Beverly Hills City Council
February 20, 2024

AGENDA REPORT
Meeting Date: February 20, 2024
Item Number:

To: Honorable Mayor & City Council
From: Shana Epstein, Director of Public Works
Robert Welch, P.E., Utilities General Manager
Melissa Gomez, Senior Management Analyst
Subject: AN ORDINANCE OF THE CITY OF BEVERLY HILLS TO MODIFY

RATES AND CHARGES FOR WATER AND WASTEWATER

SERVICES AND FACILITIES FURNISHED BY THE CITY AND
ADDING NEW SECTION 6-1-308 (WASTEWATER SERVICE
CHARGES) TO ARTICLE 3 (WASTEWATER SYSTEM) OF
CHAPTER 1 (CITY UTILITY SERVICES) OF TITLE 6 (UTILITIES

AND FRANCHISES) OF THE BEVERLY HILLS MUNICIPAL CODE
AND RENUMBERING THE REMAINING SECTIONS OF ARTICLE 3

ACCORDINGLY
Attachments: 1. Ordinance

2. Combined Customer Bill Impacts

3. Water and Wastewater Rates Community Outreach

4. Water Rate Study (January 23, 2024)

5. Wastewater Rate Study (January 24, 2024)

RECOMMENDATION
It is recommended that City Council waive the full reading of the ordinance and that the ordinance entitled “An Ordinance of the City of Beverly Hills to Modify Rates and Charges for Water and Wastewater Services and Facilities Furnished by the City and Adding New Section 6-1-308 (Wastewater Service Charges) to Article 3 (Wastewater System) of Chapter 1 (City Utility Services) of Title 6 (Utilities and Franchises) of the Beverly Hills Municipal Code and Renumbering the Remaining Sections of Article 3 Accordingly” be introduced for first reading.

BEVERLY
HILLS
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Meeting Date: February 20, 2024

INTRODUCTION
The City’s Water and Wastewater Utilities are enterprise entities, and their expenses and revenues are separate from the City’s General Fund. In essence, customers pay for water and wastewater services through rates adopted by the City Council. Customer rates must generate sufficient revenues to sustain operations, maintenance, debt payments, capital improvement projects, costs of oversight and administrative functions performed by the City’s internal service departments and maintain healthy reserve levels based on the City’s financial policies. Every five years, the City aims to perform a cost of service and rate design study to ensure that adequate revenues are generated to support the water and wastewater systems and that the revenue needs are allocated to each customer class based on the cost of the service to that class. In 2021, the City contracted with HF&H Consultants (HF&H) to conduct a cost-of-service study for the Water and Wastewater Enterprises. The rate study process was a two-year collaboration between staff, the Public Works Commission (Commission), the City Council/Public Works Commission Liaison (Liaison), and financial consultants (HF&H). Additionally, on February 8, 2024, the Commission voted in favor of recommending the proposed water and wastewater rates for City Council consideration. The water rate study (Attachment 4) concluded that the City needs a nominal increase in water revenue during the next five-year period so the City can continue a robust capital improvement program that prioritizes reliability and resilience. The wastewater rate study (Attachment 5) concluded that no additional revenue from rates is necessary during the next five-year period.

However, after evaluating the current wastewater rate structures, changes are proposed that are more reasonable for the customers.

DISCUSSION
Water Rates
The City’s Water Enterprise provides potable water to residential, commercial, and municipal customers within its City limits, approximately 8,500 connections. In addition to these connections, the City also serves a portion of customers located in West Hollywood that includes an additional 1,800 connections. The City owns, operates, and maintains the water system within its service area. The water system includes storage reservoirs, pump stations, wells, pipelines, water meters, and the Foothill Water Treatment Plant.

The City purchases water from Metropolitan Water District (MWD) to deliver to its customers. The City also produces a portion of its water supply from various wells and treats the water at the Foothill Water Treatment Plant.

Revenue Requirements
The purpose of evaluating the revenue requirement is to establish the revenue needs of the water utility. Understanding the financial resources needed over the next 10 years is critical to managing and planning for the future, as well as to avoid drastic rate fluctuations year to year. A spreadsheet model was developed to derive revenue requirements for FY 2022-23 through FY 2031-32. This study relied on the City’s Operations and Maintenance (O&M) budget for FY 2022-23 and the City’s Capital Improvements Plan (CIP) budget covering FY 2022-23 through FY 2027-28. Results of the revenue requirements evaluation determined that the water rate revenues need to increase $6,043,000 over the next five-year period. This funding level is forecast to support moderate increases in operations and maintenance and a robust capital improvement program. The additional funding is a significant investment by our Meeting Date: February 20, 2024

community that is focused on reliability and the resilience of our vital water resources and infrastructure.

Cost-of-Service Study and Rate Structure Design
A cost-of-service analysis determines the costs of services in the form of rates that customers pay in proportion to the services they receive. The cost-of-service analysis allocated FY 2022-23 projected expenses, based on CIP spending. The analysis indicated that the revenue from existing service charge rates needs to generate approximately $3,323,000 to cover the cost of service related to capacity (i.e., meters) and the revenue from existing quantity charge rates needs to generate approximately $2,720,000 to cover the cost of service of water supply (i.e., volume of water used).

Adjusting the respective rates accordingly will provide the additional revenue needed to cover the increased costs. Key discussion points are below.

Service (Fixed) Charge Revenue
Fixed charge revenue balance remains the same at approximately 17.4% from fixed service plus fire service charges and 82.6% from variable quantity charges.

Approximately 71% of expenses incurred by the Water Enterprise are fixed. Therefore, the proposed fixed charges will recover a portion of the fixed costs (e.g., personnel, capital). The remaining fixed costs are recovered through the non-seasonal variable quantity charge revenue. Even though most of the Water Enterprise fund’s costs are fixed, this ratio has allowed customers to manage their bills through consumption. At the same time, the Water Enterprise fund has maintained revenue stability. The table below details the proposed fixed service charge rates for the next five years.

Service Current Proposed (All Customer Classes; Inside and Outside City) Size Charge 7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028 Water Meter Service Charges
1" $53.51 $53.51 $58.64 $59.81 $61.01 $62.23
1-1/2" $93.84 $93.84 $100.69 $102.70 $104.75 $106.85
2" $142.24 $142.24 $151.15 $154.17 $157.25 $160.40
3" $271.30 $271.30 $285.72 $291.43 $297.26 $303.21
4" $416.50 $416.50 $437.11 $445.85 $454.77 $463.87
6" $819.82 $819.82 $857.63 $874.78 $892.28 $910.13
8" $1,311.71 $1,311.71 $1,362.26 $1,389.51 $1,417.30 $1,445.65 10" $1,967.57 $1,967.57 $3,548.99 $3,619.97 $3,692.37 $3,766.22 Fire Meter Service Charges
<= 2" $29.73 $29.73 $30.32 $30.93 $31.55 $32.18
2 1/2" $44.32 $44.32 $45.21 $46.11 $47.03 $47.97
3" $64.56 $64.56 $65.85 $67.17 $68.51 $69.88
4" $124.69 $124.69 $127.18 $129.72 $132.31 $134.96
6" $340.52 $340.52 $347.33 $354.28 $361.37 $368.60
8" $712.74 $712.74 $726.99 $741.53 $756.36 $771.49
10" $1,272.63 $1,272.63 $1,298.08 $1,324.04 $1,350.52 $1,377.53 12" $1,654.42 $1,654.42 $1,687.51 $1,721.26 $1,755.69 $1,790.80 Meeting Date: February 20, 2024

Current Quantity Charge Rates Recommended Quantity Charge Rates Current Proposed New Proposed
Tier Size $/HCF Tier Size 7/1/2024 Tier Size 1/1/2025 1/1/2026 1/1/2027 1/1/2028 Inside City $/HCF $/HCF $/HCF $/HCF $/HCF
Single-Family/Duplex Single-Family/Duplex
Tier 1 0-26 HCF $3.65 Tier 1 0-26 HCF $3.65 0-32 HCF $3.75 $3.83 $3.91 $3.99 Tier 2 27-48 HCF $7.12 Tier 2 27-48 HCF $7.12 33-48 HCF $6.36 $6.49 $6.62 $6.75 Tier 3 49-86 HCF $10.48 Tier 3 49-86 HCF $10.48 49-83 HCF $10.52 $10.73 $10.94 $11.16 Tier 4 86+ HCF $14.87 Tier 4 86+ HCF $14.87 84+ HCF $14.94 $15.24 $15.54 $15.85 Multi-Family Multi-Family
Tier 1 0-8 HCF $4.66 Tier 1 0-8 HCF $4.66 0-8 HCF $5.06 $5.16 $5.26 $5.37 Tier 2 9+ HCF $13.31 Tier 2 9+ HCF $13.31 9+ HCF $14.73 $15.02 $15.32 $15.63 Commercial $7.24 Commercial $7.24 $7.43 $7.58 $7.73 $7.88 Water Reliability (all customers) $0.26 All Use $0.27 $0.28 $0.29 $0.30 $0.31 Fire Protection (all customers) $3.65 All Use $3.65
Outside City Tier Size $/HCF Tier Size $/HCF Tier Size $/HCF $/HCF $/HCF $/HCF Single-Family/Duplex Single-Family/Duplex
Tier 1 0-26 HCF $4.54 Tier 1 0-26 HCF $4.54 0-32 HCF $4.43 $4.52 $4.61 $4.70 Tier 2 27-48 HCF $8.01 Tier 2 27-48 HCF $8.01 33-48 HCF $7.04 $7.18 $7.32 $7.47 Tier 3 49-86 HCF $11.36 Tier 3 49-86 HCF $11.36 49-83 HCF $11.20 $11.42 $11.65 $11.88 Tier 4 86+ HCF $15.77 Tier 4 86+ HCF $15.77 84+ HCF $15.62 $15.93 $16.25 $16.58 Multi-Family Multi-Family
Tier 1 0-8 HCF $5.55 Tier 1 0-8 HCF $5.55 0-8 HCF $5.74 $5.85 $5.97 $6.09 Tier 2 9+ HCF $14.19 Tier 2 9+ HCF $14.19 9+ HCF $15.41 $15.72 $16.03 $16.35 Commercial $8.14 Commercial $8.14 $8.11 $8.27 $8.44 $8.61 Water Reliability (all customers) $0.41 All Use $0.42 $0.43 $0.44 $0.45 $0.46 Fire Protection (all customers) $4.54 All Use $4.54 $4.43 $4.52 $4.61 $4.70 Quantity Charge Revenue
To generate the $2,720,000 in additional revenue from quantity charges, the cost-ofservice analysis first re-aligns the tier sizes with the cost of providing service to each customer class and then establishes adjusted rates aligning with these tiers, resulting in an overall decrease for single-family residential customers; an increase for multi-family residential customers; and an increase for commercial customers. Outside City customer rates reflect a $0.68 per hundred cubic feet (HCF) rate increase over Inside City rates, which is later explained in this report.

The tier structure review determined that the single-family customer tiers need to be updated to reflect current customer demand patterns. Accordingly, the sizes of the tiers are proposed to be adjusted to reflect changing customer demands and thereby align the level of service with the cost of providing that service within each tier. Tier 1 will increase from 0 to 26 HCF to 0 to 32 HCF, Tier 2 will decrease from 27-48 HCF to 33-48 HCF, Tier 3 will decrease from 49-86 HCF to 49-83 HCF and Tier 4 will expand from 86+ HCF to 84+ HCF. Multi-family and commercial tiers are proposed to remain the same. The table below demonstrates the proposed quantity charge rates and tier sizes for the next five years.

Outside City Rate Differential
The City provides water services to a portion of the City of West Hollywood. During the previous cost-of-service study, it was determined that Beverly Hills customers (Inside City customers) and West Hollywood customers (Outside City customers) should pay different quantity charges mainly due to the contribution of the services provided by the City of Beverly Hills’ General Fund to the Water Enterprise. These services include public safety from police and fire, use of government facilities such as City Hall and corporation yards, and right-of-way maintenance. Inside City customers pay for these services through Meeting Date: February 20, 2024

property taxes. Outside City customers do not contribute property taxes, so their rates reflect an increase over Inside City rates to account for these costs and reimburse the General Fund. For the current cost-of-service study, it was determined that the Outside City rate differential would decrease from $0.88-$0.90 to $0.68 per HCF due to the decrease in Outside City water flow. (For context, one HCF is equivalent to 748 gallons.) Pass-Through Adjustments
Government Code Section 53756 allows an agency that provides water and wastewater services to adopt a schedule of fees or charges authorizing automatic adjustments that pass-through increases in wholesale charges for water or wastewater treatment. City Council adopted pass-through adjustments that would allow increases in wholesale water charges for purchasing water from MWD to be passed through directly to customers if they are higher than the adopted budgeted costs. If future MWD rates are more than what was projected in the cost-of-service study, then the incremental difference will be passed through to customers. Customers will be notified prior to the effective date of adjustment. Since the pass-through adoption, the City has not exercised the adjustments. Every five years, this provision needs to be included in the Proposition 218 notification. The pass-through adjustments will be approved for use (if needed) for an additional five years beginning 30 days after adoption of the ordinance approving the rate adjustments.

Water Reliability Charge
The water reliability charge provides dedicated funding for the expansion of the water system to the La Brea subarea. Developing the La Brea basin will increase local groundwater production and reduce the City’s dependence on MWD for water supply.

Estimated project costs for the calculation of the water reliability charge were derived from the La Brea Subarea Wells, Water Treatment and Transmission Main Project Preliminary Design Report from May 2017. The water reliability charge is in addition to the quantity and service charges. A customer’s water reliability charge is the product of the water reliability charge rate multiplied by the customer’s water consumption during the billing period. The water reliability charge will be billed to both Inside and Outside City customers over 30 years to cover the cost of the project. The 30-year projection of this rate in the last cost of service study was retained for the current cost of service study and the next five years were included. The rate per HCF is proposed to continue to increase by $0.01 each year, bringing the proposed water reliability charges beginning July 1, 2024, to $0.27 for Inside City customers and $0.42 for Outside City customers.

This rate differential between Inside City customers and Outside City customers is due to a $10 million General Fund contribution which subsidized the Inside City customer charge.

Water Shortage Revenue Stabilization Factors
The State of California has experienced intense periods of drought or water disruptions due to unforeseen events like earthquakes, resulting in mandatory water restrictions. In extreme cases, restrictions could negatively affect water utility revenues. To prepare, the City adopted a schedule of revenue stabilization factors to be implemented during water shortages with City Council approval and 30 days’ notice to water customers. The factors are correlated with reductions in each customer class’s required level of conservation for each stage. The factors are lowest for multi-family customers because their water use has less irrigation than, for example, single-family customers (during water shortages, irrigation water use is restricted more than indoor water uses). The revenue stabilization factors act as a multiplier to the customers’ existing quantity charge rates. Once the water shortage is over, rates will return to the normal rate schedule. The revenue stabilization rates replaced the drought surcharge implemented in prior years.

Meeting Date: February 20, 2024

Since the adoption of the revenue stabilization factors, the City has not exercised the factors. The table below demonstrates the revised water shortage revenue stabilization factors. If approved, the updated factors will replace the current factors 30 days after the adoption of the ordinance approving the rate adjustments.

Stage A Stage B Stage C Stage D Stage E
Up to Up to Up to Up to Up to
Class (5% Reduction) (10% Reduction) (20% Reduction) (30% Reduction) (50% Reduction) Single Family 1.041 1.088 1.203 1.360 1.827
Multi-Family 1.018 1.038 1.081 1.129 1.361
Commercial 1.024 1.050 1.109 1.179 1.453
Irrigation 1.095 1.224 1.685 3.180 n/a
To be applied to the prevailing quantity charge rates in effect at the time of the shortage declaration, if needed Revenue Stabilization Factors by Customer Class
Wastewater Rates
The City provides sewer service only to customers within the City boundary. The City owns, operates, and maintains the sewer collection system. However, the City discharges all wastewater to the City of Los Angeles’s system via the Hyperion Water Reclamation Plant. For this treatment service, the City reimburses the City of Los Angeles for its proportionate share of discharge volumes. The City’s collection system consists only of gravity pipelines. On average, the City conveys approximately 3.5 million gallons per day (MGD) to Hyperion Water Reclamation Plant without the aid of lift stations.

Revenue Requirements
The purpose of evaluating the revenue requirement is to establish the revenue needs of the wastewater utility. Understanding the financial resources needed over the next 10 years is critical to managing and planning for the future, as well as to avoid drastic rate fluctuations year to year. A spreadsheet model was developed to derive revenue requirements for FY 2022-23 through FY 2031-32. This study relied on the City’s Operations and Maintenance (O&M) budget for FY 2022-23 and the City’s Capital Improvements Plan (CIP) budget covering FY 2022-23 through FY 2027-28.

Results of the revenue requirements evaluation determined that no additional revenue from rates is necessary during the next five-year period. However, current revenue is less than expenses; therefore, a total of $10.9 million (over a five-year period) of capital expenses will be funded using reserve funds. Although no additional rate revenue is needed to fund wastewater operations, this cost-of-service study determines if each of the customer classes’ rates contribute revenue in proportion to their cost of service. In this case, the cost of service has shifted between the customer classes since the last time a cost-of-service study was conducted, and the proposed wastewater rates reflect that rebalancing.

Meeting Date: February 20, 2024

Cost-of-Service Study and Rate Structure Design
A cost-of-service analysis determines the costs of services in the form of rates that customers pay in proportion to the services they receive. The cost-of-service analysis accounts for the load that each class places on the wastewater collection and treatment system. Their respective loads are measured in terms of the estimated volumes of wastewater discharged to the sewers and the estimated strength concentrations (i.e., the amounts of organic and inorganic matter) of those discharges. Over the last 13 years since the previous cost-of-service study was conducted, the relative proportions of the loadings have shifted due to different growth rates among the classes as well as other factors (e.g., the diversion of organics in commercial wastewater to solid waste collection and disposal). To reflect the current cost of service, rates have been rebalanced in proportion to the cost of service as shown in the proposed rates.

Currently, residential customers (single-family and multi-family) are charged only a fixed rate per dwelling unit, which is the same for both classes. Commercial customers pay a fixed rate per account, a flow charge based on actual water use, and some excessstrength customers pay an additional water quality surcharge. Commercial customers with higher strength wastewater (e.g., restaurants, grocery stores), which require greater treatment to meet discharge requirements, are charged a higher flow charge than those customers with average strength wastewater.

The residential wastewater rate structure was evaluated in this cost-of-service study for a few reasons. First, the installation of a separate landscape meter for all existing properties has been a City Council priority since FY 2016-17. The current deliverable for this priority is to implement a volumetric rate structure for the wastewater residential class. The proposed rate structure will incentivize the installation of a separate irrigation meter, as water used for irrigation will not be assessed a wastewater charge. Secondly, during the last water rate cycle, residents expressed their concerns about the current residential wastewater rate structure given that a multi-family unit is charged the same wastewater charge as a single-family home. After hearing the public comment a few City Council members expressed their interest in exploring alternative wastewater rate structures for the residential class, and City staff agreed to investigate restructuring the residential wastewater rates. Lastly, due to the disparity between revenues and the cost of service for each customer class, staff, HF&H, and the Commission explored alternative rate structures to better align revenue from each class with their respective cost of service.

Service (Fixed) Charge Revenue
Service charge rates are recommended to be made the same uniform charge for all customer classes. To achieve the cost-of-service, existing residential customer service charge rates are recommended to decrease from $87.38 per dwelling unit to $40.08 (by the fifth year). This shift is the result of introducing a quantity charge to residential customers, thus reducing the amount of the fixed service charge. Service charge rates assessed to commercial customers are recommended to increase from $34.20 per account to $40.08 per account to align with the fixed costs covered by the service charge, which does not differ by customer class.

Quantity Charge Revenue
Currently, all residential customers only pay a fixed service charge regardless of the amount of wastewater (i.e., indoor water use) that is discharged into the sewer system. It is recommended that residential customers also be charged a quantity charge (similar to commercial) to reflect differences in indoor water use among residential households which can vary in size. Based on the cost-of-service analysis, residential customers Meeting Date: February 20, 2024

would be charged $3.58 per HCF (by the fifth year) of wastewater discharged, based on the adjusted water use during the billing period. The proposed quantity charges for all customer classes would be based on estimated sewered flow by factoring down each customer’s actual water use by a Sewer Return Factor, which reflects the fact that not all water use (e.g., irrigation) returns to the sewer system. Sewer Return Factors for each customer class are as follows: Single-Family is 52%; Multi-Family is 90%; and Commercial is 83%. Customers with a separate irrigation meter would be charged for all water use on the potable, non-irrigation meter and will not be charged sewer charges for the irrigation meter.

Commercial Quantity Charge Rate Structure
Commercial customers currently have low-strength (“Domestic Strength”) and a highstrength (“Excess Strength”) customer categories. There is currently no mediumstrength class. The proposed rates recommend the addition of a third quantity charge rate to create three Non-Residential customer classes: Commercial – Low Strength, Commercial – Medium Strength, and Commercial – High Strength. Some commercial accounts are composed of multiple businesses with a mix of domestic (e.g., retail) and excess strength (e.g., restaurants) wastewater and are served by the same meter.

Introducing a third commercial class between domestic and excess strength is a common industry practice and will recognize mixed-use properties, which are not 100% domestic or 100% excess strength, as well as other medium-strength businesses. Low Strength customer rates are proposed to decrease from $4.74 per HCF to $3.58 per HCF to re-align with the cost-of-service. High Strength customer rates are proposed to decrease from $7.08 per HCF to $6.95 per HCF to re-align with the cost-of-service. The new Medium Strength customer class will be charged $5.24 per HCF to align with the cost-of-service.

The table below details the proposed wastewater rates.

Charge Type Current Proposed
Customer Class Rates 7/ 1/2024 1/1/ 2025 1/1/ 2026 1/ 1/2027 1/ 1/2028 Bi-Monthly Fixed Service Charge
Single Family $87.38 $77.92 $68.46 $59.00 $49.54 $40.08 Mult i Family $87.38 $77.92 $68.46 $59.00 $49.54 $40.08 Commercial - Low Strength $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Commercial - Medium Strength n/a $40.08 $40.08 $40.08 $40.08 $40.08 Commercial - High Strength $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Quantity Charge Rate per hcf [1]
Single Family $0.00 $0.72 $1.43 $2.15 $2.86 $3.58
Mult i Family $0.00 $0.72 $1.43 $2.15 $2.86 $3.58
Commercial - low Stre ngth $4.74 $3.58 $3.58 $3.58 $3.58 $3.58 Commercial - Medium Strength n/a $5.24 $5.24 $5.24 $5.24 $5.24 Commercial - High Strength $7.08 $6.95 $6.95 $6.95 $6.95 $6.95 [1] Quantity charge applied to sewered water use. Sewered water u se is cal culated as actual water use x Return to Sewer Factor.

Return to Sewer Factors a re as fol I ows:

Single Family = 52%
Multi Family = 90%
Commeri ca I = 83%
Meeting Date: February 20, 2024

Note: Customers with an irrigation meter will be charged 100% of their water use for the domestic meter.

Customer Bill Impacts
Bill impacts will vary by customer class and actual water use from billing period to billing period. The Commission and Liaison agreed in concept with the residential rates being implemented over five years to minimize impacts. With consultation from the City Attorney’s Office, it was determined that revised commercial wastewater rates should be implemented in the first year instead of gradually phasing in over five years, as commercial customers are seeing a decrease in wastewater rates and should receive that impact sooner rather than later. Also, revised residential wastewater rates will continue to be implemented over five years with the use of reserves. No phase-in is recommended for water rates. Customer bill impacts for both water and wastewater are included as Attachment 2.

COMMUNITY ENGAGEMENT
Staff mailed notices for the February 20, 2024, public hearing in accordance with Proposition 218 requirements. Staff also hosted two town hall meetings to present the proposed rates, the impact on customers’ bills, and how the rate adjustments will allow Water and Wastewater Enterprises to continue serving the community. Since each customer will be impacted differently, a bill impact calculator was provided on the City’s website (www.beverlyhills.org/waterrates). Customers are able to input their water use data and compare their bill under the current and proposed rates. As of February 5, 2024, the rates website has 342 views with 129 unique viewers.

Staff also provided ample time to respond to questions and concerns from the public.

The date, time, and location of the town hall meetings were advertised in local newspapers for both Beverly Hills and West Hollywood to include the West Hollywood customers. Additionally, the information was placed on the City’s website, and through multiple social media channels, including Instagram, Facebook and Twitter. Information was sent to the Just in Case Groups to distribute to their members. The Public Works Director has been making the rounds in attending community meetings through February 2024 including City Commissions, the Rotary Club of Beverly Hills and Chamber of Commerce to address any concerns from the business community. Staff has included information on the proposed water and wastewater rate adjustments in the Public Works newsletter, The Backbone, and Water Tracker e-newsletter. As of February 8, 2024, staff received a total of three calls related to the water and wastewater rate adjustments compared to 12 calls and one email during the previous water rate study held in 2019.

As of February 8, 2024 the City Clerk has received four unverified protest votes. Lastly, Attachment 3 includes the full outreach matrix that identifies the various community outreach completed.

FISCAL IMPACT
The proposed water rates, if adopted, would generate an additional $6 million for the Water Enterprise over the five-year study period to address operational and capital investment needs.

Meeting Date: February 20, 2024

The proposed adjustments to wastewater rates, if adopted, will generate no additional revenue for the Wastewater Enterprise. The proposed Wastewater rates are intended to be revenue neutral. However, current projected revenue is less than forecasted expenses; therefore, a total of $10.9 million (over a five-year period) of capital expenses will be funded using reserve funds. The proposed adjustments will better align the rates for each customer class with the costs attributable to providing their respective services.

Wastewater rates will be phased in for residential customers to avoid large impacts on customers by using $2.0 million from reserves over the five-year planning period. With the use of reserves to fund capital expenses and the phase-in recommendation, the Wastewater reserve fund ending balance is projected to be above the City’s reserve target of 50% of annual Operating and Maintenance in reserves at all times.

Shana Epstein,
Director of Public Works
Approved By
Attachment 1
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B0785-0001\2917463v2.doc
ORDINANCE NO. 24-O-_____

AN ORDINANCE OF THE CITY OF BEVERLY HILLS TO

MODIFY RATES AND CHARGES FOR WATER AND

WASTEWATER SERVICES AND FACILITIES FURNISHED
BY THE CITY AND ADDING NEW SECTION 6-1-308
(WASTEWATER SERVICE CHARGES) TO ARTICLE 3
(WASTEWATER SYSTEM) OF CHAPTER 1 (CITY
UTILITY SERVICES) OF TITLE 6 (UTILITIES AND

FRANCHISES) OF THE BEVERLY HILLS MUNICIPAL

CODE AND RENUMBERING THE REMAINING SECTIONS
OF ARTICLE 3 ACCORDINGLY

THE CITY COUNCIL OF THE CITY OF BEVERLY HILLS DOES ORDAIN AS FOLLOWS:

Section 1. The City Council of the City of Beverly Hills hereby finds as follows:
(a) The City Council is authorized pursuant to the California Health and Safety Code Section 5471 to prescribe, revise and collect rates and charges for water and wastewater services and facilities furnished by the City.
(b) The City Council wishes to modify the rates and charges for water services and facilities furnished by the City (the “water service charges”) and the rates and charges for wastewater services and facilities furnished by the City (the “wastewater service charges”), as provided in Exhibit A.
(c) The City Council identified the parcels upon which the proposed water service charges and the proposed wastewater service charges would be imposed and calculated the amount of the proposed water service charges and the proposed wastewater service charges. (d) The City Clerk caused a notice of the time and place of a public hearing on the proposed water service charges and proposed wastewater service charges to be mailed as required by Section 6 of Article XIIID of the California Constitution. (e) Each notice described the amount of proposed water service charges and proposed wastewater service charges, the basis upon which the amounts of the proposed water -2-
B0785-0001\2917463v2.doc
service charges and proposed wastewater service charges were calculated, the reason for the proposed water service charges and proposed wastewater service charges, and the date, time, and location of a public hearing on the proposed water service charges and proposed wastewater service charges.
(f) On February 20, 2024, the City Council conducted a public hearing on the proposed water service charges and proposed wastewater charges and heard and considered all objections and protests thereto. At the close of the public hearing, the City Council determined that written protests against the proposed water service charges representing a majority of the parcels that receive water service had not been presented and that written protests against the proposed wastewater service charges representing a majority of the parcels that receive wastewater services had not been presented, meaning there was no majority protest against the proposed water service charges or proposed wastewater service charges.

Section 2. The City Council hereby approves the water service charges and the wastewater service charges in the amounts and on the effective dates as provided in Exhibit A.

The water service charges are subject to automatic adjustments for an additional five (5) years beginning on the effective date of this Ordinance that pass through to the water customers increases in wholesale water charges for purchasing water from the Metropolitan Water District if the wholesale charges for purchasing water are higher than the adopted budgeted costs. In addition, the Water Shortage Revenue Stabilization Factors set forth in Exhibit A, although not currently used, are approved for use (if needed) for an additional five (5) years beginning on the effective date of this Ordinance.

Section 3. The City Council hereby adds new Section 6-1-308 (Wastewater Service Charges) to Article 3 (Wastewater System) of Chapter 1 (City Utility Services) of Title 6 (Utilities and Franchises) of the Beverly Hills Municipal Code to read as follows and renumbers the remaining sections of Article 3 accordingly:
“Section 6-1-308: Wastewater Service Charges
A. There is imposed a wastewater service charge for the receiving, transportation, pumping, treatment and disposal of wastewater through the wastewater system, and capital replacement costs pertaining thereto.
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B. The wastewater service charge shall be charged to residential, commercial, governmental, industrial and other users of the wastewater system pursuant to article 1, “General Provisions Relating to City Utility Service” of this chapter. It shall have the following components as follows:

1. A fixed rate component, which shall be based on a user class to recover the City’s fixed costs of service to that particular user class.

2. A variable rate component, which shall be based on estimated volume discharge of wastewater as determined by metered water usage and adopted discharge factors to recover the City’s variable or flow related cost of service.

3. Wastewater strength component of low, medium, or high wastewater strength, shall be applied to commercial and industrial users. The strength component shall be based on the actual or estimated sewage strength using Biological Oxygen Demand (BOD) and Total Suspended Solids (TSS) criteria, and generally intended to recover the City’s variable costs of collecting, transporting, pumping, treating and disposing of wastewater which exceeds residential strength.

Classification of wastewater strength by commercial or industrial users are referenced below.
a. Low Strength (Range – BOD/TSS: 0 to 250 mg/L (ppm))
Banks & Financial Institutions
Barber Shops/Hair Salons (Hair Cutting Only)
Post Offices/Government
Retail Stores
Libraries
Schools
Religious Buildings, Halls & Lodges
Offices (Business and Professional)
b. Medium Strength (Range – BOD/TSS: 251 to 600 mg/L (ppm)) Bars & Taverns (w/o Dining)
Appliance Repair
Barber Shops/Hair Salons (Haircutting w/Add’l Treatments) Dry Cleaners
Nail Salons
Pet Groomers
Commercial Laundromats
Tasting Rooms
Medical Offices/Hospitals (General, Cosmetic, Dental, Convalescent & Veterinarian)
Hotels, Motels, or Bed & Breakfast
Pools with Restrooms (Clubhouse) Theaters
Warehouses
Car Washes
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B0785-0001\2917463v2.doc
Gym or Health Club
Service Stations, Garages, Auto Repair Shops
Car Rental/Car Service
Mini Marts (w/o Dish Washer or Garbage Disposal)
Mini Mart with Gas Pumps – (w/o Dish Washer or Garbage Disposal) Spa
c. High Strength (Range –BOD/TSS: over 600 mg/L (ppm))
Restaurants
Coffee Shops
Ice Cream Parlors
Catering
Eatery
Juice Bars
Bakeries
Butcher Shops
Bars & Taverns (w/ Dining)
Grocery Stores or Markets
Mini Marts (w/ Dish Washer or Garbage Disposal)
Delicatessens

4. Commercial or industrial users may request to evaluate their wastewater strength for appropriate classification. The Director of Public Works, or his or her designated representative, shall evaluate the user’s wastewater strength by using Section 6-1-308 (B)(3) user classification and/or estimated return to the wastewater system by the types of commercial or industrial users in the customer’s premise.

