When the estimated underflow from areas identified by the preliminary DInSAR study are included, the 100-year average potential recharge for the SMB is approximately 12,131 to 12,722 AFY, with 100-year maximum and minimum recharge values of 44,704 to 1,224 AF/Y, respectively.
The City is in the process of permitting a new well for aquifer recharge as art of its Sustainable Water Infrastructure Project (SWIP). When operational, this well will be capable of artificially recharging the City’s aquifers with approximately another 1,000 AFY of highly treated water derived from non-conventional resources such as stormwater, brackish groundwater and municipal waste water, thereby increasing the total range of recharge to between approximately 13,131 AFY to 13,722 AFY. In addition, the City is engaging ECI to conduct a supplemental TINS analysis of the additional mountain front area that is thought to be contributing to recharge from outside the SMB. Results from this analysis are expected to increase the estimated range of potential recharge from this area.
Long-term the City is exploring new conservation programs to reduce demand and innovative projects for the expanded treatment and reuse of non-conventional water resources such as brackish/saline groundwater. When integrated with the recently completed Clean Beaches
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Packet Pg. 994 Attachment: 2018 Sustainable Water Master Plan Update (6637 : Water Service Rates (10 mins)) 1 Ada Parkway, Suite 100, Irvine, CA 92618 USA +1.949.333.6600 +1.949.333.601 fax icf.com Initiative Project (CBI) and the City’s SWIP, these programs and projects will result in a cohesive and comprehensive strategy for adaptive management of the City’s water resources.
Lastly, it should be noted that this recharge estimate does not account for underflow to or from adjacent groundwater basins (other than the noted potential underflow from the Hollywood Basin into the Santa Monica Basin), nor does it consider the effects of groundwater extraction from pumping wells. However, it provides a valuable preliminary estimate of potential recharge in the SMB that is useful for the evaluation and estimation of sustainable yield. We understand that the City intends to revisit and update its recharge and sustainable yield estimates utilizing a water balance method that is consistent with hydrogeologic modeling concepts every two years going forward. This practice will help ensure the City meets and maintains its objectives of water resiliency and self-sufficiency.
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APPENDIX B
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Packet Pg. 998 Attachment: 2018 Sustainable Water Master Plan Update (6637 : Water Service Rates (10 mins)) Appendix B
Sustainable Water Master Plan
Water Treatment Enhancement Projects
PROJECT DESCRIPTION PRELIMINARY
ESTIMATE
SCHEDULED
COMPLETION
Closed Circuit Reverse Osmosis
(CCRO)
New reverse osmosis technologies are available to
recover more potable water from the treatment
process. A pilot test of the CCRO technology will be
conducted. If successful, this project would install a
3-MGD CCRO at the Arcadia Water Treatment Plant.
$17.6M 2023
Arcadia Water Treatment Plant
Expansion
Focused modifications at the Arcadia Water
Treatment Plant could provide increased treatment
capacity to approximately 12 MGD. If feasible and
effective, the treatment system modifications would
be completed by 2023. This project goes hand in
hand with the CCRO project above. $12.4M 2023
Ultraviolet (UV), Advanced
Oxidation, and Granular
Activated Carbon
Additional Olympic Wellfield contamination
treatment upgrades due to increased pumping and
new state regulatory requirements. $15.5M 2023
Total: $45.5M
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Packet Pg. 999 Attachment: 2018 Sustainable Water Master Plan Update (6637 : Water Service Rates (10 mins)) 2018 2019 2020 2021 2022 2023 2024 2025
Well Projects • 2018 - 2023
SMURRF • 2019-2020
SWIP • 2019-2022
• 2018 - 2023
*Arcadia WTP Expansion
& CCRO
• 2023-2025 Additional Wells
Contingency
• Ongoing Conservation
Water Self-Sufficiency
Project Schedule
* Assumes approval from Council to proceed with design/build by 10/01/18. Self-Sufficiency Reached
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Packet Pg. 1000 Attachment: 2018 Sustainable Water Master Plan Update (6637 : Water Service Rates (10 City of Santa Monica | SUSTAINABLE WATER MASTER PLAN UPDATE ATTACHMENT B ES-19
ATTACHMENT B
City Council Staff Report – Sustainable Water Master Plan Update and Pathway to Water Self-Sufficiency
(Water Resources Division, November 2018)
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Packet Pg. 1001 Attachment: 2018 Sustainable Water Master Plan Update (6637 : Water Service Rates (10 mins)) City Council
Report
City Council Meeting: November 27, 2018
Agenda Item: 8.C
1 of 40
To: Mayor and City Council
From: Susan Cline, Director, Public Works, Water Resources Subject: Sustainable Water Master Plan Update and Pathway to Water SelfSufficiency Recommended Action
Staff recommends that the City Council:
1. Provide staff with direction to proceed with water self-sufficiency components.
2. Provide staff with direction regarding funding recommendations to achieve water self-sufficiency.
3. Authorize budget changes as outlined in the Financial Impacts and Budget Actions section of this report.
4. Direct staff to return for a public hearing on January 8, 2019, to consider implementation of 9% water rate increase previously approved by Council on February 24, 2015 to go into effect on March 1, 2019.
Executive Summary
The City of Santa Monica (City) has historically provided water service to residential and business customers allowing for bold efforts in securing resiliency and self-sufficiency for the community. Given the statewide challenges surrounding a safe and reliable water supply in recent years, Council directed staff to develop a water self-sufficiency plan with the goal of meeting 100% of Santa Monica’s water demand using local water sources by 2020. On October 28, 2014, Council adopted the Sustainable Water Master Plan (SWMP), which outlines a strategy to achieve the City’s water self-sufficiency goal (Attachment A). Staff initiated a comprehensive update of the SWMP in 2017 to incorporate new information regarding local groundwater resources and to integrate new water conservation programs and alternative water supply opportunities. On January 9, 2018, staff reported to Council that further analysis was needed to assess whether the City could meet its water self-sufficiency goal by 2020 (Attachment B). The further analyses have been completed and confirm that achieving water self-sufficiency that can be maintained into the future is practical and cost effective, but the projected
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date of reaching that goal would be 2023. The delay from the original date is due to new state drinking water requirements implemented in 2018, permitting requirements for alternative water supply projects, and results of recently completed feasibility studies which resulted in longer timelines for project completion relative to previous estimates.
The benefits of becoming water self-sufficient when compared to the alternative of continuing to meet a portion of local water demand using imported water include: longterm cost benefits for water ratepayers, establishment of a diverse, sustainable and drought resilient local water supply, and reduction of the City’s water supply energy footprint. It should be noted that in the updated plan proposed by staff, water selfsufficiency equates to approximately 99% locally sourced water, with 1% of the City’s water supply still being purchased from the Metropolitan Water District of Southern California (MWD) to maintain the imported water connection for emergency purposes.
The updated proposal to meet water self-sufficiency presented in this staff report includes an optimized water conservation program together with local water supply projects, an updated implementation timeline, and recommended funding toward achieving water self-sufficiency for the City. Following Council direction and approval, the final components will be included in an updated SWMP that will guide City efforts toward achieving the goal through 2023. To achieve self-sufficiency by 2023, staff is proposing to replace imported water purchases with a comprehensive plan consisting of:
Component 1 - continuing and increasing water conservation efforts to permanently reduce water demand,
Component 2 - developing sustainable and drought resilient alternative water supplies, and
Component 3 - expanding local groundwater production within sustainable yield limits.
The anticipated cost to implement the components required to meet the self-sufficiency goal is approximately $38 million to increase local water supplies, which includes capacity expansion of the Arcadia Water Treatment Plant (WTP), implementation of
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production efficiency enhancements, as well as acquiring an additional groundwater well to enhance resiliency. The $38 million would be funded primarily through the issuance of a water revenue bond and a contribution from the Wastewater Fund ($3.25 million) to the Water Fund to fund the various projects outlined in this staff report, with the debt service on the bonds incorporated into water rates in an upcoming rate study.
An additional $64 million from existing water-contamination settlement funds would be used for restoring the Olympic Sub-basin, which would allow additional water production from that sub-basin to support achievement of water self-sufficiency. The proposed water self-sufficiency plan and staff recommendations are based on recently completed studies (e.g., confirmation of sustainable yield analysis, evaluation of new drinking water regulations on the Olympic Sub-basin restoration, and feasibility studies to assess new technologies that increase production efficiency at the Arcadia WTP) in which multiple scenarios were evaluated for cost, benefits and effectiveness.
Lastly, staff will return to Council on January 8, 2019, for a public hearing and to recommend a full implementation of the 9% water rate adjustment (within the previously adopted Council authorization) for calendar year 2019 and effective on water bills issued on or about March 1, 2019. The recommended water rate adjustment would ensure a fiscally sustainable comprehensive program for safe, clean, reliable water supply to our community. It would also help offset increased construction costs to keep up with the City’s 100-year water main replacement program and fund preliminary design efforts on the various components required to achieve water self-sufficiency as contemplated in the 2014 rate study.
Background
On January 25, 2011, City Council directed staff to develop a water self-sufficiency plan with the goal of meeting 100% of Santa Monica’s water demand using local water sources by 2020. On October 28, 2014, Council adopted the SWMP which outlines a comprehensive plan to achieve water self-sufficiency. The SWMP involves a combination of water demand reduction strategies through various water conservation and efficiency programs designed to permanently reduce residential and commercial
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water use, along with increased water supply from 1) alternative water sources such as captured rainwater and treated wastewater; 2) increased efficiency of the City’s water treatment systems; and 3) additional pumping from existing groundwater wells and new wells in the local groundwater basin. Implementation of the SWMP has been proceeding since 2014, with updates provided during Council’s annual consideration of water rate adjustments. The most recent update was provided on January 9, 2018.
Between 2014 and 2018, other elements of the SWMP progressed, including completion of a preliminary Sustainable Yield Analysis (SYA) of the Santa Monica groundwater basin and finalizing plans for the Sustainable Water Infrastructure Project (SWIP) to support further analysis and refinement of alternatives to reduce reliance on imported water supply and meet the City’s self-sufficiency goal. Staff initiated a comprehensive update of the SWMP in 2017 to incorporate new information regarding local groundwater resources, regulatory updates, and to integrate new water conservation programs and alternate water supply opportunities.
On January 9, 2018, staff reported to Council that further analysis was needed to assess whether the City could meet its water self-sufficiency goal by 2020. Additional work completed since January 2018 included analysis to validate preliminary SYA estimates of the local groundwater basin, drilling of exploratory water wells in the Coastal sub-basin to evaluate potential new local water production, technical studies to evaluate the cost and viability of increasing the production efficiency of the City’s Arcadia WTP, evaluating the impact of new drinking water regulations (e.g., maximum contaminant level [MCL] for 1,2,3 TCP) on groundwater extraction from the Olympic Sub-basin, and evaluating the cost and viability of additional water conservation programs as requested by the Task Force on the Environment. A timeline summarizing key events related to the development of the SWMP from 2011 is provided in Figure 1.
Staff currently anticipates that the City would achieve water self-sufficiency in 2023 based on the plan outlined in this report. In addition to the proposed plan to achieve water self-sufficiency, a Five-Year Rate Study (2020-2024) is also currently underway and will consider potential rate impacts of water self-sufficiency projects. Results of the Five Year Rate Study will be presented to Council in the first half of 2019.
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January 25, 2011
City Council directed
staff to develop water
self-sufficiency plan
(100% on local water
supplies)
Council adopts Sustainable
Water Master Plan (Oct ’14)
Plan outlines the City’s strategy to
achieve water self-sufficiency
Olympic Treatment Pilot Project
Initiated (Sept ’14)
Evaluate treatment technologies to
restore pumping capacity at Olympic
Sub Basin
SWMP Update
(Nov ‘18)
Staff to present
strategy to meet
City’s water selfsufficiency goal
Conservation Plan
Implemented (2015)
Increased conservation
efforts saw a ~20% reduction
in gallon per capita per day
(gpcd) water consumption
SWMP Update
(Jan ‘18)
Staff reported to City
Council that additional
analysis was needed to
determine if selfsufficiency goal could
be met by 2020
New Contaminant at
Olympic Sub Basin
(May ‘18)
New drinking water
regulations required
additional analysis of
Olympic Sub Basin
treatment strategy
Water SelfSufficiency
Achieved (2023)
Figure 1: Self-Sufficiency Timeline
Discussion
Goals and Benefits of Water Self-Sufficiency
The proposed plan to meet the City’s self-sufficiency goal involves a combination of demand reduction through various water conservation and efficiency programs and the addition of local water supplies which will also provide the following benefits:
Long-term cost benefits to ratepayers by maximizing local water resources Provide a more sustainable and drought-resilient water supply through a diversified water supply portfolio
Reduce the City’s water supply energy footprint through conservation and locally sourced water supplies
With imported water purchase costs from MWD expected to increase annually from 3 to 7 percent over the next 10 years, the primary focus of the updated SWMP was to develop water self-sufficiency scenarios that are both sustainable and economical compared to the continued purchase of imported water from MWD. Development of
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cost-effective local, sustainable, and drought resilient water supplies will provide Santa Monica water ratepayers with cost benefits over the long-term and provide the City with greater cost certainty on water rates compared to the continued purchase of imported water from MWD.
Providing a sustainable and drought-resilient water supply through a diversified water supply portfolio eliminates the City’s reliance on the purchase of imported water from MWD and maintains reliable production during routine maintenance and unforeseen downtimes of treatment equipment.
Lastly, maximizing local water resources instead of purchasing imported water from MWD also has long-term environmental benefits for the community in terms of reduced energy use and the associated reduction in greenhouse gas emissions, which support Council’s goal to achieve carbon neutrality by 2050 or sooner. The addition of alternative water supplies, expansion of local groundwater supplies, and increased conservation will result in a 25-30% reduction of total energy footprint from the City’s water supply compared to continued purchase of imported water from MWD.
Marching Toward Water Self-Sufficiency
The City’s water supply portfolio has progressively transformed since 2011, with the community making significant strides toward water self-sufficiency and reduced reliance on the purchase of imported water to supplement local water resources as indicated in Figure 2. In 2011, after completion of the Charnock Wellfield Restoration Project, the City was able to meet approximately 51 percent (~6,700 acre-feet per year [AFY]) of its water supply demand through local groundwater resources and reduce the purchase of water from MWD, which is imported from Northern California and the Colorado River, to approximately 48% (~6,400 AFY).
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Figure 2: Overview of City’s Water Supply Portfolio from 2011 through 2017 In 2015, the City and its residents responded to severe drought conditions throughout California with conservation efforts that resulted in a decrease in the City’s total water demand of 14,300 AFY in 2014 by about 17% (-2,500 AFY) to approximately 11,800 AFY by 2017. Santa Monica’s population grew by about 1.6% from 92,321 to 93,834 over the same period. Conservation efforts resulted in a decrease in average annual water consumption, measured in gallons per capita per day (GPCD), from 140 GPCD to approximately 110 GPCD as indicated in Figure 3 and continues today even after the governor declared an end to the drought.
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Figure 3: Historical Population Growth versus Per Capita Water Consumption From 2015 through 2017, the City was meeting approximately 50-56% of its water supply demand through local water sources (7,400-8,200 AFY) and 26-29% through water conservation (approximately 2,500 AFY), with the amount of imported water purchased from MWD dropping to approximately 26-29% (3,700-4,100 AFY). In 2017, local groundwater supply temporarily decreased due to an extended shutdown (approximately six months) of one well in the Charnock sub-basin for maintenance and repair. The loss of a single well from the Charnock Sub-basin over the six-month period and loss of approximately 800 AFY of groundwater production highlighted the need to increase resiliency of the local water supply to maintain reliable production as the City continues its march toward water self-sufficiency.
Refined SWMP Pathway to Achieve Water Self-Sufficiency
Additional analyses of various elements of the SWMP, as outlined at the January 9, 2018 City Council meeting, have been completed, and based on those analyses staff now estimates that water self-sufficiency can be achieved by 2023. To achieve selfsufficiency by 2023, staff is proposing to replace the purchase of imported water from MWD (approximately 50% of the total water supply demand when self-sufficiency efforts were initiated in 2011) with a comprehensive plan consisting of: 1) Component 1 - continuing and increasing water conservation efforts to permanently reduce water demand, 2) Component 2 - developing sustainable and drought resilient alternative
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water supplies, and 3) Component 3 - expanding local groundwater production within sustainable yield limits.
The delay in achieving the City’s self-sufficiency goal from 2020 to 2023 is due to several factors, including new regulations established by the State Water Resources Control Board’s Division of Drinking Water (DDW) that required further analysis to determine the level of treatment required for the Olympic Sub-basin, the project timeline and permitting schedule for the SWIP project to recharge local groundwater aquifers with purified water, and the need to confirm and refine preliminary SYA estimates with additional data to establish an accurate estimate of the sustainable yield for the Santa Monica Groundwater Basin.
The remainder of this staff report is organized as follows to provide detailed descriptions of each component of the updated SWMP and its contribution/benefits toward the City’s self-sufficiency goal:
Proposed Plan to Achieve Water Self-Sufficiency
SWMP Project Cost and Implementation Schedule
Funding Recommendations
Proposed Plan to Achieve Water Self-Sufficiency
A comprehensive plan was developed through the SWMP and comprises three components that provide a path for the City to achieve water self-sufficiency by 2023.
The contribution of each proposed component to eliminate reliance on imported water supply by 2023 is summarized in Figure 4 along with the percent contribution toward replacing imported water purchases. In total, the three components: 1) conservation, 2) alternative water supplies - production efficiency, recycled water, and purified water for recharge, and 3) new local groundwater will contribute approximately 8,057 AFY toward the City’s total water supply and reduce imported water purchase to only 170 AFY. A brief description of each of the recommended components is provided below.
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New Local Groundwater,
2,100 AFY, 25%
Imported
Water (MWD),
170 AFY, 2%
Alternative Water Supply -
Purified Water (Recharge),
1,100 AFY
Alternative Water Supply -
Alternative Water Supply Recycled Water , 560 AFY
- Production Efficiency,
1,200 AFY
Conservation, 3,097 AFY, 38%
PROPOSED STRATEGIES TO REPLACE IMPORTED WATER SUPPLY (2023) New Local Groundwater Imported Water (MWD)
Alternative Water Supply - Purified Water (Recharge) Alternative Water Supply - Recycled Water Alternative Water Supply - Production Efficiency Conservation Alternative Water Supply,
2,860 AFY, 35%
Figure 4: Summary of Proposed Components to Replace Imported Water Supply by 2023 Component 1 - Conservation (38% Reduction in Imported Water Purchases) In 2014, Council authorized the significant expansion of staffing and funding to augment the City’s water conservation efforts to address the state-wide drought and help the City meet its self-sufficiency goal. This contributed to a water demand reduction of approximately 20% over the past three years (2015-2017), which equates to saving approximately 2,500 AFY. Continued implementation of the existing conservation programs with the addition of supplemental conservation efforts is expected to continue this trend of water demand reduction through 2040, with the staff recommended Optimal conservation plan which is described below. Continuation of existing, and implementation of proposed, conservation programs are essential for the City to eliminate reliance on imported water from MWD. The recommended Optimal conservation plan will contribute approximately 3,100 AFY to the City’s water supply portfolio in 2023 and reduce imported water purchases by roughly 38%.
Staff modeled three conservation plans (Optimal, Enhanced, and 90 GPCD), which are presented in gallons per capita per day by 2025 and abbreviated as GPCD. The Optimal Conservation Plan can be completed using existing budgeted resources and would reduce the City’s total water demand by approximately 20%, even after factoring in demand increases associated with expected population growth through 2025.
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Increasing conservation efforts from the Optimal to the Enhanced Plan would cost an additional $7.2 million in total program cost, on top of the budget already allocated for the Optimal Conservation Plan, but with a marginal increase in water conserved (approximately 2% additional reduction in GPCD with the Enhanced Plan). The enhanced conservation plan would still require approximately 3,500 to 3,700 AFY of water that would need to be met through the purchase of imported water or from the development of additional local water resources. With marginal gains from increased conservation efforts compared to the additional implementation cost required, staff is recommending continuing with the optimal conservation plan, which costs approximately $708/AF of water saved.
