90.00% 80 $216.71 $211.68 ($5.03) -2.32% Over Four Plex (2") 95.00% 100 $248.22 _. -$279.30 $31.08 12.52% ..._ ... __ .__ _..___.. _:.v _ __~ _ ._. _..,..,.. __....._ __ __ _ __.._ _._..._ ~._... _ General Commercial (1") Low Bi-Monthly Flow 89.00% 37 $86.16 $88.25 $2.09 2.43% Moderate Bi-Monthly Flow 89.00% 60 $115.43 $143.11 $27.68 23.98%. - High Bi-Monthly Flow 89.00% 120 $191.79 $286.22 $94.43 49.24% Medium Low Strenoth (1 ") Low Bi-Monthly Flow 89.00% 60 $131.99 $148.99 $17.00 12.88% Moderate Bi-MOrithly Flow 89.00% 100 $193.93 $248.31 $54.38 28.04% High Bi-Monthly Flow 89.00% 120 $224.90 $297.97 $73.07 32.49% Medium Strenoth (2'9 Low Bi-Monthly Flow 89.00% 90 $289.48 $257.92 ($31.56) -10.90% Moderate Bi-Monthly Flow 89.00% 150 $403.76 $429.87 $26.11 6.47% High Bi-Monthly Flow 89.00% 250 $594.22 $716.45 $122.23 20.57% Medium Hioh Strenoth (1'9 Low Bi-Monthly Flow ~ - 89.00% 60 $180.05 $187.43 - $7.39 4.10% Moderate Bi-Monthly Flow 89.00% 100 $274.03 $312.39 $38.36 14.00% High Bi-Monthly Flow 89.00% - 120 $321.02 $374.87 $53.85 16.77% Hioh Strenoth (4") Low Bi-Monthly Flow 89.00% 400 $1,558.42 $1,463.16 ($95.26) --6.11% Moderate Bi-Monthly Flow 89.00% 709 $2,482.45 $2,593.45 $111.00 4.47% High Bi-Monthly Flow 89.00% 2,000 $6,343.06 $7,315.80 $972.74 15.34% Ve Hi h Bi-MOnthl Flow 89.00% 5,000 $15,314.26 $18,289.50 $2,975.24 19.43% (1) Represents dischazge factor applied to billed water usage. 1-9 Table 1-4: Sample Bi-Monthly Customer Bill Impacts -Alternative 2 Dischar e Bo-monthly :. Bi-Month Bills r '. Difference Customer Class (Meter Size) ', g Factor Water Use -. ,. '. Current FYI Proposed FY ~. . % . HCF t ' 2008 Rates 2009 Single Family Residential (3/4") - Low Bi-Monthly Flow 51.00% 18 $30.10 $26.35 ($3.75) -12.46% Moderate Bi-MonthlyFlow 51.00% 36 $42.67 $52.69 $10.02 23.48% High Bi-Monthly Flow - 51.00%. 60 $59.44 $87.82 $28.38 47.74% Multi-Family Residential Single Duplex (1.5") 95.00% 40 $127.03 $109.06 ($17.97) -14.15% Duplex (l") 80.00% 50 $93.87 $114.80 , $20.93 22.30% Triplex (1.5") 85.00% 75 $162.31 $182.96 $20.66 12.73% Fourplex (2") 90.00% 80 $216.71 $206.64 ($10.07) -4.65% Over Four Plex (2") 95.00% - 100 $248.22 $272.65 $24.43 9.84% -_--__ ._____~_... .~ _ _.__.___ ._ -.___m_ ._.._ _ n~ .__ .. __~ General Commercial (1") Low Bi-Monthly Flow 89.00% 37 $86.16 $85.95 ($0.21) -0.25% Moderate Bi-Monthly Flow 89.00% - 60 $115.43 $139.37 $23.94 20.74% High Bi-Monthly Flow 89.00% 120 $191.79 $278.75 $86.95 45.34% Medium Low Strength (1") , Low Bi-Monthly Flow 89.00% 60 $131.99 $145.25 $13.26 10.05% Moderate Bi-Monthly Flow 89.00% 100 $193.93 $242.08 $48.15 24.83% High Bi-Monthly Flow 89.00% 120 $224.90 $290.50 $65.59 29.17% Medium Strenoth (2"1 Low Bi-Monthly Flow 89.00% 90 $289.48 $251.51 ($37.97) -13.12% Moderate Bi-Monthly Flow 89.00% 150 $403.76 $479.19 $15.43 3.82% High Bi-Monthly Flow 89.00% 250 $594.22 $698.65 $104.43 17.57% Medium Hiah Strenoth (1'9 - Low Bi-Monthly Flow 89.00% 60 $180.05 $182.63 ~ $2.58 1.43% Moderate Bi-Monthly Flow 89.00% 100 $274.03 $304.38 $30.35 . 11.08% Hlgh BI-Monthly Flow ~ 89.00%- 120 $321.02 $365.26 $44.23 13.78% Hioh Strenoth (4") - _ Low Bi-Monthly Flow 89.00% 400 $1,555.42 $1,427.56 ($130.86) -8.40% Moderate Bi-Monthly Flow 89.00% 709 $2,482.45 $2,530.35 $47.90 1.93% High 61-Monthly Flow - 89.00% 2,000 $6,343.06 $7,137.80 $794.74 12.53% _ Very High Bi-Monthly Flow 89.00% 5,000 $15,314.26 $17,844.50 $2;530.24 16.52% (1) Represents discharge factor applied to billed water usage 1-10 ~~I Zo I~~~~l~l~~rlt~ 2.1 Background The City of Santa Monica (City) engaged Raftelis Financial Consultants, Inc. (RFC) in October 2006 to perform a wastewater rate study, address revenue requirements, develop a financing plan, and identify potential opportunities to improve the current rate structure. Although the City has updated its wastewater rates annually to reflect inflation based on the Consumer Price Index (CPI), it has not conducted a wastewater rate study since 1996. During the past decade, the City addressed the major wastewater capital needs of its local collection system primarily through funds received from the Federal Emergency Management Agency (FEMA) to address sewer rehabilitation needs caused by the 1994 Northridge earthquake.. During that same time, the City faced increasing capital costs associated with the City of Los Angeles (LA) Hyperion System. The City has limited influence over capital costs associated with the Hyperion System. Consequently, addressing these capital needs with rate adjustments tied to the Consumer Price Index has resulted in the depletion of available wastewater reserves. Additionally, the City is currently in the process of implementing a new water rate structure and wishes to evaluate wastewater rate structures that will both complement the new water rate structure and address the. goals of its Sustainable City Program. .This report documents the fmdings; analyses, results, and suggestions of the wastewater rate study. The City owns and operates a local wastewater collection system (local system) as part of its wastewater fund (31). This local system provides. wastewater collection to approximately 15,500 wastewater customers located within the City's eight square mile service area. The local system comprises approximately 125 miles of sanitary sewers, 20 miles of storm drains and 825 catch basins, and a pumping. plant. In addition, the City also owns and operates the Santa Monica Urban Runoff Recycling Facility (SMURRF) which treats low flow dry weather runoff and produces recycled water for irrigation purposes. Average wastewater flows associated with the local system are approximately 11:1 million gallons per day (MGD) and support the City's permanent water conservation measures associated with its Sustaiuable City Program. The City operates the local system as aself-supporting enterprise and costs are accounted for separately under the wastewater enterprise fund. Wastewater. flows from the local system are discharged to the Hyperion Treatment Plant (HTP); which. is part of the Hyperion System that provides wastewater collection, treatment, and disposal services for an approximately 600 square mile service area. The Hyperion System, owned by the City of Los Angeles, provides wastewater services to portions of LA, the City of Santa Monica, and 28 other "Subscribing Agencies" pursuant to sewage disposal contracts. The Hyperion System consists of the 450 MGD HTP and two water reclamation plants, 28 pumping stations, and a collection system that comprises local 2-1 service lines and major collection interceptors. Under the terms of the April 22, 1999 Hyperion Agreement, all treatment and disposal charges are based on actual discharges and comply with federal and state requirements for measuring. discharge in terms of flows and strength.. The Hyperion Agreement also requires that LA and all the Subscribing Agencies pay at the same rates for treatment, disposal and conveyance based on flow, strength and distance from the treatment plant. Since LA has received federal grants and state loans, the City is also obligated to comply with the California State Water. Resources Control Board (SWRCB)'s Revenue Program Guidelines. The guidelines require that recipients of state-administered grants and/or loans establish a system of user charges that recovers operations, maintenarice, and replacement costs from users on a basis proportionate to use. The guidelines specifically require a fair and equitable apportioning of costs based on class-specific contributions of flow and strength of wastewater pollutants discharged. To comply with the revenue program guidelines, the City requested that RFC review the cost of service and develop astrength-based billing method to allocate costs among the various customer classes within the City system. The strength-based billing procedure is based on flow and the strength parameters of Biochemical Oxygen Demand (BOD) and Suspended Solids (SS); which are consistent with the strength parameters measured by LA and billed to the Subscribing Agencies of the Hyperion System. 2.2 Existing Rate Structure The City's existing wastewater rate structures for the single-family residential (SFR), Multi-family residential (MFR), and CommerciaUlndustrial customer classes include bi-monthly service charges and commodity rates. While the bi-monthly service charges are fixed charges recovered from each customer account based on water meter size, the commodity rates are applied based on bi-monthly water usage per hundred cubic feet (HCF) multiplied by the appropriate discharge factor. The existing rate structure was developed as part of the 1996 rate study conducted by David M: Griffith & Associates and the Keene Company (DG&A). The rates determined as part of that rate study have been updated annually to reflect inflation. 2.2.1 Bi-Monthly Service Charges The bi-monthly service charges, or service charges, are based on water meter size with no distinction for customer class. When originally determined, the service charges were calculated to recover fixed customer related costs and fixed capital costs. The customer costs were allocated to customers equally with no distinction for meter size, while the capacity costs were allocated to customers based on the hydraulic capacity of each meter size. The City's existing bi-monthly service charges per meter size are presented. iri Table 2-1. 2-2 Table 2-i: existing Bi-Monthly Service Charges Bi-Monthly Service Charge: Current Meter Size 3/4" $ 17.52 1" $ 39.07 1.5" $ 74.97 2" $ 118.07 3" $ 218.61 4" $ 362.26 6" $ 721.37 8" $ 1,152:28 10" $ 1,655.06 2.2.2 Commodity Rates The commodity rates for each customer class. are based on estimated volumes of wastewater flows during the bi-monthly billing period. The commodity rate and method of estimating wastewater flows varies depending on customer class. For each customer class, the estimated volume of. flow is determined based on actual billed water usage and `an assumed discharge factor that represents the portion of water usage that is returned to the wastewater system. The usage factors range from 51 % for SFR, to 95% for MFR with more than 4 dwellings. Typically, SFR customers exhibit the greatest level of outdoor water use that is not returned to the wastewater system. All Non-residential customers are assumed to return 89% of water use as wastewater discharge. The commodity rates vary based on the typical strength of wastewater discharged by customer class. Residential. customers are charged based on domestic or typical residential strengths of wastes: Non- residential customers are grouped into customer classes that are based on ranges of pollutant strength. Specifically, commercial and industrial users are classified based on LA City Use Code, which defines BOD and SS strengths for type of business or establishment. The City's existing commodity rates are presented in Table 2-2. 2-3 'Table 2-2: Existing Commodity Rates per dICF of Wastewater Commodity Rates t13CF of wastewater) Residential Single-family residential Individually metered condo/apartment Duplex Triplex Four Plex Over Fourplex , Non-Residential General Commercial Medium Low Medium Medium High High Churches SchooUInstitutional Misc. Industrial Paper Mate/Gillette Current Dischar a Factor FP 2008 51.00% 95.00% 80.00% 85.00% 90.00% .95.00% 89.00% 89.00% 89.00% 89.00% 89.00% 89.00% 89.00% 89.00% 89.00% $1.37 $1.37 $1:37 $1.37 $1.37 $1.37 $1.43 $1.74 $2.14 $2.64 $3.36 $1.37 $1.34 $1.55 2.3 Objectives - Several related objectives need to be considered in the development of a financial plan and in the design of rates. This being the case, keen judgment plays a role. in the final design of rate structures and rates. The major objectives of the studyupdate are to: • Update flow, biochemical oxygen demand (BOD), and suspended solids (SS) loadings for all customer classes; • Confirm and/or reclassify wastewater users based on updated wastewater strength estimates in the "Assignment of Amalgamated System Sewer Generation Factors to County Use Codes" applicable for users of the Hyperion System; • Review the overall costs (revenue requirements) of providing wastewater service and provide. alternative financial plans to recover these costs during the planning period; • Determine cost of service for different customer classes; and • Evaluate alternative wastewater rate structures considering the goals of the City's Sustainable City Program consistent with the water rate structure. 2-4 2.4 Scope The scope of this study includes the determination of wastewater user rates through an update of system costs, flows, and. loadings, review of the current rate design, evaluation of alternative financial plans and rate designs, and recommendation of an equitable rate structure in compliance with SWRCB requirements. The comprehensive cost of service and rate design component includes three major processes. The three major processes are as follows: Financial Planning: Revenue requirements are projected for afive-year period from FY 2009 through FY 2013. Financial planning involves an estimation of annual O&M and capital expenditures, annual debt service and reserve requirements, operating and capital revenue sources, and the determination of required annual user revenues from rates and charges. Meeting debt coverage requirements also play an important role in financial planning. The net result is the annual adjustments needed to ensure financial stability. User classification, annual user loadings estimation for the selected wastewater parameters, and system mass balance analysis are also performed concurrently. RFC evaluated two capital financing scenarios as part of this scope and analyzed the impacts on the City's customers. Cost of Service: Cost of Service involves the apportioning of required annual revenues to the different user classes proportionate to their contributions of flow, TSS and BOD to the wastewater system. Rate Design: Rate Design involves the development of a fixed and variable. schedule of rates for each of the different user classes to equitably recover the costs attributable to them. As part of this study, RFC developed and evaluated four alternative rate structures or designs. 2-5 ~~$ ~t1~T~[~1E ~~ES ~IU ~A~11V~~ The City's wastewater customer base reflects a mix of residential, commercial, and industrial users. The City currently serves a population of approximately 86,000 and a total of approximately 15,500 accounts. Residential Class: The residential classes, including SFR and MFR customers, are homogenous in that all the users are assumed to have the same BOD and SS strengths. Since all residentialaccounts use the same BOD and SS strengths, they each have a single wastewater rate that includes all three parameters and is based on metered water usage. However, the volume of wastewater flows can vary among the individual users depending on amount and purpose of water usage. The residential users are therefore classified into SFR and MFR user classes since they differ in their water usage characteristics. SFR water usage includes significant imgation usage. MFR water usage includes very low irrigation usage. MFR complexes that have large common green areas and pools usually have separate water irrigation meters. In addition, .the City serves 47 SFR wastewater customers that are not metered. As a consequence, the City has no-water usage inforination to determine the bi-monthly wastewater bill for these customers. To ensure these customers pay their equitable share of wastewater charges, it is recommended the City use bi-monthly water use for the typical or average SFR wastewater customer (36 HCF) in the City of Santa Monica. Non-Residential Class: Typically, there is significant variability in both the volume of wastewater flows and wastewater strengths,. among the different types of commerciaUindustrial users such as food service establishments, retail stores, and supermarkets. Therefore, to ensure fair and equitable determination of wastewater service charges, the City uses separate unit rates for its non-residential users based on their strength characteristics. 3.1 Wastewater Flow Estimation In order to perform a cost of service analysis, wastewater flow needs to be estimated and projected for each customer class, and for the various non-residential user types classified within the different non- residential customer classes. Wastewater flow is not measured for most users because of cost and/or accuracy concerns. Typically, flows are estimated based on either winter water usage or on an estimated percentage return of water usage for residential and most non-residential users. Actual wastewater flow is measured for only a few large commerciaUindustrial users. The City uses an estimated percentage return of water use, or discharge factor for its customers. 3-1 A .breakdown of the City's sewer customer classes, the number of accounts. associated with each customer class, the discharge factors, .and the estimated level of wastewater flow discharged by each customer class is presented in Table 3-1 below. This information is based on FY 2006 billing data. Table 3-1: FY 2006 Customer BiPling Data CustomerClass Residential Single-family residential Individually metered condo/apt Duplex Triplex Four Plex Over Fourplex Total Residential Non-Residential General Commercial Medium Low Medium Medium High High Churches School/I nstitutiona l Misc. Industrial Paper MatelGillette Total Non-Residential Water Total Accounts Billed Water. fHCF1 7,420 1,449,900 1,085 59,687 598 102,729 490 105,623 757 192,328 2,773 1, 933,279 - - 13,123 3,843,545 1,567 928,765 253 177,844 3 996 4 56,049 187 204,715 277 103,609 128 122,741 11 5,467 1 11,505 2;431 1,611,690 Discharge Estimated Factor. WW Flows (1) tHCFI 51. 00% 739,449 95. 00% 56,702 80. 00% 82,183 85. 00% 89,780 90. 00% 173,095 95. 00% 1,836,615 . 2,977,824 89. 00% 826,601 89. 00% 158,281 89. 00% 887 89. 00% .49,883 89. 00% 182,196 89. 00% 92,212 89. 00% 109,239 89. 00% 4,866 89. 00% 10,240 15,554 5,455,236 (1) Estimated wastewater flows based on customer class dischargefactor applied to billed water usage. 3.2 BOD and SS Strength Assignments 1,434,404 4-,412,229 The BOD and SS strength assignments are based on the "Assignment of Amalgamated System Sewage Generation Factors to County Use Codes" used by the City of Los Angeles for flows received and treated through the Hyperion System. LA has developed sewage generation factors (wastewater flows) for residential customers and a variety of non-residential users that have been categorized into County Use Codes, shown in Appendix B. To.reduce complexity, the City groups all residential customers into one strength classification and non-residential customers based on their strength characteristics into eight classes or groups. All customer classes are defined based on a range of the combined strength in milligrams per liter (mg/1) of BOD and SS and the wastewater strengths defined by LA. The strength components for residential customers are based on 265. mg/1 of BOD and 275 mg/1 of SS for a typical residential customer in the City of Santa Monica: 3-2 Table 3-2 presents the annual wastewater flows and loadings estimated for each of the City's customer classes for FY 2006. Table 3-2: Estimated Units of Service 0.62% 0.62% Units of Service Single-family residential Multifamily General Commercial Medium Low Medium Medium High High Churches School/Institutional Misc. Industrial Paper Mate/Gillette Total HCF (t) LBS. Per Year WW Flow BOD SS 739,449 1, 222, 753 1,268, 894 2,238,375 3,701,378 3,841,052 826,601 773,699 773,699 158, 281 246, 62 0 147, 614 887 2,737 1,645 49, 883 168, 756 160, 522 182,196 1,115,626 703,521 92,212 80,154 70,919 109,239 94,955 84,015 4,866 8,805 16,699 10,240 11,821 12,140 4,412,229 7,427,302 7,080,720 (1) Water use adjusted by wastewater discharge factors to determine W W flows: Appendix A provides more information related to the types of users and defined strength concentrations included in each of the non-residential customer classes. The projected billable wastewater flow and loadings for FY 2009 and throughout the 5-year rate planning period are assumed to remain at the FY 20061evels. 3-, A review of the wastewater system's revenue requirements is an integral part of the rate design process. The review involves an analysis of annual operating revenues under existing rates, capital revenues, operating and maintenance (O&M) and capital expenses, transfers between operating and capital funds, and operating and capital reserve requirements. This section provides a discussion of the projected revenues, O&M and capital expenditures, capital improvements financing plans, debt service requirements, and the revenue adjustments required to .ensure the financial stability of the wastewater enterprise. 4.1 Assumptions To develop a financial plan that provides stability; it is customary to review a five to ten year pro forma. Since operating costs and user data are not available in the future; it is necessary to make reasonable assumptions to estimate these data. The following are the assumptions used in the study: 1. Annual O&M and capital expenditures, annual revenues, other revenue sources and reserve requirements, O&M inflation factors, and user account growth projections are based on the same assumptions used by City's Water Resources Deparhnent in its annual wastewater financial and rate updated. User accounts are anticipated to increase at a 1.0 percent annual rate while water usage and wastewater discharges are anticipated to remain constant to reflect conservation efforts. 2. Capital costs, based on current costs; are available for the next five years, future capital costs, including Hyperion costs, are estimated based on a 4.0 percent annual inflation rate. 3. Annual billed wastewater system flows are forecast based on billed water consumption occurring during fiscal year (FY) 2006 within each customer class with the appropriate discharge factors applied to that water consumption. It is assumed that billed wastewater flows will remain constant during the projection period due to continued water conservation efforts. 