5. The wastewater service charges shall be computed at the rates established from time to time pursuant to article 1, “General Provisions Relating to City Utility Service” of this chapter.

6. No wastewater service charge shall be made to any appurtenance, improvement, building, lot or property where there is no connection to discharge to the wastewater system.

7. No wastewater service charge shall be made to water use metered by an irrigation meter where none of the water use is discharged to the wastewater system.

8. The Director of Public Works, or his or her designated representative, shall have the power and duty, and is directed to enforce all the provisions of this Section 6-1-308, and shall provide such rules and regulations as are consistent with the provisions of said section and may be necessary or desirable to aid in the administration, adjustment and enforcement of said section.” -5-
B0785-0001\2917463v2.doc
Section 4. The City Clerk shall cause this Ordinance to be published at least once in a newspaper of general circulation published and circulated in the City within fifteen (15) days after its passage, in accordance with Section 36933 of the Government Code; shall certify to the adoption of this Ordinance and shall cause this ordinance and her certification, together with proof of publication, to be entered in the Book of Ordinances of the Council of this City.

Section 5. This Ordinance shall go into effect and be in full force and effect at 12:01 a.m. on the thirty-first (31st) day after its passage.

Adopted:

Effective:

JULIAN A. GOLD, M.D.

Mayor of the City of Beverly Hills,
California
ATTEST:
(SEAL)

HUMA AHMED
City Clerk
APPROVED AS TO FORM: APPROVED AS TO CONTENT:

LAURENCE S. WIENER NANCY HUNT-COFFEY
City Attorney City Manager

JEFF S. MUIR
Director of Finance
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B0785-0001\2917463v2.doc

EXHIBIT A

1. Water Rates and Charges
A. Bi-Monthly Fixed Service Charges
Service Current Proposed (All Customer Classes; Inside and Outside City) Size Charge 7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028 Water Meter Service Charges
1" $53.51 $53.51 $58.64 $59.81 $61.01 $62.23
1-1/2" $93.84 $93.84 $100.69 $102.70 $104.75 $106.85
2" $142.24 $142.24 $151.15 $154.17 $157.25 $160.40
3" $271.30 $271.30 $285.72 $291.43 $297.26 $303.21
4" $416.50 $416.50 $437.11 $445.85 $454.77 $463.87
6" $819.82 $819.82 $857.63 $874.78 $892.28 $910.13
8" $1,311.71 $1,311.71 $1,362.26 $1,389.51 $1,417.30 $1,445.65 10" $1,967.57 $1,967.57 $3,548.99 $3,619.97 $3,692.37 $3,766.22 Fire Meter Service Charges
<= 2" $29.73 $29.73 $30.32 $30.93 $31.55 $32.18
2 1/2" $44.32 $44.32 $45.21 $46.11 $47.03 $47.97
3" $64.56 $64.56 $65.85 $67.17 $68.51 $69.88
4" $124.69 $124.69 $127.18 $129.72 $132.31 $134.96
6" $340.52 $340.52 $347.33 $354.28 $361.37 $368.60
8" $712.74 $712.74 $726.99 $741.53 $756.36 $771.49
10" $1,272.63 $1,272.63 $1,298.08 $1,324.04 $1,350.52 $1,377.53 12" $1,654.42 $1,654.42 $1,687.51 $1,721.26 $1,755.69 $1,790.80 -2-
B0785-0001\2917463v2.doc
B. Bi-Monthly Quantity Charge Rates
C. Water Shortage Revenue Stabilization Factors
Current Quantity Charge Rates Recommended Quantity Charge Rates Current Proposed New Proposed
Tier Size $/HCF Tier Size 7/1/2024 Tier Size 1/1/2025 1/1/2026 1/1/2027 1/1/2028 Inside City $/HCF $/HCF $/HCF $/HCF $/HCF
Single-Family/Duplex Single-Family/Duplex
Tier 1 0-26 HCF $3.65 Tier 1 0-26 HCF $3.65 0-32 HCF $3.75 $3.83 $3.91 $3.99 Tier 2 27-48 HCF $7.12 Tier 2 27-48 HCF $7.12 33-48 HCF $6.36 $6.49 $6.62 $6.75 Tier 3 49-86 HCF $10.48 Tier 3 49-86 HCF $10.48 49-83 HCF $10.52 $10.73 $10.94 $11.16 Tier 4 86+ HCF $14.87 Tier 4 86+ HCF $14.87 84+ HCF $14.94 $15.24 $15.54 $15.85 Multi-Family Multi-Family
Tier 1 0-8 HCF $4.66 Tier 1 0-8 HCF $4.66 0-8 HCF $5.06 $5.16 $5.26 $5.37 Tier 2 9+ HCF $13.31 Tier 2 9+ HCF $13.31 9+ HCF $14.73 $15.02 $15.32 $15.63 Commercial $7.24 Commercial $7.24 $7.43 $7.58 $7.73 $7.88 Water Reliability (all customers) $0.26 All Use $0.27 $0.28 $0.29 $0.30 $0.31 Fire Protection (all customers) $3.65 All Use $3.65
Outside City Tier Size $/HCF Tier Size $/HCF Tier Size $/HCF $/HCF $/HCF $/HCF Single-Family/Duplex Single-Family/Duplex
Tier 1 0-26 HCF $4.54 Tier 1 0-26 HCF $4.54 0-32 HCF $4.43 $4.52 $4.61 $4.70 Tier 2 27-48 HCF $8.01 Tier 2 27-48 HCF $8.01 33-48 HCF $7.04 $7.18 $7.32 $7.47 Tier 3 49-86 HCF $11.36 Tier 3 49-86 HCF $11.36 49-83 HCF $11.20 $11.42 $11.65 $11.88 Tier 4 86+ HCF $15.77 Tier 4 86+ HCF $15.77 84+ HCF $15.62 $15.93 $16.25 $16.58 Multi-Family Multi-Family
Tier 1 0-8 HCF $5.55 Tier 1 0-8 HCF $5.55 0-8 HCF $5.74 $5.85 $5.97 $6.09 Tier 2 9+ HCF $14.19 Tier 2 9+ HCF $14.19 9+ HCF $15.41 $15.72 $16.03 $16.35 Commercial $8.14 Commercial $8.14 $8.11 $8.27 $8.44 $8.61 Water Reliability (all customers) $0.41 All Use $0.42 $0.43 $0.44 $0.45 $0.46 Fire Protection (all customers) $4.54 All Use $4.54 $4.43 $4.52 $4.61 $4.70 Stage A Stage B Stage C Stage D Stage E
Up to Up to Up to Up to Up to
Class (5% Reduction) (10% Reduction) (20% Reduction) (30% Reduction) (50% Reduction) Single Family 1.041 1.088 1.203 1.360 1.827
Multi-Family 1.018 1.038 1.081 1.129 1.361
Commercial 1.024 1.050 1.109 1.179 1.453
Irrigation 1.095 1.224 1.685 3.180 n/a
To be applied to the prevailing quantity charge rates in effect at the time of the shortage declaration, if needed Revenue Stabilization Factors by Customer Class
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B0785-0001\2917463v2.doc

2. Wastewater Rates and Charges
A. Bi-Monthly Fixed Service Charge and Quantity Charge Rates

Note: Customers with an irrigation meter will be charged 100% of their water use for the domestic meter.

Charge Type Current Proposed
Customer Class Rates 7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028 Bi-Monthly Fixed Service Charge
Single Family $87.38 $77.92 $68.46 $59.00 $49.54 $40.08 Multi Family $87.38 $77.92 $68.46 $59.00 $49.54 $40.08
Commercial - Low Strength $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Commercial - Medium Strength n/a $40.08 $40.08 $40.08 $40.08 $40.08 Commercial - High Strength $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Quantity Charge Rate per hcf [1]
Single Family $0.00 $0.72 $1.43 $2.15 $2.86 $3.58
Multi Family $0.00 $0.72 $1.43 $2.15 $2.86 $3.58
Commercial - Low Strength $4.74 $3.58 $3.58 $3.58 $3.58 $3.58 Commercial - Medium Strength n/a $5.24 $5.24 $5.24 $5.24 $5.24 Commercial - High Strength $7.08 $6.95 $6.95 $6.95 $6.95 $6.95 [1] Quantity charge applied to sewered water use. Sewered water use is calculated as actual water use x Return to Sewer Factor.

Return to Sewer Factors are as follows:

Single Family = 52%
Multi Family = 90%
Commerical = 83%
Attachment 2
1 Combined Customer Bill Impacts
Combined Customer Bill Impacts- Low Water Use
Single Family/Duplex - Inside City - Low Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 28 28
Return to Sewer Factor n/a 52%
Sewered Flow n/a 15
Water
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $109.14 $109.14 $105.00 $107.24 $109.48 $111.72 Water Reliability Charge $7.28 $7.56 $7.84 $8.12 $8.40 $8.68 Total $169.93 $170.21 $171.48 $175.17 $178.89 $182.63
Increase/(Decrease) $0.28 $1.27 $3.69 $3.72 $3.74
Wastewater
Service Charge $87.38 $77.92 $68.46 $59.00 $49.54 $40.08 Quantity Charge $0.00 $10.80 $21.45 $32.25 $42.90 $53.70 Total $87.38 $88.72 $89.91 $91.25 $92.44 $93.78
Increase/(Decrease) $1.34 $1.19 $1.34 $1.19 $1.34
Total Bi-monthly Bill $257.31 $258.93 $261.39 $266.42 $271.33 $276.41 Incr/(decr) compared to Prior Yr $1.62 $2.46 $5.03 $4.91 $5.08 Cumulative Change $1.62 $4.08 $9.11 $14.02 $19.10
2 Multi Family - Inside City - Low Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1.5" meter 1.5" meter
Total Water Consumption 47 47
Dwelling Units 10 10
Average Water Consumption (per unit) 4.7 4.7
Return to Sewer Factor n/a 90.0%
Sewered Flow n/a 4.2
Water
Fixed Service Charge $93.84 $93.84 $100.69 $102.70 $104.75 $106.85 Quantity Charge $219.02 $219.02 $237.82 $242.52 $247.22 $252.39 Water Reliability Charge $12.22 $12.69 $13.16 $13.63 $14.10 $14.57 Total $325.08 $325.55 $351.67 $358.85 $366.07 $373.81
Increase/(Decrease) $0.47 $26.12 $7.18 $7.22 $7.74
Wastewater
Service Charge $873.80 $779.20 $684.60 $590.00 $495.40 $400.80 Quantity Charge $0.00 $30.24 $60.06 $90.30 $120.12 $150.36 Total $873.80 $809.44 $744.66 $680.30 $615.52 $551.16
Increase/(Decrease) ($64.36) ($64.78) ($64.36) ($64.78) ($64.36) Total Bi-monthly Bill $1,198.88 $1,134.99 $1,096.33 $1,039.15 $981.59 $924.97 Incr/(decr) compared to Prior Yr ($63.89) ($38.66) ($57.18) ($57.56) ($56.62) Cumulative Change ($63.89) ($102.55) ($159.73) ($217.29) ($273.91) 3 Commercial - Inside City - Low Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 57 57
Return to Sewer Factor n/a 83.0%
Sewered Flow 57 47
Commercial Strength Domestic Low
Water
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $412.68 $412.68 $423.51 $432.06 $440.61 $449.16 Water Reliability Charge $14.82 $15.39 $15.96 $16.53 $17.10 $17.67 Total $481.01 $481.58 $498.11 $508.40 $518.72 $529.06
Increase/(Decrease) $0.57 $16.53 $10.29 $10.32 $10.34
Wastewater
Service Charge $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Quantity Charge $270.18 $168.26 $168.26 $168.26 $168.26 $168.26 Total $304.38 $208.34 $208.34 $208.34 $208.34 $208.34
Increase/(Decrease) ($96.04) $0.00 $0.00 $0.00 $0.00
Total Bi-monthly Bill $785.39 $689.92 $706.45 $716.74 $727.06 $737.40 Incr/(decr) compared to Prior Yr ($95.47) $16.53 $10.29 $10.32 $10.34 Cumulative Change ($95.47) ($78.94) ($68.65) ($58.33) ($47.99) 4 Single Family/Duplex - Outside City - Low Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 28 28
Return to Sewer Factor n/a n/a
Sewered Flow n/a n/a
Water
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $134.06 $134.06 $124.04 $126.56 $129.08 $131.60 Water Reliability Charge $11.48 $11.76 $12.04 $12.32 $12.60 $12.88 Total $199.05 $199.33 $194.72 $198.69 $202.69 $206.71
Increase/(Decrease) $0.28 ($4.61) $3.97 $4.00 $4.02
Wastewater Not Applicabe; City of Beverly Hills does not provide Wastewater service to Outside City customers.

Total Bi-monthly Bill $199.05 $199.33 $194.72 $198.69 $202.69 $206.71 Incr/(decr) compared to Prior Yr $0.28 ($4.61) $3.97 $4.00 $4.02 Cumulative Change $0.28 ($4.33) ($0.36) $3.64 $7.66
5 Multi Family - Outside City - Low Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1.5" meter 1.5" meter
Total Water Consumption 47 47
Dwelling Units 10 10
Average Water Consumption (per unit) 4.7 4.7
Return to Sewer Factor n/a n/a
Sewered Flow n/a n/a
Water
Fixed Service Charge $93.84 $93.84 $100.69 $102.70 $104.75 $106.85 Quantity Charge $260.85 $260.85 $269.78 $274.95 $280.59 $286.23 Water Reliability Charge $19.27 $19.74 $20.21 $20.68 $21.15 $21.62 Total $373.96 $374.43 $390.68 $398.33 $406.49 $414.70
Increase/(Decrease) $0.47 $16.25 $7.65 $8.16 $8.21
Wastewater Not Applicabe; City of Beverly Hills does not provide Wastewater service to Outside City customers.

Total Bi-monthly Bill $373.96 $374.43 $390.68 $398.33 $406.49 $414.70 Incr/(decr) compared to Prior Yr $0.47 $16.25 $7.65 $8.16 $8.21 Cumulative Change $0.47 $16.72 $24.37 $32.53 $40.74
6 Commercial - Outside City - Low Water use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 57 57
Return to Sewer Factor n/a n/a
Sewered Flow n/a n/a
Commercial Strength n/a n/a
Water
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $463.98 $463.98 $462.27 $471.39 $481.08 $490.77 Water Reliability Charge $23.37 $23.94 $24.51 $25.08 $25.65 $26.22 Total $540.86 $541.43 $545.42 $556.28 $567.74 $579.22
Increase/(Decrease) $0.57 $3.99 $10.86 $11.46 $11.48
Wastewater Not Applicabe; City of Beverly Hills does not provide Wastewater service to Outside City customers.

Total Bi-monthly Bill $540.86 $541.43 $545.42 $556.28 $567.74 $579.22 Incr/(decr) compared to Prior Yr $0.57 $3.99 $10.86 $11.46 $11.48 Cumulative Change $0.57 $4.56 $15.42 $26.88 $38.36
7 Combined Customer Bill Impacts- Average Water Use
Single Family/Duplex - Inside City - Average Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 56 56
Return to Sewer Factor n/a 52%
Sewered Flow n/a 29
Water
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $335.38 $335.38 $305.92 $312.24 $318.56 $324.96 Water Reliability Charge $14.56 $15.12 $15.68 $16.24 $16.80 $17.36 Total $403.45 $404.01 $380.24 $388.29 $396.37 $404.55
Increase/(Decrease) $0.56 ($23.77) $8.05 $8.08 $8.18
Wastewater
Service Charge $87.38 $77.92 $68.46 $59.00 $49.54 $40.08 Quantity Charge $0.00 $20.88 $41.47 $62.35 $82.94 $103.82 Total $87.38 $98.80 $109.93 $121.35 $132.48 $143.90
Increase/(Decrease) $11.42 $11.13 $11.42 $11.13 $11.42
Total Bi-monthly Bill $490.83 $502.81 $490.17 $509.64 $528.85 $548.45 Incr/(decr) compared to Prior Yr $11.98 ($12.64) $19.47 $19.21 $19.60 Cumulative Change $11.98 ($0.66) $18.81 $38.02 $57.62
8 Multi Family - Inside City - Average Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1.5" meter 1.5" meter
Total Water Consumption 93 93
Dwelling Units 10 10
Average Water Consumption (per unit) 9.3 9.3
Return to Sewer Factor n/a 90.0%
Sewered Flow n/a 8.4
Water
Fixed Service Charge $93.84 $93.84 $100.69 $102.70 $104.75 $106.85 Quantity Charge $545.83 $545.83 $596.29 $608.06 $619.96 $632.79 Water Reliability Charge $24.18 $25.11 $26.04 $26.97 $27.90 $28.83 Total $663.85 $664.78 $723.02 $737.73 $752.61 $768.47
Increase/(Decrease) $0.93 $58.24 $14.71 $14.88 $15.86
Wastewater
Service Charge $873.80 $779.20 $684.60 $590.00 $495.40 $400.80 Quantity Charge $0.00 $60.48 $120.12 $180.60 $240.24 $300.72 Total $873.80 $839.68 $804.72 $770.60 $735.64 $701.52
Increase/(Decrease) ($34.12) ($34.96) ($34.12) ($34.96) ($34.12) Total Bi-monthly Bill $1,537.65 $1,504.46 $1,527.74 $1,508.33 $1,488.25 $1,469.99 Incr/(decr) compared to Prior Yr ($33.19) $23.28 ($19.41) ($20.08) ($18.26) Cumulative Change ($33.19) ($9.91) ($29.32) ($49.40) ($67.66) 9 Commercial - Inside City - Average Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 113 113
Return to Sewer Factor n/a 83.0%
Sewered Flow 113 94
Commercial Strength Domestic Low
Water
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $818.12 $818.12 $839.59 $856.54 $873.49 $890.44 Water Reliability Charge $29.38 $30.51 $31.64 $32.77 $33.90 $35.03 Total $901.01 $902.14 $929.87 $949.12 $968.40 $987.70
Increase/(Decrease) $1.13 $27.73 $19.25 $19.28 $19.30
Wastewater
Service Charge $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Quantity Charge $535.62 $336.52 $336.52 $336.52 $336.52 $336.52 Total $569.82 $376.60 $376.60 $376.60 $376.60 $376.60
Increase/(Decrease) ($193.22) $0.00 $0.00 $0.00 $0.00
Total Bi-monthly Bill $1,470.83 $1,278.74 $1,306.47 $1,325.72 $1,345.00 $1,364.30 Incr/(decr) compared to Prior Yr ($192.09) $27.73 $19.25 $19.28 $19.30 Cumulative Change ($192.09) ($164.36) ($145.11) ($125.83) ($106.53) 10 Single Family/Duplex - Outside City - Average Water Use Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 56 56
Return to Sewer Factor n/a n/a
Sewered Flow n/a n/a
Water
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $385.14 $385.14 $344.00 $350.88 $357.84 $364.96 Water Reliability Charge $22.96 $23.52 $24.08 $24.64 $25.20 $25.76 Total $461.61 $462.17 $426.72 $435.33 $444.05 $452.95
Increase/(Decrease) $0.56 ($35.45) $8.61 $8.72 $8.90
Wastewater Not Applicabe; City of Beverly Hills does not provide Wastewater service to Outside City customers.

Total Bi-monthly Bill $461.61 $462.17 $426.72 $435.33 $444.05 $452.95 Incr/(decr) compared to Prior Yr $0.56 ($35.45) $8.61 $8.72 $8.90 Cumulative Change $0.56 ($34.89) ($26.28) ($17.56) ($8.66) 11 Multi Family - Outside City - Average Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1.5" meter 1.5" meter
Total Water Consumption 93 93
Dwelling Units 10 10
Average Water Consumption (per unit) 9.3 9.3
Return to Sewer Factor n/a n/a
Sewered Flow n/a n/a
Water
Fixed Service Charge $93.84 $93.84 $100.69 $102.70 $104.75 $106.85 Quantity Charge $628.47 $628.47 $659.53 $672.36 $685.99 $699.75 Water Reliability Charge $38.13 $39.06 $39.99 $40.92 $41.85 $42.78 Total $760.44 $761.37 $800.21 $815.98 $832.59 $849.38
Increase/(Decrease) $0.93 $38.84 $15.77 $16.61 $16.79
Wastewater Not Applicabe; City of Beverly Hills does not provide Wastewater service to Outside City customers.

Total Bi-monthly Bill $760.44 $761.37 $800.21 $815.98 $832.59 $849.38 Incr/(decr) compared to Prior Yr $0.93 $38.84 $15.77 $16.61 $16.79 Cumulative Change $0.93 $39.77 $55.54 $72.15 $88.94
12 Commercial - Outside City - Average Water use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 113 113
Return to Sewer Factor n/a n/a
Sewered Flow n/a n/a
Commercial Strength n/a n/a
Water
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $919.82 $919.82 $916.43 $934.51 $953.72 $972.93 Water Reliability Charge $46.33 $47.46 $48.59 $49.72 $50.85 $51.98 Total $1,019.66 $1,020.79 $1,023.66 $1,044.04 $1,065.58 $1,087.14 Increase/(Decrease) $1.13 $2.87 $20.38 $21.54 $21.56
Wastewater Not Applicabe; City of Beverly Hills does not provide Wastewater service to Outside City customers.

Total Bi-monthly Bill $1,019.66 $1,020.79 $1,023.66 $1,044.04 $1,065.58 $1,087.14 Incr/(decr) compared to Prior Yr $1.13 $2.87 $20.38 $21.54 $21.56 Cumulative Change $1.13 $4.00 $24.38 $45.92 $67.48
13 Combined Customer Bill Impacts- High Water Use
Single Family/Duplex - Inside City - High Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 112 112
Return to Sewer Factor n/a 52%
Sewered Flow n/a 58
Water
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $1,036.40 $1,036.40 $1,023.22 $1,043.91 $1,064.60 $1,085.93 Water Reliability Charge $29.12 $30.24 $31.36 $32.48 $33.60 $34.72 Total $1,119.03 $1,120.15 $1,113.22 $1,136.20 $1,159.21 $1,182.88 Increase/(Decrease) $1.12 ($6.93) $22.98 $23.01 $23.67
Wastewater
Service Charge $87.38 $77.92 $68.46 $59.00 $49.54 $40.08 Quantity Charge $0.00 $41.76 $82.94 $124.70 $165.88 $207.64 Total $87.38 $119.68 $151.40 $183.70 $215.42 $247.72
Increase/(Decrease) $32.30 $31.72 $32.30 $31.72 $32.30
Total Bi-monthly Bill $1,206.41 $1,239.83 $1,264.62 $1,319.90 $1,374.63 $1,430.60 Incr/(decr) compared to Prior Yr $33.42 $24.79 $55.28 $54.73 $55.97 Cumulative Change $33.42 $58.21 $113.49 $168.22 $224.19 14 Multi Family - Inside City - High Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1.5" meter 1.5" meter
Total Water Consumption 186 186
Dwelling Units 10 10
Average Water Consumption (per unit) 18.6 18.6
Return to Sewer Factor n/a 90.0%
Sewered Flow n/a 16.7
Water
Fixed Service Charge $93.84 $93.84 $100.69 $102.70 $104.75 $106.85 Quantity Charge $1,783.66 $1,783.66 $1,966.18 $2,004.92 $2,044.72 $2,086.38 Water Reliability Charge $48.36 $50.22 $52.08 $53.94 $55.80 $57.66 Total $1,925.86 $1,927.72 $2,118.95 $2,161.56 $2,205.27 $2,250.89 Increase/(Decrease) $1.86 $191.23 $42.61 $43.71 $45.62
Wastewater
Service Charge $873.80 $779.20 $684.60 $590.00 $495.40 $400.80 Quantity Charge $0.00 $120.24 $238.81 $359.05 $477.62 $597.86 Total $873.80 $899.44 $923.41 $949.05 $973.02 $998.66
Increase/(Decrease) $25.64 $23.97 $25.64 $23.97 $25.64
Total Bi-monthly Bill $2,799.66 $2,827.16 $3,042.36 $3,110.61 $3,178.29 $3,249.55 Incr/(decr) compared to Prior Yr $27.50 $215.20 $68.25 $67.68 $71.26 Cumulative Change $27.50 $242.70 $310.95 $378.63 $449.89 15 Commercial - Inside City - High Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 226 226
Return to Sewer Factor n/a 83.0%
Sewered Flow 226 188
Commercial Strength Domestic Low
Water
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $1,636.24 $1,636.24 $1,679.18 $1,713.08 $1,746.98 $1,780.88 Water Reliability Charge $58.76 $61.02 $63.28 $65.54 $67.80 $70.06 Total $1,748.51 $1,750.77 $1,801.10 $1,838.43 $1,875.79 $1,913.17 Increase/(Decrease) $2.26 $50.33 $37.33 $37.36 $37.38
Wastewater
Service Charge $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Quantity Charge $1,071.24 $673.04 $673.04 $673.04 $673.04 $673.04 Total $1,105.44 $713.12 $713.12 $713.12 $713.12 $713.12 Increase/(Decrease) ($392.32) $0.00 $0.00 $0.00 $0.00
Total Bi-monthly Bill $2,853.95 $2,463.89 $2,514.22 $2,551.55 $2,588.91 $2,626.29 Incr/(decr) compared to Prior Yr ($390.06) $50.33 $37.33 $37.36 $37.38 Cumulative Change ($390.06) ($339.73) ($302.40) ($265.04) ($227.66) 16 Single Family/Duplex - Outside City - High Water Use Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 112 112
Return to Sewer Factor n/a n/a
Sewered Flow n/a n/a
Water
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $1,135.96 $1,135.96 $1,099.38 $1,121.19 $1,143.64 $1,166.54 Water Reliability Charge $45.92 $47.04 $48.16 $49.28 $50.40 $51.52 Total $1,235.39 $1,236.51 $1,206.18 $1,230.28 $1,255.05 $1,280.29 Increase/(Decrease) $1.12 ($30.33) $24.10 $24.77 $25.24 Wastewater Not Applicabe; City of Beverly Hills does not provide Wastewater service to Outside City customers.

Total Bi-monthly Bill $1,235.39 $1,236.51 $1,206.18 $1,230.28 $1,255.05 $1,280.29 Incr/(decr) compared to Prior Yr $1.12 ($30.33) $24.10 $24.77 $25.24 Cumulative Change $1.12 ($29.21) ($5.11) $19.66 $44.90
17 Multi Family - Outside City - High Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1.5" meter 1.5" meter
Total Water Consumption 186 186
Dwelling Units 10 10
Average Water Consumption (per unit) 18.6 18.6
Return to Sewer Factor n/a n/a
Sewered Flow n/a n/a
Water
Fixed Service Charge $93.84 $93.84 $100.69 $102.70 $104.75 $106.85 Quantity Charge $1,948.14 $1,948.14 $2,092.66 $2,134.32 $2,176.78 $2,220.30 Water Reliability Charge $76.26 $78.12 $79.98 $81.84 $83.70 $85.56 Total $2,118.24 $2,120.10 $2,273.33 $2,318.86 $2,365.23 $2,412.71 Increase/(Decrease) $1.86 $153.23 $45.53 $46.37 $47.48
Wastewater Not Applicabe; City of Beverly Hills does not provide Wastewater service to Outside City customers.

Total Bi-monthly Bill $2,118.24 $2,120.10 $2,273.33 $2,318.86 $2,365.23 $2,412.71 Incr/(decr) compared to Prior Yr $1.86 $153.23 $45.53 $46.37 $47.48 Cumulative Change $1.86 $155.09 $200.62 $246.99 $294.47 18 Commercial - Outside City - High Water use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 226 226
Return to Sewer Factor n/a n/a
Sewered Flow n/a n/a
Commercial Strength n/a n/a
Water
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $1,839.64 $1,839.64 $1,832.86 $1,869.02 $1,907.44 $1,945.86 Water Reliability Charge $92.66 $94.92 $97.18 $99.44 $101.70 $103.96 Total $1,985.81 $1,988.07 $1,988.68 $2,028.27 $2,070.15 $2,112.05 Increase/(Decrease) $2.26 $0.61 $39.59 $41.88 $41.90
Wastewater Not Applicabe; City of Beverly Hills does not provide Wastewater service to Outside City customers.

Total Bi-monthly Bill $1,985.81 $1,988.07 $1,988.68 $2,028.27 $2,070.15 $2,112.05 Incr/(decr) compared to Prior Yr $2.26 $0.61 $39.59 $41.88 $41.90 Cumulative Change $2.26 $2.87 $42.46 $84.34 $126.24
Attachment 3
Water and Wastewater Rates Community Outreach
p. 1 of 3
Date Type Outreach or Project Circulation Details
May 1, 2023 Public
Outreach
Public Works Liaison – 5/31/2023 -
Status Update for the Water and
Wastewater Cost of Service Study
2 Councilmembers,
2 Commissioners and
those attending the
meeting in person and
remotely
June 8, 2023 Public
Outreach
Public Works Commission – 6/8/2023
Director’s Report regarding the Public
Works Liaison Meeting (5/31/2023).
5 Commisioners and
those attending the
meeting in person and
remotely
November 7,
2023
Public
Outreach
City Council Study Session – 11/7/2023
Distribution of the Water and
Wastewater Rates Public Notice Staff
recommends that City Council authorize
staff to proceed with a Public Notice
and schedule a Public Hearing in
February 2024 for the proposed
recommended five-year water and
wastewater customer rate adjustments
in compliance with Proposition 218
requirements.
5 Council Members
and those attending the
meeting in person and
remotely
December
21, 2023
Public
Outreach
Held training for all front customer
facing staff regarding Water and Waste
Water Rate Adjusment Notice.
20 December
21, 2023
Webpage Webpage updated with
information.Working with PIO’s to
promote to webpage.
342 views
129 unique viewers
January 2,
2024
Public
Outreach
Sent out Notice to all City Water
Account Holders and households.
32,000
January
2024
Newletter The Backbone – Jan/Feb 2023 9,143 Each 2 Mo.

Cycle
January
2024
Customer
Outreach
Track Calls received by City’s Customer
Service regarding Water and Waste
Water Rate Adjusment Hearing and
Town Hall Meetings. update FAQ's
3 January
2024
Customer
Outreach
Track emails received by City’s
Customer Service regarding Water and
Waste Water Rate Adjusment Hearing
and Town Hall Meetings to update
FAQ's
0 January and
February
2024
Public
Outreach
Water and Waste Water Rate
Adjustment Meetings Messages on
Utility Bills
9,143 Each
January 4,
2024
Public
Outreach
BH Weekly Article- Issue 1266 page 5 14,950
January 9,
2024
Public
Outreach
Arts & Culture Commission Meeting
presenation in regards to Water and
5 Commisioners and
those attending the
Water and Wastewater Rates Community Outreach
p. 2 of 3
Waste Water Rate Adjusment
education.
meeting in person and
remotely
January 10,
2024
Public
Outreach
BH Weekly Newspaper AdvertisementWater and Waste Water Rate Adjusment Hearing and Town Hall
Meetings
14,950
January 11,
2024
Public
Outreach
City Press Release- Water and Waste
Water Rate Adjusment education and
upcoming meetings
Various publications
that picked up
newstory included the
BH Weekly and BH
Courier
January 11,
2024
Public
Outreach
Distributed notices to all public counters
in City Buildings
Placed in all public
counters including
community centers,
parks, City Hall
Counters
January 11,
2024
Public
Outreach
Cultural Heritage Commission Meeting -
presenation in regards to Water and
Waste Water Rate Adjusment
education.
5 Commisioners and
those attending the
meeting in person and
remotely
January 11,
2024
Public
Outreach
BH Press Newspaper AdvertisementWater and Waste Water Rate Adjusment Hearing and Town Hall
Meetings
7,420
January 12,
2024
Public
Outreach
BH Courier Newspaper- Article on -
Water and Waste Water Rate
Adjusment Hearing and Town Hall
Meetings -Issue No. 2 page7
24,400
January 12,
2024
Public
Outreach
BH Courier Newspaper AdvertisementWater and Waste Water Rate Adjusment Hearing and Town Hall
Meetings
24,400
January 17,
2024
Public
Outreach
Architectural Commission Meeting
presenation in regards to Water and
Waste Water Rate Adjusment
education.
5 Commisioners and
those attending the
meeting in person and
remotely
January 17,
2024
Public
Outreach
Water and Waste Water Rate
Adjusment Town Hall Meeting #1
3 January 18,
2024
Public
Outreach
Human Relations Commission Meetingpresenation in regards to Water and Waste Water Rate Adjusment
education.
5 Commisioners and
those attending the
meeting in person and
remotely
January 22,
2024
Public
Outreach
Health and Safety Commission
Meeting- presenation in regards to
Water and Waste Water Rate
Adjusment education.
5 Commisioners and
those attending the
meeting in person and
remotely
January 23,
2024
Public
Outreach
Special Recreation & Parks
Commission Meeting- presenation in
5 Commisioners and
those attending the
Water and Wastewater Rates Community Outreach
p. 3 of 3
regards to Water and Waste Water
Rate Adjusment education.
meeting in person and
remotely
January 23,
2024
Public
Outreach
Flyer distributed to Just in Case
captains to forward to their respective
zone members
Send to a Captain and
she disrtibueted to the
various zones through
Whatsapp Groups
January 24,
2024
Employe
e
Educatio
n
Public Works Employees- presenation
in regards to Water and Waste Water
Rate Adjusment education.
200
February 1,
2024
Public
Outreach
Water and Waste Water Rate
Adjusment Town Hall Meeting #2
4 January/
February
2024
Social
Media
Facebook-post advertising the Water
and Waste Water Rate Adjusment
Hearing and Town Hall Meetings.