A third, aggressive conservation plan was also studied following a request by the Task Force on the Environment to evaluate the cost and feasibility of reducing city-wide water demand to 90 GPCD by 2025. The assessment of the 90 GPCD Plan conducted by staff concluded that reducing overall water demand to 90 GPCD would be extremely costly and may not be feasible for implementation. The overall cost to implement this plan would exceed $56.6 million, with $40 million of the cost incurred over the first five years. In addition to the significant cost premium, this scenario would likely require additional staffing and would be very challenging to achieve by 2025.
Staff met with industry experts to review and receive input on the City staff modeling of proposed conservation programs. A panel of outside experts supported both the optimal and enhanced conservation plans and the proposed programs that comprise them. A summary of the conservation scenarios evaluated is provided in Table 1.
Table 1: Summary of Conservation Scenarios Considered
Description1 Conclusion Cost
Optimal,
108 GPCD
Best Conservation option
Does not achieve self-sufficiency
goal by itself but supports demand
reduction.
Within current operating budget
$708/AF (over 30 years) 2
Enhanced,
106 GPCD
Feasible but expensive compared to
Optimal Plan. Requires 1.5 new
staff for 10 years
$7.2 million increase in program
costs compared to Optimal
(2018-2023)
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Does not achieve self-sufficiency
goal
Not worth the incremental cost for a
2GPCD reduction.
137% increase in budgeted costs
(2018-2013)
$1,078/AF (over 30 years) 2
Aggressive,
90 GPCD
Potentially feasible but very
expensive, requires 2.5+ new staff
for 10 years
Does not achieve self-sufficiency
goal
$40.8M over the first five years;
$58.6 M 2019-2040,
800% increase in costs (2018-
2023) compared to Optimal
Scenario
~$1,280/AF (over 30 years)2
1GPCD based on water conservation efforts achieved as of 2025 2Excluding ongoing conservation staffing cost.
Due to conservation efforts since 2015, the City’s current water demand measured in gallons per capita per day (GPCD) is approximately 110 GPCD. Staff also conducted a theoretical exercise to determine what would be required for the City to become water self-sufficient solely through conservation efforts (assuming no imported water and no additional local water production). Results of that exercise indicated that the total per capita water demand would need to be reduced to 64 GPCD. Staff consulted water conservation experts, analyzed conservation efforts in other cities and evaluated various local conservation scenarios and determined that attempting to achieve the selfsufficiency goal through conservation alone (i.e. achieving 64 GPCD in Santa Monica) is neither financially feasible nor realistic within the time horizon.
However, the community should be commended on the conservation efforts already taken to reduce water demand and decrease imported water purchased from MWD.
Santa Monica is - and can be - a model for a new ethic of resource self-sufficiency and environmental sustainability. The Council’s recent adoption of the 100% renewable default rate for community electric supply represents this ethos of “living within our means.” Conservation will continue to play a critical role in the City’s march toward water self-sufficiency by continuing to reduce overall water demand in the face of continued population growth from new housing and demand from the commercial and institutional sectors of our local economy.
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Based on the modeling described above, staff recommends pursuing the Optimal conservation plan, which continues the successful conservation programs initiated over the past three years and increases water conservation in untapped areas such as:
Funding of retrofits in Santa Monica-Malibu Unified School District facilities and landscapes
Commercial sector fixture retrofits and enhanced rebates Coin-operated laundry machine retrofits
Increase in Water Neutrality offsets and direct installs Rebates for new technologies including gray and black water systems Enhanced water conservation education and enforcement Additional sustainable landscape conversions
Outreach to assist customers on how to properly adjust their irrigation timers New marketing and outreach campaign focusing on instilling permanent conservation behaviors consistent with the state’s forthcoming framework for “Making Water Conservation a California Way of Life”
Incorporating limited-term employees as part of the permanent water conservation team to ensure new state requirements and regulations are met, as well as maintaining programs at an effective level
In developing the water conservation plan to reach and maintain self-sufficiency, the City evaluated the potential for further water efficiency and conservation in all customer sectors. This included an assessment of the current level of water fixtures in the city, as well as identifying where the greatest opportunity for reducing water consumption existed. Based on this analysis, a program plan was developed to reach the City’s longterm objectives via existing and new conservation programs.
Table 2 shows the projects planned over the next five years including the number of activities for each program such as number of rebates, consultations and direct installation of water efficient fixtures to replace inefficient fixtures in existing buildings
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throughout the city. The projected number of activities is based on historical participation, available market of opportunity, and strategic community engagement campaigns to increase programs over multi-year periods. The table also includes the estimated water savings and total costs from 2018 through 2023 when water selfsufficiency is expected to be reached.
Table 2: Summary of Optimal Water Conservation Programs and Results Measure Customer Class Total Activities
2018-2023
Total Water Savings (AF)
2018-2023
Rebates, Single Family
(i.e. clothes washers, landscape, soil sensors, toilets, irrigation) Single Family 4,660 286 Water Use Consultations, Single Family Single Family 720 58 Graywater System Incentive Single Family 60 1
Direct Installs, Single Family
(i.e. 0.80 gpf toilets, water neutrality) Single Family 0 0 Direct Installs, Multi-Family
(0.80 gpf and 1.06 or less gpf toilets) Multi-Family 3,750 124 Rebates, Multi-Family
(i.e. high-efficiency clothes washers, landscape, toilets) Multi-Family 1,475 94 Water Use Consultations, Multi-Family Multi-Family 750 90 School Education Program Institutional 2,090 14
Direct Installs, Santa Monica Malibu Unified School District (i.e. 0.80 gpf and 0.125 gpf toilets and urinals, water neutrality) Institutional 537 9 Santa Monica Malibu Unified School District Weather Based Irrigation Controller Incentive Institutional 22 21
Santa Monica Malibu Unified School District Landscape
Incentive Institutional 9 8
Rebates, Commercial & Institutional
(i.e. ice machines, toilets, urinals, toilets, irrigation) Commercial & Institutional 1,792 260 Direct Installs, Commercial & Institutional
(i.e. toilets and urinals) Commercial & Institutional 3,280 517 Water Use Consultations, Commercial & Institutional Commercial & Institutional 300 45 Performance Pays Commercial & Institutional 4 9
Soil Moisture Sensor Rebates Multi-Family, Commercial & Institutional 75 7
Water Saving Devices - Faucet Aerators All 9,240 328
Water Saving Devices - Showerheads All 4,200 160
Community Outreach & Education All 16 1
Pilot Projects All 2 2
Total 32,982 2,034
The financial summary of the Optimal Conservation Plan is provided in Table 3.
Table 3: Financial Summary of Optimal Water Conservation Plan Average Water Savings (AFY)
610
Cost of Savings per Unit Volume ($/AF)
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$708
Modeling of the water conservation plan was purposefully conservative and only includes expected water demand reductions directly related to City efforts. Therefore, the projected demand reductions do not include the potential savings from efficiency improvements in California State Plumbing Codes known as “passive conservation.” Passive water conservation is achievable through non-City sponsored programs, such as maximizing current plumbing code enforcement, landscape ordinances, natural fixture replacement rates, as well as future local and state regulations and codes. This includes the impact and enforcement of the legislation, California SB 407, requiring noncompliant plumbing fixtures in any single-family residential and multi-family residential, and commercial properties to be replaced by the property owner with waterconserving plumbing fixtures.
Through the currently established programs, proposed new programs, and passive conservation, it is estimated that the City can reach 99 GPCD by 2025 and 96 GPCD by 2030. These efforts would result in an estimated additional annual savings between 680 acre-feet (AF) per year by 2025 and as much as 1,000 AF per year in 2030. The City allocates funding for conservation within the water fund annual operating budget; no additional funding would be required to implement the Optimal Conservation Plan. Staff will return during the Five-Year Rate Study to present long-term staffing options for the recommended Optimal Conservation Program.
Component 2 - Alternative Water Supplies (35% Reduction in Imported Water Purchases)
To further diversify the City’s water supply portfolio and increase overall resilience, three alternative water supply projects are proposed and collectively offset imported water purchases from MWD by 35 percent (see Figure 4). These projects include:
Increase recycled water production through the Sustainable Water Infrastructure Project (SWIP), upgrading the existing Santa Monica Urban Runoff Recycling
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Facility (SMURRF) and constructing a new Advanced Water Purification Facility (AWPF) that provides a drought resilient, local water supply. The increase in recycled water production from SMURRF would offset imported water purchases from MWD by approximately 4% (approximately 560 AFY).
Recharge local groundwater aquifers in the Olympic Sub-basin to maintain sustainable yield pumping levels with purified water from the SWIP’s AWPF. The purified water from the AWPF would offset imported water purchases from MWD by approximately 7% (approximately 1,100 AFY).
Upgrade the City’s Arcadia Water Treatment Plant (WTP) with new technology to increase overall production. Closed Circuit Reverse Osmosis (CCRO) would be added to the Arcadia WTP to treat the Reverse Osmosis concentrate waste stream, which is currently discharged to the sewer system, and increase the overall treatment efficiency at the Arcadia WTP to approximately 90 percent, or greater. The addition of CCRO at the Arcadia WTP would offset imported water purchases from MWD by approximately 8% (approximately 1,200 AFY).
The SWIP project is a major component of the alternative water supply for the City as it will provide a sustainable and drought resilient water supply by providing purified water to recharge local groundwater aquifers. In return, the aquifer recharge that will be provided by the SWIP will allow the City to maximize groundwater pumping, within sustainable yield limits, from the Olympic Sub-basin.
Component 3 - New Local Groundwater Production (25% Reduction in Imported Water Purchases)
To offset the remaining imported water purchased from MWD, local groundwater production would need to be increased to reduce imported water purchases from MWD by 25% and resiliency measures implemented to maintain reliable production.
Staff developed and analyzed seven scenarios to expand the City’s groundwater production and carefully vetted each scenario internally and with outside industry experts. The seven scenarios were compared based on project feasibility, capital, and operation cost, and are summarized in Attachment C. All scenarios evaluated assume
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that the Optimal Conservation Plan is implemented. Of the seven scenarios evaluated, Scenario 1 - Expansion of Arcadia WTP with Closed Circuit Reverse Osmosis (CCRO) combined with a Separate Olympic Sub-basin Pipeline and Treatment at the Arcadia WTP site is recommended. Scenario 1 combined with the Optimal Conservation Plan is the most cost-effective solution to achieve self-sufficiency and maximize local water resources. Scenario 1 includes the following elements:
Expansion of the Arcadia WTP, including CCRO technology (as discussed under component 2 - alternative water supplies), to increase treatment capacity and accommodate future 2040 water demands.
Acquisition of a new groundwater well to enhance resiliency. Olympic Sub-basin Restoration:
o A new pipeline separating Olympic Sub-basin water, conveying it independently to the Arcadia WTP, thus requiring a smaller treatment facility at the Arcadia WTP to remove contaminants in the Olympic Sub-basin.
o Separate contamination treatment facility at the Arcadia WTP for the Olympic basin.
Expansion at Arcadia WTP
To support development of alternative water supplies and restoration of the Olympic Sub-basin, treatment capacity expansion and plant upgrades are required at the Arcadia WTP to support an overall increase in water production and enhance resiliency to achieve water self-sufficiency. The Arcadia WTP is currently capable of treating up to approximately 11,300 AFY (10 million gallons per day [mgd]) and produce 9,900 AFY (8.9 mgd) of treated water (approximately 82% recovery or efficiency). The proposed expansion and addition of new technologies to increase production efficiency at the Arcadia WTP will increase its treatment capacity to approximately 14,700 AFY (13 mgd) and produce 13,400 AFY (12 mgd) of treated water (approximately 92% recovery or efficiency). The proposed improvements for expanding production capacity at the Arcadia WTP and enhancing water supply resiliency include:
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Acquire an additional groundwater well to enhance resiliency and maintain production during routine maintenance or unforeseen downtimes of groundwater wells, while aggressively pumping within the sustainable yield. Install new CCRO to increase overall plant efficiency to 90 percent or greater (as discussed previously under component 2 - alternative water supplies). Expand capacity (e.g., pumps, blowers, cartridge filters, etc.) of the Arcadia WTP to accommodate increased groundwater production and new technologies (e.g., CCRO described in Component 2).
Olympic Sub-basin Restoration
The Olympic Sub-basin plays a key role in achieving the City’s water self-sufficiency goal as it could provide up to 3,200 AFY of groundwater and is also the location where purified water from the SWIP will be recharged to sustain this pumping rate. However, the Olympic Sub-basin contains several contaminants that would require additional treatment to meet drinking water standards. The key contaminants in the Olympic Subbasin include: 1,2,3-Trichloropropane (1,2,3-TCP), 1,4-Dioxane, trichloroethylene (TCE), and tetrachloroethylene (PCE). Drinking water regulations, or maximum contaminant levels (MCL), have been in place for TCE and PCE prior to January 2018, and regulations for 1,2,3- TCP were established after January 2018 which required further treatment analysis. 1,4-Dioxane is currently on the State of California’s drinking water Notification Level (NL) list, which is a health-based advisory level and not an MCL. It is anticipated that the NL of 1 microgram per liter (g/L) or part per billion (ppb) for 1,4-Dioxane will likely become an MCL in the near future (within next 5 years).
Further analysis of treatment options for the Olympic Sub-basin was required due to a recently established drinking water regulation that established a MCL for 1,2,3 TCP at 5 parts per trillion (ppt), and additional data on 1,4 Dioxane was available to refine the treatment analysis to determine if the current 1 ppb NL (anticipated future MCL) could be met once full production of the Olympic Sub-basin is restored. The Olympic Subbasin treatment analysis was performed by an outside consultant, Black & Veatch. Key findings of the treatment analysis are listed below:
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1,2,3-TCP was only detected at one well, SM-4, and the MCL of 5 ppt could be met through blending with other wells at full production capacity. 1,4-Dioxane is present in all three wells (two existing and one future) and could limit groundwater production from the Olympic Sub-basin to 845 AFY or approximately 25% of the basin’s total sustainable yield.
Other contaminants, TCE and PCE, do not impact groundwater production from the Olympic Sub-basin as they would be removed through existing treatment processes at the Arcadia WTP.
To maximize groundwater production from the Olympic Sub-basin and comply with regulation on the key contaminants of concern, the following improvements are recommended:
Increase groundwater pumping from existing wells (SM-3 and SM-4), complete equipping and permitting of one recently installed new well (SM-8) and install a replacement well (SM-9) to increase local production from this sub-basin to ~3,200 AFY within sustainable yield levels. Please note that purified water from the SWIP will be used to recharge the Olympic Sub-basin that helps maintain the sustainable yield levels by supplementing naturally available groundwater within the sub-basin.
Design and procurement efforts are currently underway, and the well projects were previously approved by Council in the FY 19-20 Capital Improvement Budget. Construct a new pipeline to separate Olympic Sub-basin groundwater from Charnock wellfield groundwater for separate treatment at the Arcadia WTP, primarily to target removal of 1,4 Dioxane. This reduces the amount of water needing treatment since only the Olympic Sub-basin flows (3,200 AFY) contain 1,4 Dioxane.
If the flows are not separated, 14,700 AFY (Olympic + Charnock) would need to be treated.
Construct a new contamination treatment facility for only the Olympic Sub-basin flows to remove 1,4 Dioxane, 1,2,3-TCP, TCE, and PCE at the Arcadia WTP site.
The proposed treatment train consists of the ultraviolet light advanced oxidation
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process and granular activated carbon. With the new contamination treatment facility and increased production efficiency (90-92% recovery) at the Arcadia WTP, approximately 2,900 AFY of treated water will be produced from the 3,200 AFY extracted from the Olympic Sub-basin. The new contamination treatment facility will provide high-quality drinking water that meets current and future regulatory standards.
Sustainable Yield Update
The sustainable yield from the Santa Monica Groundwater Basin is a critical component to ensure overall groundwater production is within sustainable limits of the basin and could support the proposed projects described above on an ongoing basis. A preliminary Sustainable Yield Analysis, (SYA), prepared by Richard C. Slade & Associates (Slade) in 2017, was presented to Council in January 2018. Since then, additional work was performed to refine and update the SYA. Additional work included the Coastal Sub-basin Exploratory Boring Program and a digital elevation mapping study that analyzed the potential recharge from the nearby mountain front. The updated report contains findings from this recently completed work as well as 2017 data regarding rainfall, geology, static water levels in key wells, and groundwater withdrawals from active City wells and other known private well owners (Attachment D). The updated SYA estimate from Slade’s analysis for the Santa Monica Basin is between 11,800 and 14,725 AFY.
To substantiate the assessment conducted by Slade, City staff contracted with consultants from ICF to perform a separate estimate of the sustainable yield using a water-balance approach. This method compares the amount of water that recharges into a basin (inflow) from a wide range of sources (natural and anthropogenic), with the amount of water leaving the basin (outflow) from losses caused by pumping, evapotranspiration, basin outflow, etc. ICF’s assessment also considered findings from both the digital elevation mapping and Differential Interferometric Synthetic Aperture Radar Study (DInSAR) studies, presented to Council in January 2018. Based on ICF’s water-balance approach, average sustainable yield was estimated to be between
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11,416 AFY to 13,722 AFY. The similarity of the sustainable yield estimates developed by Slade and ICF using different modeling methods provide a strong level of confidence that the City can use local groundwater resources in an ongoing manner into the future without negatively impacting the basin or creating overdraft conditions.
It should be noted that the estimates developed by Slade and ICF are conservative and do not include a sustainable yield estimate for the Crestal Sub-basin. In addition, all estimates of sustainable yield are transitory due to myriad associated climatic and hydrogeologic factors that are constantly in flux. The State legislature enacted the Sustainable Groundwater Management Act (Water Code sections 10720 et seq.)("SGMA"), which became effective on January 1, 2015. A portion of the 50-square mile Santa Monica Basin that underlies Santa Monica has been designated by the Department of Water Resources as a "medium-priority" groundwater basin. Any groundwater basin designated as medium-priority must be managed under a groundwater sustainability plan (“GSP”) adopted by a local groundwater sustainability agency and approved by the Department, by January 31, 2022. In light of SGMA, further analysis will be required to determine if future demand will exceed what could be sustainably pumped from the basin. If it is determined that the City’s plans to extract more groundwater is not supported in the approved draft of the GSP, then the City may be precluded from withdrawing groundwater in excess of the then-projected sustainable yield and the City would need to continue purchasing imported water from MWD to meet its potable water demand. The potential limitations on future groundwater withdrawals from the City’s active sub-basins indicate that the City’s approach of pursuing nonconventional resources, indirect potable reuse via aquifer recharge, additional water supply wells in the Coastal sub-basin, replacement of underperforming wells, increasing treatment efficiency at the Arcadia Water Treatment Plant, and continuing conservation efforts are necessary for the City to achieve and sustain its long-term objective of independence from imported water. Future updates of the SYA and numerical models will further refine the sustainable yield for the basin. Going forward, the City is planning to update the SYA approximately every two to three years. Future updates will include additional findings from work being conducted jointly with the US Geological Survey (USGS) and an ongoing climate stress test evaluation by the Rand Corporation. The
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City plans to produce groundwater within the upper limit of the estimated sustainable yield, while taking into consideration two irrigation pumpers in the Arcadia Sub-basin and one in the Crestal in addition to one diminutive residential irrigation well.
Summary of Proposed Plan to Achieve Water Self-Sufficiency The three components proposed in the SWMP will help the City achieve water selfsufficiency by 2023 and eliminate the City’s reliance on imported water purchases from the MWD. The projected makeup of the City’s water supply portfolio is summarized in Figure 5, and contribution from each component to the City’s total water supply is provided in Table 4. The location for each of the three components is provided in Figure 6, and the synergy and inter-relationship between each component is illustrated in Figure 7. Achieving water self-sufficiency through a diversified water supply portfolio also provides the City with greater cost control over water rates as compared to the continued purchase of imported water from the MWD. As noted previously, approximately 1 percent of the water supply would continue to be made up of imported water purchased from the MWD as periodic circulation is required to maintain the supply line as an emergency backup for the City.
