City of Culver City, California
Agenda Item Report
Meeting Date: 06/14/2010 Item Number: PH-2
CITY COUNCIL AGENDA ITEM: PUBLIC HEARING - Adoption of a Resolution
Approving the Engineer’s Report and Affirming the Existing Annual Assessment
Levy for the Sewer User’s Service Charge for Fiscal Year 2010/2011
Contact Person/Dept.: Mate Gaspar/PW Phone Number: 310-253-5602
Fiscal Impact: Yes [X] No [] General Fund: Yes [] No [X]
Public Hearing: [X] Action Item: [] Attachments: [X]
Commission Action Required: Yes [] No [X] Date: _______________
Public Notification: (E-Mail) Agenda and Meetings – City Council (06/09/2010); Culver
City News (05/27/2010);
Department Approval:
Charles D. Herbertson (06/03/10)
City Attorney Approval:
Carol Schwab (by H. Baker) (06/09/10)
Chief Financial Officer Approval:
Jeff Muir (by M. Noller) (06/10/10)
City Manager Approval:
P. Lamont Ewell (06/10/10)
RECOMMENDATION:
Staff recommends the City Council adopt a resolution:
1. Approving the Engineer’s Report for the Sewer Users’ Service Charge for
Fiscal Year 2010-2011; and ,
2. Affirming the existing annual assessment levy for the Sewer Users’ Service
Charge in an amount equal to last year’s rate for Fiscal Year July 1, 2010 to
June 30, 2011.
PROCEDURE:
1. Mayor seeks motion from City Council to receive and file the affidavits of
publication and posting of notices and correspondence received in response to
the public hearing notices; and,
2. Mayor calls for a staff report and the City Council Members may pose questions
to staff as desired; and,
3. Mayor seeks a motion to open the public and,
4. Mayor seeks a motion to close the public hearing after all public testimony has
been presented and all ballots have been tabulated; and,
5. City Council discusses the item and arrives at its decision.
City of Culver City, California
Agenda Item Report
BACKGROUND:
Culver City currently obtains sewage treatment services at the City of Los Angeles'
Hyperion Treatment Plant through an Amalgamated Agreement with the City of Los
Angeles. This 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.
Culver City owns and operates a separate sewage collection system, which is
connected to the amalgamated system.
Federal law requires that all other 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 pay its fair share of costs for the operation, maintenance, repair and
improvement of Hyperion Treatment Plant. The “fair share” of each sewer-using
property is based on its contribution to the system in terms of flow quantity and
sewage quality (biochemical oxygen demand and suspended solids). This is in
addition to the costs experienced by Culver City in the collection, operation, and
improvement of our own sewage system.
All of these costs are annually determined and presented to the City Council in the
City Engineer's Report, in accordance with Section 5.02.035 of the Culver City
Municipal Code (CCMC). The proposed charges for Fiscal Year 2010/2011 will
address estimated costs for providing complete operation, maintenance, and local
capital improvements for the Culver City sewerage system and for the estimated
payments due to the City of Los Angeles for Culver City's share of the Los Angeles
Amalgamated System costs.
In addition to formulating and adopting a system of Sewer User’s Service Charges,
the City must also select a system of 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.
The following table is a summary of historical rate increases to the Sewer User’s
Service Charge:
FISCAL YEAR RATE INCREASE
1990/91 TO 2001/02 No rate increases -
$20.5 million
wastewater revenue
bond issued in
1991/1992
2002/03 10% rate increase City of Culver City, California
Agenda Item Report
2003/04 10% rate increase*
2004/05 10% rate increase
2005/06 5% rate increase
2006/07 10% rate increase
2007/08 10% rate increase
2008/09 No rate increase
2009/10 No rate increase
2010/11 No rate increase
proposed
*Included revisions to sewer user charges formulas.
DISCUSSION:
The Sewer User’s Service Charge budget is 100 percent self-supporting for all
expenditures related to the collection, operation & maintenance, capital
improvements, conveyance and treatment of the City’s sewer system. The sewer
user service charge is collected based on the prior calendar year’s total water
consumption for each parcel that is on the sewer system. For single family dwelling
unit, 42% of the water consumption amount is deducted due to landscape irrigation.
For a multi-family dwelling, 15% of the water consumption is deducted due to
landscape irrigation.