Facebook: 17,000
January/
February
2024
Social
Media
Instagram-post advertising the Water
and Waste Water Rate Adjusment
Hearing and Town Hall Meetings.

Instagram: 31,900
January/
February,
2024
Public
Outreach
Water Tracker Email- Water and Waste
Water Rate Adjusment Information
7,000
February 8,
2024
Public
Outreach
Government Affairs Committeepresenation in regards to Water and Waste Water Rate Adjusment
education.
16 Attachment 4
January 23, 2024

CITY OF BEVERLY HILLS
Water Rate Study
HF&H Consultants, LLC
This page intentionally left blank for double-sided printing purposes.

CITY OF BEVERLY HILLS
345 Foothill Road
Beverly Hills, CA 90210

WATER RATE STUDY
January 23, 2024

HF&H CONSULTANTS, LLC
590 Ygnacio Valley Road, Suite 105
Walnut Creek, CA 94596
© HF&H CONSULTANTS, LLC All rights reserved.
•
This page intentionally left blank for double-sided printing purposes.

HF&H CONSULTANTS, LLC
Managing Tomorrow’s Resources Today
590 Ygnacio Valley Road, Suite 105 Robert D. Hilton, Emeritus Walnut Creek, California 94596 John W. Farnkopf, PE
Tel: (925) 977-6950 Laith B. Ezzet, CMC
Fax: (925) 977-6955 Richard J. Simonson
hfh-consultants.com Marva M. Sheehan, CPA
Robert C. Hilton
January 23, 2024
Ms. Shana Epstein
Director of Public Works
City of Beverly Hills
345 Foothill Road
Beverly Hills, CA 90210
Subject: Water Rate Study – Final Report
Dear Ms. Epstein:

We are pleased to submit this wastewater rate study. This report is organized into six sections:
• Executive Summary – a summary of the proposed water rates. • Introduction – a brief description of the study purpose and project background. • Revenue Requirements – the estimated costs that must be covered by rates and other sources of revenue.
• Revenue Analysis – an analysis of revenue at current rates to determine if revenues need to increase to cover the projected revenue requirement and to maintain adequate reserves.
• Cost of Service Analysis – the allocation of the revenue requirement among the customer classes based on updated water demands of from each class. • Rate and Bill Analysis – the updated rates and residential tier breakpoints, with the cost of service adjustments and the required rate increases and a comparison of typical customer bills with comparable agencies.

We would like to express our thanks to City staff and the members of the Public Works Commission and the Public Works Liaison Committee for their diligent efforts in assisting us with this study.

Sincerely,

HF&H CONSULTANTS, LLC
Rick Simonson, Senior Vice President
HF&H Consultants, LLC Page 1 January 23, 2024
This page intentionally left blank for double-sided printing purposes.

City of Beverly Hills Water Rate Study – Final Report
Table of Contents
HF&H Consultants, LLC Page i January 23, 2024

TABLE OF CONTENTS
TABLE OF CONTENTS........................................................................................ I EXECUTIVE SUMMARY ................................................................ 1 Background ............................................................................................. 1 Current Rates .......................................................................................... 1 Findings and Recommendations ................................................................ 2 INTRODUCTION.......................................................................... 6 Study Purpose ......................................................................................... 6 Study Process .......................................................................................... 6 Current Rates .......................................................................................... 7 REVENUE REQUIREMENTS.......................................................... 9 Expense Projections ................................................................................. 9 Reserve Funds ....................................................................................... 10 COST OF SERVICE ANALYSIS.................................................... 12 General Approach .................................................................................. 12 Cost of Service Allocations ...................................................................... 12 RATE DESIGN............................................................................ 19 Design Objectives .................................................................................. 19 Summary of Rate Design Modifications .................................................... 19 Quantity Charge Rate Design and Calculations.......................................... 20 Single-family Residential Quantity Charges ........................................ 20 Multi-Family Residential Quantity Charges ......................................... 21 Commercial Quantity Charges........................................................... 23 Quantity Charge Rate Adjustments ................................................... 24 Adjusted Quantity Charge Rates ....................................................... 26 Water Reliability Rates ..................................................................... 27 Fixed Service Charge Rates..................................................................... 30 Fixed Service Charge Rates .............................................................. 30 Fire Service Charge Rates................................................................. 33 Water Shortage Revenue Stabilization Factors .......................................... 34 Methodology ................................................................................... 34 Analysis .......................................................................................... 35 Implementation............................................................................... 39 MWD Pass-Through Adjustment.............................................................. 39 CUSTOMER BILL IMPACTS ........................................................ 41 Neighboring Agency Bill Comparison........................................................ 46 SECTION 1.

1.1 1.2

1.3 SECTION 2.

2.1 2.2

2.3 SECTION 3.

3.1 3.2
SECTION 4.

4.1 4.2
SECTION 5.

5.1 5.2

5.3 5.4

5.5 5.6
A.

B.

C.

D.

E.

F.

A.

B.

A.

B.

C.

SECTION 6.

6.1 City of Beverly Hills Water Rate Study – Final Report Table of Contents
HF&H Consultants, LLC Page ii January 23, 2024
TABLES
Table 1-1. Current Bi-monthly Service Charge Rates (Inside and Outside City Customers) ............................................................................................................................. 1 Table 1-2. Current Bi-monthly Quantity Charge Rates ............................................... 2 Table 1-3. Current and Recommended Quantity Charge Rates.................................... 4 Table 1-4. Current and Recommended Fixed Service Charge Rates ............................ 5 Table 2-1. Current Bi-monthly Fixed Service Charge Rates (Inside and Outside City Customers) ............................................................................................................ 8 Table 2-2. Current Bi-monthly Variable Quantity Charge Rates .................................. 8 Table 3-1. Key Modeling Assumptions...................................................................... 9 Table 3-2. Total Annual Projected Net Revenue Requirements................................. 10 Table 4-1. Demand Allocation Factors - Systemwide ............................................... 15 Table 4-2. Functional Cost Allocations (FY 2022-23) ............................................... 16 Table 4-3. Demand Allocation Factors – Customer Classes ...................................... 17 Table 4-4. Current Rate Revenue Compared With the Cost of Service ...................... 18 Table 5-1. Single-family Tier Structure - Breakpoints .............................................. 21 Table 5-2. Single-family Tier Structure - Rates ....................................................... 21 Table 5-3. Multi Family Tier Structure - Breakpoints................................................ 22 Table 5-4. Multi Family Tier Structure - Rates......................................................... 23 Table 5-5. Calculation of Commercial Quantity Charge Rate .................................... 24 Table 5-6. Summary of Cost-of-Service Quantity Charge Rates ................................. 24 Table 5-7. Quantity Charge Rate Adjustment for General Fund Services ................... 26 Table 5-8. Recommended FY 2024-25 Quantity Charge Rates (effective 1/1/2025) ... 27 Table 5-9. Summary of Water Reliability Charge Analyses and Recommended Rates . 29 Table 5-10. Current and Recommended Quantity Charge Rates ................................ 30 Table 5-11. Fixed Service Charge Units of Service .................................................. 31 Table 5-12. Fixed Service Charge Unit Costs .......................................................... 32 Table 5-13. Recommended Bi-Monthly Fixed Service Charge Rates .......................... 32 Table 5-14. Current and Recommended Fixed Service Charge Rates ........................ 33 Table 5-15. Current and Recommended Bi-monthly Fixed Fire Service Rates............. 33 Table 5-16. Shortage Reductions by Class.............................................................. 35 Table 5-17. Calculation of Shortage Reductions by Stage and Customer Class/Type .. 37 Table 5-18. Water Shortage Revenue Stabilization Factors by Class/Type ................. 39 Table 5-19. Metropolitan Water District Purchased Water Cost Projections................ 40 Table 6-1. Bi-Monthly Bill Impacts – Inside City Customers – Low Water Use............. 41 Table 6-2. Bi-Monthly Bill Impacts – Inside City Customers – Average Water Use....... 42 Table 6-3. Bi-Monthly Bill Impacts – Inside City Customers – High Water Use ............ 43 Table 6-4. Bi-Monthly Bill Impacts – Outside City Customers – Low Water Use........... 44 Table 6-5. Bi-Monthly Bill Impacts – Outside City Customers – Average Water Use..... 45 Table 6-6. Bi-Monthly Bill Impacts – Outside City Customers – High Water Use.......... 46 City of Beverly Hills Water Rate Study – Final Report
Table of Contents
HF&H Consultants, LLC Page iii January 23, 2024

FIGURES
Figure 3-1. Projected Year-End Reserve Balances ................................................... 11 Figure 6-1. Single Family Bi-Monthly Charge Comparison with Neighboring Agencies 47 Figure 6-2. Multi Family Bi-Monthly Charge per Dwelling Unit (for a 10-Unit Complex) Comparison with Neighboring Agencies .................................................................. 47 Figure 6-3. Commercial) Bi-Monthly Charge Comparison with Neighboring Agencies. 48

APPENDIX
Appendix A – Water Reliability Charge 30-year Cash Flow Analysis

ACRONYMS
AMI Automated Meter Infrastructure
AWWA American Water Works Association
EMU Equivalent Meter Unit
FY Fiscal Year
CCF or HCF Hundred cubic feet of metered water sold; 748 gallons; a cube of water

4.6 feet on edge
CIP Capital Improvement Project
GPD Gallons Per Day
ISF Internal Services Fund – reimbursement by the Water Fund for services provided by the General Fund
O&M Operations and Maintenance
MWD Metropolitan Water District of Southern California, the City’s wholesale water supplier
PAYGo Pay-As-You-Go, in reference to funding capital improvements from cash rather than from borrowed sources of revenue

ACKNOWLEDGEMENTS
City Council
Mayor Julian A. Gold, M.D.

Vice Mayor Lester Friedman
Councilmember Lili Bosse
Councilmember Sharona R Nazarian, PsyD
Councilmember John A Mirisch
City of Beverly Hills Water Rate Study – Final Report
Table of Contents
HF&H Consultants, LLC Page iv January 23, 2024
Public Works Commission
Chairperson Wendy E. Nystrom
Vice Chairperson Charles Alpert
Commissioner John Millan
Commissioner Homayoon “Mark” Nehoray
Commissioner Susan Kimura
City Staff
Shana Epstein, Director of Public Works
Jeff Muir, Director of Finance
Robert Welch, Utilities General Manager
Melissa Gomez, Senior Management Analyst
Tatiana Szerwinski, Assistant Director of Finance
Brandy Gros, Senior Budget & Financial Analyst
HF&H Consultants, LLC
Rick Simonson, Senior Vice President
John Farnkopf, Senior Vice President
Gabe Sasser, Project Manager

LIMITATIONS
This document was prepared solely for the City of Beverly Hills in accordance with the contract between the City and HF&H and is not in intended for use by any other party for any other purpose.

In preparing this study, we relied on information and instructions from the City, which we consider accurate and reliable and did not independently verify.

Rounding differences caused by stored values in electronic models may exist.

This document represents our understanding of relevant laws, regulations, and court decisions but should not be relied upon as legal advice. Questions concerning the interpretation of legal authorities referenced in this document should be referred to a qualified attorney.

City of Beverly Hills Water Rate Study – Final Report
Executive Summary
HF&H Consultants, LLC Page 1 January 23, 2024

EXECUTIVE SUMMARY

BACKGROUND
The City of Beverly Hills (City) provides water service to residents and businesses in Beverly Hills (Inside City customers) and a portion of West Hollywood (Outside City customers). The City is heavily reliant on the Metropolitan Water District of Southern California for its potable water supply but has plans underway to continue developing local groundwater.

Since 2016, HF&H Consultants, LLC (HF&H) has supported the City in the analysis of its Water enterprise rates. On February 5, 2019, the Beverly Hills City Council approved a five-year water rate adjustment schedule based on a cost-of-service study conducted by HF&H. The restructured rate adjustments accounted for changes to the existing consumption and fixed service charges, implemented a water reliability charge, and adopted a revenue stabilization rates schedule for use during water shortages. The City’s water rates were last adjusted on January 1, 2022.

Since February 2022, HF&H has worked with City staff to develop a five-year water enterprise financial model to analyze the necessary revenue increases to fund the water system’s Operations and Maintenance (O&M) expenses, capital improvement plan, and adequately fund reserves for on-going cash flow and unexpected expenses.

CURRENT RATES
Tables 1-1 and 1-2 summarize the current quantity charge rates, service charge rates, and water reliability charge, respectively.

Table 1-1. Current Bi-monthly Service Charge Rates
(Inside and Outside City Customers)
Service Current
Size Charge
Water Meter Service Charges
1" $53.51
1-1/2" $93.84
2" $142.24
3" $271.30
4" $416.50
6" $819.82
8" $1,311.71
10" $1,967.57
SECTION 1.

1.1 1.2
City of Beverly Hills Water Rate Study – Final Report
Executive Summary
HF&H Consultants, LLC Page 2 January 23, 2024
Table 1-2. Current Bi-monthly Quantity Charge Rates

FINDINGS AND RECOMMENDATIONS
HF&H makes the following findings and recommendations.

1. Annual revenue increases. To maintain a reasonable water fund reserve (e.g., 50% of Operating Expenses, the water rate revenues need to increase $6,043,000 over the next five-year period.

2. Cost of service analysis of rate components. As discussed in item #1, water system revenues need to increase. As such, a cost-of-service analysis was performed to allocate the revenue requirements to the components associated with the service (meter size) and quantity charges (volume of water used). The analysis indicated that the revenue from existing service charge rates need to generate approximately $3,323,000 to cover the cost of service related to capacity (i.e., meters) and the revenue from existing quantity charge rates need to generate approximately $2,720,000 to cover the cost of service of water supply (i.e., volume of water used). Adjusting the respective rates accordingly will provide the additional revenue needed to cover the increased costs.

3. Cost of service analysis of the fixed meter service charge revenue. The fixed water service charges are charged for water and fire service. The proposed rate adjustments will generate the additional $3,323,000 over the next five-year period.

No change is recommended to the fixed service charge rate structure, for both Inside and Outside City customers, which is based on the size of meter servicing each property.

4. Cost of service analysis of quantity charge revenue. In order to generate the $2,720,000 in additional revenue from quantity charges, effective January 1, 2025, Inside City Outside City
Tier Size $/HCF $/HCF
Inside City
Single-Family/Duplex
Tier 1 0-26 HCF $3.65 $4.54
Tier 2 27-48 HCF $7.12 $8.01
Tier 3 49-86 HCF $10.48 $11.36
Tier 4 87+ HCF $14.87 $15.77
Multi-Family
Tier 1 0-8 HCF $4.66 $5.55
Tier 2 9+ HCF $13.31 $14.19
Commercial $7.24 $8.14
Water Reliability (all customers) $0.26 $0.41

1.3 City of Beverly Hills Water Rate Study – Final Report Executive Summary
HF&H Consultants, LLC Page 3 January 23, 2024
the cost-of-service analysis first re-aligns the tier sizes with the cost of providing service to each customer class and then establishes adjusted rates aligning with these tiers. This will result in an overall decrease for single-family residential customers; an increase for multi-family residential customers; and, an increase for commercial customers. In years when rates are not being restructured to align with the cost of service (i.e., 2026-2028), all current rates would be increased by a uniform percentage. The derivation of these rate increases is explained in the next two sections of this report.
4a. Single-family residential quantity charge rate structure. Analysis of the single-family tier structure indicates that the current number of four tiers should be retained but that the sizes of the tiers need to be adjusted to correspond with the service levels customers require ranging from non-seasonal base demand to average day, maximum day, and maximum hour peaking based on actual customer demand patterns. (See Tables 5-1 and 5-2.) 4b. Multi-family residential quantity charge rate structure. Analysis of multifamily customer water use data indicates that the current number of two tiers and the sizes of the tiers should be retained based on actual customer demand patterns. (See Tables 5-3 and 5-4.)
4c. Commercial quantity charge rate structure. Analysis of customer billing data indicates that the current uniform quantity charge rate structure (no tiers) is still applicable. (See Table 5-5.)

5. Outside City rates. Outside City quantity charge rates are currently $0.88-$0.90 per HCF higher than Inside City rates, which was an approximation of the additional cost to serve Outside City customers. We studied the current costs to provide service to Outside City customers and recommend adjusting the rate differential to $0.68 per HCF (analysis shown in Table 5-7). The additional costs identified is applied to the quantity charges only. The service charges to both Inside City and Outside City customers will be the same.

6. Water shortage revenue stabilization factors. Revenue stabilization factors are designed to offset the amount of revenue shortfall caused by conservation during specific Council-adopted water shortage stages. (See Section 5.18.). The factors have been revised based on recent customer demand patterns.

7. Water reliability charge. The City Council is undertaking the expansion of the City’s water system in order to diversify and expand its sources of supply. By doing so, reliability will be improved during shortages. In addition, the need to rely on purchased water from Metropolitan Water District (MWD) will be reduced. In return for these benefits, a new, separate water reliability charge was City of Beverly Hills Water Rate Study – Final Report
Executive Summary
HF&H Consultants, LLC Page 4 January 23, 2024
developed during the previous rate study, that provides a steady source of funding over the lifecycle of the Water Enterprise Plan (WEP). As proposed during the previous study, the water reliability charge increase $0.01 per year per HCF. The water reliability charge is an additional uniform quantity charge rate that applies to both Inside and Outside City customers. The Inside City water reliability charge is less than the Outside City water reliability charge due to a subsidy provided from the Beverly Hills General Fund. (See Section 5.9.)

8. Pass-through Adjustments. Pass-through adjustments allow the City to adjust quantity charge rates to track any differences between the Metropolitan Water District (MWD) rates that were included in the model and the actual rates adopted each year by MWD. For example, based on projections by MWD, the cost of purchased water included in this rate study is $1,256 per acre foot ($2.88 per HCF), effective January 1, 2024. If the actual cost differs, the City may increase or decrease the quantity charge rates (as shown in Tables 1-3 and 1-4) by the difference.

The City must provide a 30-day notice to ratepayers of such a change is made.

Tables 1-3 and 1-4 summarize the current and recommended quantity charge rates, fixed service charge rates, and water reliability charge, respectively.

Table 1-3. Current and Recommended Quantity Charge Rates Current Quantity Charge Rates Recommended Quantity Charge Rates Current Proposed New Proposed
Tier Size $/HCF Tier Size 7/1/2024 Tier Size 1/1/2025 1/1/2026 1/1/2027 1/1/2028 Inside City $/HCF $/HCF $/HCF $/HCF $/HCF
Single-Family/Duplex Single-Family/Duplex
Tier 1 0-26 HCF $3.65 Tier 1 0-26 HCF $3.65 0-32 HCF $3.75 $3.83 $3.91 $3.99 Tier 2 27-48 HCF $7.12 Tier 2 27-48 HCF $7.12 33-48 HCF $6.36 $6.49 $6.62 $6.75 Tier 3 49-86 HCF $10.48 Tier 3 49-86 HCF $10.48 49-83 HCF $10.52 $10.73 $10.94 $11.16 Tier 4 87+ HCF $14.87 Tier 4 87+ HCF $14.87 84+ HCF $14.94 $15.24 $15.54 $15.85 Multi-Family Multi-Family
Tier 1 0-8 HCF $4.66 Tier 1 0-8 HCF $4.66 0-8 HCF $5.06 $5.16 $5.26 $5.37 Tier 2 9+ HCF $13.31 Tier 2 9+ HCF $13.31 9+ HCF $14.73 $15.02 $15.32 $15.63 Commercial $7.24 Commercial $7.24 $7.43 $7.58 $7.73 $7.88 Water Reliability (all customers) $0.26 All Use $0.27 $0.28 $0.29 $0.30 $0.31 Fire Protection (all customers) $3.65 All Use $3.65
Outside City Tier Size $/HCF Tier Size $/HCF Tier Size $/HCF $/HCF $/HCF $/HCF Single-Family/Duplex Single-Family/Duplex
Tier 1 0-26 HCF $4.54 Tier 1 0-26 HCF $4.54 0-32 HCF $4.43 $4.52 $4.61 $4.70 Tier 2 27-48 HCF $8.01 Tier 2 27-48 HCF $8.01 33-48 HCF $7.04 $7.18 $7.32 $7.47 Tier 3 49-86 HCF $11.36 Tier 3 49-86 HCF $11.36 49-83 HCF $11.20 $11.42 $11.65 $11.88 Tier 4 87+ HCF $15.77 Tier 4 87+ HCF $15.77 84+ HCF $15.62 $15.93 $16.25 $16.58 Multi-Family Multi-Family
Tier 1 0-8 HCF $5.55 Tier 1 0-8 HCF $5.55 0-8 HCF $5.74 $5.85 $5.97 $6.09 Tier 2 9+ HCF $14.19 Tier 2 9+ HCF $14.19 9+ HCF $15.41 $15.72 $16.03 $16.35 Commercial $8.14 Commercial $8.14 $8.11 $8.27 $8.44 $8.61 Water Reliability (all customers) $0.41 All Use $0.42 $0.43 $0.44 $0.45 $0.46 Fire Protection (all customers) $4.54 All Use $4.54 $4.43 $4.52 $4.61 $4.70 City of Beverly Hills Water Rate Study – Final Report
Executive Summary
HF&H Consultants, LLC Page 5 January 23, 2024
Table 1-4. Current and Recommended Fixed Service Charge Rates This report documents the rates proposed for adoption by the City. The first rate adjustment is proposed to become effective in January 1, 2025 with subsequent adjustments every January 1 thereafter, through January 2028. The water reliability charge and revenue stabilization factors shall become effective July 1, 2024.

Service Current Proposed (All Customer Classes; Inside and Outside City) Size Charge 7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028 Water Meter Service Charges
1" $53.51 $53.51 $58.64 $59.81 $61.01 $62.23
1-1/2" $93.84 $93.84 $100.69 $102.70 $104.75 $106.85
2" $142.24 $142.24 $151.15 $154.17 $157.25 $160.40
3" $271.30 $271.30 $285.72 $291.43 $297.26 $303.21
4" $416.50 $416.50 $437.11 $445.85 $454.77 $463.87
6" $819.82 $819.82 $857.63 $874.78 $892.28 $910.13
8" $1,311.71 $1,311.71 $1,362.26 $1,389.51 $1,417.30 $1,445.65 10" $1,967.57 $1,967.57 $3,548.99 $3,619.97 $3,692.37 $3,766.22 Fire Meter Service Charges
<= 2" $29.73 $29.73 $30.32 $30.93 $31.55 $32.18
2 1/2" $44.32 $44.32 $45.21 $46.11 $47.03 $47.97
3" $64.56 $64.56 $65.85 $67.17 $68.51 $69.88
4" $124.69 $124.69 $127.18 $129.72 $132.31 $134.96
6" $340.52 $340.52 $347.33 $354.28 $361.37 $368.60
8" $712.74 $712.74 $726.99 $741.53 $756.36 $771.49
10" $1,272.63 $1,272.63 $1,298.08 $1,324.04 $1,350.52 $1,377.53 12" $1,654.42 $1,654.42 $1,687.51 $1,721.26 $1,755.69 $1,790.80 City of Beverly Hills Water Rate Study – Final Report
Introduction
HF&H Consultants, LLC Page 6 January 23, 2024

INTRODUCTION

STUDY PURPOSE
The City is responsible for setting rates in compliance with California law. Voters passed Proposition 218 in November 1996, which enacted Article XIIID of the California Constitution. Article XIIID, Section 6, requires that fees and charges for water service shall not exceed the proportional cost of service.

One key purpose of this report is to document that the proposed rates comply with the relevant laws in California for setting tiered water rates. Another key purpose is to ensure that the rates generate sufficient revenue from conserving levels of demand to fund the water enterprises operating and capital costs as well as to maintain adequate reserves.

STUDY PROCESS
The rate study was conducted following industry standards and practices promulgated by the American Water Works
Association 1. A comprehensive rate study involves the four steps shown in the adjacent diagram.

This study has been conducted in close collaboration with a working group of City staff, the City’s Public Works
Commission, the Public Works Commission’s Rates Ad Hoc
Committee, and the City’s Public Works Liaison Committee.

Over 20 meetings were held to develop alternative funding strategies, to review and refine the alternatives, and to select the preferred alternative.

Revenue requirements were projected for a ten-year planning period based on operations, maintenance, capital expenses, and contributions to reserves. The cost-of-service analysis allocates the projected expenses among the customer classes in proportion to their use of the systems. Rates are then designed so that rate payers are charged equitably. The impact on customers is then determined by comparing bills under the proposed rates with bills under the current rates.

During the course of the study, interim work products were presented at several public meetings and workshops.
1 Principles of Water Rates, Fees, and Charges. American Water Works Association Manual M1. 2012.

SECTION 2.

2.1 2.2

REVENUE REQUIREMENT

PROJECTIONS
Determines how much ra te revenue is
needed

COST-OF-SERVICE ALLOCATIONS
Allocates revenue requ irements to
charges and to customer categories

RATE STRUCTURE DESIGN
Ca lculates fixed charge rates per account
and variable charge rates for mete red
water use

CUSTOMER BILL ANALYSIS
Eva luat es impacts of proposed rates on
customer bil ls for low, average, and high
use
City of Beverly Hills Water Rate Study – Final Report
Introduction
HF&H Consultants, LLC Page 7 January 23, 2024

CURRENT RATES
The City charges the sum of a variable quantity charge and a fixed service charge, which are shown in Tables 2-1 and 2-2. This rate structure has been in effect for a number of years.

For single-family residential and multi-family residential customers, the quantity charge varies depending on the amount of metered water use in each two-month billing period.

This form of rate structure is referred to as a tiered or increasing block rate quantity charge.

For Commercial customers, the quantity charge is currently a constant amount that is not tiered. This form of rate structure is referred to as a uniform quantity charge.

Commercial customers are billed bi-monthly per account. The Commercial quantity charge was tiered at one time but is currently a uniform charge regardless of the level of demand.

The service charge is fixed based on the size of the service connection. Inside City and Outside City customers pay the same fixed service charge each billing period based on the size of their service connection. There is a single set of fixed service charge rates that does not differentiate between a customer’s location within the City’s service area, as the cost of providing capacity in the City’s water system does not differ depending on the customers location inside or outside the City limits. In this way, the increased cost of serving Outside City customers are recovered from only the variable quantity charge rates. The City currently charges Outside City water customers the variable quantity charge rates that are higher than Inside City rates. The difference in rates is designed to recover the additional costs of serving customers located outside Beverly Hills.

Specifically, the differential takes into consideration that Outside City customers do not contribute property taxes to the City. Currently, a portion of the City’s property taxes help fund Water Enterprise operating expenses; therefore, an adjustment is made to the Outside City quantity charges rates so the General Fund can recoup the cost of these services to maintain parity with Inside City customers.

In addition, the City charges Outside City water customers a higher Water Reliability rate higher than Inside City water customers. The differential reflects the fact that the City’s General Fund subsidized a portion of the water reliability capital projects funded through the Water Reliability Charge for Inside City customers through a $10 million cash contribution during the construction phase of the project. The subsidy reduced the Inside City rate only, as the Outside City customers have not contributed to the City’s general fund through property tax payments as Inside City customers have.

2.3 City of Beverly Hills Water Rate Study – Final Report Introduction
HF&H Consultants, LLC Page 8 January 23, 2024
Table 2-1. Current Bi-monthly Fixed Service Charge Rates (Inside and Outside City Customers)
Table 2-2. Current Bi-monthly Variable Quantity Charge Rates Service Water Fire
Size Meter Meter
1" $53.51 $29.73
1-1/2" $93.84 $29.73
2" $142.24 $29.73
3" $271.30 $64.56
4" $416.50 $124.69
6" $819.82 $340.52
8" $1,311.71 $712.74
10" $1,967.57 $1,272.63
Inside City Outside City
Tier Size $/HCF $/HCF
Single-Family/Duplex
Tier 1 0-26 HCF $3.65 $4.54
Tier 2 27-48 HCF $7.12 $8.01
Tier 3 49-86 HCF $10.48 $11.36
Tier 4 87+ HCF $14.87 $15.77
Multi-Family
Tier 1 0-8 HCF $4.66 $5.55
Tier 2 9+ HCF $13.31 $14.19
Commercial $7.24 $8.14
Water Reliability (all customers) $0.26 $0.41
City of Beverly Hills Water Rate Study – Final Report
Revenue Requirements
HF&H Consultants, LLC Page 9 January 23, 2024

REVENUE REQUIREMENTS
To determine whether additional rate revenue is required, projected operating and capital expenses are compared with projected revenue from current rates. Annual surpluses and deficits are then applied to the reserve funds. Rates are then increased so that the expenses are covered and operating and capital reserves are maintained. The following sections summarize the methodology for determining the annual
revenue requirements, the necessary annual revenue increases, and the projected impact these results will have on the Water Enterprise fund balance.

EXPENSE PROJECTIONS
A spreadsheet model was developed to derive revenue
requirements for FY 2022-23 through FY 2027-28. The revenue requirements represent the costs that must be covered by revenue from rates and other sources, such as reserves. The City’s Council-approved operating and capital budget for FY 2022-23 served as the starting point for projecting the City’s expenses and revenues over the five-year financial planning period. The escalation factors summarized in Table 3-1 were incorporated in the model for projecting expenses and revenues.

Table 3-1. Key Modeling Assumptions
The application of these assumptions to the O&M and capital expenses is summarized in Table 3-2.

FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 O&M Expenses
Salaries and Benefits City Budget 2.8% 2.8% 2.8% 2.8% 2.8% Materials and Supplies City Budget 5.0% 5.0% 5.0% 5.0% 5.0% Contractual Services City Budget City Budget 2.0% 2.0% 2.0% 2.0% Internal Service Charges City Budget -7.9% 3.1% 1.3% 2.1% 3.5% Purchased Water City Budget MWD Budget 3.2% 3.2% 3.2% 3.2% Miscellaneous Expenses City Budget 1.0% 1.0% 1.0% 1.0% 1.0% Project Admin. and CIP Mgmt. Charges City Budget 2.8% 2.8% 2.8% 2.8% 2.8% Capital Outlay City Budget 1.0% 1.0% 1.0% 1.0% 1.0%
Non-Operating Revenues City Budget 1.0% 1.0% 1.0% 1.0% 1.0% Debt Service Payments City Schedule City Schedule City Schedule City Schedule City Schedule City Schedule CIP Expenditures $11,692,605 $12,620,105 $11,223,355 $10,035,000 $8,695,500 $13,690,500 Construction Cost Index 2.48% 5.02% 7.62% 10.29% 13.02% 0.00% Subtotal Escalated CIP $11,982,431 $13,253,491 $12,078,797 $11,067,564 $9,827,949 $13,690,500 80% of CIP assumed to be completed $9,585,945 $10,602,793 $9,663,038 $8,854,051 $7,862,359 $10,952,400 (Less) Other Revenues ($2,533,214) ($2,601,213) ($2,684,052) ($4,334,343) ($2,853,624) ($2,940,435) Net CIP Subtotal $7,052,731 $8,001,580 $6,978,986 $4,519,708 $5,008,736 $8,011,965 5-year Average Net CIP Expenditures $6,312,348 $6,312,348 $6,312,348 $6,312,348 $6,312,348 $6,312,348 SECTION 3.