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New Local
Groundwater
13%
Imported Water
(MWD)
1% Alternative Water
Supply - Purified
Water (Recharge)
Alternative
Water Supply -
Recycled Water
Alternative Water Supply -
Production Efficiency
Conservation
20%
Local Groundwater
47%
WATER SELF-SUFFICIENCY BY 2023
New Local Groundwater Imported Water (MWD)
Alternative Water Supply - Purified Water (Recharge) Alternative Water Supply - Recycled Water Alternative Water Supply - Production Efficiency Conservation Local Groundwater
Alternative
Water Supply
19%
Figure 5: A Sustainable and Drought Resilient Water Supply Portfolio Achieved through Self Sufficiency
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Table 4: Summary of Water Supply Contribution from Each Self-Sufficiency Component Water Self Sufficiency Component Estimated
Water Supply
Contribution
by 2023 (AFY)
%
Reduction
in Imported
Water
Estimated
$/AFY
Component 1 - Conservation
Optimal Conservation Plan 3,100 38% $708
Component 2 – Alternative Water Supplies
Recycled Water from SMURRF 560 7% $4201
Purified Water from SWIP to
Recharge Olympic Sub-basin
1,100 13% $1,0171
Increase Production Efficiency at
Arcadia WTP
1,200 15% $1,0711
Component 3 – New Local Groundwater Production
Arcadia WTP Expansion and
Resiliency Enhancement2
N/A N/A $7051
Olympic Sub-basin Restoration 2,100 26% N/A3
Subtotal 8,060 99%
Existing Water Resources
Existing Local Groundwater
(2023 projected costs)
7,330 $1,100
Imported Water from MWD
(to maintain for emergency use, 2023
projected costs)
170 $1,248
Subtotal 7,500
TOTAL WATER
RESOURCES (2023)
15,560
1Estimated year 1 cost when project is complete and includes savings from avoided imported water purchase cost
2Aracadia WTP upgrades to accommodate increase in production efficiency and Olympic Sub-basin Restoration
3Olympic Sub-basin Restoration will be paid for through settlement funds
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Packet Pg. 1025 Attachment: 2018 Sustainable Water Master Plan Update (6637 : Water Service Rates (10 mins)) 25 of 40 • Olympic Sub-Basin Restoration
• Recharge with SWIP
• Production Efficiency and Capacity
Expansion at Arcadia WTP
• Separate Olympic Pipeline +
New Treatment
• CBI Tank
• SWIP
Well Acquisition to
Enhance Resiliency
Figure 6: Project Locations of Proposed SWMP Component Toward Self-Sufficiency
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Figure 7: Synergy between Proposed Water Supply Components to Achieve Self-Sufficiency SWMP Cost Summary and Implementation Schedule
A cost summary for the proposed SWMP components to achieve self-sufficiency by 2023 is provided in Table 5. The funding required to complete the capital projects increasing local water supplies and enhance water supply resiliency is $38 million. A Five-Year Rate Study (2020-2024) is currently underway and will present funding solutions to cover these costs. It is projected that the components of the proposed SWMP may be funded primarily through the issuance of water revenue bonds (approximately $34.75 million), with the debt service on the bonds incorporated into water rates, and from a contribution from the Wastewater Fund (approximately $3.25 million). Staff will return to Council in spring 2019 for a rate study session. An additional $64 million from existing water-contamination settlement funds would be used for restoring the Olympic Sub-basin, which would allow additional water production from
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that sub-basin to support water self-sufficiency. The Olympic Sub-basin restoration cost includes an approximate, one-time $20 million capital expenditure for treatment systems and 30 years of ongoing operation and maintenance for an additional $20 million. Based on current modeling projections by ICF, over 80% of the Olympic Sub-basin will be remediated within the first 30 years; however, the Sub-basin may not be completely restored. Thus, the remaining balance in the settlement fund ($24 million) should be reserved to address any contamination that may still be present after 30 years or any new regulations that may impact use of the Olympic Sub-basin. A more detailed discussion on recommended budget appropriations is provided below.
Table 5: SWMP Cost Summary for Proposed Components to Achieve Self-Sufficiency Unfunded Projects Additional Cost
Arcadia WTP: Expand Capacity and Production Efficiency
Enhancement
$30M
Additional Well and Improvements: Increase Resiliency and Ground Water Production
$8M
Olympic Sub-basin Restoration, Capital Improvements and 30 years of Operations and Maintenance
$40M
Olympic Sub-basin Restoration Reliability Reserve $24M
Total: $102M
Implementing the SWMP and reaching water self-sufficiency by 2023 entails numerous capital projects that are interrelated. An overview of the proposed implementation schedule is provided in Figure 8. Several well projects (SM-8, SM-9 and injection well) were approved by Council on July 11, 2017 and on June 12, 2018 and are on track to be completed by 2021 (Attachments E and F, respectively). A portion of the projects are in the City of Los Angeles and require installation of pipelines. Construction and permitting of pipelines in the City of Los Angeles will take time and was considered in the schedule. The design, construction, and permitting of improvements at the Arcadia WTP, including efficiency upgrades, are expected to be completed in 2023 if procurement starts in December 2018. A schedule contingency of approximately six months has been included to account for unforeseen conditions or new regulations that could impact the plan implementation.
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Figure 8: Proposed Implementation Schedule to Achieve Self-Sufficiency by 2023 Alternatives to Water Self-Sufficiency
The proposed SWMP components summarized above are a considerable investment towards the City’s future resiliency and achieving water self-sufficiency by 2023. In consideration of the capital investment and impacts to water rates, staff has also evaluated potential alternatives to reduce capital expenditures to potentially provide relief to potential water rate increases (to be confirmed in the Five-Year Rate Study for 2020-2024). A summary of potential alternatives that may reduce upfront capital investment compared to the proposed water self-sufficiency plan is provided in Table 6.
The capital cost summarized in Table 6 for each alternative is the capital cost that needs to be funded and does not include the $64 million in settlement funds that will be used for the Olympic Sub-basin restoration. For all alternatives, it is assumed that the Olympic Sub-basin restoration will be implemented. A brief description on which component is implemented and its associated capital cost to be funded is provided.
Staff also considered delaying self-sufficiency goal to beyond 2023 and delaying capital expenditures to ease rate increase over the next five years. However, delaying implementation may result in increasing overall project cost due to inflation and negate
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any potential up front capital savings. The alternatives summarized in Table 6 only consider reduction in upfront capital cost and do not include projected increase of imported water purchase from MWD (estimated to be at 5% annual increase), which will ultimately be more expensive than locally produced water.
Table 6: Summary of Alternatives Considered for Self-Sufficiency Alt. No. Alternatives
Description
Capital
Cost3
Locally Sourced
Water +
Conservation
Imported
Water
Purchase
from MWD
Staff
Recommended
Plan
99% water selfsufficiency1 Component
1 - Conservation
Component 2 -
Alternative Water
Supplies Component 3 -
New Local Groundwater
$38M 11,730 AFY
(Existing Arcadia
WTP + Olympic)
3,100 AFY
(Conservation)
560 AFY
(Recycled
Water)2
170 AFY
1 87% water selfsufficiency1 Implement
only SWIP and Olympic
Sub-Basin Restoration.
Acquire new well to
enhance resiliency at
Arcadia WTP. No
expansion and
production efficiency
enhancements at Arcadia
WTP
$8M 9,900 AFY
(Existing Arcadia
WTP + Olympic)
3,100 AFY
(Conservation)
560 AFY
(Recycled
Water)2
2,000 AFY
2 90% water selfsufficiency1 Implement
SWIP, Olympic
restoration, and
expansion at Arcadia
WTP. No production
efficiency enhancements
at Arcadia WTP. Results
in loss and negative
impact to treatment
resiliency.
$21M 10,500 AFY
(Existing Arcadia
WTP + Olympic)
3,100 AFY
(Conservation)
560 AFY
(Recycled
Water)2
1,400 AFY
3 94% water selfsufficiency1 Implement
SWIP, Olympic
Restoration, expansion
$30M 10,900 AFY
(Arcadia WTP +
Olympic) 3,100
AFY
1,000 AFY
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and production efficiency
upgrades at Arcadia
WTP. Do not acquire a
new well to enhance
resiliency.
(Conservation)
560 AFY
(Recycled
Water)2
1Percentages are based on year 2023 projected demand. 2560AFY of recycled water to be available in 2023, but actual usage of full capacity may not be until 2040. 3Excluding Olympic Sub-Basin restoration cost, which is funded through settlement funds and SWIP capital costs as it is already funded through a low interest loan from the State of California.
The alternatives evaluated by staff are simply presented as scenarios to reduce capital expenditures over the next five years but does not provide a complete solution to achieve the City’s water self-sufficiency goal.
Funding Recommendations to Achieve Water Self-Sufficiency A financial analysis for the plan outlined in this report to achieve water self-sufficiency was conducted by staff. The financial analysis includes comparing the future cost of imported water to the projected cost of locally produced water over a 30-year period.
This analysis excluded the Olympic Sub-basin restoration costs, as the recommended funding source would be from groundwater settlement funds received by the City from outside sources to cover the costs for remediating the contaminants in that sub-basin. In summary, locally produced water from the recommended SWMP components outlined in this report is projected to cost between $400/AFY to $1,100/AFY, which is less than the expected cost to purchase imported water from the MWD at $1248/AFY in 2023.
Please refer to Table 5, presented previously, for a detailed breakdown on the cost per acre-foot for each local water supply component. A comparison of the projected cost differential between the purchase of imported water from the MWD and production of locally produced water is provided in Table 7. With locally produced water cheaper than imported water costs, the components outlined in the SWMP to achieve water selfsufficiency by 2023 are a positive investment toward the future of the City. Ratepayers will benefit from the implementation of these projects, thus keeping local water costs low compared to the ongoing cost increases for imported water. Not only does the proposed SWMP provide a sustainable and drought resilient water supply for the City, it would also benefit the ratepayers with greater control over future water rates compared with
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imported water rates that are projected to increase at a higher rate and are outside the City’s control.
Table 7: Future Estimated Imported Water Cost (increased at 5%) Compared to Projected Locally Produced Water Cost. Assuming Efficiency (CCRO) technology is installed and 2,800AFY is produced.
As noted previously, staff recommends a combination of bonding and use of settlement funds to fund the capital projects supporting water self-sufficiency and the Olympic Subbasin restoration.
Water Revenue Bond: A rate study is currently being conducted through October 2019 to set water and wastewater rates for calendar years 2020 to 2024. The rate study will address options to support the costs of this plan. A possible funding solution, to be confirmed in the rate study, is the issuing of a 30-year water revenue bond totaling approximately $34.75 million to increase local water supplies and enhance resiliency as outlined in the SWMP. The remaining $3.25 million would be contributed from the Wastewater Fund due to joint property use. The $34.75 million in bonds would cover new well acquisition, treatment capacity expansion and implementation of new
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technologies to enhance production efficiency at the Arcadia WTP, and other supporting infrastructure upgrades. The Water Fund would need to cover an annual payment of approximately $2.2 million over the next 30 years to fund the projects outlined in the SWMP. Assuming a bond is issued, Figure 9 illustrates projected annual savings from avoiding imported water purchases and estimated annual bond repayments. In year 2036, where the two lines cross, the City will start saving money for rate payers on an annual basis. This analysis assumes imported water cost from MWD will increase at an annual rate of 5%. The total money borrowed is estimated to be offset by cumulative savings in the year 2048.
Figure 9: City’s Projected Annual Savings due to Local Water Production in lieu of Import Water Purchases, compared to the Payments (debt service) for a 30 Year Bond.
Settlement Funds Usage - The current balance of Gillette/Boeing funds available to program is $64.1 million. This balance includes $11.1 million transferred and currently
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available in the Water Fund as authorized by Council on January 9, 2018 and $53.0 million in the General Fund. Staff recommends transferring $53.0 million from the General Fund to the Water Fund to be used to restore the Olympic Sub-basin.
Additionally, to satisfy the settlement agreement, Boeing still owes the City three payments totaling $11.0 million. Staff recommends depositing these funds directly into the Water Fund.
Approximately $20 million would be used to construct a new treatment facility to remove the contaminants currently present in the sub-basin and $20 million would be reserved for operation and maintenance costs of the treatment facility related to restoration of the Olympic Sub-basin over a 30-year period. Due to uncertainty with the Olympic Subbasin restoration after 30 years, staff recommends setting aside the remaining $24 million of Gillette/Boeing funds as a reliability reserve. The remaining $11.0 million that has been previously transferred to the Water Fund, is currently being used for groundwater modeling, monitoring, and reporting in support of Olympic Sub-basin remediation.
With the proposed injection of advanced purified water from the SWIP into the Olympic Sub-basin, staff will revisit this timeframe and report back to Council in the future once recharge operation begins.
Grants - Staff will identify and apply for state and/or federal grants to help offset the $38 million capital investment and return to Council in early 2019 with resolutions required for grant applications if available for the proposed projects. Staff has engaged a grant consultant to assist in the process. Grants being considered are:
MWD, Local Resources Program
California Department of Water Resources, Water Quality, Supply, and Infrastructure Improvement Act of 2014 (Proposition 1).
Previously Authorized Water Rate Increase
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On February 24, 2015, the City Council adopted Resolution Number 10867 (CCS) to authorize water rate increases over a five-year period, beginning March 1, 2015.
The five-year water increase schedule was adopted after Council’s consideration of a rate study conducted by Kennedy Jenks Consultants. Resolution Number 10867 (CCS) also contained a provision, giving Council flexibility to approve a suspension of each annual increase, in whole or part, beginning with the 9% scheduled increase for January 1, 2016. This resolution was adopted without a majority protest, following a noticed public hearing in accordance with Proposition 218. Since adoption of this resolution, Council has partially suspended the full increases authorized for 2016-2018, and instead approved 5% increases for each of those years due to:
Actual water sales revenues exceeded expectations during 2015 to 2017. Actual operating and capital expenditures lower than expected. Resulting savings were applied to conservation programs, water main replacements and partially suspending planned 9% annual rate increases to more modest 5% increases.
State of the Water Fund and Forthcoming 2019 Rate Adjustment Justification Staff will return to Council on January 8, 2019 for a public hearing and to obtain authorization for the full 9% water rate increase previously approved by Council on February 24, 2015 for calendar year 2019. If approved this would result in a monthly increase of $4.33 to average single-family customer. This is the final year of a five-year rate adjustment cycle approved via resolution as mentioned above.
A summary of rate increases from 2015 is provided in Table 8.
Table 8: Rate Increase History
Calendar
Year
2015 2016 2017 2018 2019
Effective Date March 1,
2015
January
1, 2016
January 1,
2017
January 1,
2018
January 1,
2019
Maximum
Authorized
Increase
9% 9% 9% 9% 9%
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Actual
Increase*
9% 5% 5% 5% 9%**
Date Actual
Increase
Authorized
February
24, 2015
February
23, 2016
November 22,
2016
January 9,
2018
**public
hearing on
January 8,
2019
The full implementation of the 9% previously authorized adjustment would be sufficient to allow the City to:
A) Deliver potable water to Santa Monica customers reliably, safely and sustainably in compliance with federal and state regulations.
B) Fund operating and capital budgets that are necessary to implement the City's self-sufficiency goals to encourage water conservation and sustainability, as contemplated in the City's 2014 water rate analysis.
C) Continue to implement infrastructure improvements associated with replacing aging existing infrastructure facilities comprised of water mainlines that are approaching the end of their useful lives.
The 9% rate increase would provide sufficient funding to complete the following capital projects as contemplated in the City's 2014 water rate analysis and to continue progress toward the City’s water self-sufficiency goal:
1. Additional capacity improvements, which include Preliminary Design for the Arcadia Treatment Capacity Expansion and Enhancement Project - $3.18 million in FY 2018-19. As noted in the prior section, the design would upgrade pumps, blowers, cartridge filters, and other equipment at the treatment plant to accommodate increased groundwater production and new technologies. The design would also incorporate a new process (CCRO) to increase overall plant efficiency to 90% or greater (as discussed previously under component 2 - alternative water supplies.
2. New Groundwater Resiliency Well - $6,825,000 in FY 2018-19 for acquisition of a new groundwater well to enhance resiliency. Also limit future exposure to imported water.
3. Water Main Replacement Cost Escalation - an increase of $2,000,000 starting in FY 19-20. The rate increase is necessary to fund the sharp increase observed in
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water main replacement construction costs. Water main contract awards in 2017 and 2018 have returned bids of $600 to $700 per linear foot in the current highcost construction environment. These costs have increased from a prior $400 per linear foot estimate. The budget was established at $4 million per year. However, staff is now estimating a need of $6 million per year to implement the recommended 100-year water main replacement cycle (2 miles replaced per year for the City’s 205-mile water main system. Maintaining a $4 million per year budget would only yield replacement of 1.1 to 1.25 miles of pipeline per year, thus increasing the replacement cycle from 100 years to approximately 160 to 190 years. Staff recommends staying on a 100-year replacement cycle to maintain operational reliably.
Council approval of the full 9% rate increase would also help fund the following ongoing operational expenditures:
1) Metropolitan Water District (MWD) of Southern California - $5 million per year from FY 2020-21 to FY 2022-23 (additional $8.7 million) to ensure sufficient funding for imported water deliveries prior to achieving water self-sufficiency. 2) City Yards Master Plan - Required contribution from the Water Fund for upgrades to City Yards - $4 million modeled, actual costs to be determined.
As noted above, staff will return to Council on January 8, 2019 with a recommendation that Council adopt the full 9% rate increase for calendar year 2019 as previously authorized in 2015. The staff report will include a detailed justification for the 9% rate increase as well as a 10-year fund forecast, cost comparison with other water agencies and an analysis of impacts to ratepayers.
Funding Summary
Table 9 provides a summary of funding recommendations to implement the SWMP. As noted above, staff also recommends that Council approve funding for three Capital Improvement Program (CIP) projects, which would commence in FY 2018-19:
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Arcadia Capacity Expansion and Enhancement Project, Preliminary Design ($3,180,000)
New Groundwater Resiliency Well ($6,825,000)
Olympic Wellfield Restoration Design ($1,800,000).
Table 9: Funding Summary
Settlement
Funds
Available for
current
remediation
and O&M for
next 30 years
Settlement
Funds
Available for
Future Reserve
(Olympic subbasin
Restoration)
Water
Bond
Amount
(pending
ongoing rate
study)
Est. Annual
Bond Payment
(30 yrs):
$40 million $24 million $34.75 million $2.2 million
Task Force on the Environment and Water Advisory Committee Actions Findings of the Sustainable Yield Analysis, Sustainable Water Master Plan Update and proposed projects, cost and schedules were presented to the Task Force on the Environment on March 19, June 18, and October 15 and to the Task Force on the Environment Water Subcommittee on November 19, 2018. Similar updates were presented to the Water Advisory Committee on March 5, May 7, June 4, September 5 and November 5, 2018.
Rate Adjustment recommendations were presented to the Water Advisory Committee on November 5, 2018 and at a Task Force on the Environment Water Subcommittee on November 19, 2018. The Water Subcommittee strongly supports the Sustainable Water Master Plan Update and staff’s recommendations.
Financial Impacts and Budget Actions
Approval of the recommended action requires the following:
1. Appropriations to the FY 2018-19 Capital Improvement Program in the Water Fund:
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Packet Pg. 1038 Attachment: 2018 Sustainable Water Master Plan Update (6637 : Water Service Rates (10 mins)) 38 of 40
Account Number Amount
C5007740.689000 - Arcadia Capacity Expansion and
Enhancement Project, Preliminary Design
$3,180,000
C5007750.689000 - Olympic Wellfield Restoration Design $1,800,000 C5007760.689000 - New Groundwater Resiliency Well $3,575,000 Total $8,555,000
2. An appropriation to the FY 2018-19 Capital Improvement Program in the Wastewater Fund
C5107760.689000 - New Groundwater Resiliency Well, Property Joint Use.