4. Annual BOD & SS concentrations are forecast based on the annual flows for each customer class (or business classification within a customer class) and the defined wastewater pollutant strengths for each customer class. .The customer type and strength categories are similar to the existing categories. 5. The BOD & SS concentrations for different types of establishments or users have been updated to- reflect the current strengths shown in "Assignment of Amalgamated System Sewage Generation Factors to Los Angeles County Use Codes. (See Appendix B). 'The City uses the Consumer Price Index (CPI) of 3.0% during the forecastperiod, annual cost of living adjustments . (COLA) of 4.0%, annual workers compensation increases 5.0%, annual health increases of 12.0%, annual dental increases of 6.4%, and other specific factors for itemssuch as retirement and administrative indirect costs. 4-1 4.2 System Revenues The wastewater fund derives its required annual operating and capital revenues from a number of sources. The principal sources of operating revenues are the wastewater service charges collected on a bi-monthly basis from the City's customers. Other revenue sources include miscellaneous operating revenues such as administrative fines and penalties, industrial waste fees, permit fees, and payments from LA for the O&M of Moss Avenue pumping station. Other non-operating revenues include transfers from other divisions which primarily include funds to pay a portion of the costs to administer the environmental programs division (662) that is operated under the wastewater fund (31). Capital revenues include capital facility. fees, reserves, state and federal grants and loans and interest earnings and investments. RFC reviewed the various sources of operating and capital revenues and incorporated assumptions related to these revenue sources into the development of the two alternative financing plans discussed below. 4.3 System Expenditures In order to provide for the continued operation of the City's local system, the enterprise must operate on a sound financial basis. Revenues must be sufficient to meet revenue requirements or cash obligations of the system. .Revenue requirements include O&M expenses, capital improvement program (C1P) expenditures, principal and interest payments on existing debt, and other obligations. 4.3.1 Operating and Maintenance Expenses O&M expenditures include costs of operating and maintaining the wastewater collection system and administering the City's environmental programs. The wastewater.division (661) and the environmental programs division (662) are funded through the wastewater fund (31) within the environmental and public works management department (500). The costs are a continuing normal obligation of the system, and are met from operating revenues collected from customers of the wastewater system and through transfers from other City departments or divisions for the environmental programs. The environmental programs division administers programs and incentives to encourage local stakeholders to conserve energy and water, reduce waste, and minimize or eliminate use of toxic materials. As such, other divisions such as water and solid waste provide annual transfers to the wastewater fund to help fund the costs to administer the environmental program division. The majority of O&M cost projections related to the local system are escalated to reflect inflation based oh an estimated annual CPI escalator or other costs escalators such cost of living adjustments (COLA) over the five-yearplanning period. The City must also pay LA for wastewater treatment and disposal. As Figure 4-1 demonstrates, the LA treatment disposal costs represent a substantial portion of the City's annual O&M expenses, approximately 34 percent. The City's annual total O&M expenditures range from $14.2 to $16.3 million. 4-2 Figure 4-1: LA Treatment and Disposal: As Portion of Total O&M Expenses FY 2009 O&M~penses ~% 66' ® LA Treatment City O&M 4.3.2 Capital Expenditures The majority of the capital improvements associated with the City's local system relate to wastewater. main replacements, fleet vehicle replacements, street repairs, .and technology replacements. Over the past l0 .years, the City has replaced the majority of wastewater mains, within its local system. This aggressive replacement program was financed primarily through FEMA funds provided to address sewer rehabilitation needs caused by the 1994 Northridge earthquake. In addition, the City must pay a portion of the capital costs associated with capital improvements of the Hyperion System which are determined by LA. This has required the City to deplete the FEMA funds and draw down reserves to address these capital needs: Capital revenue requirements for wastewater include existing debt service and rate funded portiori of capital. projects to meet the funding requirements for the local wastewater system capital improvement projects. Hyperion Capital Charges represent a .significant portion of the City's annual wastewater expenditures, ranging from 19.2 to 3-0.2 percent of total wastewater revenue requirements during the five-year forecast period. As Figure 4-2 demonstrates, the Hyperion capital charges represent a substantial portion of the City's annual capital improvements and are anticipated to drive the City's increased capital costs during the five-year rate planning period. The City's annual capital expenses, not including existing debt service, range from $5.7 to $9.9 million. 4-3 4.4 Alternative Financing Plans To determine the most appropriate and financially feasible wastewater capital financial plan, RFC developed a computer model (Model) to evaluate the financial and customer impacts of two alternative capital financing plans. Each of these capital financing plans was developed to address capital improvement needs of the local wastewater system plus the Hyperion System Capital Charges, which are the City's portion of theannual capital improvements for the LA Hyperion System. The financial resources, or financial funding sources; available to the wastewater utility include: • Wastewater Capital Facility Fees (AB 1600)2: revenues from one-time capital charges recovered from development; and • Rate Revenue: annual user charge revenues and cash reserves available to fund capital projects. To provide the City an indication of the financial impacts of funding the capital expenditures through various levels of available ,cash and annual rate adjustments, RFC and City staff developed two alternative fmancing plans. These alternative financing plans include: • Funding the entire CIP through existing cash reserves and annual rate adjustments. This scenario will be referred to as Alternative 1. 2 Capital Facility Fees revenue can only be used to fund AB 1600 specific capital projects. The CiTy projects about $500,000 in capital projectsper yeaz from FY 2009 to FY 2013. These projects are included in Figure 4-2 above. 4-4 Figure 4-2: Annual Capital Expenditures • Funding the entire CIP through augmented cash reserves (with an additional $3 million)'and annual-rate adjustments. This scenario will be referred to as Alternative 2. In addition to the alternative financing plans described above, RFC also reviewed various debt financing scenarios. Essentially, the City would issue debt to pay for part or all of the capital expenditures over the five-year planning period. However, it was decided that these alternatives were not reflective of prudent business practices. Hence, these options were dropped from further consideration: Ultimately, the capital financial plan selected as part of this. study should meet the most important capital infrastructure needs, maintain appropriate financial strength of the wastewater utility, and mitigate customer impacts over the five-year planning period. Table 4-1 presents annual rate funded revenue adjustments required during each year of the five-year planning period under the alternative wastewater capital financing plans. Table 4-1: Alternative Capital Financing Plans _ _ FY 2009 FY 2010 _ FY 2011 FY 2012 __ FY 2013 5-yr Total`! Alternative 1 Alternative 2 18.0°!0 15.0% 18.0% 15.0% 15.0% 15.0% 9.0% [ 9.0% 4.0% 9.0% 64.0% 63.0% '}-7 X1°1® CSC C~ F2VEC ~ALCI,~L;4TIEDN The section provides an overview of the allocation of operating and capital costs to the Flow, BOD, and SS strength parameters, the determination of the unit rates, and the calculation of commodity rates for different customer classes. Total revenue requirements, net of miscellaneous revenue offsets and transfers in from other deparhnents represents the net costs of providing service, or costs to be recovered through customer rates and charges. This net cost of providing service is then used as the basis to develop unit rates for the wastewater parameters and to allocate costs to the various customer classes in proportion to the wastewater services rendered. The concept of proportionate allocation to user classes implies that allocations should take into consideration the quantity and the strength of the wastewater that a user contributes. In this study, wastewater rates were calculated for FY 2009, and accordingly FY 2009 revenue requirements are used in the cost allocation process.. As discussed in Section 4, the annual revenue requirement or cost of service to be recovered from wastewater charges includes operation and maintenance expenses, costs associated with annual renewal and replacements, and other capital related costs. 5.1 Cost Allocation to Wastewater Parameters The three cost allocation parameters are Flow, BOD, and SS. BOD and SS constitute the strength components of the wastewater discharge. The allocation of costs to the three parameters involves: • Identification of functional areas and costs of the wastewater system. • Apportioning of FY 2008 O&M and capital costs of service to the functional areas of collection, treatment & disposal, and customer service. • Apportioning collection, treatment & disposal, and customer costs to the three wastewater parameters of Flow, BOD, and SS. The cost of service allocations and unit rates were developed based on the .100 percent commodity wastewater rate structure (Alternative C). The O&M and capital costs associated- with the Hyperion System are allocated based on percentages provided by LA to Flow, BOD, and SS used for the Hyperion System. The City's collection costs are allocated to Flow. Table 5-1 presents the percentages for allocating the O&M and capital costs under the recommended wastewater rate structure alternative. 5-1 Table 5-1: Allocation of O~&tdI and Capetal Costs Alternative C: 100% Commodity Charges Service Costs Total Flow BOD SS Char e O&M 100.00% 76.03% 12.76% 11.21 % 0.00% Ca ital 100.00% 87.47% 6.34% 6.19% 0.00% 5.2 Unit Cost of Service In order to allocate costs of service to the different user classes, unit costs of service were developed for Flow, BOD, and SS. The unit costs of service are developed by dividing the total annual costs allocated to each parameter by the total annual loadings of the respective parameter (the projected annual Flow, BOD and SS loadings for FY 2009 were discussed in Section 3): The development of the FY 2009 unit costs for each of the three wastewater parameters under rate structure Alternative C is presented below. 700% Commodity Charge Development of Unit Costs & Hllocated Costs Flow BOD SS Base.Char ~ Total Net Operating Costs $6,034,823 $1,012,460 $889,901 $0" $7,937,183 Capital Costs $4,053,479 $293,630 $286,906 $0 $4,634,015 Total Cost of Service $10,088,302 $1,306,089 $1,176,807 $0 $12,571,198 Total Units of Service 4,412,229 7,427,302 7,080,720 Unit of Measure - CCF LBS LBS Total Unit Cost of Service $2.286 $0.176 $0.166 Note: The unit costs are calculated based on Alternative 2 financing plan. The unit cost of Flow, BOD, and SS is then applied to the projected FY 2009 flows and loadings for each customer class to derive the customer class costs. Table 5-2 presents the FY 2009 user class loadings and cost responsibility for each customer class under rate structure Alternative C. 5-2 Table 5-2: Alloeation of Costs to Customer Classes Allocation of Costs to Customer Classes Residential Single-family residential Multi-family Flow BOD SS Total $1,690,706 $215,021 $210,889 $2,116,616 $5,117,914 $650,886 $638,378 $6,407,179 Non-Residential General Commercial Medium Low Medium Medium High High Churches School/Institutional Misc. Industrial _ Gillette Total Cost Recovered Through Commodity Charges $1,889,975 $136,055 $128,588 $2,154,618 $361,900 $43,368 $24,533 $429,801 _ $2,028 $481 $273 $2,782 $114,055 $29,676 $26,679 $170,409 $416,581 $196,183 $116,924 $729,688 $210,837 $14,095 $11,787 $236,718 $249,769 $16,698 $13,963 $280,430 $11,125 $1,548 $2,775 $15,449 $23,412 $2,079- - $2,018 $27,509 $10,08$302 $1,306,089 $1,176,807 $12,571,198 Note: The unit costs are calculated based on Alternative 2 financing plan. The cost of service allocations conducted in this study comply fully with the SWRCB's revenue program requirements since the City's FY 2009 revenue requirements are allocated to the different user classes proportionate to their use of the wastewater system. 5-:~ C~~EV &e A'T' ~~51~ The revenue requirements and cost of service analyses described in the preceding sections of this report provide a basis for the design of wastewater rates. Rate design involves the development of rate schedules for each customer class to recover the annual cost of service determined for each user class. This section of the report discusses altemative wastewater rate structures, presents a schedule of rates for the City's user classes, and analyzes the impact of the proposed changes in user classifications, cost allocation and rate design on the user classes. The commodity rates. recover the City's direct costs, and are determined separately for each user class. The sewer usage rates for the different customer classes are based on the customer classes' required annual usage revenues and the estimated annual volume of wastewater flows. 6.1 Alternative Rate Structures In an effort to identify the most effective water and wastewater rate structures for addressing the conservation goals of the Sustainable City Program, the City engaged RFC to evaluate alternative wastewater rate structures. At the same time, the City engaged a consultant to evaluate alternatives to its current water rate structure, which is similar to the existing wastewater rate structure as it incorporates a bi-monthly service charge based on water meter size with no distinction for customer class and tiered commodity rates charged per HCF. To determine the most appropriate and effective wastewater rate structure in addressing these objectives, RFC and City staff considered the City's current rate structure along with four alternative rate structures. 6.1..1 Alternative A: Current Structure Again, the current rate structure includes a bi-monthly service charge to each customer account based on water meter size and commodity rates charged according to bi-monthly water usage per HCF. The commodity rates vary based on the typical strength of wastewater discharged by customer class and are charged to each customer based on billed water usage and the assumed discharge factor for that customer class. The annual forecast of wastewater rates for this alternative are determined based on the current (FY 2008) wastewater rates and charges adjusted annually by an across the board rate increase. 6.1.2 Alternative 8: Reduced Bi-Monthly Service Charge An alternative to the current wastewater rate structure is to eliminate the bi-monthly service charge based on water meter size and replace it with a bi-monthly service charge that is the same for all customers. This would represent a reduced fixed charge and recover fixed costs from all customers, regardless of customer class or meter capacity, on a cohsistent basis. Reducing the bi-monthly service. charge would require that a greater portion of wastewater rate revenue requirements be recovered b-1 through the commodity rates. This alternative would be more consistent with the Sustainable City Program by providing a greater incentive for water resource conservation. The commodity rates would be similar to the current commodity rates that vary based on the typical strength of wastewater discharged by customer class and charged to customers based on billed water usage and the assumed discharge factor for that customer class. However, instead of adjusting the current commodity rates by an across the board rate adjustment, the commodity rates under this alternative are determined based on an updated cost of service calculation of each strength component. 6.1.3 .Alternative C: 100% Commodity Rate The third alternative to the current wastewater rate structure is to eliminate the bi-monthly service charge all together and recover 100% of the annual rate revenue requirements through the commodity rates. This alternative is the most consistent with the Sustainable City Program as it provides the greatest incentive for water resource conservation. The commodity rates under this alternative would be similar to the current commodity rates that vary based on the typical strength of wastewater discharged by customer class and charged to each customer based on billed water usage and the assumed discharge factor for that customer class. However, the commodity rates under this alternative are also determined based on an updated cost of service calculation of each strength component. 6.1.4 Alternative D: Flat SFR Service Charge and 100% Commodity Rate The same as Alternative C for non-residential and MFR customers; for SFR customers, the current bi- monthly service charges per meter size and the commodity rates -per HCF of wastewater discharge would be eliminated and replaced by a flat bi-monthly service charge. The cost of service allocated to SFR customers would be recovered equally from each of those customers based on a flat bi-monthly charge and would not recognize any variance in the amount of wastewater discharged by individual SFR customers. This rate structure provides no water conservation incentive for SFR customers. 6.2 Proposed Rate Structure Alternative C is the most effective in addressing the City's objectives to improve water resource conservation incentives. The commodity rates under this alternative are determined based on an updated cost of service calculation for each wastewater strength component discussed in the previous section. The SFR and MFR user classes are a homogenous group with the same strength characteristics. Therefore, uniform sewer usage rates can be established for these classes. Note that the SFR and MFR classes do have different return factors but the same strength concentrations, so the unit rate in $/HCF of wastewater is the same for both classes. On the other hand, non-residential customers vary significantly in terms of strength characteristics. Therefore, unit costs and varying strength concentrations for non- ~_~ residential are used to develop usage rates for the nine non-residential classes grouped. by strength characteristics. SFR & MFR Commodity The suggested SFR and MFR sewer commodity rate is determined based on annualized wastewater. generated by SFR and MFR customers. The SFR and MFR commodity rate was calculated by dividing the estimated FY 2009 Flow, BOD, and SS revenue requirements for SFR and MFR by the estimated annualized wastewater flows for each ofthe residential customers groups. Non-Residential Commodity Rate The suggested non-residential sewer commodity rates are also determined based on annualized wastewater generated (water usage for the various non-residential customers with an 89% discharge factor) by all non-residential customers. The non-residential customers are grouped based on their strength and the commodity rates are charged based on the average strength of that group. The commodity rates for each of the residential and non-residential customer classes in the City of Santa Monica for FY 2009 and FY 2010 are shown in Table 6-1: Table 6-1: Proposed Wastewater Rates for FY 2009 and 2010 Alternative 1 Alternative 2 Commodity Rates (HCF of wastewater) Dischar a Factor FY 2009 FY 2010 FY 2009 FY 2010 Residential Single-family residential 51.00% $ - 2.94 $ .3.47 $ 2.87 $ 3.30 Individually metered condo/apartment 95.00% $ 2.94 $ 3.47 $ 2.87 $ 3.30 Duplex 80:00% $ 2.94 $ 3.47 $ 2.87 $ 3.30 Triplex ~ 85.00% $ 2.94. $ 3.47 $ 2.87 $ 3.30 Four Plex 90.00% $ .2.94 $ 3.47 $ 2,87 $ 3.30 Over Fourplex _ 95.00% $ 2.94 $ 3.47 $ 2.87 $ 3.30 Non-Residential General Commercial 89.00% $ 2.68 $ 3.16 $ 2.61 $ 3.00 Medium Low 89.00% $ 2.79 $ 3.29 $ 2.72 $ 3.13 Medium 89.00% $ 3.22 $ 3.80 $ 3.14 $ 3.61 Medium High - 89.00% $ 3.51 $ 4.14 $ 3.42 $ 3.93 High 89.00% $ 4.11 $ 4.85. $ 4.01 $ 4.61 Churches 89.00% $ 2.64 $ 3.12 $ 2.57 $ 2.96 School/Institutional 89.00% $ 2:64 $ .3.12 $ 2.57 $ 2.96 Misc.lndustrial 89.00%-. $ 3.26 $ 3.85 $ 3.18 $ 3.66 Paper Mate/Gillette 89.00% $ 2.76 $ 3.26. $ 2.69 $ 3.09 Wastewater Rate Increases 18% 18% 15% 15% Note: The City's low-income program will be revised to accommodate the new rate structure. fi-3 6.3 Customer Impact Analysis RFC evaluated the impact of the changes to the wastewater rate structure and the changes in user classification and loadings on the bi-monthly bills of different customers of-the City's wastewater system. RFC calculated bi-monthly bills under both the current and proposed rates for customers within each customer class with anticipated wastewater discharges ranging from low to high. The proposed bills are calculated under Alternative C rate structure. The impacts of each of these changes among user classes and within user classes are discussed below. 