3.1 REVEN UE REQUIREMENT

PROJECTIONS
Dete rmines how mudl rate revenue Is
needed
COST-OF-SERVIIJ: AUOCATIONS
Al toe.ates rewenue requirements to
charges and to cust001e1 categories
'\?'. RATESTRUCTURE DESIGN
Cak ulates Uxed charge rates pe r
accour,t and variabte charge r.at.es for
metere-d wate, use
'\,/
jruSTOM ER BILL ANALYS IS
Evaluates I mpaasof proposed rate.s on
customer bills torlow • .1verage, and hi,gb
....

City of Beverly Hills Water Rate Study – Final Report
Revenue Requirements
HF&H Consultants, LLC Page 10 January 23, 2024
Table 3-2. Total Annual Projected Net Revenue Requirements 1 Non-operating revenues include lease revenue, late fees, ordinance violation penalties, interest earnings, etc.

The net revenue requirement for FY 2022-23 of $35,578,735 will be used in the cost of service analysis and rate design (see Sections 4 and 5).

RESERVE FUNDS
The annual revenue increases are required to cover the net O&M and capital expenses summarized in Table 3-2. In addition to covering annual expenses, water rates need to generate revenue to maintain adequate operations and capital reserves. To determine what constitutes adequate reserve amounts, the reserve balance was subdivided into operations and capital reserves. In this way, it is possible to set recommended target balances for each purpose.

Figure 3-1 shows the minimum fund balance (red line; triangle symbols) that is recommended. The minimum fund balance represents the working capital that is needed to meet month-to-month cash flow for O&M expenses and the required debt service reserve for the City’s outstanding debt. Figure 3-1 also shows the recommended target balance. The target balance (blue line; diamond symbols) is derived by adding a contingency for capital improvements to the minimum fund balance and is based on the City’s current Council-approved policy, which states the target reserve is to equal the debt service reserve amount plus 50% of gross annual user revenue. With this contingency, the City should have sufficient cash on hand to fund its cash-funded capital Budgeted
FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 O&M Expenses
Salaries and Benefits $6,558,019 $6,738,364 $6,923,669 $7,114,070 $7,309,707 $7,510,724 Materials and Supplies $1,585,747 $1,665,034 $1,748,286 $1,835,700 $1,927,485 $2,023,859 Contractual Services $1,823,530 $1,752,421 $1,787,470 $1,823,219 $1,859,683 $1,896,877 Internal Service Charges $6,012,629 $5,540,197 $5,713,178 $5,789,723 $5,909,215 $6,116,038 Purchased Water $11,027,264 $10,386,662 $10,716,357 $11,057,976 $11,412,105 $11,779,373 Miscellaneous Expenses $371,121 $374,832 $378,581 $382,366 $386,190 $390,052 Project Admin. and CIP Mgmt. Charges $814,942 $837,353 $860,380 $884,041 $908,352 $933,331 Subtotal, O&M Expenses $28,193,251 $27,294,864 $28,127,921 $28,887,095 $29,712,738 $30,650,254 Capital Expenses
Transfer to Capital Reserves for PAYGo Projs $6,312,348 $6,312,348 $6,312,348 $6,312,348 $6,312,348 $8,011,456 Debt Service on Existing Bond $4,560,638 $4,014,845 $4,018,203 $4,017,225 $4,015,826 $4,015,132 Subtotal, O&M Expenses $10,872,986 $10,327,193 $10,330,551 $10,329,573 $10,328,174 $12,026,588 Total Expenses $39,066,237 $37,622,056 $38,458,471 $39,216,668 $40,040,911 $42,676,842 Less: Non-Operating Revenue1 ($4,914,299) ($4,914,552) ($4,914,808) ($4,915,066) ($4,915,326) ($4,915,590) Plus: Bad Debt $662,049 $444,734 $449,182 $458,165 $467,328 $476,675 Transfer (from)/to Operating Reserves $764,748 $2,426,497 $2,293,017 $2,251,812 $2,158,898 $268,919 Net Revenue Requirement $35,578,735 $35,578,735 $36,285,862 $37,011,580 $37,751,811 $38,506,847 $ Change $0 $707,127 $725,717 $740,232 $755,036
Projected

3.2 City of Beverly Hills Water Rate Study – Final Report Revenue Requirements
HF&H Consultants, LLC Page 11 January 23, 2024
improvements without cash flow constraints. This contingency is also available to help fund short-term deficits such as emergency expenditures and revenue shortfalls resulting from lower than projected water sales, if applicable.

Figure 3-1 shows the combined balance for the operating and capital reserves that is projected based on the revenue increases shown in Table 3-2. With the proposed rate adjustments, the City’s reserve fund balance (solid green line) will be above the minimum balance (red line with triangle symbols), which covers the City’s operating reserve requirements and above the target reserve balance (blue line with diamond symbols), which covers both the operating and capital reserve requirements. Without rate increases, the projected fund balance (dotted green line) would be just above the target and continuing to decrease in outer years, below the target.

Figure 3-1. Projected Year-End Reserve Balances
Revenue increases are generally achieved by increasing rates; however, with the cost-ofservice study conducted, effective 1/1/2025, a re-alignment of the cost of providing service to each customer class is first necessary to establish tiering sizes. Next, rates are adjusted to align with the new tiers. Subsequent to a re-alignment beginning 1/1/2025, a rate increase of 2% each January therafter is necessary to ensure sufficient revenue is generated to cover the cost of providing water enterprise services. The derivation of these rate increases is explained in the next two sections of this report. v.

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$40
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FY 2021 -22 FY 2022-23
• • • • • Total Reserves without Increase
Ending Reserve Fund Reserve Balance
Water Enterprise (Funds 800, 801 , 802)
.. .. -.... - - - ••••·· - - •- - - - ·.:.~· !.! • ~ . :.:. :.:.,:.: . ~ ·:.: ·~ · ·~ ·· . - - - -
FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27
- Total Reserves with Increase
- Minimum Balance (Debt Reserve+ 25% O&M Costs) City's Reserve Target (50% of O&M) City of Beverly Hills Water Rate Study – Final Report
Cost of Service Analysis
HF&H Consultants, LLC Page 12 January 23, 2024

COST OF SERVICE ANALYSIS

GENERAL APPROACH
The revenue requirement analysis establishes how much revenue is required from rates.

The next step in the analysis is determining the cost of service by customer class. The cost of service analysis performed in this study follows a procedure that has been long established by the American Water Works Association (AWWA), which is referred to as the “base/extra capacity method.” This method allocates the revenue requirements to the components of the rate structure.

The base/extra capacity method in the AWWA M1 Manual contains three categories:
base, maximum day, and maximum hour. Base capacity is determined by the average daily flow during the year. The average daily flow determines how much base capacity is needed to provide that flow. Maximum day capacity is determined by the flow on the maximum day of the year. In other words, the maximum day capacity is greater than the base capacity, including the base capacity plus the additional capacity needed to provide for the maximum day flow of the year. Maximum hour capacity is determined by the flow during the maximum hour on the maximum day. In other words, the maximum hour capacity is greater than the maximum day capacity by the amount of peak hour that occurs during the maximum day flow.

We have refined AWWA’s version of the base/extra capacity method. What AWWA considers “base” capacity is not purely base capacity because AWWA defines “base” as average day capacity. Average day capacity includes average peaking, which is greater than how “base” is defined in this report. In this report, “base” demand does not include peaking. We have introduced a fourth category that corresponds to base demand with no peaking, which we call Base Day. This Base Day demand is derived from average winter demand, when there is the least amount of peaking. Hence, in addition to Average Day, Maximum Day, and Maximum Hour categories, we have added Base Day.

COST OF SERVICE ALLOCATIONS
As the name implies, cost of service analysis (COS) is a process of determining how much water service costs to provide capacity to meet customer demands. To provide water service, infrastructure must be constructed, operated, and maintained, which must be paid for from cash or debt. The type and size of infrastructure depends on how much service customers require. Water systems are designed to provide sufficient capacity to meet customer demands for service wherever, whenever, and for as long as demanded.

Although each customer places unique demands on the system, water system design is based on the maximum or peak demand for service placed on the system by all customers SECTION 4.

4.1 4.2
City of Beverly Hills Water Rate Study – Final Report
Cost of Service Analysis
HF&H Consultants, LLC Page 13 January 23, 2024
during the peak demand period. The size of the infrastructure that is needed will depend on the maximum demand. Higher demands will obviously require larger, more costly infrastructure as well as increased operating and O&M costs. Here, the goal of a cost of service analysis is to allocate the cost of the capacity to meet the peak demand in proportion to how much of the capacity is required by each customer. The proportions correspond to the maximum amount of capacity provided by the infrastructure. This means that customers that place greater demands on the infrastructure – customers with greater service needs (i.e., higher peak demands) – will be apportioned a greater share of the operating and capital costs of the infrastructure required to meet that demand.

It is important to realize that once the peak demand is used to design the infrastructure, the capacity is available at all times, not just during peak demands. The capacity is available for the potential peak when it occurs. During off-peak demands, the same facilities are being used, but the capital cost of the facilities is determined by the peak demand only, and it is the peak demand that is used to allocate costs. Note that the costs are not allocated only to those who peak. Those who do not peak as much are also using the same facilities. Consequently, they are allocated a share of the costs of the facilities in proportion to their contribution to the peak demand, even though their contribution to peaking may be significantly less.

A cost of service analysis determines the unit cost of the services provided to the City’s water customers. Inside City and Outside City customers, and each customer class therein, is charged the same unit cost for its share of the services that it requires. In this way, the total revenue requirement is proportioned between the fixed service charges and the quantity charges; the quantity charges are further proportioned among the customer classes and between Inside City and Outside City Customers. This methodology is consistent with industry standards promulgated by the American Water Works Association 2 and referred to as the “base/extra capacity method.” The analysis involves a sequence of steps that is summarized in Figure 4-1. The sequence leads to determining how much revenue should be recovered from fixed service charges and from variable quantity charges for each customer class. The derivation of the rates for the service and quantity charges is described in Section 5.

The analytical procedure contains the following steps:

1. Cost classification - Costs in the FY 2022-23 revenue requirement are classified into the service categories related to providing for customer demands and for customer service.

2. Cost allocation - The classified costs are allocated to the functions associated with each service. For demand services, the functions are levels of service that comprise 2 American Water Works Association, Principles of Water Rates, Fees, and Charges (Seventh Edition, 2017).

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base day, average day, maximum day, and maximum hour demands. For customer services, the functions are customer accounts and customer capacity.

The classifications of major costs are summarized as follows:

Demand services
• Base, non-seasonal demand, when there is minimal peaking. • Average day demand, which includes non-seasonal demand plus average daily peaking.
• Maximum day demand, which includes average day demand plus peaking on the maximum day of the year.
• Maximum hour demand, which includes maximum day demand plus peaking at the maximum hour on the maximum day.

Customer services
• Accounts: meter reading, billing, accounting, customer service. • Capacity: a portion of distribution storage, distribution mains to customers, hydrants, MWD readiness-to-serve charges, MWD capacity charges.

Composite services
• Indirect allocations for costs that are not directly related to either the demand or customer service functions: personnel, overhead, non-operating revenue.

Table 4-1 shows the derivation of the allocation factors associated with each level of demand. The factors are based on meter reading data from the City’s automated meter infrastructure (AMI), which is capable of reading customer meters at hourly intervals.

The AMI has a software interface known as Water Tracker, which allows customers to monitor their water use and allows aggregation of the data by customer class. This data can be aggregated to determine the flow that corresponds to the functions provided to meet customer demands:

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Table 4-1. Demand Allocation Factors - Systemwide
1 Source: 2017-2018 AMI data
The flows shown in Table 4-1 are the aggregate flows for the entire water system. The resulting factors are used to allocate the functionalized costs into the four demand service categories. In turn, the costs for each of the demand service categories are allocated among the customer classes using the AMI data aggregated at the customer class level (see discussion in Section 5).

For purposes of allocating costs associated with meeting Average Day demands, 77% is allocated to the Average Day service and 23% is allocated to the Base Day service, as shown in Table 4-1. Maximum Day demand includes Base Day, Average Day, and Maximum Day components. Maximum Hour demand has all four service levels of demand. While system capacity is essentially designed to meet peak demands, it is important to understand that the cost of facilities that are sized for peak demands is not borne by only customers that peak.

Using distribution pipelines as an example, they are sized to meet Maximum Hour demands. Even though they are sized for the highest level of service, lower peak demands are also accommodated by these pipelines. Hence, the cost of the pipelines is not allocated 100% to the Maximum Hour service level. Thus, the costs of peaking are shared by all customers and not exclusively allocated to those who peak the most.

Base Average Maximum Maximum
Day Day Day Hour
Demand (HCF per day)1 8,329 10,811 16,742
÷ 24 hours 24 24 24
Demand (HCF per hour) 347 450 698 1,193
Incremental Change 103 247 495
Allocation Percentage Calculations Total HCF
Base Day 347 347
% of Total 100% 100%
Average Day 347 103 450
% of Total 77% 23% 100%
Maximum Day 347 103 247 698
% of Total 50% 15% 35% 100%
Maximum Hour 347 103 247 495 1,193
% of Total 29% 9% 21% 42% 100%
Demand Service Levels
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Table 4-2 shows the allocation of the functionalized costs to the demand and customer service categories. Costs associated with the demand services are allocated using the factors in Table 4-1, which are based on systemwide AMI data. Costs associated with customer service are used for calculating water and fire fixed service charges.

Table 4-2. Functional Cost Allocations (FY 2022-23)
Note: Numbers may not sum exactly due to rounding
Allocation factors from Table 4-1.

Table 4-3 shows the derivation of the customer class allocation factors that are applied to the demand service allocations at the bottom of Table 4-2. The allocation factors apportion the cost of the demand service among the customer classes. It can be seen that the allocation to single-family customers increases with each level of demand because of the peak irrigation demands that single-family customers place on the facilities relative to the multi-family and commercial classes. The resulting allocations establish the cost Subtotal - Subtotal -
Base Average Maximum Maximum Demand Customer
Date Day Day Hour Services Service
O&M Expenses
Water Supply
Groundwater $2,681,365 Average Day $2,072,428 $608,937 $0 $0 $2,681,365 $0 $2,681,365 Water Treatment $755,992 Average Day $584,306 $171,685 $0 $0 $755,992 $0 $755,992 MWD Purchased Water $9,637,244 Average Day $7,448,630 $2,188,613 $0 $0 $9,637,244 $0 $9,637,244 MWD - RTS and Capcity Charges $1,390,020 Customer Service $0 $0 $0 $0 $0 $1,390,020 $1,390,020 Water Quality - Distribution $755,992 Max Hour $219,963 $63,554 $156,659 $315,816 $755,992 $0 $755,992 Maintenance & Repair $3,998,155 Max Day $2,022,197 $602,624 $1,373,333 $0 $3,998,155 $0 $3,998,155 Water Services & Installations $1,666,436 Customer Service $0 $0 $0 $0 $0 $1,666,436 $1,666,436 Conservation $364,645 Peaking Only $0 $0 $213,277 $151,368 $364,645 $0 $364,645 Fire (e.g., hydrants, meters, etc.) $59,642 Customer Service $0 $0 $0 $0 $0 $59,642 $59,642 Subtotal O&M Expenses $21,309,490 $12,347,524 $3,635,414 $1,743,270 $467,184 $18,193,392 $3,116,098 $21,309,490 O&M Composite 57.9% 17.1% 8.2% 2.2% 85.4% 14.6% 100%
Miscellaneous O&M Expenses $56,190 O&M Composite $32,559 $9,586 $4,597 $1,232 $47,974 $8,217 $56,190 Capital Expenses
PAYGo Projects $6,312,348 CIP Composite $1,621,915 $399,830 $2,027,708 $1,008,801 $5,058,253 $1,254,095 $6,312,348 Capital Project Admin $814,942 CIP Composite $209,394 $51,619 $261,783 $130,239 $653,035 $161,907 $814,942 Debt Service $4,560,638 D/S Composite $3,188,323 $38,340 $94,507 $190,521 $3,511,691 $1,048,947 $4,560,638 Subtotal Capital Expenses $11,687,928 $5,019,632 $489,789 $2,383,998 $1,329,560 $9,222,979 $2,464,949 $11,687,928 Total O&M and Capital $33,053,609 $17,399,715 $4,134,789 $4,131,865 $1,797,976 $27,464,345 $5,589,264 $33,053,609 Exp Composite 52.6% 12.5% 12.5% 5.4% 83.1% 16.9% 100%
Internal Service Funds (Overhead) $6,012,629 Exp Composite $3,165,101 $752,140 $751,608 $327,062 $4,995,912 $1,016,717 $6,012,629 Contribution To/(From) Reserves $1,426,796 Exp Composite $751,078 $178,483 $178,357 $77,612 $1,185,529 $241,267 $1,426,796 Non-Operating Revenue ($660,299) Customer Service $0 $0 $0 $0 $0 ($660,299) ($660,299) Lease & Rents ($4,254,000) Base Day ($4,254,000) $0 $0 $0 ($4,254,000) $0 ($4,254,000) Outside City GF reimbursement ($323,399) Base Day ($323,399) $0 $0 $0 ($323,399) $0 ($323,399) Net Revenue Requirement $35,255,335 $16,738,495 $5,065,412 $5,061,830 $2,202,649 $29,068,387 $6,186,949 $35,255,335 Costs to be Allocated Allocation Factor
Demand Services
Total
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of providing service to each customer class for each level of demand. 3 The allocated demand service costs are used to determine the quantity charge rates for each class and for each tier for those classes with tiered rates.

Table 4-3. Demand Allocation Factors – Customer Classes Note: Numbers may not sum exactly due to rounding
1 Net demand services revenue requirement from Table 4-3. 2 Source: 2018-2019 AMI data (pre-COVID).

The customer service costs are the basis for the water and fire fixed service charge rates.

The fixed service charge rates are based on the size of the service connection and are independent of whether the customer is single-family, multi-family, commercial, or irrigation. The derivation of the variable quantity and fixed service charge rates is described in Section 5. Important conclusions about the cost of base and extra capacity demand are indicated in Table 4-3. $16.7 million (58%) of the total $29.1 million is related to non-seasonal base day demand. In effect, if there were no peak demands, the facilities could be sized much smaller, reducing the cost to 58% of the current cost. However, peaking occurs and the cost to provide extra capacity for this service increases incrementally.

Rates need to be designed to generate each class’s share of the revenue requirement related to quantity charges and fixed service charges. Table 4-4 compares the revenue projected from current rates to the cost of service by customer class for the quantity charges and the revenue projected from current rates to the cost of service for the fixed 3 Note that the flows for Base Day, Average Day, and Maximum Day are for 24-hour periods and that the flow for Maximum Hour is for a one-hour period.

Base Average Maximum Maximum
Date Day Day Hour
Net Demand Services Revenue Requirement1 $16,738,495 $5,065,412 $5,061,830 $2,202,649 $29,068,387 Units of Service (HCF) by Customer Class2
Single-Family 4,023 6,054 10,543 1,012
Multi Family 1,983 2,080 2,236 88
Commercial 2,323 2,677 3,963 93
Total Units of Service 8,329 10,811 16,742 1,193
Proportional Allocation to Customer Classes
(% of Total Units of Service)
Single-Family 48.30% 56.00% 62.97% 84.84%
Multi Family 23.81% 19.24% 13.36% 7.39%
Commercial 27.89% 24.77% 23.67% 7.77%
Total 100.00% 100.00% 100.00% 100.00%
+2% Revenue increase
Net Revenue Requirement by Customer Class FY 2022-23 1/1/2025 Single-Family $8,084,311 $2,836,516 $3,187,559 $1,868,820 $15,977,206 $16,296,750 Multi Family $3,986,186 $974,441 $676,052 $162,724 $5,799,403 $5,915,391 Commercial $4,667,999 $1,254,455 $1,198,219 $171,105 $7,291,777 $7,437,613 Total $16,738,495 $5,065,412 $5,061,830 $2,202,649 $29,068,387 $29,649,754 Demand Services
Total
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fixed service charge. Table 4-4 indicates that the revenue from existing quantity charge rates differs from each classes’ share of the cost of service.

Table 4-4. Current Rate Revenue Compared With the Cost of Service Section 5 provides the recommended modifications to the quantity charges (including water reliability charges and potential pass-through adjustments) and fixed service charges in order to meet the current cost of service requirements shown in Table 4-4.

Current Revenue ¹ FY 2024-25 Difference
Components of Rate Structure at Current Rates Cost-of-Service COS Minus Current Quantity Charges
Single-Family/Duplex $17,070,869 $16,296,750 ($774,118) -4.5% Multi-Family $5,413,607 $5,915,391 $501,784 9.3%
Commercal & Municipal $7,189,296 $7,437,613 $248,316 3.5% $29,673,772 83% $29,649,754 82% ($24,018) -0.1%
Service Charges
Fixed Service Charges $4,898,554 $5,284,151 $385,597 7.9% Fire Service Charges $1,006,409 $1,026,537 $20,128 2.0% $5,904,963 17% $6,310,688 17% $405,725 6.9%
Outside City GF Reimbursement included in Qty $325,420 1% Charges above
Grand Total $35,578,735 100.0% $36,285,862 100.0% $707,127 2.0% ¹Based on Projected Water Use at Current Rates.
,.
,.

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RATE DESIGN

DESIGN OBJECTIVES
The rate design analysis links the revenue requirements identified in Section 2 with the water rates necessary to achieve full cost recovery. The focus of this process is to set rates and substantiate that each rate reflects its fair and proportionate share of system costs.

Setting rates in California is subject to key laws and court decisions of which Article XIIID of the California Constitution is most important. Article XIIID has three substantive provisions that must be met: (1) the revenue from rates must not exceed the cost of providing service, (2) the revenue from rates must be used for providing service, and (3) the fees and charges must be proportional to the cost of providing the service. In meeting these provisions, the water supplier is responsible for meeting the burden of proof. The first two provisions are more closely related to developing revenue requirements and revenue projections. The last provision is the primary objective in rate structure design.

The San Juan Capistrano decision is a 2015 appellate court decision that found that tiered rates must be proportionate to the cost of service across the range of consumption. While acknowledging that such an analysis may be complex, no formulas, rules, or specific procedures are prescribed in the decision for how to set tiered rates, only that each tier must be cost-based.

The City has historically charged water customers the combination of a fixed service charge and a variable quantity charge based on metered water use. As previously discussed, this is a very common set of charges that is prevalent throughout the water industry. This section explains the derivation of the variable quantity and fixed service charge rates that reflect the projected cost of service.

SUMMARY OF RATE DESIGN MODIFICATIONS
Based on discussion with City staff, the Public Works Commission, and the City Council/Public Works Liaison Committee, and careful review of the cost of service analysis, the following rate design elements were discussed, and in some cases modified from current, as noted. The calculation of rates and the rationale for any recommended modifications follow this section. • Maintain three separate customer classes for quantity charge rates: single-family, multi family, and commercial.
• Maintain four tiers for single-family quantity charge rates and adjust the breakpoints of the four tiers based on current water demand patterns, if necessary.

SECTION 5.

5.1 5.2
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• Maintain two tiers for multi-family quantity charge rates and adjust the breakpoints of the tiers based on current water demand patterns, if necessary. • Maintain a uniform (no tiers) quantity charge rate for commercial customers. • Update rate stabilization factors to be applied to quantity charge rates during declared water shortages to maintain revenue stability. • Maintain 17% of rate revenue from fixed service charges rates to maintain revenue stability.

QUANTITY CHARGE RATE DESIGN AND CALCULATIONS
The City has separate quantity charges for single-family residential, multi-family residential, and commercial customers, which is appropriate as different levels of service are being provided to the average customer within each class. However, within the singlefamily and multi-family customer classes, we have identified some recommended changes in the number and/or size of the tiers. Our analysis of historical customer water use data, by customer class, has led to our recommended changes. Each classes’ rate design is described below.

The quantity charges calculated in Section 5.3.A (Single-family Residential), Section 5.3.B (Multi Family Residential), and Section 5.3.C (Commercial), which are the same for Inside City and Outside City customers, reflect the cost to provide service before adjustments for contributions and services provided by the City’s General Fund. Adjustments to these calculated rates due to the General Fund contributions and service impact the Inside City customer rates differently than Outside City customer rates. The rationale and calculations for adjusting the rates can be found in Section 5.3.D and the resulting adjusted quantity charge rates for Inside City and Outside City customers can be found in Section

5.3.E.

Single-family Residential Quantity Charges
Tiered rate structures are well suited to single-family residential quantity charges because of the wide variation in peak demand patterns. The use of four tiers has been in place for the City’s single-family residential customers and continues to be appropriate.

With four tiers, it is possible to size tiers corresponding to non-seasonal base demand, average day demand, maximum day demand, and maximum hour peak demand. The size of the tiers is based on the demand pattern for single-family customers using AMI data. The proposed breakpoints align the cost associated with each level of demand with the demand in each tier.

The rate for each tier is calculated by dividing the cost of service associated with each tier (see Table 4-3) by the quantity of water subject to the rate in each tier. The size of the tiers is based on the demand pattern for single-family customers using AMI data, which is summarized in Table 5-1. The division between each tier – the “breakpoint” – corresponds to the four base/extra capacity levels of demand.

5.3 A.

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Table 5-1. Single-family Tier Structure - Breakpoints
The rate for each tier is the quotient of the cost of service divided by the demand within the tier. Table 5-2 shows the step-wise calculation. For example, the Tier 1 rate applies to all billed water usage. Any bi-monthly water use that exceeds the Tier 1 breakpoint will be subject to the Tier 2 rate. The quantity charge will be the sum of the amounts for the successive tiers. Whereas low water use will only pay the Tier 1 quantity charge rate, high water use will pay the sum of the quantity charges for each tier. Table 5-2 tabulates the cost increment for each of the four levels of demand. The quantity charge rate for each tier sums the increments that are added with each successive tier.

Table 5-2 shows the calculation of the per-unit costs for single-family customers, before adjusting for the general fund funded service reimbursement which is added to the rates for Outside Customers described in Section 5.D. below. The total revenue requirement for the class was distributed across the tiers as shown in Table 4-3.

Table 5-2. Single-family Tier Structure - Rates
1 Net revenue requirement from Table 4-3.

Multi-Family Residential Quantity Charges
The multi-family quantity charge rate structure is also tiered. The derivation of the multifamily quantity charge rate structure follows the same steps as the single-family quantity charge rate structure. The size of the multi-family tiers is based on the demand pattern Base Average Maximum Maximum
Single Family Day Day Day Hour
HCF per Day 4,023 6,054 10,543
x days per billing period 60 60 60
HCF per billing period 241,350 363,218 632,577
÷ Single-Family dwelling units 7,617 7,617 7,617
Average flow per dwelling unit (HCF) 32 48 83 >83
Tier 1 Tier 2 Tier 3 Tier 4
Single-Family/Duplex Base Average Maximum Maximum FY 22-23 Cost-of-Service per Unit Day Day Day Hour Total
Demand services revenue requirement¹ $8,084,311 $2,836,516 $3,187,559 $1,868,820 $15,977,206 Demand per Tier
Tier 1: 0-32 HCF 1,085,446
Tier 2: 33-48 HCF 329,896 329,896
Tier 3: 49-83 HCF 349,050 349,050 349,050
Tier 4: 84+ HCF 431,822 431,822 431,822 431,822
÷ Total HCF per Tier 2,196,213 1,110,768 780,871 431,822 FY 2022-23 Cost-of-Service per Unit (HCF) $3.68 $2.55 $4.08 $4.33 FY 2024-25 Revenue Increase 1.02 1.02 1.02 1.02
$3.75 $2.60 $4.16 $4.41
B.

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for multi-family customers using AMI data. For single-family customers, the demand pattern is broader than it is for multi-family customers because of the variation in dwelling unit size, which is larger for single-family customers, and in lot size, which for multifamily customers consists of common landscape area, if any. In both cases, smaller dwelling and lot sizes result in a much narrower range of demand for multi-family customers, as shown in Table 5-3.

Table 5-3. Multi Family Tier Structure - Breakpoints
It is recommended that the Tier 1 breakpoint for the proposed rate structure be set at 8 HCF, which is the base day demand as shown in Table 5-3. With this design, the proposed Tier 1 rate remains affordable for base day demand, which includes minimal peaking. The proposed Tier 2 rate covers the costs associated with higher rates of peaking, which are attenuated compared to single-family peaking but that nonetheless exist.

Table 5-4 shows the calculation of the per-unit costs for multi-family customers, before adjusting for the general fund funded service reimbursement which is added to the rates for Outside Customers described in Section 5.D. The total revenue requirement for the class was distributed across the tiers as shown in Table 4-3.

Base Average Maximum Maximum
Multi-Family Day Day Day Hour
HCF per Day 1,983 2,080 2,236
x days per billing period 60 60 60
HCF per billing period 119,004 124,778 134,164
÷ Multi-Family dwelling units 14,073 14,073 14,073
Average flow per dwelling unit (HCF) 8 9 10 >10
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Table 5-4. Multi Family Tier Structure - Rates
Commercial Quantity Charges
The commercial quantity charges are a uniform, untiered rate that does not vary depending on the level of consumption. This structure has been in place for over ten years. We recommend maintaining the current structure because the commercial class is not homogeneous the way the residential classes are. The types of customers, the amounts of their water use, and the seasonality of their water use are so diverse as to make it problematic to determine the location of breakpoints. For that reason, tiered rates are not well suited for the commercial customer class.

Table 5-5 shows the calculation of the per-unit costs for both Inside and Outside City commercial customers, before adjustments for general fund contributions for non-operating lease revenue and general fund service reimbursements. The total revenue requirement for the commercial class was distributed across the tiers as shown in Table 4-3.

Tier 1 Tier 2 Tier 3 Tier 4
Multi-Family Base Average Maximum Maximum FY 22-23
Cost-of-Service per Unit Day Day Day Hour Total
Demand services revenue requirement¹ $3,986,186 $974,441 $676,052 $162,724 $5,799,403 Demand per Tier
Tier 1: 0-8 HCF 611,910
Tier 2: 9+ HCF 191,291 191,291 191,291 191,291
÷ Total HCF per Tier 803,201 191,291 191,291 191,291
FY 2022-23 Cost-of-Service per Unit (HCF) $4.96 $5.09 $3.53 $0.85 FY 2024-25 Revenue Increase 1.02 1.02 1.02 1.02
$5.06 $5.20 $3.60 $0.87
Note: Numbers may not sum exactly due to rounding
t revenue requirement from Table 4-3.

Multi-Family Unit Cost Calculation Tier 1 Tier 2
Maximum Hour Component $0.87
Maximum Day Component $3.60
Average Day Component $5.20
Base Day Component $5.06 $5.06
Unit Cost per HCF (by Tier) $5.06 $14.73
c.

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Table 5-5. Calculation of Commercial Quantity Charge Rate (before General Fund contribution adjustments)
Quantity Charge Rate Adjustments
The quantity charge rates summarized in Table 5-6 reflect the cost to provide service before adjustments for contributions and services provided by the City’s General Fund.

At this point, both Inside City and Outside City customers would pay the same quantity charge rates because the services provided to Inside and Outside City customers are approximately the same.