$3,250,000
Total $3,250,000
3. $53 million cash transfer of Gillette/Boeing settlement funds from the General Fund to the Water Fund and the corresponding release of the remaining fund balance in General Fund account 1.380237. The cash will be recorded in an interest earning restricted cash account in the Water Fund, Olympic Wellfield Remediation account 50.102442.
4. Transfer of two remediation capital projects, appropriated in previous fiscal years and funded with Gillette/Boeing funds, from the General Fund to the Water Fund to consolidate all budgeted Olympic restoration projects in the Water Fund.
General Fund Account Number Proposed Water Fund
Account
Amount
C019045.589000 Olympic Sub-basin
Remediation
C5005880.689000 $1,909,732
C019067.589000 Olympic Sub-basin Well
Hydrology
C5006050.689000 $1,946,407
5. The following budget items related to Gillette/Boeing water mediation settlement funds were previously taken by Council:
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On January 9, 2018, Council authorized staff to make an $11,100,000 transfer of Gillette/Boeing settlement funds from the General Fund to the Water Fund for ongoing and future remediation costs associated with polluted groundwater in the Olympic Wellfield (Attachment B). Staff transferred these funds to account 25695.570080 in FY 2017-18.
On June 12, 2018, Council approved a FY 2018-19 transfer of $2,300,000 of Gillette/Boeing water mediation settlement funds from the General Fund to the Water Fund (Attachment F). This transfer was to fund the projects for the Olympic Wellfield remediation appropriated in the FY 2018-19 Capital Improvement Program.
Account Number Amount
C5007460.689410 City / USGS Monitoring Well & Numerical Flow Model
$1,800,000
C5007260.689410 Redrill Santa Monica Well #3 $500,000
Total $2,300,000
6. Future Gillette/Boeing settlement funds are to be deposited in the Water Fund, and a corresponding receivable shall be established. The liability associated with current and future pollution remediation utilizing Gillette/Boeing funds will be recorded in the Water Fund.
Prepared By: Alex Nazarchuk, Interim Water Resources Manager Approved Forwarded to Council
Attachments:
A. October 28, 2014 Staff Report (Web Link)
B. January 9, 2018 Staff Report
C. Summary of Water Self-Sufficiency Scenarios to Expand Groundwater Production
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D. Updated Preliminary Sustainable Yield Analysis
E. July 11, 2017 Staff Report (Web Link)
F. June 12, 2018 Staff Report (Web Link)
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Packet Pg. 1041 Attachment: 2018 Sustainable Water Master Plan Update (6637 : Water Service Rates (10 mins)) Item 12-A
June 10, 2025
Item 12-A
June 10, 2025
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Packet Pg. 1042 Attachment: Written Comments [Revision 1] (6637 : Water Service Rates (10 mins)) 1 David Yakobson
From: Bonnie Johnstone <[email protected]>
Sent: Sunday, June 8, 2025 11:32 PM
To: councilmtgitems
Subject: re : water rate inreases
EXTERNAL
Please do not increase water rates so much!! The (proposed) rates of increase are going to end up hurting everyone!! If they must be increased, approve only small, gradual increases Thank you, Bonnie Johnstone
Item 12-A
June 10, 2025
Item 12-A
June 10, 2025
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Packet Pg. 1043 Attachment: Written Comments [Revision 1] (6637 : Water Service Rates (10 mins)) 12A. Public Hearing
Water Rate Adjustment
6/10/2025
Item 12-A
June 10, 2025
Item 12-A
June 10, 2025
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Packet Pg. 1044 Attachment: PowerPoint Presentation [Revision 1] (6637 : Water Service Rates (10 mins)) Rate Study Schedule
Public
Engagement
September
2024
March 25,
2025
April 11,
2025
March 17,
2025
June 10,
2025
Council Study
Session
Rate Study
Report + Prop
218 Notice
Sustainability
Commission
Council Rate
Adoption Hearing
July 1,
2025
New Rates
in Effect
Study
Kick-Off
• Neighborhood Groups
• General Public Meetings in May
• Downtown Santa Monica + Chamber of Commerce
September 1,
2025
First Utility Bill
w/New Rates
Item 12-A
June 10, 2025
Item 12-A
June 10, 2025
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Packet Pg. 1045 Attachment: PowerPoint Presentation [Revision 1] (6637 : Water Service Rates (10 mins)) Proposed Water Rate Adjustment • Maintain Funding for routine CIP Projects and Replace Aging Infrastructure
• Keep Pace with Inflation for Day-to-Day Operations
• Rehabilitate Reservoirs and Replace Water Operations
Center/Water Quality Lab • Emergency Preparedness • Resilient Water Storage • Reliable Operations and Water Delivery • Ability to Meet Peak Water Demands in the City • Proposed Five-Year Rate Increase of 20%, 16%, 9%, 9%, and 6% • Increases in Year 1 and 2 are to Replenish Reserves and Raise Matching Funds to Rehabilitate Reservoirs Item 12-A
June 10, 2025
Item 12-A
June 10, 2025
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Packet Pg. 1046 Attachment: PowerPoint Presentation [Revision 1] (6637 : Water Service Rates (10 mins)) Recommended City Council Action
1. Hold a public hearing for the proposed five-year water rate adjustment
2. Adopt finding of CEQA Categorical Exemption pursuant to Section 15273
3. Receive public comments pursuant to Proposition 218 requirements
4. Consider all protests against the proposed water rate adjustments that have been submitted in accordance with Proposition 218
5. Adopting the resolution establishing five-year schedule of water rate adjustments to go into effect July 1, 2025
Item 12-A
June 10, 2025
Item 12-A
June 10, 2025
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Packet Pg. 1047 Attachment: PowerPoint Presentation [Revision 1] (6637 : Water Service Rates (10 mins)) THANK YOU…
Item 12-A
June 10, 2025
Item 12-A
June 10, 2025
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Packet Pg. 1048 Attachment: PowerPoint Presentation [Revision 1] (6637 : Water Service Rates (10 mins)) Comparison of Water Bills (Single Family Residential)
$115 $123
$167
$186 $190 $189
$211
$268
$308
$372
$229
$-
$50
$100
$150
$200
$250
$300
$350
$400
Torrance El Segundo Glendale Burbank Santa
Monica
Long Beach Pasadena Culver City LADWP Beverly
Hills
Typical Bi-monthly Water Bill
Current Rates Proposed 7/1/2025
Item 12-A
June 10, 2025
Item 12-A
June 10, 2025
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Packet Pg. 1049 Attachment: PowerPoint Presentation [Revision 1] (6637 : Water Service Rates (10 mins)) Comparison of Water Bills (Multi Family Residential)
$266 $267
$318 $322 $340
$406
$506
$592
$644 $650
$505
$-
$100
$200
$300
$400
$500
$600
$700
Torrance El Segundo Glendale Burbank Long Beach Santa
Monica
Pasadena Beverly
Hills
Culver City LADWP
Typical Bi-monthly Water Bill
Current Rates Proposed 7/1/25
One hundred cubic feet (HCF) of water = 748 gallons.
Item 12-A
June 10, 2025
Item 12-A
June 10, 2025
12.A.h
Packet Pg. 1050 Attachment: PowerPoint Presentation [Revision 1] (6637 : Water Service Rates (10 mins)) Comparison of Water Bills (Typical Commercial)
$472 $498 $519
$576 $589
$640
$822
$702
$961
$1,230
$884
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
Burbank El Segundo Torrance Glendale Long Beach Pasadena Beverly Hills
Santa
Monica
LADWP Culver City
Typical Bi-monthly Water Bill
Avg Commercial Proposed 7/1/25
One hundred cubic feet (HCF) of water = 748 gallons.
Item 12-A
June 10, 2025
Item 12-A
June 10, 2025
12.A.h
Packet Pg. 1051 Attachment: PowerPoint Presentation [Revision 1] (6637 : Water Service Rates (10 mins)) Comparison of Water Bills (Commercial - Retail)
$46
$59 $64
$81
$105 $107 $109
$83
$134
$284
$111
$-
$50
$100
$150
$200
$250
$300
Torrance LADWP Burbank El Segundo Beverly
Hills
Long Beach Glendale Santa
Monica
Pasadena Culver City
Typical Bi-monthly Water Bill
Small Commercial Proposed 7/1/25
One hundred cubic feet (HCF) of water = 748 gallons.
Item 12-A
June 10, 2025
Item 12-A
June 10, 2025
12.A.h
Packet Pg. 1052 Attachment: PowerPoint Presentation [Revision 1] (6637 : Water Service Rates (10 mins)) City Council
Report
City Council Meeting: June 10, 2025
Agenda Item: 12.B
1 of 9
To: Mayor and City Council
From: Rick Valte, Public Works Director, Public Works, Water Resources Subject: Public Hearing and Adoption of a Resolution Establishing Scheduled FiveYear Wastewater Rate Adjustments Recommended Action
Staff recommends that the City Council:
1. Hold a public hearing for the proposed five-year sewer rate adjustment;
2. Adopt a finding of Categorical Exemption pursuant to Section 15273 of the CEQA Guidelines for the five-year sewer rate adjustment public hearing;
3. Receive public comments pursuant to Proposition 218 requirements;
4. Consider all protests against the proposed sewer rate adjustments that have been submitted in accordance with Proposition 218; and
5. Adopt the attached resolution establishing five-year schedule of sewer rate adjustments to go into effect July 1, 2025.
Summary
The City of Santa Monica continues to be a recognized leader in the world for its innovative water infrastructure projects and environmental policies aimed to provide a resilient, reliable and sustainable water supply. The City’s Public Works Department – Water Resources Division provides drinking water, wastewater collection, and recycled water services to residents, commercial, and institutional customers throughout the City.
These services are funded through self-sustaining Water and Wastewater Enterprise Funds that are separate from the City’s General Fund. The Water and Wastewater Enterprise Funds are evaluated every five years to ensure that sufficient funding is available to: 1) supply high-quality drinking water for potable use, 2) maintain routine operation and maintenance of the water distribution and wastewater collection infrastructure, 3) implement capital improvement program (CIP) projects for system
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resiliency and reliability, 4) advance sustainable water management efforts (e.g., water conservation and sustainable groundwater management) and 5) comply with Proposition 218 requirements to ensure cost of services are properly allocated amongst user classifications and rate tiers. The City Council has consistently taken a strategic approach to setting future water and wastewater rates that balance a concern for keeping costs affordable to the community while adequately investing in long-term water quality, reliability, resiliency, and sustainability.
The Water and Sewer Rate Study Report recommends a 7 percent increase for Fiscal Year (FY) 2025-26, 7 percent increase for FY 2026-27, 7 percent increase for FY 2027- 28, 6 percent increase for FY 2028-29, and 6 percent increase for FY 2029-30 for the Wastewater Enterprise Fund. The recommendation also includes implementing a 20 percent fixed charge and 80 percent commodity charge structure as well as adjusting the rate tiers and tier thresholds to reflect the current cost of service. In addition, staff also recommends adopting the drought rate structure and maintaining the low-income assistance program. The estimated average increase for each major customer class bimonthly sewer charges of the total utility bill per year is listed below. • Single Family Homes - an estimated $8 increase for an average single-family home bimonthly bill, or roughly $4 per month, each year over five years. • Multi-Family Units - an estimated $18 increase on the bi-monthly bill for an average 8-unit multifamily residential building, which represents an approximate monthly increase of $1 per unit, each year over five years. • Commercial - an estimated $31 increase for an average commercial building’s bimonthly bill each year over five years.
Due to the legal requirements of Proposition 218 to appeal or protest rate increases, the individual Water and Wastewater rate studies are being presented in separate public hearings and require separate action by Council. Proposition 218 notices (Attachment B) were mailed out the week of April 14, 2025, to inform all affected property owners of the proposed rate increases. Staff have also conducted in-person outreach to
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neighborhood groups, held general outreach meetings and to members of the business community to solicit feedback and provide education. Staff recommends City Council to hold a public hearing, receive public comments, consider any protests against the proposed sewer rate adjustment, and adopt the resolution (Attachment C) to establish the five-year schedule of sewer rate adjustments.
Background
The Water and Wastewater Rate Study will establish the basis to set the water and wastewater rates for FY 2025-26 through 2029-30 in compliance with Proposition 218 requirements. Proposition 218 stipulates, among other things, that charges for water and wastewater services must not exceed the proportional cost of the service attributable to each parcel or customer. Staff has worked closely with a rate consultant, NBS, to establish the cost of service that is in compliance with Prop 218 requirements.
The rate study included a review of the following to set the water and wastewater rate structure:
• Operating and capital revenue requirements for the City’s Water and Wastewater enterprise funds over a five-year period, FY 2025-26 through FY 2029-30; • Fund reserves, maintain AAA bond rating/capacity, and cover current and future debt obligations;
• Water and sewer rates / structure – adjusting the fixed-service charge component, tiered rates, number of tiers, usage allocations by tier, and customer class designations (e.g., residential, commercial);
• Affordability of rates including low-income discounts / rates for purposes of determining the level of subsidy from non-rate payer funds (e.g., City’s general fund);
• Cost of service for each rate/fee/charge by customer class, meter size and tier; • Impact of proposed changes versus existing rates;
• Funding for capital improvement program projects (e.g., system resiliency projects including rehabilitating the City’s four potable water storage reservoirs); and
• Other related factors as identified by the public, City Council, advisory groups
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and staff as part of the rate study outreach process.
The consultant’s financial analysis considered the cost of service to operate the system, produce and distribute high-quality drinking water, replace and upgrade existing facilities, implement routine capital improvement projects, and fund one-time CIP projects that will maintain infrastructure reliability and resiliency. The financial analysis for the water and wastewater enterprise funds are broken down into three key components:
1. Expenditures, broken down into three categories:
a. Operating & Maintenance (O&M) - Salaries and benefits of Water Resources staff (current and future to support expanded operations from water self-sufficiency projects added in the prior five-year rate study period) as well as all the supplies, contracted services, and sustainability programs to maintain reliable wastewater collection services for the community. The O&M expenditure also includes debt service taken on to fund water self-sufficiency projects from the prior rate study period (e.g., $55 million State Revolving Fund loan in the wastewater fund). O&M expenditures typically account for approximately 70-75% of the total wastewater fund expenditures.
b. Routine Capital Projects - Replace aging sewer mains, upgrade software infrastructure and facilities to function efficiently, reliably, and meet industry standards. Routine capital projects typically account for approximately 20-25% of the total wastewater fund expenditures.
2. Revenues - the primary source of revenue generated by the established water and sewer rates.
3. Reserves - to ensure continuity of water and wastewater service due to unforeseen events. The water and wastewater enterprise fund’s current reserve policy includes:
a. Capital Rehabilitation and Replacement Reserve = 3% of capital assets. b. Operating Reserve = maintain minimum of 60 days of operating budget and target a 90-day operating reserve.
c. Rate Stabilization Reserve = intended for unexpected decrease in
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revenues or increase in expenditures (e.g., higher than forecasted increase for charges from regional wastewater collection/treatment provider). A rate stabilization reserve of $1 million has been set by City Council previously.
Discussion
Wastewater Enterprise Fund
The City provides wastewater service through operation and maintenance of an extensive wastewater collection system as well as advanced treated recycled water through the Sustainable Water Infrastructure Project (SWIP). The City is one of 28 agencies that contracts with the City of Los Angeles for wastewater treatment services provided at the City of Los Angeles’ Hyperion Treatment plant. Under the terms of the agreement with the City of Los Angeles, the City pays a proportionate share of the operations and maintenance expenses as well as capital charges for the Hyperion treatment and collection system. Payment to the City of Los Angeles for treatment typically accounts for 30% to 50% of the Wastewater Fund’s annual budget. Similar to the Water Enterprise Fund, the Wastewater Enterprise Fund also experienced a total revenue shortfall of approximately $12 million. Revenue targets were met in FY 2022-23 due to the $4 million in principal forgiveness from the low interest State Revolving Fund loan provided by the State of California to finance the construction cost for SWIP. In addition, revenues for FY 2024-25 are forecasted to have a shortfall of nearly $3.4 million. Expenditures for both operation and construction during and post pandemic have also exceeded original projections due to higher than anticipated market inflation rates caused by supply chain shortages and increases in raw material costs.
Staff was still able to deliver on local water supply projects despite the revenue shortfalls and high market escalation rates experienced over the past five years. In particular, the wastewater fund, with support from the City’s stormwater fund, was able to deliver the award winning SWIP that captures stormwater, urban runoff, and municipal wastewater to produce purified water for non-potable (e.g., irrigation) and potable reuse (groundwater recharge). Staff was able to bridge the funding gap by securing a $8.77 million grant from the State Water Resources Control Board
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Proposition 1 Stormwater grant, $7.5 million grant from the Los Angeles County Measure W Safe Clean Water Program, and a $55 million low interest loan from the State Water Resources Control Board Clean Water State Revolving Fund.
For the current five-year rate cycle (FY 2025-26 through FY 2029-30), the recommended rate adjustment for the wastewater fund aims to keep pace with market escalation rates over the five-year period at 7% for FY 2025-26, 7% for FY 2026-27, 7% for FY 2027-28, 6% for FY 2028-29, and 6% for FY 2029-30. The wastewater fund is not expected to fund any major one-time capital projects during the current rate study period and will fund primarily routine capital projects to maintain existing wastewater infrastructure. There are two one-time projects that are listed under the wastewater fund but are reimbursed by the City of Los Angeles: the Moss Avenue Pump Station Improvements and the Santa Monica Urban Runoff Recycling Facility (SMURRF) Upgrades. The Moss Avenue Pump Station Improvements project is a part of City of Los Angeles’ Amalgamated System for wastewater collection, and cost associated with the project is 100% reimbursed by the City of Los Angeles. Upgrades at the SMURRF is a 50/50 cost share with the City of Los Angeles as the facility reduces pollution from dry weather urban runoff from the watershed and in the ocean.
Low Income Provision
The current and proposed rate structure includes a low-income provision where the wastewater rate for qualified single-family, low-income customers is discounted. On February 24, 2015, Council approved a discount rate of $1 per hundred cubic feet (HCF) for the first wastewater tier. Low-income customers qualify for the discount by providing evidence of enrollment in the low-income program offered by Southern California Edison or the Southern California Gas Company.
Cost of service requirements under Proposition 218 require that the discount provided to qualified low-income customers be covered by the City’s General Fund in order to avoid it being subsidized by other ratepayers. The average annual General Fund transfer to the Wastewater Fund has historically been around $50,000 per year and, most recently, approximately $104,000 for FY 2023-2024, benefiting over 360 customer
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accounts. Staff recommends funding low-income customers at the same levels.
Community Outreach
Throughout the rate study period, staff presented at the City’s neighborhood groups, civic/business groups and one open house event to educate the community about the rate study and potential impacts of rate adjustments, and answer questions about the rate study.
In addition to input received from City Council during the March 25, 2025 Study Session, staff also solicited feedback from the Commission on Sustainability, Environmental Justice, and the Environment on March 17, 2025, where the recommended rate increase was supported by the Commission.
A public hearing is required as part of the Proposition 218 process to allow the community to provide comments, the City Clerk to tally Proposition 218 protests received, and the Council to vote on the recommended rate increases. Separate public hearings are being held for the Water and Wastewater Funds to comply with Proposition 218 requirements. Proposition 218 notices (Attachment B) were mailed out the week of April 14, 2025 to inform all affected property owners of the proposed rate increases. The Proposition 218 notices include a summary of the new rate and tier structures Environmental Review
The City’s water and wastewater rate study is categorically exempt from CEQA pursuant to Section 15273 of the CEQA Guidelines, which states that CEQA does not apply to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, and other charges by public agencies which the public agency finds are for the purpose of meeting operating expenses, purchasing for leasing supplies, equipment, or materials, meeting financial reserve needs and requirements, and obtaining funds for capital projects, necessary to maintain service within existing service areas.” The intent of the rate study is to adjust water and wastewater rates to maintain system reliability and resiliency while ensuring the rates are proportional to the cost of service provided to each parcel or customer. Therefore, adjustment of rates is exempt
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from CEQA.
