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SR-12-16-2014-8ACity Council Report City of Santa 1Fionlea City Council Meeting: December 16, 2014 Agenda Item: 8R To: Mayor and City Council From: Martin Pastucha, Director of Public Works Subject: Water Rate Analyses and Proposed Water Rate Options Recommended Action Staff recommends that the City Council: 1. Approve a 13% rate increase option (9% first year) as the proposed five -year plan to raise water rates, to be considered at a public hearing, in accordance with Proposition 218. 2. Adopt a resolution setting the public hearing to increase water rates on February 24, 2015, in accordance with Proposition 218. 3. Authorize the City Clerk to issue notices of the proposed water rate increases and public hearing on February 24, 2015, in accordance with Proposition 218. Executive Summary Due to declining water sales and increased capital funding needs, the City's cost to provide water service is projected to exceed the City's water revenues without additional water rate increases. A Water Rate and Revenue Plan report (Attachment A) (referenced hereinafter as the "Rate Study ") is included with this report to detail the revenue requirements of three proposed water rate alternatives to address the projected revenue shortfall. Water rates were last adjusted in a five year schedule in July 2008. At that time, a commodity -only rate structure was approved which eliminated the fixed service charge and provided a strong conservation signal. Presently, revenue requirements are driven by the need to augment conservation plans, offset reduced revenues due to declining water sales, and increase capital program funding to address the needs for continued infrastructure investment and Sustainable Water Master Plan requirements. Council's recent adoption of city -wide mandatory water conservation will result in a 20% reduction in water sales. Staff has identified three water rate alternatives for Council's consideration: 2015 2016 2017 2018 2019 Option 1 2.5% 2.5% 2.5% 2.5% 2.5% (CPI only) Option 2 9% 9% 9% 9% 9% (9% plan) Option 3 90 /(a 13% 13% 13% 13% (9/13% plan) Staff proposes to maintain the existing commodity -only rate structure, and adjust the unit pricing in each tier. Staff recommends that Council adopt Option 3 because it would fully support Council's stated goal of achieving water self- sufficiency by the year 2020 as well as continue to invest in the City's water infrastructure. Background The City provides water service to three customer classifications. These classifications are single - family, multi - family and non - residential. The current water rate structure was adopted on July 8 2.008 to provide equity between customer types and among customers within a classification. The rate structure adopted in 2008 eliminated the bi- monthly fixed service charge so that the water bill became entirely based on actual water usage, thereby improving the water conservation incentive at all levels. For residential customers, the previously existing three tier structure was replaced with a four tier structure. For non - residential customers, a uniform commodity rate was established, applicable to nearly all water use. A second tier for non - residential customers applied at the high end of consumption, in order to provide a strong disincentive for excessive water use. 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. Rates were adjusted by CPI annually between 1999 and 2008 with the exception of a 6% increase in 2005. After the 2008 schedule of rate adjustments was completed in FY 2012- 13, rates were adjusted by CPI on July 1, 2013, and July 1, 2014. The Rate Study was completed by Kennedy Jenks Consultants as part of its contract with the City to prepare the Sustainable Water Master Plan (SWMP). The objectives of the Rate Study include development of a strategy for meeting the utility's ongoing financial obligations for the five year planning period (FY 2014 -15 through FY 2019 -20) and assessment of changes to the rate structure in keeping with the City's self - sufficiency goals to encourage water conservation and sustainability. The Rate Study is included with this report as Attachment A. 2 Discussion Water Rate Analysis Santa Monica's water revenues are expected to cover the cost of providing service through user charges and other revenues generated by the City's provision of water service. The financial revenue plans presented in the Rate Study are based on the premise that the Water Fund will be self - supporting, with revenues sufficient to address ongoing operations and maintenance expenses as well as capital program expenses and programmatic expenses in support of the SWMP. Infrastructure rehabilitation, replacement, and upgrade requirements are necessary to maintain an aging water distribution system, certain parts of which are approaching 100 years in age. Ongoing funding of water main replacements at a level necessary to ensure reliability and long term performance are essential to system sustainability. In addition, other financial demands placed on the Water Fund arise from the need to fund capital programs to accomplish the City's water self- sufficiency goals, from the reduction in water sales that reduces annual revenues, and from increased conservation projects. Capital Requirements By nature, water systems are capital intensive operations. The SWMP addresses system capacity, long range water supply reliability, and conservation programs necessary to meet the City's stated water self- sufficiency goals. This is supported by the City's water system Capital Improvement Program (CIP). Details of the five -year $33 million CIP are provided in Table 4 of the attached Rate Study, with selected projects and cost projections included below: ® General Water System Capital Improvement Program: ➢ Infrastructure improvements associated with replacing aging existing infrastructure facilities comprised of water mainlines and appurtenant distribution system facilities that are approaching the end of their useful lives, $20M ➢ Commencement of an Advanced Meter Infrastructure (AMI) program to provide more frequent and accurate metering of water use. Additionally, AMI would aid customers to better monitor their daily water use, $5M 3 ➢ Plans for reliability and water transmission improvements for the City's highest pressure zone (zone 500) with a new booster pump station, $2.5M ➢ Funding for various other ongoing rehabilitation and facility specific improvements or studies, $5.5M • Sustainable Water Master Plan program expenditures included in the CIP and identified as those items that comprise short-term Water Fund obligations related to decreased reliance on imported water and achieving the City's year 2020 self - sufficiency goal, include: ➢ Brine concentrator evaluation at Arcadia Treatment Plant to increase finished water recovery, $0.3M ➢ Charnock Granular Activated Carbon (GAC) improvements to improve carbon performance and potentially reduce carbon change -out frequency, $0.3M ➢ Infrastructure Capacity Improvements (water main connections to new supply sources), $2.01VI • Olympic Basin Water Treatment Program. Funding for the capital costs of these improvements is from settlement agreements with Gillette /Proctor & Gamble and the Boeing Company arising from groundwater contamination. System improvements have been noted in the CIP that are associated with the Olympic well field contamination and related water treatment plant construction. These improvements are necessary improvements to maintain and to develop local water sources for water self- sufficiency, and include: ➢ Treatment Evaluation Pilot Study, $0.65M ➢ Well siting, design, construction, $6M ➢ Treatment facility, full scale construction and operation, $40M Revenue Loss from Reduced Water Consumption The City's Water Fund is projected to experience a decrease in water sales associated with the implementation of additional self- sufficiency related water conservation programs and the City's adoption of a Stage II Water Shortage, which calls for mandatory 20% reduction in water use by all customers. Since most of the water utility's Ell costs are fixed, the Water Fund is projected to be affected by the addition of costs associated with a new water conservation unit, conservation programs and incentives, and a reduction in water sales -based revenues. Water sales revenues in FY 2013 -14 were $21.5 million. With a rate adjustment limited to only a CPI increase, and the projected reduction in demand due to conservation program requirements, projected revenue from water sales in FY 2015 -16 is $16.9 million. Water Rate Options Three projected revenue plan scenarios with various rate adjustments were developed to compare the water utility's revenues and revenue requirements through FY 2019 -20. They include the following: • Option 1 — Baseline scenario (CPI -only) Implement a water rate increase in accordance with the estimated increase of the consumer price index (CPI). This scenario is a baseline option; essentially a status quo or no change alternative. ® Option 2 — Implement a water rate increase of 9 % per year. This increase would improve the Water Fund's financial position over the CPI- only plan, but would limit the City's ability to fully invest in all of its programmed capital improvements, require annual /bi- annual cash flow balancing by prioritization of capital projects and programs, and place additional vulnerability on fund reserves and debt financing capabilities in later years of the projection. ® Option 3 — Implement a water rate increase of 9% in year one, and 13% per year thereafter. This increase would improve the financial position of the Water Fund, reduce the risk of revenue shortfalls from reduced water sales, fund identified self- sufficiency related improvements, and improve net operating parameters that are required to issue new municipal debt that may be needed for future water system improvements. 5 The revenue plans include the potential option for a debt financing program in later years for water system improvements. Although debt funding of capital expenditures is common among utilities, the City has historically funded its water fund obligations on a pay -as- you -go basis. From the cash flow pro forma developed herein, approximately $10 million in additional debt financing is anticipated in FY 2018 -19 to fund various pipeline or water supply - related capital improvements. It is assumed that the need and viability of any external borrowing to support Water Fund activities will be evaluated during the City's annual budget process. As discussed with Finance Department staff, the City would contract with its municipal financial advisor for the evaluation and support of such actions as required. Three options are presented in Table 1 and further discussed below. Table 1 — Rate Adjustment Options 1. CPI -only increases would be implemented on a fiscal year basis (July 1) 2. Option 2 and 3 would be implemented on a calendar year basis ( March 1 in the first year and January 1 each year thereafter) The financial projection for each scenario is based on the City's projected customer account characteristics, the projected operation and maintenance expenses, and the inclusion of the City's comprehensive Capital Improvement Program. Additionally, several ratemaking criteria were also integrated in the revenue plan. These key criteria include: ® Short term population growth is based on the projections indicated in the City's 2010 Urban Water Management Plan and estimated annualized LUCE 0 2015 2016 2017 2018 2019 Option 1 2.5% 2.5% 2.5% 2.5% 2.5% (CPI only) Option 2 9% 9% 9% 9% 9% (9% plan) Option 3 9% 13% 13% 13% 13% (9113% plan) 1. CPI -only increases would be implemented on a fiscal year basis (July 1) 2. Option 2 and 3 would be implemented on a calendar year basis ( March 1 in the first year and January 1 each year thereafter) The financial projection for each scenario is based on the City's projected customer account characteristics, the projected operation and maintenance expenses, and the inclusion of the City's comprehensive Capital Improvement Program. Additionally, several ratemaking criteria were also integrated in the revenue plan. These key criteria include: ® Short term population growth is based on the projections indicated in the City's 2010 Urban Water Management Plan and estimated annualized LUCE 0 projections of 0.5% per year. This is expected to be approximately 0.5% per year and yield a modest increase in new accounts through 2020. • Water usage is projected to reduce by approximately 10% during FY 2014 -15, and an additional 10% during FY 2015 -16 due to conservation efforts. Water usage is projected to essentially remain at these reduced levels during the balance of the planning period. Reduced water consumption would result in reduced revenues to the water fund. • The option of an additional $10 million in debt financing is programmed for FY 2018 -19. This may be available through a new debt issuance, potential short- term inter -fund borrowing, or other strategies as determined appropriate by the Finance Department at that time. • With potential rate increases commencing in March of FY 2014 -15, no change in rates is proposed beyond FY 2018 -19. Years beyond the five years in the planning horizon exceed the maximum allowed by state law. • Rate increases corresponding to Options 2 and 3 would be implemented in January of each year. Implementation of new rates in this time frame would minimize the immediate impact of any rate increase as customer water use is at its lowest during the winter. To demonstrate the potential short and long -term implications of the alternative rate - related approaches, a revenue plan of the City's water utility was developed for each scenario by integrating the ratemaking criteria with the projected water system costs and projected capital improvement program expenditures. The results of these financial projections are provided in the following section. Option 1: Protected Revenue Plan — Consumer Price Index (CPI) Based Annual Water Rate Increase (Baseline Option) This percentage is consistent with the City's recent budget forecasts. Including the actual CPI increases in the analysis in FY 2013 -14 and FY 2014 -15, a projected CPI increase of 2.5% is included in all subsequent years through FY 2019 -20. The results of this analysis are shown graphically in Figure 1. Under this option, projected revenues do not support an ongoing capital program. Water conservation efforts continue to reduce revenue from water sales. Based on the Council adopted Sustainable Water Master Plan and water conservation efforts, water rate increases limited only to the general rate of inflation are insufficient to support the activities of the Water Fund. The Water Fund would be in deficit as of FY 2016 -17. 7 Option 2: 9% Proiected Revenue Plan — 9% Annual Water Rate Increase This percentage is less than the annual increases adopted during the 2008 Rate Study, but higher than the average annual CPI increases derived in the Option 1 baseline plan. Similar to the prior plan, following actual CPI increases in FY 2013 -14 and FY 2014 -15, a projected increase of 9% is included in all subsequent years through FY 2018 -19. The results of this analysis are shown graphically in Figure 1. While this rate plan provides a much stronger financial performance than the CPI only (baseline) alternative and achieves a positive net operating performance in the later years of the forecast, it does fall short of some Water Fund financial goals and performance metrics. These shortfalls are as follows: • Approximately $5 million in capital projects would have to be eliminated; a reduction in general system planned capital improvements of 20 %. The Water Fund is projected to fall short of the adopted minimum annual reserve fund targets in four of the five planning years. • Net operating revenues may not be adequate to issue the $10 million in new debt forecasted for capital improvements in FY 2018 -19. Option 3: 9 %/13% Projected Revenue Plan As previously noted, this plan is based on a 9% increase in the first year, and a 13% increase in each of the remaining four years of the financial plan. The results of this analysis are shown graphically in Figure 1. This rate plan provides a much stronger financial performance over the previous rate plans and provides additional financial stability for the Water Fund to meet projected capital improvements, potential emergency system improvements, and absorb more than projected declines in water demands and water sales revenues. A summary of the benefits of this option follows: • The $5 million in capital projects would no longer have to be eliminated from the budget, although there may need to be a small reduction in capital spending in FY 2017 -18. • The Water Fund is projected to fall short of the adopted minimum annual reserve fund targets in essentially only one of the five planning years. • Net operating revenues should be adequate to issue new debt in the FY 2018- 19. 0 The fund balance trends corresponding to the three options are presented in Figure 1 below. The fund balance trend in the 13% option (red line) dips below the trend of the 9% option (green line) due to reductions in capital improvement and conservation programs in the 9% option. Figure 1 — Water Fund Revenue Requirements, Fund balance trends $50M $40M _CPI M ..ease No Changafo Gpif41 & No Gsh InfuslOn \\ — 13 %Inttelse \� No Change to Qplhl & $I0M Gsh InWgon $30M �� - -- 9 %In..easa Dmreue In Gp11.1 & $10M Gsh Id.O.. $20M $IOM FY20M14 FY201415 FY201516 FY2016. FY2017-18 FY 2018-19 FY 201930 .$10M .$20M .