With the Amalgamated Agreement with the City of Los Angeles, certain costs
related to conveyance and treatment are included in this charge by Los Angeles
which the City pays based on flow measurements throughout the year. The City of
Los Angeles sends Amalgamated Cities their 5-year projections for costs related to
the agreement. In a February, 2010 letter from the City of Los Angeles to Culver
City they have projected a total charge of $2,145,000 for Fiscal Year 2010/11. The
final amount is not known until August every year and has historically been less
than the projected amount.
The Sewer Enterprise Fund currently maintains an adequate reserve. Staff does
not recommend any rate increase this year. In future years, due to a planned
aggressive capital improvement program, the sewer fund reserve is expected to
diminish, and it will be likely that staff will recommend increases in the sewer user
charge rates at that time.
Golden State Water Company (GSWC) has informed the City in writing that they
will no longer provide the water consumption data for each parcel. GSWC has
stated that they consider the water consumption data to be private and that the
California State Public Utilities Commission (CPUC) has not directed them to
release it.
City of Culver City, California
Agenda Item Report
There was not enough time to schedule an agenda item with the CPUC regarding
obtaining the water consumption data. Therefore, staff recommends that the water
consumption data for the Fiscal Year 2009/2010 sewer charges be used to
calculate the Fiscal Year 2010/2011 sewer user service charges. Property owners
will still be entitled to refunds to the sewer charges if they can provide GSWC
billings that show their water consumption is less than the previous year’s water
consumption.
Staff will present to the City Council recommendations regarding future billing
options at an upcoming City Council meeting.
FISCAL ANALYSIS:
The report contains a spreadsheet of the 5 year estimated sewer user service fund
cash flow projections.
ATTACHMENTS:
Ÿ Engineer’s Report
Ÿ Resolution
Ÿ Sewer Enterprise Funds 5 year cash flow projection
MOTION:
That the City Council:
(Absent a majority protest) Adopt a Resolution approving the Engineer’s Report
and confirming the existing rates and ordering the annual assessment levy for
the Sewer User’s Service Charge in an amount equal to last year’s rate for Fiscal
Year July 1, 2010 to June 30, 2011.
6/14/10
PUBLIC HEARING - Adoption of a Resolution
Approving the Engineer's Report and Affirming
the Existing Annual Assessment Levy for the
Sewer User's Service Charge for Fiscal Year
2010/2011
MEETING DATE:
AGENDA ITEM:
ATTACHMENTS
Pages|109| Resolution
1-3|109| City Engineer's Report
4-11RESOLUTION NO. 2010-R
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CULVER CITY, CALIFORNIA, APPROVING THE
ENGINEER'S REPORT AND AFFIRMING THE EXISTING
ASSESSMENT LEVY FOR THE SEWER USER'S
SERVICE CHARGE FOR FISCAL YEAR 2010/2011
WHEREAS, the City Council of the City of Culver City desires to assess a
levy for fiscal year 2010/2011 of the Sewer User's Service Charge pursuant to the
provisions of Chapter 5.02 of the Culver City Municipal Code ("CCIVIC") for a service
charge to be known and designated as SEWER USER'S SERVICE CHARGE
(hereinafter referred to as the "Service Charge"); and
WHEREAS, on May 17, 2010, the City Council declared its intention to
order the annual assessment levy, to collect the assessments, and to carry on all other
proceedings necessary for the levy of annual assessments for the Assessment District;
and ordered the City Engineer to prepare a Report on the Annual Levy 2010-2011, Sewer
User's Service Charge, (the "Engineer's Report") to be filed with the City Clerk and
submitted to the City Council for consideration at a public hearing on June 14, 2010; and•
WHEREAS, the City Engineer prepared and filed the Engineer's Report
(attached hereto as Exhibit "A" and incorporated herein by reference) for the City
Council's consideration; and
WHEREAS, the City Council has heard all testimony and evidence at a duly
noticed public hearing held on June 14, 2010 and has determined to proceed with the
levy of annual assessment for the Service Charge.
NOW, THEREFORE, the City Council of the City of Culver City, DOES
HEREBY RESOLVE as follows:
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1. Upon the conclusion of the public hearing arid consideration of all
public testimony, the Engineers Report is hereby approved, the existing annual levy as
set forth and described in the Engineers Report is hereby ordered, and no increase is
ordered at this time|109| The adoption of this Resolution constitutes the levy of the existing
assessment for the fiscal year commencing July 1, 2010 and ending June 30, 2011.