Table 5-6. Summary of Cost-of-Service Quantity Charge Rates (before General Fund contribution adjustments)
1 From Table 5-2
2 From Table 5-4
3 From Table 5-5
Uniform Rate - No Tiers
Commercial/Municipal Base Average Maximum Maximum FY 22-23 Cost-of-Service per Unit Day Day Day Hour Total
Demand services revenue requirement¹ $4,667,999 $1,254,455 $1,198,219 $171,105 $7,291,777 ÷ Total HCF per Tier 1,000,461 1,000,461 1,000,461 1,000,461 FY 2022-23 Cost-of-Service per Unit (HCF) $4.67 $1.25 $1.20 $0.17 +2% FY 2024-25 Revenue Increase 1.02 1.02 1.02 1.02
$4.76 $1.28 $1.22 $0.17
Note: Numbers may not sum exactly due to rounding
¹Net Revenue requirement from Figure 4-3
Commercial/Municipal Unit Cost CalculatiUniform Rate
Maximum Hour Component $0.17
Maximum Day Component $1.22
Average Day Component $1.28
Base Day Component $4.76
Unit Cost per HCF $7.43
Tier Size $/HCF
Single-Family/Duplex1
Tier 1 0-32 HCF $3.75
Tier 2 33-48 HCF $6.36
Tier 3 49-83 HCF $10.52
Tier 4 84+ HCF $14.94
Multi-Family2
Tier 1 0-8 HCF $5.06
Tier 2 9+ HCF $14.73
Commercial3 $7.43
I
D.

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During our analysis, we found the City’s General Fund has contributed to the Water Enterprise through the City’s General Fund incurring costs to serve water customers for public safety services, governmental facilities, and right-of-way maintenance. These contributions have not been accounted for in the revenue requirement used to derive the quantity charge rates shown in Table 5-6.

The following subsection discusses the rationale and calculations for adjusting the quantity charge rates for Inside City and Outside City customers. The adjusted quantity charge rates are summarized in Section 5.3.E.

General Fund Services Provided to the Water Enterprise
Generally speaking, City enterprise funds receive administrative services from the General Fund for which reimbursement is appropriately due. One category of these services is considered governmental overhead of which the City Manager, City Attorney, Finance, IT, and Human Resources are examples. The reimbursements from the enterprises are typically based on overhead cost allocation plans that derive the reimbursements using commonly accepted cost allocation formulae. The Water Enterprise currently reimburses the General Fund for overhead through the annual budgeting process.

A second category of services is related to specific activities that are directly charged to the enterprise. Public Works engineering associated with enterprise capital improvements is an example. The Water Enterprise also reimburses the General Fund for these services.

A third category of services is typically not considered to be overhead (therefore not included in the annual overhead cost allocation payment from the Water Enterprise to the General Fund) and is not charged directly as is the case with the second category. These services can include public safety, the use of governmental facilities such as city halls and corporation yards, and right-of-way maintenance.

As part of the cost of service analysis, we conducted a cost-based analysis which indicated the City’s General Fund is projected to incur approximately $2,649,015 in costs to provide public safety, governmental facilities, and right-of-way maintenance to the Water Enterprise. Of the total $2,649,015, the General Fund incurs $2,325,615 per year to serve Inside City customers and $323,399 per year to serve Outside City customers.

For Inside City customers, these costs are covered by property taxes paid to the City; therefore, no adjustment to the quantity charge rates will be made to the Inside City customers for this item. 4 4 The City plans to continue to cover Beverly Hills’ share of these three enterprise reimbursements with property tax revenue and not to include them in the Inside City quantity charge water rates.

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Outside City customers do not contribute property taxes to the City; therefore, an adjustment needs to be made to the Outside City quantity charges rates so the General Fund can recoup the cost of these services. The reimbursement by Outside City customers (through the quantity charge rate adjustment) for public safety services, governmental facilities, and right-of-way maintenance is required to maintain parity with Inside City customers, which has previously been paying the entire cost through property tax revenue.

The entire $323,399 cost can be recovered by adding $0.66 per HCF, increased by the Water Enterprise revenue requirement increase for FY 2024-25 (see Table 5-7), to the Outside City quantity charges for its single-family, multi family, and commercial customers.

Table 5-7. Quantity Charge Rate Adjustment for General Fund Services Adjusted Quantity Charge Rates
Table 5-8 summarizes the recommended FY 2024-25 quantity charge rates, to be effective January 1, 2025. The recommended rates reflect the cost of service calculations that resulted in the common FY 2024-25 quantity charge rates paid by both Inside City and Outside City customers (see Table 5-6), with the recommended adjustments to reflect the contributions made by the City’s General Fund (discussed in Section 5.3.D).

LESS: GF
Contribution
Net
(to)/from
Rates
LESS: GF
Contribution
Net
(to)/from
Rates
Public Safety $372,566 87.8% $327,082 ($327,082) $0 12.2% $45,484 $0 $45,484 Government Facility $467,172 87.8% $410,139 ($410,139) $0 12.2% $57,034 $0 $57,034 Right-of-Way Maintenance $1,809,276 87.8% $1,588,394 ($1,588,394) $0 12.2% $220,882 $0 $220,882 $2,649,015 ($2,325,615) $0 $0 $323,399
÷ Total Projected Outside City Flow (HCF) 488,316
Quantity Charge rate adj ($/HCF) None FY 2022-23 COS Qty Charge rate adj ($/HCF) $0.66 FY 23-24 revenue requirement increase 1.02
1/1/2025 Quantity Charge rate adj ($/HCF) $0.68
1 Based on proportional share of total water connections Allocation
Water
Enterprise
Beverly Hills Outside City Allocation
Allocation1 Allocation1
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Table 5-8. Recommended FY 2024-25 Quantity Charge Rates (effective 1/1/2025) 1 From Table 5-6
2 From Table 5-7
Water Reliability Rates
In 2018, the City Council approved funding for the development of local water supplies in order to diversify and expand its sources of supply. By doing so, reliability will be improved during shortages. In addition, the need to rely on purchased water from Metropolitan Water District will be reduced. In return for these benefits, a new, separate water reliability charge was established to provide a steady source of funding over the lifecycle of the WEP project.

The new charge was uniformly applied to all water use, on a per-HCF basis. The effect of applying an equal, uniform rate to all water use is that the same cost of additional reliability is paid for all water used by all customers. The principle is that all customers get the same benefit of improved reliability regardless of their customer class or their level of water use.

The local water supply project includes the following components:

1. Three (3) groundwater production wells in the La Brea Subarea General Fund
Cost Allocation Total
Tier Size $/HCF1 Adjustment2 ($/HCF)
Inside City
Single-Family/Duplex
Tier 1 0-32 HCF $3.75 $0.00 $3.75
Tier 2 33-48 HCF $6.36 $0.00 $6.36
Tier 3 49-83 HCF $10.52 $0.00 $10.52
Tier 4 84+ HCF $14.94 $0.00 $14.94
Multi-Family
Tier 1 0-8 HCF $5.06 $0.00 $5.06
Tier 2 9+ HCF $14.73 $0.00 $14.73
Commercial All water use $7.43 $0.00 $7.43
Outside City
Single-Family/Duplex
Tier 1 0-32 HCF $3.75 $0.68 $4.43
Tier 2 33-48 HCF $6.36 $0.68 $7.04
Tier 3 49-83 HCF $10.52 $0.68 $11.20
Tier 4 84+ HCF $14.94 $0.68 $15.62
Multi-Family
Tier 1 0-8 HCF $5.06 $0.68 $5.74
Tier 2 9+ HCF $14.73 $0.68 $15.41
Commercial All water use $7.43 $0.68 $8.11
Cost-of-Service Analysis
F.

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2. Raw water transmission main from the production wells to the Foothill Water Treatment Plant (approximately 4 miles)
The water reliability charge was based on a 30-year cash flow model to calculate the uniform quantity charge rates to be charged equally to Inside City and Outside City customers (see Appendix A-1), on all water use, and the same rate for all customer classes (i.e., single-family, multi family, and commercial). Based on the funding strategy, the average unit cost equals $0.38 per HCF starting in 2019, with annual $0.01 increases through 2049.

To reduce the rate impacts on City residents and businesses, the City Council approved a one-time $10 million to partially subsidize the cost to Inside City customer. This is funded by the City’s General Fund for use during the construction phase of the project.

With the $10 million subsidy, the water reliability charge for Inside City customers was reduced from $0.38 per HCF to $0.23 per HCF starting in 2019. The Outside City customer rate remained at $0.38 per HCF. We modeled the impacts of the $10 million cash contribution (see Appendix A-2). The $10 million contribution would reduce the amount of the revenue bond to be issued from $41.85 million to $31.85 million, saving approximately $7.1 million in interest expense over the 30-year period. The combination of the $10 million cash contribution and the $7.1 million in interest cost savings results in a subsidy to the Inside City water reliability charge of $0.15 per HCF. The Outside City customer water reliability charge remains unchanged. As such, based on the rate schedule previously approved by City Council, the Water Reliability Charge for Inside and Outside City customers shall increase by $0.01 per HCF each year during the five-year planning period (FY 2023-24 through FY 2027-28), as shown in Figure 5-9.

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Table 5-9. Summary of Water Reliability Charge Analyses and Recommended Rates Table 5-10 compares the current and recommended quantity charge rates and water reliability charges through 2028.

Assumptions: No GF Subsidy With GF Subsidy
Bond (30yrs, 4.0%) $41 .85M $31 .85M - - ,- -
Total Interest Incurred $30.5M $23.4M
Contribution from Reserves $12.5M $12.5M ,_ - General Fund Subsidy Amount - $10M ,- - Interest Savings from GF Subsidy - $7.1M Inside City Subsidy for 30 years ($111cO $0.00 $0. 15
Rates per H CF
Annual Rate Increase 1 cent per HCF 1 cent per HCF
Inside & Outside Inside Outside
Fiscal Year $/HCF
FY 2018-19 (Year 1) $0.38 $0.23 $0.38
FY 2019-20 $0.39 $0.24 $0.39
FY 2020-21 $0.40 $0.25 $0.40
FY 2021-22 $0.41 $0.26 $0.41
FY 2022-23 $0.42 ctn ?7 ctn ,1-,
FY 2023-24 $0.43 $0.28 $0.43
FY 2024-25 $0.44 $0.29 $0.44 - -- -- FY 2025-26 $0.45 $0.30 $0.45 - -- -- FY 2026-27 $0.46 $0.31 $0.46 - -- -- FY 2027-28 $0.47 $0.32 $0.47 FY 2028-29 $0.48 $0.33 $0.48
FY 2029-30 $0.49 $0.34 $0.49
FY 2030-31 $0.50 $0.35 $0.50
FY 2031-32 $0.51 $0.36 $0.51
FY 2032-33 $0.52 $0.37 $0.52
FY 2033-34 $0.53 $0.38 $0.53
FY 2034-35 $0.54 $0.39 $0.54
FY 2035-36 $0.55 $0.40 $0.55
FY 2036-37 $0.56 $0.41 $0.56
FY 2037-38 $0.57 $0.42 $0.57
FY 2038-39 $0.58 $0.43 $0.58
FY 2039-40 $0.59 $0.44 $0.59
FY 2040-41 $0.60 $0.45 $0.60
FY 2041-42 $0.61 $0.46 $0.61
FY 2042-43 $0.62 $0.47 $0.62
,_ FY 2043-44 -- $0.63 -- $0.48 $0.63
,_ FY 2044-45 -- $0.64 -- $0.49 $0.64
FY 2045-46 $0.65 $0.50 $0.65
FY 2046-47 $0.66 $0.51 $0.66
FY 2047-48 $0.67 $0.52 $0.67
FY 2048-49 (Year 30) $0.68 $0.53 $0.68
Total Revenue from Charges
(Year 1 through Year 30)
hside City Customers $60.4M $43.3M
Outside City Customers - $8.0M $8.0M
Total $68.8M $51.4M
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Table 5-10. Current and Recommended Quantity Charge Rates

FIXED SERVICE CHARGE RATES
The fixed service charge rates are fixed rates charged per account that are billed each billing period. The fixed service charge rates are graduated in proportion to the capacity of the service serving a property. Fixed service charge rates are charged for water service and for those customers with separate services for fire service.

Fixed Service Charge Rates
The cost of service analysis determined how much of the revenue requirement is attributable to the customer service function. The function has two components – customer accounts and customer capacity – each of which is itemized in the cost of service analysis in Table 5-12. Costs attributable to customer accounts are allocated to customers in proportion to the number of accounts. Costs attributable to customer capacity are allocated to customers in proportion to the capacity of their services. The sum of the two components equals the fixed service charge rate per connection.

Table 5-11 lists the units of service corresponding to each of the cost components. The 10,350 meters/services are used for apportioning the customer accounts cost component.

Current Quantity Charge Rates Recommended Quantity Charge Rates Current Proposed New Proposed
Tier Size $/HCF Tier Size 7/1/2024 Tier Size 1/1/2025 1/1/2026 1/1/2027 1/1/2028 Inside City $/HCF $/HCF $/HCF $/HCF $/HCF
Single-Family/Duplex Single-Family/Duplex
Tier 1 0-26 HCF $3.65 Tier 1 0-26 HCF $3.65 0-32 HCF $3.75 $3.83 $3.91 $3.99 Tier 2 27-48 HCF $7.12 Tier 2 27-48 HCF $7.12 33-48 HCF $6.36 $6.49 $6.62 $6.75 Tier 3 49-86 HCF $10.48 Tier 3 49-86 HCF $10.48 49-83 HCF $10.52 $10.73 $10.94 $11.16 Tier 4 87+ HCF $14.87 Tier 4 87+ HCF $14.87 84+ HCF $14.94 $15.24 $15.54 $15.85 Multi-Family Multi-Family
Tier 1 0-8 HCF $4.66 Tier 1 0-8 HCF $4.66 0-8 HCF $5.06 $5.16 $5.26 $5.37 Tier 2 9+ HCF $13.31 Tier 2 9+ HCF $13.31 9+ HCF $14.73 $15.02 $15.32 $15.63 Commercial $7.24 Commercial $7.24 $7.43 $7.58 $7.73 $7.88 Water Reliability (all customers) $0.26 All Use $0.27 $0.28 $0.29 $0.30 $0.31 Fire Protection (all customers) $3.65 All Use $3.65
Outside City Tier Size $/HCF Tier Size $/HCF Tier Size $/HCF $/HCF $/HCF $/HCF Single-Family/Duplex Single-Family/Duplex
Tier 1 0-26 HCF $4.54 Tier 1 0-26 HCF $4.54 0-32 HCF $4.43 $4.52 $4.61 $4.70 Tier 2 27-48 HCF $8.01 Tier 2 27-48 HCF $8.01 33-48 HCF $7.04 $7.18 $7.32 $7.47 Tier 3 49-86 HCF $11.36 Tier 3 49-86 HCF $11.36 49-83 HCF $11.20 $11.42 $11.65 $11.88 Tier 4 87+ HCF $15.77 Tier 4 87+ HCF $15.77 84+ HCF $15.62 $15.93 $16.25 $16.58 Multi-Family Multi-Family
Tier 1 0-8 HCF $5.55 Tier 1 0-8 HCF $5.55 0-8 HCF $5.74 $5.85 $5.97 $6.09 Tier 2 9+ HCF $14.19 Tier 2 9+ HCF $14.19 9+ HCF $15.41 $15.72 $16.03 $16.35 Commercial $8.14 Commercial $8.14 $8.11 $8.27 $8.44 $8.61 Water Reliability (all customers) $0.41 All Use $0.42 $0.43 $0.44 $0.45 $0.46 Fire Protection (all customers) $4.54 All Use $4.54 $4.43 $4.52 $4.61 $4.70

5.4 A.

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Capacity costs associated with the distribution system are apportioned among the connections in proportion to the capacity associated with each connection. Accounts are converted to Equivalent Meter Units (EMUs) to apportion the customer capacity cost component. An EMU represents the number of 1-inch meters to which a larger meter is equivalent. For example, a 2-inch meter provides 3.2 times as much capacity as a 1-inch meter. The capacity multipliers are based on the safe maximum operating capacity by meter size per the current AWWA standards included in Table B-2 of AWWA’s M-1 manual, seventh edition. For example, the 1,140 2-inch meters equal 3,648 EMUs. There are 16,861 total EMUs. In effect, the 10,3503 services of various sizes have the equivalent capacity as 16,861 1-inch meters.

Table 5-11. Fixed Service Charge Units of Service
Table 5-12 derives the unit costs for the customer accounts and customer capacity cost components. Each account is allocated $16.26 for the customer account cost component.

That amount represents the costs incurred to maintain an account regardless of the capacity of the service. Each account is also allocated $41.23 per EMU. That amount represents a portion of the cost of providing distribution system capacity for each account, and increases based on the capacity of the meter.

Service # of BH # of WH Total # of Meter Capacity
Size Meters Meters Meters Ratings (gpm) Multiplier* EMUs a b a b c = b ÷ 50 d = a * c
1" 5,583 1,468 7,051 50 1.00 7,051
1-1/2" 1,725 152 1,877 100 2.00 3,754
2" 999 141 1,140 160 3.20 3,648
3" 145 25 170 320 6.40 1,088
4" 75 17 92 500 10.00 920
6" 14 6 20 1,000 20.00 400
8" 0 0 0 1,600 32.00 0
10" 0 0 0 4,200 84.00 0
Total Meters 8,541 1,809 10,350 Total EMUs 16,861
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Table 5-12. Fixed Service Charge Unit Costs
Source: Customer Service Expenses from Table 4-3
Source: Units of service from Figure 5-11
Table 5-13 combines the customer service and capacity components into a single fixed service charge for each size service increased by the revenue requirement increase in 2025.

Table 5-13. Recommended Bi-Monthly Fixed Service Charge Rates Source: Figures 5-11 and 5-12.

Tables 5-14 compares the current and recommended fixed service charge rates.

The fixed service charge rates proposed for 1/1/2025 are based on the cost of service analysis and the subsequent three years are based on the 1/1/2025 cost of service rates with annual increases thereafter, which corresponds with the respective annual increases in the Water Enterprises revenue requirement as shown in Figure 3-2.

Customer Customer
FY 2022-23 Customer Account Capacity
Service Expenses Component Component Total
O&M Expenses 1,135,729 1,988,586 $3,124,315
Capital Expenses $1,048,947 $1,416,002 $2,464,949
Administrative Overhead $397,404 $619,313 $1,016,717
Non-Operating Revenue ($565,995) $146,963 ($419,032)
Subtotal FY 2022-23 $2,016,085 $4,170,863 $6,186,949
Less: Fire Service Revenue ($1,006,409) $0 ($1,006,409) Total FY 2022-23 $1,009,677 $4,170,863 $5,180,540
Units of Service 10,350 16,861
Meters EMUs
Unit Cost (bi-monthly) $16.26 $41.23
per Account per EMU
Service Current Proposed (All Customer Classes; Inside and Outside City) Size Charge 7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028 Water Meter Service Charges
1" $53.51 $53.51 $58.64 $59.81 $61.01 $62.23
1-1/2" $93.84 $93.84 $100.69 $102.70 $104.75 $106.85
2" $142.24 $142.24 $151.15 $154.17 $157.25 $160.40
3" $271.30 $271.30 $285.72 $291.43 $297.26 $303.21
4" $416.50 $416.50 $437.11 $445.85 $454.77 $463.87
6" $819.82 $819.82 $857.63 $874.78 $892.28 $910.13
8" $1,311.71 $1,311.71 $1,362.26 $1,389.51 $1,417.30 $1,445.65 10" $1,967.57 $1,967.57 $3,548.99 $3,619.97 $3,692.37 $3,766.22 City of Beverly Hills Water Rate Study – Final Report
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Table 5-14. Current and Recommended Fixed Service Charge Rates Fire Service Charge Rates
All customers pay fixed service charges based on the size of their connection for fire service. Some customers have additional fire service connections. Fire service connections are for sprinkler systems that provide water on a stand-by basis for fire suppression. Revenue from fixed fire service charges covers about 3% of the total revenue requirement. The cost of service analysis is currently limited in deriving the full cost of fire service because costs directly related to fire service are not directly identified among water operations costs. As a result, the allocation is limited by the level of detail in the operations cost breakdown. For that reason, it would be appropriate to maintain the current fire service rates on 7/1/2024 until such time as operational detail is sufficient to allow for a thorough cost of service analysis. Subsequently, each January 1 thereafter (as shown in Figure 5-15), we recommend annual adjustments which correspond with the respective annual increases in the projected revenue requirement as shown in Figure 3-

2. Table 5-15. Current and Recommended Bi-monthly Fixed Fire Service Rates Account
Service Component Capacity Cost-of-Service Cost-of-Service Size ($/bi-month) $/EMU Multiplier Total (FY 2022-23) (eff. 1/1/2025) a b c d = b * c e = a + d f = e * 1.02
1" $16.26 $41.23 1.00 $41.23 $57.49 $58.64
1-1/2" $16.26 $41.23 2.00 $82.46 $98.71 $100.69
2" $16.26 $41.23 3.20 $131.93 $148.19 $151.15
3" $16.26 $41.23 6.40 $263.86 $280.12 $285.72
4" $16.26 $41.23 10.00 $412.28 $428.54 $437.11
6" $16.26 $41.23 20.00 $824.56 $840.82 $857.63
8" $16.26 $41.23 32.00 $1,319.29 $1,335.55 $1,362.26
10" $16.26 $41.23 84.00 $3,463.14 $3,479.40 $3,548.99
Capacity Component Fixed Service Charge ($/bi-month)
Service Current Proposed (All Customer Classes; Inside and Outside City) Size Charge 7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028 Fire Meter Service Charges
<= 2" $29.73 $29.73 $30.32 $30.93 $31.55 $32.18
2 1/2" $44.32 $44.32 $45.21 $46.11 $47.03 $47.97
3" $64.56 $64.56 $65.85 $67.17 $68.51 $69.88
4" $124.69 $124.69 $127.18 $129.72 $132.31 $134.96
6" $340.52 $340.52 $347.33 $354.28 $361.37 $368.60
8" $712.74 $712.74 $726.99 $741.53 $756.36 $771.49
10" $1,272.63 $1,272.63 $1,298.08 $1,324.04 $1,350.52 $1,377.53 12" $1,654.42 $1,654.42 $1,687.51 $1,721.26 $1,755.69 $1,790.80 B.
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WATER SHORTAGE REVENUE STABILIZATION FACTORS
During prolonged shortages, customers are required to conserve or even ration their water use. These shortages can include locally declared water shortages caused by facility operations, State mandated reductions, or natural disasters including droughts. The magnitude of the water savings can significantly reduce water sales revenue from quantity charges.

During shortages, costs do not decrease in direct proportion to decreases in water use because typically over 70% of the costs are fixed regardless of how much water is supplied. Hence, a 10% reduction in water use may only reduce costs about 3% (i.e., 10% of the 30% of costs that vary in proportion to water use). Because the City only receives 15% of its revenue from fixed charges, a 10% reduction in water sales results in an 8.5% reduction in revenue (i.e., 10% of 85% of the revenue from quantity charges). This means that, in a year-long 10% shortage, 97% of the costs are incurred while only 91.5% of the revenue is received, which is a 5.5% revenue shortfall.

Ten percent shortages are not uncommon or as severe as the 2016 shortage, when the State mandated a 32% reduction for the City. Reserves may be able to cover the revenue shortfall during brief rationing periods. For longer or more severe rationing periods, rate increases are needed to offset this revenue shortfall in order to maintain service levels.

On average, the rate increases are designed to be revenue neutral. In other words, customers that reduce their demand by the required amount will pay quantity charge rates, which when multiplied by their reduced demand, will generate only enough quantity charge revenue to cover costs.

The City proposes to use Water Shortage Revenue Stabilization Factors to make the rate adjustments that are needed during shortages declared by the City Council to offset the revenue shortfalls caused by conservation. Although the rate increases are designed to be revenue neutral, they must be implemented in compliance with the Proposition 218 protest process. Revenue stabilization adjustments can be implemented that would eliminate the need for a Proposition 218 process every time revenue-neutral adjustments are needed during shortages.

Methodology
Since the passage of Proposition 218, water shortages have occurred that have led an increasing number of water suppliers to adopt revenue stabilization adjustments that do not trigger the Proposition 218 protest process each time an adjustment is made. This is accomplished by including the Water Shortage Revenue Stabilization Adjustment procedure in the Proposition 218 notice at the time rates are adopted in compliance with Proposition 218. The notice describes the process, which rate payers have the right to protest.

Barring a majority protest, the adjustment process is adopted as part of the rate increase and can be implemented as needed during the term of the adopted rate increases.

5.5 A.

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The adjustment process includes factors by which quantity charge rates are adjusted in conjunction with the reduction stages in the Water Shortage Contingency Plan. The factors are only applied to the variable quantity charge rates and not to the fixed service charge rates to give effect only to customer’s changes in water demand. The City’s current Water Shortage Contingency Plan is based on the same reduction in water use for all classes in each of the five stages. As part of the recommended Water Shortage Revenue Stabilization Adjustments, it is proposed that the shortage reductions will vary by customer class. Each classes’ reduction will be determined by reducing “outdoor” water use (seasonal water use) six times more than “indoor” (average winter water use) water use. 5 It is assumed that seasonal “outdoor” water demand is primarily for irrigation, which is a lower beneficial use than non-seasonal “indoor” demand, which is primarily related to health and safety needs.

Analysis
Based on customer water use data gathered through customer water meters, the resulting reductions are summarized in Table 5-16. The reductions shown represent the customer class reductions required to achieve the reduction associated with each shortage stage.

The customer class reductions are greater or less than the overall average for each stage depending on how much of each classes’ water demand is seasonal.

Table 5-16. Shortage Reductions by Class
Table 5-17 shows the calculation of each customer classes’ respective shortage reduction required during each shortage stage. The annual demand for each class is separated into indoor and outdoor water use where indoor water use is defined as the period from January through March multiplied times four to get the annualized indoor water use over 12 months. Subtracting indoor water use from the total annual water use determines the seasonal outdoor water use. In the case of the irrigation customer class, all of the demand is considered to be outdoor water use.
5 This 6-to-1 reduction formula was implemented by the San Francisco Public Utilities Commission during the 1987-1992 drought.

Stage A Stage B Stage C Stage D Stage E
Up to Up to Up to Up to Up to
Class (5% Reduction) (10% Reduction) (20% Reduction) (30% Reduction) (50% Reduction) Single Family 6% 12% 24% 36% 56%
Multi-Family 3% 6% 11% 17% 36%
Commercial 4% 7% 14% 22% 41%
All Irrigation Meters 13% 26% 51% 77% 100%
B.

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The percentage reductions for each customer class required to achieve the overall reduction for a particular stage are derived so that outdoor consumption is reduced six times indoor consumption. In a Stage A shortage, a 2.1% reduction in indoor water use and an

12.8% reduction in outdoor water use are required to achieve an overall 5% reduction.

Applying the same reduction factors to each class results in different overall reductions for the class based on the relative proportions of their indoor and outdoor water use.

As shown in Table 5-16, to achieve the 5% Stage A reduction, single-family and irrigation customers are required to conserve more than 5% because they have higher seasonal use compared to multi-family and commercial customers. This pattern is consistently repeated for Stages A, B, C, and D. Note that the 50% reduction required in Stage E is so great that all outdoor water use is eliminated and indoor water use has to be cut back

31.8%, which is a 3.15-to-1.0 relationship, not 6.0-to-1.0. In Stage E, a 100% reduction in water use by irrigation customers is required.

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Table 5-17. Calculation of Shortage Reductions by Stage and Customer Class/Type The fixed service charge rates are fixed and generate about 17% of the total rate revenue regardless of shortages. The remaining 83% of revenue is generated by the quantity charge rates. In deriving the revenue stabilization factors, the factors will only apply to 5% Stage A Reduction (up to 5% reduction)
Class Total Indoor Outdoor Indoor Outdoor Indoor Outdoor Total Total Single Family 2,098,170 1,350,705 747,465 2.1% 12.8% 28,925 96,042 124,968 6% Multi-Family 741,305 698,190 43,115 2.1% 12.8% 14,952 5,540 20,492 3% Commercial 902,480 778,557 123,923 2.1% 12.8% 16,673 15,923 32,596 4% All Irrigation Meters 115,206 - 115,206 0.0% 12.8% - 14,803 14,803 13% Total 3,857,160 2,827,452 1,029,708 60,550 132,308 192,858 5.0% 10% Stage B Reduction (up to 10% reduction)
Class Total Indoor Outdoor Indoor Outdoor Indoor Outdoor Total Total Single Family 2,098,170 1,350,705 747,465 4.3% 25.7% 57,851 192,084 249,935 12% Multi-Family 741,305 698,190 43,115 4.3% 25.7% 29,904 11,080 40,983 6% Commercial 902,480 778,557 123,923 4.3% 25.7% 33,346 31,846 65,192 7% All Irrigation Meters 115,206 - 115,206 0.0% 25.7% - 29,606 29,606 26% Total 3,857,160 2,827,452 1,029,708 121,100 264,616 385,716 10.0% 20% Stage C Reduction (up to 20% reduction)
Class Total Indoor Outdoor Indoor Outdoor Indoor Outdoor Total Total Single Family 2,098,170 1,350,705 747,465 8.6% 51.4% 115,702 384,169 499,871 24% Multi-Family 741,305 698,190 43,115 8.6% 51.4% 59,807 22,159 81,967 11% Commercial 902,480 778,557 123,923 8.6% 51.4% 66,692 63,692 130,383 14% All Irrigation Meters 115,206 - 115,206 0.0% 51.4% - 59,211 59,211 51% Total 3,857,160 2,827,452 1,029,708 242,201 529,231 771,432 20.0% 30% Stage D Reduction (up to 30% reduction)
Class Total Indoor Outdoor Indoor Outdoor Indoor Outdoor Total Total Single Family 2,098,170 1,350,705 747,465 12.8% 77.1% 173,553 576,253 749,806 36% Multi-Family 741,305 698,190 43,115 12.8% 77.1% 89,711 33,239 122,950 17% Commercial 902,480 778,557 123,923 12.8% 77.1% 100,037 95,538 195,575 22% All Irrigation Meters 115,206 - 115,206 0.0% 77.1% - 88,817 88,817 77% Total 3,857,160 2,827,452 1,029,708 363,301 793,847 1,157,148 30.0% 50% Stage E Reduction (up to 50% reduction)
Class Total Indoor Outdoor Indoor Outdoor Indoor Outdoor Total Total Single Family 2,098,170 1,350,705 747,465 31.8% 100.0% 429,401 747,465 1,176,866 56% Multi-Family 741,305 698,190 43,115 31.8% 100.0% 221,961 43,115 265,076 36% Commercial 902,480 778,557 123,923 31.8% 100.0% 247,510 123,923 371,433 41% All Irrigation Meters 115,206 - 115,206 0.0% 100.0% - 115,206 115,206 100% Total 3,857,160 2,827,452 1,029,708 898,872 1,029,708 1,928,580 50.0% Baseline Annual Demand (HCF) Reductions
Baseline Annual Demand (HCF) Reductions
Baseline Annual Demand (HCF) Reductions
Baseline Annual Demand (HCF) Reductions
Baseline Annual Demand (HCF) Reductions
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Rate Design
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the quantity charge rates because fluctuations in water use correlate with fluctuations in variable costs. Each customer class, including irrigation meters as a separate class, has its own set of revenue stabilization factors corresponding to its reduction in each stage of shortage.

The formula for the revenue stabilization factors comprises conservation and variable cost components. The conservation component adjusts to account for the required reduction in water demand. The variable cost component adjusts to account for the portion of variable costs that is covered by the quantity charges. The revenue stabilization factors are the product of the conservation component multiplied by the variable cost component. Each component is defined as follows:

Revenue Stabilization Factor = Conservation Component multiplied times Variable Cost Component, where Conservation Component = 1/(1 - a), where
a = required percentage reduction, which varies by customer class.

Variable Cost Component = (b - (c * a))/b, where
a = required percentage reduction, which varies by customer class; b = percentage of revenue from total service and quantity charges for all customer classes that is attributable to quantity charges, an amount that is currently 83%; and
c = percentage of total revenue requirement covered by service and quantity charges that varies based on fluctuations in demand, an amount that is currently 29%. 6 The following example illustrates how the formula determined the 1.041 revenue stabilization factor in Table 5-18 for the single-family customer class in a Stage A shortage in which an overall conservation goal of 5% if required.

Conservation Component: 1/(1 - a) = 1/(1 - 0.0596) = 1.06337, where a = required percentage reduction is 5.96% for the single-family customer class (see Table 5-17, where a rounded 6% is shown).

Variable Cost Component: (b - (c * a))/b = (0.83 - (0.29 * 0.0596))/0.83 = 0.979, where
6 The cost of MWD water is the largest example of a variable cost, which varies with water demand.