$50M -540M Recommended Revenue Plan Based on revenue projections, the rate plan that incorporates a 9% increase in the first year and a 13% increase in each of the remaining four years in water rates is recommended at this time. Proceeding with Option 3, the 9%/13% rate plan, provides the City with the financial stability necessary to fund the projected programs and projects that will be required to reach self- sufficiency, to promote additional water use efficiency, and to remain financially stable during the projected level of continued drought in California. This rate plan is projected to provide a reasonable estimate of the projected revenue requirements of the City's Water Fund through 2020. Since state law only permits the adoption of rates up to five - years, no rate increase is schedule for FY 2019 -20 as this is year six of a proposed five -year rate plan. 9 Rate Structure Considerations Potential adjustments to the City's water rates were developed to support both the financial health of the City's water utility and the Sustainable Water Master Plan (SWMP) objectives through the 2020 planning period. The rates and rate structures derived during the rate study were based upon an analysis of future system costs and financial obligations established by the City and the recommendations from the SWMP. Input from the City's Task Force on the Environment and the SWMP Advisory Committee were obtained throughout the development of the SWMP's self- sufficiency strategies and activities and financial elements contained in this financial plan. There was extensive discussion among City staff, the SWMP Advisory Committee, and the Task Force on the Environment regarding enhancements that could be made to the existing rate structure, adopted in 2008. The alternative structures that were considered by these groups included: ® Modifying the existing tiered block rate structure for changes in water allocation per block. • Increasing the number of tiered blocks. • Altering the current basis of change in price between tiered blocks. • Re- introducing a fixed bimonthly service charge back into the structure. • Consideration for a base level water allocation to be include with the new service charge. ® Abandoning the current structure and migrate to a full water budget based rate structure. The result of this process was the development of a small group of alternative structures that was considered. This short -list included: a) the current structure, b) a structure with the current tiered blocks and a new fixed service charge with a potential water allowance, and c) a structure with new tiered blocks and a new fixed service charge with a potential water allowance. 10 On July 15, 2014, the State Water Resources Control Board (SWRCB) adopted an Emergency Regulation for Statewide Urban Water Conservation, requiring the City and other urban retail water agencies to implement all requirements and actions of their water shortage contingency plans that impose mandatory outdoor irrigation restrictions. Subsequently on August 12, 2014, Council approved a resolution declaring a Stage 2 Water Supply Shortage requiring mandatory water conservation to achieve a 20% reduction in water use (as compared to the 2013 base year). On October 28 2014, Council adopted the SWMP. Additional evaluation and assessment is ongoing regarding the appropriate basis for new drought surcharges or penalties and the associated administrative structure to implement these charges. This is anticipated to be presented to Council in January 2015. Given the complexities of the development and implementation of the Water Shortage Response Plan concurrent with consideration of rate adjustments, staff recommends continuation of the current tiered rate structure rather than a new rate structure with new blocks and /or a new fixed service charge. This approach would produce a more understandable message associated with the rate increase and minimize the potential confusion associated with drought compliance related charges and structures. As such, no adjustment in the current tiered water rate structure is proposed. The City's current water rate structure is very common in California. It provides a built in mechanism to support water conservation on a pay for what you use basis. It is simple to understand, generally fosters public acceptance, and provides relatively predictable revenues. Rate Comparison It is worth noting that Santa Monica has experienced the same pressure for increased water efficiency and conservation over recent years due to drought and climate effects as other statewide and regional water agencies. In comparison to other regional jurisdictions, Santa Monica single - family residential rates remain in the lower third of neighboring comparison agencies. Figure 2 below provides a comparison of proposed Santa Monica single - family residential (SFR) water rates, including a 13% increase over current rates, with neighboring agency SFR water rates. This 13% increase represents the proposed year two increase following the 9% increase in year one, as in option 3. The bill 11 comparison is based on a %" water meter and 24 hundred cubic feet HCF of bi- monthly water usage. This represents the water allowance in the Stage 2 Water shortage plan for single - family residences. The proposed bi- monthly average charge of $89.30 for Option 3 (13% increase) in year two reflects a monetary increase of $16.80 (bi- monthly) over the existing charge of $72.50. Even with the proposed 13% increase, residential water bills in Santa Monica will be lower than the current average rate of the other communities surveyed. Tables 2, 3, and 4 provide a summary of average water bills under the presented options for average water use. Figure 2 — Proposed Water Rate Comparison with Neighboring Agencies $200 $180 LL $160 U o $140 m $120 v Y 3 $100 L Y C $80 E no $60 u a a � $40 $20 $0 Pasadena Santa Monica Long Beach Burbank Glendale (1) Los Angeles Beverly Hills Culver City(2) (1) 2013 -14 1,2014.15 (1.) Increases proposed for FY 2014 -15 (2.) Culver City serviced by Golden State Water Company, a CPUC regulated utility 12 A summary of potential bi- monthly water bill impacts for select customer classifications at average consumption rates is presented in Tables 2, 3, and 4. Table 2 Example of Proposed Bi- Monthly Bill Single - Family Residential, % -inch meter, 30 HCF current average use (1.) CPI Increase only in all years, effective January 1 (2.) 9% increase effective January 1 each year (3.) 13% increase effective years 2 through 5, 9% increase year 1 Table 3 Example of Proposed Bi- Monthly Bill Multi - Family Residential, 1 '/2 - inch meter, 77 HCF current average use(l ) Year 1 Year 2 Year 3 Year 4 Year 5 Current Bill, $90.63 without conservation Option 1 Current Rates, with 20 %conservation 24HCF $72.50 $74.31 $76.17 $78.07 $80.03 option, $79.03 $86.14 $93.90 $102.35 $111.56 9% increase in unit prices, with 20% conservation $298.49 $325.35 $354.64 $386.55 $421.34 Option 3 13% increase in unit prices, with 20% conservation $79,03 $89.30 $100.91 $114.03 $128.86 (1.) CPI Increase only in all years, effective January 1 (2.) 9% increase effective January 1 each year (3.) 13% increase effective years 2 through 5, 9% increase year 1 Table 3 Example of Proposed Bi- Monthly Bill Multi - Family Residential, 1 '/2 - inch meter, 77 HCF current average use(l ) (1.) 11 HCF per res. unit; average 7 units per Multi - Family residential account (2.) CPI Increase only in all years, effective January 1 (3.) 9% increase effective March 1, 2015; January 1 each year thereafter. (4.) 13% increase effective years 2 through 5 (January 1), 9% increase year 1 (March 1, 2015) 13 Year Year Year Year Year Current Bill, $342.30 without conservation Option 1 $273.84 $280.69 $287.70 $294.90 $302.27 Current Rates, with 20% conservation 62HCF Option 2 $298.49 $325.35 $354.64 $386.55 $421.34 9% increase in unit prices, with 20% conservation Option V), $298.49 $337.29 $381.14 $430.69 $486.68 13% increase in unit prices, with 20% conservation (1.) 11 HCF per res. unit; average 7 units per Multi - Family residential account (2.) CPI Increase only in all years, effective January 1 (3.) 9% increase effective March 1, 2015; January 1 each year thereafter. (4.) 13% increase effective years 2 through 5 (January 1), 9% increase year 1 (March 1, 2015) 13 Table 4 Example of Proposed Bi- Monthly Bill Non- Residential, 2- inch meter, 192 HCF current average use. (1.) CPI Increase only in all years, effective January 1 (2) 9% increase effective January 1 each year (3.) 13% increase effective years 2 through 5, 9% increase year 1 Low Income Provision On May 13 2008, Council approved a change in the discount for low income customers. Because the rate structure changed in 2008 to eliminate the fixed charge and move to a commodity -only rate structure, the reduced first tier water rate for qualified single - family low income customers was discounted $1 per HCF. Staff recommends continuing this discount of $1 per HCF for the first tier only. This is appropriate given that the rate structure is unchanged from the 2008 structure; this discount would apply to all of the options. For single - family customers the maximum bi- monthly discount would be $14. Second, third, and fourth tier rates would not be discounted since these apply to more discretionary uses of water, rather than basic water needs. Low income customers become qualified for the water discount by providing evidence of qualification and enrollment in the low income program offered by Southern California Edison or the Southern California Gas Company. There are currently 213 customers qualified as low income and receiving the discounted first tier water rate. Proposition 218 Compliance Proposition 218 requires 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 proposed new rates (with a few days allowance for mailing). 14 Year 1 Year 2 Year 3 Year 4 Year 5 Current Bill, $687.23 without conservation Option 1 $549.78 $563.52 $577.61 $592.05 $606.85 Current Rates, with 20% conservation 154 HCF Option 2 , $599.26 $653.19 $711.98 $776.07 $845.90 9% increase in unit prices, with 20% conservation Option 314-1, $599.26 $677.16 $765.20 $864.67 $977.08 13% increase in unit prices, with 20% conservation (1.) CPI Increase only in all years, effective January 1 (2) 9% increase effective January 1 each year (3.) 13% increase effective years 2 through 5, 9% increase year 1 Low Income Provision On May 13 2008, Council approved a change in the discount for low income customers. Because the rate structure changed in 2008 to eliminate the fixed charge and move to a commodity -only rate structure, the reduced first tier water rate for qualified single - family low income customers was discounted $1 per HCF. Staff recommends continuing this discount of $1 per HCF for the first tier only. This is appropriate given that the rate structure is unchanged from the 2008 structure; this discount would apply to all of the options. For single - family customers the maximum bi- monthly discount would be $14. Second, third, and fourth tier rates would not be discounted since these apply to more discretionary uses of water, rather than basic water needs. Low income customers become qualified for the water discount by providing evidence of qualification and enrollment in the low income program offered by Southern California Edison or the Southern California Gas Company. There are currently 213 customers qualified as low income and receiving the discounted first tier water rate. Proposition 218 Compliance Proposition 218 requires 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 proposed new rates (with a few days allowance for mailing). 14 The notices to be mailed to all property owners will include a description of the need for a rate adjustment, and explain the protest process for the public to follow if they wish to oppose the proposed rates. Absent a majority protest, City Council may then approve the final adoption of the rates at a public hearing. By not changing the rate structure and staying with the commodity -only rate structure adopted in 2008, the cost of service requirements of Proposition 218 are achieved. The findings of a cost of service analysis performed on the commodity -only rate structure, included in Appendix B of the attached Rate Study, indicates that the costs of providing service coincide with revenues generated by single family residential, multi - family residential, and commercial (non - residential) customer classifications. Community Outreach Outreach efforts continue in an effort to engage the community in discussions about proposed rate adjustments, the Sustainable Water Master Plan (SWMP), and the Water Shortage Response Plan. Staff from Public Works and the Office of Sustainability and the Environment (OSE) conducted a community forum for the business community and residents, "Let's Talk Water ", on November 24, 2014 at Ken Edwards Center, and have presented drought and rate information at neighborhood and business groups including North of Montana Association, Northeast Neighbors, Ocean Park Association, Chamber of Commerce Government Affairs Committee, and the Convention and Visitors Bureau Hotel Managers Group. City staff has also been present at all of the recent Santa Monica Talks community forums. Outreach will continue with the community throughout the period leading to the formal adoption of rate adjustments by Council. Wastewater Rate Analysis Present day wastewater rates were established in 2008, concurrent with the last water rate adjustments. Consistent with the adopted water rates at the time, wastewater rates were also established as a commodity -only rate structure, based upon 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 15 accounts, to 95% for multi - family residential accounts with more than 4 units. All non- residential customers are assigned a discharge factor of 89 %. Commodity charges for non - residential customers vary depending on sewage strength (as represented by biochemical oxygen demand and suspended solids) for each class. On May 13 2014, Council approved redemption of all outstanding Wastewater Enterprise Revenue Bonds. This action will save the Wastewater Fund approximately $600,000 over the next four years (bond maturity was January 1, 2018). Coupled with a remaining healthy fund balance, an increase in wastewater rates, other than an annual CPI adjustment, will not be required over the five year planning period considered in this analysis. Summary and Recommended Option Taking into account the expected levels of water conservation mandated by the Stage 2 restrictions and the SWMP, and the added loss of revenue, a revenue increase of 13% annually (9% in first year) would be required in order to keep the Water Fund balance positive throughout the five year planning period and fund necessary capital improvements and conservation programs. Rate increases are driven equally by the need to fund capital programs to accomplish the City's water self- sufficiency goals, the need to invest in infrastructure rehabilitation and replacement, the reduction in water sales that reduces annual revenues, and increased water conservation programs. Option 1 is presented as the base line option and an indication of the status quo, or the result of non - action relative to rates, other than an annual CPI increase. This option would leave the fund unsustainable, as adopting this course would result in a negative fund balance by FY 2016 -17. Option 2 includes an across - the -board 9% increase on all tiers of the existing unit prices. This option is included to indicate the effect of utilizing a single digit rate increase. As might be expected, a lower percentage rate increase results in lower revenue generation. Accordingly, expenditure reductions are required to accommodate the lower rate increase. This may be achieved through modifications in capital 16 programs such as main replacements, valve rehabilitation, automatic meter infrastructure development, or some water conservation programs. The consequence of cuts to these programs would likely result in a delay in reaching the self- sufficiency goal by 2020. Staff recommends Option 3, (the 9 %/13% option) which fully funds the projected capital programs, infrastructure investments, and conservation programs over the five year planning period. Because the first rates increase in the five year planning period is proposed to take effect in March 2015 only a 9% increase is required for the first year (i.e., one quarter of FY 2014 -15 would be subject to the rate increase). This approach maintains progress toward achieving the City's 2020 self- sufficiency goal. Due to the water conservation achieved by customers as a result of the mandatory Stage 2 water shortage plan, water bill increases would be somewhat offset by the reduction in water use which is anticipated from each customer. As indicated in Figure 3, residential water bills remain competitive with comparison cities even after a 13% rate increase. Next Steps Following direction from Council regarding a preferred rate alternative, staff will continue with community outreach to discuss drought actions and financial planning efforts. Staff recommends Council set a public hearing date of February 24, 2015 for formal approval of rate adjustments. This date allows ample time for the required 45 day notice period, during which the Proposition 218 public notices will be mailed to every property owner in the City, which allows them to send in a protest vote. If over 50% of the eligible property owners vote to protest the proposed rates, the Council would not be allowed to enact the proposed rate increase. At the February 24, 2015 Council meeting, staff will return with a summary of community responses and a formal recommendation to adopt new rates (unless there is a majority protest). 17 Financial Impacts & Budget Actions Contingent upon Council direction, the FY 2014 -15 budget would be revised as follows: 1. For Option 1, no change in water sales revenue account number 25671.402310 would be required because rates were adjusted by CPI on July 1, 2014. 2. For Options 2 and 3 (both 9% in the first year), there would be an increase in water sales of $645,265 in revenue account number 25671.402310. Prepared by: Gil Borboa, P.E., Water Resources Manager Y a . . ' 7 akai . Martin Pastucha Director of Public Works Attachment: A - Water Rate and Revenue Plan Report B - Resolution Forwarded to Council: Rod Gould City Manager M. 3210 El Camino Real, Suite 150 Irvine, CA 92602 949 - 261 -1577 949 - 261 -2134 (Fax) City of Santa Monica Water Rate and Revenue Plan Draft Report November 7, 2014 City of Santa Monica Water Resources Division 1212 Fifth Street Third Floor Santa Monica, CA 90401 K/J Project No. 1282015'00 Table of Contents Listof Tables .................................................................................................. ............................... ii Listof Figures ................................................................................................ ............................... iii Listof Appendices ......................................................................................... ............................... ui Section1: Introduction ................................................... ............................1 -1 1.1 Background and Objectives ...................................... .... ...................... 1 -1 Section 2: Historical and Current Conditions' ................ ............................2 -1 2.1 Evaluation of Historical & Current Financial Condition ...................2 -1 2.2 Customer Accounts and Water Demands ............... ..........:.:...............2 -1 Section 3: Future Revenue Requirements .... .............. ............................3 -1 3.1 Projected Customer Growth and Water Sales ....................... ............ 