6.3.9 SFR Impacts SFR customers will experience a range of impacts depending on their usage level. Impacts range from a decrease of about 10.3% (or 12.5% for Alternative 2) for low bi-monthly wastewater discharge customers (using 18 HCF of water bi-monthly) to an increase of about 51.4% (or 47.7% for Alternative 2) for high bi-monthly wastewater customers (using 60 HCF of water bi-monthly). Moderate bi- monthly wastewater customers (using 36 HCF of water bi-monthly), which represents the average SFR customer, will- experience an increase' of approximately 26.5% (or 23.5% for Alternative 2). The favorable impacts for the low use customers are the result of eliminating 4he fixed bi-monthly service charges: However, elimihating these service charges naturally increases commodity rates, which results in adverse impacts on customers with higher water usage levels. This is consistent with the goals of the Sustainable City Program. To ensure that the 47 non-metered wastewater customers pay their equitable share of wastewater charges, the City may use bi-monthly water use for the typical or average SFR wastewater customer (36 HCF) in the City of Santa Monica. Tables 6-2 and 6-3 show the bi-monthly bill impacts at different SFR usage levels for Alternatives 1 and 2, respectively. 6.3.2 MFR Impacts Since the current and recommended rate structures assume different discharge factors for different types of MFR customers, our analysis presents bi-monthly bills for a variety of MFR establishments with different meter sizes and at a range of assumed wastewater discharge levels. MFR accounts typically provide service to multiple dwellings and many MFR customer classes must use larger water meters to serve these multiple dwellings. Since the current rate structure applies bi-monthly service charges that vary based on meter size, those MFR .customers with larger meters will experience more favorable impacts than MFR customers with smaller meters if they exhibit similar wastewater discharge levels. Again, the recommended rate structure is more effective in providing these .customers with a conservation incentive through the more adverse impacts experienced by higher use customers. Tables 6-2 and 6-3 show the bi-monthly bill impacts at different MFR usage levels under each alternative. 6.3.3 Non-Residentiallmpacts Due to updated customer classifications and strength loadings, non-residential customer impacts vary based on the amount of usage and .the strength of discharge. However, eliminating the bi-monthly 6-4 service charges and recovering wastewater costs entirely through the commodity rates serves to shift the burden of cost recovery on higher wastewater discharge customers. The non-residential customer impacts are somewhat similar to the impacts experienced by residential customers. Customers with lower wastewater discharges will experience more favorable impacts than those with higher wastewater discharges. Additionally, customers with larger meters will tend to experience more favorable impacts than those with smaller meters. Tables 6-2 and 6-3 show the bi-monthly bill impacts for the different non-residential customer strength classifications for Alternative 1 and 2, respectively. Table 6-2: Sample Customer Bi-Monthly Bill Impacts -Alternative 1 Di h Bo-monthly : Bi-Monthl Bills :- Difference Customer Class (Meter Size) sc arge Factor Water Use '. Current FY ' Proposed FY ~ ,ya HCF 1 , :2008Rates 20091. Single Family Residential (3/4") Low BI-Monthly Flow 51.00% 18 $30.10 $26.99 ($3.11) -10:32% Moderate Bi-Monthly Flow 51.00% 36 $42.67 $53.98 $11..31 26.49% High Bi-Monthly Flow - .51.00% 60 $59.44 $89.96 $30.52 51.35% Multi-Family Residential Single Duplex (1.5") 95.00% 40 $127.03 $111.72 ($15.31) -12.05% Duplex (1") 80.00% 50 $93.87 $117.60 $23.73 25.28% Triplex (1.5") 85.00% 75 $162.31 $187.43 $25.12 15.48% Fourplex (2") 90.00% 80 $216.71 $211.68 ($5.03) -2.32% Over Four Plex (2") ....___ ._._.____..__..._m_....______ .. 95.00% ~.__..... _ - 100 ___._.m______.. $248.22 _...__..___._.__ $279.30 _ $31.08 _ 12.52% ___..__ _,~ -~°;,xm-.gym r: m-:. ._.___ _ __ _. .._._ _ . ___..~._ _. _ . _- _ _~ __.___-.___ _..~ ____. _.__..n.._.._.__~ ~ ---.~..-a..~: - ~~. _ ._. _ - . _ ._. _m._,....._m._ v--.._=__ ..m__._.~ - _m___ ....~.._.. -- ,~-.- _=~ ___ _ x_...__._..._ General Commercial (1") Low Bi-Monthly Flow 89.00% 37 $86.16 $88.25 $2:09 2.43% Moderate Bi-Monthly Ftow 89.00% 60 $115.43 $143.11 $27.68 23.98% High Bi-Monthly Flow 89.00% 120 $191.79 $286.22 $94.43 - 49.24% Medium Low Strength (1") Low Bi-Monthly Flow 89.00% 60 $131.99 $148.99 $17.00 12.88% Moderate Bi-Monthly Flow 89.00% 100 $193.93 $248.31 $54.38 28.04% High Bi-Monthly Flow 89.00% 120 $224.90 $297.97 $73.07 32.49% Medium Strength (2"1 Low Bi-Monthly Flow 89.00% 90 $289.48 $257.92 ($31.56) -10.90% -Moderate Bi-Monthly Flow 89.00% 150 $403.76 $429.87 $26.11 6.47% High Bi-Monthly Flow 89.00% 250 $594.22 $716.45 $122.23 20.57% Medium Hioh Strenoth (1"1 LowBi-Monthly Flow 89.00% - 60 $180.05 $187.43 $7.39 - 4.10% Moderate Bi-Monthly Flow 89.00% 100 $274.03 $312.39 $38.36 14.00°/0 Hlgh Bi-Monthly Flow 89.00% 120 $321.02 $374.87 $53.85 16.77% High Strength (4") Low Bi-Monthly Flow 89.00% 400 $1,558.42 $1,463.16 ($95.26) -6.11% Moderate Bi-Monthly Flow 89.00% 709 $2,482.45 $2,593.45 $111.00 4.47% High Bi-Monthly Flow 89.00% 2,000 $6,343.06 $7,315.80 $972.74 15.34% Ve Hi h Bi-Monthl Flow 89.00% 5,000 $15,314.26 $18,289.50 $2,975.24 19.43% (1) Represents dischage faotor applied to billed water usage. 6-5 Table 6-2: Sample Customer Bi-1~Iouthly Bill impacts -Alternative 2 Di h B~-monthly '. Bi-Monthl Bills '. Difference . Customer Class (Meter Size) ' sc arge F t Water Use Current FY. Proposed FY ', % ac or I HCF i -2008 Rates 2009.. $' Single family Residential (3/4") Low Bi-Monthly Flow 51.00% 18 $30.10 $26.35 ($3.75) -12.46% Moderate Bi-Monthly Flow 51.00% - 36 $42.67 ~ $52.69 $10.02 - 23.48% High Bi-Monthly Flow 51.00% 60 $59.44 $87.82 $28.38 47.74% Multi-Family Residential - Single Duplex (1.5") 95.00% 40 $127.03 $109.06 ($17.97) -14.15% Duplex (1") 80.00% 50 $93.87 ~ $114.80 $20.93 22.30% Triplex (1.5") 85.00% 75 $162.31 $182.96 $20.66 12.73° Fourplex (2") 90:00% 80 $216.71 ~ - $206.64 - ($10.07) -4.65% Over Four Plex 2" ..~.~ _ . _~____....... . 95.00% . 100 _ $248.22 - $272.65 - ~ $24.43 - ~ 9.84% , ~ __ _-:. ~- ~G#t~13PSftterttia~.W=®~ m - n :m~-.-..:-:::-_ _._._...._.._...~._ = ~~_- . m-~..-:-~ ..__w.__n - ~ -- ~. ~-.w ____ ~_w._____- = ~.m.- ~- .~m n:: nn __._.__._._____m_ - ---_== .:~~~n ~ .______m. x..... m. ~,..-__.__.. General Commercial (1") - Low Bi-Monthly Flow - 89.00% 37 $86.16 $85.95 ($0.21) -0.25% Moderate Bi-Monthly Flow 89.00% 60 $115.43 $139.37 $23.94 20.74% High Bi-Monthly Flow 89.00% 120 $191.79 $278.75 $86.95 45.34% Medium Low Strength (1") Low Bi-Monthly Flow 89.00% 60 $131.99 $145.25 $13.26 10.05% Moderate Bi-Monthly Flow ~ 89.00% 100 $193.93 $242.08 $48.15 24.83% High Bi-Monthly Flow 89.00% 120 $224.90 $290.50 .$65.59 29.17% Medium Strength (2") - LOW Bi-Monthly FIOW 89.00% 90 $289.48 $251.51 - ($37.97) - -13.12% Moderate Bi-Monthly Flow 89.00% 150 $403.76 $419.79 $15.43 3.82% High Bi-Monthly Flow 89.00% 250 $594.22 $698.65 $104.43 17.57% Medium High Strength (1'9 - Low Bi-Monthly Flow 89.00% - 60 $180.05 $182.63 $2.58 1.43% Moderate Bi-Monthly Flow 89.00% 100 $274.03 $304.38 $30.35 11.08% High Bi-Monthly Flow 89.00% 120 - $321.02 $365.26 $44.23 13.78° High Strength (4"). Low Bi-Monthly Flow 89.00°/a 400 $1,558.42 $1,427.56 ($130.86) -8.40% Moderate Bi-Monthly Flow 89.00% 709 $2,482.45 $2,530.35 $47.90 1.93% High Bi-Monthly Flow 89.00% 2,000 $6,343.06 $7,137.80 $794.74 - 12.53°/a Ve Hi h Bi-Monthl Flow 89.00% 5,000 $15,314.26 $17,844.50 $2,530.24 16.52% (1) Represents discharge factor applied to billed water usage. 6-6 A I dust®~r Str~nth ~lassi~ieati~n e Sy~tcrn Scwa~c C~cncrati®n Fact®rs ASSIGNMENT OF AMALGAMATED SYSTEM SEWAGE GENERATION FACTORS TO COUNTY USE CODES Amalgamated System County Use Classification Atlditional LA Sewage Generation Factors ~ Sewage Generation Factors County _ Cotle Description Descriptor Applicable LA SFC Use Category SGF in GPD BOD SS SGF in.GPD BOD 55 010X,0200,010D,010 Single; Double; Duplex or Two- RESIDENTIAL H,O60X,OBD unit (Regular and Modular) 1 Bedroom OUPLEXITOWMHOUSEISFD - 1 BDR 130 /DU 265 275 130 /DU 265 275 010X,0200,010D,010 Single; Double; Duplex or Two• RESIDENTIAL H,060X,O6D unit (Regular antl Motlular) 2Bedrooms DUPLEX/TOWNHOUSE/SFD-26DR6 180/DU 265 275 180/DU 265 275 010X,0200,010D,010 Single; Double; Duplex or Two• RESIDENTIAL: H,O60X,O6D unit (Regular and Modular) 3Bedrooms DUPLEXITONMHOUSEISFD-3BDR ~ 230/DU 265 275 230/DU 265 275 010X,0200,010D,010 Single; Double; Duplex or Two- RESIDENTIAL H,O60X,06D unit (Regular and Motlular( > 3 Betlrooms. DUPLEXlTOWNHOUSEISFD ->3 BDR - 50 /ADDITIONAL BDR 265 275 50 /ADDITIONAL BDR 265 275 Condominium; Condominium Conversion; Cooperative, Three- unit;FOnr-unikpive or More 010C,010E,010F,030Apartment or Units; (Regular 0,0400,05%X,8891, and Motlular) Public Housing; 061X,1020 Artist in Resitlence Bachelor? RESIDENTIAL: APT- BACHELOR 80 /DU 265 275 80 /DU 265 275 Condominium; Condominium Conversion; Cooperative, Three- unit; Four-unit; Five or More 010C,010E,010F,030Apartment or Units; (Regular 0,0400,05%X,8891 antl Motlular( Public Housing 1 Bedroom RESIDENTIAL CONDO,APT- 1 BDR, 120 /DU 265 275 120/DU 265 275 Condominium; Condominium Conversion; Cooperative, Three• unit; Faur•unil; Five or More 010C,010E,010F,030Apartment or Units; (Regular 0,0400,05%X,8891 antl Modular( Public Housing 2Bedrooms RESIDENTIAL: CONDO, APT- 2 BDR 160 /DU 265 275 1601DU 265 275 Condominium; Condominium - Conversion; Cooperative, Three- unit;FOUr-unit; Five or More' 010C,010E,010F,030Apartment or Units; (Regular 0,0400,05%X,8891 and Modular( Public Housing 3Bedrooms RESIDENTIAL: CONDO, APT- 3BDR 200 /DU 265 275 200/DU 265 278 Condominium; Condominium Conversion; Cooperative, Three- unit;FOUr-unit; Fiveor More 010C,010E,010F,030Apartment or Units; (Regular 0,0400,05%X,8891 antl Motlular) Public Housing > 3 Betlrooms RESIDENTIAL: CONDO, APT->3 BDR 40 /ADDITIONAL BDR 265 275 40 /ADDITIONAL BDR 265 275 2fi5 275 ' 265 275 ASSIGNMENT OF AMALGAMATED SYSTEM SEWAGE GENERATION FACTORS TO COUNTY USE CODES Amalgamated System Coun ty Use Classification Atltlitlonal LA Sewage Generation Factors Sewage Generation Factors County Code Description Descriptor Applicable LA SFC Use Category SGF in GPD - BOD SS SGF in GPD BOD SS (mgll) (mgll) (mg10 (mg/q Mobile Homes; Mobile Home Number of 07%Q090X Parks Dwelling Units RESIDENTIAL: MOBILEHOME 160 /DU 265 275 760 /DU 2fi5 275 0800 Rooming Houses HOMELESS SHELTER 75 265 .275 ' Number of RESIDENTIAL DORM: COLLEGE OR 0800 Rooming Houses Bedrooms RESIDENTIAL 75 /STUDENT 265 275 Number of 0800 Rooming Houses Bedrooms RESIDENTIAL: BOARDING HOUSE 75 /BED 265 275 - Number of 0800 Rooming Houses Bedrooms SCHOOL: DORMITORY 75 /STUDENT 265 275 0800 Rooming Houses - 75/BED 265 275 Commercial; Community 1000,1070,8890 Redevelopment _ COMMERCIAL USE 80 /1000 GR.SO.FT. 150 150 80 /1000 GR.SO.FT. 150 750 1100 Stores BAKERY 260 /1000 GR.SO.FT. 1000 600 1100 Stores COLD STORAGE: RETAIL SALES 80 /1000 GR.SO.FT. 150 150 1100 Stores DAIRY: RETAIL AREA 80 /1000 GR.SO.FT. 150 150 FILM PROCESSING - 1 HOUR PHOTO, 1100 Stores etc. ~ 100 /1000 GR.SO.FT. 150 150 POST OFFICE: PRIVATE MAIL$OX 1100 Stores - RENTAL 80 /1000 GR.SO.FT. 150 150 1100 Stores RETAIL AREA 80 /700D GR.SO.FT. 150 150 1100 Stores STORE: ICE CREAM/YOGURT 80 /1000 GR.SO:FT. 1000 600 Store CombiOations (Wth Offce or 1200 Residence) 1100,13X0 Stores, Depanmenl Stores STORE: RETAIL 80 /1000 GR.SO.FT. 150 150 Wholesale and Mainufaduring 2200 Outlets 8872 Government-Souvenir Shop Stores; Store.COmbintations; 1100,7200,73X0, Department Stores; Wholesale 2200 and Manufacturing Outlets g0 /1000 GR.SO.Ft 150 150 gptlof Avg. Process 14X0 Supermarkets Markets: Retail Flow 800 800 - ' gpd of Avg. Process 14X0 Supermarkets Markets: Wholesale Flow 800. 800 Markets without Garbage disposal (eg. ~ gpd of Avg. Process 14X0 Supermarkets - Convenience Stores) Flow 150 150 14X0 Supermarkets 7 7 800 800 Shopping Centers (Neighborhood, 1500 Community) MINI-MALL 80 /1000 GR.SO.FT. 600 400 ASSIGNMENT OF AMALGAMATED SYSTEM SEWAGE GENERATION FACTORS TO COUNTY USE CODES Amalgamated System' County Use Classigcation Addi0onal LA~Sewage Generation Factors Sewage Generation Factors County Code Description 'Descriptor Applicable LA SFC Use Category SGF in GPD BOD SS SGF in GPD BOD ' SS Shopping Centers (Neighborhood, 1500,1600. Community 8 Regional) Shopping Centers 1500 ' (Neighborhootl, Community) 1600 .Shopping Centers (Regional) 17X0 Office Buildings 17X0 Office Buildings 17X0 Office Buildings Government Services, General; City Hall, Administration Center; 8820-2 Auxiliary & Regional Center - 8823 Police and Fire Station 8824 Utilities, Office 8625 Welfare and Social Service 8826 Postal Facility 8829 Government -Military Post 8834 School Administration.Center 8674 Government-Offce Space Lease 17X0,8820.2,8823- Office Buildings, Police and Fire 26,8834,8874 Stations 18X0 Hotels and Motels 78X0 Hotels and Motels 18X0 Hotels antl Motels 1900 Professional Builtlirigs 1910 Professional Builtllings 1910 Professional Buildings 1910 Professional Builtlings 1910 Professional Buildings 1910 Professional Buildings 1910 Professional Buildings 1920 Professional Builtlings 79X0 Professional Buildings 2000 Commercial Combined Commercial & Retail - (Shopping Center) 100 gpd 600 400 gpd of Avg. Process Regional Mall Flow 600 CONFERENCE ROOM OF OFFICE BLDG. Same as other areas in an office 130 OFFICE BUILDING 150 /1000 GR.SQ.FT. 130 OFFICE BLDG W/COOLING TOWER 180 /1000 GR.SO.FT. 108 gpd of Avg. Process Public Administration Flow 130 POST OFFICE: FULL SERVICE 80 /1000 GR.SQ.FT. 600 400 400 7 T 600 400 80 80 67 80 150 /1000 GR.SQ.FT. 750 150 150 /1000 GR.SO.FT. 130 80 HOTEL: USE GUEST ROOMS ONLY MOTEL: USE GUEST ROOMS ONLY COUNSELING CENTER ' ACUPUNCTURE OFFICEICLINIC CHIROPRACTIC OFFICE DENTAL OFFICE/CLINIC DRUG REHABILITATION CENTER MEDICAL BUILDING MEDICAL OFFICE/CLINIC VETERINARY CLINIC/OFFICE 130 /ROOM 370 120 730 /ROOM 310 120 150 /1000 GR. SO. FT. 130 80 150 /7000 GR. SO. FT. 130 80 150 /1000 GR. SO. FT. 130 80 250 /1000 GR. SO. FT. 130 80 750 /1000 GR. SO. FT. 130 80 250 /1000 GR. SO. FT. 130 80 250 /7000 GR. SO. FT 130 80 280 /1000 GR. SO. FT. 130 80 130 /ROOM 310 120 250 /1000 GR.SQ.FT. 130 - 80 80 11000 GR.SQ.FT. 150 150 ASSIGNMENT OF AMALGAMATED SYSTEM SEWAGE GENERATION FACTORS TO COUNTY USE CODES - Amalgamated System County Use Classigcation Additional LA Sewage Generaton Factors Sewage Generation Factors County Code Description Descriptor Applicable LA SFC Use Category SGF in GPD BOD SS SGF in GPD BOD SS 2100 Restaurants and Cockail Lounges BANOUET.ROOM/BALLROOM 800 /1000 GR .SO. FT. 1000 600 . - 800 /1000 GR. SO. FT. -. 1000 600 2100. Restaurants and Cocktail Lounges BAR: COCKTAIL, FIXED SEAT 18 /SEAT 200 200 518 /1000 GR. SO. FT. 200 200 2100 Restaurants and Cocktail Lounges BAR: COCKTAIL, PUBLIC TABLE AREA 500 /1000 GR .SO. FT. 1000 600' 500 /1000 GR. SO. FT. 1000 600 2100 Restaurants and Cocktail Lounges CAFETERIA: FIXED SEAT 30 /SEAT 1000 600 864 /1000 GR. SQ. FT. 1000 600 gpd of Avg. Pr ocess 2100 _ Restaurants and Cocktail Lounges Caterers Flow 1,000 600 /1000 GR. SO. FT. 1,000 600 2100 Restaurants and Cocktail Lounges COCKTAIL LOUNGE: FIXED SEAT 18 /SEAT - 200 200 518 /1000 GR. SQ. FT. 200 2DD COFFEE HOUSE: NO PASTRY BAKING 2100 Restaurants and Cocktail Lounges & NO FOOD PREPARATION 120 /1000 GR .SO. FT. 200 200 120 /7000 GR. SO. FT. 200 200 COFFEE HOUSE: PASTRY BAKING 2100 Restau~anls and Cocktail Lounges GNLY 280 /1000 GR .SQ. FT. 1000 600 280 /1000 GR. SQ. FT, 1000 .600 COFFEE HOUSE: SERVES PREPARED ' 2100 Restaurants and Cocktail Lounges FOOD 30 /SEAT 1000 600 864 /t 000 GR. SO. FT. 7000 600 DANCING AREA (OF BARS OR 2100 Restaurants and Cocktail Lounges NIGHTCLUB) 600 /1000 GR .SO. FT. 200 200 600 /1000 GR. SO. FT. 200 200 2100 Restaurants and Cocktail Lounges LOUNGE 80 /1000 GR .SQ. FT. ' 200 200 80 /1000 GR. SO. FT. .200 200 - HtSiAUKHNI: FULL JttiVlGt- 2100 Restaurants and Cocktail Lounges .INDOOR SEAT 30 /SEAT 1000 600 864 /1000 GR. SO. FT. 1000 600 ' RESTAURANT: FULL SERVICE- 2100 Restaurants and cocktail Lounges OUTDOOR SEAT 18 /SEAT 1000 600 /1 DDO GR. SO. FT. 1000 600 2100 Restaurants and wcklail Lounges WINE TASTING ROOM: ALL AREA 80 /1000 GR .SO. FT. 750 150 80 /1000 GR. SO. FT. 750 150 2100 Restaurants antl Cocktail Lounges WINE TASTING ROOM: KITCHEN 215 /1000 GR .SO. FT. 150 150 215 /1000 GR. SO. FT. 150 150 2110 Fast Food -Walk Up BAR: JUICE, NO BAKING FACILITIES15 120 AD00 GR .SQ. FT. 200 200 120 /1000 GR. SO. FT. 200 200 BAR: JUICE, WITH BAKING 2110 Fasi Footl -Walk Up FACILITIE515 280 /1000 GR .SO. FT. 1000 600 280 /1000 GR. SO. FT. .1000 600 2110 Fast Food -Walk Up DOUGHNUT SHOP 280 /1000 GR .SO. FT. 1000 800 280 /1000 GR. SO. FT. 1000 600 ' RESTAURANT: FAST FOOD-INDOOR 2110 Fast Food -Walk Up SEAT 20 /SEAT 1000 600 576 /1000 GR. SO. FT. 1000 600 RESTAURANT: FAST FOOD- 2770 Fast Food -Walk Up OUTDOOR SEAT ~ 12 /SEAT 1000 600 /1000 GR. SO. FT. 1000 600 2110 Fast Footl -Walk Up RESTAURANT: TAKE-OUT 300 /7000 GR .SO. FT. 1000 600 300 /1000 GR. SO. FT. .1000 600 2120 Fast Footl -Auto Oriented RESTAURANT: DRIVE-IN 40 /STALL 1000 600 1000 600 2120 Fast Footl -Auto Oriented RESTAURANT: DRIVE-IN 20 /SEAT 1000 600 576 /1000 GR. SO. FT. 1000 600 Government- Concession on - ' 8870,8877 Public Propedy; Food Concession Restaurants and Cocktail How can we separate restaurants and 21X0 Lounges bars? ~ 30 /SEAT 1000 600 2300 Banks & Savings & Loans BANK: BRANCH 80 /1000 GR .SO. FT. 150 150 2300 Banks & Savings & Loans BANK: HEADQUARTERS 150 /1000 GR .SQ. FT. 130 80 ASSIGNMENT OF AMALGAMATED SYSTEM SEWAGE GENERATION FACTORS TO COUNTY USE CODES Amalgamated System County Use Classification Additional LA Sewage Genemtian Factors -Sewage Generation Factors County Code Descrip0on Descriptor Applicable LA SFC Use Category SGF in GPD - BOD SS SGF in GPD BOO SS (male (mglp (ma/q (mglp 2300 Banks S Savings & Loans CREDIT UNION 150 /1000 GR.SQ.FT. 150 150 ' 2300 Banks & Savings 8 Loans 150/1000 GR.SO.FT. 150 150 2400 Service Shops Miscellaneous Repair Shops Flow 180 280 TANNING SALON: INDEPENDENT, NO 2400 Service Shops SHOWER 80 /1000 GR.SO.FT. 150 150 2400 Service Shops ? 7 ? ? LAUNDROMAT 170/MACHINE 150 110 gpd of Avg. Process Laundries: Linen & General Flow 450 240 ' gpdpf Avg. Process Laundries: Towel & Uniform Flow 450 240 ? Laundries 7 T ? p ' gpd of Avg. Process Carpet 8 Rug Cleaning & Dyeing Flow 153 617 ' gpd of Avg. Process .Disinfecting, Exterminating & Cleaning Flow 298 599 gpd of Avg. Process ' Ship Cleaning & Washing Flow .1,150 1,250 gpd of Avg. Pracass _ Steam Cleaning: Commercial Flow 1,150 1,250 gpd o(Avg. Process Steam Cleaning: Industrial Flow 1,150 1,250 gpd of Avg. Process - TankCarCleaning Flow 1,150 1,250. ? Cleaning T ? ? ? LABORATORY: COMMERCIAL 250 /1000 GR.SQ.FT. '339 151 gpd of Avg. Process Laboratories: Analytical Flow 339 151 gpd of Avg. Process Laboratories: Biological Flow 200 50 gpd of Avg. Process Laboratories: Dental Flow ~ 339 151 gpd of Avg. Process Laboratories: Medical Flow 339. 151 gpd of Avg. Process Laboratories: Pharmaceutical Flow 200 50 ASSIGNMENT OF AMALGAMATED SYSTEM SEWAGE GENERATION FACTORS TO COUNTYUSE CODES Amalgamated System County Use Classification Additional LA Sewage Generation Factors. Sewage Generation Factors County Code Description Descriptor Applicable LA SFC Use Category SGF in GPD BOD SS SGF in GPO BOD SS Im /p (m ll) Imalq (mglq ' - 9Pd of Avg. Process Laboratories: Research & Development Flow 339 151 gpd of Avg. Process ' - Laboratodes: Soil & Foundation Flow 290 550 gpd of Avg. Process Laboatodes: X-my Flow 339 151 ' LABORATORY: INDUSTRIAL Avg. Process Flow 339 151 ? Laboratories 250 /1000 GR.SO.FT. 339 151 2510 Service Stations GAS STATION: FOUR BAYS MAX 430 /STATION 180 280 2510 Service Stations GAS STATION: SELF SERVICE 100 NJ.C. 180 280 .gpd of Avg. Process 2500 Service Stations Steam Cleaning: Amc Flow 1,150 1,250 gpd of Avg. Process 2500 Service Stations Truck Repair & Service Flow 180 280 gptl o(Avg. Process 2500 Service Stations Truck Washing & Steam Cleaning Flow 1,150 1,250 2500,2510 Service Stations 430 /STATION 180 280 2640 Car Washes -Self Service? - CAR WASH: COIN OPERATED BAYS Avg. Process Flow 20 150 7 ? 20 750 Car Washes in Service Stations, gptl of Avg. Process 2520,2630 Auto Service Auto Laundry Flow 20 150 Car Washes {n Service Stations, 2520,2630 Auto Service CAR WASH: AUTOMATIC Avg. Process Flow 20 150 Car Washes in Service Stations, 2520,2630 Auto Service CAR WASH: COUNTER & SALE AREA 80 /1000 GR.SO.FT. 20 150 Car Washes in Service Stations. 2520,2630 Auto Service _ CAR WASH: HAND WASH Avg. Process Flow 20 150 _ Car Washes~in Servile Stations, - 2520,2630 Auto.Service ~ ? - 7 20 150 Auto Service Shops, Body and AUTO BODY/MECH. REPAIR$HOP ' 2600,2670 Fender, Auto Service Centers (DOMESTIC) 80 /1000 GR.SO.FT. 18D 280 Auto Service Shops, Botly and AUTO BODY/MECH. REPAIR SHOP 2600,2670 Fender, Auto Service Centers (INDUSTRIAL) Avg. Process Flow 180 280 Government-School Service 8835 Cenler 2600,2610,2620,265 Auto, Recreation & Constr. 0,2880,2670 Equip., Sales & Service ~ 80 /1000 GR.SO.FT. 180 280 ASSIGNMENT OF AMALGAMATED SYSTEM SEWAGE GENERATION FACTORS TO COUNTV USE CODES Amalgamated System County Use Classification Atlditional LA Sewage Generation Factors Sewage Generation Factors County Code Description Descriptor Applicable LA SFC Use Category - SGF in GPD BOO SS SGF in GPO BOD SS 2800 Animal Kennels HOSPITAL: ANIMAL 280 /1000 GR.SO.FT. 150 150 ' 2800 - Animal Kennels KENNEL: DOG KENNEL/OPEN 700 /1000 GR.SO.FT. 150 150 2800 Animal Kennels 100 /1000 GR.SQ.FT. ' gpd of Avg. Process 2900 Nurseries or Greenhouses Nurseries Flow 150 150 ? 