3. The estimates of costs and all other matters as set forth in the
Engineer's Report as submitted pursuant to GCMG § 5.02.035 are hereby approved and
adopted.
4. The existing assessment as set forth in the Engineers Report shall -
be performed pursuant to law. The County Auditor shall enter on the County Assessment
Roll the amount of the assessment and the assessment shall then be collected at the
same time and in the same manner as the County property taxes are collected. After
collection by the County, the net amount of the assessment shall be paid to the City
Treasurer of the City of Culver City.
5. Upon receipt of monies representing assessments collected by the
County, the City Treasurer for the City of Culver CO shall deposit the monies into a
special fund known as the "Fund for Sewer Users Service Charge," which was previously
established.
6. Immediately upon the adoption of this Resolution, the City Clerk shall
file a certified copy of the Engineers Report containing the assessment, with the County
Auditor.
-2-MARTIN•R. COLE, City Clerk
A10-00199
7. A certified copy of the Engineer's report shall also be filed in the
Office of the City Engineer, with a duplicate copy on file in the Office of the City Clerk,
and shall be open for public inspection.
APPROVED and ADOPTED this day of June 2010.
CHRISTOPHER ARMENTA, MAYOR
City of Culver City, California
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3PUBLIC WORKS DEPARTMENT
9770 CULVER BOULEVARD, 2ND FLOOR
CULVER CITY, CALIFORNIA 90232-0507
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ENGINEER'S REPORT
ON THE ANNUAL LEVY
2010-2011
SEWER USER'S SERVICE CHARGE
CHARLES D. HERBERTSON
Phone (310) 253-5600
Public Works Director/City Engineer
FAX (310) 253-5626
ENGINEER'S REPORT
ON THE ANNUAL LEVY
2010-2011
SEWER USER'S SERVICE CHARGE
IN THE CITY OF CULVER CITY UNDER THE
PROVISIONS
OF CHAPTER 5.02 OF THE CODE OF THE CITY OF
CULVER CITY, CALIFORNIA
FILED with the City Clerk
on June 03, 2010
PRESENTED to the City Council
and APPROVED by Resolution
No. 2010-R , adopted by said
City Council on June 14, 2010
and thereafter filed in the
Office of the City Clerk
Martin Cole
City Clerk
City of Culver CityENGINEER'S REPORT
ON THE ANNUAL LEVY
2010-2011
SEWER USER'S SERVICE CHARGE
TO: The Honorable Mayor and Members of the City Council
FROM: Charles D. Herbertson, Public Works Director and City Engineer
CITY ENGINEER'S REPORT FOR SEWER USER'S SERVICE CHARGES FOR
FISCAL YEAR 2010-11
1.0 Introduction
A major challenge confronting those responsible for wastewater infrastructure,
transportation, treatment and disposal is acquiring adequate funds to finance and
operate facilities and capital equipment, along with implementing appropriate pricing
structures to ensure the self-sufficiency of the utility. The financing vehicle that is used
by the utility and the timing of the financing are crucial in ensuring that wastewater
customers are appropriately paying for facilities that they need, and not inappropriately
financing facilities for future customers. It is a major goal of an effective financial plan to
'match' the economic impact on customers with the benefits received from the service.
Regulations governing Federal and State grant funds require the City of Los Angeles to
maintain a Cost Recovery Program (Sewer User Charges System) which includes all
operations and maintenance costs directly or indirectly related to the treatment and
collection of liquid waste discharge by residents and businesses. As a result of Culver
City's contractual relationship with the City of Los Angeles for wastewater treatment at
the Hyperion Treatment Facility, Culver City (City) is also required to recover from each
wastewater user their proportionate share of the costs incurred for wastewater collection
capital improvements within Culver City, wastewater system operation and
maintenance, City of Los Angeles capital improvements for conveyance to Hyperion
and operation and maintenance at Hyperion. Accordingly, Culver City adopted a plan to
collect wastewater user charges and implemented it for the first time in fiscal year 1 980-
81.
The City recovers wastewater user charges on an annual basis. Since the plan's
inception, the County Auditor-Controller's offices, and the annual property tax bill, have
been utilized as the vehicle for both billing and collection. This method has proven to be
both functionally satisfactory and exceptionally economical over the last twenty eight
years.