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a = 5.96% reduction for single-family customers in a Stage A shortage. b = 83% of total rate revenue is generated by quantity charges; and c = 29% of revenue requirement is related to variable costs.

Revenue Stabilization Factor = 1.06337 * 0.979 = 1.041
The single-family residential quantity charge rates in effect under non-shortage conditions would be multiplied by 1.041 to derive the quantity charge rates to be in effect during a Stage A water shortage. Table 5-18 shows the adjustment factors that would be applied to the rates that would normally be in effect absent declared shortages. 7 Table 5-18. Water Shortage Revenue Stabilization Factors by Class/Type Implementation
The recommended water shortage revenue stabilization factors in Table 5-18 are implemented only during periods of declared shortages. The adjustments can go in either direction from stage to stage depending on whether the level of reduction is increasing or decreasing during the shortage. At least 30 days prior to making the adjustment, notice must be provided to rate payers, which can be included in the customer’s bills. No protest process is required.

MWD PASS-THROUGH ADJUSTMENT
A pass-through adjustment allows the City to adjust quantity charge rates to track any difference between the MWD rates that were included in the model and the actual rates adopted each year by MWD. For example, based on projections by MWD, the cost of 7 In Stage E, there is no adjustment factor in Table 5-18 for irrigation because irrigation is 100% curtailed.

Irrigation water use in Stage E is prohibited and would be subject to sanctions.

Stage A Stage B Stage C Stage D Stage E
Up to Up to Up to Up to Up to
Class (5% Reduction) (10% Reduction) (20% Reduction) (30% Reduction) (50% Reduction) Single Family 1.041 1.088 1.203 1.360 1.827
Multi-Family 1.018 1.038 1.081 1.129 1.361
Commercial 1.024 1.050 1.109 1.179 1.453
Irrigation 1.095 1.224 1.685 3.180 n/a
To be applied to the non-shortage rates in effect at the time of the shortage declaration c.

5.6 City of Beverly Hills Water Rate Study – Final Report Rate Design
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purchased water included in this rate study is $1,256 per acre foot ($2.88 per HCF), effective January 1, 2024. If the actual cost differs, the City may increase or decrease the quantity charge rates by the difference. Table 5-19 summarizes the MWD rates and charges included in the rate study.

Table 5-19. Metropolitan Water District Purchased Water Cost Projections The pass-through adjustment for MWD costs can be made by providing 30-day notice in the customer bills without triggering the need for a Proposition 218 protest process. 1/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Purchased Water Costs
Cost per Acre Foot $1,256 $1,296 $1,338 $1,380 $1,425
Cost per HCF $2.88 $2.98 $3.07 $3.17 $3.27
Readiness-to-Serve Charge $1,189,900 $1,208,150 $1,226,400 $1,244,650 $1,262,900 Capacity Charge $303,020 $333,496 $367,037 $403,952 $444,579 City of Beverly Hills Water Rate Study – Final Report
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CUSTOMER BILL IMPACTS
Based on the recommended variable quantity charge rates summarized in Table 5-9, the recommended fixed service charge rates summarized in Table 5-13., and the recommended water reliability charge rates summarized in Table 5-18 (with general fund subsidy), the bi-monthly customer bill impacts were evaluated.

Tables 6-1 through 6-3 provides sample bills impacts for Inside City customers. Tables 6-4 through 6-6 provide sample bills impacts for Outside City customers. Each table includes the bill impacts for low (half of average), average, and high (three time average) water use for each customer class. The multi-family sample bill impacts are based on a 10-unit complex which is the most-common size within the City’s service area.

Table 6-1. Bi-Monthly Bill Impacts – Inside City Customers – Low Water Use Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 28 28
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $109.14 $109.14 $105.00 $107.24 $109.48 $111.72 Water Reliability Charge $7.28 $7.56 $7.84 $8.12 $8.40 $8.68 Total $169.93 $170.21 $171.48 $175.17 $178.89 $182.63
Increase/(Decrease) $0.28 $1.27 $3.69 $3.72 $3.74
Multi Family - Inside City - Low Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1.5" meter 1.5" meter
Total Water Consumption 47 47
Dwelling Units 10 10
Average Water Consumption (per unit) 4.7 4.7
Fixed Service Charge $93.84 $93.84 $100.69 $102.70 $104.75 $106.85 Quantity Charge $219.02 $219.02 $237.82 $242.52 $247.22 $252.39 Water Reliability Charge $12.22 $12.69 $13.16 $13.63 $14.10 $14.57 Total $325.08 $325.55 $351.67 $358.85 $366.07 $373.81
Increase/(Decrease) $0.47 $26.12 $7.18 $7.22 $7.74
Commercial - Inside City - Low Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 57 57
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $412.68 $412.68 $423.51 $432.06 $440.61 $449.16 Water Reliability Charge $14.82 $15.39 $15.96 $16.53 $17.10 $17.67 Total $481.01 $481.58 $498.11 $508.40 $518.72 $529.06
Increase/(Decrease) $0.57 $16.53 $10.29 $10.32 $10.34
SECTION 6.

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Table 6-2. Bi-Monthly Bill Impacts – Inside City Customers – Average Water Use Single Family/Duplex - Inside City - Average Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 56 56
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $335.38 $335.38 $305.92 $312.24 $318.56 $324.96 Water Reliability Charge $14.56 $15.12 $15.68 $16.24 $16.80 $17.36 Total $403.45 $404.01 $380.24 $388.29 $396.37 $404.55
Increase/(Decrease) $0.56 ($23.77) $8.05 $8.08 $8.18
Multi Family - Inside City - Average Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1.5" meter 1.5" meter
Total Water Consumption 93 93
Dwelling Units 10 10
Average Water Consumption (per unit) 9.3 9.3
Fixed Service Charge $93.84 $93.84 $100.69 $102.70 $104.75 $106.85 Quantity Charge $545.83 $545.83 $596.29 $608.06 $619.96 $632.79 Water Reliability Charge $24.18 $25.11 $26.04 $26.97 $27.90 $28.83 Total $663.85 $664.78 $723.02 $737.73 $752.61 $768.47
Increase/(Decrease) $0.93 $58.24 $14.71 $14.88 $15.86
Commercial - Inside City - Average Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 113 113
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $818.12 $818.12 $839.59 $856.54 $873.49 $890.44 Water Reliability Charge $29.38 $30.51 $31.64 $32.77 $33.90 $35.03 Total $901.01 $902.14 $929.87 $949.12 $968.40 $987.70
Increase/(Decrease) $1.13 $27.73 $19.25 $19.28 $19.30
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Table 6-3. Bi-Monthly Bill Impacts – Inside City Customers – High Water Use Single Family/Duplex - Inside City - High Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 112 112
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $1,036.40 $1,036.40 $1,023.22 $1,043.91 $1,064.60 $1,085.93 Water Reliability Charge $29.12 $30.24 $31.36 $32.48 $33.60 $34.72 Total $1,119.03 $1,120.15 $1,113.22 $1,136.20 $1,159.21 $1,182.88 Increase/(Decrease) $1.12 ($6.93) $22.98 $23.01 $23.67
Multi Family - Inside City - High Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1.5" meter 1.5" meter
Total Water Consumption 186 186
Dwelling Units 10 10
Average Water Consumption (per unit) 18.6 18.6
Fixed Service Charge $93.84 $93.84 $100.69 $102.70 $104.75 $106.85 Quantity Charge $1,783.66 $1,783.66 $1,966.18 $2,004.92 $2,044.72 $2,086.38 Water Reliability Charge $48.36 $50.22 $52.08 $53.94 $55.80 $57.66 Total $1,925.86 $1,927.72 $2,118.95 $2,161.56 $2,205.27 $2,250.89 Increase/(Decrease) $1.86 $191.23 $42.61 $43.71 $45.62
Commercial - Inside City - High Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 226 226
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $1,636.24 $1,636.24 $1,679.18 $1,713.08 $1,746.98 $1,780.88 Water Reliability Charge $58.76 $61.02 $63.28 $65.54 $67.80 $70.06 Total $1,748.51 $1,750.77 $1,801.10 $1,838.43 $1,875.79 $1,913.17 Increase/(Decrease) $2.26 $50.33 $37.33 $37.36 $37.38
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Table 6-4. Bi-Monthly Bill Impacts – Outside City Customers – Low Water Use Single Family/Duplex - Outside City - Low Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 28 28
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $134.06 $134.06 $124.04 $126.56 $129.08 $131.60 Water Reliability Charge $11.48 $11.76 $12.04 $12.32 $12.60 $12.88 Total $199.05 $199.33 $194.72 $198.69 $202.69 $206.71
Increase/(Decrease) $0.28 ($4.61) $3.97 $4.00 $4.02
Multi Family - Outside City - Low Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1.5" meter 1.5" meter
Total Water Consumption 47 47
Dwelling Units 10 10
Average Water Consumption (per unit) 4.7 4.7
Fixed Service Charge $93.84 $93.84 $100.69 $102.70 $104.75 $106.85 Quantity Charge $260.85 $260.85 $269.78 $274.95 $280.59 $286.23 Water Reliability Charge $19.27 $19.74 $20.21 $20.68 $21.15 $21.62 Total $373.96 $374.43 $390.68 $398.33 $406.49 $414.70
Increase/(Decrease) $0.47 $16.25 $7.65 $8.16 $8.21
Commercial - Outside City - Low Water use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 57 57
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $463.98 $463.98 $462.27 $471.39 $481.08 $490.77 Water Reliability Charge $23.37 $23.94 $24.51 $25.08 $25.65 $26.22 Total $540.86 $541.43 $545.42 $556.28 $567.74 $579.22
Increase/(Decrease) $0.57 $3.99 $10.86 $11.46 $11.48
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Table 6-5. Bi-Monthly Bill Impacts – Outside City Customers – Average Water Use Single Family/Duplex - Outside City - Average Water Use Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 56 56
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $385.14 $385.14 $344.00 $350.88 $357.84 $364.96 Water Reliability Charge $22.96 $23.52 $24.08 $24.64 $25.20 $25.76 Total $461.61 $462.17 $426.72 $435.33 $444.05 $452.95
Increase/(Decrease) $0.56 ($35.45) $8.61 $8.72 $8.90
Multi Family - Outside City - Average Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1.5" meter 1.5" meter
Total Water Consumption 93 93
Dwelling Units 10 10
Average Water Consumption (per unit) 9.3 9.3
Fixed Service Charge $93.84 $93.84 $100.69 $102.70 $104.75 $106.85 Quantity Charge $628.47 $628.47 $659.53 $672.36 $685.99 $699.75 Water Reliability Charge $38.13 $39.06 $39.99 $40.92 $41.85 $42.78 Total $760.44 $761.37 $800.21 $815.98 $832.59 $849.38
Increase/(Decrease) $0.93 $38.84 $15.77 $16.61 $16.79
Commercial - Outside City - Average Water use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 113 113
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $919.82 $919.82 $916.43 $934.51 $953.72 $972.93 Water Reliability Charge $46.33 $47.46 $48.59 $49.72 $50.85 $51.98 Total $1,019.66 $1,020.79 $1,023.66 $1,044.04 $1,065.58 $1,087.14 Increase/(Decrease) $1.13 $2.87 $20.38 $21.54 $21.56
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Table 6-6. Bi-Monthly Bill Impacts – Outside City Customers – High Water Use

NEIGHBORING AGENCY BILL COMPARISON
Typical bills based on the proposed rates (effective January 1, 2025, the first rate adjustment for the fixed service charge and quantity meter charges) for the City are compared with other neighboring water agencies in Figures 6-1 through 6-3. The comparison is made for sample Single Family, Multi Family, and Commercial, based on average water use by customer class. Bills shown for neighboring agencies reflect their current rates (as of July 1, 2023). NOTE: It is anticipated that the neighboring agencies’ rates may conduct Single Family/Duplex - Outside City - High Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 112 112
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $1,135.96 $1,135.96 $1,099.38 $1,121.19 $1,143.64 $1,166.54 Water Reliability Charge $45.92 $47.04 $48.16 $49.28 $50.40 $51.52 Total $1,235.39 $1,236.51 $1,206.18 $1,230.28 $1,255.05 $1,280.29 Increase/(Decrease) $1.12 ($30.33) $24.10 $24.77 $25.24 Multi Family - Outside City - High Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1.5" meter 1.5" meter
Total Water Consumption 186 186
Dwelling Units 10 10
Average Water Consumption (per unit) 18.6 18.6
Fixed Service Charge $93.84 $93.84 $100.69 $102.70 $104.75 $106.85 Quantity Charge $1,948.14 $1,948.14 $2,092.66 $2,134.32 $2,176.78 $2,220.30 Water Reliability Charge $76.26 $78.12 $79.98 $81.84 $83.70 $85.56 Total $2,118.24 $2,120.10 $2,273.33 $2,318.86 $2,365.23 $2,412.71 Increase/(Decrease) $1.86 $153.23 $45.53 $46.37 $47.48
Commercial - Outside City - High Water use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Meter Size 1" meter 1" meter
Average Water Consumption 226 226
Fixed Service Charge $53.51 $53.51 $58.64 $59.81 $61.01 $62.23 Quantity Charge $1,839.64 $1,839.64 $1,832.86 $1,869.02 $1,907.44 $1,945.86 Water Reliability Charge $92.66 $94.92 $97.18 $99.44 $101.70 $103.96 Total $1,985.81 $1,988.07 $1,988.68 $2,028.27 $2,070.15 $2,112.05 Increase/(Decrease) $2.26 $0.61 $39.59 $41.88 $41.90

6.1 City of Beverly Hills Water Rate Study – Final Report Customer Bill Impacts
HF&H Consultants, LLC Page 47 January 23, 2024
their own rate studies and adjust rates on July 1, 2024, which is not reflected here, as those adjustments are unknown at this time.

The agencies selected for this comparison have unique conditions that account for the differences in bills. Some agencies may have recently or are currently undergoing major capital improvement programs while others may not. Some agencies may receive significant support from non-operating revenue such as property taxes, which is not the case with the City.

Figure 6-1. Single Family Bi-Monthly Charge Comparison with Neighboring Agencies
Figure 6-2. Multi Family Bi-Monthly Charge per Dwelling Unit (for a 10-Unit Complex) Comparison with Neighboring Agencies
$1,400.00
$1,200.00
$1,000.00
$800.00
$600.00
$400.00
$200.00
$0.00
$140.00
$120.00
$100.00
$80.00
$60.00
$40.00
$20.00
$0.00
Average Single-Family Bi-Monthly Bills - 56 hcf
-------------------------------------------------------------------------------------------- $~168.29 _ - - - - - - - - - - - - - ~ - - - - - - ~ - - - - -$492 =;5 - - - --$5..1.l.SS - - - _$_552,]4 _ - - -$645.8~ - - - - . $380.24 $396.98 $403.45 $426.56 $461.61 •
- - -$:29&.36- - - - - - - - - - - - - -
Glendale
-
Beverly
-
Hills Ventura
-
Beverly
-
Hil ls
-
West West
-
Santa Monica Los Angeles
(Proposed (Current) Hollywood Hollywood
2025) (Proposed (Cu rrent)
2025)
Bi-Monthly Service Cha rge Quantity Charge
Average Multi-Family Bi-Monthly Bills- 9 hcf per dwelling unit Ventura
- -
Glendale Santa Monica Beverly
-Hills Beverly Hills -West San
-
Diego Los Angeles
(Current) (Proposed Hollywood
2025) (Current)
■ Bi- Monthly Service Charge Quantity Charge
San
-
Diego Palo -Alto Santa
-
Barbara
$145.67 $148.98
------ ------ ---
Hollywood
-West -
(Proposed
2025)
Pa lo Alto Santa Barbara
City of Beverly Hills Water Rate Study – Final Report
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Figure 6-3. Commercial) Bi-Monthly Charge Comparison with Neighboring Agencies
Average Commercial Bi-Monthly Bills - 113 hcf
$1,300.00
$1,100.00
--------------------------------~ ------------------- ~ ------------------------------- , ~ $1097.04 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ______________________ $1,019_66.. __ $1,023~6.6.. __ ~!,Ql3)!5 ___ .?!,Q~3~?_2 ____ ' __ _ $901.01
$900.00 - - - - - - - - - - - - - - - - - - - - -$814. l.4- - - - - $700.00 ----------- $648.65 ---- $541.26
$500.00
$300.00
$100.00 ---- -------
- -
$929.87 $939.38
----- ----- ----- ----- ----- --- -$100.00 - - Grenclale- - - - Ventura- - - -sanDiego - - Beverly HHls - Beverly HHls - tos-Angeres - - - - - West - - - - - West - - -santail-arbara-Sa-nta-Monica- - - -Pafo-Aito -- -
(Current) (Proposed Hollywood Hollywood
2025) (Current) (Proposed
2025)
Bi-Monthly Service Charge Quantity Charge
APPENDIX A.

WATER RELIABILITY CHARGE CASH FLOW

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 1 Assumptions
2 Annual Inflation ‐ Expenses 3.0%3 Annual Interest Rate ‐ Bonds 4.0%4 Annual Interest Rate ‐ GF Loan 3.0%5 WR Charge Year 1 (2019) ‐ unsubsidized $0.386 Annual change in WR Charge $0.017 Inside City Subsidy  ($/HCF) $0.1589 Results 10 Inside City WRC Revenue $43,320,00011 Outside City WRC Revenue $7,950,00012 2049 Ending Cash Balance ($120,462) 13 Annual Ending Cash Balance $0 $10,121,512 $29,465,562 $18,452,636 $5,456,108 $494,460 $310,809 $156,980 $57,124 $11,570 $20,658 $84,73614 Interest on Bond(s) $23,402,98515 Interest on GF Loan $016 Reserves Remaining to be Paid $017 Fiscal Year Ending: 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 18 Revenues
19 Water Reliability Charge Revenue20 Inside City Customers21 Inside City Flow (HCF) 1,900,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 22 $/HCF WR Charge $0.23 $0.24 $0.25 $0.26 $0.27 $0.28 $0.29 $0.30 $0.31 $0.32 $0.3323 Subtotal ‐ Inside City $0 $437,000 $912,000 $950,000 $988,000 $1,026,000 $1,064,000 $1,102,000 $1,140,000 $1,178,000 $1,216,000 $1,254,000 24 Outside  City Customers
25 Inside City Flow (HCF) 250,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 26 $/HCF WR Charge $0.38 $0.39 $0.40 $0.41 $0.42 $0.43 $0.44 $0.45 $0.46 $0.47 $0.4827 Subtotal ‐ Outside City $0 $95,000 $195,000 $200,000 $205,000 $210,000 $215,000 $220,000 $225,000 $230,000 $235,000 $240,0002829 Total Water Reliability Charge Revenue $0 $532,000 $1,107,000 $1,150,000 $1,193,000 $1,236,000 $1,279,000 $1,322,000 $1,365,000 $1,408,000 $1,451,000 $1,494,0003031 General Fund Contributions $9,000,000 $10,000,000 32 General Fund Loans33 Bond Proceeds $31,845,000
34 Transfer in from Reserves $0 $8,500,000 $0 $0 $0 $1,900,000 $2,100,000 $0 $0 35 Total Revenue $9,000,000 $19,032,000 $32,952,000 $1,150,000 $1,193,000 $3,136,000 $3,379,000 $1,322,000 $1,365,000 $1,408,000 $1,451,000 $1,494,000 363738 Expenditures to Start Up
39 Capital Expenses40 Preliminary Design Report $0 $874,182 $0 $0 $0 $0 $0 $0 $0 $0 $0 $041 Land Acquisition (3rd Well Site) $9,000,000 $2,787,250 $2,787,250 $0 $0 $0 $0 $0 $0 $0 $0 $0 42 CEQA $0 $327,818 $0 $0 $0 $0 $0 $0 $0 $0 $0 $043 Final Design $0 $1,678,092 $1,296,326 $1,335,216 $0 $0 $0 $0 $0 $0 $0 $044 Engineerings Svcs During Const (ESDC) $0 $542,766 $559,049 $575,821 $593,095 $610,888 $0 $0 $0 $0 $0 $045 Construction Mgmt and Inspection $0 $687,503 $708,128 $729,372 $751,254 $773,791 $0 $0 $0 $0 $0 $0 46 Well Drilling (3 sites) $0 $1,122,941 $2,313,258 $0 $0 $0 $0 $0 $0 $0 $0 $0 47 Transmission Main $0 $0 $3,664,342 $3,774,272 $3,887,500 $0 $0 $0 $0 $0 $0 $0 48 Well Equipping (3 sites) $0 $464,553 $0 $3,107,874 $3,201,110 $0 $0 $0 $0$0$0$0 49 Treatment Plant $0 $0 $0 $0 $3,092,381 $3,200,302 $0 $0 $0 $0 $0 $0 50 System Permitting & Testing $0 $0 $0 $0 $0 $660,375 $680,186 $0 $0 $0 $0 $0 51 Total Capital Expenses $9,000,000 $8,485,106 $11,328,354 $9,522,555 $11,525,340 $5,245,356 $680,186 $0 $0 $0 $0 $0 5253 Operational Expenses
54 O&M per PDR $0 $0 $0 $347,782 $358,216 $368,962 $380,031 $1,467,870 $1,511,906 $1,557,263 $1,603,981 $1,652,100 55 Additional Staffing
56 Project Manager 3 $0 $206,837 $212,895 $219,135 $225,562 $232,182 $239,000 $246,170 $253,556 $261,162 $268,997 $277,067 57 Water Treatment Operator 1 $0 $0 $0 $0 $0 $163,573 $168,480 $173,535 $178,741 $184,103 $189,626 $195,31558 Pump/Well Mechanic $0 $109,273 $112,551 $115,927 $119,405 $122,987 $126,677 $130,477 $134,392 $138,423 $142,576 $146,85359 Pump/Well Electrician $0 $109,273 $112,551 $115,927 $119,405 $122,987 $126,677 $130,477 $134,392 $138,423 $142,576 $146,85360 Total Operational Expenses $0 $425,382 $437,997 $798,772 $822,588 $1,010,692 $1,040,866 $2,148,530 $2,212,986 $2,279,375 $2,347,756 $2,418,1896162 Debt Service $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 63 Reserves Repayment6465 Less: MWD Water Purchase Savings ($2,514,300) ($2,589,729) ($2,667,421) ($2,747,443) ($2,829,867) 6667 Net Expenditures/(Cost Savings) $9,000,000 $8,910,488 $13,607,950 $12,162,926 $14,189,527 $8,097,648 $3,562,651 $1,475,829 $1,464,856 $1,453,554 $1,441,912 $1,429,9226869 Net Operating Suprlus/(Shortfall) $0 $10,121,512 $19,344,050 ($11,012,926) ($12,996,527) ($4,961,648) ($183,651) ($153,829) ($99,856) ($45,554) $9,088 $64,07870 Cash Balance for WR Expenditures $0 $10,121,512 $29,465,562 $18,452,636 $5,456,108 $494,460 $310,809 $156,980 $57,124 $11,570 $20,658 $84,736 Water Reliability Charge 30-year Cash Flow Analysis (with $10 million General Fund contribution) 1 Assumptions
2 Annual Inflation ‐ Expenses3 Annual Interest Rate ‐ Bonds4 Annual Interest Rate ‐ GF Loan5 WR Charge Year 1 (2019) ‐ unsubsidized6 Annual change in WR Charge7 Inside City Subsidy  ($/HCF)89 Results 10 Inside City WRC Revenue11 Outside City WRC Revenue12 2049 Ending Cash Balance13 Annual Ending Cash Balance14 Interest on Bond(s)15 Interest on GF Loan16 Reserves Remaining to be Paid17 Fiscal Year Ending:18 Revenues19 Water Reliability Charge Revenue20 Inside City Customers21 Inside City Flow (HCF)22 $/HCF WR Charge23 Subtotal ‐ Inside City24 Outside  City Customers25 Inside City Flow (HCF)26 $/HCF WR Charge27 Subtotal ‐ Outside City2829 Total Water Reliability Charge Revenue3031 General Fund Contributions32 General Fund Loans33 Bond Proceeds34 Transfer in from Reserves35 Total Revenue363738 Expenditures to Start Up39 Capital Expenses40 Preliminary Design Report41 Land Acquisition (3rd Well Site)42 CEQA43 Final Design44 Engineerings Svcs During Const (ESDC)45 Construction Mgmt and Inspection46 Well Drilling (3 sites)47 Transmission Main48 Well Equipping (3 sites)49 Treatment Plant50 System Permitting & Testing51 Total Capital Expenses5253 Operational Expenses54 O&M per PDR55 Additional Staffing56 Project Manager 357 Water Treatment Operator 158 Pump/Well Mechanic59 Pump/Well Electrician60 Total Operational Expenses6162 Debt Service63 Reserves Repayment6465 Less: MWD Water Purchase Savings6667 Net Expenditures/(Cost Savings)6869 Net Operating Suprlus/(Shortfall)70 Cash Balance for WR Expenditures 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 $4,164 $4,314 $5,566 $4,313 $4,961 $4,926 $5,638 $5,540 $6,086 $6,747 $7,006 $7,360 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 $0.34 $0.35 $0.36 $0.37 $0.38 $0.39 $0.40 $0.41 $0.42 $0.43 $0.44 $0.45 $1,292,000 $1,330,000 $1,368,000 $1,406,000 $1,444,000 $1,482,000 $1,520,000 $1,558,000 $1,596,000 $1,634,000 $1,672,000 $1,710,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 $0.49 $0.50 $0.51 $0.52 $0.53 $0.54 $0.55 $0.56 $0.57 $0.58 $0.59 $0.60 $245,000 $250,000 $255,000 $260,000 $265,000 $270,000 $275,000 $280,000 $285,000 $290,000 $295,000 $300,000 $1,537,000 $1,580,000 $1,623,000 $1,666,000 $1,709,000 $1,752,000 $1,795,000 $1,838,000 $1,881,000 $1,924,000 $1,967,000 $2,010,000$1,537,000 $1,580,000 $1,623,000 $1,666,000 $1,709,000 $1,752,000 $1,795,000 $1,838,000 $1,881,000 $1,924,000 $1,967,000 $2,010,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,701,663 $1,752,713 $1,805,295 $1,859,454 $1,915,237 $1,972,694 $2,031,875 $2,092,831 $2,155,616 $2,220,285 $2,286,893 $2,355,500 $285,379 $293,940 $302,759 $311,841 $321,197 $330,832 $340,757 $350,980 $361,510 $372,355 $383,525 $395,031$201,174 $207,210 $213,426 $219,829 $226,424 $233,216 $240,213 $247,419 $254,842 $262,487 $270,362 $278,472$151,259 $155,797 $160,471 $165,285 $170,243 $175,351 $180,611 $186,029 $191,610 $197,359 $203,279 $209,378$151,259 $155,797 $160,471 $165,285 $170,243 $175,351 $180,611 $186,029 $191,610 $197,359 $203,279 $209,378 $2,490,735 $2,565,457 $2,642,421 $2,721,693 $2,803,344 $2,887,444 $2,974,068 $3,063,290 $3,155,188 $3,249,844 $3,347,339 $3,447,759$1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $200,000 $175,000 $230,000 $289,000 $344,000 $402,000 $459,000 $518,000 $576,000 $635,000 $695,000 $755,000 ($2,914,763) ($3,002,206) ($3,092,272) ($3,185,040) ($3,280,591) ($3,379,009) ($3,480,379) ($3,584,791) ($3,692,334) ($3,803,104) ($3,917,197) ($4,034,713) $1,617,571 $1,579,851 $1,621,748 $1,667,253 $1,708,352 $1,752,035 $1,794,288 $1,838,099 $1,880,453 $1,923,339 $1,966,741 $2,009,646 ($80,571) $149 $1,252 ($1,253) $648 ($35) $712 ($99) $547 $661 $259 $354 $4,164 $4,314 $5,566 $4,313 $4,961 $4,926 $5,638 $5,540 $6,086 $6,747 $7,006 $7,360 Water Reliability Charge 30-year Cash Flow Analysis (with $10 million General Fund contribution) 1 Assumptions
2 Annual Inflation ‐ Expenses3 Annual Interest Rate ‐ Bonds4 Annual Interest Rate ‐ GF Loan5 WR Charge Year 1 (2019) ‐ unsubsidized6 Annual change in WR Charge7 Inside City Subsidy  ($/HCF)89 Results 10 Inside City WRC Revenue11 Outside City WRC Revenue12 2049 Ending Cash Balance13 Annual Ending Cash Balance14 Interest on Bond(s)15 Interest on GF Loan16 Reserves Remaining to be Paid17 Fiscal Year Ending:18 Revenues19 Water Reliability Charge Revenue20 Inside City Customers21 Inside City Flow (HCF)22 $/HCF WR Charge23 Subtotal ‐ Inside City24 Outside  City Customers25 Inside City Flow (HCF)26 $/HCF WR Charge27 Subtotal ‐ Outside City2829 Total Water Reliability Charge Revenue3031 General Fund Contributions32 General Fund Loans33 Bond Proceeds34 Transfer in from Reserves35 Total Revenue363738 Expenditures to Start Up39 Capital Expenses40 Preliminary Design Report41 Land Acquisition (3rd Well Site)42 CEQA43 Final Design44 Engineerings Svcs During Const (ESDC)45 Construction Mgmt and Inspection46 Well Drilling (3 sites)47 Transmission Main48 Well Equipping (3 sites)49 Treatment Plant50 System Permitting & Testing51 Total Capital Expenses5253 Operational Expenses54 O&M per PDR55 Additional Staffing56 Project Manager 357 Water Treatment Operator 158 Pump/Well Mechanic59 Pump/Well Electrician60 Total Operational Expenses6162 Debt Service63 Reserves Repayment6465 Less: MWD Water Purchase Savings6667 Net Expenditures/(Cost Savings)6869 Net Operating Suprlus/(Shortfall)70 Cash Balance for WR Expenditures 2042 2043 2044 2045 2046 2047 2048 2049
$8,323 $8,423 $9,204 $10,227 $14,068 $14,322 $15,602 ($120,462) 2042 2043 2044 2045 2046 2047 2048 2049
3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 3,800,000 1,900,000 $0.46 $0.47 $0.48 $0.49 $0.50 $0.51 $0.52 $0.53
$1,748,000 $1,786,000 $1,824,000 $1,862,000 $1,900,000 $1,938,000 $1,976,000 $1,007,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 250,000 $0.61 $0.62 $0.63 $0.64 $0.65 $0.66 $0.67 $0.68
$305,000 $310,000 $315,000 $320,000 $325,000 $330,000 $335,000 $170,000 $2,053,000 $2,096,000 $2,139,000 $2,182,000 $2,225,000 $2,268,000 $2,311,000 $1,177,000$2,053,000 $2,096,000 $2,139,000 $2,182,000 $2,225,000 $2,268,000 $2,311,000 $1,177,000 $0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0$0 $0 $0 $0 $0 $0 $0 $0 $2,426,165 $2,498,950 $2,573,919 $2,651,136 $2,730,670 $2,812,590 $2,896,968 $2,983,877 $406,882 $419,089 $431,661 $444,611 $457,949 $471,688 $485,839 $500,414$286,827 $295,431 $304,294 $313,423 $322,826 $332,511 $342,486 $352,761$215,659 $222,129 $228,793 $235,657 $242,726 $250,008 $257,508 $265,234$215,659 $222,129 $228,793 $235,657 $242,726 $250,008 $257,508 $265,234 $3,551,192 $3,657,728 $3,767,460 $3,880,484 $3,996,898 $4,116,805 $4,240,309 $4,367,518$1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $1,841,600 $815,000 $877,000 $938,000 $1,000,000 $1,060,000 $1,127,000 $1,190,000 $215,000 ($4,155,755) ($4,280,427) ($4,408,840) ($4,541,105) ($4,677,339) ($4,817,659) ($4,962,189) ($5,111,054) $2,052,037 $2,095,900 $2,138,219 $2,180,978 $2,221,159 $2,267,746 $2,309,720 $1,313,064 $963 $100 $781 $1,022 $3,841 $254 $1,280 ($136,064)
$8,323 $8,423 $9,204 $10,227 $14,068 $14,322 $15,602 ($120,462) Water Reliability Charge 30-year Cash Flow Analysis (with $10 million General Fund contribution) Attachment 5
January 24, 2024
HF&H Consultants, LLC

CITY OF BEVERLY HILLS
Wastewater Rate Study
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CITY OF BEVERLY HILLS
345 Foothill Road
Beverly Hills, CA 90210

WASTEWATER RATE STUDY
January 24, 2024

HF&H CONSULTANTS, LLC
590 Ygnacio Valley Road, Suite 105
Walnut Creek, CA 94596
© HF&H CONSULTANTS, LLC All rights reserved.
•
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HF&H CONSULTANTS, LLC
Managing Tomorrow’s Resources Today
590 Ygnacio Valley Road, Suite 105 Robert D. Hilton, Emeritus Walnut Creek, California 94596 John W. Farnkopf, PE
Tel: (925) 977-6950 Laith B. Ezzet, CMC
Fax: (925) 977-6955 Richard J. Simonson
hfh-consultants.com Marva M. Sheehan, CPA
Robert C. Hilton
January 24, 2024
Ms. Shana Epstein
Director of Public Works
City of Beverly Hills
345 Foothill Road
Beverly Hills, CA 90210
Subject: Wastewater Rate Study Report
Dear Ms. Epstein:

We are pleased to submit this wastewater rate study. This report is organized into six sections:
• Executive Summary – a summary of the proposed wastewater rates. • Introduction – a brief description of the study purpose and project background. • Revenue Requirements – the estimated costs that must be covered by rates and other sources of revenue.
• Revenue Analysis – an analysis of revenue at current rates to determine if revenues need to increase to cover the projected revenue requirement and to maintain adequate reserves.
• Cost of Service Analysis – the allocation of the revenue requirement among the residential and non-residential customers based on updated loadings from each class.
• Rate and Bill Analysis – the updated rates, and rate structure (e.g., transitioning single family and multi family customers to a flow-based structure, with the cost of service adjustments and the required rate increases and a comparison of typical customer bills with comparable agencies.

