9770 CULVER BOULEVARD, 2ND FLOOR
CULVER CITY, CALIFORNIA 90232-0507
YANNI DEMITRI, P.E. Phone (310) 253-5600
Public Works Director/City Engineer FAX (310) 253-5626
ENGINEER’S REPORT
ON THE ANNUAL LEVY
2024-2025
SEWER USER’S SERVICE CHARGE
IN THE CITY OF CULVER CITY UNDER THE
PROVISIONS
OF CHAPTER 5.02 OF THE CODE OF THE CITY OF
CULVER CITY, CALIFORNIA
FILED with the City Clerk PRESENTED to the City Council On April 3, 2024 and APPROVED by Resolution
No. 2024-R____, adopted by said
City Council on April 8, 2024
and thereafter filed in the
Office of the City Clerk
__________________________
City Clerk
City of Culver City
TO: The Honorable Mayor and Members of the City Council
FROM: Yanni Demitri, Public Works Director and City Engineer
CITY ENGINEER’S REPORT FOR SEWER USER’S SERVICE CHARGES FOR FISCAL YEAR 2024-25
_________________________________
Yanni Demetri, P.E. RCE 63388
Public Works Director/City Engineer
1.0 Introduction
A major challenge confronting those responsible for wastewater infrastructure, transportation, treatment and disposal is acquiring adequate funds to finance and operate facilities and capital equipment, along with implementing appropriate pricing structures to ensure the self -sufficiency of the utility. The financing vehicle that is used by the utility and the timing of the financing are crucial in ensuring that wastewater customers are appropriately paying for facilities that they need, and not inappropriately financing facilities for future customers. It is a major goal of an effective financial plan to ‘match’ the economic impact on customers with the benefits received from the service.
Regulations governing Federal and State grant funds require the City of Los Angeles to maintain a Cost Recovery Program (Sewer User Charges System) which includes all operations and maintenance costs directly or indirectly related to the treatment and collecti on of liquid waste discharge by residents and businesses. As a result of Culver City’s contractual relationship with the City of Los Angeles for wastewater treatment at the Hy perion Treatment Facility, Culver City (City) is also required to recover from e ach wastewater user their proportionate share of the costs incurred for wastewater collection capital improvements within Culver City, wastewater system operation and maintenance, City of Los Angeles capital improvements for conveyance to Hyperion and operation and ma intenance at Hyp erion. Accordingly, Culver City adopted a plan to collect wastewater user charges and implemented it for the first time in fiscal year 1980-81.
The City recovers wastewater user charges on an annual basis. Since the plan’s in ception, the County Auditor -Controller’s offices, and the annual property tax bill, have been utilized as the vehicle for both billing and collection. This method has proven to be both functionally satisfactor y and exceptionally economical.
2.0 Discussion
In 2012, the City Co uncil awarded a contract to NBS Government Finance Group dba NBS to conduct an in-depth review of the existing SUSC and determine if they were fair and equitable to each customer class taking into consideration the cost of City of Los Angeles services to convey and treat the wastewater and Culver City’s costs for collection and conveyance of the sewage in its own system.
NBS determined the following findings:
1. The City’s current sewer rates need to be adjusted to collect more revenue fr om si ngle family customers and less from other customer classes, particularly commercial/restaurant customers.
2. The City should collect approximately 60% of rate revenue from base charges and 40% from its commodity charges based on the cl assification of current expe nses as either fixed or variable. The City collected 90% of rate revenue from commodity charges. Fixed costs (which are associated with Base charges) are personnel costs (including cost for maintenance of the City’s sewage col lection system) , office expe nse, and 75% of administrative charges and consultant support costs. These costs do not vary directly with the quantity of sewage produced.
Variable costs (which are associated with Commodity Charges) are what the City pays to the City of Los Angeles for wastewater treatment-related costs, utilities at the pump stations, and 25% of administrative charges and consultant support. These charges are more directly tied to the quantity of sewage produced.
3. Existing landscape irrigation credits of 42% for residential customers are reasonable.
In addition, NBS prepared 5-year financial plan/revenue requirements (2012/13 through 2016/17) for the sewer enterprise fund. These requirements are based on several factors such as NBS’ recommended targ ets for opera ting, capital and debt reserve balances and the City’s projected capital improvement program.
On July 22, 2013, after a 45-day public notice, the City Council, after receiving and hearing all public comment, adopted rate increa ses of 4% across all customer classes for each Fiscal Years, 2013-2014, 2014-15 and 2015 -16, with the exception of only a 3% rate increase for single family residences in Fiscal Year 2015 -2016. In addition, base charges were adjusted to a 60% / 40% revenue split.
For Fiscal Year 2016/17 no rate increase was proposed or approved.