In order to achieve a fair and equitable system of wastewater user charges, users are
charged in a manner consistent with their actual use of the system. This comprises not
only the flow quantity, but also the wastewater strength (quality) as characterized by
ROD (biochemical oxygen demand) and SS (suspended solids).
Pursuant to the Culver City Municipal Code, in FY 2003-04 the City reviewed and
approved the Sewer User's Service Charges (SUSC) structures and billing formulas to
ensure that the City utilizes an effective pricing structure within the constraints of
Proposition 218. Additionally, the City wanted to ensure that its sewer pricing structureENGINEER'S REPORT
ON THE ANNUAL LEVY
2010-2011
SEWER USER'S SERVICE CHARGE
continues to achieve the goals and objectives of the community, while maintaining a fair
and equitable distribution of costs to all of its customers.
2,0 Discussion
Staff recommends that the existing rates be affirmed for 2010-11 tax rolls. Staff
believes, based on the current Sewer Fund balances and the anticipated revenues and
costs, that the existing rates will protect the solvency of the Fund.
Credits for residential landscaping can be given in two ways. 1) Either the resident can
install a separate water meter for landscaping which will not be assessed on the tax bill
or 2) prove by submitting calculations and evidence that the percentage reduction in the
tabled formula is not adequate.
Last year, the City of Los Angeles charged $1.75 million for operations, maintenance
and capital improvements for the treatment and conveyance of Culver City wastewater.
For fiscal year 2010-11, the charge is projected to be about $2,145,000.
3.0 Calculation of Annual Expenditures and Revenue
For fiscal year 2010-11 the estimated annual expenditures are as follows:
Operating Costs — City $3,087,941
Operating and Capital Projected charges from $2,145,000
City of Los Angeles*
Debt Service on Sewer Bond $1,552,000
Capital Projects — City $ 4,600,000
Total FY 2010-2011 budget $ 11,384,941
Table 1 shows the Five-Year Cash Flow Projection for the Sewer Enterprise Fund.
*Operating and capital projects charges from the City of Los Angeles for fiscal year
2010-11 is a projection that was made in February 2010. Based on past experience,
the charges amount will likely change and be at a lower amount.
In addition to annual operating and capital expenditures, sewer fund rates are set
so as to maintain a minimum reserve within the sewer fund. The minimum
reserve amount is calculated as follows:
Minimum Reserve Fund = 70% of annual operations budget + 2 yrs of debt service
÷ annual capital improvements budget
For fiscal year 2010-2011 the minimum required reserve fund is estimated to be
$9,865,558 and the available cash balance is projected to be $24,213,328.ENGINEER'S REPORT
ON THE ANNUAL LEVY
2010-2011
SEWER USER'S SERVICE CHARGE
For fiscal year 2010-11 the estimated annual revenue is as follows:
Sewer User Service Charge
$8,104,500
Interest Income
$ 350,000
$8,454,500
Staff recommends that the current SUSC billing formulas and charges remain the same
for fiscal year 2010-11 due to the healthy cash reserve balance.
4.0 Summary of Current SUSC Rate Structure
The current SUSC Rate Structure is composed of a base charge and a commodity
charge for all customer classifications.
A. Base Charge
The base charge of the SUSC are fixed costs and are comprised of two components:
Customer Costs — Calculating the sewer user service charge for the annual property tax
bill and responding to property owner inquiries regarding the charges
Capacity Costs — Capacity costs are fixed costs associated with the cost of providing
the required capacity within the sewer collection system . These costs include rents
and leases.
B. Commodity Charge
The Commodity Charge is also comprised of two components:
Collection System Costs — Collection system costs are debt service and variable costs
associated with the maintenance of the underground pipelines from each customer and
the integrated pipeline system prior to the discharge points to the City of Los Angeles
transmission system. As there are no treatment costs involved in the maintenance of
the Culver City's collection system, these costs are allocated on a flow basis only.
Treatment Costs —The process and costs of providing transmission, treatment, and
disposal of Culver City's customers' sewage are provided and determined by the City of
Los Angeles. These costs are considered variable costs, as they vary with the flow and
sewage strength as metered and determined by the City of Los Angeles. Treatment
costs are recovered through commodity rates charged on the basis of each customer's
adjusted actual water usage and their assumed sewage strengths_ In July of every yearENGINEER'S REPORT
ON THE ANNUAL LEVY
2010-2011
SEWER USER'S SERVICE CHARGE
the City of Los Angeles provides Culver City with the Amalgamated System Sewerage
System charge rates for the upcoming fiscal year.