3 -1 3.2 Budgeted /Projected Operating Expenses .............. ............................3 -1 3.3 Projected Capital Improvement & Debt Service Financing Program ........ ..:...... :,;, .........' ........... . .............. ...... 3 -3 3.4 Summary of Projected Revenue Requirements_ ................................ 3-3 3.5 Projected Revenue Requirements Using Assumed Rate Scenarios................... ................ ............................................ ............. 3 -5 3.5.1 Option 1: Projected Revenue Plan — Consumer Price Index (CPI) Based Annual Water Rate Increase (Baseline Option)..:::' .................................... ............................3 -5 3.5.2 Option 2: Projected Revenue Plan — 9% Annual Water RateIncrease .............................................. ............................3 -6 3.5.3 Option 3: Projected Revenue Plan — 9/13% Annual Water Rate Increase .................................... ............................3 -6 3.5.4 Recommended Revenue Plan ............. .................... ................ 3 -7 Section 4: Current Water Rates ...................................... ............................4 -1 Section 5: Alternative and Proposed Water Rates and Structures ........... 5 -1 5.1 Fixed and Variable Rate Considerations .................................... ......... 5 -1 5.2 Development of Alternative Water Rate Structures and Revised WaterRates ............................................................ ............................5 -1 5.2.1 Development of Alternative Rate Structures ............................5 -2 5.2.2 Development of Alternative Water Rates and Typical Bills ....... 5 -3 5.3 Comparison of Monthly Bills with Other Communities ........................5 -3 5.4 Summary of Findings and Proposed Water Rates .. ............................5 -4 Water Rate and Revenue Analysis, City of Santa Monica Table of Contents (cont'd) List of Tables 1 Historical Operating Revenues and Expenses 2 Current Accounts and Water Consumption 3A Budgeted and Projected Operation and Maintenance Expenses 3B Projected Water Supply and Production Plan 4 Proposed Capital Improvement and Debt Financing Program 5a Projected Revenue Plan — Consumer Price Index (CPI) Based Rate Increases 5b Projected Revenue Plan — 9% Rate Increases 5c Projected Revenue Plan —9/13% Rate Increases 6 Current Water Rates 7 Alternative Water Rates 8 Alternative Water Rates and Typical Bills 9 Comparison of Monthly Water Bills — Single Family Residential Water Rate and Revenue Analysis, City of Santa Monica Table of Contents (cont'd) List of Figures 5A - Revenue Plan with Annual CPI Based Water Rate Increase 5B - Revenue Plan with 9% Annual Water Rate Increase 5C - Revenue Plan with 9/13% Annual Water Rate Increase 9 - Water Rate Comparison with Neighboring Agencies, single family account 10 —Water Rate Comparison, Non - residential account List of Appendices Appendix A - Miscellaneous Tabular Support Information Appendix B - Miscellaneous Alternative Rate Restructuring Support Information Water Rate and Revenue Analysis, City of Santa Monica iii Section 1: Introduction The City of Santa Monica (City) is a coastal community located in Los Angeles County. The City provides commonly sought services, including water and sewer services, to approximately 91,000 residents covering an area of approximately 8 square miles. To provide a reliable and quality water supply to its customers, the City is now in the implementation phase of a comprehensive long range water system improvement program with the goal of having a reliable infrastructure and a sustainable water supply by eliminating its dependence on imported water sources to meet potable water needs by 2020. 101 Background and Objectives The City's desire to maintain appropriate infrastructure investments and meet a sustainable water self- sufficiency goal are integral elements of a Sustainable Water Master Plan (SWMP) that is also underway. Implementation of SWMP capital improvements and programs, as well as other factors will affect the financial performance of the City's water utility. These factors include: • The need to evaluate the future operating and non- operating revenues and expenses and their effect on the utility's operation, • The need to fund capital improvements associated with the City's Sustainable Water Master Plan (SWMP) and other water system capital projects to improve reliability and system efficiencies, • The need to develop programs and strategies to meet the City's water conservation goals and objectives, • The need to assess and project the impact of- reduced water usage from new water use efficiency programs, other water conservation measures, and the current drought conditions in California, • The need to develop updated rates to fund the projected water enterprise financial requirements, and 1 • A need to review and develop an appropriate rate structure to maintain the Water Fund's obligations, meet various cost recovery requirements, and support overall customer understanding and acceptance . It is important to note that this report integrates several important considerations that have affected the short and long -term financial obligations of the Water Fund. This approach phases in the increased use of local groundwater supplies and water treatment related improvements to address water quality and incorporates other capital improvement projects to meet water self - sufficiency by reducing /eliminating reliance on imported water, phases in projected reductions in water sales -based revenues as the result of an increased effort for additional water conservation and account -level usage reductions in response the statewide water shortage, begins a methodical use of fund reserves to fund other local capital projects that are the result of aging infrastructure and other needed system improvements, and is consistent with the recommendations of the SWMP. Water Rate and Revenue Analysis, City of Santa Monica Together, these factors have placed an increased burden on short -term water rates to improve the financial position of the Water Fund, and are the basis for the capital, operational, and rate - related findings presented herein. Water Rate and Revenue Analysis, City of Santa Monica 1 -2 Section 2: Historical and Current Conditions This section of the report is developed to provide a background of the water utility's historical and current financial conditions and customer account summary information. A discussion of these elements is provided in the following subsections. — , The financial condition of the City's water utility was reviewed and a summary of financial performance is presented in Table 1. The information presented in this table was derived largely from the City's Finance Department and Comprehensive Annual Financial Reports (CAFRs) as appropriate. The financial condition of a water utility is assessed by contrasting several financial parameters with the financial performance as reported in the City's financial data. Foremost among these parameters are criteria for net operating revenues and an assessment of the utility's fund balance. The findings related to each of these elements are provided as follows. Net operating revenues are an important financial parameter of a utility's performance. This financial parameter is generally desired to be at least 20% of total operating revenues to generate adequate capital improvement funding for new and "replacement (depreciation- based) assets. As shown in Table 1, the water utility has historically fallen short of this parameter in the last three years. During the three year period, this parameter has ranged from a positive 2% to 10 %, well short of the 20% benchmark. As such, the utility currently is not generating sufficient funds to provide for future capital expenditures and increased water utility operating expenses. In addition to this operational performance, the impact of various non - operating revenues and capital expenditures is included so that an assessment of the annual ending cash fund balance or reserves can be derived. As indicated by the net increase or decrease in cash value, the water income has essentially broken even in Fiscal Year (FY) 10 -11 and FY 11 -12. The significant increase in performance and cash in FY 12 -13 can be attributed to the consolidation of the Fund 25 and Fund 05 (Charnock) for both cash and expenses. In consideration of these factors and the need for increased capital investment in the coming years, additional revenues from water rates are needed to improve the financial position of the Water Fund. The following sections of this study provide the supporting information for the level and timing of proposed rate adjustments to meet the Water Fund's current and future financial requirements. As noted in the City's water billing data, the City provides water service to its residential and non - residential customers through approximately 16,400 metered water accounts (does not include dedicated fire protection meters). A summary of the water utility customer information related to general customer types, number of accounts, and water demands are detailed in Table 2. As shown, the majority of these water accounts are residential customers. Water Rate and Revenue Analysis, City of Santa Monica 2 -1 W N Z w IL w z Z Q w z Z W W w J � m h z Z_ P 9 w EL O J U_ 0 _N 01 N m d d C m d E d c o m N O N nn d x L O � � U N C C � C O U N K u m o 0 V CO C LL _M d 7 � N C M D Q � d D d o � > U O O_ C . d y cd c C Q - N E a O o m D U o ,N- m m c U E N CO O j w = m d w C w L m d N U � m 0 U � L N �LLU CO m g co (O r N (V NN EA fA fA fA H! N� EA H3 �M LL ow 1/) d' V N m f� r M of W N O V of O O M ' �O V ` T m M M OJ N V (O In O - W M� N cO� ttJ M N U r 00 W N O V� � 6 (d � �» C 1 O fA r` (o � v> � � w LL V O rM m c0 L6 - EA fR N ' FA d' (A ( � (A � fA fA Nv 0 W I� LL 42 O U W s O_ f2 y w N ¢ C O > d m ~ 9 d N _ 9 V1j n d m U n 2 A d U m a o x > m m o W m c LL U D c �. o ro c @ D H w D v o' > N Ji O. m O. E O W d j �1 d 8 O' V1 d U d a' N d d w `o . c a ,� �` d w o o uni d E d 'p m d c w m m C m M w d O K OU 0n .' C o c 2 o d c C w 0 C E O U ro U > 0> C x .JO d p L uj d J Z N W Q N m (0 O Z c C N d O n ` w n t E2 E C 0 d O s o F- o d a¢ C) Do 0 F- Z c O i:d m O O z d z z d z d M c w 01 N m d d C m d E d c o m N O N nn d x L O � � U N C C � C O U N K u m o 0 V CO C LL _M d 7 � N C M D Q � d D d o � > U O O_ C . d y cd c C Q - N E a O o m D U o ,N- m m c U E N CO O j w = m d w C w L m d N U � m 0 U � L N �LLU CO m g N W J m F C 0O L 1v O j p @ p 0 D O @ N C � N m Z c N J N @ N @N E N r N T ` L � N O.N.. T C J N Q (O� C @ O M Q N O a N @ O N �C N O @ N N � w E °v T J y C N w N N 'G. T C,j O 0 N N O w N N C 4, TNT C U'o 3 4 tea° v TO @ O M m a N p y O� J W @ > a c o E O N a�'� N @ @p O O N D O o E L O � m 3 E o N (n r Um J p] LL = N N @ T O L U �m N O Q O N E rn N E K CU N U E J w O Op O p = � U a n- y 0 @ (q yp C @ C C O N� W.- U O N 00 0 o o 2 c N N a.o E UU 00 0 0 U JE N (n ) O O O p d CO Q. Q W p p��sa��m z M N r m r V V w o r r 0 N W O N a m (O (D N i� N r- ( ( D m c6 (V r (O M � N (NMO m m It N [t N m O h 0 N m V M It f� M M (o (O N (O m M M r r m m V t0 r M r O) N m M N a (O CO (O O r m m6 N rC6 r m } m .N- m M M N M O O (O m O O (O m M (O N M N O a m m m It (O V (O M m m CO N M (O (O Cl) m N m (O V d' (D (O N r I� N m m m m N M w U N (O O r d' N M N V IT (O N N (O (O f� O It O r m CL I� N N (O (6-47 N I, O r Cl) M t0 N r M M LL •- r r 7 (O N N M t W M I� N L6 (O m V N M (O M i m r M r W N (00 M M M m (O m O d' m (O O) M (O M V O) N N (O O M V N m (n (O V (O N r � CO (O N r V m O w W m M (O N CO CO N N m N N a m V N r r N m (O (O N N f� r .-- M (O I� Ol r r r M Y M M (O N V LL r (V M M N O M N (O O N NW (Q N M r V N m r (O c} O m d m n` m (O N r (rD r� m M W ((OO r W 7 M M N N M U r N r (n Q LL V G w 0 R a v U o a U v a v U e p 1 p ld fb T 'O .c -c -O T p Ol U C p p r O Nc N p y LL O T U @ O U:3 @- U 2i @, U @ E U @ E ¢ E U W d W? d E .� N @= N C W W W @ W U W O O C 0O L 1v O j p @ p 0 D O @ N C � N m Z c N J N @ N @N E N r N T ` L � N O.N.. T C J N Q (O� C @ O M Q N O a N @ O N �C N O @ N N � w E °v T J y C N w N N 'G. T C,j O 0 N N O w N N C 4, TNT C U'o 3 4 tea° v TO @ O M m a N p y O� J W @ > a c o E O N a�'� N @ @p O O N D O o E L O � m 3 E o N (n r Um J p] LL = N N @ T O L U �m N O Q O N E rn N E K CU N U E J w O Op O p = � U a n- y 0 @ (q yp C @ C C O N� W.- U O N 00 0 o o 2 c N N a.o E UU 00 0 0 U JE N (n ) O O O p d CO Q. Q W p p��sa��m z Recent and projected water demand is also provided in Table 2. For FY 11/12, the total annual water consumption was approximately 5,408,605 hundred cubic feet (HCF) and the average consumption per account was approximately 329 HCF per year, or 27.5 HCF per month (674 gallons per day). Based on the current water rate structure, this level of water usage generates approximately $17 million. It should be noted that while water sales have increased slightly over the last few years, additional water conservation - related activities will reduce water usage in the coming years. Incorporating the planning projections from the 2010 UWMP, and the recent drought compliance planning, water demand in FY 14/15 is projected to reduce to approximately 4,906,120 HCF and further reduce to 4,360,995 in FY 15/16. Appendix A includes copies of the water system reports submitted annually to the Department of Water Resources (DWR) to document the City's water system statistics as an aid to detailing the City's recent water usage and customer account trends. Water Rate and Revenue Analysis, City of Santa Monica 2-2 Section 3: Future Revenue Requirements An evaluation of future revenue requirements can be focused in the projection of four specific areas. These areas are customer growth, water supply costs, operating costs, and capital - related expenditures. The following sections discuss the impact of these factors on the City's water utility revenue requirements through FY 19/20. Customer growth affects the revenue requirements of the City's, water utility in two ways. First, it increases the customer base that is paying for more water usage through the water usage rate and pays a connection fee to buy into to system capacity. Second, it increases the level of those costs that vary with the quantity of water used such as water supply, treatment, and pumping expenses. In financial planning, applying low to moderate growth factors provides a conservative assessment of future utility revenue requirements. Based on population projection data taken from the City's 2010 Urban Water Management Plan and the Land Use and Circulation Element (LUCE) of the General Plan, a very small annual growth is included in this financial plan. In fact, at a projected increase of approximately 0.5 %, an addition of only 20 equivalent meter units (EMUs) per year is included in the five year planning projection. As previously noted, for Santa Monica, foremost among the factors that needs to be considered is the impact of reduced water usage associated with increased conservation activities, enhanced customer awareness, and upcoming excess water usage surcharges or penalties in response to mandatory water usage reductions. It should be noted that predicting annual growth and water usage can not be derived as precise values. As such, the future growth and water demand values used herein are to be considered as estimates only and are intended to provide a conservative forecast of new customers so that connection fee revenues and water sales are not overestimated. Similarly, while it can be assumed that water usage should decline with the forthcoming increase in water costs and rates, behavioral changes are difficult to quantify. Accordingly, the magnitude of future water conservation included in this financial, plan is only an estimate used for the purpose of projecting future water sales. All of these factors should be evaluated and integrated as an element of the City's ongoing rate and budget review process to evaluate the financial performance of the City's Water Fund. Budgeted/Projected Operating Expenses Costs associated with the management, administration, and operations of the City's water utility are grouped in two primary categories: ® Water Fund 25, Department No. 500 Expenses — This consists of Divisions 671, 672, and 673, which include operation and maintenance costs associated with the Arcadia Water Treatment Plant (673), Charnock Water Treatment Plant (672), and General Water (671). Note that Water Fund 05, the Charnock Fund, was also consolidated with Water Rate and Revenue Analysis, City of Santa Monica 3 -1 Water Fund 25 for the management, administration and accounting of overall water utility activities in FY 12/13. ® SWMP Program Budget Adjustments and New Program Expenses— This consists of items that will promote and support the City's transition from purchasing imported water to meeting potable water demands with local groundwater sources in accordance with the City's Sustainable Water Master Plan. The budgeted and projected water utility costs for these categories are shown in Table 3A. Note that the Water Fund 25 Department 500 costs included herein are based on the City's projected budget and are primarily inflation driven, with the integration of some additional costs associated with anticipated future personnel and cost allocation adjustments. The SWMP Program Expenses category develops estimated changes in these budgeted cost and funds new programs to implement the SWMP findings and recommendations. Table 3B includes a summary of the water supply and production plan that forms the basis for the budget adjustment categories and a table of enhanced /new water conservation activities that are programmed to be implemented as part of the SWMP self- sufficiency goals and objectives. The budgeted and projected water utility costs for these categories are shown in Table 3A. Table 3B includes a summary of the water supply and production plan that forms the basis for the budget adjustment categories. Note that the Water Fund 25 Department 500 costs included herein are based on the City's projected budget and are primarily inflation driven, with the integration of some additional costs associated with anticipated future personnel and cost allocation adjustments. The SWMP Program Expenses category develops estimated changes in these budgeted cost and funds new programs to implement the SWMP findings and recommendations. Notable among the programs are the costs associated with additional conservation programs that are needed to enhance water use efficiency and support self - sufficiency. Given the new statewide water shortage conditions and the City's adoption of its Stage II Water Shortage provisions, these program costs may need to be accelerated to better align with the City's short -term water conservation goals and objectives. Should that occur, the City should plan on an annual review of revenues and expenses as some offsetting reductions in capital or operational costs may be required to meet the funds available in the Water Fund. A table of enhanced /new water conservation activities that are programmed to be implemented as part of the SWMP self- sufficiency goals and objectives is provided in Appendix A. It is important to note that the City has a long- standing practice for the development and integration of new and updated Best Management Practices (BMPs) to improve utility system operational efficiencies and control or reduce both operating and capital costs. In fact, since 2003, while the water system has increased from 14,979 accounts to 17,709 accounts, the number of full time equivalent employees used to manage, operate, and maintain the system has remained the same. Moreover, upon completion of the new Advanced Meter Infrastructure (AMI) program, it is anticipated that additional efficiencies and cost reductions will be realized. This and other projected capital improvement projects are discussed in the following section. 