SR 08-28-2018 3E
City Council
Report
City Council Meeting: August 28, 2018
Agenda Item: 3.E
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To: Mayor and City Council
From: Susan Cline, Director, Public Works, Water Resources
Subject: Award Agreement for Water/Wastewater Rate Study Consultant Services
Recommended Action
Staff recommends that the City Council:
1. Award RFP #172 to NBS, a California-based company, to complete a water /
wastewater rate and capital facility fee study for calendar years 2020 to 2024;
and
2. Authorize the City Manager to negotiate and execute an agreement with NBS, in
an amount not to exceed $175,000 through June 30, 2020, with future year
funding contingent on Council budget approval.
Summary
The City requires consultant services to conduct a rate study and assist in collection of
public input to set water/wastewater rates and capital facility/connection fees for
calendar years 2020 to 2024 in compliance with Proposition 218, including proportional
cost of service, account holder notification and public hearing requirements. Revenues
from covered fees and charges (listed in Attachment A) are approximately $40 - $45
million per year and are used to fund water and sewer-related operating and capital
programs. Staff recommends that the City award an agreement with NBS to provide
rate study consultant services through June 30, 2020 in an amount not to exceed
$175,000.
Discussion
The City provides potable water, recycled water, fire line and sewer services to over
18,000 Santa Monica residential, commercial and institutional account holders billed on
a bimonthly basis. As part of the development permit process, capital facility fees, also
known as connection charges, are collected for installations or modifications to water
meters for potable water or fire line service, and for residential and commercial
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construction and additions which would increase flows to the City’s sewer system.
Overall revenues from these fees and charges amount to approximately $40-$45 million
per year and fund the City’s water and wastewater operating and capital programs
including:
Water production, treatment and storage;
Water and sewer distribution system (pipelines and pump stations);
Importation of potable water from the Metropolitan Water District of Southern
California;
Treatment and disposal of City wastewater via the City of Los Angeles Bureau of
Sanitation’s Amalgamated System;
Software and technology systems (billing, system controls, work order, etc.);
Conservation programs;
Vehicles, facilities, infrastructure and other projects.
Summary of Covered Water/Wastewater Rates, Fees & Charges
Annual Revenue
Rate / Fee /
Charge Description Rate/Fee History Water
Fund
Wastewater
Fund
Water
Sales
Bimonthly billing for water service;
amount based on usage, account
type and tier.
2015-2019 rates adopted
2/24/15 - up to 9% annual
increases (lowered to 5%
in 2016, 2017 & 2018).
$23.0M
Sewer Service
Charges
Bimonthly billing for sewer
service; amount based on water
usage, rate and customer class.
2008-2013 rates adopted
7/8/08; unchanged since
2014
$18.0M
Fire line
Charges
Fixed bimonthly billing charge
based on meter size. Same as water sales $1.0M
Capital Facility
Fees – Water
Development permit fee based on
water/fire line meter addition size.
Unchanged since adoption
on 6/17/08 $0.5M
Capital Facility
Fees - Wastewater
Development permit fee based on
estimated sewer flow increase.
Unchanged since adoption
on 6/17/08 $0.8M
Totals: $24.5M $18.8M
Consultant services are required to assist the City in setting water/wastewater rates and
capital facility fees for calendar years 2020 to 2024 and to facilitate a robust public
outreach and input process. For property-based charges including water sales, fire line
charges, and sewer service charges (but excluding capital facility fees), rates must be
set in compliance with Proposition 218 (California Constitution Article XIII D, Section 6)
requirements including charges based on proportional cost of service (cannot charge
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more than the cost of service), ratepayer notifications of any proposed changes over a
maximum term of five years, and a public hearing process. NBS would provide technical
assistance to the City to comply with Proposition 218 requirements, including complex
cost of service calculations to formulate a thoughtful, defensible rate structure to support
water/wastewater program goals with due consideration given to ratepayers and the
financial viability of the Water and Wastewater enterprise funds. The rate study would
review:
Operating and capital revenue requirements for the City’s Water and Wastewater
enterprise funds over a five-year period (2020 to 2024), incorporating the City’s
goal of attaining water self-sufficiency;
Determination of adequate fund reserves and the ability to bond and cover
current and future debt obligations;
Water and sewer rates / structure – with or without a fixed service charge
component, tiered rates, number of tiers, usage allocations by tier, and customer
class designations;
Affordability including low-income discounts / rates;
Cost of service for each rate/fee/charge by customer class, meter size and tier;
Impact of proposed changes versus existing rates;
Comparison of City of Santa Monica water/wastewater rates versus other local
water/sewer agencies;
Funding for capital projects;
Demonstration that no ratepayer funds will be used for groundwater remediation
funded by water remediation settlement funds obtained by the City from
responsible parties for cleanup of the Olympic and Charnock groundwater sub-
basins; and
Other factors as identified by the public, City Council, advisory groups and staff
as part of the study outreach process.