For Fiscal Year 2017/18, the City Council approved a rate increase of 2.7% based on the Bureau of Labor Statistics February Consumer Price Index for All Urban Consumers for the Los Angeles – Riverside - Orange County area for the prior 12 -month period ending February 2017 for Fiscal Year 2017/2018.
For Fiscal Year 2018/19 the City Council approved a rate increase of 3.6% based on the Bureau of Labor Statistics February Consumer Price Index for All Urban Consumers for the Los Angeles area for the prior 12-month period ending February 2018 for Fiscal Year 2018/2019.
For Fiscal Year 2019/20 the City Council approved a rate increase of 2.5% based on the Bureau of Labor Statistics February Consumer Price Index for the Los Angeles area for the prior 12-month period ending February 2019.
For Fiscal Year 20 20/21 the City Council, due to the severe impacts to both individuals and businesses caused by the COVID-19 pandemic, there was no increase proposed.
For F iscal Year ’s 2021/22 thru 2023/24, due to sufficient reserves, there was no increase proposed.
The required reserve balance is $1.6 million per the sewer bond covenants and is in a separate account and not part of the following sewer cash expenditure table.
2022/2023 2023/2024 2024/2025
Actual Estimated Proposed
Budget
Beginning unreserved cash balance 23,704,578 24,343,056 14,578,033
Sewer - Operating 8,527,832 8,550,000 8,685,600
Interest Income 306,794 204,000 200,000
Sewer Facility - CC 118,565 240,000 240,000
Misc. Revenue 255,954 375,000 350,000.00
Total Revenue 9,209,145 9,369,000 9,475,600
Less: Operating Costs
Salaries and Benefits 1,396,365 1,855,000 1,985,700
Other Culver City Operating Costs 3,102,275 2,730,217 2,900,000 L.A. Hyperion 1,221,006 1,800,000 1,500,000
Bond Debt Service 788,558 1,696,500 1,696,500
Total Operating Exp (CAFR less
Depreciation)
6,508,204 8,081,717 8,082,200
Capital Projects
Culver City (Appropriated) 841,457 9,252,306 1,500,000
L.A. Hyperion 1,221,006 1,800,000 1,500,000
Total Capital Projects 2,062,463 11,052,306 3,000,000
Total Expenses 8,570,667 19,134,023 11,082,200
Net Surplus/Deficit 638,478 -9,765,023 -1,606,600
Additional Operating Cash 0 0 0
Cash Balance-End of June 24,343,056 14,578,033 12,971,433
3.0 Recommendation
Staff proposes for Fiscal Yea r 2024/2025 that the City Council approve a rate increase of 3.4% based on the Bureau of Labor Statistics February Consumer Price Index for All Urban Consumers for the Los Angeles area for the prior 12 -month period ending February 20 24 as shown in the following table:.
Customer Class Base Charge Code
Commodity Rate
101 Single Family1 $309.88 +
102 Multi-Family2 $248.55 +
200 Commercial/Business: $309.88 +
300 Commercial/Restaurants: $309.88 +
400 Institutional: $309.88 +
500 School/Public: $309.88 +
600 Special Users (Description in Engineer’s Report)
601 $ 309.88 + 602 $ 309.88 + 603 $ 309.88 + 604 $ 309.88 + 605 $ 309.88 + 606 $ 309.88 + 607 NOT USED
608 $ 309.88 + 609 NOT USED
610 NOT USED + 611 NOT USED
612 $ 156.20 + 613 $ 309.88 + 614 $ 309.88 + 615 $ 309.88 + W=Annual Water Consumption in HCF
1 Base charge is per parcel
2 Base charge is per dwelling unit
(0.58W x $1.41)
(0.85W x $1.41)
(W x $4.01)
(W x $7.97)
(W x $4.24)
(W x $3.27)
(W x $4.70)
(W x $6.07)
(W x $6.08)
(W x $3.71)
(W x $6.27)
NOT USED
(W x $4.85)
NOT USED
NOT USED
NOT USED
(W x $0)
(W X $0.40)
(W x $3.40)
(W x $4.82)
601 – 6000 Sepulveda Boulevard – Westfield Mall
602 – 6333 Bristol Parkway
603 – 5992 Green Valley Circle
604 – Southern California Hospital
605 – Sony Studios
606 – 6161 Centinela Avenue
607 – Not used
608 – 4065 Jackson Avenue – 50% of Code 101 + 50% of Code 300 609 – Not used
610 – Not used
611 – Not used
612 – Nurseries
613 – 10121 Jefferson Boulevard #4904651 – 10% of Code 200 614 – 10555 Jefferson Boulevard – 85% of Code 200
615 – 10824 Venice Boulevard – 20% of Code 300 + 80% Code 200
Continue to use Los Angele s Auditor-Controller property tax roll for SUSC billing p urposes for FY 2024-2025 as it eliminates costly billing systems, additional staff, and minimizes bad debt.