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W K a Z O 5 J U U r 0 U z Z J N N n N N N O Ip N (p O N M 1� O OI f9 f9 M 1� O rn N O Y1_ N M C) W � LL r W � W mry m co, inn rn N N" N -m O m � } N W fq m m o °o rn o m m M a c p O fA W t� r W � W m m m o °o rn o m m M a c p m m °W N W O C4 m m o 0 0 0 0 m rnq m N 'm Ld •" m� V � O O � }NI mb )A LL N Y co N LL N ph O O t9 W c W � m � W Q Q L @c C K 0 K a U U OO Opp O o � N O W � O W N [n0 W N V (O NW o W 00 N o o N vami p N O N O O M W W OI v N lL N p Q O < y b U ¢ @ 0 O o U Q U O Tj d o c a @ O Q @ J LL D o @ r E E o v ¢ m m C7 F 3 F N o m J N p J Q Q Q 0 O N r W Q N 'a c O J J tq ro O C N a o N m @ p 0 W E m Z J N m > m m N a N 3 a N c 0 C pJ U O U C @ w O N@ rn_ Wv N c E D 0 0 Dp oyY U U T d m r c 5 W � U T @ T 7 Q C a � « So T > � J c c ¢ c @ a « O n @ N O D M C U O c d N D E0 @ N D U c J p U J O U N � N C Ol @ N � C D d C Ta jaw ¢ C N M. p o LL m r m o m of UI O m N 0 m o M @ U J N r W c_ @ tyi jop ro o j o D o r/� n @ aLL BLL�n` ¢ c E M @ N N > W ¢ N P r n r O W N O O r CWJ A P P °W N W O -m IL M N O N O b� p tpp r n O O b I� CJ h P O N N N O V W W O W N W P N_ M N N y N lL (9 Eq f9 W N O O m V p O T W O O 02 O^i p 10 F9 N N N V � N y N Il f9 tq W m n CC�� W N O q O O N O mq u>q o� m N n alp �- NN W Ln y N LL d3 tN m M m o 0 0 0 0 m rnq m N 'm Ld •" m� V � O O � }NI mb )A LL N Y co N LL N ph O O t9 W c W � m � W Q Q L @c C K 0 K a U U OO Opp O o � N O W � O W N [n0 W N V (O NW o W 00 N o o N vami p N O N O O M W W OI v N lL N p Q O < y b U ¢ @ 0 O o U Q U O Tj d o c a @ O Q @ J LL D o @ r E E o v ¢ m m C7 F 3 F N o m J N p J Q Q Q 0 O N r W Q N 'a c O J J tq ro O C N a o N m @ p 0 W E m Z J N m > m m N a N 3 a N c 0 C pJ U O U C @ w O N@ rn_ Wv N c E D 0 0 Dp oyY U U T d m r c 5 W � U T @ T 7 Q C a � « So T > � J c c ¢ c @ a « O n @ N O D M C U O c d N D E0 @ N D U c J p U J O U N � N C Ol @ N � C D d C Ta jaw ¢ C N M. p o LL m r m o m of UI O m N 0 m o M @ U J N r W c_ @ tyi jop ro o j o D o r/� n @ aLL BLL�n` ¢ c E M @ N N > W ¢ 3.3 Projected Capital Improvement & Debt Service Financin.-- Program Utility systems are by nature capital intensive operations. To evaluate system capacity and long range water supply reliability, the City is implementing a Sustainable Water 'Master Plan. This program will serve as the basis for the development of many of the City's capacity - related water system capital improvement program needs. The City's water system Capital Improvement Program (CIP) is comprised of the following primary project categories: • General Water System Capital Improvement Program. This category includes infrastructure improvements associated with replacing aging existing infrastructure that are approaching the end of their useful lives, begins to fund a new Advanced Meter Infrastructure (AMP program, plans for reliability and water transmission improvements for the City's highest pressure zone (zone 500) with a new booster pump station, and funds various other ongoing rehabilitation and facility specific improvements or studies. • SWMP Program Expenditures. SWMP program expenditures are those items additional expenditures that have been identified as short- term,Water Fund obligations related to decreased reliance on imported water. • Olympic Water Treatment Program, While not an obligation of the Water Fund (funding source is from settlements with the Olympic basin pollution responsible parties), other water system improvements have been noted that are associated with the Olympic well field and associated water treatment plant construction as these facilities are necessary improvements for water self sufficiency. Much like the implementation and administration of settlement funds used to construct and operate the Charnock WTP during the last decade, the Olympic,WTP Program will clean this area of the underlying groundwater basin and provide a source of very high quality water to the City's water customers at essentially no cost for many years. A summary of the capital improvement plan for these primary project categories is provided in Table 4, While not highlighted in Table 4, the resulting revenue plan also includes the potential need for a debt financing program in later years. Although debt funding of capital expenditures is common among utilities, the City has historically funded most of its water fund obligations on a pay -as- you -go basis. From the cash flow pro forma derived herein, approximately $10 million in additional cash has been programmed in FY 18/19 to fund various pipeline or water supply - related capital improvements. It is assumed that the need and viability of any external borrowing to support Water Fund activities will be evaluated during the City's annual budget process. As discussed with the City Finance Department staff, the City will contract with its Municipal Financial Advisor for the evaluation and support of such actions as required. The City's Water Fund is projected to experience a decrease in water sales associated with the implementation of additional self sufficiency - related water conservation programs and the City's adoption of a Stage II Water Shortage, resulting in an immediate 20% reduction in water sales Water Rate and Revenue Analysis, City of Santa Monica 3 -3 A a Z W V W 2' J a U O W N 0 a K a C N N m t°- a n' D N N TN LL B m w 0 N v N00 NO0 NO NNNmm NN 00 NN NNNNmmmrN O O NNNN N O N o N o m N N O O N o p O O O O O O O O O r O o N N °m N N O N N N N N N CJ N N O p O O O O_ O O O O O N O O O O O N N � O � N m O O l� NMN N 49 bi N N O fag N O M N m N p N N N ai O O O O O O O O O O O O O N r NOOO mO NNNNN Nl9°NNN NNNNVIOrN O O 00 O O O O O O N0000 m V N 06 O y LL Nm° NN MN mMNl9 N IryA N aN � _ �- N N N N 00 a0O N fN A Nw O O O O O O O O o O O O O O O O N r O O O O O h ° N O O O m 00 N N N N N N Op O° N N N N N O° N m Nm np VNI O O � N m O O O f9 N O 00 00000000 00000 Or O O o OO O 00 N O 00 m O° N N N N N Op N 00 O° O N N N °° O N m N N O O V 1� N r 00 O r N Op O O O° O 'O� O O O 00 M N 000 O N m O< O O O N N m 00 O' O O .Q O O 00 O O O m N ryf N }O ON NOO �NrN M m19 N NNN Mff9g N NN�N N NN N N ' N Nm N M lLm O�NNNNm N N p N fA N j O O N O 10 O N O (OIO N N N N� N f9 N� m O O N N r� M M I�NNr NfMOO N N N M N m r N N.}N m N LL E 0 W N �rn mmmmm mm °m�� LL c mmmm mmro rorommmmmm rorommmm N �mmmm m m O 10 M M N m� O m N m N N r 0 p M m N V r N_ d C U LL O O ( O I m N N N h m N N l r 0 .22'2.6-2 N N N N m N m N N N N N N N N N N N N N N N N ry N N N N N N N UUUUU �UU UUU UUUf?NN y T/1 N EUUUUU�UU q 5 U A � ° U m Im v X E O C O N °m °-'E -o O N U _ .o wdX % o m oa�m a a� m w E W z a 9 �� W (U U U N O �a3LL a« m Q :o vvcvd SE.. TUi °a Exmv� E�� ry dm `a `md�"a v y W a R D.� @$ v rnv EEvov vvj from 2013 levels. Since most of the water utility's costs are fixed, the Water Fund is projected to be adversely affected by these increases in program costs and reduction in water sales - based revenues. To evaluate the impact of these changes, three projected revenue plan scenarios were developed to compare the water utility's revenues and revenue requirements through FY 19/20. They include the following: 1. Implement a water rate increase in accordance with the estimated increase of the consumer price index (CPI). This scenario is a baseline option; essentially a status quo or no change alternative. 2. Implement a water rate increase of 9% per year. This increase would improve the Water Fund's financial position over the CPI -only plan, but would limit the City's ability to fully invest in all of its programmed capital improvements, require annual /bi- annual cash flow balancing by prioritization of capital projects and programs, and place additional vulnerability on fund reserves and debt financing capabilities in later years of the projection. 3. Implement a water rate increase of 9% in year one, and 13% per year thereafter. This increase would improve the financial position of the Water Fund, reduce the risk of revenue shortfalls from reduced water sales, fund identified self sufficiency related improvements, and improve net operating parameters that are required to issue new municipal debt that may be needed for future water system improvements. The financial projection for each scenario is based on the City's projected customer account characteristics, the projected O &M expenses, and the inclusion of the City's comprehensive capital improvement program. Additionally, several ratemaking criteria were also integrated in the revenue plan. These key criteria include: • Short term growth is based on the projections indicated in the City's 2010 Urban Water Management Plan and estimated annualized LUCE projections. This is expected to yield a modest increase in new accounts through 2020 • Water usage is projected to reduce by approximately 10% during FY 14/15, and an additional 10% during FY 15/16. Water usage is projected to essentially remain at these reduced levels during the balance of the planning period. • A placeholder for an additional cash infusion of approximately $10 million is programmed for FY 18/19. This may be available through a new debt issuance, potential short -term inter -fund borrowing, or other strategies as determined appropriate by the Finance Department at that time. • With potential rate increases commencing in FY 14/15, no change in rates are proposed for FY 19/20, as this and later years are beyond the five years of rate increases, the maximum allowed by state law, • Rate increases that are greater than inflation are programed to be implemented in January of each year, or as soon as possible thereafter. Implementation of new rates in this time frame will minimize the immediate impact of any rate increase as customer water use is at its lowest during the winter, Water Rate and Revenue Analysis, City of Santa Monica 3-4 ® Target Water Fund reserves have been established based on the sum of the following financial criteria: Operating Reserve — equivalent to 50% of the budget for MWD purchases (3 year running average), with a minimum level of $3 million. ® Capital Reserve — equivalent to 50% of the annual capital program expenditure, with a minimum level of $3 Million, and ® Rate Stabilization Reserve — established at $1 million. ® Combining these three reserves suggest a minimum goal of approximately $7 million in reserves for the Water Fund in any fiscal year throughout the planning period. To demonstrate the potential short and long -term implications of the alternative rate - related approaches, a revenue plan of the City's water utility was developed for each scenario by integrating the ratemaking criteria with the projected water system costs and projected capital improvement program expenditures. The results of these financial projections are provided in the following section. 3.5 Projected Revenue Requirements Using Assumed Rate Scenarios As expected, the results of the revenue plan projections indicate that the baseline option is unsustainable and additional revenues are needed to meet the future obligations of the Water Fund if the objectives of the City's Sustainable Water Master Plan are to be partially or fully implemented under current and projected drought conditions. Several cash flow evaluations and alternatives were prepared with City staff to balance financial performance with ratepayer impact. These alternatives varied the debt financing strategies, alternative capital improvement program phasing, projected growth and water consumption levels, rate increase levels /phases, and rate structure elements such as fixed meter and water usage charges so that short term cash flow obligations were met and provisions for future debt service coverage ratios may be attained, if practical. Based on these evaluations, projected revenue plans for the three scenarios previously described were prepared to project the water utility annual financial obligations and revenues through the 2020 planning period, and assess the ability to sustain positive financial performance., These revenue plans are presented in the following subsections. 3.5.1 Option 1: Projected Revenue Plan - Consumer Price Index (CPI) Based Annual Water Rate Increase (Baseline Option) Table 5A presents a revenue plan using annual rate increase based on the estimated increase in CPI. This percentage is consistent with the City's basis of planning as reflected in its recent budget forecasts. As shown, following actual CPI increases in FY 13/14 and FY 14/15, a projected increase of 2.5% is included in all subsequent years through FY 19/20. The results of this analysis are Water Rate and Revenue Analysis, City of Santa Monica 3 -5 W Q W U a U 3 a W Z LU ui ui a N W J m h n Y LL LL 10p C M O W d N d M Eyh C W � r O M m C M � N b (O , M m E M E C N O 00 O O V lh C r o 0 M M p O C N f9 O M O OOi 0 o g r to r �n � M i r. O O 00 O O O O CJ N h tO � O d V N W� f NM N N N i O N OOi M OI � O d O O pOy�1 N N In0 (my (d IMO M " N � M � O O 00 O O O O CJ N h tO � O d V N W� f NM N N N i O O O M O O W M n O O M n N m g N � �M�O C r NM O M N r W � � p Z M v O o Imo � o O 0 W O O O O M O O W O N n N m C1 C h NM O N r W � � O O O M O W N n N m 9 C m o o_ r Z M v O o O 0 y> O d N C m C m O U a N N ] E u O N Q@ � N O O O N O C �O 6 f N Y1 < OOl r6 r ni N a O D m O a' U V r �yO�N u w v o a m a a a] c n Q c m Z v« w w ]c o o M d N l 8> O ' Q w m w E m y p $ n c°� o C W M O N C) n 6 ij F LL 6 A m D D U a O gyi €1 i O O O O O � N N N a N N i N a n N m C Q Z M v O o v m yr m O U a O M ] E u O N Q@ � N 0 d Z O p C N N 6 m> N a O D m O a' U u w v o a m a a a] c n Q c m Z v« w w ]c o o l 8> U m w m w E m C W e >Eq E2 a `m m 0 n 6 ij F LL 6 A m D D U a O a K C a OI m m a 6 N] O �' O 2 0 W LL C U d. f7 o N v r B R aii n O _ o U v o U F- m a d 3 0 C7 U Q ti l- 0 c = =- LL Fto- ,'S_ n . na .= m'v O10 UK 0 Z Z 2 0 0 Z ma W {� N N a N N i N a n N m C Q Z v O o v m yr m O U a ] E u � E o Q@ � 0 0 d o Z � � E \ � ~ / - /- a § . u � @ / m \ - ® d a k / k . .\ k \; « « - Ln ■ 2. . LLI _ E � \ L.L � � � _ ± k � / ® C ■ z : a « ■ _� � t m « c C a > \ ■ y- ! 2 \ \ \ \ \ \ § \ m , ( \lw sasuadx3 ig senUOAOII I o c N C °m w O O O C m C O b N � b � e O [ °v < M m r M t M i � r O O O C o a m i°n c s S. 8. 0E � ^aa i O O O O O C O O N O O O O Nw v. w O O O O N O O O O bl N N r N M i V (O C M T O w O O O O O N O O O O bl N N r N M N V (O C M T O w O 0 > co N tl h M n no o° N � � 00 O o O o 0 0 M d0 O � t0 O_ tl w °- M� n� O O O O N O O O O bl N N r m r V (O C M T O w O 0 > co N tl h M n no o° O 00 6 O N W f V r O O N N O 00 00 bl N N r m V (O C yy� T O w O 0 > co 6 O N W f V r O O N N O C O V V r m V (O C > co N tl h M O 00 N O C w °- M� n� d o� O N M N K d > yy O O O I,I Or O O O O_ O p O O O & aka$ 119ImW MW �W W > co h M O Q o� o� yy O O O I,I Or O O O O_ O p O O O & aka$ 119ImW MW �W W N N N N N N 8 ad � N i C W C t = U LL Ti K a O v d N U C Z N � M rdj� Q N fn d � d O O z 0 0 H Z i > h M O Q o� o� O N M N K d > d m -0 L .a c 6 c m >°( c U' i a w C C E U N E QW d W>~ d E w m m 00 m a o �E a 9 i6U O z E% W E udi ir. c rn m c U y F7 A y O O 0 �Ur o�U¢N~ z z° z u u z mw r N N N N N N 8 ad � N i C W C t = U LL Ti K a O v d N U C Z N � M rdj� Q N fn d � d O O z 0 0 H Z i .( ! \ \ / 6 biD \ \ � ® . \ _ b % / c ® ■ Al MARTINAMEM 2 � ® \ ) x k f U� m / a \ � ■ ; LLI 2 t � � « « ` ONO ± J ® + 2 \ c / - f ■ — r J ® ® a a ■ / 2 2 y . y $ g ■ ` � « -All ® r z \ \ ........�. 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O O O 00 0 0 0� O 0 0 yr O O a ° O O m u O O O O O m H m aci N w YNj O m .> d w w a i L^ O o °>' o UO c m m o rG d m U O w c 2 a% v - rn N a � w v � d c u O° O O m 00 O O C 0 �0 � O O N O C°J O° r CJ N 0 0 Z of ui w o o r OI am ai .a o m c4 ooh m r' a a m m O o~ U v o c 2 °1 o `- N p V d m (O N �O yN CJ N N w 9 y E O c m Q w a m w O c o LL E `o r N W (9 f9 M N N r W C p M m c a. � _ tt o w$ c c m .¢ v m '3 a O a`r d d m A _ A o t c c m m° n@ m E V °= o Q O 00 O of O O 0 5- 5 ii I°- v m m LL v a c m O U tt 'E m 6 a ° o v O z z z U U z m w o 00 ❑ z U a o o Lo O O O O O O 00 O ul O � ry O O 00 O O W O • by r m - N � N N O U) N Oj N p• qm p' m H O� (O NM N M f9 W df L-1 di m m N W N di m J E N e e p O O O O O O O O 00 O O 0 Qq N O O 00 O O N O a h M N V mm M O M d O �O O n m o d N N 4 1; N N p W (9 m m 7 N� 'm Z O O m N @ U = @ N N C o d n N d LL C @ LL d U IL d W d n N OI LL U? o a cc v N a > u m aci N w m .> d w w a i L^ O o °>' o UO c m m o rG d m U O w c 2 a% v - rn N a � w v � d c u C E2 �0 � > C Z Z d @ n E m r' a a m m O o~ U v o c 2 °1 o K c N LL° m m n U w 9 y E c m Q w a m w O c o LL E `o d w A O n °' `t' �e W m c a. � _ m o w$ c c m .¢ v m '3 a O a`r d d m A _ A o t c c m m° n@ m E V °= o Q > U I°- a C9 U Q w H 0 5- 5 ii I°- v m m LL v a c m O U tt 'E m 6 a ° o v O z z z U U z m w r ❑ z U a t- z � ! IN � . } » a K ) § 7 _ u . ro Q) � ' � f W : ± \ R _ /. y. - \ ■ / ; � � \ � z Z. LL & 0 - % � c % ° / ■ � g z $ c ■ � a a « » » » 4 § 0 0 to m m e , , oimw 9 _e63, __k shown graphically in Figure 5A; demonstrating the inadequacy of this level of increased funding and the projected negative fund balance during FY 16/17. 