Base
Charge
Commodity Charge
Annual Water Return to Rate for the
Usage X SewerX Customer
SUSC
5.0 Current SUSC Rates for 2009-10
SUSC Current Billing Formulas for FY 09/10
Base Charge Commodity Charge
(Per HCF Annual total flow)
Multi-Family $ 42.32 per unit + (0.85W x $3.85)
Single Family $ 42.32 + (0.58W x $3.85)
Group II Users: $ 42.32 + ( W x $3.85)
(Commercial no food preparation)
Group III Users: $ 42.32 + (W x $7.63)
(Commercial with food preparation)
Group IV Users: $ 42.32 +
(W x $3,75)
(Institutional)
Group V Users: $ 42.32 + (W x $3.26)
(Schools)
Group VI Users: Individual Special Users
601 $ 42.32 + (W x $4.10)
602 $ 42.32 + (W x $5.35)
603 $ 42,32 + (W x $5.35)
604 $ 42.32 + $3.75) (W x$3.75)
605 $ 42.32 + (W x $3.21)
606 $ 42.32
1- (W x $5.35)
607 $ 42.32 + (W x$3.85) $3.85)
609 $ 42.32 + (W x $3.85)
610 $ 42.32 + (W x $0.77)
W=Annual Water Consumption In HCF
Unit is a resident dwelling unit.
Annual Water Consumption was based on calendar year 2008.
sq.ENGINEER'S REPORT
ON THE ANNUAL LEVY
2010-2011
SEWER USER'S SERVICE CHARGE
6.0 Proposed SUSC Rates for 2010-11
Base Commodity Charge
Charge Annual Water Return to Rate for the SUSC
Usage X Sewer X Customer
SUSC Proposed Billing Formulas for FY 10/11
Base Charge Commodity Charge
(Per HCF Annual total flow)
Multi-Family $ 42.32 per unit + (0.85W x $3.85)
Single Family $ 42.32 + (0.58W x $3.85)
Group II Users: $ 42.32 + ( W x $3.85)
(Commercial no food preparation)
Group ill Users: $ 42.32 + (W x $7.63)
(Commercial with food preparation)
Group IV Users: $ 42.32 + (W x $3.75)
(Institutional)
Group V Users: $ 42.32 + (W x $3.26)
(Schools)
Group VI Users: Individual Special Users
601 $ 42.32 + (VV x $4.10)
602 $ 42.32
+ NV x $5-35)
603 $ 42.32 + (W x $5.35)
604 $ 42.32 + (W x $3.75)
605 $ 42.32 + (W x $3.21)
606 $ 42.32 + (W x $5.35)
607 $ 42.32 + (W x $3.85)
609 $ 42.32 + (W x $3.85)
610 $ 42.32 + (IN x $0.77)
W=Annual Water Consumption In HCF
Unit is a residential dwelling unitPublic Works 1-ctor and City Engineer
ENGINEER'S REPORT
ON THE ANNUAL LEVY
2010-2011
SEWER USER'S SERVICE CHARGE
Annual water consumption is based on calendar year 2009. However, as was reported
to the City Council on May 24, 2010, Golden State Water Company has stated they will
no longer provide water consumption data to the City. They believe that the water
consumption data is private and cannot be released to the City. Also they have stated
that they have not been directed to release water consumption data by the California
Public Utilities Commission. It is recommended that water consumption data from 2008
be used in calculations of the fiscal year 2010-2011 sewer user service charges.
Staff will present to the City Council alternative options on securing water consumption
data and conducting billings in a separate City Council report in the early part of fiscal
year 2010-2011.
7.0 Recommendations:
In Summary, Staff makes the following recommendations:
• Continue to use Los Angeles Auditor-Controller property tax roll for SUSC billing
purposes for FY 2010-2011 as it eliminates costly billing systems, additional staff,
and minimizes bad debt.
• Adopt a resolution that reaffirms the existing SUSC billing formulas for fiscal year
2010-11.
tOENGINEER'S REPORT
ON THE ANNUAL LEVY
2010-2011
SEWER USER'S SERVICE CHARGE