Past Council Actions
Meeting Date Description
May 14, 2024
(Attachment E)
Award Professional Services Contract to NBS Government
Finance Group, dba NBS, to Analyze the Existing
Water/Wastewater Rate Structure and Establish a New Five-Year Rate Structure for Potable Water, Recycled Water, and
Wastewater Commodity Charges; Fire Line Rates; and Capital Facility Fee for Calendar Years 2025 to 2029
March 25, 2025
(Attachment F)
Five-Year Water and Wastewater Rate Study Session
Financial Impacts and Budget Actions
The recommended rate increases in the Water and Sewer Rate Study will provide the necessary revenue to deliver reliable wastewater services to the community, maintain a modern and reliable water system, and invest in reliability and resiliency. The proposed rate increases over the next five years (FY2025-26 through FY2029-30) would allow the Wastewater enterprise fund to collect sufficient revenues to meet the projected operating expenditures, maintain adequate fund reserve levels, and replace aging infrastructure. Revenues from the rate changes are incorporated in the FY 2025-27 Proposed Biennial Budget, pending adoption, and the Wastewater Fund’s five-year forecast.
Prepared By: Sunny Wang, Water Resources Manager
Approved Forwarded to Council
Attachments:
A. Santa Monica Water and Sewer Rate Study Report
B. Prop 218 Notices
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C. PW - Resolution - Wastewater Service Rates
D. Award Professional Services Contract to NBS Government Finance Group, dba NBS (Web Link)
E. Five-Year Water and Wastewater Rate Study Session (Web Link) F. PowerPoint Presentation
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nbsgov.com
Water, Sewer and Recycled Water Rate Study Report
Draft Final Report
May 2025
12.B.a
Packet Pg. 1062 Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service Rates (5 min))
TABLE OF CONTENTS
1. Introduction ..................................................................................................................... 1
1.1 Purpose................................................................................................................... 1
1.2 Overview of the Study ............................................................................................ 1
2. Water Rate Study ............................................................................................................. 6
2.1 Key Water Rate Study Issues................................................................................... 6
2.2 Financial Plan / Water Utility Revenue Requirements............................................ 6
2.3 Capital Improvement Program and Financing....................................................... 10
2.4 Cost-of-Service Analysis........................................................................................ 10
2.4.1 Costs Allocated to Customer Classes.......................................................................... 14
2.5 Current vs. Proposed Water Rate Structures........................................................ 18
2.6 Drought Rate Analysis........................................................................................... 22
3. Sewer Rate Study ........................................................................................................... 24
3.1 Key Sewer Rate Study Considerations................................................................... 24
3.2 Financial Plan / Sewer Utility Revenue Requirements .......................................... 25
3.3 Characteristics of Sewer Customers by Class........................................................ 28
3.4 Rate Design Analysis............................................................................................. 30
3.4.1 Fixed Charges.............................................................................................................. 30
3.4.2 Variable Charges......................................................................................................... 31
3.5 Current and Proposed Wastewater Rates............................................................. 31
4. Recommendations and Next Steps ................................................................................. 33
4.1 Consultant Recommendations.............................................................................. 33
4.2 Next steps............................................................................................................. 33
4.3 NBS’ Principal Assumptions and Considerations................................................... 33 Technical Appendices ............................................................................................................ 34 Appendix A. Water Rate Study Tables and Figures................................................................. 35 Appendix B. Sewer Rate Study Tables and Figures................................................................. 36
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Packet Pg. 1063 Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service Rates (5 min))
TABLE OF FIGURES
Figure 1. Primary Components of a Rate Study.................................................................................................. 2 Figure 2. Summary of Water Revenue Requirements........................................................................................ 9 Figure 3. Summary of Water Reserve Funds...................................................................................................... 9 Figure 4. Allocation Percentages of Revenue Requirements........................................................................... 12 Figure 5. Single Family Meter Size Characteristics........................................................................................... 13 Figure 6. Water Consumption by Customer Class............................................................................................ 13 Figure 7. Capacity Factors by Customer Class.................................................................................................. 14 Figure 8. Number of Meters by Customer Class............................................................................................... 14 Figure 9. Cost Allocation Methodology ............................................................................................................ 15 Figure 10. Capacity Related Costs (fixed share), Customer & Fire Protection Costs Allocation ...................... 16 Figure 11. Meter Equivalency Factors.............................................................................................................. 17 Figure 12. Volumetric Related Costs Allocation ............................................................................................... 17 Figure 13. Summary of Proposed Tier Breakpoints.......................................................................................... 18 Figure 14. Calculation of FY 2025/26 Standard Fixed Meter Charges for SFR Customers ............................... 20 Figure 15. Calculation of FY 2025/26 Standard Fixed Meter Charges for non-SFR Customers........................ 20 Figure 16. Calculation of FY 2025/26 Private Fire Protection Meter Fixed Charges........................................ 20 Figure 17. Calculated Variable Charges for FY 2025/26 ................................................................................... 21 Figure 18. Current and Proposed Water Rates ................................................................................................ 22 Figure 19. FY 2025/26 Calculation of Commodity Costs at Various Levels of Conservation............................ 23 Figure 20. Proposed Drought Rates.................................................................................................................. 23 Figure 21. Summary of Revenue Requirements............................................................................................... 26 Figure 22. Summary of Sewer Reserve Funds.................................................................................................. 28 Figure 23. Development of the Volume Allocation Factor and Discharge Factors .......................................... 29 Figure 24. Development of the Strength Allocation Factor ............................................................................. 29 Figure 25. Development of the Customer Allocation Factor............................................................................ 30 Figure 26. Development of Fixed and Variable Charges .................................................................................. 31 Figure 27. Proposed Wastewater Rates – Fixed Charges................................................................................. 32 Figure 28. Proposed Wastewater Rates – Volumetric Charges........................................................................ 32 Figure 29. Proposed Recycled Water Rates – Volumetric Charges.................................................................. 32
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Packet Pg. 1064 Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service Rates (5 min)) Water and Sewer Rate Study – City of Santa Monica
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1. Introduction
1.1 Purpose
The City of Santa Monica (City) retained NBS to conduct a comprehensive water and sewer rate study (Study) for its water and sewer enterprise funds. The City had several objectives and goals in mind for this study including meeting revenue requirements to maintain reliable water and sewer services, reviewing the rising costs of providing water and sewer services to the community, funding capital improvements to maintain a reliable and resilient infrastructure and changes in costs, and complying with certain legal requirements (e.g., California Constitution Article XIII D, Section 6, which is commonly referred to as Proposition 218 [Prop 218]). The City’s broader objectives in this study include ensuring adequate funding for operating and capital costs, maintaining reasonable reserves, and ensuring revenue stability in utility rates. The rates resulting from this study were developed in a manner that is consistent with industry standard cost-of-service principles. In addition to documenting the rate study methodology, this report is provided with the intent to assist the City in its continuing effort to maintain transparent communications with the residents and community it serves.
Throughout the course of the rate study, NBS worked cooperatively with City staff in developing rate alternatives. Based on input from City Staff, NBS has recommended the water and sewer rates proposed in this study. The purpose of this report is to summarize NBS’ findings resulting from the water, sewer and recycled water rate study. Appendices are included for the purpose of further documenting the analysis and results, and includes the Financial Plan, Cost-of-Service Analysis and Rate Design Tables for the water and sewer utilities, respectively.
1.2 Overview of the Study
Comprehensive rate studies, such as this one, typically include three components: (1) preparation of a financial plan that identifies the net revenue requirements for the utility; (2) analysis of the cost to serve each customer class, and (3) the rate structure design. These steps are shown in Figure 1 and are intended to follow industry standards and reflect the fundamental principles of cost-of-service rate making embodied in the American Water Works Association’s (AWWA) Principles of Water Rates, Fees, and Charges, 1 also
referred to as Manual M1, and the Water Environment Federation’s Financing and Charges for Wastewater Systems (Manual of Practice No. 27).2
Rate studies also address requirements under Prop 218 that rates not exceed the cost of providing the service and be proportionate to the cost of providing service for all customers. In terms of the chronology of the study, the three steps shown in Figure 1 represent the order in which they were performed. 1 Principles of Water Rates, Fees, and Charges, Manual of Water Supply Practices, Manual M1, American Water Works Association (AWWA), 7
th Edition, 2017.
2 Financing and Charges for Wastewater Systems, Manual of Practice No. 27, Water Environment Federation, Fourth Edition, 2018.
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Figure 1. Primary Components of a Rate Study
1 FINANCIAL
PLAN 2
COST-OFSERVICE
ANALYSIS
3 RATE DESIGN
ANALYSIS
Compares current sources and
uses of funds and determines the
revenue needed from rates and
projects rate adjustments.
Proportionally allocates revenue
requirements to the customer
classes in compliance with industry
standards and State Law.
Considers the rate structure that
best meets the City’s need to collect
rate revenue from various types of
customers.
As a part of this rate study, NBS projected revenues, expenditures, and net revenue requirements, performed cost-of-service rate analyses, and recommended new utility rates. Rate increases -- or more accurately, increases in the total revenue collected from rates -- are recommended for both the water and sewer utilities. The following sections in this report present an overview of the methodologies, assumptions, and data used along with the financial plan and rates developed during this study. Detailed tables and figures documenting the development of the proposed rates are provided in the Appendices.
The City provided NBS with the data necessary to conduct the study, including historical, current, and projected revenues and expenditures, number of customer accounts, and water consumption data along with other operational and capital cost information.
FINANCIAL PLAN
As a part of the rate study, NBS projected revenues and expenditures on a cash-flow basis for the next five (5) years. The amount of rate revenue required, that will allow reserves to be maintained at the recommended levels, is known as the net revenue requirement. As current rate revenue falls short of the net revenue requirement, rate adjustments – or more accurately, adjustments in the total revenue collected from rates – are recommended. This report presents an overview of the methodologies, assumptions, and data used along with the financial plan and proposed rates developed in this study.3
COST-OF-SERVICE ANALYSIS
The basic purpose of the cost-of-service analysis (COSA) is to fairly and equitably allocate costs to customer classes. The cost-of-service analysis consists of two major components: (1) the classification of expenses, and (2) the allocation of costs to customer classes. For example, a key task is the “classification” of the water revenue requirements into the following categories:
• Commodity related costs
• Groundwater related costs
• Purchased water related costs
3 The complete financial plans are available in the Appendix A and Appendix B.
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• Conservation related costs
• Capacity related costs
• Customer-service related costs
• Fire protection related costs
For the sewer utility, the normal classification of sewer revenue requirements uses the following categories:
• Flow-related costs
• Strength related costs
• Customer-service related costs
Further details are discussed below and documented in Appendix A and Appendix B.
RATE DESIGN ANALYSIS
During the rate design phase of the study, NBS and City staff worked together to develop rate alternatives that will meet the City’s objectives. It is important for the City to send proper price signals to its customers about the actual cost of providing service. This objective is typically addressed through both the magnitude of the rate adjustments and the rate structure design. In other words, both the amount of revenue collected and the way in which the revenue is collected from customers are important.
Several criteria are typically considered in setting rates and developing sound rate structures. The fundamentals of this process have been well documented in several rate-setting manuals, such as AWWA’s Manual M1. The foundation for evaluating rate structures is generally credited to James C. Bonbright in Principles of Public Utility Rates,
4 which outlines pricing policies, theories, and economic concepts along with various rate designs. The following is a simplified list of the attributes of a sound rate structure:
• Rates should be easy to understand from the customer’s perspective. • Rates should be easy to administer from the utility’s perspective. • Rates should be equitable and non-discriminating (i.e., cost-based). • Rates should promote the efficient allocation of the resource. • There should be continuity in the rate making philosophy over time. • Rates should address other utility policies (e.g., conservation and economic development). • Rates should provide month-to-month and year-to-year revenue stability.
RATE STRUCTURE TERMINOLOGY
This section covers basic rate design criteria that NBS and City staff considered as a part of their review of the rate structure alternatives. One of the most fundamental points in considering rate structures is the relationship between fixed and variable costs. Fixed costs, such as debt service and personnel costs, typically do not vary with the amount of water consumed. In contrast, variable costs, such as the cost of purchased water, chemicals, and electricity, tend to change with the quantity of water sold. Most rate structures contain a fixed, or minimum, charge in combination with a volumetric charge. 4 James C. Bonbright, Albert L. Danielsen, and David R. Kamerschen, Principles of Public Utility Rates, Arlington, VA: Public Utilities Report, Inc., Second Edition, 1988, pp. 383-384.
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Fixed Charges – Fixed charges can be called base charges, minimum monthly charges, customer charges, fixed meter charges, etc. Fixed charges for water utilities are typically based on meter size. For example, a customer with a 2" meter may have a fixed meter charge that is four to five times greater than a 3/4” meter charge based on the meter’s safe operating capacity5. Because a large portion of water utilities’ costs are typically related to meeting capacity requirements, reflecting individual demands for capacity is an important factor in establishing rates for customers.
Volumetric (Consumption-Based) Charges – In contrast, variable costs such as the cost of electricity used in pumping water and chemicals for treatment tend to change with the quantity of water produced or the purchase of imported water. For a water utility, variable charges are generally based on metered consumption and charged on a dollar-per-unit cost (e.g., per 100 cubic feet, or hcf).
Uniform (Single-Tier) Water Rates – There are significant variations in the basic philosophy of variable charge rate structure alternatives. Under a uniform (single tier) rate structure, the cost per unit does not change with consumption, and provides a simple and straightforward approach from the perspective of customer understanding and rate administration/billing.
Tiered Water Charges – The 2015 San Juan Capistrano court decision held that water agencies may only charge tiered rates if they can show that the tiered rates are proportionate to the agency’s higher costs to serve those customers, meaning that caution must be used to ensure that customers are appropriately allocated costs that meet legal requirements.
KEY FINANCIAL ASSUMPTIONS
The NBS rate study was undertaken to address the unique challenges currently facing the water and sewer utilities (e.g., climate change, market volatility, and rising inflation). It is appropriate to conduct an in-depth review of the current rates and rate structure design for both the water and the sewer utility to ensure that the new proposed rates collect sufficient revenues to meet all financial obligations during the five-year rate period.
The following are the key financial assumptions used in the water rate analyses:
Funding of Water Utility Capital Projects – The City will fund planned capital costs using a combination of cash in reserves, additional revenue from the proposed rate increases and new debt issuances. The capital projects listed in the financial plan are from the City’s capital improvement program aimed to maintain a modern water and sewer infrastructure to serve the community.
Reserve Targets – Reserves for operations and capital needs are set at target levels that are consistent with industry standards for utility fund management. Reserve targets used in the analysis are as follows:
• Operating & Maintenance Reserve – target 90 days of operating and maintenance expenses and maintain a minimum of 60 days of operating and maintenance expenses. • Capital Rehabilitation and Replacement Reserve – approximately 3% of net assets. • Rate Stabilization Reserve – target reserve of $1 million and is to remain unchanged from current City policy.
Inflation and Growth Projections:
5 American Water Works Association, “Principles of Water Rates, Fees and Charges” – M1 Manual, p. 202.
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Revenue and expenses for FY 2023/24 through FY 2028/29 were based on the City of Santa Monica’s water fund forecast as provided during FY 2023/2024. For subsequent years following FY 2028/29, the following inflation and growth projections were provided by the City of Santa Monica for use in the rate study:
• Customer growth is estimated at 0.42% annually.
• General cost inflation is estimated at 2.40% annually. • Salary inflation is estimated at 3.00% annually.
• Workers’ compensation insurance is estimated at 8.00% annually. • Medical inflation for miscellaneous employees is estimated between 5.90% to 9.00% annually. • General medical inflation costs are estimated at 1.50% annually. • Dental inflation is estimated at 3.00% annually.
• Employee health contribution is estimated to be between 6.86% to 7.00% annually. • Retirement costs are estimated to increase between 24.17% to 29.84% annually. • General insurance costs are estimated to increase 5.00% annually. • Property insurance costs are estimated to increase 10.00% annually. • Energy costs are estimated to increase by 2.40% annually. • Fuel costs are estimated to increase by 3.00% annually.
The following are the key assumptions used in the sewer rate analyses:
Funding of Sewer Utility Capital Projects – The City will fund planned capital costs using a combination of cash in reserves and additional revenue from the proposed rate increases. The capital projects listed in the financial plan are from the City’s capital improvement program.
Reserve Targets – Reserves for operations and capital needs are set at NBS recommended levels, which are consistent with industry standards for utility fund management. Reserve targets used in the analysis are as follows:
• Operating & Maintenance Reserve – 90 days of operating and maintenance expenses. • Capital Rehabilitation and Replacement Reserve – approximately 3% of net assets. • Rate Stabilization Reserve – target reserve of $1 million and is to remain unchanged from current City policy.
Inflation and Growth Projections:
Revenue and expenses for FY 2023/24 through FY 2028/29 were based on the City of Santa Monica’s water fund forecast as provided during FY 2023/24. For subsequent years following FY 2028/29, the following inflation and growth projections were provided by the City of Santa Monica for use in the rate study:
• Customer growth is estimated at 0.42% annually.
• General cost inflation is estimated at 2.00% annually. • Salary inflation is estimated at 4.00% annually.
• General benefits inflation is estimated at 6.00% annually. • Energy costs are estimated to increase by 5.00% annually. • Chemical costs are estimated to increase by 3.00% annually. • Fuel costs are estimated to increase by 3.00% annually.
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2. Water Rate Study
2.1 Key Water Rate Study Issues
The City’s water rate analysis was undertaken with a few specific objectives, including:
• Generating sufficient revenue to meet anticipated operating and maintenance costs and fund necessary capital improvement projects for the next five years. • Continuing to encourage water conservation with a tiered rate structure. • Provide greater revenue stability for the utility, due to level of capital investment planned over the next five years.
• Verifying the cost-of-service linkage between the current rate structure and the proposed water rates.
• Maintaining adequate reserve levels to ensure continuity in operations. • Complying with the legal requirements of Prop 218 to ensure the cost of providing service is properly allocated amongst user classifications. This was the basis for eliminating tiered water rates.
NBS developed various water rate alternatives as requested by City staff over the course of this study. All rate structure alternatives relied on industry standards, cost-of-service principles, and the requirements of Prop 218. The new rates that will be implemented are ultimately the decision of the City Council.
The following are the basic components included in this analysis:
Developing Cost Allocations – The water revenue requirements were “functionalized” into categories; and then these functionalized costs were then used to develop unit costs based on various factors, such as water consumption, peaking factors, and number of accounts by meter size.
Determining Revenue Requirements by Customer Class – The total revenue that needs to be collected from each customer class was determined using the functional costs and allocation factors. For example, customer costs are allocated based on the number of meters, while volume-related costs are allocated based on the water consumption of each customer class. Once the costs are allocated and the net revenue requirement for each customer class is determined, collecting the revenue requirements from each customer class is addressed within the rate design.
Evaluating Rate Design (Fixed vs. Variable Charges) – The revenue requirements for each customer class are collected from both fixed monthly service charges and variable commodity charges. The City decided to recommend adjusting the existing rate structure that collects 15% fixed/85% variable rate revenue to one with 20% fixed/80% variable rate revenue collection in order to increase revenue stability while also maintaining the City’s commitment to water conservation and sustainability.
2.2 Financial Plan / Water Utility Revenue Requirements It is important for municipal utilities to not only collect sufficient revenues every year, but to also maintain reasonable reserves to handle emergencies, fund working capital, maintain a good credit rating, and generally follow sound financial management practices. Rate adjustments are governed by the need to
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meet operating and capital costs as well as maintain reasonable reserve levels. The current state of the City’s water utility, regarding these objectives, is as follows:
Meeting Net Revenue Requirements6: For FY 2025/26 through FY 2029/30, the projected net revenue requirement (i.e., total annual expenses plus debt service and rate-funded capital costs, less non-rate revenues) increases from approximately $50.2 million to $71.3 million. If no rate adjustments are implemented, the water utility is projected to run an estimated $25.4 million deficit by FY 2029/30. Rate increases of 20% in FY 2025/26, 16% in FY 2026/27, 9% in FY 2027/28 and FY 2028/29, and 6% in FY 2029/30 are recommended in order to fund operating expenses, planned capital projects and meet debt service obligations. These recommended rate increases ensure that the water utility will meet the minimum debt coverage target of 1.25, for both the existing debt service as well as the projected new debt issuance.