We would like to express our thanks to City staff and the members of the Public Works Commission and the Public Works Liaison Committee for their diligent efforts in assisting us with this study.

Sincerely,

HF&H CONSULTANTS, LLC
Rick Simonson, Senior Vice President
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City of Beverly Hills Wastewater Rate Study – Final Report Table of Contents
HF&H Consultants, LLC Page i January 24, 2024

TABLE OF CONTENTS
SECTION 1. EXECUTIVE SUMMARY................................................................. 5 Background.................................................................................................................... 5 Current Rates ................................................................................................................. 5 Findings and Recommendations....................................................................................... 6 SECTION 2. INTRODUCTION .......................................................................... 9 Study Purpose and Priorities............................................................................................ 9 Study Process................................................................................................................. 9 Current Rates ............................................................................................................... 10 SECTION 3. REVENUE REQUIREMENTS ........................................................ 12 Expense Projections ...................................................................................................... 12 Revenue Projections ..................................................................................................... 13 Reserve Policies............................................................................................................ 14 Minimum/Operating Target Balance .................................Error! Bookmark not defined.

Target Balance................................................................................................................14 Fund Balance................................................................................................................ 14 SECTION 4. COST OF SERVICE ANALYSIS .................................................... 16 Functional Cost Allocations ............................................................................................ 16 Units of Service ............................................................................................................ 17 Unit Costs of Service..................................................................................................... 19 SECTION 5. RATE DESIGN ............................................................................ 21 Cost of Service Rates .................................................................................................... 21 SECTION 6. CUSTOMER BILL IMPACTS ........................................................ 24 Neighboring Agency Bill Comparison .............................................................................. 29

TABLES AND FIGURES
Figure 1-1. Current Rates .................................................................................................... 5 Figure 1-2. Projected Year-End Reserve Balances.................................................................. 6 Table 1-1. Cost of Service Rates Comparison to Current Rates ............................................... 8 Table 1-2. Recommended Phase-In Schedule to Achieve Cost of Service Rates ....................... 8 Table 2-1 Current Wastewater Rates ................................................................................... 11 Table 3-1. Key Modeling Assumptions ................................................................................ 12 Figure 3-1. Annual Revenue Requirement Components........................................................ 13 Table 3-2. Projected Revenue Shortfall............................................................................... 13 Figure 3-2. Fund Balance Without Rate Revenue Increases.................................................. 15 Table 4-1. Allocation of Costs to Functions.......................................................................... 17 Table 4-2. Units of Service By Function – Existing Customer Classes .................................... 18 Table 4-3. Return to Sewer Factors .................................................................................... 19 Table 4-4. Unit Costs of Service by Function ....................................................................... 19 Table 4-6. Current Rate Revenue Compared With the Cost of Service................................... 20 City of Beverly Hills Wastewater Rate Study – Final Report Table of Contents
HF&H Consultants, LLC Page ii January 24, 2024
Table 5-1. Calculation of Residential Cost of Service Rates................................................... 21 Table 5-2. Calculation of Commercial Cost of Service Rates ................................................. 22 Table 5-3. Calculation of New Medium Strength Customer Class Rates ................................. 22 Table 5-4. Comparison of Current Rates with Cost-of-Service Rates ..................................... 23 Table 5-5. Proposed Rates with Five-Year Phase-In to Cost of Service.................................. 24 Table 6-1. Single Family Bill Impacts with Proposed Rates ................................................... 25 Table 6-2. Multi Family Bill Impacts with Proposed Rates ..................................................... 26 Table 6-3. Commercial – Low Strength Impacts with Proposed Rates ................................... 27 Table 6-4. Commercial – Medium Strength Impacts with Proposed Rates ............................. 28 Table 6-5. Commercial – High Strength Impacts with Proposed Rates .................................. 29 Figure 6-6. Single Family Bi-Monthly Charge Comparison with Neighboring Agencies............ 30 Figure 6-7. Multi Family Bi-Monthly Charge per Dwelling Unit (for a 10-Unit Complex) Comparison with Neighboring Agencies.................................................................................................. 30 Figure 6-8. Commercial (Low Strength) Bi-Monthly Charge Comparison with Neighboring Agencies............................................................................................................................ 31

APPENDIX

APPENDIX A
Examples of Commercial Customer Categorization by Strength of Wastewater Discharge

ACRONYMS
BOD Biological Oxygen Demand; a component of wastewater strength CCF or HCF Hundred cubic feet of metered water sold; 748 gallons; a cube of water 4.6 feet on edge
CIP Capital Improvement Program
Domestic Strength Commercial customers currently not paying a sewer surcharge rate
DU Dwelling Unit
Excess Strength Commercial customers currently paying a sewer surcharge rate FY Fiscal Year
GPD Gallons per Day
MFR Multiple Family Residential
Mg/l Milligrams per Liter
O&M Operations and Maintenance
PAYGo Pay-As-You-Go; funding capital improvements from cash rather than from borrowed sources of revenue
SFR Single Family Residential
TSS Total Suspended Solids; a component of wastewater strength City of Beverly Hills Wastewater Rate Study – Final Report Table of Contents
HF&H Consultants, LLC Page iii January 24, 2024

ACKNOWLEDGEMENTS
City Council
Mayor Julian A. Gold, M.D.

Vice Mayor Lester Friedman
Councilmember Lili Bosse
Councilmember Sharona R Nazarian, PsyD
Councilmember John A Mirisch
Public Works Commission
Chairperson Wendy E. Nystrom
Vice Chairperson Charles Alpert
Commissioner John Millan
Commissioner Homayoon “Mark” Nehoray
Commissioner Susan Kimura
City Staff
Shana Epstein, Director of Public Works
Jeff Muir, Director of Finance
Robert Welch, Utilities General Manager
Melissa Gomez, Senior Management Analyst
Tatiana Szerwinski, Assistant Director of Finance
Brandy Gros, Senior Budget & Financial Analyst
HF&H Consultants, LLC
Rick Simonson, Senior Vice President
John Farnkopf, Senior Vice President
Gabe Sasser, Project Manager

LIMITATIONS
This document was prepared solely for the City of Beverly Hills in accordance with the contract between the City and HF&H and is not intended for use by any other party for any other purpose.

In preparing this analysis, we relied on information and instructions from the City, which we consider to be accurate and reliable and did not independently verify.

Rounding differences caused by stored values in electronic format may exist.

City of Beverly Hills Wastewater Rate Study – Final Report Table of Contents
HF&H Consultants, LLC Page iv January 24, 2024
This document addresses relevant laws, regulations, and court decisions but should not be relied upon as legal advice. Questions concerning the interpretation of legal authorities referenced in this document should be referred to a qualified attorney.

City of Beverly Hills Wastewater Rate Study – Final Report Section 1. Executive Summary
HF&H Consultants, LLC Page 5 January 24, 2024
SECTION 1. EXECUTIVE SUMMARY

BACKGROUND
The City of Beverly Hills (City) provides wastewater service only to customers within the City boundary. The City owns, operates, and maintains the sewer collection system.

However, the City discharges all wastewater to the City of Los Angeles’s system via the Hyperion Water Reclamation Plant. For this treatment service, the City reimburses the City of Los Angeles for its proportionate share of discharge volumes. The City’s collection system consists only of gravity pipelines. On average, the City conveys approximately

3.5 million gallons per day (MGD) to Hyperion Water Reclamation Plant without the aid of lift stations.

The present wastewater rates have not been updated since FY 2009-10. However, HF&H evaluated the current rates in 2017 and found rates sufficient to continue the enterprise’s strong financial position through FY 2021-22, without any need for a rate increase. Our projections demonstrated existing rates in FY 2017-18 would be sufficient to meet all reserve targets and revenue requirements through FY 2021-22.

CURRENT RATES
The current bi-monthly residential (Single Family and Multi Family) rates are based on a fixed charge per dwelling unit. Commercial customers (commercial, industrial, municipal, and industrial) are charged a flat rate plus additional variable charges based on flow and strength identified for a domestic user. Wastewater flows with strength characteristics exceeding domestic user levels are billed a surcharge. Figure 1-1 shows the current rate structure.

Although it varies from year to year depending on water consumption, HF&H estimates that about two-thirds of the wastewater enterprise’s rate revenue is derived from fixed charges.

Figure 1-1. Current Rates
Bi-monthly Charges Rate
Bi-monthly Service Charge
Residential per dwelling unit $87.38
Commercial per account $34.20
Quantity Charge ($/hcf)
Residential n/a
Commercial - domestic strength $4.74
Strength Surcharge $2.34
City of Beverly Hills Wastewater Rate Study – Final Report Section 1. Executive Summary
HF&H Consultants, LLC Page 6 January 24, 2024

FINDINGS AND RECOMMENDATIONS
HF&H makes the following findings and recommendations.

1. No annual revenue increases are recommended. Despite annual operating shortfalls, the wastewater enterprise fund has enough reserves to continue meeting the City’s target balance. Also, the wastewater enterprise does not have existing debt service nor plans to issue debt service. Therefore, no revenue increases are recommended from FY 2023-24 through FY 2027-28 (see Figure 1-2).

Figure 1-2. Projected Year-End Reserve Balances

2. Cost of service analysis of service charge revenue. Service charge rates are recommended to be made the same uniform charge for all customer classes. To achieve the cost-of-service, existing residential customer service charge rates are recommended to decrease from $87.38 per dwelling unit to $40.08. This shift is the result of introducing a quantity charge to residential customers, thus reducing the amount of the fixed service charge. Service charge rates assessed to Commercial customers are recommended to increase from $34.20 per account to $40.08 per account to align with the fixed costs covered by the service charge, which does not differ by customer class.

3. Cost of service analysis of residential quantity charge revenue. Currently, all residential customers only pay a fixed service charge regardless of the amount of wastewater (i.e., indoor water use) that is discharged into the sewer system. It is recommended that Residential customer also be charged a quantity charge (similar to commercial) to reflect differences in indoor water use among residential households which can vary in size. Based on the cost-of-service analysis, $50
$45
$40
$35
$30
$25
$20
$15
Ending Reserve Fund Balance
Wastewater Enter rise Funds 840 & 841
$10 --------------------------------------------------------------------------------------------------------------------------------------------------------------------- $5 --------------------------------------------------------------------------------------------------------------------------------------------------------------------- $0
FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 ~ Total Reserves with Rate Adjustments ....... city's Reserve Target (50% of O&M) City of Beverly Hills Wastewater Rate Study – Final Report Section 1. Executive Summary
HF&H Consultants, LLC Page 7 January 24, 2024
Residential customers would be charged $3.58 per hundred cubic feet (HCF) of wastewater discharged, based on the adjusted water use during the billing period.

Adjusted water use is determined by multiplying actual water use during the billing period multiplied by the return to sewer factor discussed in Item #4 below.

As a reminder, this is a new charge which results in a lower fixed charge to residential customers (as discussed in #2 above) to ensure residents are not over charged based on the cost-of-service analysis.

4. Return to sewer factors for calculation of quantity charge. Customers use of water and the volume of water discharged to the sewer collection system varies by customer class. Return to sewer factors were developed to approximate the level of consumption of metered water use that is returned to the sewer collection system. These factors modify the level of water use attributed to a customer’s quantity charge portion of the wastewater bill. Based on historical water use data, return to sewer factors for each customer class are as follows: Single Family is 52%; Multi-Family is 90%; and Commercial is 83%. Customers with a separate irrigation meter would be charged for all water use on the potable, non-irrigation meter and will not be charged sewer charges for the irrigation meter.

5. Commercial quantity charge rate structure. The City has two existing Commercial quantity charge rates. For the purposes of this report, the current quantity charge rates will be denoted as Domestic and Excess Strength. Excess Strength customers with wastewater strength exceeding domestic strength, pay an additional $2.34 per HCF.

The proposed rates recommend the addition of a third quantity charge rate to create three Non-Residential customer classes: Commercial – Low Strength, Commercial – Medium Strength, and Commercial – High Strength. The introduction of a Medium Strength class is proposed to take into consideration mixed use commercial properties that may have a combination of low strength businesses (e.g., office space, retail stores) and high strength businesses (e.g., restaurants, coffee shops) and other businesses that may generate wastewater that is of higher strength than low-domestic strength customers, but lower than high strength customers. Low Strength customer rates are proposed to decrease from $4.74 per HCF to $3.58 per HCF, to re-align with the cost-of-service. High Strength customer rates are proposed to decrease from $7.08 per HCF to $6.95 per HCF, to re-align with the cost-of-service. The new Medium Strength customer class will by charged $5.24 per HCF, to align with the cost-of-service.

6. Five-year phase-in plan to reach cost of service structure for residential customers. With the residential recommendations identified in items #2-4, a fiveyear schedule of revenue neutral adjustments to the rates calculated by the costof-service analysis is proposed. The phase-in adjustment period reduces the bill City of Beverly Hills Wastewater Rate Study – Final Report Section 1. Executive Summary
HF&H Consultants, LLC Page 8 January 24, 2024
impacts that would occur if rates were adjusted the first year (i.e., FY 2023-24).

Table 1-1 shows the cost-of-service rates for residential customers. Table 1-2 shows the proposed rates with a five-year phase-in schedule. The five-year phasein plan for the residential rates will require the use of approximately $1,998,000 from reserves, as the updated service charge and quantity charge rates for residential customers will be gradually decreased and increased, respectively, each year until they each reflect the full cost-of-service on 1/1/2028.

Table 1-1. Cost of Service Rates Comparison to Current Rates [1] Quantity charge applied to sewered water use. Sewered water use is calculated as actual water use x Return to Sewer Factor. Return to Sewer Factors are as follows: Single Family = 52%; Multi Family = 90%; Commercial = 83%; irrigation meters = 100% Table 1-2. Recommended Phase-In Schedule to Achieve Cost of Service Rates This report documents the rates proposed for adoption by the City. The first rate adjustment is proposed to become effective in July 1, 2024 with subsequent adjustments every January 1 thereafter, through January 2028.

Current Cost-of-Service $
Rates Rates Difference
Bi-Monthly Service Charge
Single and Multi Family per account $87.38 $40.08 ($47.30) Commercial - Low Strength $34.20 $40.08 $5.88
Commercial - Medium Strength n/a $40.08 $40.08
Commercial - High Strength $34.20 $40.08 $5.88
Quantity Charge per hcf[1]
Single and Multi Family n/a $3.58 $3.58
Commercial - Low Strength $4.74 $3.58 ($1.16)
Commercial - Medium Strength n/a $5.24 $5.24
Commercial - High Strength $7.08 $6.95 ($0.13)
Current Rates 7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028 Overall Revenue Increase
Bi-Monthly Service Charge
Single and Multi Family $87.38 $77.92 $68.46 $59.00 $49.54 $40.08 Commercial Low Strength $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Commercial Medium Strength n/a $40.08 $40.08 $40.08 $40.08 $40.08 Commercial High Strength $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Quantity Charge Rate per hcf
Single and Multi Family $0.00 $0.72 $1.43 $2.15 $2.86 $3.58 Commercial Low Strength $4.74 $3.58 $3.58 $3.58 $3.58 $3.58 Commercial Medium Strength n/a $5.24 $5.24 $5.24 $5.24 $5.24 Commercial High Strength $7.08 $6.95 $6.95 $6.95 $6.95 $6.95 City of Beverly Hills Wastewater Rate Study – Final Report Section 2. Introduction
HF&H Consultants, LLC Page 9 January 24, 2024
SECTION 2. INTRODUCTION

STUDY PURPOSE AND PRIORITIES
The City is responsible for setting rates in compliance with California law. Voters passed Proposition 218 in November 1996, which enacted Article XIIID of the California Constitution. Article XIIID, Section 6, requires that fees and charges for wastewater service shall not exceed the proportional cost of service.

This purpose of this report is to document that the proposed rates comply with the relevant laws in California for setting wastewater rates. This report also ensures that the rates generate sufficient revenue from conserving levels of demand to fund the wastewater enterprises operating and capital costs as well as to maintain adequate reserves.

The following are the key objectives/priorities of this study based on discussions with City staff, the Public Works Commission, and the City Council Liaison Committee:
• Ensure proposed rates will cover projected operating and capital costs throughout the five-year period.
• Ensure each customer class is covering their proportional cost of service. • Review the current rate structure and make any recommended changes to better align the rates with the costs the City incurs to provide wastewater service to each account (e.g., move from a uniform fixed charge for all residential customers, regardless of how much indoor water is used at the property), to a fixed charge plus quantity charge to reflect variances in indoor water use among residential customers, which impacts the amount and treatment of their respective wastewater discharge.
• If the proposed rates result in significant increases to a customer class, explore alternatives for phasing in the increase to reduce rate shock in the first year. This will allow customers to re-evaluate their water use and make changes to reduce their water use in the future, as rates increase gradually over time instead of all at once.

STUDY PROCESS
The rate study was conducted following industry standards and practices promulgated by the Water Environment Federation1. A comprehensive rate study involves four steps:
1 Financing and Charges for Wastewater Systems. Water Environment Federation Manual of Practice 27. 2018.

City of Beverly Hills Wastewater Rate Study – Final Report Section 2. Introduction
HF&H Consultants, LLC Page 10 January 24, 2024

1. Revenue requirement projections

2. Cost-of-service allocations

3. Rate structure design

4. Customer bill analysis
This study has been conducted in close collaboration with a working group of City staff, the City’s Public Works Commission, the Public Works Commission’s Rates Ad Hoc Committee, and the City’s Public Works Liaison Committee. Over 20 meetings were held to develop alternative funding strategies, to review and refine the alternatives, and to select the preferred alternative.

Revenue requirements were projected for a five-year planning period based on operations, maintenance, capital expenses, and contributions to reserves. The cost-ofservice analysis allocates the projected expenses among the customer classes in proportion to their use of the systems. Rates are then designed so that rate payers are charged equitably. The impact on customers is then determined by comparing bills under the proposed rates with bills under the current rates.

During the study process, interim work products were presented at several public meetings and workshops.

CURRENT RATES
The current bi-monthly residential (Single Family and Multi Family) rates are based on a fixed charge of $87.38 per dwelling unit. Non-residential (Commercial) customers (commercial, municipal, and industrial) are charged a flat bi-monthly rate of $34.20 per account plus additional quantity charges based on flow and strength identified for a domestic user. Wastewater flows with strength characteristics exceeding domestic user levels are billed a surcharge.

The present wastewater rates have not been updated since FY 2009-10 after the 2017 rate study recommended no adjustment to rates through FY 2021-22. Table 2-1 shows the current rates.

City of Beverly Hills Wastewater Rate Study – Final Report Section 2. Introduction
HF&H Consultants, LLC Page 11 January 24, 2024
Table 2-1 Current Wastewater Rates
The City has two existing Commercial quantity charge rates. For the purposes of this report, the current quantity charge rates will be denoted as Domestic (e.g., office buildings, retail) and Excess Strength (wastewater discharge that include significant amounts of fats, oils, grease, and food waste, e.g., restaurants, delis, grocery stores).

Excess Strength customers with wastewater strength exceeding domestic strength, pay an additional $2.34 per HCF. Currently, all metered water use is charged based on the Commercial customer’s wastewater classification as a Domestic Strength or Excess Strength customer.

Bi-monthly Charges Rate
Bi-monthly Service Charge
Residential per dwelling unit $87.38
Commercial per account $34.20
Quantity Charge ($/hcf)
Residential n/a
Commercial - domestic strength $4.74
Strength Surcharge $2.34
City of Beverly Hills Wastewater Rate Study – Final Report Section 3. Revenue Requirements
HF&H Consultants, LLC Page 12 January 24, 2024
SECTION 3. REVENUE REQUIREMENTS
To determine whether additional rate revenue is required, projected operating and capital expenses are compared with projected revenue from current rates. Annual surpluses and deficits are then applied to the reserve funds. Rates are then adjusted so that the expenses are covered and operating and capital reserves are maintained. The following sections summarize the methodology for determining the annual revenue requirements, the necessary annual revenue adjustments, and the projected impact these results will have on the Wastewater Enterprise fund balance.

EXPENSE PROJECTIONS
A spreadsheet model was developed to derive revenue requirements for FY 2022-23 through FY 2027-28. The revenue requirements represent the costs that must be covered by revenue from rates and other sources, such as reserves. The City’s Council-approved operating and capital budget for FY 2022-23 served as the starting point for projecting the City’s expenses and revenues over the five-year financial planning period. We worked with City staff to project beyond FY 2022-23. The escalation factors in Table 3-1 summarize effective annual percentage increases in various cost categories. The application of these assumptions to the O&M and capital expenses are summarized in Figure 3-1 and are described in more detail below. The revenue from current rates is also shown (dotted black line).

Table 3-1. Key Modeling Assumptions
Assumptions FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 Personnel Services Per Budget 2.75% 2.75% 2.75% 2.75% 2.75% Materials and Supplies Per Budget 3.00% 2.00% 2.00% 2.00% 2.00% Contractual Services - BH Operations Per Budget 3.00% 2.00% 2.00% 2.00% 2.00% Contractual Services - Treatment Per Budget 3.00% 2.00% 2.00% 2.00% 2.00% Internal Service Charges Per Budget Per Budget Per Budget Per Budget Per Budget 3.0% Other Expenses Per Budget 1.00% 1.00% 1.00% 1.00% 1.00% Project Admin. and CIP Mgmt. Charges Per Budget 2.75% 2.75% 2.75% 2.75% 2.75% % Increase in Revenue due to Growth Per Budget 0.00% 0.00% 0.00% 0.00% 0.00% Construction Cost Inflation 2.48% 5.02% 7.62% 10.29% 13.02% 15.82% Interest on Fund Balance 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% CIP Completion Factor 100% 100% 100% 100% 100% 100%
City of Beverly Hills Wastewater Rate Study – Final Report Section 3. Revenue Requirements
HF&H Consultants, LLC Page 13 January 24, 2024
Figure 3-1. Annual Revenue Requirement Components

REVENUE PROJECTIONS
Table 3-2 compares revenue from current rates, capacity fees, and miscellaneous (nonoperating) revenues with the revenue requirement from Table 3-2. Absent rate increases, the wastewater fund will utilize reserves to absorb a total shortfall of $16.7 million through FY 2027-28. Reserves must be reviewed to determine whether forgoing rate increases beyond FY 2027-28 is reasonable.

Table 3-2. Projected Revenue Shortfall.

FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 Collection System O&M $4,238,395 $4,315,594 $4,434,281 $4,527,779 $4,635,228 $4,760,841 Treatment System O&M $3,234,500 $3,331,535 $3,398,166 $3,466,129 $3,535,452 $3,606,161 PAYGo CIP Funded by Rates $5,036,134 $4,861,901 $4,676,583 $4,515,121 $4,338,349 $4,142,028 PAYGo CIP Funded by Reserves $2,920,865 $3,095,098 $3,280,416 $3,441,878 $3,618,649 $649,854 Total Revenue Requirement $15,429,894 $15,604,127 $15,789,445 $15,950,907 $16,127,678 $13,158,883 $0
$2
$4
$6
$8
$10
$12
$14
$16
$18
FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 Net Revenue Requirement ($ Millions)
Collection System O&M Treatment System O&M PAYGo CIP Funded by Rates PAYGo CIP Funded by Reserves Revenue at Current Rates
FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 Sewer Service Charges $12,509,029 $12,509,029 $12,509,029 $12,509,029 $12,509,029 $12,509,029 Capacity Fees $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 Miscellaneous Revenues $1,500 $1,515 $1,530 $1,545 $1,561 $1,577 Total Revenue $12,560,529 $12,560,544 $12,560,559 $12,560,575 $12,560,590 $12,560,606 (Less) Revenue Requirement ($15,429,894) ($15,604,127) ($15,789,445) ($15,950,907) ($16,127,678) ($13,158,883) Surplus/(Shortfall) ($2,869,365) ($3,043,583) ($3,228,886) ($3,390,332) ($3,567,088) ($598,277) - - - -
City of Beverly Hills Wastewater Rate Study – Final Report Section 3. Revenue Requirements
HF&H Consultants, LLC Page 14 January 24, 2024

RESERVE POLICIES
In addition to covering annual expenses, wastewater revenue is used to maintain adequate unrestricted reserves. The City has established policies for the types of reserves and the appropriate balances that should be maintained for each reserve. To set rates so that these policies are met, the reserves are organized as follows.

Target Balance
Meeting the Target Balance provides an additional increment of working capital liquidity to fund capital projects that are funded on a PAYGo basis (as opposed to those that are funded with debt) as well as other renewal and replacement capital costs. The City has an established operating target balance of 50% of annual O&M expenses. With adequate capital reserves, the City is able to pay for day to day operations, contractors, debt service, and cash-funded capital improvements, without encroaching on other reserves.

FUND BALANCE
Figure 3-2 shows the target balance and the projected annual fund balances without rate adjustments. Since the proposed rate adjustments are revenue neutral, the fund balance without the proposed rate adjustments mirrors the fund balance projections previously shown in Figure 1-2 (i.e., Fund Balance Projections with proposed rate adjustments) Although the projections for the fund balance show straight lines between years, the fund balance will fluctuate up and down substantially during each year. The reserves are actively drawn on at all times during the year but are only periodically added to when revenue is received from rate payers. The reserves are not simply accumulated without being used.

Despite the projected shortfalls in Table 3-2, The City’s wastewater enterprise fund has sufficient reserves to absorb the deficit (created by the need for capital improvements throughout the five-year planning period) without needing to raise rates. Figure 3-2 depicts the City’s use of reserves over the five-year period, while maintaining a fund balance (green line) greater than the City’s target balance (blue line). The minimum balance is not depicted, as the reserve fund balance is not at risk of approaching this lower level of reserves during the five-year period.

City of Beverly Hills Wastewater Rate Study – Final Report Section 3. Revenue Requirements
HF&H Consultants, LLC Page 15 January 24, 2024
Figure 3-2. Fund Balance Without Rate Revenue Increases The City has adequate reserves to fund its projected revenue requirement over the fiveyear period, and rate phase-in approach, which will allow it to focus on adjusting wastewater rates to meet any potential changes identified in the cost-of-service analysis.

Ending Reserve Fund Balance
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so FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 .......,Total Reserves with Rate Adjustments --City's Reserve Ta rget ( 50% of o& M) City of Beverly Hills Wastewater Rate Study – Final Report Section 4. Cost of Service Analysis
HF&H Consultants, LLC Page 16 January 24, 2024
SECTION 4. COST OF SERVICE ANALYSIS
A cost-of-service analysis determines how much of the total revenue requirement should be paid by each customer class based on its respective share of wastewater flow and strength (i.e., biological oxygen demand (BOD) and total suspended solids (TSS), the measures of wastewater strength used by the City). The City periodically reviews and updates its rates to ensure that they are based on the cost of service. Such updates should be conducted to account for any material changes in the loadings among the classes.

This section of the report describes the cost-of-service analysis step by step. The cost-ofservice analysis involves the following steps:

1. Allocate cost to the functions provided by the City’s wastewater facilities;

2. Determine units of service by function;

3. Determine unit costs of service by function;

4. Determine cost of service rates by customer class.

The cost-of-service analysis is a process of correlating the FY 2022-23 budgeted costs of the functions provided by the City with how much of those functions are required by each customer class. In addition, the City’s cost accounting for this year serves to allocate the costs into categories that are consistent with the cost of service analysis.

FUNCTIONAL COST ALLOCATIONS
Table 4-1 first presents the allocation of operating expenses to the five functional cost categories (i.e., Accounts, Capacity, Flow, BOD, and TSS). The allocations depend on whether the cost is related to treatment plant expenses, collection system operations, collection system capital, or customer O&M. Each of these functions has its own set of allocation factors that were reviewed with and determined with the City.

The functional allocations are used to calculate an Expense Composite Allocation Factor which is calculated by taking the percentage of expense costs allocated to each of the five functional cost categories. The Expense Composite Allocation Factors are used for allocating transfers, which are not associated with specific costs. The result of this series of allocations yields the revenue requirement itemized by function.

City of Beverly Hills Wastewater Rate Study – Final Report Section 4. Cost of Service Analysis
HF&H Consultants, LLC Page 17 January 24, 2024
Table 4-1. Allocation of Costs to Functions
Note: Rounding differences caused by stored values in electronic format may exist.

UNITS OF SERVICE
Each of the five functional categories provides service to customers as shown in Table 4-

2. This table shows the number of accounts and estimated wastewater discharge for each customer class.

The values used for all customers reflect reduced metered water use flows based on return to sewer factors calculated as part of this study. The return to sewer factors account for irrigation and other forms of metered water that does not return to the sewer

FUNCTIONAL ALLOCATION FACTORS
Type Total Accounts Capacity Flow BOD TSS
1 Treatment Plant 100.0% 0.0% 0.0% 34.0% 33.0% 33.0%
2 Collection System - Operations 100.0% 0.0% 0.0% 90.0% 5.0% 5.0% 3 Collection System - Capital 100.0% 0.0% 40.0% 40.0% 10.0% 10.0% 4 Customer Account 100.0% 100.0% 0.0% 0.0% 0.0% 0.0%
5 Expense Composite 100.0% 12.2% 20.8% 41.3% 12.9% 12.9%

REVENUE REQUIREMENT ALLOCATION
Rev. Req't Allocation
2022-23 Type Accounts Capacity Flow BOD TSS
Treament Plant
Contractual Services - Disposal $3,234,500 1 $0 $0 $1,099,730 $1,067,385 $1,067,385 PayGo Capital - Treatment $0 1 $0 $0 $0 $0 $0
Subtotal $3,234,500 $0 $0 $1,099,730 $1,067,385 $1,067,385 Collection System
O&M Expenses
Personnel Services $1,677,400 2 $0 $0 $1,509,660 $83,870 $83,870 Materials and Supplies $103,200 2 $0 $0 $92,880 $5,160 $5,160 Contractual Services - BH Operations $320,989 2 $0 $0 $288,890 $16,049 $16,049 Other O&M Expenses $189,222 2 $0 $0 $170,300 $9,461 $9,461 Subtotal $2,290,811 $0 $0 $2,061,730 $114,541 $114,541
Capital Expenses
PayGo Capital - Collection System $7,956,999 3 $0 $3,182,799 $3,182,799 $795,700 $795,700 Project Admin. & CIP Mgmt. Charges $70,254 3 $0 $28,102 $28,102 $7,025 $7,025 Subtotal $8,027,253 $0 $3,210,901 $3,210,901 $802,725 $802,725 Other Expenses/(Revenues)
Administrative Expenses (ISC) $1,877,330 4 $1,877,330 $0 $0 $0 $0 Subtotal $1,877,330 $1,877,330 $0 $0 $0 $0
Subtotal Expenses $15,429,894 $1,877,330 $3,210,901 $6,372,361 $1,984,651 $1,984,651 Expense Composite 12.2% 20.8% 41.3% 12.9% 12.9%
Transfers to/from Reserves ($2,920,865) 5 ($355,377) ($607,821) ($1,206,282) ($375,693) ($375,693) Net Revenue Requirement $12,509,029 $1,521,953 $2,603,080 $5,166,079 $1,608,958 $1,608,958 100.0% 12.2% 20.8% 41.3% 12.9% 12.9%
Cost Allocation
i
I
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City of Beverly Hills Wastewater Rate Study – Final Report Section 4. Cost of Service Analysis
HF&H Consultants, LLC Page 18 January 24, 2024
collection system. The return to sewer factors calculated (as shown in Table 4-3) are unique to each customer class. For example, Single Family customers have the lowest return to sewer factor, recognizing the larger proportion of water used for irrigation purposes this customer class exhibits. In other words, the lower the return value, the less metered water is assumed to be returned to the sewer through toilets, drains, or other entry points.