Consultant Selection
RFP Data
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RFP Posting
Date
RFP Posted
On
RFP Advertised In
(City Charter &
Municipal Code)
# of
Vendors
Downloaded
# of
Submittals
Received
Date
Publicly
Opened
5/1/2018 City's Online
Bidding Site
Santa Monica Daily
Press 43 7 5/30/2018
RFPs Received (short-listed firms in bold)
Black & Veatch Management
Consulting GovRates, Inc. HF&H Consultants, LLC
Madison Consulting Group NBS Raftelis
Robert D. Niehaus, Inc.
Justification for Best Qualified Firm
Responses to the RFP were reviewed by a selection panel of staff from the Finance and
Public Works departments and City Attorney’s Office. Staff interviewed the three
shortlisted finalist firms HF&H Consultants, NBS and Raftelis. Staff recommends NBS
based on the clarity and quality of their previous rate studies completed for other
California water/sewer agencies, Proposition 218 expertise, rate models, proposed work
plan and responsiveness to City requests during the RFP process. NBS understood the
City’s study needs, proposed adequate project hours to support a robust public outreach
process and offered the best overall value. Staff checked references including the City
of Santa Monica’s Office of Sustainability and the Environment (Stormwater
Management User Fees and Clean Beaches and Ocean Parcel Tax), City of Hesperia,
City of Redding, County of San Luis Obispo and Desert Water Agency; all highly
recommended NBS for performing water, wastewater and/or capital facility fee studies
and advised that work completed was thorough, responsive and came in at or under
budget.
Next Steps
After contract execution, staff and NBS would commence work on the rate study
including collection of input from City staff, the public and advisory groups such as the
Water Advisory Committee and the Task Force on the Environment. Staff would return
to Council on the following schedule for approval and implementation of new rates, fees
and charges:
March / April 2019 – Council study session for draft rate study; incorporate
proposed changes and conduct research and public outreach for rate-related
inquiries and issues;
August 2019 – Final rate study presentation and Proposition 218 notice to all
water and sewer account holders (initiation of 45-day protest period);
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October 2019 – Public hearing for adoption of water/wastewater rates and capital
facility fees by resolution for calendar years 2020 to 2024. New capital facility
fees would be effective for development permit applications submitted on or after
January 2, 2020. New water/sewer rates would be effective on bills issued on or
after March 1, 2020 for water use starting on January 1, 2020 (start of the first
two-month billing cycle).
Financial Impacts and Budget Actions
Staff seeks authority to award an agreement with NBS to complete a water / wastewater
rate and capital facility fee study for calendar years 2020 to 2024. The rate study base
cost would be $118,400. The total project cost will depend on the amount of elective
hourly and optional services required.
Agreement Request
Request Amount
FY 2018-19 Budget
Public Works Department Account #
Total Contract
Amount
$87,500 50500001-552010 $87,500
$87,500 51500001-552010 $87,500
$175,000 Total $175,000
Prepared By: Kevin Nagata, Senior Administrative Analyst
Approved
Forwarded to Council
Attachments:
A. 2018 Water & Sewer Rates, Fireline Charges and Capital Facility Fees
B. January 9, 2018 Staff Report - Calendar Year 2018 Water Rate Adjustment -
Item 9.A (WebLink)
C. February 24, 2015 Staff Report - Public Hearing to Adopt Water Rates - 2015 to
2019 - Item 9-A (WebLink)
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D. July 8, 2008 Staff Report - Water and Wastewater Rates - FY 2008-09 to 2012-
13 - Item 9-A (WebLink)
E. June 17, 2008 Staff Report - Adoption of FY 2008-09 Budget - Attachments D1
and D2 - Capital Facility Fees - Item 8A (WebLink)
F. Oaks Initiative Disclosure Form - NBS
Tier Rate per HCF Rate Discharge Factor
Tier 1 3.16$ 4.65$ 51%
Tier 2 4.73$
Tier 3 7.10$
Tier 4 11.10$
Tier 1 3.16$ 4.65$ 80%
Tier 2 4.73$ 4.65$ 85%
Tier 3 7.10$ 4.65$ 90%
Tier 4 11.10$ 4.65$ 95%
4.65$ 95%
Low income rate applies to Tier 1 use only; other use billed at regular rates.