3.5.2 Option 2: Projected Revenue Plan - 9% Annual Water Ratz Increase Table 5B presents a revenue plan using a 9% annual water rate increase, which is inclusive of CPI. This percentage is less than the annual increases adopted during the 2007 Rate Study, but higher than the average annual CPI increases derived in the Option 1 baseline plan. Similar to the prior plan, following actual CPI increases in FY 13/14 and FY 14/15, a projected increase of 9% is included in all subsequent years through FY 18/19. No rate increase is schedule for FY 19/20 as this is year six of a proposed five year rate plan, The results of this analysis are shown graphically in Figure 5B. While this rate plan provides a much stronger financial performance than the CPI only (baseline) alternative and achieves a positive net operating performance in the later years of the forecast, it does fall short of some Water Fund financial goals and performance metrics. These shortfalls are as follows: • Approximately $5 Million in capital projects would have to be eliminated; a reduction in general system planned capital improvements of 20 %. • The Water Fund is projected to fall short of the adopted minimum annual reserve fund targets in four of the five planning years, and • Net operating revenues may not be adequate to issue the $10 million in new debt forecasted to be needed in FY 18/19. '- 3.5.3 Option 3: Projected Revenue Plan — 9113% Annual Water Rate Increase Table 5C presents ,a revenue plan using a 13 % annual water rate increase. As previously noted, this plan is based on a 9 % increase in the first year, and a 13% increase in each of the remaining four years of the financial plan. The results of this analysis are shown graphically in Figure 5C. As expected, this rate plan provides a much stronger financial performance over the previous rate plans and therefore provides additional financial stability for the Water Fund to meet unforeseen expenses, potential emergency system improvements, and absorb further than projected declines in water demands and water sales revenues. A summary of the benefits of this option follows: The $5 million in capital projects would no longer have to be eliminated from the budget, although there may need to be a small reduction in capital spending in FY 17/18, The Water Fund is projected to fall short of the adopted minimum annual reserve fund targets in essentially only one of the five planning years, and • Net operating revenues should be adequate to issue new debt in the FY 18/19 forecast. Water Rate and Revenue Analysis, City of Santa Monica 3 -6 • 1 _, Based on the findings derived herein, the rate plan that incorporates the 13% increases in water rates is recommended at this time. Proceeding with Option 3, the 9°/x/13% rate plan, provides the City with the most financial stability to adjust to changing conditions and fund the projected programs and projects that will be necessary to reach self sufficiency, promote additional water use efficiency, and remain financially stable during the projected level of continued drought in California. While the magnitude of these increases may vary based on change in costs, demand conditions, or other unforeseen conditions, this rate plan is projected to provide a reasonable estimate of the projected revenue requirements of the City's Water Fund through 2020. Since state law only permits the adoption of rates up to five - years, no rate increase is schedule for FY 19/20 as this is year six of a proposed five year rate plan. As discussed with staff, additional review of the cost components and revenue requirements should be made during the annual budget development and review process. Accordingly the level of the required annual rate increases may differ from the rate and revenue projections derived herein based on those annual findings. A discussion of the City's current and proposed rates and rate structure is provided in the following sections. Water Rate and Revenue Analysis, City of Santa Monica 3-7 Section : Current Water Rates The City provides water service to three primary customer types: single - family, multi - family and non - residential. The current water rate structure was adopted in July 2008, with a focus on increasing customer awareness on water usage in an effort to promote additional water conservation. To that end, the rate structure adopted in 2008 eliminated the bi- monthly fixed service charge so that the water bill became entirely based on actual water usage, clearly a pay for what you use approach. In addition to the elimination of the fixed charge to increase the financial incentive for reduced consumption, new block tiers were also introduced to further support a goal for reduced per capita water usage. For residential customers, the previously existing three tier structure was replaced with a four tier structure. For non - residential customers, a uniform commodity rate was established, applicable to nearly all water use. A second tier for non - residential customers was developed for high end of water consumption in order to provide a strong disincentive for excessive water use. Finally, in 1999, a resolution to annually increase rates by the actual Consumer Price Index (CPI) increase was adopted and has been1mplemented with each annual budget. The City's present water rates and rate structure went into effect on July 1, 2014. It consists of a water volume charge that is charged for all water used by the City's customers. The characteristics of the present rate structure are described below for residential and non- residential customers. • Current Usage Based Rates Residential Customers. The City's current usage based rates (or variable rates) are applied to water usage using a tiered rate structure. • Current Usage Based Rates: Non - Residential Customers. The City's current usage based rates (or variable rates) are applied to water usage using a tiered rate structure by meter size. Tiered rates are commonly used by water utilities to recover the costs of providing water service to its customers. Usage based or commodity rates correlate a customer's costs of service with the quantity of water consumed in any given tier or block to calculate a bi- monthly water bill. As such, a customer's water bill will fluctuate in proportion to the change in water usage for each billing cycle. This usage based' rate element supports a fundamental pay- for -use ratemaking philosophy. The City's current water quantity rates and rate structures are shown in Table 6. Water Rate and Revenue Analysis, City of Santa Monica 4 -1 TABLE 6 CURRENT WATER RATES Single - Family Residential Water Rates ($IHCF) Meter Size Start of End of (Inches) Tier Tier (HCF) Tier (HCF) FY 12113161 FY 13/141`1 FY 14/1 5(d) N/A 1 0 14 $2.43 $2.48 $2.50 NIA 2 15 40 $3.65 $3.74 $3.75 NIA 3 41 148 $5.47 $5.60 $5.62 NIA 4 149 $8.55 $8.76 $8.80 Multi-Family Water Rates ($ /HCF) Meter Size Start of End of (Inches) Tier Tier (HCF) Tier (HCF) FY 121131'1 FY 13114101 FY 141151tl1 N/A 1 0 4 $2.43 $2.48 $2.50 N/A 2 5 9 $3.65 $3.74 $3.75 N/A 3 10 20 $5.47 $5.60 $5.62 NIA 4 21 $8.55 $8.76 $8.80 Non - Residential Water Rates ($ /HCF) Meter Size Start of End of (Inches) Tier Tier (HCF) Tier (HCF) FY 121131'1 FY 13/14101 FY 1411 51d) 3/4" 1 0 210 3.48 3.56 3.57 3/4" 2 211 8.55 8.76 8.80 1" 1 0 210 3.48 3.56 3.57 1" 2 211 8.55 8.76 8.80 11/2" 1 0 465 3.48 3.56 3.57 11/2" 2 466 8.55 8.76 8.80 2" 1 0 870 3.48 3.56 3.57 2" 2 871 8.55 8.76 8.80 3" 1 0 1700 3.48 3.56 3.57 3" 2 1701 8.55 8.76 8.80 4" 1 0 2550 3.48 3.56 3.57 4" 2 2551 8.55 8.76 8.80 611+ 1 0 5280 3.48 3.56 3.57 6 "+ 2 5281 8.55 8.76 8.80 Notes: Source: City of Santa Monica website: Water and Sewer Rates. Customers billed bi- monthly. (a) Rates effective July 1, 2011 (b) Rates effective July 1, 2012 (c) Rates effective July 1, 2013 (d) Rates effective July 1, 2014 • •': Structures As previously discussed, upon completing various comprehensive studies of the City's water supplies and overall water system, the City has embarked on a proactive program to assure the long -term reliability and sustained quality of the City's water system. To meet the objectives of the Sustainable Water Master Plan, additional revenue is needed to meet the City's current and projected obligations. The proposed rate increases are developed as staged adjustments to the current variable water rates. To minimize ratepayer impact, annual increases are suggested to be implemented in January of each year when water usage is typically at its lowest. A discussion of the City's variable rates, development of alternative service and usage charges, development of monthly bills, and a comparison of charges with other communities are provided in this section of the financial plan. 5.1 Fixed and Variable Rate Considerations An important element when considering a change in rate structure is the need to consider the utility's vulnerability to short -term revenue shortfalls. Depending on the utility's rate structure and water supply situation, short -term revenue shortfalls can occur during periods of drought, economic downturn, or wet or atypical weather conditions that reduce water sales. As previously noted, in 2008, the City eliminated the fixed bi- monthly service charge from its rate structure in favor of a structure that was entirely based on a customer's water usage. Because water systems are capital and labor intensive, total system costs for most water utility systems are generally recognized as approximately 60 to 75% fixed. It is for this reason that many water agencies throughout the United States utilize a fixed rate or monthly service charge to complement the variable water usage rate component of its water rate structure. Proceeding in this manner generally improves the financial stability of the water system and enables the utility to operate with lower fund reserves needed to react to rate stabilization and/or conditions of economic uncertainty. It is for these reasons that strong consideration was given to reintroducing a fixed bi- monthly service charge into the City's water rate structure. The recommended rate structure is discussed later in this section of the report. 5.2 Development of Alternative Water Rate Structures and Revised Water Rates Potential adjustments to the City's water rates were developed to support the financial health of the City's water utility while meeting the Sustainable Water Master Plan objectives through the 2020 planning period. The rates and rate structures derived herein are based upon an analysis of future system costs and financial obligations established by the City's Public Works/Water Resources Division and the recommendations from the SWMP. Input from the City's Task Force on the Environment and the SWMP Advisory Committee were obtained throughout the development of the SWMP's self- sufficiency strategies and activities and financial elements contained in this financial plan. Water Rate and Revenue Analysis, City of Santa Monica 5-1 To more thoroughly explore alternative water rates and rate structures, extensive discussions occurred with the Advisory Committee over the last year via group meetings, emails and conference calls. This committee is comprised of: Mark Gold, Chair of the City's Environmental Task Force, Associate Director UCLA Institute of the Environment and Sustainability; Andy Lipkis, Tree People Founder and President; Conner Everts, Southern California Watershed Alliance Executive Director; Ed Osann, Natural Resources Defense Council Senior Policy Analyst, Water Program; Judy Abdo, Santa Monica representative on the MWD Board of Directors, former Santa Monica Mayor and Councilmember; Caryn Mandelbaum, Environment Now Freshwater Program Director, Staff Attorney; and Tracy Quinn, Natural Resources Defense Council Policy Analyst, Water Program. A discussion of the development of alternative water rate structures and water rates is provided in this section of the study. 5.2.1 Development of Alternative Rate Structures As discussed, there was extensive discussion among City staff, the Advisory Committee, and the Task Force on the Environment regarding enhancements that could be made to the existing rate structure, adopted in 2008. The alternative structures that were considered by these groups included: • Modifying the existing tiered block rate structure for changes in water allocation per block, • Increasing the number of blocks, • Altering the current basis of change in price between blocks, • Re- introducing a fixed bimonthly service charge back into the structure, • Consideration for abase level water allocation to be include with the new service charge, • Abandoning the current structure and migrate to a full water budget based rate structure at this time, and • Conformance with costs of service findings. To support the consideration for alternative rate structures, two key areas of service were performed. First, a cost of service assessment was performed to provide a basis for the recovery of system costs from each customer class. Second, account level demand models were constructed so that changes in price, block size, and /or structure could be evaluated based on its impact on the City's customers. To demonstrate the level of effort associated with evaluating and deliberating water rate restructuring, and document the basic customer class related costs of service, a representative sample of the tabular rate structure alternatives analysis and discussion items is included in Appendix B. Appendix B also includes a summary of findings for the water system cost of service analysis. This analysis indicates that the current rate structure continues to provide a reasonable recovery of system costs as allocated among the City's customer classes. Water Rate and Revenue Analysis, City of Santa Monica 5 -2 The result of this process was the development of a small group of alternatives structures that was being considered for dissemination to the City Council for final direction. This short -list of structures included: a) the current structure, b) a structure with the current blocks and a new fixed service charge with a potential water allowance, and c) a structure with new blocks and a new fixed service charge with a potential water allowance. The study group, which included the Advisory Committee, was inclined to recommend item "c" above when on July 15, 2014, the State Water Resources Control Board (SWRCB) adopted an Emergency Regulation for Statewide Urban Water Conservation, requiring the City and other urban retail water agencies implement all requirements and actions of their water shortage contingency plans that impose mandatory outdoor irrigation restrictions. Subsequently, on August 12, 2014, the City Council adopted a resolution declaring a Stage 2 Water Supply Shortage requiring mandatory water conservation to achieve a 20% reduction in water use (compared to 2013). Much discussion ensued regarding the appropriate basis for new drought surcharges or penalties and the associated administrative structure to implement these charges. From this discussion, it became apparent that a concise and understandable community outreach program will be critically important in achieving this drought response goal. Based on these new conditions, additional water rate restructuring discussions evolved and it was believed that the community would benefit from a continuation of the current rate structure, as this approach would produce a more understandable message associated with the rate increase and minimize the potential confusion associated with'drought compliance related charges and structures. As such, no change in 'the current tiered water rate structure is being proposed at this time. The City's current water rate structure is very common in California as it provides a built in mechanism to support water, conservation on a pay for what you use basis, is simple to understand, generally fosters public acceptance, and provides relatively predictable revenues. 5.2.2 Development of Alternative Water Rates and Typical Bills Consistent with the revenue requirements derived in Section 3 - Future Revenue Requirements, three options were derived to generate additional revenues for the Water Fund. These three rate adjustment options are shown in Table 7. As previously shown, the Water Fund's financial stability and funding flexibility increases with the higher rate adjustment options. Typical customer bills are often developed to evaluate the impact of a water rate schedule on a utility's customers. Current typical bills are derived by correlating the current schedule of charges shown in Table 6 with the average or typical consumption values for various customer types. Similarly, projected typical bills are calculated by applying the proposed increase to the usage charge components of the alternative water rate schedule. Table 8 reflects the resulting impacts of the proposed rate increases for the next five years under various rate options. As shown, the calculated typical bills are not projected to increase materially for those customers that meet the reductions in mandated water use. 5.3 Comparison of Monthly Bills with Other Communities In addition to the development of typical bills for City customers, Table 9 provides a comparison of the City's current and proposed bimonthly single - family bill with other local adjacent agencies. Water Rate and Revenue Analysis, City of Santa Monica 5 -3 The comparison is based on an average Single Family residential bi- monthly water usage of 30 HCF. These results are graphically depicted in Figure 9. As shown, the City's current water bill is in the lower third when compared to the neighboring agencies, suggesting that other regional agencies have faced similar water system funding needs in their communities. Moreover, even when the 13% rate increase is applied, the City's residential water bills will compare favorably with the current average rate of the other communities surveyed. A similar comparison for a non - residential commercial account is presented in Figure 10. In addition to this finding, it should be noted that rate surveys often do not provide the full picture of the utility's position. For example, some of the agencies may have additional increases that are in process or being proposed, may have varying water supply program cost, quality, and reliability issues or objectives, and certainly there is often a wide range of variance in local level of service, capital reinvestment, and preventive maintenance considerations. Given the current condition and direction of the City's water utility and water resource requirements, it appears the City's water rates are consistent with other local communities. 