The values used for BOD and TSS concentrations are based on monitoring of wastewater strengths at the Hyperion Treatment Plant, owned and operated by the City of Los Angeles .

Table 4-2. Units of Service By Function – Existing Customer Classes Note: Rounding differences caused by stored values in electronic format may exist.

1. Average of CY 2017-2019 water flow data

2. Calculated percentages in Table 4-3 based on average of lowest month of consumption each year.

3. Calculated by applying the return to sewer factor to the annual flow.

4. City data
Table 4-3 shows the calculated return to sewer factors based on historical water use data compiled over 2017-2019, which is the pre-COVID period which best represents normal water use. The lowest winter water month was used as a proxy to determine the level of indoor, non-discretionary water use. The ratio of the annualized total of the lowest period of monthly use and the total annual water use of each customer class determined the return to sewer factor. The final return to sewer factors in Table 4-3 are the average of the calculated ratios for each customer class.

Accounts Annual Flow¹ Sewered BOD4 TSS4 BOD TSS
Units hcf Flow³ (hcf) mg/l mg/l (lbs/year) (lbs/year)
Residential
Single Family Residences 6,080 2,017,021 52% 1,049,980 215 205 1,409,217 1,343,672 Multiple Family Residences 10,117 572,457 90% 512,609 215 205 687,991 655,992 Total Residential 16,197 2,589,478 1,562,589 2,097,208 1,999,663 Domestic Strength Non Residential
Commercial/Industrial 795 547,737 83% 455,544 215 205 611,402 582,965 Municipal 57 41,207 50% 20,523 215 205 27,544 26,263
Total Domestic Strength Non
Residential 852 588,944 476,067 638,946 609,228
Excess Strength Non Residential
Commercial/Industrial 102 186,436 83% 155,056 1,000 600 967,933 580,760 Municipal 1 1,844 50% 918 1,000 600 5,731 3,439
Total Excess Strength Non Residential 103 188,279 155,974 973,665 584,199 Total 17,152 3,366,701 2,194,630 3,709,818 3,193,090
Return to
Sewer²
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City of Beverly Hills Wastewater Rate Study – Final Report Section 4. Cost of Service Analysis
HF&H Consultants, LLC Page 19 January 24, 2024
Table 4-3. Return to Sewer Factors

1. Average of CY 2017-2019 annual metered flow

2. Annualize value of the average of lowest water consumption month of CY 2017-2019.

UNIT COSTS OF SERVICE
The cost of service corresponding to each of the five functions is calculated by dividing the functional costs in Table 4-1 by the units of service in Table 4-2. The result is shown in Table 4-4.

Table 4-4. Unit Costs of Service by Function

1. Functionalized costs from Table 4-1.

2. Units of service from Table 4-2.

Annual Flow¹ Sewered Flow² Return
Customer Class hcf hcf to Sewer
a b c = b/a
Single Family Residential
Without Irrigation meter 2,017,021 1,049,980 52%
With Irrigation meter 100%
Irrigation meter 0%
Multiple Family Residences 572,457 512,609 90%
Low Strength Non Residential
Commercial 547,737 455,544 83%
Municipal 41,207 20,523 50%
588,944 476,067
High Strength Non Residential
Commercial 186,436 155,056 83%
Municipal 1,844 918 50%
188,279 155,974
3,366,701 2,194,630 65%
Service Charge Component Quantity/Quality Charge Component Functional Costs¹ Dwellings Capacity Flow BOD TSS Total Treatment Plant $0 $0 $1,099,730 $1,067,385 $1,067,385 $3,234,500 Collection System O&M $0 $0 $2,061,730 $114,541 $114,541 $2,290,811 Collection System Capital $0 $3,210,901 $3,210,901 $802,725 $802,725 $8,027,253 Other Expenses $1,877,330 $0 $0 $0 $0 $1,877,330
Transfers To/(From) Reserves ($355,377) ($607,821) ($1,206,282) ($375,693) ($375,693) ($2,920,865) $1,521,953 $2,603,080 $5,166,079 $1,608,958 $1,608,958 $12,509,029 ÷ ÷ ÷ ÷ ÷
Units of Service² 17,152 17,152 2,194,630 3,709,818 3,193,090 accts/DUs accts/DUs hcf lbs lbs
Unit Costs $88.73 $151.77 $2.35 $0.43 $0.50
$/acct or DU $/acct or DU $/hcf $/lb $/lb
Bi-Monthly Unit Costs $14.79 $25.29
$/acct or DU $/acct or DU
Portion of Rate Revenue 33% 67% 100%
City of Beverly Hills Wastewater Rate Study – Final Report Section 4. Cost of Service Analysis
HF&H Consultants, LLC Page 20 January 24, 2024
In the cost-of-service analysis, all customer classes are treated equally through the application of the same unit costs to all customers, which is the fundamental purpose of cost of service analysis. In this way, the cost of service analysis proportionately distributes the revenue requirement to customers without discrimination, after which rates can be designed to generate the revenue required to provide the necessary level of service to each class.

Rates need to be designed to generate each class’s share of the revenue requirement related to quantity charges and fixed service charges. Table 4-5 compares the revenue projected from current rates to the cost of service by customer class. Table 4-5 indicates that the revenue from existing rates differs from each classes’ share of the cost of service.

While overall revenue does not need to increase, single family and multi family quantity charge rate revenue need to increase to bring them in line with the cost of service and commercial rate revenues need to decrease.

Table 4-5. Current Rate Revenue Compared With the Cost of Service Section 5 provides the recommended modifications to the quantity charges and service charges in order to meet the current cost of service requirements shown in Table 4-5.

Current
Revenue
Cost-ofService Difference
Single and Multi Family $8,491,763 $9,490,807 $999,043
Commercial Domestic Strength $2,739,728 $1,909,644 ($830,085) Commercial Excess Strength $1,277,538 $1,108,579 ($168,959) Total $12,509,029 $12,509,029 $0
City of Beverly Hills Wastewater Rate Study – Final Report Section 5. Rate Design
HF&H Consultants, LLC Page 21 January 24, 2024
SECTION 5. RATE DESIGN
In this section, rates are first calculated based on the cost of service determined in Section

4. Those rates are compared with current rates to see how the updated cost of service compares with the previous cost of service rates. To reduce the impacts in the proposed rate structure, which increases revenue needed from residential customers. A five-year schedule of phasing in the new rates is included for residential customers.

COST OF SERVICE RATES
Tables 5-1, 5-2, and 5-3 show the derivation of the cost-of-service rates. These rates are derived by applying the unit costs of service in Table 4-4 to the units of service in Table 4-2. Under the proposed rates, Single Family and Multi Family customers would be billed $40.08 bi-monthly per dwelling unit and $3.58 per Hundred Cubic Feet (HCF)2 of sewered flow. As identified previously in Table 4-3, Single Family customers, who do not have a separate irrigation meter, would see their metered water consumption reduced to 52% (i.e., return to sewer factor) of billed water use in order to calculate the variable portion of their wastewater bill. In contrast, Multi Family customers would see their metered water consumption reduced to 90% of billed use in the calculation of the variable portion of their wastewater bill. The specific bill impacts to each customer class will be discussed further in Section 6.

Table 5-1. Calculation of Residential Cost of Service Rates Note: Rounding differences caused by stored values in electronic format may exist.

1. 6,080 single-family account, 10,117 multi-family accounts

2. Sewered flow, BOD, TSS values from Residential total in Table 4-2.

3. Unit costs from Table 4-4.

As shown in Table 5-2, Commercial customers (which includes municipal customers) are billed per account and by flow based on estimated wastewater discharge using metered potable water use from the City as a proxy, adjusted by the 83% return to sewer factor for commercial customers and by the 50% return to sewer factor for municipal customers), as derived in Table 4-3.
2 Hundred Cubic Feet = 748 gallons
Residential
Total
Single and Multi Family Residential (per hcf)
Units¹ 16,197 DUs 1,562,589 hcf 2,097,208 lbs 1,999,663 lbs Sewered Flow² 1,562,589 hcf 1,562,589 hcf 1,562,589 hcf Units per account 1.00 DU Ratio 1.00 1.34 lbs/hcf 1.28 lbs/hcf Unit Costs ($ per Unit/year)³ $88.73 per DU $151.77 per DU $2.35 per hcf $0.43 per lbs $0.50 per lbs Total cost per Unit $88.73 per DU/year $151.77 per unit $2.35 per hcf $0.58 per hcf $0.64 per hcf $3.58 Bi-Monthly Rates $14.79 per DU $25.29 per DU $2.35 $0.58 $0.64 $40.08 per DU $3.58 per hcf
Dwelling Units (DUs) Capacity Flow BOD TSS
City of Beverly Hills Wastewater Rate Study – Final Report Section 5. Rate Design
HF&H Consultants, LLC Page 22 January 24, 2024
Table 5-2. Calculation of Commercial Cost of Service Rates Note: Rounding differences caused by stored values in electronic format may exist.

1. Units from Table 5-3.

2. Sewered flow, BOD, TSS values from Residential total in Table 4-2.

3. Unit costs from Table 4-4.

As part of the study, the City decided to expand from two to three Commercial classes.

The unit costs calculated in Table 4-4 were applied to the new customer class, Commercial – Medium Strength. The City provided wastewater strength concentrations in order to calculated the flow-based rate. The proposed bi-monthly rates for Commercial -Medium Strength customers are shown below.

Table 5-3. Calculation of New Medium Strength Customer Class Rates Note: Rounding differences caused by stored values in electronic format may exist.

1. Unit costs from Table 4-4.

Under the proposed rates, Commercial customers billed for Domestic Strength will now be classified as Commercial – Low Strength. Commercial customers previously billed a surcharge for Excess Strength will be classified as Commercial – High Strength.

Commercial - Low Strength customers would include such accounts as schools, libraries, banks, and professional offices. Commercial – Medium Strength customers would include such accounts as dry cleaners, pet groomers, tasting rooms, car washes, and gyms. Commercial - High Strength customers would include such accounts as restaurants, coffee shops, grocery stores, bakeries, and bars or taverns with dining. For Commercial
Total
Low Strength (Domestic Strength) (per hcf)
Units¹ 852 accounts 476,067 hcf 638,946 lbs 609,228 lbs Sewered Flow² 852 accounts 476,067 hcf 476,067 hcf 476,067 hcf Units per account 1.00 DU Ratio 1.00 1.34 lbs/hcf 1.28 lbs/hcf Unit Costs ($ per Unit)³ $88.73 per account $151.77 per DU $2.35 per hcf $0.43 per lbs $0.50 per lbs Total $88.73 per account $151.77 per unit $2.35 per hcf $0.58 per hcf $0.64 per hcf $3.58 Bi-Monthly Rates $14.79 per account $25.29 per DU $2.35 $0.58 $0.64 $40.08 per DU $3.58 per hcf
Total
High Strength (Excess Strength) (per hcf)
Units¹ 103 accounts 155,974 hcf 973,665 lbs 584,199 lbs Sewered Flow² 103 accounts 155,974 hcf 155,974 hcf 155,974 hcf Units per account 1.00 DU Ratio 1.00 6.24 lbs/hcf 3.75 lbs/hcf Unit Costs ($ per Unit)³ $88.73 per account $151.77 per DU $2.35 per hcf $0.43 per lbs $0.50 per lbs Total $88.73 per account $151.77 per unit $2.35 per hcf $2.71 per hcf $1.89 per hcf $6.95 Bi-Monthly Rates $14.79 per account $25.29 per account $2.35 $2.71 $1.89 $40.08 per account $6.95 per hcf
Account Capacity Flow BOD TSS
Account Capacity Flow BOD TSS
Commercial
Total
Medium Strength (per hcf)
COS Unit Costs ($ per Unit)¹ $88.73 per account $151.77 per DU $2.35 per hcf $0.43 per lbs $0.50 per lbs Strength Concentration (mg/l) 600 mg/l 400 mg/l
Strength Concentration (lb/yr) 3.75 lb/yr 2.50 lb/yr
Unit Costs $88.73 per account $151.77 per unit $2.35 per hcf $1.62 per hcf $1.26 per hcf $5.24 Bi-Monthly Rates $14.79 per account $25.29 per account $2.35 $1.62 $1.26 $40.08 per account $5.24 per hcf
Account Capacity Flow BOD TSS
City of Beverly Hills Wastewater Rate Study – Final Report Section 5. Rate Design
HF&H Consultants, LLC Page 23 January 24, 2024
an expanded list of examples of wastewater customer class (e.g., low, medium., high) by type of commercial business, refer to Appendix A.

The cost-of-service rates from Tables 5-1 through 5-3 are summarized and compared with the current rates in Table 5-4.

Table 5-4. Comparison of Current Rates with Cost-of-Service Rates [1] Quantity charge is applied to sewered water use. Sewered water use is the product of the return to sewer factor applied to actual water use. Return to sewer factors are as follows: Single Family = 52%; Multi Family = 90%; Commercial = 83%.

As a result of the cost of service adjustments, rates for each class increase or decrease by different percentages. As shown in Table 4-4, single family and multi family revenue needs to increase by $999,043, while commercial revenue needs to decrease by $999,043.

During the study process, the City Council Liaison Committee requested HF&H to provide a five-year schedule to phase-in the residential rate adjustments to reduce the immediate impact on residential customers, in particular single family customers with high water use, as their bills will increase the greatest as the proposed rate structure is moving from a fixed charge only, to a fixed charge plus quantity charge based on actual water use adjusted by the return-to-sewer factor. Table 5-5 provides the recommended rates to achieve the cost-of-service by 2028. A five-year phase-in is not being proposed for commercial rates as the commercial customer classes’ cost of service is less than current rate revenues at current rates and the re-alignment to the lower cost of service should be provided right away.

Current Cost-of-Service $
Rates Rates Difference
Bi-Monthly Service Charge
Single and Multi Family per account $87.38 $40.08 ($47.30) Commercial - Low Strength $34.20 $40.08 $5.88
Commercial - Medium Strength n/a $40.08 $40.08
Commercial - High Strength $34.20 $40.08 $5.88
Quantity Charge per hcf[1]
Single and Multi Family n/a $3.58 $3.58
Commercial - Low Strength $4.74 $3.58 ($1.16)
Commercial - Medium Strength n/a $5.24 $5.24
Commercial - High Strength $7.08 $6.95 ($0.13)
City of Beverly Hills Wastewater Rate Study – Final Report Section 6. Customer Bill Impacts
HF&H Consultants, LLC Page 24 January 24, 2024
Table 5-5. Proposed Rates with Five-Year Phase-In to Cost of Service SECTION 6. CUSTOMER BILL IMPACTS
Based on the recommended rates summarized in Table 5-5, the bi-monthly customer bill impacts were evaluated.

Tables 6-1 through 6-5 provide sample bills impacts for each of the five wastewater customer classes proposed. Each table includes the bill impacts for low (half of average), average, and high (two times average) water use for each customer class. The multifamily sample bill impacts are based on a 10-unit complex which is the most-common size within the City’s service area. The Commercial – Medium Strength comparison assumes the customer is currently being charged based on a Domestic Strength classification.

Current Rates 7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028 Overall Revenue Increase
Bi-Monthly Service Charge
Single and Multi Family $87.38 $77.92 $68.46 $59.00 $49.54 $40.08 Commercial Low Strength $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Commercial Medium Strength n/a $40.08 $40.08 $40.08 $40.08 $40.08 Commercial High Strength $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Quantity Charge Rate per hcf
Single and Multi Family $0.00 $0.72 $1.43 $2.15 $2.86 $3.58 Commercial Low Strength $4.74 $3.58 $3.58 $3.58 $3.58 $3.58 Commercial Medium Strength n/a $5.24 $5.24 $5.24 $5.24 $5.24 Commercial High Strength $7.08 $6.95 $6.95 $6.95 $6.95 $6.95 City of Beverly Hills Wastewater Rate Study – Final Report Section 6. Customer Bill Impacts
HF&H Consultants, LLC Page 25 January 24, 2024
Table 6-1. Single Family Bill Impacts with Proposed Rates Single Family - Low Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Water Consumption 28 28
Return to Sewer Factor n/a 52%
Sewered Flow n/a 15
Wastewater Bill
Service Charge $87.38 $77.92 $68.46 $59.00 $49.54 $40.08 Quantity Charge $0.00 $10.80 $21.45 $32.25 $42.90 $53.70 Total Bi-Monthly Bill $87.38 $88.72 $89.91 $91.25 $92.44 $93.78 Increase/(Decrease) from Prior Year $1.34 $1.19 $1.34 $1.19 $1.34 Cumulative Increase/(Decrease) $1.34 $2.53 $3.87 $5.06 $6.40 Single Family - Average Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Water Consumption 56 56
Return to Sewer Factor n/a 52%
Sewered Flow n/a 29
Wastewater Bill
Service Charge $87.38 $77.92 $68.46 $59.00 $49.54 $40.08 Quantity Charge $0.00 $20.88 $41.47 $62.35 $82.94 $103.82 Total Bi-Monthly Bill $87.38 $98.80 $109.93 $121.35 $132.48 $143.90 Increase/(Decrease) from Prior Year $11.42 $11.13 $11.42 $11.13 $11.42 Cumulative Increase/(Decrease) $11.42 $22.55 $33.97 $45.10 $56.52 Single Family - High Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Water Consumption 112 112
Return to Sewer Factor n/a 52%
Sewered Flow n/a 58
Wastewater Bill
Service Charge $87.38 $77.92 $68.46 $59.00 $49.54 $40.08 Quantity Charge $0.00 $41.76 $82.94 $124.70 $165.88 $207.64 Total Bi-Monthly Bill $87.38 $119.68 $151.40 $183.70 $215.42 $247.72 Increase/(Decrease) from Prior Year $32.30 $31.72 $32.30 $31.72 $32.30 Cumulative Increase/(Decrease) $32.30 $64.02 $96.32 $128.04 $160.34 City of Beverly Hills Wastewater Rate Study – Final Report Section 6. Customer Bill Impacts
HF&H Consultants, LLC Page 26 January 24, 2024
Table 6-2. Multi Family Bill Impacts with Proposed Rates Multi Family - Low Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Total Water Consumption 47 47
Dwelling Units (DUs) 10 10
Water Consumption per unit (rounded) 4.7 4.7
Return to Sewer Factor n/a 90%
Sewered Flow n/a 4.2
Wastewater Bill
Service Charge $873.80 $779.20 $684.60 $590.00 $495.40 $400.80 Quantity Charge $0.00 $30.24 $60.06 $90.30 $120.12 $150.36 Total Bi-Monthly Bill $873.80 $809.44 $744.66 $680.30 $615.52 $551.16 Total Bill Increase/(Decrease) ($64.36) ($64.78) ($64.36) ($64.78) ($64.36) Increase/(Decrease) per DU ($6.44) ($6.48) ($6.44) ($6.48) ($6.44) Cumulative Increase/(Decrease) per DU ($6.44) ($12.91) ($19.35) ($25.83) ($32.26) Multi Family - Average Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Total Water Consumption 93 93
Dwelling Units 10 10
Water Consumption per unit (rounded) 9.3 9.3
Return to Sewer Factor n/a 90%
Sewered Flow n/a 8.4
Wastewater Bill
Service Charge $873.80 $779.20 $684.60 $590.00 $495.40 $400.80 Quantity Charge $0.00 $60.48 $120.12 $180.60 $240.24 $300.72 Total Bi-Monthly Bill $873.80 $839.68 $804.72 $770.60 $735.64 $701.52 Total Bill Increase/(Decrease) ($34.12) ($34.96) ($34.12) ($34.96) ($34.12) Increase/(Decrease) per DU ($3.41) ($3.50) ($3.41) ($3.50) ($3.41) Cumulative Increase/(Decrease) per DU ($3.41) ($6.91) ($10.32) ($13.82) ($17.23) Multi Family - High Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Total Water Consumption 186 186
Dwelling Units 10 10
Water Consumption per unit (rounded) 18.6 18.6
Return to Sewer Factor n/a 90%
Sewered Flow n/a 16.7
Wastewater Bill
Service Charge $873.80 $779.20 $684.60 $590.00 $495.40 $400.80 Quantity Charge $0.00 $120.24 $238.81 $359.05 $477.62 $597.86 Total Bi-Monthly Bill $873.80 $899.44 $923.41 $949.05 $973.02 $998.66 Total Bill Increase/(Decrease) $25.64 $23.97 $25.64 $23.97 $25.64 Increase/(Decrease) per DU $2.56 $2.40 $2.56 $2.40 $2.56 Cumulative Increase/(Decrease) per DU $2.56 $4.96 $7.53 $9.92 $12.49 City of Beverly Hills Wastewater Rate Study – Final Report Section 6. Customer Bill Impacts
HF&H Consultants, LLC Page 27 January 24, 2024
Table 6-3. Commercial – Low Strength Impacts with Proposed Rates Commercial - Low Strength - Low Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Water Consumption per unit 57 57
Return to Sewer Factor n/a 83.0%
Sewered Flow 57 47
Commercial Strength Domestic Low
Wastewater Bill
Service Charge $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Quantity Charge $270.18 $168.30 $168.30 $168.30 $168.30 $168.30 Total Bi-Monthly Bill $304.38 $208.38 $208.38 $208.38 $208.38 $208.38 Increase/(Decrease) ($96.00) $0.00 $0.00 $0.00 $0.00
Cumulative Increase/(Decrease) ($96.00) ($96.00) ($96.00) ($96.00) ($96.00) Commercial - Low Strength - Average Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Water Consumption per unit 113 113
Return to Sewer Factor n/a 83.0%
Sewered Flow 113 94
Commercial Strength Domestic Low
Wastewater Bill
Service Charge $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Quantity Charge $535.62 $336.60 $336.60 $336.60 $336.60 $336.60 Total Bi-Monthly Bill $569.82 $376.68 $376.68 $376.68 $376.68 $376.68 Increase/(Decrease) ($193.14) $0.00 $0.00 $0.00 $0.00
Cumulative Increase/(Decrease) ($193.14) ($193.14) ($193.14) ($193.14) ($193.14) Commercial - Low Strength - High Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Water Consumption per unit 226 226
Return to Sewer Factor n/a 83.0%
Sewered Flow 226 188
Commercial Strength Domestic Low
Wastewater Bill
Service Charge $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Quantity Charge $1,071.24 $673.21 $673.21 $673.21 $673.21 $673.21 Total Bi-Monthly Bill $1,105.44 $713.29 $713.29 $713.29 $713.29 $713.29 Increase/(Decrease) ($392.15) $0.00 $0.00 $0.00 $0.00
Cumulative Increase/(Decrease) ($392.15) ($392.15) ($392.15) ($392.15) ($392.15) City of Beverly Hills Wastewater Rate Study – Final Report Section 6. Customer Bill Impacts
HF&H Consultants, LLC Page 28 January 24, 2024
Table 6-4. Commercial – Medium Strength Impacts with Proposed Rates Commercial - Medium Strength - Low Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Water Consumption per unit 57 57
Return to Sewer Factor n/a 83.0%
Sewered Flow 57 47
Commercial Strength Domestic Medium
Wastewater Bill
Service Charge $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Quantity Charge $270.18 $246.12 $246.12 $246.12 $246.12 $246.12 Total Bi-Monthly Bill $304.38 $286.20 $286.20 $286.20 $286.20 $286.20 Increase/(Decrease) ($18.18) $0.00 $0.00 $0.00 $0.00
Cumulative Increase/(Decrease) ($18.18) ($18.18) ($18.18) ($18.18) ($18.18) Commercial - Medium Strength - Average Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Water Consumption per unit 113 113
Return to Sewer Factor n/a 83.0%
Sewered Flow 113 94
Commercial Strength Domestic Medium
Wastewater Bill
Service Charge $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Quantity Charge $535.62 $492.24 $492.24 $492.24 $492.24 $492.24 Total Bi-Monthly Bill $569.82 $532.32 $532.32 $532.32 $532.32 $532.32 Increase/(Decrease) ($37.50) $0.00 $0.00 $0.00 $0.00
Cumulative Increase/(Decrease) ($37.50) ($37.50) ($37.50) ($37.50) ($37.50) Commercial - Medium Strength - High Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Water Consumption per unit 226 226
Return to Sewer Factor n/a 83.0%
Sewered Flow 226 188
Commercial Strength Domestic Medium
Wastewater Bill
Service Charge $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Quantity Charge $1,071.24 $984.48 $984.48 $984.48 $984.48 $984.48 Total Bi-Monthly Bill $1,105.44 $1,024.56 $1,024.56 $1,024.56 $1,024.56 $1,024.56 Increase/(Decrease) ($80.88) $0.00 $0.00 $0.00 $0.00
Cumulative Increase/(Decrease) ($80.88) ($80.88) ($80.88) ($80.88) ($80.88) City of Beverly Hills Wastewater Rate Study – Final Report Section 6. Customer Bill Impacts
HF&H Consultants, LLC Page 29 January 24, 2024
Table 6-5. Commercial – High Strength Impacts with Proposed Rates

NEIGHBORING AGENCY BILL COMPARISON
Typical bills based on the proposed rates (effective July 1, 2024) for the City are compared with other neighboring wastewater agencies in Figures 6-6 through 6-7. The comparison is made for sample Single Family, Multi Family, and Commercial Low Strength (the most common commercial customer type in the City). Bills shown for neighboring agencies Commercial - High Strength - Low Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Water Consumption per unit 57 57
Return to Sewer Factor n/a 83.0%
Sewered Flow 57 47
Commercial Strength Excess High
Wastewater Bill
Service Charge $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Quantity Charge $403.56 $326.59 $326.59 $326.59 $326.59 $326.59 Total Bi-Monthly Bill $437.76 $366.67 $366.67 $366.67 $366.67 $366.67 Increase/(Decrease) ($71.09) $0.00 $0.00 $0.00 $0.00
Cumulative Increase/(Decrease) ($71.09) ($71.09) ($71.09) ($71.09) ($71.09) Commercial - High Strength - Average Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Water Consumption per unit 113 113
Return to Sewer Factor n/a 83.0%
Sewered Flow 113 94
Commercial Strength Excess High
Wastewater Bill
Service Charge $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Quantity Charge $800.04 $653.17 $653.17 $653.17 $653.17 $653.17 Total Bi-Monthly Bill $834.24 $693.25 $693.25 $693.25 $693.25 $693.25 Increase/(Decrease) ($140.99) $0.00 $0.00 $0.00 $0.00
Cumulative Increase/(Decrease) ($140.99) ($140.99) ($140.99) ($140.99) ($140.99) Commercial - High Strength - High Water Use
Current Proposed
7/1/2024 1/1/2025 1/1/2026 1/1/2027 1/1/2028
Assumptions
Water Consumption per unit 226 226
Return to Sewer Factor n/a 83.0%
Sewered Flow 226 188
Commercial Strength Excess High
Wastewater Bill
Service Charge $34.20 $40.08 $40.08 $40.08 $40.08 $40.08 Quantity Charge $1,600.08 $1,306.35 $1,306.35 $1,306.35 $1,306.35 $1,306.35 Total Bi-Monthly Bill $1,634.28 $1,346.43 $1,346.43 $1,346.43 $1,346.43 $1,346.43 Increase/(Decrease) ($287.85) $0.00 $0.00 $0.00 $0.00
Cumulative Increase/(Decrease) ($287.85) ($287.85) ($287.85) ($287.85) ($287.85) City of Beverly Hills Wastewater Rate Study – Final Report Section 6. Customer Bill Impacts
HF&H Consultants, LLC Page 30 January 24, 2024
reflect their current rates (as of July 1, 2023). NOTE: It is anticipated that the neighboring agencies’ rates may conduct their own rate studies and adjust rates on July 1, 2024, which is not reflected here, as those adjustments are unknown at this time. For rate structures based on flow, the average wastewater flow per customer for the City was used and is identified in the figure.

The agencies selected for this comparison have unique conditions that account for the differences in bills. Some agencies may have recently or are currently undergoing major capital improvement programs while others may not. Some agencies may receive significant support from non-operating revenue such as property taxes, which is not the case with the City.

Figure 6-6. Single Family Bi-Monthly Charge Comparison with Neighboring Agencies
Figure 6-7. Multi Family Bi-Monthly Charge per Dwelling Unit (for a 10-Unit Complex) Comparison with Neighboring Agencies
$120.00
$100.00
$80.00
$60.00
$40.00
$23.30
$20.00
$0.00
Glendale
Average Multi-Family Bi-Monthly Bills - 8.4 hcf per dwelling unit $44.84
$48.72
Santa
-
Monica Los Angeles
$82.87 $83.97
$68.48
$54.96
Ventura* San Diego* Santa Barbara Beverly Hills (eff.
7/1/2024)
■ Bi-Monthly Service Charge Quantity Charge
$87.38
Beverly Hills
(Current)
$89.24
Palo Alto
City of Beverly Hills Wastewater Rate Study – Final Report Section 6. Customer Bill Impacts
HF&H Consultants, LLC Page 31 January 24, 2024
Figure 6-8. Commercial (Low Strength) Bi-Monthly Charge Comparison with Neighboring Agencies
r
$1,200.00
$1,000.00
$800.00
$600.00
$400.00
$200.00
$0.00
Average Commercial Low Strength Bi-Monthly Bills - 94 HCF of sewered flow $468.00
$376.60
Beverly
-
Hills (eff. Santa Barbara Santa
-
Monica
7/1/2024)
$479.76
Beverly -Hills
{Current)
$479.30
San -Diego
$545.20
Los Angeles
■ Bi-Monthly Service Charge Quantity Charge
$586.58
Ventura
-
$942.76
Palo
-
Alto
$981.81
Glendale

APPENDIX A
(Examples of Commercial Customer Categorization by Strength of Wastewater Discharge) Example Low-Strength Commercial Business Types
Banks & Financial Institutions
Barber Shops/Hair Salons (Hair Cutting Only)
Post Offices/Government
Retail Stores
Libraries
Schools
Halls & Lodges
Offices (Business and Professional)
Example Medium-Strength Commercial Business Types
Mixed-Use Properties (i.e., mixture of office space and restaurants, nail salons, gyms, etc.) Bars & Taverns (w/o Dining)
Appliance Repair
Barber Shops/Hair Salons (Haircutting w/Add’l Treatments) Dry Cleaners
Nail Salons
Pet Groomers
Commercial Laundromats
Tasting Rooms
Medical Offices/Hospitals
Hotels, Motels, or Bed & Breakfast
Pools with Restrooms (Clubhouse)
Theaters
Car Washes
Gym or Health Club
Service Stations, Garages, Auto Repair Shops
Car Rental/Car Service
Mini Mart with Gas Pumps (w/o Dish Washer or Garbage Disposal) Spa
Example high-Strength Commercial Business Types
Restaurants
Coffee Shops
Ice Cream Parlors
Catering
Eatery
Juice Bars
Bakeries Butcher Shops
Bars & Taverns (w/ Dining)
Grocery Stores or Markets
Mini Marts (w/ Dish Washer or Garbage Disposal)
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590 Ygnacio Valley Road, Suite 105
Walnut Creek, CA 94596