Multi‐family discount only available to 100% low‐income properties.
Tier 1 4.48$ 4.24$ 89%
Tier 2 11.06$ 4.40$ 89%
Recycled Water 4.03$ 5.09$ 89%
5.55$ 89%
*Non‐Residential Accounts ‐ Tier Designations by Meter Size and Usage Range 6.50$ 89%
4.19$ 89%
4.19$ 89%
3/4" meter 211+ 4.19$ 89%
1" meter 211+ 5.16$ 89%
1‐1/2" meter 466+
2" meter 871+
3" meter 1,701+
4" meter 2,551+
6"+ meter 5,281+$100.44
Meter Size Capital Facility Fee Capital Facility Fee Meter Size Bi‐Monthly
Fixed Charge
3/4" meter 743.00$ 2,239.00$ 1‐1/2" meter 45.20$
1" meter 1,241.00$ 2" meter 72.52$
1‐1/2" meter 2,474.00$ 1,168.00$ 3" meter 124.81$
2" meter 3,960.00$ 1,557.00$ 4" meter 199.49$
3" meter 7,429.00$ 1,947.00$ 6" meter 386.10$
4" meter 12,384.00$ 779.00$ 8" meter 610.04$
6" meter 24,762.00$ 1,265.00$ 10" meter 871.29$
8" meter 39,620.00$ 779.00$
10" meter 56,960.00$ 1,655.00$
292.00$
2,920.00$
195.00$
NOTES:
2.24$ See above
Churches
Institutional
Schools
Misc Industrial
Residential Low Income
Multi‐Family Accounts Multi‐Family Accounts
2018 WATER & SEWER RATES, FIRELINE CHARGES AND CAPITAL FACILITY FEES
WATER RATES SEWER SERVICE CHARGES
Usage per Billing Period (HCFs) Category
Single Family Accounts Single Family Accounts
0 to 14 Single Family
15 to 40
41 to 148
149+
Tier 1 2.16$ 0 to 14 (single family)
0 to 4 per dwelling unit
(multi‐family)
0 to 4 per dwelling unit Duplex
5 to 9 per dwelling unit Triplex
10 to 20 per dwelling unit Fourplex
21+ per dwelling unit Over four units
Individually metered
Residential Low Income Rate Residential Low Income Rate
Sewer Service Charge (bi‐monthly bill) =
0 to 1,700 Amount of Water Used (HCFs) x Rate x Discharge Factor
Non‐Residential Accounts Non‐Residential Accounts
Based on meter size*
Based on meter size*
All usage
Meter Size Tier 1 Usage
(HCFs)
Tier 2 Usage
(HCFs)
General Commercial
Medium Low
Medium
Medium High
High
Each billing period is approximately 61 days (~6 billing periods per year)
0 to 210
0 to 210
0 to 465
0 to 870
0 to 2,550 Example: a fourplex sewer bill using 24 HCF of water would be:
0 to 5,280 24 HCF x $4.65 x 90% =
1 HCF = 1 Hundred Cubic Feet of water = 748 gallons
Hotel / Motel (per unit)
CAPITAL FACILITY FEES & FIRE LINE CHARGES
Water Capital Facility Fees Wastewater Capital Facility Fees Fireline Charges
Land Use
Single Family Residence
Multi‐Family Residence:
Add 1 bedroom
Add 2 bedrooms
Add 3 bedrooms
Commercial (per 1,000 sq ft)
1) Water capital facility fees collected at the permit counter are in addition to meter installation charges for water meter and fire lines. Capital facility fee for
enlarged meters is the difference between the old and new meter size.
2) Wastewater capital facility fees for land uses not listed above are charged at $9.73 per gallon per day times the Amalgamated System Sewage Generator
Factors for the type of land use. The City also collects pass‐through Amalgamated System Sewerage Facilities Charges on behalf of the City of Los Angeles.
3) Fireline service charges are charged bi‐monthly via water & sewer bills based on meter size.
4) Water rates and fireline charges are effective for calendar year 2018 usage only; sewer service charges and capital facility fees shall remain at the above
rates until changed via City Council resolution.
Industrial (per 1,000 sq ft)
Laundromats (per machine)
Restaurant:
Bar, Sit Down (per seat)
Carry Out (per 1,000 sq ft)
Storage (per 1,000 sq ft)
REFERENCE:
Agreement No. 10738
(CCS)