5.4 Summary of Findings and Proposed Water Rates In consideration of the financial performance, customer impact, and agency survey findings, the 9/13% increase option is recommended herein. It is believed that this option provides the highest return on investment for the City and its ratepayers. Coupling the projected level of decline in fund reserves and the current uncertainty surrounding water usage -based revenues, this option offers the greatest stability and increases the probability of having adequate funding in place to meet the goals and objectives of the Sustainable Water Master Plan and the associated water use efficiency improvements. This increase is recommended to be implemented as early as possible in 2015 to begin, improving the performance of the Water Fund. In addition to the rate- related adjustments provided herein, the City should continue its methodical review of system costs, water demands, and utility rates. Much of this work can be incorporated as an element of the annual budget process as additional information is being developed and evaluated. Water Rate and Revenue Analysis, City of Santa Monica 5-4 Notes: Adjustments for Option 1 is applied on July 1 each year. Adjustments for Options 2 and 3 are applied in January of each year. FY 14115 FY 15116 FY 16117 FY 17118 FY 18119 Option 1 2.5% 2.5% 2.5% 2.5% 2.5% Option 2 9.0% 9.0% 9.0% 9.0% 9.0% Option 3 9.0% 13.0% 13.0% 13.0% 13.0% Notes: Adjustments for Option 1 is applied on July 1 each year. Adjustments for Options 2 and 3 are applied in January of each year. TABLE 8 EXAMPLES OF TYPICAL BI- MONTHLY BILLS Example of Proposed Bi- Monthly Bill, Single Family Residential, % -inch meter, 30 HCF current average use Description of Rate Options Current Bill, without conservation Option 1, Current Rates, with 20% conservalion(24HCF)") Option 2, 9% increase in unit prices, with 20% conservation(b) Option 3, 13% increase in unit prices, with 20% conservation(`) Year 1 Year 2 Year 3 Year 4 Year 5 $90.63 Current Bill, without conservation $342.30 $72.50 $74.31 $76.17 $78.07 $80.03 $79.03 $86.14 $93.90 $102.35 $111.56 $79.03 $89.30 $100.91 $114.03 $128.86 Example of Proposed Bi- Monthly Bill, Multi - Family Residential, 1 %- inch meter, 77 HCF current average use Description of Rate Options Year 1 Year 2 Year 3 Year 4 Year 5 Current Bill, without conservation $342.30 Option 1, Current Rates, with 20% conservation (62HCF)") $273.84 $280.69 $287.70 $294.90 $302.27 Option 2, 9% increase in unit prices, with 20% conservation (b) $298.49 $325.35 $354.64 $386.55 $421.34 Option 3, 13% increase in unit prices, with 20% conservation(`) $298.49 $337.29 $381.14 $430.69 $486.68 Example of Proposed Bi- Monthly Bill, Non- Residential, 2- inch meter, 192 HCF current average use Description of Rate Options Year 1 Year 2 Year 3 Year 4 Year 5 Current Bill, without conservation $687.23 Option 1, Current Rates, with 20% conservation (154 HCF)(a) $549.78 $563.52 $577.61 $592.05 $606.85 Option 2, 9% increase in unit prices, with 20% conservation(b) $599.26 $653.19 $711.98 $776.07 $845.90 Option 3, 13% increase in unit prices, with 20% conservation(`) $599.26 $677.16 $765.20 $864.67 $977.08 Note: (a) CPI Increase only in all years, effective July 1 each year (b) 9% increase effective January 1 each year (c) 13% increase effective years 2 through 5, 9% increase year 1 effective January 1 each year J J m W J h Q Q W LU J ®_ LU J 0 m � J � m Q LL LL 0 W Z J 0 ca Z_ Q N ®. 2 0 V m � m N y1 M L S. 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II19 aageM leoldhy N N > W m N Q� N G a N J F u u u 0 �n c N a -f0o M s m v m ago 0 J C N m 7001' • 1 • r; • •:: • • • • T N a M r V O � N 0 K� m L Z (6 m � E C o U U C O w V C V d co v U j w V (/7 Q U (n fV � C 0 C U) W w I�-/-� v/ LLJ F- �N O W Z W < V W J � m a C G U E C O (D O v7 N O N ((00 N O d rn m -o o w CO (0 @ � 0 9 LL' W (O o E a C CO a Y Y O a 3 2 E N > O O O 0 N C� > M m 3 J C U N O @ Ei O O O @ P 2 U I- a LL W U d Z o ;Gil Borboa, Water Resources Mgr 3 15th Street Third Floor ;Santa Monica, CA r- IPWS #1910146 N @ W O m W N @ N q (O O O N m 7 N O O M O O (6 O N OM W O° Cp N N (D O d) LLi M, O a W M r a 0 � � N j @ O C (� N° ° m 00 C T L U O O V LL W W IL W O 7 O E M 0 N O pM Z o7 'V N M c U C O W O (D C6 O N O N O N° OD N O ° w G O O N V ° O O V M O_ N O a 0 0 0 ^° t0 Q C I W M N ° (3) O m (n N O O N N N W W O') N V' N E U) co I- ''t M V @ (O 0 't 6J O W p w w (O CO O O V M �i O W M N .0 O W M (O W N OR rn d 0 3 m m CO dM (0 ° @ Q N a> (U Q O O N U J LL LL Q N O M O U Q r-- N N O (O V M 0 N m V � V I� W In - ' N ' O (O N N O (O N ((N r° N .M- rn (, C N W O (7 C 0 0 N O V C- O M M W m° EO V N V O �N N m N (fl � 00 O N N °V U a O M of O 0) N O r C N vi ui o 4 ° L6 ° � CO V to Q N M Q N M N O (0 _ 'C O o7 O M d' D C6 O (p V (D N M @ I- U) O V O O M d V tli 0 0 0 0 0 0 Iq O N N M W W V 10 O OR N W M O > p '� N 0)(D M M O (O LL > a LL N � w O W V° t0 m L @ N O 4 o6 M N : "@J (O (!J W w M 1 � d X X X O O LL p Q > M Q @ G O ¢ C N I m m O m .�. a n m w •C m @ 0 >' o ' C) 0- o� 3 a a "0 e —o 1 h o y a@ E ,@ @ R@ Of i N w N@ O T a) a� a� M 1 >+ O N C 7 O a L U a er Q Om U L 11' h Q o N al >N a E a O U � � U � � N � � a al E Q E O W W N N O O O O N N N N @ ( (N') N N N N ( (O 00 f fl N N O O d � � (0 N C C @ @ C C W a a C C O � O C C C U ( (D N O T T @ @ N N J J w 7 LL 76 CI U p p' m = = E E i i a O n U U a O Q Q O J O N C O O Q C6 U C O @ C @ N y @ @ Co N N N N C w a O v Z Z C a) v Cn N O @ Ei O O O @ P 2 U I- a LL W U d Z o ;Gil Borboa, Water Resources Mgr 3 15th Street Third Floor ;Santa Monica, CA r- IPWS #1910146 N @ W O m W N @ N q (O O O N m 7 N O O M O O (6 O N OM W O° Cp N N (D O d) LLi M, O a W M r a 0 � � N j @ O C (� N° ° m 00 C T L U O O V LL W W IL W O 7 O E M 0 N O pM Z o7 'V N M c U C O W O (D C6 O N O N O N° OD N O ° w G O O N V ° O O V M O_ N O a 0 0 0 ^° t0 Q C I W M N ° (3) O m (n N O O N N N W W O') N V' N E U) co I- ''t M V @ (O 0 't 6J O W p w w (O CO O O V M �i O W M N .0 O W M (O W N OR rn d 0 3 m m CO dM (0 ° @ Q N a> (U Q O O N U J LL LL Q N O M O U Q r-- N N O (O V M 0 N m V � V I� W In - ' N ' O (O N N O (O N ((N r° N .M- rn (, C N W O (7 C 0 0 N O V C- O M M W m° EO V N V O �N N m N (fl � 00 O N N °V U a O M of O 0) N O r C N vi ui o 4 ° L6 ° � CO V to Q N M Q N M N O (0 _ 'C O o7 O M d' D C6 O (p V (D N M @ I- U) O V O O M d V tli 0 0 0 0 0 0 Iq O N N M W W V 10 O OR N W M O > p '� N 0)(D M M O (O LL > a LL N � w O W V° t0 m L @ N O 4 o6 M N : "@J (O (!J W w M 1 � d X X X O O LL p Q > M Q @ G O ¢ C N I m m O m .�. a n m w •C m @ 0 >' o ' C) 0- o� 3 a a "0 e —o 1 h o y a@ E ,@ @ R@ Of i N w N@ O T a) a� a� M 1 >+ O N C 7 O a L U a er Q Om U L 11' h Q o T N Q N r U N 5 O B F, m � Z N E -p F c o � U U C O V d C C U Q) v v p w U) Q LLJ U N N x C � C O W W F- of LLI >Q CO w > O W Z Q W K V a J L R O o 0 d o +� a@i o N L @ E, O O N V4 R U E= a LL W U d Z C G O E w O M O N a) q N O (a a o 0 00 (CO0 @ m 00 a) ca E 3 <7 ro 3 J e 0 o ;Gil Borboa, Water Resources Mgr 15th Street Third Floor ;Santa Monica, CA h I PWS #1910146 N O m d O N @ M M m N y0 m m N U F N N V U U O m 0 0 N_ Lp U U O CO a j @ J O C L 11 n O M m O@ I I U- 4 C6 U N m M V U U 0 U c U O O O 7 M O N O @ M m M O @ O U N N d Q c O c O N O m o d; Q N r 0'i N N N II N U U N LO N O M O a) a n r O U J N N 7 30 > U U- a U J LL Q n O N O O L` U Q N a U d O O M O Nm L M O M (O O n N N m M 'O r O r N O n O O N M O y C N O O w N M O LL w M O V O (Ii 04 w o Q I® r a7 J (Vi a a) m c m O N I @ a) @ a @ U O I o c (1) a { 4 .a Z C i I O M O (m0 N N V M M N F- o M , m 7 CO (O d" O c0, O r N V 0 r N to r 0 N d O N o) LO CO m O) 4 O W N Z 000 ((0 O N m 0 � o V L W m O M OO m L r V (O U m V N m N O o m 't o v � M rn n o IT m CI U) OMi (O O M W W o V LO 04 m N M O T w m u c6 r OJ M Q m M m (D r N O N N 0c) N O N a N I-� LU a r (m0 M -� O W CO N (V N N m o o o m c N (6 't fl o J W m 0) n VO N @ (O (O rn O N O rn m M N N M N O d � N M O N r M Q r m O ((; N V Q r 0 N � o (0 O N o L6 r N fl ^ N O N M O M 1 N (°'o o T rn ' CO CO M LL O O N O W M O N N N C N (rj N 1 a m N p o M i XI x o w m @ N (0 l N j X C O w C C U 3 C LY C 41 m t _ T - 'i O E m 0 E a ac s m � U o w (n J O o �L P Q m O 0 w Li F- Q O rn a w O W � m m @ E E E a) O O N N N N U � � d E N O m m N N O N r r O O N N r r c0 a) C C N O O c p O c O m _ _ O > > @ @ N N J J J L L' ( (¢- U O O, m D E J J a ac L L C D E a O C U a O Q Q O J O to c O_ 0 O Q @ U 0 O @ G @ U) N O @ @ @ @ C J 0 0 N N O @ M Z Z q N N O @ M o ;Gil Borboa, Water Resources Mgr 15th Street Third Floor ;Santa Monica, CA h I PWS #1910146 N O m d O N @ M M m N y0 m m N U F N N V U U O m 0 0 N_ Lp U U O CO a j @ J O C L 11 n O M m O@ I I U- 4 C6 U N m M V U U 0 U c U O O O 7 M O N O @ M m M O @ O U N N d Q c O c O N O m o d; Q N r 0'i N N N II N U U N LO N O M O a) a n r O U J N N 7 30 > U U- a U J LL Q n O N O O L` U Q N a U d O O M O Nm L M O M (O O n N N m M 'O r O r N O n O O N M O y C N O O w N M O LL w M O V O (Ii 04 w o Q I® r a7 J (Vi a a) m c m O N I @ a) @ a @ U O I o c (1) a { 4 .a Z C i I O M O (m0 N N V M M N F- o M , m 7 CO (O d" O c0, O r N V 0 r N to r 0 N d O N o) LO CO m O) 4 O W N Z 000 ((0 O N m 0 � o V L W m O M OO m L r V (O U m V N m N O o m 't o v � M rn n o IT m CI U) OMi (O O M W W o V LO 04 m N M O T w m u c6 r OJ M Q m M m (D r N O N N 0c) N O N a N I-� LU a r (m0 M -� O W CO N (V N N m o o o m c N (6 't fl o J W m 0) n VO N @ (O (O rn O N O rn m M N N M N O d � N M O N r M Q r m O ((; N V Q r 0 N � o (0 O N o L6 r N fl ^ N O N M O M 1 N (°'o o T rn ' CO CO M LL O O N O W M O N N N C N (rj N 1 a m N p o M i XI x o w m @ N (0 l N j X C O w C C U 3 C LY C 41 m t _ T - 'i O E m 0 E a ac s m � U o w (n J O o �L P Q m O 0 w Li F- Q O rn a w O d O O M O Nm L M O M (O O n N N m M 'O r O r N O n O O N M O y C N O O w N M O LL w M O V O (Ii 04 w o Q I® r a7 J (Vi a a) m c m O N I @ a) @ a @ U O I o c (1) a { 4 .a Z C i I O M O (m0 N N V M M N F- o M , m 7 CO (O d" O c0, O r N V 0 r N to r 0 N d O N o) LO CO m O) 4 O W N Z 000 ((0 O N m 0 � o V L W m O M OO m L r V (O U m V N m N O o m 't o v � M rn n o IT m CI U) OMi (O O M W W o V LO 04 m N M O T w m u c6 r OJ M Q m M m (D r N O N N 0c) N O N a N I-� LU a r (m0 M -� O W CO N (V N N m o o o m c N (6 't fl o J W m 0) n VO N @ (O (O rn O N O rn m M N N M N O d � N M O N r M Q r m O ((; N V Q r 0 N � o (0 O N o L6 r N fl ^ N O N M O M 1 N (°'o o T rn ' CO CO M LL O O N O W M O N N N C N (rj N 1 a m N p o M i XI x o w m @ N (0 l N j X C O w C C U 3 C LY C 41 m t _ T - 'i O E m 0 E a ac s m � U o w (n J O o �L P Q m O 0 w Li F- Q O rn a w O 'O r O r N O n O O N M O y C N O O w N M O LL w M O V O (Ii 04 w o Q I® r a7 J (Vi a a) m c m O N I @ a) @ a @ U O I o c (1) a { 4 .a Z C i I O M O (m0 N N V M M N F- o M , m 7 CO (O d" O c0, O r N V 0 r N to r 0 N d O N o) LO CO m O) 4 O W N Z 000 ((0 O N m 0 � o V L W m O M OO m L r V (O U m V N m N O o m 't o v � M rn n o IT m CI U) OMi (O O M W W o V LO 04 m N M O T w m u c6 r OJ M Q m M m (D r N O N N 0c) N O N a N I-� LU a r (m0 M -� O W CO N (V N N m o o o m c N (6 't fl o J W m 0) n VO N @ (O (O rn O N O rn m M N N M N O d � N M O N r M Q r m O ((; N V Q r 0 N � o (0 O N o L6 r N fl ^ N O N M O M 1 N (°'o o T rn ' CO CO M LL O O N O W M O N N N C N (rj N 1 a m N p o M i XI x o w m @ N (0 l N j X C O w C C U 3 C LY C 41 m t _ T - 'i O E m 0 E a ac s m � U o w (n J O o �L P Q m O 0 w Li F- Q O rn a w O { 4 .a Z C i I O M O (m0 N N V M M N F- o M , m 7 CO (O d" O c0, O r N V 0 r N to r 0 N d O N o) LO CO m O) 4 O W N Z 000 ((0 O N m 0 � o V L W m O M OO m L r V (O U m V N m N O o m 't o v � M rn n o IT m CI U) OMi (O O M W W o V LO 04 m N M O T w m u c6 r OJ M Q m M m (D r N O N N 0c) N O N a N I-� LU a r (m0 M -� O W CO N (V N N m o o o m c N (6 't fl o J W m 0) n VO N @ (O (O rn O N O rn m M N N M N O d � N M O N r M Q r m O ((; N V Q r 0 N � o (0 O N o L6 r N fl ^ N O N M O M 1 N (°'o o T rn ' CO CO M LL O O N O W M O N N N C N (rj N 1 a m N p o M i XI x o w m @ N (0 l N j X C O w C C U 3 C LY C 41 m t _ T - 'i O E m 0 E a ac s m � U o w (n J O o �L P Q m O 0 w Li F- Q O rn a w O O rn a w O d m � Z } AE t6 a C U 4% U C O r c O U V U v Q Q W N U 7 U W w F- K (/J LU } Q LL W U {- Z a L" v w MJM � W a r m 0 N N C ,O � D EE > 0 m T ttl O U LL U E `w w �° E rn E CO 2 U m 0 N M Z 000� v C Q C 3 o E J O U O 0 0 0. z E !City of Santa Monica Gil Borboa, Water Resources Mgr., 11212 5th Street Third Floor, Santa N,Nonica, CA 90401 0 a U D N 3 S LL U U 0 E 11 0 c� N C D a� w �s w L o N F- w m 0 a N o � a � � d O E N +' N N m 0 0 3 N J d a U N W >N N II O T T a a m 0 O Z l0 0 4 O� C c x X � x v O 3 a` c 3 v ro m � I r.. v a N a d M O v f6 o C O N O E N a° 0 °� N w m W (O N o ro m a `O O ¢ mo w Y m G0_ 0 6 6 P (9 0 a m 0 O E E .°_: ,C n aUi-a LL L6 m 0 N M Z 000� v C Q C 3 o E J O U O 0 0 0. z E !City of Santa Monica Gil Borboa, Water Resources Mgr., 11212 5th Street Third Floor, Santa N,Nonica, CA 90401 0 a U D N 3 S LL U U 0 E 11 0 c� N C D a� w �s w L o N F- w m 0 a N o � a � � d O E N +' N N m 0 0 3 N J d a U N W >N N II O T T a a m 0 O Z l0 0 4 O� C c x X � x v O 3 a` c 3 v ro m � I r.. v a N a d M O c N Q r a� O � N 0 K (a E � L Z @ N 'Q E C o � U U C O V a) C V y V U N ; p Q M Q uj U V) N � c 0 C O (1) W W LLJ K � F- > LL O W 1 Z Q W i7 � U a J W m CL C c 2 C) t�- E c t� w o 00 coo v, o y m co ,� (p CP, a) a) .- LO oo W C a C Q m M ° a Q Z E C w_ N> O O .n N a) 3� > M M 3 J C U O a) N O N L N E N O O@ r a U F a LL w U d Z T O U 0 w U) LO U F M O M V N a O O N co O U m (-� L N ao C O L 11 O O ONi, O LL U N O U Z m o M f// O C O W O N M ca O m O N - N V O N N O a) N M W M (n N m m (D O a) V N d U O N U @ Q N m C O N LL @ C Q O O m N N @ o E m � n w U O N O O� U c L N w O N ro M rn O O "6 M O ((7 N N O c n N 6 05 Q Q N W O } U) M _N C r 0 7 N N � N (a a � O d > w O G V LL N N W m N v C m N W w .@.) N r � m M 3 O 4@ N @ m U O c a) d I a Z) or� - rn v m v M m 0 N LLi M N 3 N M MO N U W (MO O O N o 7 C LL O (NO (�O V M L) o MN r,� (NO, N cr0, Z w V N r C O M (O N C O O N O N O N N V N N m co cl N O N O N cq U J ? NO (O LL ¢ N N V m M Q r ul m v U N m w j O 6 O D M N � d Oi N v m o m m m N N d N (MO O (o N n @ N (6 N O m N N N N N V N N m m 0 rn Q I w V Q V N N M O N N V 4 N W N O N w @ W (co, (D V (NO, N N M m m M V N a) r N W N M O (O N I- V N LL d M N m O -O N M N y O (0 It N O d d O @ N D M Q =1 � N 41 X 0 @ C l ci X c o w ti d m E E -Fu m m 0 >, a) E N N u@i a E a c w- in U O r C Q m U o uw u. h Q 6 N a V o j @ N c � m � N � `o T U O N Y � � @ E E E a O O N N N m m U w w N a) N E N N r r O O N N r r N C O C U) O O C C O C O C C O O - - a) C __ O > >' , ,(0 a a) N N J J n L L'@ m m m m Y Y t ti U o O o) Y Y= a a L L? O E O U.2 U U E O Q Q a) O) C N J_@ U C O C @ a) O @ @ N N C > a O CD M Z a h O O O N M O a) N O N L N E N O O@ r a U F a LL w U d Z T O U 0 w U) LO U F M O M V N a O O N co O U m (-� L N ao C O L 11 O O ONi, O LL U N O U Z m o M f// O C O W O N M ca O m O N - N V O N N O a) N M W M (n N m m (D O a) V N d U O N U @ Q N m C O N LL @ C Q O O m N N @ o E m � n w U O N O O� U c L N w O N ro M rn O O "6 M O ((7 N N O c n N 6 05 Q Q N W O } U) M _N C r 0 7 N N � N (a a � O d > w O G V LL N N W m N v C m N W w .@.) N r � m M 3 O 4@ N @ m U O c a) d I a Z) or� - rn v m v M m 0 N LLi M N 3 N M MO N U W (MO O O N o 7 C LL O (NO (�O V M L) o MN r,� (NO, N cr0, Z w V N r C O M (O N C O O N O N O N N V N N m co cl N O N O N cq U J ? NO (O LL ¢ N N V m M Q r ul m v U N m w j O 6 O D M N � d Oi N v m o m m m N N d N (MO O (o N n @ N (6 N O m N N N N N V N N m m 0 rn Q I w V Q V N N M O N N V 4 N W N O N w @ W (co, (D V (NO, N N M m m M V N a) r N W N M O (O N I- V N LL d M N m O -O N M N y O (0 It N O d d O @ N D M Q =1 � N 41 X 0 @ C l ci X c o w ti d m E E -Fu m m 0 >, a) E N N u@i a E a c w- in U O r C Q m U o uw u. h Q 6 N a V o j @ N c � m � N � `o T U O w O N ro M rn O O "6 M O ((7 N N O c n N 6 05 Q Q N W O } U) M _N C r 0 7 N N � N (a a � O d > w O G V LL N N W m N v C m N W w .@.) N r � m M 3 O 4@ N @ m U O c a) d I a Z) or� - rn v m v M m 0 N LLi M N 3 N M MO N U W (MO O O N o 7 C LL O (NO (�O V M L) o MN r,� (NO, N cr0, Z w V N r C O M (O N C O O N O N O N N V N N m co cl N O N O N cq U J ? 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O N M a M V N (O M O i I N i N @ C C_ O @ @ n O co N r M cli N LL r G C O E C N v+ a N N O M N O O O L @ d N6 p d E _ M 3 M 3 J C U o d S n ii C7 N C N O X E N O O@ ~ N p C OI w u ' aa____ U_________ Q_____ LL__ •C O N N C 'w� C C ----- __w____3_____U____a_____z______ __M__ �- 0 3v'o. 3 a E?2i m— a —i° ; `o ' @ o , a l E .10 N M i ° ° �` ' o ;Mailing Label a � om U d I w LL U 00 O N Q v (N @ @ O N v o N of cu a) U N (0 L � � � N Z (3 a N N 'B N N C N v (D E N W M O M N o a° v U N c m c a� U 0 0 � U N G m _ d E > i- E? 0 a U LL N NJ N U w I¢- +� m E Q Q o> E o L U W N tq U LL O Q U � c 7 G O W W of N CC �>.. @ Vi C > IY O W @ I— c Z �Q n W ! 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V N Q U Q N c N �}{ (O h V❑ m W O V M M � r V 1n N N r r tmp M N N O to W m O a � d O m h to M w U- N O lL (O N d' N w d r N M N W tmo � 0 of o v w M M N tp M N N w � y d o W C m ri a o ro i m o m e a (n o rn m N c @ w �m E� (D c c� ;Gil Borboa, Water Resources Mgr. m 6 o T a > � > M 11212 5th Street 3rd FLSanta Monica, I o a o o � ;CA 90401 PWS #1910146 SID a er = ¢ ro v 0 ui u Q o N ro E � E E a � c 0 V � � N N E W W W N N W W ( (0 N j_6 d d N N O O N N V V N N r r O O r N m r a° N m (0 G N G G G G O O 6 E ro a a� c c 6 E to L LL r- 65 U U c c O O Q Q U .c 0 @ N U C C N N o G � E m ri a U 1- a M w 0 m Z N (O W to m N N m N _ M M (O F V' F N w N N N N N M N ( It V' N U1 D _ 9 .c tmp 6 (�O, N M p U ❑ O M M c ❑ O O LO 0 N �V Z i Z d N to r N M w ro m c� p tmn O w p O W W W to r O M � U m � o U o m M CO r Z' 'E N (mo o m C ^ t6 ❑ 0) M 'C❑ N tmp M (�O U) v n V M (6 N N m W N W I� m Q @ b r r ❑ W r r r U) El to CO r V W N N 3 v° °a 3 10 tp 'v 0 a N w. 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V N Q U Q N c N �}{ (O h V❑ m W O V M M � r V 1n N N r r tmp M N N O to W m O a � d O m h to M w U- N O lL (O N d' N w d r N M N W tmo � 0 of o v w M M N tp M N N w � y d o W C m ri a o ro i m o m e a (n o rn m N c @ w �m E� (D c c� ;Gil Borboa, Water Resources Mgr. m 6 o T a > � > M 11212 5th Street 3rd FLSanta Monica, I o a o o � ;CA 90401 PWS #1910146 SID a er = ¢ ro v 0 ui u Q o �m E� (D c c� ;Gil Borboa, Water Resources Mgr. m 6 o T a > � > M 11212 5th Street 3rd FLSanta Monica, I o a o o � ;CA 90401 PWS #1910146 SID a er = ¢ ro v 0 ui u Q o U c Q O 2 O 'o K � F- R4F C w V d C V m `) r j F w Q Q N O N LLI N I® o V% G E W N Q C% JM W IL L N >y) N E a � � U � N � O7 m � � E N M M O O r r I I0 < <Y N N @ N N r o r LL C C @ C Nw p o p o co m m T L C O O) — — p E E T T@ N N @ @ J J LL I IQ- U n:i U U a a J J O O Q Q N O) C Q O a C @ U N C C O U O C N @ @ CO N d 3 3 C c E O C c E O L w E O O O @ ri�z U I- a LL u1 �: U a Z @ I E � O � U i `o 6, (Mailing Label @ O6 O r M �O N M of v w u N M M O u � 0 a a ❑ 0 M M m N 0 ❑',. 