Maintaining Reserve Funds: Reserve funds provide a basis for a utility to cope with fiscal emergencies, such as revenue shortfalls, asset failure, and natural disasters, among other events. Reserve policies provide guidelines for sound financial management, with an overall long-range perspective to maintain financial solvency and mitigate financial risks associated with revenue instability, volatile capital costs, and unexpected emergencies.
Building and Maintaining Reserve Funds: The City should maintain sufficient reserves for the Water Utility.
NBS recommends that the City adopt and maintain the following target reserve fund balances:
• Operating Reserve should normally be 90 days of the Utility’s budgeted annual operating expenses, which is equal to a three-month (or 25%) cash reserve for normal operations. The City’s minimum operating reserve target is set equal to 60 days of reserves. An Operating Reserve is intended to promote financial viability in the event of any short-term fluctuation in revenues and/or expenditures, such as those caused by weather patterns, the natural inflow and outflow of cash during billing cycles, natural variability in demand-based revenue streams (e.g., volumetric charges), and – particularly in periods of economic distress – changes or trends in age of receivables. • Capital System Replacement Reserve should typically equal at least 3% of net depreciable capital assets, which equates to a 33-year replacement cycle for capital assets. This target serves as a starting point for addressing long-term capital system replacement needs. • Rate Stabilization Reserve has a target reserve of $1 million and is to remain unchanged from current City policy. This reserve is intended to provide additional financial security to the Utility should any unforeseen revenue shortages or capital emergency occur.
Funding Capital Improvement Projects: The City must also be able to fund necessary capital improvements for the Utility in order to maintain current service levels. City staff has identified a total of roughly $249 million in capital improvements for the City’s water system for the five years. The preferred rate adjustments will be able to fund 100% of the identified capital improvement project needs, with these project costs planned to be funded with a combination of rate revenue, reserve cash on hand, and secure outside financing support (e.g., issuing bonds or apply for federal low interest loan programs aimed to support water and wastewater infrastructure projects) for large, non-routine capital projects such as rehabilitating the City’s water storage reservoirs and replacing the water operations center. Without the 6 A more detailed breakdown of the revenue requirements is provided in Tables 1 and 2 of the Technical Appendix.
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rate increases recommended in this study, the City will not be able to sufficiently fund the identified necessary capital improvements.
Inflation and Growth Projections: Cost inflation and growth assumptions are necessary to project future revenues and expenses for the study period. Customer growth is estimated to be 0.42% annually. This factor was used in the analysis for rate revenues while inflation factors, including the Consumer Price Index,7 were used in projecting expenses. Inflation and growth projections are based on the City’s budgeting fund forecast for the water utility.
Pollution Remediation Liability: During FY2022-2023 Year End Budget Process, the Water Resources Division loaned $15 million from the unrestricted Gillette/Boeing Settlement Funds to the City's General Fund to pay a portion of the $122.5 million settlement agreement against sexual abuse claims against a former City employee and volunteer approved by City Council on April 24, 2023. The General Fund would repay the $15 million loan starting in FY2029-2030. The $15 million loan is from future year remediation costs that will be repaid by the General Fund starting in FY2029-30. The repayment schedule is as follows:
$1.25 million each fiscal year from FY2029-30 through FY2034-35, $1.5 million in FY2035-36, and minimum transfers of $600,000 each year from FY 2036-37 through FY 2046-47. For additional details, please refer to the October 24, 2023 Staff Report for the FY2022-2023 Year-End Budget Review.
Maintaining Adequate Bond Coverage: The City is required by its bond covenant to maintain a debt service coverage ratio of at least 1.25 for the outstanding Water Revenue Bonds. The analysis assumes that the same will be required for the new Revenue Bonds planned to be issued during the projected five-year rate implementation period. The benefit of maintaining at least the minimum coverage ratio is that it strengthens the City’s credit rating, which can help lower the interest rates for debt-funded capital projects, and in turn reduces annual debt service payments. It is projected that, with the proposed rate increases, the City’s revenues will be sufficient to meet the 1.25 debt coverage ratio for existing and planned new debt.
Figure 2 summarizes the sources and uses of funds, net revenue requirements, and the annual percent adjustments in total rate revenue recommended for the next five years. 7 Consumer Price Index for all urban consumers in the Los Angeles area. Source: Website: https://www.bls.gov/cpi/.
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Figure 2. Summary of Water Revenue Requirements
Figure 3 summarizes the projected reserve fund balances and reserve targets.8 A summary of the utility’s proposed 10-year financial plan is included in Table 1 of Appendix A. This Appendix tables include revenue requirements, reserve funds, revenue sources, proposed rate increases, operating revenue and expenses, the City’s capital improvement program, and debt obligations.
Figure 3. Summary of Water Reserve Funds
8 A more detailed breakdown of the reserve funds is provided in the Technical Appendices.
FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Sources of Water Funds
Water Rate Revenue
Water Sales Revenue Under Current Rates $ 41,567,286 $ 41,567,286 $ 41,741,869 $ 41,917,184 $ 42,093,237 $ 42,270,028 Revenue from Rate Increases 1
- 8,313,457 16,362,812 21,682,921 27,522,040 31,832,092 Subtotal: Rate Revenue After Rate Increases $ 41,567,286 $ 49,880,743 $ 58,104,681 $ 63,600,106 $ 69,615,276 $ 74,102,120 Non-Rate Revenue
Reimbursement from other funds $ 450,000 $ 463,500 $ 477,405 $ 491,727 $ 507,986 $ 520,177 Water Neutrality Fee Revenue 1,328,296 1,354,862 1,381,959 1,409,598 1,437,790 1,472,297 Charges for Service (other than Rate Revenue) 767,000 767,000 767,000 767,000 767,001 767,001 Investment Income 750,000 221,468 177,395 147,340 173,573 173,573 Other Revenues 555,000 530,000 530,000 530,000 530,002 470,000 Subtotal: Non-Rate Revenue $ 3,850,296 $ 3,336,830 $ 3,333,759 $ 3,345,666 $ 3,416,352 $ 3,403,048 Total Sources of Funds $ 45,417,582 $ 53,217,573 $ 61,438,440 $ 66,945,772 $ 73,031,628 $ 77,505,169 Uses of Water Funds
Operating Expenses
Salaries and Benefits $ 9,457,601 $ 11,873,093 $ 12,362,633 $ 12,777,742 $ 13,359,453 $ 14,558,417 Water Purchases2 5,207,080 5,727,788 6,300,567 6,930,623 7,623,686 7,806,654 Supplies and Expenses 16,503,494 16,733,036 17,082,869 17,374,298 17,747,400 18,052,432 Retirement and OPEB 49,169 51,627 54,209 56,919 59,766 215,663 Interfund Transfers 1,411,672 1,456,843 1,503,367 1,551,285 1,605,655 1,655,982 Subtotal: Operating Expenses $ 32,629,016 $ 35,842,387 $ 37,303,644 $ 38,690,868 $ 40,395,959 $ 42,289,148 Other Expenditures
Debt Service (Interfund Loan Repayment) $ 706,367 $ 706,367 $ 706,367 $ 706,367 $ 706,367 $ 706,367 Debt Service (Water Revenue Bond) 3,553,187 3,554,587 3,553,587 3,551,863 3,550,175 3,550,362 New Debt Service - - - - 8,361,556 8,361,556
Rate-Funded Capital Expenses 13,337,857 13,438,671 18,676,718 21,436,970 19,042,343 19,803,897 Subtotal: Other Expenditures $ 17,597,411 $ 17,699,625 $ 22,936,672 $ 25,695,199 $ 31,660,440 $ 32,422,182 Total Uses of Water Funds $ 50,226,427 $ 53,542,012 $ 60,240,316 $ 64,386,067 $ 72,056,400 $ 74,711,330 Annual Surplus/(Deficit) $ (4,808,845) $ (324,439) $ 1,198,124 $ 2,559,704 $ 975,229 $ 2,793,838 $ 46,376,131 $ 50,205,182 $ 56,906,557 $ 61,040,401 $ 68,640,048 $ 71,308,282 Projected Annual Rate Revenue Adjustment 0.00% 20.00% 16.00% 9.00% 9.00% 6.00%
0.00% 20.00% 39.20% 51.73% 65.38% 75.31%
Debt Coverage After Rate Increase 18.10 24.60 34.17 40.00 3.60 3.88
1. Revenue from rate increases assumes an implementation date of July 1, 2025 and then July 1 each year thereafter.
2. Net of water purchases and Arcadia AOP/UV System that is funded with the Gillette-Boeing Settlement Funds (shown in restricted reserves section of Table 2).
RATE REVENUE REQUIREMENTS SUMMARY Budget
Net Revenue Req't. (Total Uses less Non-Rate
Cumulative Increase from Annual Revenue Increases
Projected
FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Operating Reserve
Ending Balance $ 7,951,659 $ 7,627,220 $ 8,825,344 $ 9,672,717 $ 10,098,990 $ 10,572,287 Recommended Minimum Target (90-days O&M) 8,157,254 8,960,597 9,325,911 9,672,717 10,098,990 10,572,287 Capital Rehabilitation & Replacement Reserve
Ending Balance $ 1,339,000 $ 1,339,000 $ 1,339,000 $ 3,051,332 $ 3,600,287 $ 5,920,828 Recommended Minimum Target (3% Net Assets) 1,339,000 1,943,200 2,735,100 3,613,200 4,376,200 4,430,400 Rate Stabilization Reserve
Ending Balance $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 Recommended Minimum Target 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 Total Ending Balance $ 10,290,659 $ 9,966,220 $ 11,164,344 $ 13,724,049 $ 14,699,277 $ 17,493,116 Total Recommended Minimum Target $ 10,496,254 $ 11,903,797 $ 13,061,011 $ 14,285,917 $ 15,475,190 $ 16,002,687 Surplus/(Deficit) $ (205,595) $ (1,937,577) $ (1,896,667) $ (561,868) $ (775,913) $ 1,490,428 Beginning Reserve Fund Balances and
Recommended Reserve Targets
Projected
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2.3 Capital Improvement Program and Financing
City staff has identified a total of approximately $249 million in capital improvements for the City’s water system for the five-year implementation period. The preferred rate adjustments will be able to fund 100% of the identified capital improvement project needs, with these project costs planned to be funded with a combination of rate revenue, reserve cash on hand, and outside financing (e.g., revenue bonds or federal low interest loans). Without the rate increases recommended in this study, the City will not be able to sufficiently fund the identified necessary capital improvements Tables 11 through 15 in Appendix A provides a complete list of capital projects that were factored into the financial plan and the cost of each project.
Project costs are listed in current and future values; future values reflect the estimated cost of each project in the year the project is planned, including estimated cost inflation of 3% per year, per the Engineering News Record Construction Cost Inflation Index.
9 The City is planning to secure loan funding in the amount of $139 million to help fund the planned capital improvement program costs during the rate implementation period. The $139 million program includes rehabilitating the City’s four potable water storage reservoirs and replacing the aging water operation center and water quality laboratory. This analysis assumes a conservative debt financing approach for the anticipated State Revolving Fund (SRF) or United States Environmental Protection Agency’s Water Infrastructure Finance and Innovation Act (WIFIA) loan that uses an interest rate of 4.00%, issuance costs of
2.00% of the net proceeds and a debt coverage requirement equal to the annual debt-service payment plus a 25% cushion (i.e., a “1.25 coverage ratio”), which is consistent with the outstanding water revenue bonds coverage requirement. The City also intends to explore the potential of issuing a revenue bond instead of pursuing low interest loans from the State or Federal government to support the $139 million program.
2.4 Cost-of-Service Analysis
Once the net revenue requirements are determined, the cost-of-service analysis (COSA) proportionately distributes the revenue requirements to each of the customer classes. The COSA consists of two major components: (1) the classification of expenses, and (2) the allocation of costs to each customer class. Costs are classified according to the function they serve. All costs in the City’s budget are allocated to each component of the rate structure in proportion to the level of service required by customers.
The level of service is related to the volume and strength of the water treated, infrastructure capacity, and customer service. These costs are based on allocation factors, such as water consumption, number of meters, and customer class. Ultimately, a COSA is intended to result in rates that are proportional to the cost of providing service to each customer class.
FUNCTIONALIZATION AND CLASSIFICATION OF COSTS
Most costs are not typically allocated 100% to fixed or variable categories and, therefore, are allocated to multiple functions of water service. The classification (i.e., functionalization) of costs provides the basis for allocating the classified costs to the following cost causation components:
9 See Table 10 and 11 in Appendix A for the detailed capital projects costs which include projected cost inflation and Table 14 for the cost inflation factors applied to the project costs.
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• Base Commodity related costs are those that change as the volume of water produced and delivered changes. These commonly include the costs of water quality testing, energy related to pumping for transmission and distribution, and source of supply. • Groundwater-related costs are allocated to the lower tiered commodity costs that are incurred for managing the City’s groundwater supply.
• Purchased Water related costs are the costs incurred from purchasing water from Metropolitan Water District (MWD) and are allocated to the highest tiered commodity costs only.
• Conservation related costs are the costs associated with efforts made by the City to permanently reduce water usage.
• Capacity related costs are associated with sizing facilities to meet the maximum, or peak demand. This includes both operating costs and capital infrastructure costs incurred to accommodate peak system capacity events.
• Customer related costs are associated with having a customer on the water system, such as meter reading, postage, billing and other administrative duties. • Fire Protection related costs are associated with providing sufficient capacity in the system for fire meters and other operations and maintenance costs of providing water to properties for private fire service protection.
Once costs have been organized in the City’s budget categories, they are allocated to these cost causation components that are used as the basis for establishing new water rates and translate to fixed and variable charges. Tables in the Technical Appendices show how the City’s expenses were classified and allocated to these cost causation components.
FIXED AND VARIABLE COSTS
Fixed costs generally consist of costs that a utility incurs to serve customers irrespective of the amount of water they use.
10 These include (1) the infrastructure (capacity-related facilities) required to provide service to customers, (2) costs associated with the peaking requirements, or maximum demand which affects the maximum size and operations and maintenance costs of water supply, treatment and delivery system, and (3) administrative and billing costs associated with meter reading, postage and billing.
Variable costs are those that change as the volume of water produced and delivered changes. These commonly include the costs of chemicals used in the treatment process, energy related to pumping for transmission and distribution, and source of supply.
Ideally, utilities should recover all of their fixed costs from fixed charges and all of their variable costs from volumetric charges; when this is the case, fluctuations in water sales revenues would be directly offset by reductions or increases in variable expenses. Because of this, this rate design provides greater revenue stability. However, other factors are often considered when designing water rates such as community values, water conservation goals, ease of understanding, and ease of administration.11 10 American Water Works Association, “Principles of Water Rates, Fees and Charges” – M1 Manual, p. 137-139. 11 Principles of Water Rates, Fees, and Charges, Manual of Water Supply Practices, M1, American Water Works Association, Sixth Edition, see pp. 5 and 96.
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NBS evaluated the functionalization of costs into categories that can be more generally grouped into the fixed and variable costs discussed above. This analysis resulted in a cost distribution that is approximately 50% fixed and 50% variable (volumetric).
12 Given the City’s water self-sufficiency goals, the City has historically collected a majority of the water rate revenue from their volumetric charges. The City’s current rate structure collects 85% percent of rate revenue from variable charges, except for the fixed fire meter rates. The City Council has decided that revenue stability is an important factor in this rate setting process and has selected a rate structure that will collect 20 percent (20%) of revenue from fixed charges and 80 percent (80%) from variable rates. This adjustment moves the City closer to the cost-of-service analysis results and will provide more financial stability for the City, while maintaining a tiered rate structure that will encourage conservation. However, a share of the City’s capacity costs, will need to be collected from the variable rates in order to achieve this.
Thus, most capacity-related costs (which are normally considered fixed) will be collected from both fixed and variable rates.
Figure 4 summarizes how the net revenue requirements are allocated to each classification component and used to establish new water rates.
Figure 4. Allocation Percentages of Revenue Requirements
COSTS ALLOCATED TO CUSTOMER CLASSES
Customer classes are typically determined by grouping customers with similar demand characteristics into categories that reflect the cost differentials to serve each type of customer. This process is limited by the desire to not overcomplicate the City’s rate structure.
For the City, the customer classes are split between single-family residential, multi-family residential, commercial, municipal, irrigation and fire protection. Single-family residential customers are separated from other customers for the purpose of the rate calculation because non-single-family customers:
1. Are using more water on average per account.
12 This analysis is presented in more detail in Appendix A.
Variable Costs
Base Commodity $ 13,510,220 27.1%
Groundwater 1,910,679 3.8%
MWD Purchased Water 7,261,431 14.6%
Conservation 2,320,563 4.7%
Fixed Costs
Capacity $ 22,581,241 45.3%
Customer 1,779,399 3.6%
Fire Protection 517,211 1.0%
Net Revenue Requirement $ 49,880,743 100%
Cost of Service Net Revenue
Requirements (FY 25/26)
Proposed Rates
Customer Classes
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2. Water usage varies greatly among these customers based on the specific type of customer and meter size.
As shown in Figure 5, consumption by single-family customers of meter size from ¾ inch to 1 inch are sufficiently similar to consider those meters a single class for the sake of the rate calculation (they will all pay the same fee). 1.5-inch and 2-inch meters will have a slightly higher fixed charge for single-family customers with larger meters. The similarities are apparent in the capacity factors shown in this figure.
Figure 5. Single Family Meter Size Characteristics
The amount of consumption, the capacity factors and the number of meters by size are used in the cost-ofservice analysis to allocate costs to customer classes and determine the appropriate rate structures for each. The City’s most recent consumption is summarized in Figure 6, capacity factors in Figure 7 and number of customers by customer class is shown in Figure 8.
Commodity related costs are costs associated with the total annual consumption of water by customer class, as shown in Figure 6. This figure shows the actual consumption in FY 2023/24 and the projected consumption for FY 2025/26.
Figure 6. Water Consumption by Customer Class
Capacity factors for each customer class are shown in Figure 7. A “capacity factor” is the relationship of each customer class’s average use to peak (generally summer) use. A capacity factor is indicative of a customers’ maximum water demand and the impact each customer class places on the City’s water system.
Average
Bi-Monthly
Con./Acct (hcf)
Peak
Bi-Monthly
Con./Acct (hcf)
FY 2023/24 FY 2023/24
3/4 inch 3,105 17.2 20 1.15
1 inch 3,285 27.8 34 1.22
1.5 inch 1,117 45.7 57 1.25
2 inch 73 67.4 101 1.50
Total 7,580 26.5 32 1.21
1. Consumption and Meters from source file: Customer Data 23 24 Meter Size
Number of
Meters
Peaking
Factor
Customer Class
Consumption,
Actual
(hcf)
FY2023/24
Consumption,
Projected
(hcf)
FY2025/26
FY 2023/24
Percent of
Total Volume,
Actual
FY 2025/26
Percent of
Total Volume,
Projected
Single Family 1,205,301 1,145,036 26.1% 26.1%
Multi Family 1,867,992 1,774,592 40.4% 40.4%
Commercial 1,356,790 1,288,951 29.4% 29.4%
Municipal 128,057 121,654 2.8% 2.8%
Irrigation 64,322 61,106 1.4% 1.4%
Total 4,622,086 4,390,523 100.0% 100.0%
Recycled Water 5,285 5,285 0.1% 0.1%
1. Consumption and Meters from source file: Customer Data 23 24
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Figure 7. Capacity Factors by Customer Class
The number of customers for each customer class (also known as customer allocation factors) are shown in Figure 8.
Figure 8. Number of Meters by Customer Class
2.4.1 Costs Allocated to Customer Classes
Costs are allocated to each customer class based on the customer characteristics of each class in order to reflect the cost differentials to serve each type of customer. Figure 9 summarizes how the costs for each cost causation component from Figure 4 are allocated to each customer class.