3100 Light Manufacturing Apparel, Fabrics Made from Fibers. gpd of Avg. Process 150 .150 3100 Light Manufamuring Blueprinting Equipment Supplies, etc. 100 gpd of Avg. Process 290 550 3100 Light Manufacturing Cooperage gpdrof Avg. Process 290 550 3100 Light Manufacturing ~ Etchers 8 Engravers gpd of Avg. Process 10 4,300 3100 Light Manufacturing Film Processing: Filler Cleaning gpd of Avg. Process 290 550 3100 Light Manufacturing Film Processing: Industrial gpd of Avg. Process 160. 60 3100 Light Manufacturing MACHINE SHOP (DOMESTIC) 80 /7000 GR.SO.FT. 150 750 3100 Light Manufacturing Machine Shop (Industrial) gpd of Avg. Process 290 550 3100 Light Manufacturing MACHINE SHOP (INDUSTRIAL) Avg. Process Flow 290 550 3100 Light Manufacturing MANUFACTURING OR INDUSTRIAL 80 /1000GR.SO.FT. 150 150 3100 Light Manufacturing MANUFACTURING OR INDUSTRIAL Avg. Process Flow 150 750 3100 Light Manufacturing Phonograph Record Mfg. gptlpf Avg. Process 298 599 3100 Light Manufacturing Photo Engraving 8 Etching gpd of Avg. Process 290 550 3100 Light Manufacturing PLATING PLANT (DOMESTIC) 80 /1000 GR.SO.FT. 150 150 3100 ~ Light Manufacturing PLATING.PLANT (INDUSTRIAL) .Avg. Process Flow 150 150 3100 Light Manufacturing Printing: Glass, Metal, Plastic gpd of Avg. Process 1,370 1,134 3100 Light Manufacturing Printing: Silkscreen gpd of Avg. Process 1,310 1,134 3100 Light Manufacuring Printing: Textile gptlof Avg. Process 270 62 3100 Light Manufacturing Printing: TYPe-Seding gpdof Avg. Process 290 550 3100 Light Manufacturing Water Treating 8 Service Equip. gptlof Avg. Process 290 550 3100 Light Manufacturing ? Heavy Manufacturing; Misc, gpd of Avg. Process 3200, 30X0 Intlustrial Air Cond, 8 Refrig. Equip. 8 Serv. Flow 290 550 Heavy Manufacturing; Misc. gpd of Avg. Process 3200, 30X0 Industrial Aircraft Mfg., Serv: 8 Maint. Flow 180 280 Heavy Manufacturing; Misc. gpd of Avg. Process 3200, 30X0 Industrial Asphalt 8 Asphalt Prod. Mfg. Flow 177 487 Heavy Manufacturing; Misc. gpd of AVg. Process 3200, 30X0 Industrial Auto Mfg., Serv. Mai M. Flow 180 280 ' Heavy Manufacturing; Misn ~ gpdof Avg. Process 3200, 30X0 Industrial Bafteries Mig. B Servicing Flow 290 550 150 150 7 750 150 ? 290 550 ASSIGNMENT OF AMALGAMATED SYSTEM SEWAGE GENERATION FACTORS TO COUNTY USE CODES - - Amalgamated System County Use Classification Atltlitional LA Sewage Generation Factors ~ Sewage Generation Factors County Code Description Descriptor Applicable LA SFC Use Category SGF in GPD BOD SS SGF in GPD BOO SS (mg/ll (m9nl Im III (m ll) Heavy Manufacturing; Misc. gpd of Avg. Process ' 3200, 30X0 Industrial Boiler Mfg. 8 Servicing Flow 290 550 Heavy Manufacturing; Misc. gpd of Avg. Process 3200, 30X0 Industrials ~ Building Material Flow 177 487 Heary Manufacturing; Misc. gpd of Avg. Process 3200, 30X0 Industrial Bus Mfg: 8 Servicing Flow 180 280 Heavy Manufacturing; Misa gpd of Avg. Process 3200, 30X0 Industrial Ceramic 8 Clay Prod. Mfg. Flow 290 550 Heavy Manufacturing; Misc. gpd of Avg. Process 3200, 30X0 Industrial Comp. Gases-Mfg., Handling Flow 290 550 Heavy Manufacturing; Misa gpd of Avg. Process 3200, 30X0 Industrial ~ Concrete Products MFg. Flaw ~ 177 487 Heavy Manufacturing; Misc. gpd W Avg. Process 3200, 30X0 Industrial - Cosmetic Mfg. Flow t50-1,900 32-280 Heavy Manufacturing; Misa .gpd of Avg. Process 3200, 30X0 Industrial Foundries Flow 290 230-2,700 Heavy Manufacturing; Misc. gpd of Avg. Process 3200, 30X0 Industrial Grinding (Minerals) Flow 290 550 Heavy Manufacturing; Misa gpd of Avg. Process 3200, 30X0 Industrial Industrial Discharge Flow 290 550 Heavy Manufacturing; Misc. - gpd of Avg. Process ' 3200, 30X0 Industrial Lumber Treating Flow , 298 599 Heavy Manufacturing; Misc. gpd of Avg. Process 3200, 30X0 Industrial Machinery Mfg. (Except Elect.) Flow 290 550 Heavy Manufacturing; Misc. gpd of Avg. Process 3200, 30X0 Industrial - Metal Fabrication (Weltl) Flow 290 550 Heavy Manufacturing; Misc. - ~ gpd of Avg: Process 3200, 30X0 Intlusbial - Metal Finishing 8 Plating Flaw 10 3&10,000 Heavy Manufacturing; Misa gpd of Avg. Process 3200, 30X0 Industrial Metal Treating Flaw t0 5,300 Heavy Manufacturing; Misc. gpd of Avg. Process 3200, 30X0 Industrial Mirror Mfg. 8 Glass Treatment Flow 290 550 Heavy Manufacturing; Misa gpd of Avg. Process 3200, 30X0 Industrial Paint Mfg. Flow 300-14,000900-99,000 Heavy Manufacturing; Misa gpd of Avg. Process 3200, 30X0 Industrial Paint Removers, Mfg. Service Flow 1,310 t,134 Heavy Manufacturing; Misc. gpd of Avg. Process ' 3200, 30X0 Industrial Paint Spray Booths Flaw 1,310 1,134 Heavy Manuacuring; Misc. _ gpd of A_vg. Process 3200, 30X0 Industrial Paper Mfg. FIOw 676 493 Heavy ManNacturing; Misc. ~ gpd of Avg. Process 3200,30X0 Industrial Paper Protlucts Mfg. Flow 676 493 .Heavy Manufacturing; Misc. gpd of Avg. Process ' 3200, 30X0 ~ Industrial Paper Pulp Products Flaw 676 493 Heavy Manufacturing; Misc gpd of Avg. Process 3200, 30X0 Industrial - Pharmaceutical Protl. Mfg. Flaw 150.2,500 32-840 ' Heavy Manufacturing; Misc. - gpd of Avg. Process 3200, 30X0 Industrial Pipe Culling and Threading Flaw 290 550 Heavy Manufacturing; Misa gpd of Avg. Process 3200, 30X0 Industrial ~ Plating Plant (Industrial) Flow 10 39-70,000 Heavy Manufacturing; Misc. gpd of Avg. Process 3200, 30X0 Industrial Railroad Equipment Repair 8 Mfg. Flow 180 280 ASSIGNMENT OF AMALGAMATED SYSTEM SEWAGE GENERATION FACTORS TO COUNTY USE CODES Amalgamated System County Use Classification Atltlitional LA Sewage Generation Factors Sewage Generation Factors County Cotle Descfiptfon Descriptor Applicable LA SFC Use Category SGF in GPD .BOO SS SGF in GPD BOD SS Heavy Manufacturing; Misc. gpd of Avg. Process - ' 3200, 30X0 Industdal Rendering Plants Flow 2,213 1,453 Heavy Manufacturing; Misc. gpd of Avg. Process ' 3200, 30X0 Industrial Shipbuilding & Repair Flow 180 280 Heavy Manufacturing; Misc. gpd of Avg. Process 3200, 30X0 Industrial Soaps, Cleaning Preparations, Perfume Flow 298 599 Heavy Manufacturing; Misc. gpd of Avg. Process 3200, 30X0 Industrial Tanning Flow 350-2,500 390.3,900 ' Heavy Manufacturing; Misa gpd of Avg. Process 3200, 30X0 Industdal Textiles Flow 170-440 38-185 Heavy Manufacturing; Misa gpd of Avg. Process 3200, 30X0 Industdal Tire Mfg. R Servicing Flow 298 599 Heavy Manufacturing; Misc. gpd of Avg. Process 3200, 30X0 Industdal Truck & Trailer Mtg. Flow 180 280 3200 Heary Manufacturing ? ? 290 550 33X0 Warehousing, Distribution, Storage COLD STORAGE: NO SALES 20 /1000 GR.SO.FT. 150 150 33X0 - Warehousing, Distribution, Storage STORAGE: BUILDINGNJAREHOUSE 20 /1000 GR.SO.FT. 150 150 33X0 Warehousing, Distribution, Slorage STORAGE: SELF STORAGE BLDG. 20 /1000 GR.SQ.FT. 150 150 33X0 Warehousing, Distribution, Slorage Storage:BUilding/Warehouse gpd of AVg. Process 150 150 33X0 Warehousing, Distribution, Storage WAREHOUSE 20 /1000 GR.SQ.FT. 150 150 33X0 Warehousing, Distribution, Storage WAREHOUSE W/ OFFICE SFC =sum of SFC's 39X0 Open Storage 20 /1000 GR.SO.FT. 150 150 Warehousing, Distribution, 33X0,39X0 Storage - 20 /1000 GR.SO.FT. 150 150 gptl of Avg. Process 3400 Food Processing, Meat Food Processing: Egg, Flow 2,213 1,453 gptl of Avg. Process 3400 Food Processing, Meat Food Processing: Fish Flow 2,213 1,453 ' gptl of Avg. Process 3400 Footl Processing, Meal Food Processing: Meat Flow 2,213 1,453 gpd of Avg. Process 3400 Food Processing, Meat Footl Processing: Poultry Flaw 2,213 .1,453 - gpd of Avg. Process - 3400 Food Processing, Meat Meat Packer Flow 2,213 1,453 3400 Food Processing, Meat ? ? 2,213 1,453 gptl of Avg. Process 3410 Foodprocessing, Beverage Beverage Mfg. Flaw 541 130 gptl of Avg. Process 3410 Food Processing, Beverage Breweries Flow' 1,870 1,200 gptl of Avg. Process 3410 Food Processing,Beverage Dislilledes Flow 1,870 1,200 gptl of Avg. Process ' 3410 Fcod Processing, Beverage Wineries Flow 1,870 1,200 ASSIGNMENT OF AMALGAMATED SYSTEM SEWAGE GENERATION FACTORS TO COUNTY USE CODES Amalgamated System County Use Classi0cation Additional LA Sewage Generation Factors Sewage Generation Factors County Cotle Description Descriptor Applicable LA SFC Use Category SGF in GPD BOD S$ ~ SGF in GPD BOO SS' 3410 Food Processing, Beverage 7 ? ? ? .gpd of Avg. Process 3420 Food Processing, Other Candy Mrg. & Confectioners Flow 2,213 7,453 3420 Fnod Processing, Other DAIRY Avg. Process Flow 2,369 _ 922 - gpd of Avg. Process 3420 Food Processing, Other Dairy Products Mfg Flaw 2,369 922 3420 Food Processing, Other DAIRY: BARN Avg. Process Flow 2,213 1,453 ' gpd of Avg. Process 3420 Food Processing, Other Food Processing: Citrus Flow 2,213 1;453 gpd of Avg. Process 3420 Food Processing, Other Food Processing: Dried Fruit Flow 2,273 1,453 gpd of Avg. Process 3420 Food Processing, Other Footl Processingi.Fruit Flow 2,213 1,453 gpd of Avg. Process 3420 Food Processing, Other Footl Processing: Olives Flow 2,213 1,453 ' gpdof Avg. Process 3420 Footl Processing, Other Food Processing: Pickles Flow 2,213 1,453 9ptl of Avg. Process 3420 Fcod Processing, Other Oils: Olive Flow 2,213 1,453 gpd of Avg. Process 3420 Food Processing, Other Oils: Vegetable ~ Flow 2,273 1,453 ' FOOD PROCESSING PLANT 34X0 Food Processing Plants (DOMESTIC) 80 /1000 GR.SQ.FT. 150 150 FOOD PROCESSING PLANT 34X0 Food Processing Plants (INDUSTRIAL) - Avg. Process Flow 2,213 1,453 gpd of AVg. Process ' 34X0 Food Processing Plants Misc.: Food Products Flow 2,213 7,453 3420 Food Processing, Other ? ? 2,273 7;453. Motion Picture, Radio and 3500 Television Industries - STUDIO: RECORDING 80 /1 WO GR.SO.FT. 150 150 Motion Picture Studios, Radio & STUDIO: FILM / N-AUDIENCE 3500, 3510 TV Transmission Facilities VIEWING ROOM 4 /SEAT 750 150 ' STUDIO: FILM/N-FILM Motion Picture Stutlios, Radio R PROCESS./MACHINE SHOP 3500, 3510 TV TransmissiomFacilities (INDUSTRIAL] Avg. Process Flow Motion Picture Studios, Ratlio 8 STUDIO: FILM / TV -INDUSTRIAL USE 3500, 3510 N Transmission Facilities (DOMESTIC) 80 /1000 GR.SO.FT. 150 150 Motion Picture $tUdIOS, Radio & ~ STUDIO: FILM / TV -REGULAR USE - 3500, 3570 N Transmission Facilities INDOOR FILMING AREA 80 /1000 GR.SO.FT. 150 750 Motion Picture Studios, Radio & gpd of Avg. Process 3500, 3510 ~ N Transmission Facilities $lUtlIO:FIImRV-Industrial Film Process 100 Flow 160 60 Motion Picture, Ratlio and 35X0 Television Industries ' - 80 11000 GR.SO.FT. 150 150 3600 Lumber Yards ASSIGNMENT OF AMALGAMATED SYSTEM SEWAGE GENERATION FACTORS TO COUNTY USE CODES Amalgamatetl System County Use Classification Additional LA Sewage Generation Factors Sewage Generation Factors County Cotle Description Descriptor Applicable LA.SFC Use Category SGF in GPD BOD SS SGF in GPD BOD SS - - Im9/l) (mgll) (mg/p Im9/I) ' gpd of Avg. Process Chemical Mi9. & Packing Flow 298 599 gptl of Avg. Process Cleaners 8 Dyers Flow 298 599 gpd of Avg. Process ' Industrial Organic Discharge Flow 298 599 gptl of Avg. Process ' Insedicide Mfg. Flow 298 599 gpd mAVg. Process Latex & Rubber Produds Flow 298 599 gptl of Avg. Process ' Oil Producers Flow ~ 84 105 gptl of Avg. Process Oil Refnedes Flow 84 .105 gpdof Avg. Process Oils: Fuel & Heating Flow - 84 105 gpd of Avg. Process Oils: Lubricating Flow 700 300 gptl of Avg. Process - Oils: Mfg. & Packaging Flow 84 105 - gpdof Avg. Process Oils: Mfg. & Packng Flow >i4 105 gpd of Avg. Process Oils: Mineral - Flow 84 105 ' gpd of Avg. Process Oils: Redaimed Flow - 84 105 .gpd of AVg. Process Oils'Re-refned Flow 84 105 gpd of Avg. Process - Plastics Flow 298 599 gptl of Avg. Process Wax Mfg. Flaw 298 599 3720 4000-5900 so0a 6110 6110 6120 61X0 Mineral Processing -Petrol Refinery, Chemical Plant Farm, Forest, Desert, etc. ~ a 7 ~ 0 /1000 GR.SQ.FT. 0 0 Recreation Facilities Movie Theatres, Drive Ins THEATER: CINEMA 4 /SEAT 150 150 Movie Theatres, Drive Ins THEATER: DRIVE-IN 10 NEHICLE 150 150 Legitimate Theatre - ~ THEATER: LIVE/MUSIC/OPERA 4 /SEAT 150 150 Theaters 4 /SEAT 150 .150 ASSIGNMENT OF AMALGAMATED SYSTEM SEWAGE GENERATION FACTORS TO COUNTY USE CODES ' Amalgamatetl System County Use Classification Add'dional LA Sewage Generation Factors Sewage Generation Factors County Cotle Description Descriptor Applicable LA SFC Use Category SGF in GPD BOD SS SGF.in GPD BOO SS (m911) (mgll) (m911) (mg/ll 6200 Open, Night Clubs? SFC=Sum of BOWLING FACILITY: SFC's for all areas, ARCADE/BAR/RESTAURANT/DANCIN based on individual .6300 Bowling Alleys G SGF's ' BOWLING ALLEY: ALLEY, LANES & 6300 Bowling Alleys LOBBY AREA BO /1000 GR.SO.FT. 150 150 69X0 Skating Rinks 150 150 8300 Bowling Alleys; Skating Rinks - T /1000 GR.SQ.FT. 150 150 Clubs, Lotlge Halls, Fraternal 6400 Organizations LODGE HALL 4 /SEAT 750 - 150 4 /SEAT 150 150 Auditoriums, Stadiums, 6500 Ampitheatres AUDITORIUM 4 /SEAT 150 150 Auditoriums, Slatliums, gpd of Avg. Process 6500,8844 Ampitheatres, Sports stadiums Sports Statlium/Arena Flow 150 150 Race Tracks, Horse Stable- Convention Center, Fairground, gpd of Avg. Process 67X0 Private, Racetrack, Flow - 150 150 Auditoriums, Slatliums, ' Ampitheatres, Race Tracks, 6500,67X0,8844 Sports stadiums - 7 ? 750 150 6510 Amusement Facilities ARCADE -VIDEO GAMES BO /1000 GR.SQ.FT. 150 150 6510 Amusement Facilities POOL HALL (NO ALCOHOL) 80 /1000 GR.SO.FT. 150 150 6540 Dance Halls 8847 Amusement Ride 8849 Youth Facility 6570,6540,8847 Amusement Facilities 8011000 GR.SO.FT. 150 750 Commercial Swimming, Pools, SWIMMING POOL (Commercial, with Avg. Backwash 6520 Schools backwash fillers) Flow Gymnasiums, Health Spas with GYMNASIUM-BASKETBALL, 6530 Showers VOLLEYBALL 250 /1000 GR.SO.FT. 150 150 ' Gymnasiums, Health Spas with 6530 Showers HEALTH CLUB/SPA 800 /1000 GR.SO.FT. 150 150 Gymnasiums, Health Spas with SPA/JACUZZI (Commercial, with Avg. Backwash 6530 Showers ~ backwash fillers) Flow 150 150 ' Gymnasiums, Health Spas with TANNING SALON: WITHIN A HEALTH 6530 Showers ~ SPA/CLUB 800 /1000 GR.SO.FT. 150 150 6550 Tennis Courts, Clubs, Pro Shops 8843 Public Swimming Pool ASSIGNMENT OF AMALGAMATED SYSTEM SEWAGE GENERATION FACTORS TO COUNTY USE CODES Amalgamatetl System CounryUse Classification Atltlitional LA Sewage Generation Factors Sewage Generation Factors County Code - Descripgon - Descriptor Applicable LA SFC Use Category SGF in GPD BOD 55 SGF in GPD BOD 55 Gymnasiums, Health Spas with Showers; Tennis Courts, Clubs, Pro Shops; Commercial ' 8520,6530,6550,884 Swimming Pools, Schools; 3 Public Swimming Pools 7 ? 150 150 7100 Churches CHAPEL: FIXED SEAT 4 /SEAT 150 150 7100 Churches CHURCH: FIXED SEAT 4 /SEAT 150 150 7100 Churches 4/SEAT 150 150 7000 Schools and Colleges 7200 Private Schools CHURCH SCHOOL: DAY CARE/ELEM 8 /OCCUPANT 130 100 7200 Private Schools CHURCH SCHOOL: ONE DAY USE 200 /1000 GR.SQ.FT. 130 100 7200 Private Schools DANCE STUDIO 80 /1000 GR.SQ.FT. 150 150 7200 Private Schools SCHOOL: ARTS/DANCING/MUSIC '80 /1000 GR.SO.FT. 130 100 7200 Private Schools SCHOOL: DAY CARE CENTER a /CHILD 130 100' 7200 Private Schools SCHOOL: MARTIAL ARTS ~ 8011000 GR.SO.FT. 130 100 7200 Private Schools SCHOOL: NURSERY-DAY CARE a /CHILD 130 100 7200 Private Schools SCHOOL: SPECIAL CLASS 8 /STUDENT 130 100 Schools-Private ono Public Elementary; Public School, 7200,8833,8830 General SCHOOL: ELEMENTARY/JR. HIGH ' e /STUDENT 130 100 Schools-Private and Public Elementary; Public School, 7200,8833,8830 General SCHOOL: KINDERGARTEN 200 /1000 GR.SO.FT. 130 100 General, Day-Care ono 7200,8833,8830 Elementary Schools ~, B /STUDENT 130 100 8832 Public High Schools ~ SCHOOL: HIGH SCHOOL 12 /STUDENT 130 100 SCHOOL: TRADE OR VOCATIONAL 12 /STUDENT 130 100 SCHOOL: TRAINING 12 /STUDENT 130 900 8852 Secontlary Schools - 12 /STUDENT - 130 100 7300,7000,7600,780 0,7900,8831 Colleges, Universities SCHOOL: UNIVERSITY/COLLEGE 78 /STUDENT 130 100 7300,7000,7600,780 0,7900,8831 Colleges, Universities SCHOOL: STADIUM, PAVILION 4 /SEAT 150 150 7300,7000,7600,780 0,7900,8831 Colleges, Universities 18 /STUDENT 130 100 7400 Hospitals HOSPITAL 75 /BED 250 100 ASSIGNMENT OF AMALGAMATED SYSTEM SEWAGE GENERATION FACTORS TO COUNTY USE CODES Amalgamatetl System County Use ClassfOCatfon Additional LA Sewage Generation Factors Sewage Generation Factors - County Cotle Description Descriptor Applicable LA SFC Use Category SGF in GPD BOD SS SGF in GPD BOO SS (male (mglp (m /q Ira /p 7400 Hospitals HOSPITAL: CONVALESCENT 75 /BEO 250 100 7400 Hospitals HOSPITAL: PSYCHIATRIC 75 /BED - 215 205 7400 Hospitals HOSPITAL: SURGICAL - 450 /BED 250 100 gpd of Avg. Process 7400 Hospitals Metlical: Lab in Hospital Flow ~ 339 151 7400 Hospitals 75 /BED 250 700 Intlustrial7 Convalescent Hospitals, Nursing 7470 Homes 7500 Homes for Agetl and others REST HOME 75 /BED 250 100 7410,7500 Homes for Aged and others 75 /BED 250 100 7600 Open gpd of Avg. Process 7710 Mortuaries, Funeral Homes Mortuaries: Embalming Flow 800 800 7770 Mortuaries, Funeral Homes MORTUARY: CHAPEL 4 /SEAT 150 150 7770 Mortuaries, Funeral Homes - MORTUARY: EMBALMING 5 /7 GR: SO. FT. 800 800 7710 Mortuaries, Funeral Homes MORTUARY: LIVING AREA 80 /1000 GR.SO.FT. 215 205 ' SFC=Sum of SFC's MORTUARY:CHAPEL/LIVING 'for all areas, 6asad - 7710 Mortuaries, Funeral Homes AREA/EMBALMING on intlivitlual SGF's - 7710 Mortuaries, Funeral Homes ? 7 800 800 7800,7900 - Open 8000,8100 Utilities ~ , 8200 Mining 8300 Petroleum and Gas 8400 Pipelines, Canals 8500 Rights of Way ' 8700 Rivers, Lakes and Quarries Mineral Processing-Cement, 3710 Rock & Gravel 7700 Cemetaries, Mausoleums 880V Government-Vacant Lantl Government-Rights of Way, 8810 General ' Government-Street, Road, 8877,8812 Highway; Future Street ASSIGNMENT OF AMALGAMATED SYSTEM SEWAGE GENERATION FACTORS TO COUNTY USE CODES Amalgamated System County Use Classi0cation Additional LA Sewage Generation Factors Sewage Generation Factors County Code Description Descriptor Applicable lA SFC Use Category SGF in GPD BOD SS SGF in GPD BOD SS Img/ll 1 /q Im /l) 1 /l) Government-Power Tfansmission - 8813,8814 Lines; Sewers, Utilities ' Government-Water Relaletl 8850 Facilities Government- Boat Slip; Boat 8852-3 Mooring Government- Flood Control Drainage; Irrigation Related; Dam; Reservoir, Tank, Underground 8855-9 Storage; Watershed 8864 Government-Airport, Tie-down Government-Rapid Transit, Bus, 8866 eta 8900 Dump Sites Cement, Rock & Gravel; - Cemeteries and Mausoleums; Mining; Petroleum and Gas; 3710,7700,8200,830 Pipelines, Canals, Rights of 0,8400,8500,8700,88 Way; Rivers, Lakes and 45,8848,8850,8852• quarries; Government • No 4,8855-0,8864 Wastewater, ~ 0 /1000 GR.Sq.FT. 0 0 8827 Government- Library LIBRARY: PUBLIC AREA 80 /1000 GR.Sq.FT. 150 150 8827. Government- Library LIBRARY: STACKS, STORAGE 25 /1000 GR.Sq.FT. ~ 150 150 8827 Government-Library 80 /1000 GR.SQ.FT. 150 150 Government-Court Building, 8828. Jail JAIL 85 /INMATE 310 120 85 /INMATE 310 120 8842 Art Center, Museum MUSEUM: ALL AREA 20 /1000 GR.SQ.FT. 150 150 8842 Art Center, Museum MUSEUM: OFFICE OVER 15% 150 /1000 GR.Sq.FT 150 150 ' 8842 Art Center, Museum MUSEUM: SALES AREA 80 /1000 GR.Sq.FT. 150 150 8842 Art Center, Museum 20 11000 GR.Sq.FT: 150 150 GOLF COURSE: 18-HOLE/9-HOLE 6600 Golf Courses GREEN AREA 150 150 6600 Golf Courses GOLF COURSE: DRIVING RANGE 150 150 SFC=Sum of SFC's for all areas, GOLF COURSE FACILITY: based on individual 6600 Golf Courses LOBBY/OFFICE/RESTAURANT/BAR SGF's Camp, Park (Structures and ' gpd of Avg. Process 68X0,8841 Camp; Government-Park Improvements) Flow 150 150 ASSIGNMENT OF AMALGAMATED SYSTEM SEWAGE GENERATION FACTORS TO COUNTV USE CODES Amalgamated System County Use Classification Additional LA Sewage Generation Factors Sewage Generation Factors County Cade ~ Description : Descriptor Applicable lA SFC Use Category SGF ioGPD BOD SS SGF in GPD BOO SS 1 9111 Im 111 Im /l) 1 /l) 8800 Government-General 8840 Governmem -Recreation, General COMMUNITY CENTER 4 /OCCUPANT 150 150 8845 Government- Beach - - 8851 Government- Small Boat Madna 8854 Government-Pier, Whart Government-Transportation, General; Harbor and Relatetl; 8860-2 Airport, General 88fi3 Government-Airport, T Hanger HANGER (AIRCRAFT) 80 /1000 GR.SO.FT. 180 280 Government-Airport, Fixed-Base 8865 Operator - - 8899 Government-NOt Classifable COMFORT STATION: PUBLIC 100 /FIXTURE 150 150 Golf Courses; Camps; Governmem • General; Recreation, General; Beach; Ball Field; Park; Small Boat Marina; Pier, Wharf; Transportation, 6600,68X0,8800,884 General; Harbor and Relatetl; 0- Airport, General, T-Hanger and 1,8845,8848,8861,88 Fixed -Base Operator; Not 54,8880-3;8865,8899 Classifiable 884fi Government-Horse Stable Parcels Atlded During Preparation of the Supplemental 9200 Direct Assessment 100/FIXTURE? 150 150 ? ? ? ? 7 ? T ? ATTACHMENT C '.. City a6 ~~~tts+ '"~~~~'~ ' CITY OF SANTA MONICA ENVIRONMENTAL PROGRAMS DIVISION FUNDING IN COMPLIANCE WITH PROPOSITION 218 HF&H CONSULTANTS, LLC ~F I-I December 14, 2007 FINAL REPORT CITY OF SANTA MONICA 1717 - 4TH STREET, SUITE 250 SaNTa MONICA, CA 90401 ENVIRONMENTAL PROGRAMS DIVISION FUNDING IN COMPLIANCE WITH PROPOSITION 218 FINAL REPORT December 14, 2007 ~~ HF&H CONSULTANTS, LLC 2175 N. California Blvd., Suite 990 Walnut Creek, CA 94596 Tel: (925) 977-6953 Fax: (925) 977-6955 ~:~ HF&H CONSULTANTS, LLC Advisory Services to Municipal Management 2175 North California Boulevard, Suite 990 Walnut Creek Walnut Creek, Califomia 94596 Newport Beach Tel: (925) 977-6950 _ Fax: (925)977-6955 unum.hfh-consuitants.com TECHNICAL MEMORANDUM To: Craig Perkins, City of Santa Monica Director of Environmental & Public Works Management Carol Swindell, City of Santa Monica Director of Finance Janet Shelton, City of Santa Monica Budget Manager Dean Kubani, City of Santa Monica Environmental Programs Division Manager From: John Farnkopf, HF&H Senior Vice President Edmund Jones, HF&H Associate Analyst Date: December 14, 2007 Subject: Final Report: City of Santa Monica Environmental Programs Division - Funding In Compliance with Proposition 218 The City has historically funded the Environmental Programs Division with revenue from the Water, Wastewater, Solid Waste, and Stormwater enterprises. The purpose of this report is to present our findings from our independent review of the funding for the City's Environmental Programs Division. The report is organized as follows: Section I. Summary of Findings Section II. Methodology Section III. EPD Programs Section FV. Allocation of EPD Budget to Programs Section V. Allocation of Program Budgets to Funding Sources Section VI. Proportional Water and Wastewater Rates Section VI. References Appendix. Cost Allocation Model I. SUMMARY OF FINDINGS The City has funded the Environmental Programs Division s budget using a methodology that was developed over time. The purpose of the present study was to perform an independent cost allocation analysis to determine the appropriate funding. Figure 1 summarizes the allocations derived in this study and compares them with the City's allocations. Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 2 Figure 1. Comparison of Allocationsr Fund HFBH Allocation City Allocation HF&H Minus City Water 34.2% $1,363,871 35.0% $1,395,912 -0.8% ($32;041) Wastewater 21.4% $855,958 35.0% $1,394,715 -13.5% ($538,756) Solid Waste - 18.7% $745,613 14.2% $564,670 4.5% $180,944 Stormwater 18.5% $739,260 15.9% $635,304 2.6% $103,957 Subtotal 92.8% $3,704,703 100.0% $3,990,600 -7.2% ($285,897) General Fund/Other Funding 7.2% $285,897 0.0% $0 7.2% $285,897 Total 100.0% $3,990,600 100.0% $3,990,600 0.0% $0 The principal differences are: • 7.2% ($285,897) of the EPD budget is allocated to the General Fund/Other Funding.2 The allocation is from the Energy Conservation, Green Building Assistance and Sustainable City Plan programs. • The $285,897 allocated to the General Fund represents 15.1% of the combined $1,889,076 cost of these programs. • The Water Fund's share'of the EPD budget decreased 2.3% (from $1,395,912 to $1,363,871). • The Wastewater Fund's share decreased 38.6%. • The Solid Waste Fund's share increased 32.0%. • The Stormwater Fund's share increased 16.4%. The overall result is a shift of costs away from the Water. and Wastewater Funds to the Solid Waste, Stormwater, and General/Other Funds. II. METHODOLOGY There are two substantive provisions of Proposition 218 related to setting fees and charges that are relevant to the present report. The first provision states that "Revenues derived from the fee or charge shall not exceed the funds required to provide the property related service." 3 We interpret this to mean that costs included in fees and charges required to provide water, wastewater, Stormwater, and solid waste services must be related to those services and cannot exceed the funding requirement. In other words, for example, revenue generated by water rates cannot be unrelated to providing water service. Hence, any EPD cost reimbursed from . 1 The FY 2007-OS budget was used in this report as the cost basis for all analysis. s "General Fund/Other Funding" is intended to indicate any source of funding other than the four enterprises and is also referred to as "General Fund". s California Constitution Article XIII D, section (6)(b)(1). Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 3 water rate revenue cannot exceed the amount that is related to providing water service. Demonstrating that EPD's budget is related to providing water, wastewater, stormwater, and solid waste services is the primary purpose of this report. The second provision states that "The amount of a fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel." 4 We interpret this to mean at least that fees. or charges levied by the Water, Wastewater, stormwater, and Solid Waste Funds must not exceed the proportional cost of service for each fund. Again, for example, the EPD cost included in water rates must be proportionately distributed among rate payers. Demonstrating that EPD's budget is proportionately allocated to appropriate funding sources is a secondary purpose of this report. A two-step approach was followed in this study to allocate EPD's budget to appropriate funding sources: 1. Determine Program Budgets - EPD's total budget was itemized into its seven major programs based on the activities of staff and the objectives of each program. 2. Allocate Programs to Funding Sources -The seven program budgets were allocated to funding sources based on the benefits received by each funding source. The City has historically allocated the entire EPD budget to the four enterprise funds. For purposes of this study, we have included the General Fund as a potential funding source for any expenses for which the nexus to the enterprises maybe questionable in our opinion. III. EPD PROGRAMS With the assistance of City staff, the following descriptions of each of the major EPD programs were developed. Water Consewvation EPD engages in a number of water conservation programs and activities including: Baysaver, which replaces old toilets, faucet aerators and showerheads with new, low- flow ones; • Rebates for the purchase and installation of water-efficient washing machines, irrigation controllers and the like. a California Constitution Article XIII D, section (6)(b)(3). Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 4 Reviewing City operations, especially parks, for efficiency opportunities with irrigation systems and plays a role in the water-efficient design of public spaces. Outreach targeting homes, landscaping and restaurants where conservation can often make the greatest gains; Outreach materials are distributed at a wide variety. of venues, from festivals to public lectures. Water conservation benefits water rate payers by improving operational efficiency, improving reliability, and lowering the cost of supplying water. Water conservation reduces sewered water use, which benefits wastewater customers by lowering the hydraulic load on wastewater collection and treatment facilities. Water conservation also reduces irrigation inefficiency, thereby reducing urban runoff pollution from turf, which may contain fertilizer and pesticide residues; hence, stormwater rate payers benefit from water conservation. Underground Tank Management This program handles regulation, inspection and enforcement functions for public and private underground storage, mostly in the form of gasoline tanks. The monitoring of these tanks is crucial to the protection of groundwater from leaks of toxic substances. Clean groundwater is crucial to achieving the City's sustainability goal of increasing the percentage of the City's potable water sourced from local supplies. Watershed Management The primary function of Watershed Management is to minimise urban runoff pollution into Santa Monica Bay. Staff support the runoff treatment provided by the Santa Monica Urban Runoff Recycling Facility ("SMURRF") through public outreach efforts, enforcement of the urban runoff ordinance, plan checks for new construction, and implementing National Pollution Discharge Elimination System ("NPDES") measures: Staff also write grant proposals to procure filtration systems for the stormwater system. These activities benefit water, wastewater, and stormwater rate payers. Water rate payers benefit because Watershed Management helps reduce urban runoff from irrigation, which reduces water use and contamination from fertilizers and pesticides that are used on landscapes, chemicals that can potentially percolate into the groundwater supply. Wastewater rate payers benefit because Watershed Management improves runoff drainage into receiving waters. With improved drainage, less runoff can enter the wastewater collection system as inflow and infiltration; which places a burden on the collection and treatment facilities. Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 5 Stormwater rate payers benefit because pollution in runoff that drains to Santa Monica Bay is minimized. Hazardous Materials. Mitigation This program encompasses Household Hazardous Waste ("HHW") collection, administration of he Cites Certified Unified Program Agency ("CUPA").program and oversight of hazardous waste remediation for City projects. Program activities support the full-time operation of the HHW collection facility, which also processes all City-generated hazardous waste. There is also a program for the collection of electronic waste. The purpose of this type of collection activity, besides following State requirements, is to prevent toxic materials from reaching the landfill where they can leach toxins into the groundwater. This program area involves considerable public outreach on specific items targeted for HHW collection (including mercury thermometers, batteries, used motor oil and fluorescent light bulbs) as well as efforts to educate the public about the proper disposal of HHW. This program also focuses on businesses that generate hazardous waste, such as: drycleaners, printing companies, auto mechanics and painting companies. Program staff perform regulatory functions like inspections provided under the auspices of the CUPA program, working with the fire department on permitting, and the industrial waste section of the Wastewater system. The benefits associated with this program are received by water rate payers (i.e., groundwater quality is protected), wastewater rate payers (i.e, wastewater pollution is reduced), Stormwater rate payers (i.e., urban runoff pollution is reduced), and solid waste rate payers (i.e., hazardous wastes are better controlled). Energy Conservation The activities of this program are targeted at improving energy efficiency, which benefits both municipal and public (e.g., residents and businesses) energy users.- Staff work to reduce energy use by City offices and facilities and to promote the Solar Santa Monica program. Of the four enterprises, the primary beneficiary is the Water Fund, which uses a large amount of electricity for pumping water. The Wastewater Fund benefits similarly due to the electricity involved in pumping wastewater. In addition, the City's water supply benefits from energy conservation because improved energy efficiency reduces greenhouse gas emissions, which are predicted to impact the reliability and availability of water supplies. The public benefits from outreach designed to educate about energy use and waste and to influence new building design as it pertains to potential energy loading. Staff perform energy Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 6 audits, promote energy-efficient equipment and work with other cities to share ideas and try to influence state and federal policy. Green Building Assistance This program promotes environmentally sustainable building in the City. Green building includes: • Energy efficiency through the use of proper insulation, solar power and energy-efficient appliances; • Water efficiency through appropriate landscaping for the climate and water-efficient appliances and fixtures; • Water quality protection by discouraging landscaping that is dependent on large amounts of chemical fertilizers and pesticides and irrigation that will not over-water and generate runoff to storm drains; • Improving indoor air quality by selecting paints, carpeting and sealants that do not "off-gas' harmful chemicals; this also reduces the amount of toxic materials that go into landfills or that are poured down storm drains; and • Selecting sustainable, non-toxic building materials,promoting those that can be used with min;mal waste and recycling the construction and demolition debris that is generated. The program includes outreach to educate the public and assistance with choosing and purchasing green building products. Outreach is focused on both residential and commercial building. This program benefits water rate payers (i.e., water conservation ie improved), wastewater rate payers (i.e., wastewater pollution is reduced), stormwater rate payers (i.e., urban runoff pollution is reduced), and solid waste rate payers (i.e., hazardous wastes are better controlled). Sustainable City The Sustainable City Plan began as a series of environmental programs and has grown to encompass such concepts as Human Dignity, Civic Participation, and Affordable Housing. Within EPD, Sustainable City functions as an umbrella program, encompassing all of the goals and activities of the other EPD programs. EPD works within City operations to achieve these goals and supports and encourages sustainable businesses and individuals through both awards/recognition programs and hands-on assistance like water or power use audits. The EPD, in support of the Plan, performs all of the data tracking and most of the public outreach for all of the Plari s goal areas. Doing this, partof the cost of this program can be Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 7 viewed as overhead expenses for other City departments. As such, these departments should be reimbursing EPD for a portion of the program expenses estimated to be attributable to them. Figure 2 summarizes the nexus between the EPD programs and the Enterprise Funds. Fi~txre 2. Nexus Summary EPD Pro am Water Fund Wastewater Fund Stormwater Fund Solid Waste Fund Water Reducing water use and Reducing wastewater Reducing irrigation ' Conservation associated vaiiable costs and associated variable runoff into stormwater No demonstrated nexus costs system Underground Preventing under- Tank gTO11~d storage tanks from contammating No demonstrated nexus No demonstrated nexus No demonstrated nexus Management groundwater Effident irrigation Redurin mflow and Watershed reduces customer water ill infiltration of runoff Redudng polluted Management b s; less mnoff results , in less pollution from into sewer system surface mnoff in SMUI~P and ut Santa No demonstrated nexus landscaping and other reduces treatment costs, Monica Bay chemicals necessary capacity Hazardous Improper disposal of Keeping hazardous Reducing polluted Primary program focus Materials hazardous waste waste out of sewer surface runoff in is diverting hazardous contaminates system reduces SMURRF and in Santa waste items from Mitigation groundwater treatment costs Monica Bay landfill Energy Improved energy Improved energy Improved energy Improved energy COri3erVdtlori efficiency in operations efficiency in operations efficiency in operations efficiency in operations and at facilities and at Facilities and at faci]itles and at facilities Green Redudngwater use and Reducing the volume of Reducing polluted Minimizing the amount Buildin associated variable water introduced into the sewer s stem fewer surface runoff in of waste generated by C&D red cin t i g costs; reducing y , SMURRF and in Santa ; u g ox c Assistanee groundwater polluton toxics in wastewater Monica Bay materials used; focus on stream recycling and reuse Sllstainable Umbrella program Umbrella program Umbrella program Umbrella program City Plan encompassing al] of the encompassing all of the encompassing all of the encompassing all of the above above above above - IV. ALLOCATION OF EPD BUDGET TO PROGRAMS The EPD budget breaks down into three basic sections: Salaries and Wages, Supplies and Expenses, and Capital Outlay. We slightly reorganized these sections for cost allocation purposes and divided the budget into Salaries and Wages, Shared Expenses, and Other Expenses. Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 8 Salaries and Wages A schedule was prepared with a row for each staff position and a column for each program, plus one for administrative/other activities. With the assistance of the EPD Manager, staff time for each staff position was allocated to each program as shown in Figure 3. The percentages for each position were multiplied by the budget for that position, with the. Admin/Other component reallocated to the programs in proportion to the each program s direct time allocation. Figure 3. Allocation of Salaries and Wages to Programs Environmental Progams Undergrountl Hazartlous Green Water Tank Watershetl Materials Energy Builtling Sustainable Staff Position Conservation Management Management Mftigaticn Conservation Assistance City Plan Atlmin/Other Environmental Programs Manager 10.00% 10.00% 10.00% 10.00% 5.00% 5.00% 20.00% 30.00% Energy antl Green Buildings Program Atlministrator 40.00% 40.00% 20.00% Energy Efficiency Engineer 60.00% 20.00% Green Buildings Program Atlvisor -- 20.00% 80.00% Senior Administrative Analyst-Urban Runoff 15.00% 85.00% Senior Environmental Analyst - Sustainable Ciry 100.00% Senior Environmental Analyst- . Hazardous Materials 5.00% 95.00% Water Resources Specialist#t 95.00% 5.00% Water Resources Specialist#2 95.00% 5.00% Environmental Programs Analyst- Sustainable Ciry 10.00% 20.00% 5.00% 5.00% 55.00% 5.00% Environmental Progrems Anayst- HazartlousMaterials - 700.00% Environmental Compliance Specialisf 95.00% 5.00% Envimnmental Outreach Specialist 10.00% 10.00% 10.00% 70.00% 70.00% 50.00% Hazardous Materials Technician - 100.00% Leatl Hazartlous Materials Technician 100.00 Environmental Programs Technician 15.00% 85.00% Atlminista0ve Staff Assistant - Envimnmental Programs 100.00 Staff Time 13.24% 6.47% 7.35% 25.59% - 9.41% 9.47% 14.12% 74.41% Allocation bf AtlminlOther 2.23% 1.09% 1.24% 4.31% 7.58% 7.58% 2.38% Staff Time Allocable to Programs 75.46% 7.56% 8.59°/, 29.90% 17.00% N.00% 16.49% Shared Expenses A number of the line items listed under Supplies and Expenses and Capital Outlay are for shared use/staff support and have been renamed here under the heading, Shared Expenses for Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 9 purposes of cost allocation. Shared expenses are allocated to the programs using a composite of the overall allocation percentages for Salaries and Wages from the last row of Figure 3 and summarized in Figure 4. Figure 4. Allocation of Shared Expenses to Programs haretl Ex ense ttems Environmental Programs Underground Hazardous Green Water Tank Watershed Materials Energy Building Sustainable Conservation Management Management Mitigation Conservation Assistance City Plan Util-Telephone 15.46% 7.56% 8.59% 29.90% 11.00% 11.00% 16.49% Offce Supplies 15.46% 7.56% 8.59% 29.90% 11.00% 71.00% 16.49% Metered Postage 15.46% 7.56% 8.59% 29.90% 11.00% 11.00% 76.49% Mileage 15.46% 7.56% 8.59% 29.90% 11.00% 11.00% 76.4900/a Conf/Meetings/travel 15.46% 7.56% 8.59% 29.90% 17.00% 11.00% 16.49% Books/Pamphlets 15.46% 7.56% 8.59% 29.90% 11.00% 11.00% 16.49% Administrative Indirect 15.46% 7.56% 8.59% 29.90% 11.00% 11.00% 16.49% Computer Equipment 15.46% 7.56% 8.59% 29.90% 11.00% 17.00% 16.49% Communications Systems 15.46% 7.56% 8.59% 29.90% 17.00% 11.00% 16.49% Furniture and Furnishings 15.46% 7.56% 8.59% 29.90% 17.00% 11.00% 16.49% Bldg RenovatioNMaint. 15.46% 7.56% 8.59% 29.90% 11.00% 71.00% 16.49% Other Expenses The remaining line items from Supplies and Expenses were allocated according to the program area(s) that they directly support. Ixt addition, revenue attributed to EPD was allocated among the programs. The percentage allocations shown in Figure 5 were derived from the notes to ' the line items found in'the City budget or in conversations with the EPD Manager. The support for these allocations can be found in the Appendix, which contains a copy of the entire allocation model. Applying the allocation factors in Figures 3, 4, and 5 to the corresponding line-item budget expenses yields an allocation of the EPD budget to each of the programs, as summarized in Figure 6. Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 10 FiQUre 5. Allocation of Other Expenses to Programs ther Expense Items Environmental Programs Underground Hazardous Green Water Tank Watershed Materials Energy Building Sustainable Conservation Management Management Mitigation Conservation Assistance City Plan Advertising 2007-OB 17.04% 2.89% 17.04% 17.83% 17.27% 17.27% 10.66% Unif/Protective Clothing 100.00% - Employee Medical Exams 100.00% Toxic Chemical 100.00 Training 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% Community Sustainability Program 100.00% Offce Rent 10.00 % 10.00% 10.00 % 10.00 % 25.00 % 25.00 % 10.00 Memberships and Dues 2.00% 2.00% 50.00% 40.00% 2.00% 2.00% 2.00% Vehicles--FUelslLUbr 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% Vehicle Mgt. Fund-Main[ 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% Building/Structure Maintenance 100.00% Other Costs (BAYSAVER) 75.00% 25.00% Prof Services 2007-OB 21.85 % 5.31 % 13.81 % 5.12 % 6.95 % 12.73 % 34.23 Transfer Station Fee ~ 100.00 Vehicles-Insumnce 14.29% 14.29% 74.29% 14.29% 14.29% - 74.29% 14.29% CNG Fuel 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% Insurance-Comprehensive 14.29% 74.29% 14.29% 14.29% 14.29% 14.29% 14.29% EPD Revenues Admin Fines/Penalties 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% Untlergrountl Tank Permits 100.00 Other Revenue-Miscellaneous 14.29% 14.29% 14.29% 74.29% 14.29% 14.29% '14.29% eaysaver Fees 100.00% CUPA AtlminisVation Fees 700.00% Figure 6. Summary of Program Budeets, FY 2007-OS Environmental Programs Water Underground Watershed Hazardous ~ Energy Green Sustainable Total Expense Conservation Tank Management Materials Conservation Building City Plan Expense Maria ement Miti anon Assistance Salaries&Wages - $259,729 $138,735 $173,036 $462,665 $241,474 $237,051 $372,124 $1,884,814 Shared Expenses $68,393 $33,436 $37,996 $132,226 $48,635 $48,635 $72,952 $442,273 Ofher Expenses $304,768 $9,503 $234,110 $248,928 $144,693 $198,693 $524,818 $1,663,513 Total Program Budget $632,889 $181 674. $445,142 $841,818 $434,803 $484,379 $969,894 $3,990,600 %of TOtaI EPD BUtlget 15.86% 4.55% 11.15% 21.10% 70.90% 12.14% 24.30% 100.00% Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 11 V. ALLOCATION OF PROGRAM BUDGETS TO FUNDING SOURCES Having established the program budgets in Section IV, the next step was to allocate the program budgets to the appropriate funding sources based on the rationale in Section III. With the assistance of the EPD Manager, the qualitative nexus described for each of the programs in Section III was translated into the allocations shown in Figure 7. Figure 7. Allocations of Program Budgets to Funding Sources Funtl Water Undergrountl Watershetl Hazartlous Energy Green Sustainable Conservation Tank Management Materials Conservation Building City Plan Mana ement Miti ation Assistance Composite o{ Total Fxpense Water 50% 100% 30% 20% 60% 22.5% 20% 34.2% Wastewater 40% 0% 10% 20% 20% 22.5% 20% 21.4% Solid Waste 0% 0% 0% 50% 5% 22.5% 20% 16.7% Stormwaler 10% 0% 60% 70% 5% 22.5% 20% 19.5% Subtotal 100% 100% 100% 100% 90% 90% 80% 92.8% General FUnd/Other Funding 0% 0% 0% 0% 70% 10% 20% 7.2% Total 100% 700% 100% 100% 700% 100% 700% 100.0% Fund Untlergrountl Hazartlous Green Water Tank Watershetl Materials Energy Building Sustainable Conservation Mana ement Management Miti ation Conservation Assistance Ciry Plan Total Expense Water $376,445 $181,674 $133,543 $168,364 $260;882 $708,985 $193,979 $7,363,871 Wastewater $253,156 $0 $44,514 $168,364 $86,961 $108,985 $193,979 $855,956 Solitl Waste $0 $0 $0 $420,909 $21,740 $108,985 $193,979 $]45,613 Stortnwater $63,289 $0 $267,085 $84,182 $21,740 $108,985 $193,979 $739,260 Subtotal $632,889 $181,674 $445,742 $841,818 $397,322 $435,942 $775,975 $3,704,703 General Fund/Other Funtling $0 $0 $0 $0 $43,490 $48,438 $193,979 $285,897 Total $632,889 $181,874 $445,142 $847,818 $434,803 $484,379 $969,894 $3,990,600 Four of the programs (i.e., Water Conservation, Underground Tank Management, Watershed Management, and Hazardous Materials Management) were viewed as being entirely related to the four enterprises. Three of the programs (i.e., Energy Conservation, Green Building Assistance, and Sustainable City Plan) were viewed as providing benefits that extend beyond the four enterprises. In this case, a provision was made for allocations of these three programs outside of the four enterprise funds to what we refer to as "General Fund/Other Funding." For these three programs, the allocation process was two-fold. First, a portion of their costs was allocated to the General Fund/Other Funding category. Second, the remaining cost was allocated among the enterprises. In the allocation between the enterprises and General Fund, it was recognized that the Sustainable City Plan program deals with more issues that are unrelated to the four enterprises than either the Energy Conservation or Green Building Assistance programs. Toward that end, the Sustainable City Plan was allocated equally to the five funding sources. (20% each to the four enterprises and the General Fund). It was felt that equa120% allocations of Energy Conservation and Green Building Assistance to the five funding sources would over allocate Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 12 to the General Fund because these two programs are more closely related to the four enterprises than is the Sustainable City Program. Hence, only 10% of these two programs was allocated to the General Fund. The cost of these three programs was allocated to the four enterprises relative to the benefits received. In the case of Energy Conservation, the Water Fund uses the majority of energy and therefore received the highest allocation, with the other three enterprises receiving token allocations. The Green Building Assistance and Sustainable City Plan programs were viewed as providing equal benefits to each of the four enterprises. The allocations in Figure 7 vary from the current allocations, as summarized in Figure 8. In effect, the allocations in this study shift revenue from the Wastewater Fund to the other three enterprises and the General Fund. Fi>;ttre 8. Comparison of Allocations Fund HF&H Allocation City Allocation HF&H Minus City Water ~ 34.2% $1,363,871 35.0% $1,395,912 -0.8% ($32,041) Wastewater 21.4% $855,958 35.0% $1;394,715 -13.5% ($538,756) SolidWaste 18.7% $745,613 14.2% $564,670 4.5% $180,944 Stormwater 18.5% .$739,260 15.9% $635,304 2.6% $103,957 Subtotal 92.8% $3,704,703 100.0% $3,990,600 -7.2% ($285,897) General Fund/Other Funding 7.2 % $285,897 0.0% $0 7.2% $285,897 Total 100.0% $3,990,600 100.0% $3,990,600 0.0% $0 Although the allocation of nearly $286,000 away from the four enterprises may improve compliance with Proposition 218, it also places an additional funding burden on the General Fund. It is possible that this burden can be offset by reducing funding that may currently be provided by the General Fund instead of by the enterprises. For example, each of the enterprises should fully reimburse the City for right-of-way maintenance including, pavement repair, mapping, fencing, etc., all of which benefit the enterprises. It is also possible that other sources of revenue (e.g., taxes, grants, fees) currently apportioned to other funds or enterprises are more appropriately retained by the General Fund. VI. PROPORTIONAL WATER AND WASTEWATER RATES As previously mentioned, the primary purpose of this report was to determine the appropriate sources of funding the EPD budget, which is a condition that must be met to comply with Proposition 218. The foregoing report has documented the nexus and the proportionate amount of funding that is appropriate for each funding source. Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 13 Under Proposition 218, not only must the fees and charges be related to the service, but they must be proportionate to the cost of service. Proportionality in this case refers to the manner in which the fees and charges distribute the cost of service among water, wastewater, solid waste, and stormwater rate payers. Each of these enterprise funds has existing fees and charges that are designed to distribute their respective costs of service proportionately among customers. From arate-making standpoint, proportionality is established when there is a reasonable relationship (nexus) between the benefit received by rate payers and the cost of the benefit paid by rate payers. We have reviewed the City's recent water and wastewater rate studies. It is our opinion that the recommended rates conform to industry standards and thereby comply with the proportionality requirement in Proposition 218.. We have not reviewed the stormwater or solid waste rates to make a similar determination. VII. REFERENCES In preparing this report, the following documents were referred to: Nexus Between EPWM Enterprise Funds and Budgeted Activities of the Environmental Programs Division. Memorandum from Departrnent of Environmental and Public Works Management. March 15, 2007. Legal Considerations as to Raising EPWM Fees. Memorandum from Office of City Attorney to P. Lamont Ewell et al. Apri117, 2007. Wastewater Rate Study Report. Raftelis Financial Consultants, Inc. March 29, 2007. 2Q07 Water Rate Study. The Reed Group, Inc March 5, 2007. Santa Monica Sustainable Cihj Plan. Task Force on the Environment, Sustainable City Working Group. Revised October 24, 2006. City of Santa Monica Budget, Fiscal Years 2007-08, 2008-09. City of Santa Monica Environmental Programs Division Reimbursement Calculations - FY 2007-08, 2008-09. City of Santa Monica APPENDIX Allocation Model Environmental Pro rams Underground Hazardous Green - Water Tank Watershed Materials Energy Building Sustainable Stat Position Conservation Management Management Mitigation Conservation Assistance Ci Plan Admin/Other Environmental Programs Manager 10.00% 10.00% 10.00% 10.00% 5.00% 5.00% 2D.OD% 30.00% Energy and Green Buildings Program Atlminislrator 40.00% 40.00% 20.00% Energy Effciency Engineer 80.00% 20.00% Green Buildings Program Advisor 20.00% 80.00% Senior Administrative Analyst Urban Runoff 15.00% 85.00% Senior Environmental Analyst- Sustainable City 100.00 Senior Environmental Analyst- Hazardous Materials 5.00% 95.00% Water Resources Specialist#1 95.00% 5.00% Water Resources Specialist#2 95.00% 5.00% Environmental Programs Analyst- Sustainable City 10.00% 20.00% 5.00% 5.00% 55.00% 5.00% Environmental Programs Analyst - Hazardous Materials 100 00 Environmental Compliance Specialist 95.00% 5.00% Environmental Outreach Specialist 10.00% 10.00% 10.00% 10.00% 10.00% 5D.OD% Hazardous Materials Technician 100.00 Lead Hazardous Materials Technician 100.00% Environmental Programs Technician 15.00% 85.00% Administrative StaffASSistant- EnvironmentalPrograms 100.00% C~M~ @,I(i{PI, ~, ~dti~~ii~i :~I E ~ ~ . { ~ , a ~ir, i €(i f1G~~~~~~I~i a~ : I ~i it E i[I 1r ~E 3i ~ ~ S : ~'-~;?;'+!13S~1E1 , E~~~ ; ~{II(~~G{E~, ~~ , '~~~I(; ~ 1{'~?3 Ii? E(~Et) I~ ~~ ;1 I iEl EG I~" . . . ,, . . . _ . , . , , .. . .,v ....... . r , . ,~ , , , ., , +,nrs i .._ :._ .4 i~ion~~,~ Tk~~p#~d~rY~ l~1~~1 3 ~ ~~u!; < E ~I I "I .~ al ~ F i iE~i~fi{IIj I ' ' ~ ~~ ~ » ~a ~~il l ' ~; , ~~ ~E' ~ r~6F~i~ ~j EE I w sy ~' `I i E ' 11 iI ~~~ ~ ~ : ~ s ~ ~~ (~ O ~ L r , ~ i ~'[ ~i i~i ~~~~ ' . t.t . i . < ... , , , .d _ .., ., , , . ,,. . .. i P .... ,3 1 d, . ,E l ,,. _in un.....,,, k~4 d.i Staff Time 13.24% 6.47% 7.35% 25.59% 9.41% 9.41% 14.12% Allocation of Admin/Other 2.23% 1.09% 1.24% 4.31% 1.58% 1.58% 2.38% Staff Time Allocable to Programs 15.46% 7.56% 8.59% 29.90% 11.00% 11.00% 16.49% HF&H Consultants, LLC 12/17/2007 9:26 AM 1 0/8 14.41 % % of all staff time to each program each program's time as % of all program time' 19.17 sum of above 2 rows; To Shared Expenses Table Santa Monica EPD Funding Matnx v3.xls Salaries and Wages Environmental Programs Underground Hazardous Green Water Tank Watershed Materials Energy Building Sustainable Staff Position Conservation Management Management Mitigation Conservation ~ASSistance Ci Plan Environmental Programs Manager $22,090 $22,090 $22,090 $22,090 $11,045 $11,045 $44,179 Energy and Green Buildings Program Administrator $0 $0 $0 $0 $71,938 $71,938 $0 Energy Efficiency Engineer $0 $0 $0 $0 $106,196 $26,549 $0 Green Buildings Program Advisor $0 $0 $0 $0 $25,075 $100,298 $0 Senior Administrative Analyst-Urban Runoff $15469 $0 $110,323 $0 $0 $0 $0 Senior Environmental Analyst- Sustainable City $0 $0 $0 $0 $0 $0 $112,345 Senior Environmental Analyst- Hazardous Materials $p $6,279 $0 $119,299 $0 $0 $0 Water Resources Specialist #1 $98,057 $0 $5,056 $0 $D $0 $0 Water Resources Specialist #2 $96,057 $0 $5,056 $0 $0 $0 $0 Environmental Programs Analyst- Sustainable City $0 $0 $11,543 $23,086 $5,771 $5,771 $63,486 Environmental Programs Analyst- Hazardous Materials $0 $0 $0 $97,605 $0 $0 $0 Environmental Compliance Specialist $0 $102,571 $0 $0 $0 $0 ~ $0 Environmental Outreach Specialist $10,111 $0 $10,111 $10,111 $10,111 $10,111 $50,557 Hazardous Materials Technician $0 $0 $0 $71,347 $D $D $0 Lead Hazardous Materials Technician $0 $D $0 $88,301 $0 $0 $0 Environmental Programs Technician $D $0 $0 $0 $0 $0 $84,550 Administrative Staff Assistant- Environmental Programs $12,087 $5,909 $6,715 $23,368 $8,595 $8,595 $12,893 Overtime $1,352 $881 $751 $2,614 $961 $961 $1,442 Temporary Positions $2,505 $1,225 $1,392 $4,844 $1,782 $1,782 $2,672 total Staff Salaries & Benefits $259,729 $138,735 $173,036 $462,665 $241,474 $237,051 $372,124 HF&H Consultants, LLC Santa Monica EPD Footling Matrix v3.xls 12/17/2007 9:26AM 2of8 Salaries and Wages hared Ex ense Items Environmental Programs Underground Hazardous Green Water Tank Watershed Materials Energy Building Sustainable Conservation Management Management Mitigation Conservation Assistance City Plan Util-Telephone 15.46% 7.56% 8.59% 29.90% 11.00% 11.00% 16.49 Office Supplies 15.46 % 7.56 % 8.59°/ 29.90 % 11.00 % 11.00 % 16.49 Metered Postage 15.46% 7.56% 8.59% 29.90% 11.00% 11.00% 16.49% Mileage ~ 15.46% 7.56%. 8.59% 29.90% 11.00% 11.00% 16.49% Conf/Meetings/travel 15.46 % 7.56% 8.59°/ 29.90% 11.00% 11.00% 16.49% Books/Pamphlets 15.46% 7,56% 8.59% 29.90% 11.00% 11.00% 16.49% Administrative Indirect 15.46% 7.56% 8,59% 29.90% 11.00% 11.00°/ 16.49% Computer Equipment 15.46°/ 7.5fi% 8.59 % 29.90% 11.00°/ 11.00 % 16.49° Communications Systems 15.46°/ 7.56% 8.59% 29.90% 11.00% .11.00% 16.49% Furniture and Furnishings 15.46% 7.56°/ 8.59% 29.90°/ 11.00% 11.00% 16.49% Bldg Renovation/Maint. 15.46% 7.56% 8.59°/ 29.90% 11.00% 11.00% 16.49% Note.' Allocations of each shared expense to each program are in the same percentages of the whole as overall staff time, since these are for shared use items [hat support the activities of all staff. 2087+98 ~,~ i. hared Ex ense Items Environmental Programs Underground Hazardous Green Water- Tank Watershed Materials Energy Building Sustainable Conservation Management Management Mitigation Conservation Assistance City Plan Util-Tele hone $2,165 $1,058 $1,203 $4,186 $1,540 $1,540 $2,309 Office Su lies $13,144 $6,426 $7,302 $25,412 $9,347 $9,347 $14,020 Metered Posta a $1,033 $505 .$574 $1,998 $735 $735 $1,102 Milea a $142 $70 $79 $275 $101 $101 $152 Conf/Meetin sfl"ravel $317 $155 $176 $613 $225 $225 $338 Books/Pam hlets $652 $319 $362 - $1,260 $464 $464 $695 Administrative Indirect $47,614 $23,278 $26,452 $92,055 $33,859 $33,859 $50,789 Com uter E ui merit $0 $0 $0 $0 $0 $0 $0 Communications S stems $0 $0 $0 $0 $0 $D $0 Furniture and Furnishin s $232 $113 $129 $448 $165 $165 $247 Bld Renovation/Maim. $3,093 $1,512 $1,718 $5,979 $2,199 $2,199 $3,299 i oral anarec expenses $116,39"3 $83,496 $37,996 $132,226 $48,635 $48,635 $72,952 HF&H Consultants, LLC Santa Monica EPD Funtling Matrix v3.xls 12/17/2007 9:26 AM 3 of 8 Shared Expenses ther Ex ense Items Environmental Programs Underground Hazardous Green Water Tank Watershed Materials Energy Building Sustainable Conservation Management Management Mitigation Conservation Assistance City Plan Advertising 2007-OS 17.04% 2.89% 17.04% 17.83% 17.27% 17.27% 1D.66% Unit/Protective Clothing 100.00% Employee Medical Exams 100.00% Toxic Chemical 100.00% Training 14.29% .14.29% 14.29% 14.29% 14.29% 14.29% 14.29% Community Suslainability Program 100.00 Offce Rent 10.00% 10.00% 10.00% 10.00% 25.00% 25.00% 10.00% Memberships and Dues 2.00% 2.00 % 50.00% 40.00°/ 2.00% 2.00% 2.00% Vehicles--Fuels/LUbr 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% Vehicle Mgt. Fund-Maint 14.29°/ 14.29% 14.29% 14.29°/ 14.29% 14.29% 14.29% Building/Structure Maintenance 100.00% Other Costs (BAYSAVER) 75.00% 25.00% Prof Services 2007-08 21.85% 5.31 % 13.81% 5.12% 6.95% 12.73 % 34.23% Transfer Station Fee 900,Ogo~ Vehicles-Insurance 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% CNG Fuel 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% Insurance-Comprehensive 14.29% 14.29°/ 14.29% 14.29% 14.29% 14.29% 14,29% EPD Revenues Atlmin Fines/Penalties 14,29% 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% Underground Tank Permits 100.00 Other Revenue -Miscellaneous 14.29 % 14.29% 14.29 % 14.29% 14.29% 14.29°/ 14.29 Baysaver Fees 100.00% CUPA Administration Fees 100.00 Note: Advertising and Professional Services are allocated by the breakdown of individual expenses in the line item account, as noted in the City budget. The percentage calculations are shown on the Line Item Allocations tab. All other allocations shown here were arrived at in tliscussion with Dean Kubani, EPD Manager. HF&H Consultants, LlC Santa Monica EPD Funding Matnx v3.xls 17/17/2007 9:26 AM 40/8 Other Expenses 200T`08 i iii! . ~'~. ~1 x ense Items Environmental Programs Underground Hazardous Green Water Tank Watershed Materials Energy 8uiltling Sustainable Conservation Management Management Mitigation Conservation Assistance Cil Plan Advertisin $37,929 $6,429 $37,929 $39,679 $38,429 $38,429 $23,729 Unif/Protective Clothin $g $0 $0 $2,621 $0 $0 $g Em to ee Medical Exams $0 $0 $0 $1,000 $0 $0 $0 Toxic Chemical $0 $0 $0 $239,010 $0 $0 $0 Trainin $4,513 $4,513 $4,513 $4,513 $4,513 $4,513 $4,513 Communit Sustainabilit Pro ram $0 $0 $0 $0 $0 $0 $160,000 Offce Rent Membershi s antl Dues $13,1 T7 $493 $13,117 $493 $13,117 $12,336 $13,117 $9,869 $32,793 $493 $32,793 $493 $13,117 $493 Vehicles--Fuels/LUbr Vehicle M i. Fund-Maint $29 $1,929 $29 $1,929 $29 $1,929 $29 $1,929 $29 $1,929 $29 $1,929 $29 $1,929 Buildin /Structure Maintenance $0 $13,364 $0 $0 $0 $0 $0 Other Casts BAYSAVER $101,250 $0 $33,750 $0 $0 $0 $0 Prof Services $203,780 $49,571 $128,780 $47,780 $64,780 $118,780 $319,280 Transfer Station Fee $0 $0 $0 $44 $0 $0 $0 Vehicles-Insurance $914 $914 $914 $914 $914 $914 $914 CNG Fuel $29 $29 $29 $29 $29 $29 $29 Insurance-GOm rehensive $2,643 $2,643 $2,643 $2,643 $2,643 $2,643 $2,643 less: EPD Revenues Atlmin Fines/Penalties $1,429 $1,429 $1,429 $1,429 $1,429) $1,429) $1,429 Under round Tank Permits Other Revenue -Miscellaneous $0 $429 $81,670 $429 $0 $429 $0 ($429 $0 $429 $0 $429 $0 $429 Ba saver Fees $60,000 $0 $0 $0 $0 $D $0 CUPA Administration Fees $0 $0 $0 $114,390 $0 $0 $0 otal Program Other Expenses $304,768 $9,503 $234,110 $246,928 $144,693 $198,693 $524,818 HF&H Consulfanfs, LLC Sanfa Monica EPD Funding Ma Mx v3.xls 1Y77/2007 9:26 AM 5ofe Other Expenses 2997 RBI I I :a I I I Environmental Programs Expense Water Underground T k ~ Watershed Hazardous Energy Green Sustainable Conservation an Management Materials Conservation Builtling Cily Plan Total Expense Management Miti anon assistance Salaries&Wages $259,729 $138,735 $173,036 $462,665 $241,474 $237,051 $372,124 $1,884,814 Shared Expenses $68,393 $33,436 $37,996 $132,226 $48,635 $48,635 $72,952 $442,273 Other Expenses $304,768 $9,503 $234,110 $246,928 $144,693 $198,693 $524,818 $1,663,513 Total Program Budget of Total EPD Butlget $632,889 $181,674 $445,142 15.86% 4.55% 11.15% $841,818 -$434,803 $484,379 $969,894 21.10 % 10.90% 12.14% 24.30 $3,990,600 100.00 Percentage Allocation Fund Water Underground Watershed Hazardous Energy Green Sustainable Conservation Tank Management Materials Conservation Building City Plan Mona ement Miti anon Assistance Composite of Total Expense Water 50 % 100 % 30% 20 % 60 % 22.5%. 20% 34.2% . Wastewater 40% 0% 10% 20% 20% 22.5% 20% 21.4% Solitl Waste 0% 0% 0% 50% 5% 22.500/a 20% 18.7% Slormwater 10% 0% 60% 10% 5% 22.5% 20% 18.5% Subtotal 700% 700% 100% 100% 90% 90% 80% 92.8% General FUnd/Other FUntlin9 0% 0% 0% 0% 10% 10% 20% 7.2% Total 700% 100% 100% 700% 100% 700% 100% 100.0% Fund Underground Hazardous Green Water Tank Watershed Materials Energy Building Sustainable Conservation Maria ement Management Miti anon Conservation Assistance City Plan Total Expense Water $316,445 $181,674 $133,543 $168,364 $260,882 $108,985 $193,979 $1,363,871 Wastewater $253,156 $0 $44,514 $168,364 $86,961 $108,985 $193,979 $855,958 Solid Waste $0 $0 $0 $420,909 $21,740 $106,985 $193,979 $745,613 Stormwater - $63,289 $0 $267,085 $84,182 $21,740 $108,985 $193,979 $739,260 Subtota $832,889 $187,674 $445,142 $841,818 $397,322 $435,942 $775,975 $3,704,703 General Fund/Other Funding $0 $0 $0 $0 $43,480 $48,438 $193,979 $285,897 Total $632,889 $181,674 $445,142 $847,818 $434,803 $484,379 $969,894 $3,990,600 HF&H Consultants, LLC Santa Monica EPD Funding Marnx v3.xls 12/172007 9:26 AM 6 of B Program Allocations Professional Services 2097-09i~' ~~ IiI P f i i' (i~, 1 i~ i I 1 I~1 ,t se of Funds Environmental Prog Underground Hazardous Water Tank Watershed Materials Conservation Management Management Mitigation rams Energy Green Building Sustainable Conservation Assistance City Plan Aspen Accord Ener Efficiency Collaborations ~ 15,000 ener efficiency accounting far Cit facilities 5,000 Civic Center Energy District 28,000 green design and construction im lementation 100,000 LGC Sustainable Energy coalition p Urban Runoff management Plan Phase II at Airport 25,000 catch basin inserts/screens upgrades 20,000 water conservation consulting services 145,000 Water Strate is Plan im lementation 40,000 Regional Board monitoring tans 15,000 Runoff rant water ualit re ort 25,000 Urban runoff Grant GAPPs and Monitorin Plans 25,000 residential and business sustainabilit ro rams 250,000 Sustainable Cit Plan consultin services 20,000 Sustainable Cit Plan survey 20,000 school ardens ro ram fund transfer to SMMUSD 2,500 2,500 2,500 2,500 2,500 2,500 sustainable urchasin trainin and standards develo merit 10,500 im lementation of Inte rated Pest Management and Toxcis Use Reduction Pro gram 14,000 Santa Monica Festival 4,571 4,571 4,571 4,571 4,571 4,571 4,571 environmental education 11,708 11,708 - 11,708 11,708 11,708 11,708 Underground lank Program consultant 30,000 develop and maintain GIS database 15,000 15,000 203,780 49,571 128,780 47,780 64,780 118,780 319,280 21.85% 5.31% 13.81% 5.12% 6.95% 12.73% 34.23% HF&H Consultants, LLC Santa Monica EPD Funding Matrix v3.xls 7Y77/2007 9:26 AM 7o(e Line Item Allocations Detail Advertising 2007~1f$~ ~ ~ ..i3 i i j iij 4 se of Funds Environmental Prog Underground Hazardous Water Tank Watershed Materials Conservation Management Management Mitigation rams Energy Green Building Sustainable Conservation Assistance Cit Plan Energy & green building related rograms 32,000 32,000 website activities 714 714 714 714 714 714 714 Sustainable city plan 17,300 toxics use redudian 13,250 hazardous & electronic waste education 20,000 water conservation & urban runoff .31,500 31,500 Cit TV 4,214 4,214 4,214 4,214 4,214 4,214 4,214 other advertising expenses 1,500 1,500 1,500 1,500 1,500 1,500 1,500 :17,929 6,429 37,929 39,679 38,429 38,429 23,729 17.04% 2.89% .17.04% 17.83% 17.27% 17.27°O/a 10.66% HF&H Consultants, LLC Santa Monica EPD Funding Ma Mx v3.xls 1Y77/2007 9:26 AM a ofe Line Ifem Allocations Detail g -~- ~1~316~ 3 ATTACHMENT C '.. City a6 ~~~tts+ '"~~~~'~ ' CITY OF SANTA MONICA ENVIRONMENTAL PROGRAMS DIVISION FUNDING IN COMPLIANCE WITH PROPOSITION 218 HF&H CONSULTANTS, LLC ~F I-I December 14, 2007 FINAL REPORT CITY OF SANTA MONICA 1717 - 4TH STREET, SUITE 250 SaNTa MONICA, CA 90401 ENVIRONMENTAL PROGRAMS DIVISION FUNDING IN COMPLIANCE WITH PROPOSITION 218 FINAL REPORT December 14, 2007 ~~ HF&H CONSULTANTS, LLC 2175 N. California Blvd., Suite 990 Walnut Creek, CA 94596 Tel: (925) 977-6953 Fax: (925) 977-6955 ~:~ HF&H CONSULTANTS, LLC Advisory Services to Municipal Management 2175 North California Boulevard, Suite 990 Walnut Creek Walnut Creek, Califomia 94596 Newport Beach Tel: (925) 977-6950 _ Fax: (925)977-6955 unum.hfh-consuitants.com TECHNICAL MEMORANDUM To: Craig Perkins, City of Santa Monica Director of Environmental & Public Works Management Carol Swindell, City of Santa Monica Director of Finance Janet Shelton, City of Santa Monica Budget Manager Dean Kubani, City of Santa Monica Environmental Programs Division Manager From: John Farnkopf, HF&H Senior Vice President Edmund Jones, HF&H Associate Analyst Date: December 14, 2007 Subject: Final Report: City of Santa Monica Environmental Programs Division - Funding In Compliance with Proposition 218 The City has historically funded the Environmental Programs Division with revenue from the Water, Wastewater, Solid Waste, and Stormwater enterprises. The purpose of this report is to present our findings from our independent review of the funding for the City's Environmental Programs Division. The report is organized as follows: Section I. Summary of Findings Section II. Methodology Section III. EPD Programs Section FV. Allocation of EPD Budget to Programs Section V. Allocation of Program Budgets to Funding Sources Section VI. Proportional Water and Wastewater Rates Section VI. References Appendix. Cost Allocation Model I. SUMMARY OF FINDINGS The City has funded the Environmental Programs Division s budget using a methodology that was developed over time. The purpose of the present study was to perform an independent cost allocation analysis to determine the appropriate funding. Figure 1 summarizes the allocations derived in this study and compares them with the City's allocations. Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 2 Figure 1. Comparison of Allocationsr Fund HFBH Allocation City Allocation HF&H Minus City Water 34.2% $1,363,871 35.0% $1,395,912 -0.8% ($32;041) Wastewater 21.4% $855,958 35.0% $1,394,715 -13.5% ($538,756) Solid Waste - 18.7% $745,613 14.2% $564,670 4.5% $180,944 Stormwater 18.5% $739,260 15.9% $635,304 2.6% $103,957 Subtotal 92.8% $3,704,703 100.0% $3,990,600 -7.2% ($285,897) General Fund/Other Funding 7.2% $285,897 0.0% $0 7.2% $285,897 Total 100.0% $3,990,600 100.0% $3,990,600 0.0% $0 The principal differences are: • 7.2% ($285,897) of the EPD budget is allocated to the General Fund/Other Funding.2 The allocation is from the Energy Conservation, Green Building Assistance and Sustainable City Plan programs. • The $285,897 allocated to the General Fund represents 15.1% of the combined $1,889,076 cost of these programs. • The Water Fund's share'of the EPD budget decreased 2.3% (from $1,395,912 to $1,363,871). • The Wastewater Fund's share decreased 38.6%. • The Solid Waste Fund's share increased 32.0%. • The Stormwater Fund's share increased 16.4%. The overall result is a shift of costs away from the Water. and Wastewater Funds to the Solid Waste, Stormwater, and General/Other Funds. II. METHODOLOGY There are two substantive provisions of Proposition 218 related to setting fees and charges that are relevant to the present report. The first provision states that "Revenues derived from the fee or charge shall not exceed the funds required to provide the property related service." 3 We interpret this to mean that costs included in fees and charges required to provide water, wastewater, Stormwater, and solid waste services must be related to those services and cannot exceed the funding requirement. In other words, for example, revenue generated by water rates cannot be unrelated to providing water service. Hence, any EPD cost reimbursed from . 1 The FY 2007-OS budget was used in this report as the cost basis for all analysis. s "General Fund/Other Funding" is intended to indicate any source of funding other than the four enterprises and is also referred to as "General Fund". s California Constitution Article XIII D, section (6)(b)(1). Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 3 water rate revenue cannot exceed the amount that is related to providing water service. Demonstrating that EPD's budget is related to providing water, wastewater, stormwater, and solid waste services is the primary purpose of this report. The second provision states that "The amount of a fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel." 4 We interpret this to mean at least that fees. or charges levied by the Water, Wastewater, stormwater, and Solid Waste Funds must not exceed the proportional cost of service for each fund. Again, for example, the EPD cost included in water rates must be proportionately distributed among rate payers. Demonstrating that EPD's budget is proportionately allocated to appropriate funding sources is a secondary purpose of this report. A two-step approach was followed in this study to allocate EPD's budget to appropriate funding sources: 1. Determine Program Budgets - EPD's total budget was itemized into its seven major programs based on the activities of staff and the objectives of each program. 2. Allocate Programs to Funding Sources -The seven program budgets were allocated to funding sources based on the benefits received by each funding source. The City has historically allocated the entire EPD budget to the four enterprise funds. For purposes of this study, we have included the General Fund as a potential funding source for any expenses for which the nexus to the enterprises maybe questionable in our opinion. III. EPD PROGRAMS With the assistance of City staff, the following descriptions of each of the major EPD programs were developed. Water Consewvation EPD engages in a number of water conservation programs and activities including: Baysaver, which replaces old toilets, faucet aerators and showerheads with new, low- flow ones; • Rebates for the purchase and installation of water-efficient washing machines, irrigation controllers and the like. a California Constitution Article XIII D, section (6)(b)(3). Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 4 Reviewing City operations, especially parks, for efficiency opportunities with irrigation systems and plays a role in the water-efficient design of public spaces. Outreach targeting homes, landscaping and restaurants where conservation can often make the greatest gains; Outreach materials are distributed at a wide variety. of venues, from festivals to public lectures. Water conservation benefits water rate payers by improving operational efficiency, improving reliability, and lowering the cost of supplying water. Water conservation reduces sewered water use, which benefits wastewater customers by lowering the hydraulic load on wastewater collection and treatment facilities. Water conservation also reduces irrigation inefficiency, thereby reducing urban runoff pollution from turf, which may contain fertilizer and pesticide residues; hence, stormwater rate payers benefit from water conservation. Underground Tank Management This program handles regulation, inspection and enforcement functions for public and private underground storage, mostly in the form of gasoline tanks. The monitoring of these tanks is crucial to the protection of groundwater from leaks of toxic substances. Clean groundwater is crucial to achieving the City's sustainability goal of increasing the percentage of the City's potable water sourced from local supplies. Watershed Management The primary function of Watershed Management is to minimise urban runoff pollution into Santa Monica Bay. Staff support the runoff treatment provided by the Santa Monica Urban Runoff Recycling Facility ("SMURRF") through public outreach efforts, enforcement of the urban runoff ordinance, plan checks for new construction, and implementing National Pollution Discharge Elimination System ("NPDES") measures: Staff also write grant proposals to procure filtration systems for the stormwater system. These activities benefit water, wastewater, and stormwater rate payers. Water rate payers benefit because Watershed Management helps reduce urban runoff from irrigation, which reduces water use and contamination from fertilizers and pesticides that are used on landscapes, chemicals that can potentially percolate into the groundwater supply. Wastewater rate payers benefit because Watershed Management improves runoff drainage into receiving waters. With improved drainage, less runoff can enter the wastewater collection system as inflow and infiltration; which places a burden on the collection and treatment facilities. Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 5 Stormwater rate payers benefit because pollution in runoff that drains to Santa Monica Bay is minimized. Hazardous Materials. Mitigation This program encompasses Household Hazardous Waste ("HHW") collection, administration of he Cites Certified Unified Program Agency ("CUPA").program and oversight of hazardous waste remediation for City projects. Program activities support the full-time operation of the HHW collection facility, which also processes all City-generated hazardous waste. There is also a program for the collection of electronic waste. The purpose of this type of collection activity, besides following State requirements, is to prevent toxic materials from reaching the landfill where they can leach toxins into the groundwater. This program area involves considerable public outreach on specific items targeted for HHW collection (including mercury thermometers, batteries, used motor oil and fluorescent light bulbs) as well as efforts to educate the public about the proper disposal of HHW. This program also focuses on businesses that generate hazardous waste, such as: drycleaners, printing companies, auto mechanics and painting companies. Program staff perform regulatory functions like inspections provided under the auspices of the CUPA program, working with the fire department on permitting, and the industrial waste section of the Wastewater system. The benefits associated with this program are received by water rate payers (i.e., groundwater quality is protected), wastewater rate payers (i.e, wastewater pollution is reduced), Stormwater rate payers (i.e., urban runoff pollution is reduced), and solid waste rate payers (i.e., hazardous wastes are better controlled). Energy Conservation The activities of this program are targeted at improving energy efficiency, which benefits both municipal and public (e.g., residents and businesses) energy users.- Staff work to reduce energy use by City offices and facilities and to promote the Solar Santa Monica program. Of the four enterprises, the primary beneficiary is the Water Fund, which uses a large amount of electricity for pumping water. The Wastewater Fund benefits similarly due to the electricity involved in pumping wastewater. In addition, the City's water supply benefits from energy conservation because improved energy efficiency reduces greenhouse gas emissions, which are predicted to impact the reliability and availability of water supplies. The public benefits from outreach designed to educate about energy use and waste and to influence new building design as it pertains to potential energy loading. Staff perform energy Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 6 audits, promote energy-efficient equipment and work with other cities to share ideas and try to influence state and federal policy. Green Building Assistance This program promotes environmentally sustainable building in the City. Green building includes: • Energy efficiency through the use of proper insulation, solar power and energy-efficient appliances; • Water efficiency through appropriate landscaping for the climate and water-efficient appliances and fixtures; • Water quality protection by discouraging landscaping that is dependent on large amounts of chemical fertilizers and pesticides and irrigation that will not over-water and generate runoff to storm drains; • Improving indoor air quality by selecting paints, carpeting and sealants that do not "off-gas' harmful chemicals; this also reduces the amount of toxic materials that go into landfills or that are poured down storm drains; and • Selecting sustainable, non-toxic building materials,promoting those that can be used with min;mal waste and recycling the construction and demolition debris that is generated. The program includes outreach to educate the public and assistance with choosing and purchasing green building products. Outreach is focused on both residential and commercial building. This program benefits water rate payers (i.e., water conservation ie improved), wastewater rate payers (i.e., wastewater pollution is reduced), stormwater rate payers (i.e., urban runoff pollution is reduced), and solid waste rate payers (i.e., hazardous wastes are better controlled). Sustainable City The Sustainable City Plan began as a series of environmental programs and has grown to encompass such concepts as Human Dignity, Civic Participation, and Affordable Housing. Within EPD, Sustainable City functions as an umbrella program, encompassing all of the goals and activities of the other EPD programs. EPD works within City operations to achieve these goals and supports and encourages sustainable businesses and individuals through both awards/recognition programs and hands-on assistance like water or power use audits. The EPD, in support of the Plan, performs all of the data tracking and most of the public outreach for all of the Plari s goal areas. Doing this, partof the cost of this program can be Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 7 viewed as overhead expenses for other City departments. As such, these departments should be reimbursing EPD for a portion of the program expenses estimated to be attributable to them. Figure 2 summarizes the nexus between the EPD programs and the Enterprise Funds. Fi~txre 2. Nexus Summary EPD Pro am Water Fund Wastewater Fund Stormwater Fund Solid Waste Fund Water Reducing water use and Reducing wastewater Reducing irrigation ' Conservation associated vaiiable costs and associated variable runoff into stormwater No demonstrated nexus costs system Underground Preventing under- Tank gTO11~d storage tanks from contammating No demonstrated nexus No demonstrated nexus No demonstrated nexus Management groundwater Effident irrigation Redurin mflow and Watershed reduces customer water ill infiltration of runoff Redudng polluted Management b s; less mnoff results , in less pollution from into sewer system surface mnoff in SMUI~P and ut Santa No demonstrated nexus landscaping and other reduces treatment costs, Monica Bay chemicals necessary capacity Hazardous Improper disposal of Keeping hazardous Reducing polluted Primary program focus Materials hazardous waste waste out of sewer surface runoff in is diverting hazardous contaminates system reduces SMURRF and in Santa waste items from Mitigation groundwater treatment costs Monica Bay landfill Energy Improved energy Improved energy Improved energy Improved energy COri3erVdtlori efficiency in operations efficiency in operations efficiency in operations efficiency in operations and at facilities and at Facilities and at faci]itles and at facilities Green Redudngwater use and Reducing the volume of Reducing polluted Minimizing the amount Buildin associated variable water introduced into the sewer s stem fewer surface runoff in of waste generated by C&D red cin t i g costs; reducing y , SMURRF and in Santa ; u g ox c Assistanee groundwater polluton toxics in wastewater Monica Bay materials used; focus on stream recycling and reuse Sllstainable Umbrella program Umbrella program Umbrella program Umbrella program City Plan encompassing al] of the encompassing all of the encompassing all of the encompassing all of the above above above above - IV. ALLOCATION OF EPD BUDGET TO PROGRAMS The EPD budget breaks down into three basic sections: Salaries and Wages, Supplies and Expenses, and Capital Outlay. We slightly reorganized these sections for cost allocation purposes and divided the budget into Salaries and Wages, Shared Expenses, and Other Expenses. Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 8 Salaries and Wages A schedule was prepared with a row for each staff position and a column for each program, plus one for administrative/other activities. With the assistance of the EPD Manager, staff time for each staff position was allocated to each program as shown in Figure 3. The percentages for each position were multiplied by the budget for that position, with the. Admin/Other component reallocated to the programs in proportion to the each program s direct time allocation. Figure 3. Allocation of Salaries and Wages to Programs Environmental Progams Undergrountl Hazartlous Green Water Tank Watershetl Materials Energy Builtling Sustainable Staff Position Conservation Management Management Mftigaticn Conservation Assistance City Plan Atlmin/Other Environmental Programs Manager 10.00% 10.00% 10.00% 10.00% 5.00% 5.00% 20.00% 30.00% Energy antl Green Buildings Program Atlministrator 40.00% 40.00% 20.00% Energy Efficiency Engineer 60.00% 20.00% Green Buildings Program Atlvisor -- 20.00% 80.00% Senior Administrative Analyst-Urban Runoff 15.00% 85.00% Senior Environmental Analyst - Sustainable Ciry 100.00% Senior Environmental Analyst- . Hazardous Materials 5.00% 95.00% Water Resources Specialist#t 95.00% 5.00% Water Resources Specialist#2 95.00% 5.00% Environmental Programs Analyst- Sustainable Ciry 10.00% 20.00% 5.00% 5.00% 55.00% 5.00% Environmental Progrems Anayst- HazartlousMaterials - 700.00% Environmental Compliance Specialisf 95.00% 5.00% Envimnmental Outreach Specialist 10.00% 10.00% 10.00% 70.00% 70.00% 50.00% Hazardous Materials Technician - 100.00% Leatl Hazartlous Materials Technician 100.00 Environmental Programs Technician 15.00% 85.00% Atlminista0ve Staff Assistant - Envimnmental Programs 100.00 Staff Time 13.24% 6.47% 7.35% 25.59% - 9.41% 9.47% 14.12% 74.41% Allocation bf AtlminlOther 2.23% 1.09% 1.24% 4.31% 7.58% 7.58% 2.38% Staff Time Allocable to Programs 75.46% 7.56% 8.59°/, 29.90% 17.00% N.00% 16.49% Shared Expenses A number of the line items listed under Supplies and Expenses and Capital Outlay are for shared use/staff support and have been renamed here under the heading, Shared Expenses for Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 9 purposes of cost allocation. Shared expenses are allocated to the programs using a composite of the overall allocation percentages for Salaries and Wages from the last row of Figure 3 and summarized in Figure 4. Figure 4. Allocation of Shared Expenses to Programs haretl Ex ense ttems Environmental Programs Underground Hazardous Green Water Tank Watershed Materials Energy Building Sustainable Conservation Management Management Mitigation Conservation Assistance City Plan Util-Telephone 15.46% 7.56% 8.59% 29.90% 11.00% 11.00% 16.49% Offce Supplies 15.46% 7.56% 8.59% 29.90% 11.00% 71.00% 16.49% Metered Postage 15.46% 7.56% 8.59% 29.90% 11.00% 11.00% 76.49% Mileage 15.46% 7.56% 8.59% 29.90% 11.00% 11.00% 76.4900/a Conf/Meetings/travel 15.46% 7.56% 8.59% 29.90% 17.00% 11.00% 16.49% Books/Pamphlets 15.46% 7.56% 8.59% 29.90% 11.00% 11.00% 16.49% Administrative Indirect 15.46% 7.56% 8.59% 29.90% 11.00% 11.00% 16.49% Computer Equipment 15.46% 7.56% 8.59% 29.90% 11.00% 17.00% 16.49% Communications Systems 15.46% 7.56% 8.59% 29.90% 17.00% 11.00% 16.49% Furniture and Furnishings 15.46% 7.56% 8.59% 29.90% 17.00% 11.00% 16.49% Bldg RenovatioNMaint. 15.46% 7.56% 8.59% 29.90% 11.00% 71.00% 16.49% Other Expenses The remaining line items from Supplies and Expenses were allocated according to the program area(s) that they directly support. Ixt addition, revenue attributed to EPD was allocated among the programs. The percentage allocations shown in Figure 5 were derived from the notes to ' the line items found in'the City budget or in conversations with the EPD Manager. The support for these allocations can be found in the Appendix, which contains a copy of the entire allocation model. Applying the allocation factors in Figures 3, 4, and 5 to the corresponding line-item budget expenses yields an allocation of the EPD budget to each of the programs, as summarized in Figure 6. Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 10 FiQUre 5. Allocation of Other Expenses to Programs ther Expense Items Environmental Programs Underground Hazardous Green Water Tank Watershed Materials Energy Building Sustainable Conservation Management Management Mitigation Conservation Assistance City Plan Advertising 2007-OB 17.04% 2.89% 17.04% 17.83% 17.27% 17.27% 10.66% Unif/Protective Clothing 100.00% - Employee Medical Exams 100.00% Toxic Chemical 100.00 Training 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% Community Sustainability Program 100.00% Offce Rent 10.00 % 10.00% 10.00 % 10.00 % 25.00 % 25.00 % 10.00 Memberships and Dues 2.00% 2.00% 50.00% 40.00% 2.00% 2.00% 2.00% Vehicles--FUelslLUbr 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% Vehicle Mgt. Fund-Main[ 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% Building/Structure Maintenance 100.00% Other Costs (BAYSAVER) 75.00% 25.00% Prof Services 2007-OB 21.85 % 5.31 % 13.81 % 5.12 % 6.95 % 12.73 % 34.23 Transfer Station Fee ~ 100.00 Vehicles-Insumnce 14.29% 14.29% 74.29% 14.29% 14.29% - 74.29% 14.29% CNG Fuel 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% Insurance-Comprehensive 14.29% 74.29% 14.29% 14.29% 14.29% 14.29% 14.29% EPD Revenues Admin Fines/Penalties 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% Untlergrountl Tank Permits 100.00 Other Revenue-Miscellaneous 14.29% 14.29% 14.29% 74.29% 14.29% 14.29% '14.29% eaysaver Fees 100.00% CUPA AtlminisVation Fees 700.00% Figure 6. Summary of Program Budeets, FY 2007-OS Environmental Programs Water Underground Watershed Hazardous ~ Energy Green Sustainable Total Expense Conservation Tank Management Materials Conservation Building City Plan Expense Maria ement Miti anon Assistance Salaries&Wages - $259,729 $138,735 $173,036 $462,665 $241,474 $237,051 $372,124 $1,884,814 Shared Expenses $68,393 $33,436 $37,996 $132,226 $48,635 $48,635 $72,952 $442,273 Ofher Expenses $304,768 $9,503 $234,110 $248,928 $144,693 $198,693 $524,818 $1,663,513 Total Program Budget $632,889 $181 674. $445,142 $841,818 $434,803 $484,379 $969,894 $3,990,600 %of TOtaI EPD BUtlget 15.86% 4.55% 11.15% 21.10% 70.90% 12.14% 24.30% 100.00% Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 11 V. ALLOCATION OF PROGRAM BUDGETS TO FUNDING SOURCES Having established the program budgets in Section IV, the next step was to allocate the program budgets to the appropriate funding sources based on the rationale in Section III. With the assistance of the EPD Manager, the qualitative nexus described for each of the programs in Section III was translated into the allocations shown in Figure 7. Figure 7. Allocations of Program Budgets to Funding Sources Funtl Water Undergrountl Watershetl Hazartlous Energy Green Sustainable Conservation Tank Management Materials Conservation Building City Plan Mana ement Miti ation Assistance Composite o{ Total Fxpense Water 50% 100% 30% 20% 60% 22.5% 20% 34.2% Wastewater 40% 0% 10% 20% 20% 22.5% 20% 21.4% Solid Waste 0% 0% 0% 50% 5% 22.5% 20% 16.7% Stormwaler 10% 0% 60% 70% 5% 22.5% 20% 19.5% Subtotal 100% 100% 100% 100% 90% 90% 80% 92.8% General FUnd/Other Funding 0% 0% 0% 0% 70% 10% 20% 7.2% Total 100% 700% 100% 100% 700% 100% 700% 100.0% Fund Untlergrountl Hazartlous Green Water Tank Watershetl Materials Energy Building Sustainable Conservation Mana ement Management Miti ation Conservation Assistance Ciry Plan Total Expense Water $376,445 $181,674 $133,543 $168,364 $260;882 $708,985 $193,979 $7,363,871 Wastewater $253,156 $0 $44,514 $168,364 $86,961 $108,985 $193,979 $855,956 Solitl Waste $0 $0 $0 $420,909 $21,740 $108,985 $193,979 $]45,613 Stortnwater $63,289 $0 $267,085 $84,182 $21,740 $108,985 $193,979 $739,260 Subtotal $632,889 $181,674 $445,742 $841,818 $397,322 $435,942 $775,975 $3,704,703 General Fund/Other Funtling $0 $0 $0 $0 $43,490 $48,438 $193,979 $285,897 Total $632,889 $181,874 $445,142 $847,818 $434,803 $484,379 $969,894 $3,990,600 Four of the programs (i.e., Water Conservation, Underground Tank Management, Watershed Management, and Hazardous Materials Management) were viewed as being entirely related to the four enterprises. Three of the programs (i.e., Energy Conservation, Green Building Assistance, and Sustainable City Plan) were viewed as providing benefits that extend beyond the four enterprises. In this case, a provision was made for allocations of these three programs outside of the four enterprise funds to what we refer to as "General Fund/Other Funding." For these three programs, the allocation process was two-fold. First, a portion of their costs was allocated to the General Fund/Other Funding category. Second, the remaining cost was allocated among the enterprises. In the allocation between the enterprises and General Fund, it was recognized that the Sustainable City Plan program deals with more issues that are unrelated to the four enterprises than either the Energy Conservation or Green Building Assistance programs. Toward that end, the Sustainable City Plan was allocated equally to the five funding sources. (20% each to the four enterprises and the General Fund). It was felt that equa120% allocations of Energy Conservation and Green Building Assistance to the five funding sources would over allocate Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 12 to the General Fund because these two programs are more closely related to the four enterprises than is the Sustainable City Program. Hence, only 10% of these two programs was allocated to the General Fund. The cost of these three programs was allocated to the four enterprises relative to the benefits received. In the case of Energy Conservation, the Water Fund uses the majority of energy and therefore received the highest allocation, with the other three enterprises receiving token allocations. The Green Building Assistance and Sustainable City Plan programs were viewed as providing equal benefits to each of the four enterprises. The allocations in Figure 7 vary from the current allocations, as summarized in Figure 8. In effect, the allocations in this study shift revenue from the Wastewater Fund to the other three enterprises and the General Fund. Fi>;ttre 8. Comparison of Allocations Fund HF&H Allocation City Allocation HF&H Minus City Water ~ 34.2% $1,363,871 35.0% $1,395,912 -0.8% ($32,041) Wastewater 21.4% $855,958 35.0% $1;394,715 -13.5% ($538,756) SolidWaste 18.7% $745,613 14.2% $564,670 4.5% $180,944 Stormwater 18.5% .$739,260 15.9% $635,304 2.6% $103,957 Subtotal 92.8% $3,704,703 100.0% $3,990,600 -7.2% ($285,897) General Fund/Other Funding 7.2 % $285,897 0.0% $0 7.2% $285,897 Total 100.0% $3,990,600 100.0% $3,990,600 0.0% $0 Although the allocation of nearly $286,000 away from the four enterprises may improve compliance with Proposition 218, it also places an additional funding burden on the General Fund. It is possible that this burden can be offset by reducing funding that may currently be provided by the General Fund instead of by the enterprises. For example, each of the enterprises should fully reimburse the City for right-of-way maintenance including, pavement repair, mapping, fencing, etc., all of which benefit the enterprises. It is also possible that other sources of revenue (e.g., taxes, grants, fees) currently apportioned to other funds or enterprises are more appropriately retained by the General Fund. VI. PROPORTIONAL WATER AND WASTEWATER RATES As previously mentioned, the primary purpose of this report was to determine the appropriate sources of funding the EPD budget, which is a condition that must be met to comply with Proposition 218. The foregoing report has documented the nexus and the proportionate amount of funding that is appropriate for each funding source. Mssrs. Perkins, Swindell, Shelton, and Kubani December 14, 2007 Page 13 Under Proposition 218, not only must the fees and charges be related to the service, but they must be proportionate to the cost of service. Proportionality in this case refers to the manner in which the fees and charges distribute the cost of service among water, wastewater, solid waste, and stormwater rate payers. Each of these enterprise funds has existing fees and charges that are designed to distribute their respective costs of service proportionately among customers. From arate-making standpoint, proportionality is established when there is a reasonable relationship (nexus) between the benefit received by rate payers and the cost of the benefit paid by rate payers. We have reviewed the City's recent water and wastewater rate studies. It is our opinion that the recommended rates conform to industry standards and thereby comply with the proportionality requirement in Proposition 218.. We have not reviewed the stormwater or solid waste rates to make a similar determination. VII. REFERENCES In preparing this report, the following documents were referred to: Nexus Between EPWM Enterprise Funds and Budgeted Activities of the Environmental Programs Division. Memorandum from Departrnent of Environmental and Public Works Management. March 15, 2007. Legal Considerations as to Raising EPWM Fees. Memorandum from Office of City Attorney to P. Lamont Ewell et al. Apri117, 2007. Wastewater Rate Study Report. Raftelis Financial Consultants, Inc. March 29, 2007. 2Q07 Water Rate Study. The Reed Group, Inc March 5, 2007. Santa Monica Sustainable Cihj Plan. Task Force on the Environment, Sustainable City Working Group. Revised October 24, 2006. City of Santa Monica Budget, Fiscal Years 2007-08, 2008-09. City of Santa Monica Environmental Programs Division Reimbursement Calculations - FY 2007-08, 2008-09. City of Santa Monica APPENDIX Allocation Model Environmental Pro rams Underground Hazardous Green - Water Tank Watershed Materials Energy Building Sustainable Stat Position Conservation Management Management Mitigation Conservation Assistance Ci Plan Admin/Other Environmental Programs Manager 10.00% 10.00% 10.00% 10.00% 5.00% 5.00% 2D.OD% 30.00% Energy and Green Buildings Program Atlminislrator 40.00% 40.00% 20.00% Energy Effciency Engineer 80.00% 20.00% Green Buildings Program Advisor 20.00% 80.00% Senior Administrative Analyst Urban Runoff 15.00% 85.00% Senior Environmental Analyst- Sustainable City 100.00 Senior Environmental Analyst- Hazardous Materials 5.00% 95.00% Water Resources Specialist#1 95.00% 5.00% Water Resources Specialist#2 95.00% 5.00% Environmental Programs Analyst- Sustainable City 10.00% 20.00% 5.00% 5.00% 55.00% 5.00% Environmental Programs Analyst - Hazardous Materials 100 00 Environmental Compliance Specialist 95.00% 5.00% Environmental Outreach Specialist 10.00% 10.00% 10.00% 10.00% 10.00% 5D.OD% Hazardous Materials Technician 100.00 Lead Hazardous Materials Technician 100.00% Environmental Programs Technician 15.00% 85.00% Administrative StaffASSistant- EnvironmentalPrograms 100.00% C~M~ @,I(i{PI, ~, ~dti~~ii~i :~I E ~ ~ . { ~ , a ~ir, i €(i f1G~~~~~~I~i a~ : I ~i it E i[I 1r ~E 3i ~ ~ S : ~'-~;?;'+!13S~1E1 , E~~~ ; ~{II(~~G{E~, ~~ , '~~~I(; ~ 1{'~?3 Ii? E(~Et) I~ ~~ ;1 I iEl EG I~" . . . ,, . . . _ . , . , , .. . .,v ....... . r , . ,~ , , , ., , +,nrs i .._ :._ .4 i~ion~~,~ Tk~~p#~d~rY~ l~1~~1 3 ~ ~~u!; < E ~I I "I .~ al ~ F i iE~i~fi{IIj I ' ' ~ ~~ ~ » ~a ~~il l ' ~; , ~~ ~E' ~ r~6F~i~ ~j EE I w sy ~' `I i E ' 11 iI ~~~ ~ ~ : ~ s ~ ~~ (~ O ~ L r , ~ i ~'[ ~i i~i ~~~~ ' . t.t . i . < ... , , , .d _ .., ., , , . ,,. . .. i P .... ,3 1 d, . ,E l ,,. _in un.....,,, k~4 d.i Staff Time 13.24% 6.47% 7.35% 25.59% 9.41% 9.41% 14.12% Allocation of Admin/Other 2.23% 1.09% 1.24% 4.31% 1.58% 1.58% 2.38% Staff Time Allocable to Programs 15.46% 7.56% 8.59% 29.90% 11.00% 11.00% 16.49% HF&H Consultants, LLC 12/17/2007 9:26 AM 1 0/8 14.41 % % of all staff time to each program each program's time as % of all program time' 19.17 sum of above 2 rows; To Shared Expenses Table Santa Monica EPD Funding Matnx v3.xls Salaries and Wages Environmental Programs Underground Hazardous Green Water Tank Watershed Materials Energy Building Sustainable Staff Position Conservation Management Management Mitigation Conservation ~ASSistance Ci Plan Environmental Programs Manager $22,090 $22,090 $22,090 $22,090 $11,045 $11,045 $44,179 Energy and Green Buildings Program Administrator $0 $0 $0 $0 $71,938 $71,938 $0 Energy Efficiency Engineer $0 $0 $0 $0 $106,196 $26,549 $0 Green Buildings Program Advisor $0 $0 $0 $0 $25,075 $100,298 $0 Senior Administrative Analyst-Urban Runoff $15469 $0 $110,323 $0 $0 $0 $0 Senior Environmental Analyst- Sustainable City $0 $0 $0 $0 $0 $0 $112,345 Senior Environmental Analyst- Hazardous Materials $p $6,279 $0 $119,299 $0 $0 $0 Water Resources Specialist #1 $98,057 $0 $5,056 $0 $D $0 $0 Water Resources Specialist #2 $96,057 $0 $5,056 $0 $0 $0 $0 Environmental Programs Analyst- Sustainable City $0 $0 $11,543 $23,086 $5,771 $5,771 $63,486 Environmental Programs Analyst- Hazardous Materials $0 $0 $0 $97,605 $0 $0 $0 Environmental Compliance Specialist $0 $102,571 $0 $0 $0 $0 ~ $0 Environmental Outreach Specialist $10,111 $0 $10,111 $10,111 $10,111 $10,111 $50,557 Hazardous Materials Technician $0 $0 $0 $71,347 $D $D $0 Lead Hazardous Materials Technician $0 $D $0 $88,301 $0 $0 $0 Environmental Programs Technician $D $0 $0 $0 $0 $0 $84,550 Administrative Staff Assistant- Environmental Programs $12,087 $5,909 $6,715 $23,368 $8,595 $8,595 $12,893 Overtime $1,352 $881 $751 $2,614 $961 $961 $1,442 Temporary Positions $2,505 $1,225 $1,392 $4,844 $1,782 $1,782 $2,672 total Staff Salaries & Benefits $259,729 $138,735 $173,036 $462,665 $241,474 $237,051 $372,124 HF&H Consultants, LLC Santa Monica EPD Footling Matrix v3.xls 12/17/2007 9:26AM 2of8 Salaries and Wages hared Ex ense Items Environmental Programs Underground Hazardous Green Water Tank Watershed Materials Energy Building Sustainable Conservation Management Management Mitigation Conservation Assistance City Plan Util-Telephone 15.46% 7.56% 8.59% 29.90% 11.00% 11.00% 16.49 Office Supplies 15.46 % 7.56 % 8.59°/ 29.90 % 11.00 % 11.00 % 16.49 Metered Postage 15.46% 7.56% 8.59% 29.90% 11.00% 11.00% 16.49% Mileage ~ 15.46% 7.56%. 8.59% 29.90% 11.00% 11.00% 16.49% Conf/Meetings/travel 15.46 % 7.56% 8.59°/ 29.90% 11.00% 11.00% 16.49% Books/Pamphlets 15.46% 7,56% 8.59% 29.90% 11.00% 11.00% 16.49% Administrative Indirect 15.46% 7.56% 8,59% 29.90% 11.00% 11.00°/ 16.49% Computer Equipment 15.46°/ 7.5fi% 8.59 % 29.90% 11.00°/ 11.00 % 16.49° Communications Systems 15.46°/ 7.56% 8.59% 29.90% 11.00% .11.00% 16.49% Furniture and Furnishings 15.46% 7.56°/ 8.59% 29.90°/ 11.00% 11.00% 16.49% Bldg Renovation/Maint. 15.46% 7.56% 8.59°/ 29.90% 11.00% 11.00% 16.49% Note.' Allocations of each shared expense to each program are in the same percentages of the whole as overall staff time, since these are for shared use items [hat support the activities of all staff. 2087+98 ~,~ i. hared Ex ense Items Environmental Programs Underground Hazardous Green Water- Tank Watershed Materials Energy Building Sustainable Conservation Management Management Mitigation Conservation Assistance City Plan Util-Tele hone $2,165 $1,058 $1,203 $4,186 $1,540 $1,540 $2,309 Office Su lies $13,144 $6,426 $7,302 $25,412 $9,347 $9,347 $14,020 Metered Posta a $1,033 $505 .$574 $1,998 $735 $735 $1,102 Milea a $142 $70 $79 $275 $101 $101 $152 Conf/Meetin sfl"ravel $317 $155 $176 $613 $225 $225 $338 Books/Pam hlets $652 $319 $362 - $1,260 $464 $464 $695 Administrative Indirect $47,614 $23,278 $26,452 $92,055 $33,859 $33,859 $50,789 Com uter E ui merit $0 $0 $0 $0 $0 $0 $0 Communications S stems $0 $0 $0 $0 $0 $D $0 Furniture and Furnishin s $232 $113 $129 $448 $165 $165 $247 Bld Renovation/Maim. $3,093 $1,512 $1,718 $5,979 $2,199 $2,199 $3,299 i oral anarec expenses $116,39"3 $83,496 $37,996 $132,226 $48,635 $48,635 $72,952 HF&H Consultants, LLC Santa Monica EPD Funtling Matrix v3.xls 12/17/2007 9:26 AM 3 of 8 Shared Expenses ther Ex ense Items Environmental Programs Underground Hazardous Green Water Tank Watershed Materials Energy Building Sustainable Conservation Management Management Mitigation Conservation Assistance City Plan Advertising 2007-OS 17.04% 2.89% 17.04% 17.83% 17.27% 17.27% 1D.66% Unit/Protective Clothing 100.00% Employee Medical Exams 100.00% Toxic Chemical 100.00% Training 14.29% .14.29% 14.29% 14.29% 14.29% 14.29% 14.29% Community Suslainability Program 100.00 Offce Rent 10.00% 10.00% 10.00% 10.00% 25.00% 25.00% 10.00% Memberships and Dues 2.00% 2.00 % 50.00% 40.00°/ 2.00% 2.00% 2.00% Vehicles--Fuels/LUbr 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% Vehicle Mgt. Fund-Maint 14.29°/ 14.29% 14.29% 14.29°/ 14.29% 14.29% 14.29% Building/Structure Maintenance 100.00% Other Costs (BAYSAVER) 75.00% 25.00% Prof Services 2007-08 21.85% 5.31 % 13.81% 5.12% 6.95% 12.73 % 34.23% Transfer Station Fee 900,Ogo~ Vehicles-Insurance 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% CNG Fuel 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% Insurance-Comprehensive 14.29% 14.29°/ 14.29% 14.29% 14.29% 14.29% 14,29% EPD Revenues Atlmin Fines/Penalties 14,29% 14.29% 14.29% 14.29% 14.29% 14.29% 14.29% Underground Tank Permits 100.00 Other Revenue -Miscellaneous 14.29 % 14.29% 14.29 % 14.29% 14.29% 14.29°/ 14.29 Baysaver Fees 100.00% CUPA Administration Fees 100.00 Note: Advertising and Professional Services are allocated by the breakdown of individual expenses in the line item account, as noted in the City budget. The percentage calculations are shown on the Line Item Allocations tab. All other allocations shown here were arrived at in tliscussion with Dean Kubani, EPD Manager. HF&H Consultants, LlC Santa Monica EPD Funding Matnx v3.xls 17/17/2007 9:26 AM 40/8 Other Expenses 200T`08 i iii! . ~'~. ~1 x ense Items Environmental Programs Underground Hazardous Green Water Tank Watershed Materials Energy 8uiltling Sustainable Conservation Management Management Mitigation Conservation Assistance Cil Plan Advertisin $37,929 $6,429 $37,929 $39,679 $38,429 $38,429 $23,729 Unif/Protective Clothin $g $0 $0 $2,621 $0 $0 $g Em to ee Medical Exams $0 $0 $0 $1,000 $0 $0 $0 Toxic Chemical $0 $0 $0 $239,010 $0 $0 $0 Trainin $4,513 $4,513 $4,513 $4,513 $4,513 $4,513 $4,513 Communit Sustainabilit Pro ram $0 $0 $0 $0 $0 $0 $160,000 Offce Rent Membershi s antl Dues $13,1 T7 $493 $13,117 $493 $13,117 $12,336 $13,117 $9,869 $32,793 $493 $32,793 $493 $13,117 $493 Vehicles--Fuels/LUbr Vehicle M i. Fund-Maint $29 $1,929 $29 $1,929 $29 $1,929 $29 $1,929 $29 $1,929 $29 $1,929 $29 $1,929 Buildin /Structure Maintenance $0 $13,364 $0 $0 $0 $0 $0 Other Casts BAYSAVER $101,250 $0 $33,750 $0 $0 $0 $0 Prof Services $203,780 $49,571 $128,780 $47,780 $64,780 $118,780 $319,280 Transfer Station Fee $0 $0 $0 $44 $0 $0 $0 Vehicles-Insurance $914 $914 $914 $914 $914 $914 $914 CNG Fuel $29 $29 $29 $29 $29 $29 $29 Insurance-GOm rehensive $2,643 $2,643 $2,643 $2,643 $2,643 $2,643 $2,643 less: EPD Revenues Atlmin Fines/Penalties $1,429 $1,429 $1,429 $1,429 $1,429) $1,429) $1,429 Under round Tank Permits Other Revenue -Miscellaneous $0 $429 $81,670 $429 $0 $429 $0 ($429 $0 $429 $0 $429 $0 $429 Ba saver Fees $60,000 $0 $0 $0 $0 $D $0 CUPA Administration Fees $0 $0 $0 $114,390 $0 $0 $0 otal Program Other Expenses $304,768 $9,503 $234,110 $246,928 $144,693 $198,693 $524,818 HF&H Consulfanfs, LLC Sanfa Monica EPD Funding Ma Mx v3.xls 1Y77/2007 9:26 AM 5ofe Other Expenses 2997 RBI I I :a I I I Environmental Programs Expense Water Underground T k ~ Watershed Hazardous Energy Green Sustainable Conservation an Management Materials Conservation Builtling Cily Plan Total Expense Management Miti anon assistance Salaries&Wages $259,729 $138,735 $173,036 $462,665 $241,474 $237,051 $372,124 $1,884,814 Shared Expenses $68,393 $33,436 $37,996 $132,226 $48,635 $48,635 $72,952 $442,273 Other Expenses $304,768 $9,503 $234,110 $246,928 $144,693 $198,693 $524,818 $1,663,513 Total Program Budget of Total EPD Butlget $632,889 $181,674 $445,142 15.86% 4.55% 11.15% $841,818 -$434,803 $484,379 $969,894 21.10 % 10.90% 12.14% 24.30 $3,990,600 100.00 Percentage Allocation Fund Water Underground Watershed Hazardous Energy Green Sustainable Conservation Tank Management Materials Conservation Building City Plan Mona ement Miti anon Assistance Composite of Total Expense Water 50 % 100 % 30% 20 % 60 % 22.5%. 20% 34.2% . Wastewater 40% 0% 10% 20% 20% 22.5% 20% 21.4% Solitl Waste 0% 0% 0% 50% 5% 22.500/a 20% 18.7% Slormwater 10% 0% 60% 10% 5% 22.5% 20% 18.5% Subtotal 700% 700% 100% 100% 90% 90% 80% 92.8% General FUnd/Other FUntlin9 0% 0% 0% 0% 10% 10% 20% 7.2% Total 700% 100% 100% 700% 100% 700% 100% 100.0% Fund Underground Hazardous Green Water Tank Watershed Materials Energy Building Sustainable Conservation Maria ement Management Miti anon Conservation Assistance City Plan Total Expense Water $316,445 $181,674 $133,543 $168,364 $260,882 $108,985 $193,979 $1,363,871 Wastewater $253,156 $0 $44,514 $168,364 $86,961 $108,985 $193,979 $855,958 Solid Waste $0 $0 $0 $420,909 $21,740 $106,985 $193,979 $745,613 Stormwater - $63,289 $0 $267,085 $84,182 $21,740 $108,985 $193,979 $739,260 Subtota $832,889 $187,674 $445,142 $841,818 $397,322 $435,942 $775,975 $3,704,703 General Fund/Other Funding $0 $0 $0 $0 $43,480 $48,438 $193,979 $285,897 Total $632,889 $181,674 $445,142 $847,818 $434,803 $484,379 $969,894 $3,990,600 HF&H Consultants, LLC Santa Monica EPD Funding Marnx v3.xls 12/172007 9:26 AM 6 of B Program Allocations Professional Services 2097-09i~' ~~ IiI P f i i' (i~, 1 i~ i I 1 I~1 ,t se of Funds Environmental Prog Underground Hazardous Water Tank Watershed Materials Conservation Management Management Mitigation rams Energy Green Building Sustainable Conservation Assistance City Plan Aspen Accord Ener Efficiency Collaborations ~ 15,000 ener efficiency accounting far Cit facilities 5,000 Civic Center Energy District 28,000 green design and construction im lementation 100,000 LGC Sustainable Energy coalition p Urban Runoff management Plan Phase II at Airport 25,000 catch basin inserts/screens upgrades 20,000 water conservation consulting services 145,000 Water Strate is Plan im lementation 40,000 Regional Board monitoring tans 15,000 Runoff rant water ualit re ort 25,000 Urban runoff Grant GAPPs and Monitorin Plans 25,000 residential and business sustainabilit ro rams 250,000 Sustainable Cit Plan consultin services 20,000 Sustainable Cit Plan survey 20,000 school ardens ro ram fund transfer to SMMUSD 2,500 2,500 2,500 2,500 2,500 2,500 sustainable urchasin trainin and standards develo merit 10,500 im lementation of Inte rated Pest Management and Toxcis Use Reduction Pro gram 14,000 Santa Monica Festival 4,571 4,571 4,571 4,571 4,571 4,571 4,571 environmental education 11,708 11,708 - 11,708 11,708 11,708 11,708 Underground lank Program consultant 30,000 develop and maintain GIS database 15,000 15,000 203,780 49,571 128,780 47,780 64,780 118,780 319,280 21.85% 5.31% 13.81% 5.12% 6.95% 12.73% 34.23% HF&H Consultants, LLC Santa Monica EPD Funding Matrix v3.xls 7Y77/2007 9:26 AM 7o(e Line Item Allocations Detail Advertising 2007~1f$~ ~ ~ ..i3 i i j iij 4 se of Funds Environmental Prog Underground Hazardous Water Tank Watershed Materials Conservation Management Management Mitigation rams Energy Green Building Sustainable Conservation Assistance Cit Plan Energy & green building related rograms 32,000 32,000 website activities 714 714 714 714 714 714 714 Sustainable city plan 17,300 toxics use redudian 13,250 hazardous & electronic waste education 20,000 water conservation & urban runoff .31,500 31,500 Cit TV 4,214 4,214 4,214 4,214 4,214 4,214 4,214 other advertising expenses 1,500 1,500 1,500 1,500 1,500 1,500 1,500 :17,929 6,429 37,929 39,679 38,429 38,429 23,729 17.04% 2.89% .17.04% 17.83% 17.27% 17.27°O/a 10.66% HF&H Consultants, LLC Santa Monica EPD Funding Ma Mx v3.xls 1Y77/2007 9:26 AM a ofe Line Ifem Allocations Detail g -~- ~1~316~ 3 Reference Resolution No. 10288 (CCS).