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E E J J w v v�0 E E + +`• m m p p 0 '�'• N N 0 0 J C N O N N O O O 0 V O O O- r E O C `O r CO 0 r O d O n O a O r E n E Z Z m a a •C E M M O O N � N a'S Q Q Z Z 0 N J 0 N d O C ❑ O w ❑ v � L � u c o ow E _ camfN � T viN M m � 0 T m T M N M M (M O � O ° C15 ° o mm a Z N i O � T - M M r - M tt O N O a -- C D W Cu c~ c6 of t E N O a s U P a- u_ W U (N n CO) 00 O U B N ri E ;Santa Monica, City of, Gil Borboa, Jr., no ;Water Res. Manager, 1212 -5th Street, 3rd �w° !Floor, Santa Monica, CA 90401, PWS# `0 11910146 SD I ; ; a o' .0 0 E u r` N ° 'a w M C � N (D m @N ❑ M 0 N N o r D o f 7j N B y O d N M N ro (D M M W M N 1 a � m � 4 r T 0 U O � a O .E' s d d 3 W m M N N N O 0 m co N M W N W (p MW (O O 'o (0 o o 0 o N r N (D U r O o rn m N (n V ro o N N V N M M (n M rn v rn o QT M (D N 6 6 M m C W m N 7 M r O W �p M LO O M W LO N V o� of v d Qa � r MT 4 N � � r LL N r O Lq 4 LAM- b N N U c U c a c c eS C m r m m CF. m E -1 m o• LL. E O C U N N a� � E = � a O O 'O s _ _ Co U-j O w U O ¢'d 6DujLL:0 -Q, K 0 M N ro (D M M W M N 1 a � m � 4 r T 0 U O � a O .E' s d d 3 W m M N N N O 0 m co N M W N W (p MW (O O 'o (0 o o 0 o N r N (D U r O o rn m N (n V ro o N N V N M M (n M rn v rn o QT M (D N 6 6 M m C W m N 7 M r O W �p M LO O M W LO N V o� of v d Qa � r MT 4 N � � r LL N r O Lq 4 LAM- b N N U c U c a c c eS C m r m m CF. m E -1 m o• LL. E O C U N N a� � E = � a O O 'O s _ _ Co U-j O w U O ¢'d 6DujLL:0 -Q, K 0 K 0 U c M T a C) v N O N tL H (p C L h w H N W O in C a Q m y O 5 U J O N _ O ONi O O N N m E N � m z � _ E D a) N N N N A j N m ¢ U U _ = G N o c E d o, o J E E ¢ M O N O N N ON N N N V O V W OrJ E N m o c � N E a° V a W m N � T (p e 0 V d C m O N C N C Ql N � N C N Ol N m = O N 1 � U a 0) m y D N _ Q w E L U n E O Q N m Q N w o O O m J O C O h LLJ N O O C O G U O B ;O O a N N CO umi 2 Co °-' C M o E 2 m w€ m N'T M E E N (0 N m d O O U Q) U m m 0 Mailing Label i O ' m i N i w V W c L ■ 0 m 0 E 0 w 0 f U C O o d M 0 dN r N N M N N d W 7 N M � M N M N ON 0 dV d N M 6 V cMM N M M M W �v 0 d [O 1 M O) O z M � N N O ro O N 1 M M N N N O O N O N IN V O N N N M O O I Y ¢ M E N G Co M0 O N NO V O n M N Oj r LQ QJ O IN O O +�+ Il N N M O W N O � M N f 5 > G 6 � D 5 i u N u a O N r M(O v O � V c = O O m m O ❑ M o y N M W m m O W Op N 0 oj U) �I v �mo a w o a d Q M r M ❑ o M v o. 3 w (t�O W V N J 2 N O O C'1 N m a a V ro o p w Q C 0 LL M w M , V M O N CO Lq � � M c O V co O cc o N O o i (n U 0. ri m T � E m m L Ai C m a in U 0 0- � QC6C) Lii iF a r m a �o o 0 o � N M 1 O O _ O ONi O O N N m U 5 > G 6 � D 5 i u N u a O N r M(O v O � V c = O O m m O ❑ M o y N M W m m O W Op N 0 oj U) �I v �mo a w o a d Q M r M ❑ o M v o. 3 w (t�O W V N J 2 N O O C'1 N m a a V ro o p w Q C 0 LL M w M , V M O N CO Lq � � M c O V co O cc o N O o i (n U 0. ri m T � E m m L Ai C m a in U 0 0- � QC6C) Lii iF a r m a �o o 0 o � N M 1 �I v �mo a w o a d Q M r M ❑ o M v o. 3 w (t�O W V N J 2 N O O C'1 N m a a V ro o p w Q C 0 LL M w M , V M O N CO Lq � � M c O V co O cc o N O o i (n U 0. ri m T � E m m L Ai C m a in U 0 0- � QC6C) Lii iF a r m a �o o 0 o � N M 1 c O V co O cc o N O o i (n U 0. ri m T � E m m L Ai C m a in U 0 0- � QC6C) Lii iF a r m a �o o 0 o � N M 1 � E m m L Ai C m a in U 0 0- � QC6C) Lii iF a r m a �o o 0 o � N M 1 Z 5 a Z O U O O a Q 0 X_ Z 0 Z J W IL as Q fA w LU LLI LU 0 Q W O it a o m M O 'N 0 m O o 0.0. W o O N W w o N NO ` f7 m0 O w000 mOw hW O O N VIW N O ro N m0 Vo Sr� OMi N w M W M w N O N M m MNW tno o W O000 Moo ro 0 ry w N Wco N W W M w M W w w w w w M W OO O mm 0000 000 NN O cNom O N M O O M M O O O O N a M N Mw O V] h » Nw w w m w LL w w w O N 0 O O N N O O O O O O O m m O C O N � O m m M O O c N O a M O O O m w N co O O O N N N m O W m O m V a O O N N N N O_ i+I O N N M w r 1� C a lV lV 10 O N 0 O O c M O O O O O O w GI W a W O Ol N N O W [9 N O a 1614 N m M O M a m N oN a O O N h 4 N O O N } N w N w Iml1 LL. w w o O O O O O w w O d W N No_m m o o m m o a vm m o 0 0 o W 0 D o w m d m h m o M M m a M N ma M m M W N W W N y W 0 y) aw w Nw w w w w w m o O o W O a W O O o s O O O 0 0 o O w N O O O 1 N O r O V W N a O W M O a N m 0 N fp O N -w m w m 10 Vl fag w Lo cli C4 w w � w N m a O O O O O O O O O O W O O f M O O o w g W O N (ND O N aW am V t^O O W D N N @ N U 0 a 0 v N d W LL= _ U @ o n w_ 0 U m N O D LL 0 m a d N a N `w U N L C lL E a p sam `o� C N u N N oLL aim @ u Dd o >,E EEC msli o d LL o a N «1 .`w• O' ° D= `w U1 m 3 v ? v h `I 0 o. > m 33_o< D¢`�s� � a000� >j N <(DC)r� Q 03 @Q 3 ��p E C J Q @ C �(n r TLD m c V U C N C iN O @ @ @a U O U 0 N N III D D @ N c E - W N cD 3 W o3M �o m v N N cm c C C O_ @ L 01 01D NS W� �� CLLO O > C O @ p O O @ j p y S O DoN oo ODi °Cq E01m W O @ N 1] N LL N U w rn @ @ O 0 ° C v 4g 3 N U D @p L p N °v nw C O _ C O N O E c o Q E m O O ^ T d O - N a � 06 f6u c oay m'n0 m @ E w E D E T a a^'m m0z w O T N Q r@ Y m @ 0 `o 7 0 0 y N �a O j- Tp/1 pN M O N N IL U IJ a N m >m va�i v15 �LL9000F v @ n o'E n N b h m O o m W Qj b M . m N N M W b o m m 0 b N Oi W W h P Nth N m W W pp c P N N O O b I� M tT N O F9 f9 O' b b r 1� (9 ro P W b t9 p r D J ry� N ry b N Q C 5 n O o b o n OI O m O o W o O y O _ N Qm E D O K z @ QO j `b NMW N X 4 � pO 2 J U m @ @ ° d F J C @ m d j O m o 0 0 0 0 o m W O m� o$ m a Q Vi O F � 0 m N N (rNj W to ui m O N mm W � � W Qli O N W tq Ui W yt jp � N W W O @ O LL W i J U roW O W NNON NN D S O'C W f9 f9 Vj N N 3 N� C @ U p V O V C O O n ^ C V@) @ m — @ U Q c 3 O C O U LL m a� b N 12 m LL Q N N CO :O O Q N v 8- 8 W C N "N " NO0a]' o a W W O@ y N D O N J 3 W N p N@ a D O o0 —$� 'L LL U a m@ o@ N N i APPENDIX A TABLE OF WATER CONSERVATION PROGRAMS Simple Water Conservation Program for the City of Santa Monica —April 2, 2013 Residential IIt Clothes Washor Rebate Single Family 880 30 $24,100 $216,600 Residential HCT Rebate Slagle Fancily __. 3562 Z] $14,400 $129,11 Residential WBIC Rebate Single Pnmily 1920 79 $29,300 $263,800 CRY% Cash for Gross Rebate Prng'am Single Fanily 1, 100,000 Square feet S1 - $209,900 $1,889,100 '. Cuy's Cap Irrigation Rebate Program Single family 1,100,000square feet 24 $139,91 $1,259,400 j City's HE NOUIe Rebate Program Single Pamliy SSU,WO squire feat -7 $52,500 $4%2,300 Water Smart Software S% Reduction In Water Use (t,mM' ) - Single Family 3,040costomers 8. $261600 $239,300 118 Rpl Toilets{puect Installation) gffW) -- Multifamily 5,496 13 -- $174,800 $1,577,100 Residential HE Clothes WaMa.'r Rebate Mu10 Family 540 19 $9,800 $$8,600 I Residential gF,T Rebate tviUltl Family 4,000 13 $16,200 $145,400 ' laminar HOw liestdrlors t6156l0bn's MOdlcal CCUtcc (:: V3) Commercial 860 6 $1,500 $13,600 Commercial Fly Vernon) Pump (rebate Commercial 40, S $1,400 $12,600 Commercial Cannectiontess Food Steamer Rebate Commercial 2 1 $100 $500 - CommorUai Zero Water Urinal Rebate Commercial A - 011 $25 $1.00 Canmerciol Uitm=law Vohrme Urinal Rebate Commercial 540 8 $3,500 $31,100 Commercial CoudmflMly Controller Rebate - Com..."Cut 2... 4 - $0 50 s Conunorpoi HE9 Rebate Connnerolal 200 5 52,500 $22,940 ' CH Cooling Tower Troannm4- Zero Bimwlown(WreJ) Commercial - 1 - 1 $200 $1,41 Coin -0peratad Laundry Machine Retrofit be W) Commercial AS 360 33,500 ,.. $31,600 !, NETS far 3tJOiri slNedlFai LYnlcr {Ntit2} Commercial 10 0.1 $100 41,100 _... _tern.. .teen.. 0.125 gpf Urinals for St. John's Medical Center it,e +.;'} Commercial 7 - 0.1 $40 - $000 1.5 goal Faucet Aerators for it. iahns Medual Center (NEVI) Commercial 158 - 0.3 $800 $61900 StdMUSG Audits& Retrofits - Assumes 5'1$ Reduction in Total Institutional Maintained through 5 $94,400 $849,400 Source: Sustainable Water Master Plan Notes: HE — High Efficiency, HET — High Efficiency Toilet, WBIC — Weather Based Irrigation Controller .. MM my 1-1 N W 2' U m F w n G w � J a� �r 2 J Q Q F w K U 0 E � D N N N 12 d C Z Z Z Z L _ C o E m Q Q W d m `v ~ b E L b d a N N % N s¢ `v r d U o Z L y L c � V E I ♦O N m J K l v LL E C G _ o Q f9 � tl3 m� W > z � o d Ll E °a N � yy Ei� n Q Nw Mm � nw w n ; m w J d v Eu K ° Q Nm mw N o w m E m b N + Eu E m Q Nm v mm w °w 5 d + v °r co r O U c w `w_ i- o U f" W m d L d A D N N N 0 0 0 0 Q T d C Z Z Z Z L _ C o E m A y ~ Q N a y. n Q Q W m `v s s s a s a d d w 0 N o i c w `w O U d O a .M. Q a d N d 'o ate. Q Q v N 7 Q Q d u) °° a a° a n q° a °sB a s °n n 9 n n 5 a n 9 9 .- n 9 a 9 M [Ni) M M M M M CN] Cml (NJ M m Cm'1 M° Cl M m M M m M M m M m� N (O m N N m N m m m m ci ri m ri ei of ri ri of ri m o » mw m m m in w w m O1m w m m w m m m m m m m m m m m m m. m D 2 0 2 n o 0 C N N V m ^ N N W `d o U Y N N ^2 N d W S m `w 'c N d 9 01 N m L 0 E a a v a v E H U v W 3 a m `v 3 v N d 3 19 N 0 U o 'o Z N 0 N N z i9 N d H N_ W m `v ~ b d a N N % N s¢ 4 Q¢ r d U Z Z Z Z L y L c � V E m d O a .M. Q a d N d 'o ate. Q Q v N 7 Q Q d u) °° a a° a n q° a °sB a s °n n 9 n n 5 a n 9 9 .- n 9 a 9 M [Ni) M M M M M CN] Cml (NJ M m Cm'1 M° Cl M m M M m M M m M m� N (O m N N m N m m m m ci ri m ri ei of ri ri of ri m o » mw m m m in w w m O1m w m m w m m m m m m m m m m m m m. m D 2 0 2 n o 0 C N N V m ^ N N W `d o U Y N N ^2 N d W S m `w 'c N d 9 01 N m L 0 E a a v a v E H U v W 3 a m `v 3 v N d 3 19 N 0 U o 'o Z N 0 N N z v L Y U N N x0+ K a) 'w ro c 6 Y Q 9 w r r d t A � U U 'c `y O 'L C A � C N Ui m O N U R U Q H O c O N �6 a1 O. E O U d L V U N v L d Q N a L sr O 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 N N N m 1° N °M N 67 4-J VT 69 Ui fy Ey yy (� .c U >a x0. O Io M M O O M >� O O � M M N O (fl M (`M O f00 o M M �O O 69 69 f9 69 ffl V3 V-7 64 m N V (n M N r C O N N m N N N L a U L � N -O O X LL O LL n N ai U � 3 � N E rn � U It a N X a LL x a �� LU Q�e»6s�i W " orn 2Qct°O M .. N N J M O d' O W O M M n m 0 M O N a0 0 0 0 of O N O O N M It r r m O r N 69 fA N V 693 69 64 64 II LL d O O O O O Q N N 69 69 69 wr N M 6H u LL e N c' M O N r N V N O 00 CMO, O r � � 64 E9 69 > 64 69 69 E1 7 69 64 64 Y C U U � V VT 69 �. � fA Efl Vi 64 fA f13 69 69 R T LL C r S O 0 0 0 0 0 0 0 0 0 0 0 N 07 M (n M M M M — --- a1 a) N U N N C C C G C C m m U U m U U @ m o o R� aroaaa)a aa�aaa N co m N 0 m N N m O E E > O a E ESQ S 3 E E > Q E E E E E E U U) U U U U N T U m T E C a N LL @ N O LL N N C O U Z sr O 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 N N N m 1° N °M N 67 4-J VT 69 Ui fy Ey yy (� .c U >a x0. O Io M M O O M >� O O � M M N O (fl M (`M O f00 o M M �O O 69 69 f9 69 ffl V3 V-7 64 m N V (n M N r C O N N m N N N L a U L � N -O O X LL O LL n N ai U � 3 � N E rn � U It a N X a LL x Santa Monica Demand Model to Evaluate Block Structure for Single Family Water Rates IVJ 1283015'00 ALT 1 Totals: ::1,308,0$0 $j 100.0% VellOvc cells are manually inputted values. 1,309,6965. 100% Variable Revenue: $4,637,789 Calculated increase Variable Revenue: $5,055,190 Fixed Revenue: $0 Assuming No Conservation Fixed Revenue: $0 Total Revenue: $4,637,700 9.0% Total Revenue: $5,055,190 100.0% Estimated Change in Hi-Monthly BIII by Usage (Both Fixed and Quantity Charge) Average BI-Monthly Usage (Hot n a Hcf Chan eln Bill Existing Rate Structure Ye of Total DU Block Rana Het COrreni Slruelore 13-11 Rate Structure Proposed Block Rate Structure $) I% ) 6 $1488_ $16.22 2011 90% 413 5.4% 413 820 988 1751 2947 3155 3897 4762 5441 Will 6588 685] 7152 7335 ]363 ]429 ]474 ]511 ]551 ]569 7585 7598 7604 1 7616 7624 7635 7842 ]646 ]fi48 7649 54% 10.7% 12.6% 22.9% 38.5% 412% 50.9% 82.3% ]1.1% 78.7% 06.1% 8b6% 938% 95.9% 96.3% W.1% 97.7% 982% 98.7% 99.0% 902% 99.3% 99.4% 99.6% 99.7% 99.8% 99.9% 100.0% 100.0% 1000% 9 $22.32 $24.33 Projected % 407 9.3% Water Rate $24.80 Less Than Annual % Annual Rate (per Annual Greater Less Than Rate (par % Rata Unit Usage Annual Projected Annual % Annual Blocks $5.14 or Tgoual Usage Usage Hcf) Revenue TM1an or Tgoual Hcf ] Chung. Reduction Usage Annual Revenue Revenue 9.014 742 9.7 04 Hcf' $94.56 $103.0] 58.51 9.0% 885 11.3% 35 $113.26 Hcf' Usa a 9.0% 6]9 Blocks 14 566,912 43.3% 52.48 $1,405943 0 14 $2.]0 9.0% 0.0 % 58fi,912 43.3% $1532,4]8 30.3% Block2 FThad __ 40 90% _ 396% $3.]4 51,93],]]0 14 40 54.08 9.0% 0.0% 518,120 39.6% $2,112.169 41.8% elack3 9.0% 148 _518,120 213,282 183% 55.60 $1,194,381 40 _ 148 28 0% 0.0% 213,282 163% $1,3018 }fi 25.8% Block4 0.9% 10000 11381 00% 58.76 $99,695 148 10000 0% 00 11361 0.0% 5108,688 2.1% Block6 $439.96 10000 0 0.0% $876 $0 10000 10000 $51008 OA% 0 0.0% $0 0.0% Block6 $47.16 10000 0 0.0% 56]6 $0 10000 10000 9.0% 0% 00% 0 0.0% $0 0.0% Block} 8 10000 0 0.0% 50. }6 $0 10000 10000 3$M59,0% 0% 00% 0 0.0% 50 00% Biock8 ifi0 10000 0 90% 9.0% $0 10000 IODDO $T 10 6fib $1204.10 0.0 %- 0 0.0% so 0.0% $1,411.28 10000 Io00o 0 00% _ 0.1°h so Uwaii IODOD 5146.73 9.0% o.0% 0 90% 50 00% Block l0 _ 10000 10000 _ 0 0.0% _ 50 10000 10000 0 0.0% $0 Oo% Fixed Chains BI- MOnthivIOU: $0.00 50.00 Totals: ::1,308,0$0 $j 100.0% VellOvc cells are manually inputted values. 1,309,6965. 100% Variable Revenue: $4,637,789 Calculated increase Variable Revenue: $5,055,190 Fixed Revenue: $0 Assuming No Conservation Fixed Revenue: $0 Total Revenue: $4,637,700 9.0% Total Revenue: $5,055,190 100.0% Estimated Change in Hi-Monthly BIII by Usage (Both Fixed and Quantity Charge) Average BI-Monthly Usage (Hot T Ica18i- Moothl BIII Chan eln Bill No. of DU Ye of Total DU continues. COrreni Slruelore 13-11 Rate Structure No. of BU %of Total DU $) I% ) 6 $1488_ $16.22 $1.34 90% 413 5.4% 413 820 988 1751 2947 3155 3897 4762 5441 Will 6588 685] 7152 7335 ]363 ]429 ]474 ]511 ]551 ]569 7585 7598 7604 1 7616 7624 7635 7842 ]646 ]fi48 7649 54% 10.7% 12.6% 22.9% 38.5% 412% 50.9% 82.3% ]1.1% 78.7% 06.1% 8b6% 938% 95.9% 96.3% W.1% 97.7% 982% 98.7% 99.0% 902% 99.3% 99.4% 99.6% 99.7% 99.8% 99.9% 100.0% 100.0% 1000% 9 $22.32 $24.33 $2.01 9.D% 407 9.3% 10 $24.80 $2].03 $223 9.0% 146 10 %� V1 $34]2 _ $3784 $3.12 9.0% 785 103% 20 $57A6 $62.30 $5.14 9.0% 1198 116% 21 $66.38 $5.48 9.0% 208 27% 25 _$60.90 $]5.86 _ $8269 $6.83 9.014 742 9.7 04 30 $94.56 $103.0] 58.51 9.0% 885 11.3% 35 $113.26 _ $123.45 $10.19 9.0% 6]9 8.9% $131.96 $14384 $1788 90% 5}7 7.5% $171.16 $188.55 $15.40 9.0% 570 Z5% $499.16 $21].00 $17.92 90% 269 35% $243.98 $265.92 $21.96 90% 295. 3.9% $208.]6 $314.75 $25.99 9.0% 183 24% $299.96 $326.98 $2]00 9.0% 28 0.4% [40 $32].98 $357.48 $2952 90% 66 0.9% $355.9fi $388.00 $32.04 9.0% 45 08% $383.96 $418.52 $34.56 9.0% 37 OS% $439.96 $479.56 $39.60 90% 40 95A $46].95 $51008 $42.12 90% 1B 0.2% $5]1.12 $47.16 90% 18 0.2% _$523.96 5551.96 5801 fi4 $49.68 9.0% 11 0.1 °/t 120 $57996 $632.16 $52.20 gou 8 0.1% _ 130 $635.96 $693.20 55724 9.0% 12 0.2% _ 140 $691.96 $]54.24 _ 562.28 90% 8 0.1% ifi0 584188 $91].65 $]5.71 9.0% 11 0.1% 190 $T 10 6fib $1204.10 $99.42 9.0% ] _ 0.1 °A 225 $1,411.28 512].02 9.0% 4 _ 0.1°h 250 $1,63028 _$1,538.30 5146.73 9.0% 2 00% 125D - -- _$1.777.01 - - - -- - --. - -- _ 1 00% Santa Monica Demand Model to Evaluate Block Structure for Single Family Water Rates W31203015.00 ALT 2 Estimated Change in BI- Monthly Bill by Usage (Both Fixed and Quantity Charge) Average Bi- Monthly Usage Hcf Block Rana Hof Chang, In Bill (6J 1%1 Eaton. , Rate Structure %of Total DU Block Rana Hcf Current Structure Block Rate structure Proposed Block Rate Structure %of Tolal DU 6 $14.08 $24.88 $1900 67.2% 413 201t 413 820 966 1751 2947 3155 3097 4762 5441 6010 658B 6857 7152 7335 7363 7429 7474 7511 7551 7589 7505 7596 7604 7616 7824 7635 7642 7846 7848 -ma-L-1-00 5.4% 10.7% 12.6% 22.9% 365% 41.2% 50a% 623% 71.1% ]8]% 86.1% Bob% 935% 95.9% 96.3% 97.1% 9]]% 982% 90.7% 998% 992% 99.3% 99.4% 99.6% 99.7% 99.8% 99.9% 100.0% 100.0% .0% 9 $22.32 $32.32 SlD90 44.8% 407 Projectetl % $24.80 $3480 $1090 40.3% Rate Create Less Than Annual %Annual Rate (par Annual Greater Less Than Rate (par %Rate Unit Usage Annual Projected Annual %Annual 21 58090 ks Than or Equal Usage Usage Hcf) Revenue Than or Tgoual Hot Change Reduction Usage Annual Revenue Revenue 10.6% 855 11.3% _ 35 $11326 Hef' $10.00 0.0% 679 8.9% 40 $131.95 $141.96 $10.00 Hcf° Usage 75% 47 $1]1.16 $181.16 ks 5.8% 14 566,912 43.3% $248 $209.16 D 14 $2.40 0.0% O.D% _568,912 .k2 510.00 4.1% 295 3.9% fib $288.76 40 510,120 39.6% $3]4 _$1,405,943 51,93],]]0 14 40 $3.]4 0.0 °a O.D% 518,120 396% 51,93],l]0 4L8% $337.96 $10.00 k3 66 148 213,282 _ 16.3% $5.60 $1,194,381 40 148 $5.60 00% 0.0% 213282 163% $1,194,301 37 0.5% 95 [Wler k4 $449.96 10000 11381 0.9% $91fi $99,895 140 10000 $0]6 0.0% 0.0 °0 11,381 0.9% $99,695 2.1% $10.00 1.9% k5 _ 0.2% t000D 0 $561.98 $876 $0 10000 ID000 $8.76 _ OB% 0.0% D 90% $0 O.0% 180 S635,98 k6 *4148 10000 _ 12 0.2% - $B]6 -$0 $704.96 ta00D $e]0 D.0% Oo/ 0 O.o% 50 Do% 12% 11 k] 190 10000 $1,11468 $10.00 $0.]6- $0 _10000 10000 10000 $876 90% 00% 0 0.0% 50 OA% $164026 ke O6% 10000 0.0% >250 $0 10000 10000 1 0.0% 0.0% 0 0.0% $0 0.0% k9 10000 $0 1W00 10000 _ 00 °h 0 O.00 _ SO k /0 10000 SO 1D000 10000 0 OB% $0 90% Charge BI- MOnIM1I !OU : $0.110 510.00 Totals: 1.309,696 ':" 100.0% 1,309,696`:. -. 100% Variable Revenue: $4,63],]89 Calculated Increase Variable Revenue: $4,631,789 Fixed Revenue: $0 Assuming No Conservation Fixed Revenue: $]2],398 Total Revenue: $4,63],]89 15.7% Total Revenue: $5,365,185 100.0% Yellow cells are manually inputted values. Estimated Change in BI- Monthly Bill by Usage (Both Fixed and Quantity Charge) Average Bi- Monthly Usage Hcf Typical Bf-- onthly Bill Chang, In Bill (6J 1%1 No. of OU %of Total DU Cumulative Current Structure Block Rate structure NO.of BU %of Tolal DU 6 $14.08 $24.88 $1900 67.2% 413 5.4% 413 820 966 1751 2947 3155 3097 4762 5441 6010 658B 6857 7152 7335 7363 7429 7474 7511 7551 7589 7505 7596 7604 7616 7824 7635 7642 7846 7848 -ma-L-1-00 5.4% 10.7% 12.6% 22.9% 365% 41.2% 50a% 623% 71.1% ]8]% 86.1% Bob% 935% 95.9% 96.3% 97.1% 9]]% 982% 90.7% 998% 992% 99.3% 99.4% 99.6% 99.7% 99.8% 99.9% 100.0% 100.0% .0% 9 $22.32 $32.32 SlD90 44.8% 407 53% 10 $24.80 $3480 $1090 40.3% 148 1.9% 14 $34]2 _ $44.]2 510.00 289% ]85 10.3% 20 $5].16 $8].16 $10.00 1]5% 1198 _15.6% 21 58090 $70.90 $10.00 _ 18.4% 208 2.]% 25 $85.86 $1080 13.2% 742 9.7% 30 __$75.88 $94.56 $10406 _ $10.00 10.6% 855 11.3% _ 35 $11326 $123.26 $10.00 0.0% 679 8.9% 40 $131.95 $141.96 $10.00 7.6% 57 7 75% 47 $1]1.16 $181.16 $10.Oo 5.8% 570 _Z5% 52 $199.16 $209.16 $10.00 _ 50% 269 3.5% 60 $243.96 $253.96 510.00 4.1% 295 3.9% fib $288.76 $29836_ $10.00 3.5% 103 2.4% 70 $299.96 $309.96 $10.00 8.J% 28 0.4% 75 $32796 $337.96 $10.00 10% 66 0.9% _ 80 $355.98 $36596 $10.00 28% 45 _ 0.6% 05 $383.96 $393.96 $10 Do 26% 37 0.5% 95 $439.96 $449.96 $1000 2.3% 40 0.5% 100 $467.96 $4]].96 _ $10.00 2.1% 10 9291G 110 $523.96 $533.96 $10.00 1.9% 16 _ 0.2% 115 $551,9fi $561.98 $10.00 1.8% 11 0.1% 120 $579.96 $589.96 $10.00 1.7% 8 0.1% 180 S635,98 $645.96 $1000 1.6% _ 12 0.2% _ 140 $691.90 $704.96 $1900 _ 1.4% 6 0.1% 160 $841.88 $85L88 _ $10.00 12% 11 0.1% 190 $1,104.60 $1,11468 $10.00 09% _ 7 0.1% 225 $1,411.28 $1,421.20 $10.00 0.7% 4 0.1 % 250 $164026 $1000 O6% 2 0.0% >250 _$1,630.28 - - -- - - - -- - - -- - - - -- 1 0.0% Santa Monica Demand Model to Evaluate Block Structure for Single Family Water Rates KIJ 1283015.00 ALT 3 Tends: :1,309,6986 100.0% Yellow cells are manually inputted values. 