City of Culver City, California
Agenda Item Report
RECOMMENDATION:
Staff recommends the City Council adopt a Resolution approving the Engineer’s
Report for the Sewer User’s Service Charge for Fiscal Year 2015/2016 declaring its
Intention to levy and collect the Sewer User’s Service Charges for Fiscal Year
2015/2016 and setting a public hearing for June 8, 2015, at 7:00 p.m. in the Mike
Balkman Council Chambers.
BACKGROUND:
Culver City owns and operates a separate sewage collection system which is
connected to the City of Los Angeles’ system. Culver City sewage, which is
deposited into the Los Angeles system, is treated at the City of Los Angeles'
Hyperion Treatment Plant prior to its ultimate disposal in the Pacific Ocean or
additional treatment by West Basin Municipal Water District for the production of
recycled water that is used throughout the region. An agreement between the City of
Los Angeles and a number of other cities called the Amalgamated Agreement
(Agreement) requires Culver City to pay a proportionate share of the costs of
conveyance, operation, maintenance, repair, and capital improvements to upgrade
and improve the Amalgamated Sewerage system.
Federal law requires that all agencies using the City of Los Angeles' Hyperion
Treatment Plant adopt a system of charges to assure that each property served by a
public sewer pays its fair share of costs for the operation, maintenance, repair, and
improvement of the Hyperion Treatment Plant. The “fair share” of each property is
based on its contribution to the system in terms of flow quantity and sewage strength
(biochemical oxygen demand and suspended solids). This is in addition to the cost
experienced by Culver City in the collection, operation, and improvement of our own
sewage collection and conveyance system.
Meeting Date: 05/11/2015 Item Number: C-17
CITY COUNCIL AGENDA ITEM: Adoption of a Resolution Approving the Engineer’s
Report, Declaring the Intention to Order the Sewer User’s Service Charge for Fiscal
Year 2015/2016, and Setting the Date, Time, and Place for the Public Hearing to be
Monday, June 8, 2015 at 7:00 PM in the Mike Balkman Council Chambers
Contact Person/Dept.: Mate Gaspar/PW Phone Number: 310-253-5602
Fiscal Impact: Yes [] No [X] General Fund: Yes [] No [X]
Public Hearing: [] Action Item: [] Attachments: [X]
Commission Action Required: Yes [] No [X] Date: _______________
Public Notification: (E-Mail) Agenda and Meetings – City Council (05/06/15)
Department Approval:
Charles D. Herbertson (04/30/15)
City Attorney Approval:
Carol Schwab (by H. Baker) (05/04/15)
Chief Financial Officer Approval:
Jeff Muir (by M. Noller) (05/05/15)
City Manager Approval:
John M. Nachbar (05/06/15) City of Culver City, California
Agenda Item Report
In addition to formulating and adopting a system of Sewer User’s Service Charges
(SUSC), the City must also select a system for collecting these charges. In 1980,
based on an engineering study and the City Engineer’s recommendation, the City
Council initiated a once-a-year billing procedure for Sewer User’s Service Charges
that places each property owner’s charges on their property tax bill. This method of
collection has proven to be very efficient and provides the lowest cost billing and
collection service for Culver City.
On May 7, 2012, the City Council awarded a contract to NBS Government Finance
Group dba NBS to conduct an in-depth review of the existing SUSC and determine if
they were fair and equitable to each customer class taking into consideration the cost
of the City of Los Angeles’ services to convey and treat the wastewater and Culver
City’s costs for collection and conveyance of the sewage in its own system.
NBS determined the following findings:
1. The City’s current sewer rates need to be adjusted to collect more revenue from
single family customers and less from other customer classes, particularly
commercial/restaurant customers.
2. The City should collect approximately 60% of rate revenue from base charges
and 40% from its commodity charges based on the classification of current
expenses as either fixed or variable. However, the City collected 90% of rate
revenue from commodity charges. Fixed costs (which are associated with Base
charges) are personnel costs (including cost for maintenance of the City’s sewage
collection system), office expense, and 75% of administrative charges and
consultant support costs. These costs do not vary directly with the quantity of
sewage produced. Variable costs (which are associated with Commodity
Charges) are what the City pays to the City of Los Angeles for wastewater
treatment-related costs, utilities at the pump stations, and 25% of administrative
charges and consultant support. These charges are more directly tied to the
quantity of sewage produced.
3. Existing landscape irrigation credits of 42% for residential customers are
reasonable.
In addition, NBS prepared a 5-year financial plan with revenue requirements for the
Sewer Enterprise Fund. These requirements are based on several factors such as
NBS’ recommended targets for operating, capital, and debt reserve balances and the
City’s projected capital improvement program. Based on their findings and the 5 year
financial plan, NBS proposed rate reductions for most of the customer classes in the
first year and a revision to the rate with an overall revenue increase of 4% each year
for Fiscal Year 2013/2014 through Fiscal Year 2015/2016.
City of Culver City, California
Agenda Item Report
On August 13, 2012, the City Council approved the rate reductions for certain
customer classes.
On July 22, 2013, after a 45 day public notice, the City Council, after receiving and
hearing all public comment, adopted rate increases of 4% across all customer
classes for each Fiscal Years 2013/2014, 2014/2015, and 2015/2016, with the
exception of only a 3% rate increase for single family residences in Fiscal Year
2015/2016. In addition, the sewer charge formula was adjusted to a 60%/40%
revenue split, base charge + commodity rate).
DISCUSSION:
Pursuant to a Resolution adopted by the City Council on April 13, 2015, the Public
Works Director/City Engineer has prepared the Engineer’s Report for the Sewer
User’s Service Charge and filed said Report with the City Clerk. A copy of the
Engineer’s report is attached to this report for consideration by the City Council.
As stated in the background section of this report, on July 22, 2013, the City Council
approved the SUSC rates for Fiscal Year 2015/2016. California Government Code
53756 requires that a 30 day notice of a rate adjustment be mailed to property
owners. A postcard notice was mailed to each property owner stating that the SUSC
will be increased as authorized for Fiscal Year 2015/2016.
The following table shows the sewer user’s service charge (base charge +
commodity rate) based on customer class for Fiscal Year 2015/2016:
SEE FOLLOWING PAGE FOR TABLE City of Culver City, California
Agenda Item Report
Customer Class Base Charge
Code
Commodity Rate
101 Single Family1 $274.80 +
102 Multi-Family2 $220.42 +
200 Commercial/Business: $274.80 +
300 Commercial/Restaurants: $274.80 +
400 Institutional: $274.80 +
500 School/Public: $274.80 +
600 Special Users (Description in Engineer’s Report)
601 $ 274.80 +
602 $ 274.80 +
603 $ 274.80 +
604 $ 274.80 +
605 $ 274.80 +
606 $ 274.80 +
607 NOT USED
608 $ 274.80 +
609 NOT USED
610 $ 274.80 +
611 NOT USED
612 $ 138.52 +
613 $ 274.80 +
614 $ 274.80 +
615 $ 274.80 +
W=Annual Water Consumption in HCF
1 Base charge is per parcel
2 Base charge is per dwelling unit
(0.58W x $1.25)
(0.85W x $1.25)
(W x $3.56)
(W x $7.07)
(W x $3.76)
(W x $2.89)
(W x $4.18)
(W x $5.53)
(W x $5.54)
(W x $3.88)
(W x $3.29)
(W x $5.55)
NOT USED
(W x $4.30)
NOT USED
(W x $0.60)
NOT USED
(W x $0)
(W X $0.26)
(W x $3.11)
(W x $4.27)
Customer Class Base Charge
Code
Commodity Rate
Staff recommends that the City Council adopt a resolution (1) approving the
Engineer’s Report, (2) declaring the City Council’s intention to levy and collect
assessments for the upcoming fiscal year; and (3) setting the time and place for the
public hearing as required by Culver City Municipal Code (CCMC) Sections
5.02.035.C and 5.02.040.
Should the City Council adopt the proposed resolution, pursuant to 5.02.040 of the
CCMC, the City Clerk shall give notice of the public hearing by causing the
Resolution of Intention to be published at least 10 days prior to the date of the
hearing.
FISCAL ANALYSIS:
As detailed in the Engineer’s Report, the proposed charges for Fiscal Year
2015/2016 will address estimated costs for providing complete operation, City of Culver City, California
Agenda Item Report
maintenance, and local capital improvements for the Culver City sewerage system
and for the estimated payments due the City of Los Angeles for Culver City's share of
the Los Angeles Amalgamated System costs.
ATTACHMENTS:
1. Proposed Resolution
2. Engineer’s Report
MOTION:
That the City Council:
Adopt a Resolution (1) approving the Engineer’s Report, (2) declaring the City
Council’s intention to levy and collect assessments for the Sewer User’s Service
Charge - Fiscal Year 2015/2016, and (3) setting the time, date, and place for a
Public Hearing for June 8, 2015, at 7:00 p.m. in the Mike Balkman Council
Chambers.