1,309696,7; 100% Variable Revenue: $4,637,789 Calculated Increase Variable Revenue: $4,174,610 Fixed Revenue: $0 Assuming No Conservation Fixed Revenue: $1,091,093 Total Revenue: $4,037,709 18.5% Total Revenue: $5,265,104 10D.0% Estimated Change in Bi- Monthly BIII by Usage (Both Fixed and Quantity Charge) Average Bi- Monthly Usage (Hcf) Block Rana Het Chan ein Bill Existing Rate structure otal Block Rana 110 Current structure Block Rate Structure Pro osed Black Rate Structure %of Total DU $) Water Rate Blocks Greater Than Less Than °f iu al 2011 Annual Usage Hal' % Annual Usage Rate (per Het( Annual Revenue Greater Than Less Than or Banat get. (par He() % Change CM1an9e Red Usage Reduction' cleared Annual Usage Het' projected Annual Usa a Annual Revenue %Annual Revenue _ 10 14 566,912 43.3% 52.48 51,905,993 D 14 $2.23 - 10.0% 0.0% 566,912 43.3 °0 $1,285,349 30.3% Block $66.44 40 518,120 396% $3.74 $193],]]0 14 40 533] -10_0% 0.0% 518,120 39.6% $1743,993 41.8% 5].41 148 213,282 16.3% $580 $1,194,3f11 40 148 $5.04 - 10.0% _ o.0% 213,282 16.3% $1,0]4,943 258% 6]9 10000 11381 _ 0.9% $8.]8 59.9,695 148 10000 $]88 - 100% 0.0% 11,381 0.9 °0 589,]26 2.1% 5 10000 0 _ 0.0% 58.]8 $0 10000 10000 $].BB -10.0% O6 /° 0 0.0% 50 D.0% 6 IFIxedhaMe L 1c000 0 0.0% $a 7fi $0 _ 10000 10000 $].88 -10.0% 0.0% 0 0.0% $D D.0% 7 66 faces 0 0.0% $876 $0 _ 10000 10000 $1.88 - 10.0% 0.0% 0 00% _ $0 OD% B 95 I000O o 0.0% -6.6% $0 10000 100 0 $467.96 $436.16 0.0% 0 0.0% $0 0.0% 9 $486.56 10000 0 0.0% 0.2% _ 50 10000 10000 - $40.20 4.3% 0.0% 0 0.0% $0 0.0% 0 -7.4% 10000 0 0.0% $635.96 $o 10000 10ODD 12 0.2% 140 0 0.0% $0 0.0% al IDU: 0, 1°b 160 $000 $77269 - $69.19 -8.2% 515.00 D.1% 190 $1,104.68 $1 OD9.21 - $95.4] _ -se% Tends: :1,309,6986 100.0% Yellow cells are manually inputted values. 1,309696,7; 100% Variable Revenue: $4,637,789 Calculated Increase Variable Revenue: $4,174,610 Fixed Revenue: $0 Assuming No Conservation Fixed Revenue: $1,091,093 Total Revenue: $4,037,709 18.5% Total Revenue: $5,265,104 10D.0% Estimated Change in Bi- Monthly BIII by Usage (Both Fixed and Quantity Charge) Average Bi- Monthly Usage (Hcf) Typical Bi- MOnlhl Biil Chan ein Bill No. of DU otal umulative Current structure Block Rate Structure No. of DU %of Total DU $) Mt 6 $1488 $28.39 $13.51 908% 413 413 820 966 7]51 2947 3155 389] 4]62 r22 5441 6018 6588 685] ]152 7335 7363 7429 7474 7511 7551 7569 7585 7596 7604 7616 7624 7635 7642 7846 7648 ]649 54% 10.7% 12.6% 22.9% 305% 41.2% 50.9% 62.3% ]t.t% 7B.7% 8B.1% 09.6% 935% 95.9% 96.3% 97.1% 97.7% 98.2% 98.7% 99.0% 99.2% 99.3% 99.4% 99.6% 997% 99.0% 99.9% 100.0% 1000% 100.0% 9 _ $22.32 $35.09 $12]] 5].2% 40] _ 10 $24.80 $3].32 $1252 505% 146 14 $34]2 $4625 $1183 33.2% ]85 % 20 55].16 $66.44 $9.28 16.2% 1196 % 21 560.90 $69.81 $891 14.8% 208 % 25 5]586 $83.2] 5].41 9.8% 792 % 30 $94.56 $100.10 $5.54 5.9% 885 % 35 511326 $116.93 $387 3.2% 6]9 % 40 $131.96 $133]6 $1.80 1.4% 577 % 47 $1]1.16 $169.04 -$2.12 -1.2% 570 % 92 $19434 -$4.92 -2.5% 269 % 80 _$199.18 $243.96 $23456 -5940 -39% 295 % 68 $288.76 5274.88 -$1388 -4.8% 183 2.4% 70 $29996 $284.96 - $15.00 -5.0% 28 0.4% 75 $327.96 $310.16 41TUO -5.4% 66 0.9% 80 $355.96 $335.36 420 00 -5.89A 45 0.6% 85 $303.96 $360.56 - $2340_ -6.1% 37 0.5% 95 $439.96 $410.96 -$2900 -6.6% 40 05% 100 $467.96 $436.16 - $31.80 -6.8% 18 01% 110 $5238fi $486.56 _ - $37.40 -T1% 16 0.2% _ 115 $551.96 $511.76 - $40.20 4.3% 11 0.1% 120 $579.98 $536.96 44100 -7.4% B 0.11A 130 $635.96 $587.36 - $48.60 -7.6% 12 0.2% 140 $69198 $637.76 - $54.20 -7.8% 8 0, 1°b 160 $841.88 $77269 - $69.19 -8.2% 11 D.1% 190 $1,104.68 $1 OD9.21 - $95.4] _ -se% 7 0.1% 225 $1,41128 $1285.15 _ - 5126.13 -8.9% 4 OA% 250 $1,630.26 $1,48225 - $148.03 -9.1% 2 _0.0% >250 - - - -- -- ----- ---- 1 0.0% Santa Monica Demand Model to Evaluate Block Structure for Single Family Water Rates KIJ 1263015.00 ALT 4 New Blocks, No Fixed Rate Totals: . 1,309,096 100.0% Variable Revenue: $4,63],]88 Fixed Revenue: $0 Total Revenue: $4,637,709 Yellow cells are manually inputted values. Estimated Change in Bi- Monthly Bill by Usage (Both Fixed and Quantity Charge) Average BI- Monthly Usage (Hot))) Block Range Hcf Chan eln Rill ($) %) Existing Rate Structure %of Tr- DU Block Range (Hai Current 8irueWre Black Rate $term Proposed Block Rata Structure 6 $14.88 Water Rate Blocks Greater Than Less TM1an or Toovai 2011 Annual Usage Hcf r %Annual Usage Rate (,or Hap Annual Revenue Greater Than Less Than or Equal Rate (par Het) %Rata Change Unit Usage Reduction Projected Annual Usage Het' % Projected Annual Usage Annual Revenue %Annual Revenue Black 0 14 566,912 43.3% $2.98 $1,405,943 0 14 $2.64 6.5% 0.0% 566912 43.3% $1,49],329 2B.0% Block 14 40 518,120 398% $374 $1,937,770 14 30 $404 8.0% DA% 369,786 29.8% $15]4,425 29.5% Black3 40 148 213,282 16.3% 7.4% $1,194381 30 B8 $5]i 20% Be% 2]6,828 21.1% $1,581239 296% Block 148 10000 11,381 09% _$5.60 $&76 $99,895 GB 198 $0.94 2.0% 0.0% 84,789 4.9% 55]0,899 $22].2] Blackb 10000 1.0.0.0.0 0 00% $8.]8 _ SO 148 10000 $9]4 113% 0.0% _ 11,381 0.9% $110,841 Block6 10000 1000.0 0 0.0% $36.5] $0 10000 t000U 75 5327.98 oe% 0 0.0% $0 0.0% Block? 10000 10000 0 Om% _ $0 _ 10000 10000 _ $8660 0.0% 0 O6% $0 0.0% peak 10000_ 10000 0 0.0% fee $0 10000 10000 291% 10 _ 0.0% a _ 0.0% $0 0.0% cloche 10000 10000 a 0.0% $738.61 _ $0 WOOD _ 10000 0.1% 120 00% - 0 0.0% 50 06% cloak'% "000 10000 0 90% 372% s0 10000 10000 $891.96 $961.99 $270.03 0 0.0% so 90% Fixed Charge BI- MonthlylDH: $1,150.35 $308.47 $0.00 11 0.1% 190 $1,104.68 $33].85 Max, 7 0.1M _ 225 Totals: . 1,309,096 100.0% Variable Revenue: $4,63],]88 Fixed Revenue: $0 Total Revenue: $4,637,709 Yellow cells are manually inputted values. Estimated Change in Bi- Monthly Bill by Usage (Both Fixed and Quantity Charge) Average BI- Monthly Usage (Hot))) T 100181 -MOof ilv Hill Chan eln Rill ($) %) No. of DU %of Tr- DU Cumulative Current 8irueWre Black Rate $term of %of Total BE 6 $14.88 $1585 $0.97 6.5% 413 5.4% 6857 7152 7335 7363 1429 7474 7511 7551 7569 7585 7596 7604 7616 7624 7635 7642 1848 7648 ]649 5.4% 10.7% 126% 17.5% 22.9% 41.2% 51l 62.3% 71.1% ]8 .7% 85.1% 096% 93.5% 95.9% 963% 97.1% 97.7% 98.2% 90]% 99.0% 99.2% 993% 99.4% 99.6% 997% 988% 99.9% 100.0% 100.0% ta0,0% 9 $22.32 $2317 _ $1.45 65% 407 53% 10 $24.80 526.41 $161 65% 146 1.9% 12 $29.76 $3169 $1.93 6.5% 371 4.9] 14 $34.72 $36.98 $226 65% 414 _ 5.41 21 $60.90 $65.25 $4.35 7.1% 1404 18.45 25 $7566 $5.55 7.3% 742 9.7] 30 30 $94.58 _$81.41 $10160 $704 7.4% 865 11.32 35 $11326 $130.16 $16.90 14.9% 679 8.91 40 5131.96 $158.72 $26.76 20.3% 57] 7.58 47 _ $1]116 5198.]1 $2].55 15.1% 570 7.5/8 52 $199.18 $22].2] $28,11 14.1% 269 _ &5/0 65 $243.98 $272.96_ $29.00 11.9% 295 _ 39% _ 68 $28876 $318 fib 529.90 104% 163 24% 70 $299.96 $336.53 $36.5] _ 42.2% 28 94% 75 5327.98 5361.21 $53.25 66 OBit, _ 80 $355.96 $425.88 $69.92 _16.2% 1961% _ 45 D.6% 85 $383.96 $8660 ME% 3] D.5% _ _ 95 $43996 _$4]0.58 $55991 $118.95 2Z3% 40 _ Be% fee 546].96 $604.513---$138l 291% 10 _0.2% 110 $543.96 $693.94 $169.98 _ 32.4% 15 02% 115 $55196 $738.61 $186.55 336% 11 _ 0.1% 120 $579.96 $78329 5203.33 _ 35.1% 8 _ 0.1% 130 $635.96 $872.64 $236.68 372% 12 0.2% 140 $891.96 $961.99 $270.03 39.0% 0 0 1046 160 $84188 $1,150.35 $308.47 36.6% 11 0.1% 190 $1,104.68 $33].85 Max, 7 0.1M _ 225 $1,41128 _51,44253 $1,783.41 $372.13 26.4% 4 0.1% 250 51,630.28 $2,026.89 243%_ 2 0.0% >250 - -- - -- _$39861 ----- ----- 1 0.0% 1,309,696 -7 100% Calculated Increase Variable Revenue: $5,342,734 Assuming No C.Anervahon Fixed Revenue: $0 15.2% Total Revenue: $5,342,734 100.0% Santa Monica Demand Model to Evaluate Block Structure for Single Family Water Rates KU 1283015'00 ALT 4 b $10.00 Fixed - Block 1 Price = $0.00 Totals: 1,309,696 100.0% Variable Revenue: $4,63],]69 Fixed Revenue: $0 Total Revenue: $4,637,789 Estimated Change in BI-Monthly Bill by Usage (Both Fixed and Quantity Charge) Average Block Rana Hof cM1an eln Blll ($) % Existin Rate Structure %of Total BU Block Ran a Hof Current SI en Block Rate Structure Pro osed Block Rate Stmctore %or Total UU Water Rate Blocks Greater Than Less an °r Tgo ual 2011 Annual Usage Hcf° %Annual Usage Rate(per Het) Annual Revenue Greater Than Less The. orE Equal Tu Rate (par Hcf) %Rate CM1enge Unit Usage Reduction' Projected Annual Usage Hcf' % Projected Annual Usage Annual Revenue %Annual Revenue Block 1 $29.07 14 566,912 433% $2.46 $1,405,943 0 4 $0.00 - 100.0% 0.0% P],18] 135% $0 00% elockY 14 40 fi18,120 39.6% $3.74 564.04 _ 4 25 $3.18 -15.0% _ 0.0% 886,528 52.4% $2,182,471 46.5% Block3 _ 40 14B 213,282 163% $5.80 _$1,937,770 51,194_381 25 68 $5.04 -10.0% 0.D% 369,811 262% $1,863,850 89.]% Black 148 10000 11,381 0q%, $8.76 $98,695 68 146 $832 -5,0% 00% 64,789 4.9% $539,171 115% Block _ t000D 10000 0 0.0% $8.76 $0 148 10000 59.5] 92% 0.0% 11,381 9.9% $108,91] 2.3% Block6 10000 10000 0 D.0% 5310.12 50 _ 10000 10000 D.4% ]5 0.0% 0 O0% $0 0.0% Block] 10000 Wood 0 00% 10.5% _ $0 10000 10000 $383.96 _ 0.0% 0 _ 11.0% _$0 0.0% - Block8 _ 10000 10000 0 0.0% 0.5% $0 10000 10006 $91.82 19.6% 0.0 ^/0 0 00% $0 00% Block9 10000 10000 0 0.0% _ $55196 $0 10000 10000 11 Ti % _ 120 D -0 00% $0 0.0% -Block 10 10000 10000 0 6o% $17348 - $0 10000 10000 140 $691.98 - $200.70 0.0% so 00% Fixetl CM1ar a BI- MOnthlylOU: $1,0]408 $23220 50.00 11 0.1% 190 $10.00 $1,361.19 $25fi.51 23.2% ] D.1% 225 Totals: 1,309,696 100.0% Variable Revenue: $4,63],]69 Fixed Revenue: $0 Total Revenue: $4,637,789 Estimated Change in BI-Monthly Bill by Usage (Both Fixed and Quantity Charge) Average icaI BI- Monthl Bill cM1an eln Blll ($) % No. of CU %of Total BU Cumulative Current SI en Block Rate Structure %or Total UU $14.68 $16.36 $1.46 9.9% 413 5.4% r6018 6857 7152 7335 7363 7428 ]4]4 7511 7551 7569 7585 7596 7804 7616 7624 7635 7642 7646 7648 7649 5.4% 10.7% 12.6% 1].5% 22P% 412% 50.9% 62.3% 71.1% 703% 86A% 896% 935% 95.9% 98.3% 9].1% 9]1% 98.2% 99]% 99.0% 99.2% 99.31k 994% 99.6% 99.7% 99.8% 99.9% 100.0% 1000% 100.0% $22.32 $25.90 $3.58 16.0% 40] 5.3% $2480 $29.07 $4.2] i].2% 146 1.9% _ r(H.0T $29.]6 $35.43 $58] 19.1% 3T1 4.9% $34 .72 $41.]9 $]0] 20.4% 414 54% $66,90 564.04 $3,14 5.2% 1404 18.4% $]6.86 $]6,]6 $0.90 12% 742 _ 9]% $94.56 $101.96 $].40 TB% 865 11.3% $113.26 $12].16 $1390 12.3% 679 8.9% $131.96 $15236 $2040 15.5% 577 Z5% 47 $1]1.16 $18].64 $16.48 9.8% 5]0 T5% 52 $199.18 $212.84 $13.68 6.9% Z6 9 35% 60 524396 $253.16 59.20 3.8% 295 3.9% 68 $28836 $293.48 _ $4.72 1A 183 2.4% 70 $299.96 5310.12 $10.16 3.4% 28 D.4% ]5 $327.98 - $351.73 $23.77 7.2% 66 0.9% an $355.96 $39334 $37.38 10.5% 45 015% 86 $383.96 $434.95 _ $50.99 13.3% 37 0.5% 95 $439.96 - $518.17 $]8,21 17.6% 40 0.5% 100 $467.96 $559.78 $91.82 19.6% 16 02% 110 $523.96 $543.00 $119.04 22.]% 16 0.2% 115 _ $55196 $684.61 $132,6 5 24.0% 11 Ti % _ 120 $579.96 $72622 5148.26 25.2% 8 0.1% 130 $635.96 $809.44 $17348 27.3% 12 02% 140 $691.98 $892.66 $200.70 29.0% _ 8 0.1% -- 160 4841.86 $1,0]408 $23220 27.6% 11 0.1% 190 $1,104.68 $1,361.19 $25fi.51 23.2% ] D.1% 225 $1,411.26 $1696.15 $28487 20.2% 4 0.1% 250 $1,63028 $1,935.41 $305.13 16.]% 2 0.0% >250 - - - -- - -- - -- - -- 1 00% 1,309,696:;; 100% Calculated Increase Variable Revenue: $4,694,409 Assuming No Conservation Fixed Revenue: $]2],396 16.9% Total Revenue: $5,421,605 100.0% APPENDIX A COST OF SERVICE ACCOUNT AND EQUIVALENT METER DATA Customer Class Bill Cade Meter Size Inches) Number of Meters Percent of Total Meters Meter Capacity Ratio Number of Equiv. Meters Percent of Total Equiv. Meters Single Family 7,604 =46% 12,117 -32% WASF01 314 117 1.00 117 WASF02 1 40 1.67 67 WASF03 1.5 5 3.33 17 WASF7 314 3,569 1.00 3,569 WASF2 1 2,808 1.67 4,680 WASH 1.5 1,006 3.33 3,353 WASH 2 59 5.33 315 Multi- Family 6,085 <. 37% 16,108 143% WAMFOt 3/4 19 1.00 19 WAMF02 1 2 1.67 3 WAMFO3 1.5 2 3.33 7 WAMF05 3 0 10.00 0 WAMFO6 4 0 16.67 0 WAMF07 6 0 33.33 0 WAMFO8 8 0 53.33 0 WAMF1 3/4 1,207 1.00 1,207 WAMF2 1 1,382 1.67 2,303 WAMF3 1.5 2,323 3.33 7,743 WAMF4 2 472 5.33 2,517 WAMF5 3 57 10.00 570 WAMF6 4 29 16.67 483 WAMF6A 4 1 16.67 17 WAMF7 6 9 33.33 300 WAMF8 8 2 53.33 107 WAMF9 10 0 96.67 0 WASF01 3/4 7 1.00 7 WASF02 1 1 1.67 2 WASF03 1.5 1 3.33 3 WASF04 2 0 5.33 0 WASF1 3/4 338 1.00 338 WASF2 1 190 1.67 317 WASF3 1.5 35 3.33 117 WASF4 2 4 5.33 21 WASH 3 0 10.00 0 WASH 4 0 16.67 0 WASH 6 0 33.33 0 WASH 8 0 53.33 0 WASF9 10 0 96.67 0 WANR3 1.5 2 3.33 7 WANR5 3 2 10.00 20 Comm./Inst. 2,175 '.13% 7,808 21% WANR01 3/4 0 1.00 0 WANR7 314 605 1.00 605 WANR2 1 476 1.67 793 WANR3 1.5 544 3.33 1,813 WANR4 2 365 5.33 1,947 WANR5 3 118 10.00 1,180 WANR6 4 47 16.67 783 WANR7 6 19 33.33 633 WANR8 8, 1 53.33 53 Landscape 555 3% 1,411 4% WANR01 3/4 0 1.00 0 WANR1 314 184 1.00 184 WANR2 1 160 1.67 267 WANR3 1.5 124 3.33 413 WANR4 2 75 5.33 400 WANR5 3 8 10.00 80 WANR6 4 4 16.67 67 WANR7 6 0 33.33 0 WANR8 8 0 53.33 0 TOTAL 16,419 1000% 37,445 100% APPENDIX SUMMARY OF COST OF SERVICE FINDINGS Actual Cost of Service Percent Equivalent Meters Avg Annual Usage Peak Hour Usage Revenues Costs Difference Customer Type Number % Hcf % Hcf % $'a $'s % Single Family Residential 12,117 32.4% 1,323,994 24.5% 77,226 26.6% $4,017,232 $4,276,700 106% Multi - Family Residential 16,108 43.0% 2,354,687 43.5% 113,394 39.1% $7,209,647 $7,124,134 99% Commercial /Institutional 9,219 24.6% 1,729,924 32.0% 99,168 34.2% $5,652,328 $5,478,373 97% Water System Totals 37,444 100% 5,408,605 100% 289,788 100% $16,879,206 $16,879,206 100% •1 • • • O O O O O O O (V O 00 l6 V N O c-I N uolll!w 0 Y a V .Y C T LL Y 7 i f6 C d N T E m LL y c C J N O U N U V) 0 0 N O U N 7 V N N 0 O N } LL C O U1 m 0] OI 0 Z �.� � � �� _u >� �� � � � P' � d N � �' o � A N � w � � d w a ' � d °' � e p. y a a b m � d � � v � p. ,� �i a a '° � z .�yy - „ ry '� Lp� y1�J � � Y {Ii �""� � d O ai U U d N N t� N N I �, w o oo W 0 w o � � � o a a 0 0 0 0 �� 0 0 0 0 0 0 0 0 0 0 0 0 vi N � � � � � � r O O O O O O O O O O O OOH 0£) IN aaleM A141UOwla lealdr(,)_ a T Y v u N x T `a w m N v w ee N O J N N N roC A a � m ri O N u N m co K O J N u �C O N Y G (0 10 10 N 10 Q H M d H N N N Lf) O� O r� ww r- 'O N �DQ�D r� N U V U U J V U Q p �xxxxxx aLI) u V u r m xx d o i N O x x N LO r� O O L6 m m L6 N F U5 • O CV It; C Cy L6 O N E N y w O f U � Cf) EF} H3 Efi H} EA Ff3 ER EH f}} H3 H M d H N N N Lf) O� O r� d+ 00 r- r- 'O N w O i r� N U V U U J V V �xxxxxx r m d o i N O N �c N LO r� r N m m m U5 y w rl f � Cf) 0 O •N z H M d H N JUU xxxxxxo O 0 cM N N N N Lf) O� O r� d+ 00 r- r- 'O N w O i r� N U V U U J V V �xxxxxx r m d o cH d N O 00 �c 'I N LO r� r— N O� JUU xxxxxxo O 0 cM N N N N Lf) O� O r� d+ 00 r- r- 'O N w O i r� N ra N C?) ra v U U U U U V U Hxxxxxxx O O n H N® N LOf) U ddd m _ 0 y w It LO NQ) N Wo O O O O o 0 O W �O V fV O UOIIIILIY $ ro 0 ro e 0 .Y c N 0 m E ro w Y e w C N K v C r m u N N 4- O i' O u a N N 7 C N N a f0 a N H Q N O N r �y c 0 v m ti z° N s;un000tl % n N n a N O m ca N .i O .i fi b 0 N n m LL V S DJ v tlA N N O n O � LL U T O vi x a v m m `v a > m Q 0 N f0 V O d Z O 9 City Council Meeting: December 16, 2014 Santa Monica, California RESOLUTION NUMBER 10852 (CCS) (City Council Series) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA RECOMMENDING CONSIDERATION OF CERTAIN PROPOSED WATER RATE INCREASES; SETTING A PUBLIC HEARING ON FEBRUARY 24, 2015, TO HEAR ANY PROTESTS OR OBJECTIONS TO THE PROPOSED CONSIDERATION OF WATER RATE INCREASES; AND DIRECTING THE CITY CLERK TO ISSUE NOTICE OF THE HEARING TO ALL IMPACTED PROPERTY OWNERS OF RECORD IN ACCORDANCE WITH PROPOSITION 218 WHEREAS, due to declining water sales and increased capital funding needs, the City's cost to provide water service is projected to exceed the City's water revenues unless water rates are increased; and WHEREAS, City has conducted a water rate study which details the revenue requirements of three proposed water rate alternatives to address the projected revenue shortfall; and WHEREAS, revenue requirements are driven by the need to augment conservation plans, offset reduced revenues due to declining water sales, and increase capital program funding to address the needs for continued infrastructure investment and Sustainable Water Master Plan requirements; and WHEREAS, Council has considered three proposed water rate alternatives, as follows: and; WHEREAS, Option 3 is based on a 9% increase in the first year, and a 13% increase in each.of the remaining four years of the financial plan; and WHEREAS, Option 3 provides for much stronger financial performance than the other two proposed options and provides additional financial stability for the Water Fund to meet projected capital improvements, potential emergency system improvements, and absorb further than projected declines in water demands and water sales revenues. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES RESOLVE AS FOLLOWS: KA 2015 2016 2017 2018 2019 Option 1 2.5% 2.5% 2.5% 2.5% 2.5% (CPI only) Option 2 9% 9% 9% 9% 9% (9% plan) Option 3 9% 13% 13% 13% 13% (9113% plan) and; WHEREAS, Option 3 is based on a 9% increase in the first year, and a 13% increase in each.of the remaining four years of the financial plan; and WHEREAS, Option 3 provides for much stronger financial performance than the other two proposed options and provides additional financial stability for the Water Fund to meet projected capital improvements, potential emergency system improvements, and absorb further than projected declines in water demands and water sales revenues. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES RESOLVE AS FOLLOWS: KA SECTION 2. Council hereby recommends consideration of a 9% increase above existing water rates in the first year with 13% increases above then existing water rates in the next four years as the plan for water rate increases in order to ensure financial stability of the Water Fund. SECTION 3. Pursuant to Article XIII D Section 6 of the California Constitution, the City Council does hereby order and declare that on the 24th day of February, 2015, in the City Council Chambers of City Hall, 1685 Main Street, Santa Monica, California 90401, it will conduct a public hearing upon the proposed plan for water rate increases and consider all protests and objections against these water rate increases, which may be raised by any property owner subject to these water rate increases or by any other interested persons. SECTION 4. All protests or objections must be in writing and filed with the City Clerk on or before the time set for the hearing of the protests and objections. SECTION 5. The City Clerk is hereby directed to mail notices, pursuant to Article XIII D Section 6 of the California Constitution, to consider the proposed water rate fee increases to all persons owning commercial, industrial, or residential real property in the City of Santa Monica whose names and addresses appear on the last equalized assessment roll for the City taxes or as known to the City Clerk. SECTION 6. The City Clerk is directed to publish this Resolution, in accordance with Government Code Section 6066 in the Santa Monica Daily Press once a week for 0 two successive weeks, with at least five days intervening between the first date and the second date of publication. The first publication is to be made no less than 15 days prior to the date of the above public hearing. SECTION 7. The City Clerk shall certify to the adoption of this Resolution, and thenceforth and thereafter the same shall be in full force and effect. APPROVED AS TO FORM: 12 Reference: Resolution No. 10852 (CCS)