Customer Class
Peak Bi-Monthly
Use FY2023/24
(hcf)
Average BiMonthly Use
FY2023/24
(hcf)
Bi-Monthly
Peaking
Factor
FY 2023/24
Bi-Monthly Max
Capacity Factor
Single Family 243,441 201,383 1.21 27.0%
Multi Family 333,610 312,168 1.07 37.0%
Commercial 259,773 226,775 1.15 28.8%
Municipal 31,368 21,782 1.44 3.5%
Irrigation 32,844 12,322 2.67 3.6%
Total 901,230 774,370 1.16 100.0%
Recycled Water 7,950 1,458 5.45 82.4%
1. Based on bi-monthly billing data (peak day data not available).
Customer Class Number of Meters Percent of
Total
Single Family 7,580 41.2%
Multi Family 6,507 35.4%
Commercial 2,160 11.7%
Municipal 191 1.0%
Irrigation 662 3.6%
Fire 1,297 7.1%
Total 18,397 100.0%
Recycled Water 29 0.2%
1. Consumption and Meters from source file: Customer Data 23 24
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Figure 9. Cost Allocation Methodology
The costs allocated to each causation component are assigned to each customer class using the cost allocation methodology described in Figure 9. This process is shown in the following sections.
Capacity Related Costs (fixed share) and Fire Protection The capacity-related costs (fixed share) allocation is summarized in Figure 10. Capacity related costs are those costs associated with constructing and operating the water system to ensure there is sufficient capacity in the system to meet the demand of each meter connected. Per CA Govt Code § 53750.5 (2024), hydrants and the water distributed through them are included as part of the property-related water service provided to all property owners served by a water service provider. Through hydrants, water is immediately available to those properties to aid in extinguishing a fire that directly threatens them. The cost associated with this aspect of water service is proportionately allocable among properties that may receive a reasonably similar level of service from the immediate availability of water to aid in extinguishing fires that directly or indirectly threaten those properties.
These capacity-related costs are first allocated to customer classes based on bi-monthly peak capacity factors and then by hydraulic capacity. It should be noted that all meter sizes for single-family residential customers are combined. For non-single-family residential customers, costs are allocated by meter size. Larger meters have the potential to use more of the system’s capacity, compared to smaller meters. The potential capacity demanded is proportional to the maximum safe meter capacity each meter size as established by the AWWA13. The meter capacity factors used in this study are shown in Figure 11. 13 Principles of Water Rates, Fees, and Charges, Manual of Water Supply Practices, M1, AWWA, seventh edition, 2017, p. 338. •Allocated based on peak water consumption by customer class •Then, allocated based on the hydraulic capacity of each meter size Capacity Related Costs
(fixed share)
•Allocated based on the total number of accounts Customer Related Costs
•Allocated based on the hydraulic capacity of fire meters Fire Protection Related Costs
•Allocated based on water consumption by customer class Commodity Related Costs
•Allocated to Tier 1 and Tier 2 water rates as the number one source of supply Ground Water Related Costs
•Allocated to Tier 3 water rates as the additional source of supply from MWD Purchased Water Costs
•Recovered from Tier 2 and Tier 3 water rates to encourage conservation Conservation Related Costs
•Allocated to Tier 3 water rates Water Self-Sufficiency Related Costs
•Allocated based on peak consumption by customer class Capacity Related Costs (volumetric share)
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A “hydraulic capacity factor” is calculated by dividing the maximum capacity or flow of large meters by the capacity of the base meter size, which is typically the most common residential meter size (in this case a 1- inch meter). For example, Figure 11 shows the hydraulic capacity of a two-inch meter is 3.20 times that of a 1-inch meter and therefore, the capacity component of the fixed meter charge is 3.20 times that of the 1-inch meter.
The actual number of meters by size is multiplied by the corresponding capacity ratios to calculate the total number of equivalent meters. The number of equivalent meters is used as a proxy for the potential demand that each customer can place on the water system and the percentage of capacity related costs (fixed share) distributed to each meter size by the percent of total hydraulic capacity.
The fire protection cost allocation is also summarized in Figure 10. Only Fire Protection meters are allocated this cost component. A direct allocation is made in the functionalization and classification step in the cost-ofservice analysis to represent their share of system capacity and other related operations and maintenance costs and then allocate to Fire Protection meters through hydraulic capacity. Unlike the potable users, cost recovery for fire protection is 100% collected through fixed charges.
Customer Related Costs
The customer-related cost allocation is also summarized in Figure 10. Customer related costs are comprised of those costs related to reading and maintaining meters, customer billing and collection, and other customer service-related costs. The customer service costs do not differ among the various meter sizes; therefore, these costs are spread equally among all meters. Each customer class is allocated customer related costs based upon the percentage of total meters that are in that class.
Figure 10. Capacity Related Costs (fixed share), Customer & Fire Protection Costs Allocation Single Family $ 6,099,653 $ 733,154 $ -
Multi Family $ 8,358,944 $ 629,372 -
Commercial $ 6,508,877 $ 208,920 -
Municipal $ 785,954 $ 18,474 -
Irrigation $ 822,929 $ 64,030 -
Fire $ 4,883 $ 125,449 517,211
Total Net Revenue Requirement $ 22,581,241 $ 1,779,399 $ 517,211 Customer Classes
Fire Protection
Classification Components (Fixed Costs)
Capacity Customer
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Figure 11. Meter Equivalency Factors
Commodity Related Costs
Commodity related costs are those costs related to the amount of water sold and commonly include the costs of chemicals used in the treatment process, energy related to pumping for transmission and distribution, and source of supply. Each customer class is allocated commodity related costs based upon the percentage of total consumption by that class. The commodity-related costs (volumetric share) allocation is summarized in Figure 12.
Figure 12. Volumetric Related Costs Allocation
NBS recommends that the current tiered rate structure be maintained. Tier breakpoints were established based on the City’s current available water supply, and expected consumption in each tier was determined based on customer class. The justification when setting the tier breakpoints includes:
3/4 inch 30 1.00 30 1.00
1 inch 50 1.00 50 1.00
1.5 inch 100 2.00 100 2.00
2 inch 160 3.20 160 3.20
3 inch 320 6.40 350 7.00
4 inch 500 10.00 700 14.00
6 inch 1,000 20.00 1,600 32.00
8 inch 2,800 56.00 2,800 56.00
10 inch 4,200 84.00 4,200 84.00
1. Meter flow rates are from AWWA M-1 (Seventh Edition) Table B-2.
2. Fire Service meter flow rates are from AWWA M-6 Table 5-3.
Meter Size Meter
Capacity (gpm)
Equivalency
to 1-inch
Meter Capacity
(gpm)
Equivalency to 1-
inch
Standard Meters Fire Service Meters
Displacement Meters Displacement Meters
Compound Class I Meters Fire Service Type I & II
Turbine Class II Meters Turbine Class I Meters
Single Family $ 3,523,059 $ 498,248 $ 1,893,563 $ 605,133 Multi Family $ 5,460,085 $ 772,191 $ 2,934,669 $ 937,844 Commercial $ 3,965,858 $ 560,870 $ 2,131,557 $ 681,190
Municipal $ 374,306 $ 52,936 $ 201,181 $ 64,292
Irrigation $ 188,012 $ 26,590 $ 101,052 $ 32,294
Fire $ (1,101) $ (156) $ (592) $ (189)
Total Net Revenue Requirement $ 13,510,220 $ 1,910,679 $ 7,261,431 $ 2,320,563 Customer Classes Base
Commodity Groundwater
MWD Purchased
Water
Conservation
Classification Components (Variable Costs)
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1. Tier 1 breakpoint is updated to assumed indoor water use based on 47 gallons per capita per day (GPCD), per the indoor residential water use standard outlined in State of California’s “Making Water Conservation a California Way of Life, Implementing Executive Order B-37-16”, from 2025-2029 Single family residential water use is based on 2.56 persons per home and multi-family residential water use is based on 1.78 persons per home. This is per City staff in the Water Resources Division’s water conservation team that estimates of residential occupancy rates and used for Water Neutrality calculations. The planning department provided these estimates to the Water Resources Division for this study. Tier breakpoints for non-residential start at the SFR equivalent and are scaled based on meter size.
2. Tier 2 breakpoint is set to the total volume of Santa Monica groundwater minus the Tier 1 usage for each customer class.
3. Tier 3 water is set to include all purchased water from MWD, as this is the highest current cost for water.
Figure 13 summarizes the new proposed tier breakpoints by customer class and meter size.
Figure 13. Summary of Proposed Tier Breakpoints
2.5 Current vs. Proposed Water Rate Structures
The process of evaluating the water rate structure provides the opportunity to incorporate a number of rate-design objectives and policies, including revenue stability, equity among customer classes, and compliance with Prop 218. NBS discussed several water rate alternatives and methodologies with City Staff over the course of this study, such as the percentage of revenue collected from fixed vs. variable charges and differentiating rates by customer class. Based on input provided by all stakeholders, the proposed rates were developed. The following sections describe this process.
NBS recommends that the City make the following modifications to the water rate structure:
1. Increase the fixed revenue recovery modestly from 15% to 20%.
Customer Class and Meter Size Equivalency
to 1-inch # of Meters
# of 1-inch
Equivalent
Meters
% of
Equivalent
Meters
Tier 1 Breakpoint 1 Tier 2 Breakpoint 2 Tier 3 Breakpoint 3 Single Family
All Customers 1.00 3,105 3,105 11% 0 - 10 hcf 11 - 18 hcf 19+ hcf Subtotal: Single Family 7,580 8,858 31%
Multi Family
All Customers 1.00 1,699 1,699 6% 0 - 7 hcf 8 - 13 hcf 14+ hcf Subtotal: Multi Family 6,507 10,944 38%
Non-Residential
3/4 inch 1.00 2,094 2,094 7% 0 - 10 hcf 11 - 18 hcf 19+ hcf 1 inch 1.00 716 716 3% 0 - 10 hcf 11 - 18 hcf 19+ hcf
1.5 inch 2.00 718 1,436 5% 0 - 20 hcf 21 - 36 hcf 37+ hcf 2 inch 3.20 513 1,642 6% 0 - 32 hcf 33 - 58 hcf 59+ hcf 3 inch 6.40 161 1,030 4% 0 - 64 hcf 65 - 115 hcf 116+ hcf 4 inch 10.00 77 770 3% 0 - 100 hcf 101 - 180 hcf 181+ hcf 6 inch 20.00 26 520 2% 0 - 200 hcf 201 - 360 hcf 361+ hcf 8 inch 84.00 5 420 1% 0 - 560 hcf 561 - 1,008 hcf 1,009+ hcf Subtotal: Non-Residential 4,310 8,628 30%
Total 18,397 28,429 100%
1. Tier 1 breakpoint set to assumed indoor consumption for a typical SFR customer using 47 gallons per capita per day (GPCD) with 2.56 people per SFR,
1.78 people per MFR and allocated to non-residential based on 47 GPCD and equivalent meters. Tier breakpoints for non-residential start at the SFR equivalent and are scaled based on meter size.
2. Tier 2 breakpoint set to volume of Santa Monica groundwater source minus the Tier 1 usage for each customer class.
3. Tier 3 water is set to include all purchased water from MWD.
Per Unit
Per Unit
Per Meter
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2. Update the volumetric rates for all customers as follows to establish new tier breakpoints based on recent consumption statistics, state requirements, and cost of service analysis.
The following sections describe how the proposed water rates were developed.
FIXED MONTHLY SERVICE CHARGES
Meter sizes have different fixed charges based on the capacity requirements of each size meter connected to the system. This is because larger meters have the potential to use more of the system’s capacity, or said differently, they have higher peaking factors compared to smaller meters. The potential capacity demanded (peaking) is proportional to the maximum hydraulic flow through each meter size as established by the AWWA hydraulic capacity ratios14. As an example, a 2-inch meter has a greater capacity, or potential peak demand than a 3/4-inch meter; therefore, the fixed charge for a 2-inch meter is larger than a 3/4-inch meter based on their proportionate capacity requirements15. A “hydraulic capacity factor” is calculated by dividing the maximum capacity or flow of large meters by the capacity of the base meter size, which is typically the most common residential meter size (in this case a 3/4-inch meter).
The actual number of meters by size is multiplied by the corresponding capacity ratios to calculate equivalent meters. The number of equivalent meters is used as a proxy for the potential demand that each customer can place on the water system. A significant portion of a water system’s peak capacity, and in turn, the utility’s fixed operating and capital costs, are related to meeting system capacity requirements.
The City’s existing rates have different fixed charges for commercial fire meters than for standard water service customers, and the new rates will maintain this same structure. Fire service customers differ from other water service customers because their service is more of a standby nature, where a readiness-toserve charge is appropriate. Except in the event of a fire, these users are not intended to use water on a regular basis. However, the City still needs to provide sufficient capacity for fire meters and recover other operations and maintenance costs of providing water to such properties for private fire service protection.
Based on the cost-of-service analysis and the standby nature of fire meters, the overall cost to serve these users is less than that of a standard service; therefore, the fixed charges are less.
Figure 14 and Figure 15 shows how fixed bi-monthly service charges were calculated for standard water meters and Figure 16 shows the same for private fire meters. The customer component of the rate does not vary by meter size because it represents costs to the utility for having connections to the water system.
Capacity costs vary by meter size and are based on their hydraulic capacity. 14 See: American Water Works Association, Principles of Water Rates, Fees and Charges: Manual of Water Supply Practices M1, 326, (6th ed. 2012) and American Water Works Association, Water Meters – Selection, Installation, Testing and Maintenance M6, 65 (5th ed. 2012).
15 This is reflected in the fixed charge calculations by using the AWWA hydraulic capacity factors to represent the maximum volume each meter size is capable of delivering.
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Figure 14. Calculation of FY 2025/26 Standard Fixed Meter Charges for SFR Customers Figure 15. Calculation of FY 2025/26 Standard Fixed Meter Charges for non-SFR Customers Figure 16. Calculation of FY 2025/26 Private Fire Protection Meter Fixed Charges
VOLUMETRIC RATES
Based on input from City of Santa Monica staff, the proposed volumetric rate structure is designed to implement the new tier breakpoints for each customer class based on the updated cost-of-service analysis while maintaining the existing three-tiered volumetric rate structure.
Figure 17 shows the calculation per unit volumetric charge for each consumption tier. It should be noted that these costs are spread evenly across all customer classes, but each customer class has independent tier breakpoints, as shown in Figure 13.
Number of Meters by
Class and Size
3/4 inch 1 inch 1.5 inch 2 inch
Single Family 3,105 3,285 1,117 73
Total Meters/Accounts 3,105 3,285 1,117 73
Hydraulic Capacity Factor 1.00 1.00 2.00 3.20
Total Equivalent Meters 3,105 3,285 2,234 234
Bi-Monthly Fixed Service Charges
Customer Costs ($/Acct/bi-month) $16.12 $16.12 $16.12 $16.12 Capacity Costs ($/Acct/bi-month) $33.94 $33.94 $67.88 $108.62 Total Bi-Monthly Meter Charge $50.06 $50.06 $84.00 $124.74 Number of Meters by
Class and Size
3/4 inch 1 inch 1.5 inch 2 inch 3 inch 4 inch 6 inch 8 inch Multi Family 1,699 1,825 2,380 496 61 31 13 2
Commercial 580 492 542 349 117 54 22 4
Municipal 30 9 28 69 36 15 4 -
Irrigation 214 200 148 87 8 4 1 -
Total Meters/Accounts 2,523 2,526 3,098 1,001 222 104 40 6 Hydraulic Capacity Factor 1.00 1.00 2.00 3.20 6.40 10.00 20.00 56.00 Total Equivalent Meters 2,523 2,526 6,196 3,203 1,421 1,040 800 336 Bi-Monthly Fixed Service Charges
Customer Costs ($/Acct/bi-month) $16.12 $16.12 $16.12 $16.12 $16.12 $16.12 $16.12 $16.12 Capacity Costs ($/Acct/bi-month) $54.46 $54.46 $108.93 $174.29 $348.57 $544.64 $1,089.29 $3,050.01 Total Bi-Monthly Meter Charge $70.58 $70.58 $125.05 $190.41 $364.69 $560.76 $1,105.41 $3,066.13 Number of Meters by
Class and Size
1.5 Inch 2 Inch 3 Inch 4 Inch 6 Inch 8 Inch 10 Inch
Fire 1,270 15 8 4 - - -
Total Meters/Accounts 1,270 15 8 4 - - -
Hydraulic Capacity Factor 2.00 3.20 7.00 14.00 32.00 56.00 84.00 Total Equivalent Meters 2,540 48 56 56 - - -
Bi-Monthly Fixed Service Charges
Customer Costs ($/Acct/bi-month) $16.12 $16.12 $16.12 $16.12 $16.12 $16.12 $16.12 Capacity Costs ($/Acct/bi-month) $64.20 $102.73 $224.72 $449.43 $1,027.27 $1,797.73 $2,696.59 Total Bi-Monthly Meter Charge $80.32 $118.85 $240.84 $465.55 $1,043.39 $1,813.85 $2,712.71
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Figure 17. Calculated Variable Charges for FY 2025/26
CURRENT AND PROPOSED WATER RATES
Figure 18 provides a comparison of the current and proposed rate structure for FY 2025/26 through 2029/30. Projected rates for FY 2025/26
16 reflect adjustments based on the cost-of-service analysis; rates after FY 2025/26 assume an across-the-board rate increase to these rates based on the recommended percent increases in rate revenue each year, as shown previously in Figure 2. Increasing rates by the percentage change in rate revenue as described in this study will allow the Utility to continue meeting its annual revenue requirements and fund the priority planned capital improvements over the next five years.
More detailed tables on the development of the proposed water rates are documented in Appendix A. 16 Rate adjustments are scheduled to be effective July 1st of each fiscal year.
Tier 1 Tier 2 Tier 3
GW - Basic
Water Use
Ground Water Purchased
Water
Sources of Supply (hcf) 1,207,618 1,712,622 1,471,099 4,391,340 % of Total Consumption 28% 39% 34% 100%
% of Groundwater 41% 59% -- 100%
% of Tier 2 and 3 Water -- 54% 46% 100%
Costs Allocated to Volumetric Charges:
Tier 1 Tier 2 Tier 3 Total
Base Commodity
$ 3,715,310 $ 5,268,986 $ 4,525,924 $ 13,510,220
Ground Water 477,670 1,433,009 - 1,910,679
Purchased Water - - 7,261,431 7,261,431
Conservation - 1,160,282 1,160,282 2,320,563
Water Self-Sufficiency Projects - - 373,033 373,033
Capacity (Allocated to Variable Rate) 3,988,770 5,656,800 4,859,047 $ 14,504,617 Total $ 8,181,750 $ 13,519,077 $ 18,179,716 $ 39,880,543 21% 34% 46% 100%
$6.78 $7.89 $12.36
% of Variable Revenue
Cost Per Unit of Water
Calculation of Cost Per Tier Total
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Figure 18. Current and Proposed Water Rates
2.6 Drought Rate Analysis
Should conservation increase beyond currently expected levels, the City is still obligated to meet its annual net revenue requirements to keep the utility operating and functional. At the request of the City, drought rates have been developed so that if total consumption should decrease further due to an increase in conservation required by the state, another regulatory agency, or if the City Council declares that it is in more severe drought stages, the City’s Water Utility would still be kept whole, financially. In the event that consumption decreases beyond projected baseline consumption levels, some costs will also decrease, and the proposed drought rates have taken this reduced revenue need into consideration. Drought rates will offset the loss of variable revenue, if needed and implemented by the City in different stages of drought severity.
Figure 19 shows the calculation of the updated commodity costs for each percentage of conservation the City is looking to achieve with the drought rates for FY 2025/26. From here, the updated commodity cost is used in the variable rate calculation shown for the water rates in Figure 18. This calculation is performed for all levels of conservation and summarized in Figure 20 for the next five fiscal years. For a more detailed look at how drought rates are calculated, please refer to the Appendix.
FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30
Bi-Monthly Fixed Service Charges
Single Family Residential
3/4 inch $19.40 $50.06 $58.07 $63.30 $69.00 $73.14
1 inch $19.40 $50.06 $58.07 $63.30 $69.00 $73.14
1.5 inch $27.35 $84.00 $97.45 $106.22 $115.78 $122.72
2 inch $36.89 $124.74 $144.69 $157.72 $171.91 $182.22
All Other Customers
3/4 inch $23.46 $70.58 $81.88 $89.25 $97.28 $103.12
1 inch $23.46 $70.58 $81.88 $89.25 $97.28 $103.12
1.5 inch $35.48 $125.05 $145.06 $158.11 $172.34 $182.68 2 inch $49.89 $190.41 $220.87 $240.75 $262.42 $278.16
3 inch $88.33 $364.69 $423.04 $461.12 $502.62 $532.78
4 inch $131.58 $560.76 $650.49 $709.03 $772.84 $819.21
6 inch $251.71 $1,105.41 $1,282.27 $1,397.68 $1,523.47 $1,614.88 8 inch $684.18 $3,066.13 $3,556.71 $3,876.81 $4,225.73 $4,479.27 Fire Service Charges
1.5 inch $74.49 $80.32 $93.18 $101.56 $110.70 $117.35
2 inch $112.32 $118.85 $137.86 $150.27 $163.80 $173.62
3 inch $232.10 $240.84 $279.37 $304.51 $331.92 $351.83
4 inch $452.75 $465.55 $540.04 $588.64 $641.62 $680.12
6 inch $1,020.13 $1,043.39 $1,210.33 $1,319.27 $1,438.00 $1,524.28 8 inch $1,776.63 $1,813.85 $2,104.06 $2,293.43 $2,499.84 $2,649.83 10 inch $2,659.22 $2,712.71 $3,146.74 $3,429.95 $3,738.64 $3,962.96 Commodity Charges
All Customers ($/hcf)
Tier 1 $6.61 $6.78 $7.86 $8.57 $9.34 $9.90
Tier 2 $7.67 $7.89 $9.15 $9.98 $10.87 $11.53
Tier 3 $10.93 $12.36 $14.34 $15.63 $17.03 $18.06
Water Rate Schedule Current Rates Proposed Rates
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Figure 19. FY 2025/26 Calculation of Commodity Costs at Various Levels of Conservation Figure 20. Proposed Drought Rates
Percentage of Conservation
Total
Consumption
(hcf)
Base
Commodity
Cost
Impacted
Commodity
Cost
Savings
Updated
Commodity
Cost
a b c d = (-a) * c e = b + c
0% 4,391,340 $ 39,880,543 $ 968,597 $ - $ 39,880,543
10% 3,952,206 $ 39,880,543 $ 968,597 $ (96,860) $ 39,783,683 20% 3,513,072 $ 39,880,543 $ 968,597 $ (193,719) $ 39,686,824 30% 3,073,938 $ 39,880,543 $ 968,597 $ (290,579) $ 39,589,964 40% 2,634,804 $ 39,880,543 $ 968,597 $ (387,439) $ 39,493,104 50% 2,195,670 $ 39,880,543 $ 968,597 $ (484,298) $ 39,396,245 60% 1,756,536 $ 39,880,543 $ 968,597 $ (581,158) $ 39,299,385 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30
Commodity Charges ($/hcf)
10% Tier 1 $6.81 $7.90 $8.62 $9.39 $9.96
Tier 2 $9.17 $10.64 $11.59 $12.64 $13.40
Tier 3 $13.78 $15.98 $17.42 $18.99 $20.13
20% Tier 1 $7.65 $8.87 $9.67 $10.54 $11.17
Tier 2 $10.29 $11.94 $13.01 $14.18 $15.03
Tier 3 $15.46 $17.94 $19.55 $21.31 $22.59
30% Tier 1 $8.72 $10.11 $11.02 $12.02 $12.74
Tier 2 $11.73 $13.61 $14.83 $16.17 $17.14
Tier 3 $17.63 $20.45 $22.29 $24.30 $25.75
40% Tier 1 $10.15 $11.77 $12.83 $13.98 $14.82
Tier 2 $13.65 $15.84 $17.26 $18.82 $19.95
Tier 3 $20.52 $23.80 $25.94 $28.28 $29.97
50% Tier 1 $12.15 $14.09 $15.36 $16.74 $17.74
Tier 2 $16.35 $18.96 $20.67 $22.53 $23.88
Tier 3 $24.56 $28.49 $31.05 $33.85 $35.88
60% Tier 1 $15.15 $17.57 $19.15 $20.87 $22.13
Tier 2 $20.38 $23.64 $25.77 $28.09 $29.78
Tier 3 $30.62 $35.52 $38.72 $42.21 $44.74
Proposed Drought Rates
Mandated Level of
Conservation
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3. Sewer Rate Study
3.1 Key Sewer Rate Study Considerations
The majority of the wastewater generated in the City is conveyed to the City of Los Angeles’ Hyperion Treatment Plant for treatment and final disposal. A small portion, up to 1,500,000 gallons per day, of wastewater is diverted to the City’s Sustainable Water Infrastructure Project (SWIP) to produce purified water used for non-potable uses (e.g., irrigation) and groundwater recharge. The sewer rate analysis was undertaken with several specific objectives, including:
• Generating sufficient revenue to meet anticipated operating and maintenance costs. • Maintain adequate reserve levels to ensure continuity in operations. • Ensure adequate funding for the utility’s capital projects, due to the level of capital investment planned over the next five years, particularly the planned Water Reclamation Facility. • Comply with Prop 218 requirements to ensure costs are properly allocated between user classifications.
In this study, NBS developed several sewer rate alternatives for consideration by City staff. The rates presented in this report were developed using industry standards and cost-of-service principles. The rate alternative ultimately selected by the City staff maintains the existing rate structure design while increasing the fixed cost recovery component from 15% to 20%.
This rate structure consists of a fixed charge based on the number of dwelling units for residential customers and a fixed charge per account for non-residential customers. There is also a volumetric charge for both residential and non-residential customers based on average winter water consumption. The updated rates were calculated based on the net revenue requirements, number of customer accounts, water consumption (estimated for residential customers because actual consumption for each residential customer is not available), and the amount and strength of the effluent received at the wastewater treatment plant. The following are the basic components included in this analysis:
CUSTOMER CLASSES
Customer classes are determined by grouping customers with similar flow and strength characteristics into different categories in order to reflect the cost differentials to service each type of customer. The City’s existing customer classes have been maintained in the rates developed in this study and proposed in this report.
For the City, the customer classes are split between single family residential, multi-family residential (MFR) (dependent on number of units), commercial (low, medium and high strength), institutional, church/school, industrial and wastewater only customers (these customers are contracted with the City of Los Angeles for water service, and are all single-family residential accounts).
COST ALLOCATION FACTORS
For the purpose of allocating costs to customer classes, the sewer revenue requirements were “functionalized” into four categories: (1) Collection related costs; (2) strength costs related to biochemical
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oxygen demand (BOD); (3) strength costs related to total suspended solids (TSS); and (4) customer servicerelated costs. The effluent strength factors were derived from the Amalgamated System Sewerage Facilities Charge (ASSFC) report for March-April 2018-19 to City of Los Angeles Bureau of Sanitation (LASAN). Each of these cost allocation factors have different implications for the costs of serving customers. For example, effluent from customers that contains higher levels of BOD and TSS is more costly to treat at the wastewater treatment plant and, therefore, those customers should be allocated a greater proportion of treatment costs compared to customers with lower-strength effluent. Detailed tables that document these cost allocations are shown in Appendix B.
DETERMINING REVENUE REQUIREMENTS BY CUSTOMER CLASS
The cost allocation factors were used to determine the percentage of the revenue requirements allocated to each customer class. For example, customer costs are allocated based on number of accounts and billable units, flow-related costs are allocated based on the estimated effluent generated by each class, and strength-related costs are allocated based on estimated strength of wastewater discharged by each customer class. Once the costs are allocated and the revenue requirement for each customer class is determined, collecting these revenue requirements from each customer class is addressed in the rate design task. Appendix B shows the amount of revenue that should be collected from each customer class within each functional cost category.
RATE DESIGN
The process of evaluating the sewer rate structure provides the opportunity to incorporate a number of rate-design objectives and policies, including revenue stability, equity among customer classes, and water conservation. NBS discussed several sewer rate alternatives and methodologies with City Staff over the course of this study, such as the percentage of revenue collected from fixed vs. variable charges and differentiating rates by customer class. Based on input provided by all stakeholders, the proposed rates were developed. The following sections describe this process.
NBS recommends that the City make the following modifications to the sewer rate structure:
1. Increase the fixed revenue recovery modestly from 15% to 20%. The increase is to help the City recover its fixed cost, roughly 70% of the total expenditures is fixed, in its operations.
2. Update the volumetric rates for all customers based on recent consumption statistics, state requirements, and cost of service analysis.
The following sections describe how the proposed sewer rates were developed.
3.2 Financial Plan / Sewer Utility Revenue Requirements Like the water utility, the revenue requirements, and recommended rate increases, are governed by the need to meet operating and capital costs, maintain adequate debt coverage, and build reserve funds.
Figure 21 summarizes the sources and uses of funds for the next five years.
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Figure 21. Summary of Revenue Requirements
The current state of the sewer utility, with regard to its broader objectives, is as follows:
Meeting Revenue Requirements: For Fiscal Years 2025/26 through 2029/30, the net revenue requirement (total annual expenses plus debt service and rate-funded capital costs, less non-rate revenues) is estimated to average $25.9 million. Increases to rate revenue over the next five years will be needed in order to meet the utility’s revenue requirements.
Meeting Capital Improvement Costs: City staff has identified a total of roughly $59.8 million (current year value) in capital improvements for the City’s sewer system for the five years, including required investments for the Moss Avenue Pump Station and the Santa Monica Urban Runoff Recycling Facility. The preferred rate adjustments will be able to fund the identified capital improvement project needs over the five-year rate implementation period. Appendix B provides a complete list of capital projects that were factored into the financial plan and the cost of each project. Project costs are listed in current and future values; future values reflect the estimated cost of each project in the year the project is planned, including estimated cost inflation of 3% per year, per the Engineering News Record Construction Cost Inflation Index. Delaying the rate increases recommended in this study would result in more significant increases in later years.
Budget
FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Sources of Wastewater Funds
Wastewater Fund, 51 $ 45,852,598
Rate Revenue:
Revenue Under Current Rates $ 20,700,000 $ 20,786,940 $ 20,874,245 $ 20,961,917 $ 21,049,957 $ 21,138,367 Revenue from Rate Increases 2
- 1,455,086 3,024,678 4,717,333 6,284,372 7,957,714
Subtotal: Rate Revenue After Rate Increases $ 20,700,000 $ 22,242,026 $ 23,898,923 $ 25,679,250 $ 27,334,329 $ 29,096,081 Non-Rate Revenue:
Charges for Services $ 975,448 $ 965,946 $ 956,365 $ 958,118 $ 959,907 $ 961,731 Fines and Forfeitures - - - - - -
Interest Income 860,000 704,928 509,720 457,276 476,331 449,151 Other Revenue 220,000 400,000 398,813 406,789 414,925 423,223 Subtotal: Non-Rate Revenue $ 2,055,448 $ 2,070,874 $ 1,864,898 $ 1,822,183 $ 1,851,162 $ 1,834,105 Total Sources of Funds $ 22,755,448 $ 24,312,899 $ 25,763,821 $ 27,501,433 $ 29,185,491 $ 30,930,186 Uses of Wastewater Funds
Wastewater Fund, 51
Operating Expenses 3
Salaries and Benefits $ 3,484,644 $ 4,288,826 $ 4,578,278 $ 4,748,523 $ 4,914,736 $ 5,144,873 Supplies and Expenses 16,922,501 17,963,599 18,413,185 18,870,710 19,331,984 19,806,515 Retirement and OPEB 17,978 18,877 19,821 20,812 21,852 22,945 Interfund Transactions (3,557,049) (2,544,547) (2,580,637) (2,617,467) (2,655,055) (2,690,034) Subtotal: Operating Expenses: $ 16,868,074 $ 19,726,755 $ 20,430,647 $ 21,022,577 $ 21,613,517 $ 22,284,299 Other Expenditures
Existing Debt Service $ 2,948,946 $ 2,948,946 $ 2,948,946 $ 2,948,946 $ 2,948,946 $ 2,948,946 New Debt Service - - - - - -
Rate-Funded Capital Expenses 5,221,192 14,113,500 - - 848,603 4,147,519 Subtotal: Other Expenditures $ 8,170,138 $ 17,062,445 $ 2,948,946 $ 2,948,946 $ 3,797,549 $ 7,096,464 Total Uses of Funds $ 25,038,212 $ 36,789,201 $ 23,379,593 $ 23,971,522 $ 25,411,065 $ 29,380,763 Annual Surplus/(Deficit) $ (2,282,764) $ (12,476,301) $ 2,384,228 $ 3,529,910 $ 3,774,426 $ 1,549,423 Net Revenue Req't. (Total Uses less Non-Rate Revenue) $ 22,982,764 $ 34,718,327 $ 21,514,695 $ 22,149,340 $ 23,559,903 $ 27,546,658 Projected Annual Rate Revenue Adjustment 0.00% 7.00% 7.00% 7.00% 6.00% 6.00% Cumulative Increase from Annual Revenue Increases 0.00% 7.00% 14.49% 22.50% 29.85% 37.65% Debt Coverage After Rate Increase (minimum 1.2 ratio) 2.00 1.56 1.81 2.20 2.57 2.93
1. Revenue and expenses for are from PW_51FundForecast-Wastewater Budget values are detailed in Exhibit 1 (O&M).
2. Revenue from rate increases assumes an implementation date of July 1, 2025 and then July 1 each year thereafter.
3. The operating expenses are from the fund forecast. Inflationary factors are applied to these expenses to project costs in FY 2028/29 and beyond.
4. Stormwater fund 52 contributes to the SWIP project.
RATE REVENUE REQUIREMENTS SUMMARY 1 Projected
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Building and Maintaining Reserve Funds: It is important for municipal utilities to maintain reasonable reserves in order to handle emergencies, fund working capital, maintain a good credit rating, and generally follow sound financial management practices. NBS recommends that the City maintain reserves in order to meet the following targets:
• An Operating Reserve equal to 90 days of the Utility’s budgeted annual operating expenses, which is equal to a three-month (or 25%) cash reserve for normal operations. The City’s minimum operating reserve target is set equal to 60 days of reserves. An Operating Reserve is intended to promote financial viability in the event of any short-term fluctuation in revenues and/or expenditures. Fluctuations might be caused by weather patterns, the natural inflow and outflow of cash during billing cycles, natural variability in demand-based revenue streams (e.g., variable charges), and – particularly in periods of economic distress – changes or trends in age of receivables.
• A Capital Rehabilitation and Replacement Reserve equal to 3% of net capital assets of the utility for capital repair and replacement needs, which serves simply as a starting point for addressing long-term needs. If ratepayers can generate revenues at this level and pace, they will have reserved a partial cash resource that can be applied toward the future replacement and rehabilitation needs of the utility.
• A Rate Stabilization Reserve has a target reserve of $1 million and is to remain unchanged from current City policy. This reserve is intended to provide additional financial security to the Utility should any unforeseen revenue shortages or capital emergency occur. • Maintaining Adequate Bond Coverage: The City is required by its bond covenant to maintain a debt service coverage ratio of at least 1.25 for the outstanding revenue bonds. This analysis assumes the City will be required to maintain the same debt coverage requirement for any existing or anticipated debt (e.g., Clean Water State Revolving Fund Loan for the SWIP). However, maintaining a higher coverage ratio strengthens the City’s credit rating, which can help lower the interest rates for debtfunded capital projects in the future and reduce annual debt service payments. It is projected that the City will meet the 1.25 debt coverage ratio for all existing and anticipated debt for the five-year planning period and beyond.
Figure 22 summarizes the projected reserve fund balances and reserve targets. A summary of the proposed sewer utility 10-year financial plan, including revenue requirements, reserve funds, revenue sources, proposed rate increases, and the Utility’s capital improvement program, is included in Appendix B - Sewer Rate Study Summary Tables.
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Figure 22. Summary of Sewer Reserve Funds
A more detailed version of the utility’s proposed five-year financial plan is included in Appendix B. The Appendix tables include revenue requirements, reserve funds, revenue sources, proposed rate increases, and the City’s capital improvement program.
3.3 Characteristics of Sewer Customers by Class
The key factors used in allocating costs as a part of the sewer cost-of-service analysis include the estimated effluent (flow) going to the wastewater treatment plant from each customer class as well as the effluent strengths (i.e., biochemical oxygen demand and total suspended solids). The most recent water consumption data, which is FY 2023/24, was used to estimate flow to the wastewater treatment plant because it is correlated to the amount of flow that goes to the treatment plant.
For the City, the customer classes are split between single family residential, multi-family residential (MFR) (dependent on number of units), commercial (low, medium and high strength), institutional, church/school, industrial and wastewater only customers (these customers are contracted with the City of Los Angeles for water service, and are all single-family residential accounts).
As shown in Figure 23, the development of the collection (or volume) allocation factor was calculated by taking the lowest consecutive 4-month water usage from FY 2023/24 and annualizing the usage per customer class. From here, the annual usage was adjusted to meet the flow data from the wastewater treatment plant. It should be noted that this is where the discharge factor was also analyzed and calculated to reflect the current cost of service. The discharge factor was calculated by taking the estimated FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30
Operating Reserve
Ending Balance $ 4,931,689 $ 5,107,662 $ 5,255,644 $ 5,403,379 $ 5,571,075 Recommended Minimum Target 4,931,689 5,107,662 5,255,644 5,403,379 5,571,075 Capital Rehabilitation & Replacement Reserve
Ending Balance $ 17,557,700 $ 13,948,287 $ 14,636,063 $ 9,929,391 $ 7,840,127 Recommended Minimum Target 5,921,300 6,033,400 6,141,500 6,302,700 6,458,400 Rate Stabilization Reserve
Ending Balance $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 Recommended Minimum Target 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 Total Ending Balance (Unrestricted) $ 23,489,389 $ 20,055,948 $ 20,891,707 $ 16,332,770 $ 14,411,202 Total Recommended Minimum Target $ 11,852,989 $ 12,141,062 $ 12,397,144 $ 12,706,079 $ 13,029,475 Beginning Reserve Fund Balances and
Recommended Reserve Targets
Projected
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wastewater flow and dividing it by the annual metered water use volume per customer class. This discharge factor is the multiplier specific to each customer class that estimates the amount of sewage discharged to the City’s wastewater system.
Figure 23. Development of the Volume Allocation Factor and Discharge Factors
DETERMINING CUSTOMER CLASSES EFFLUENT STRENGTHS
Figure 24 shows the development of the strength allocation factors by customer class. The typical strength factors for biochemical oxygen demand (BOD) and total suspended solids (TSS) are derived from the Amalgamated System Sewerage Facilities Charge (ASSFC) report for March-April 2018-19 to Los Angeles Sanitation District (LASAN) and calculated for commercial customers based on weighted averages for each class.
Figure 24. Development of the Strength Allocation Factor Customer Class
Number
of Accounts 1
Number
of EDUs 1
Annual
Volume
(hcf)1
Lowest
4-Months
Water Use
(hcf)1,2
Estimated
Wastewater
Flow
Discharge
Factors
Adjusted
Annual
Volume (hcf) 3
Percentage
of Adjusted
Volume
Calculation Components
Single Family 7,541 7,541 1,205,541 341,641 1,024,922 85% 785,090 24.6% MFR: Duplex + Triplex 1,112 2,674 144,680 43,631 130,894 90% 100,264 3.1% MFR: Fourplex + Larger 3,850 40,480 1,666,254 539,142 1,617,427 97% 1,238,949 38.9% MFR : Individually metered 1,572 1,601 79,047 25,957 77,870 99% 59,649 1.9% MFR : Mixed Use 34 989 58,693 18,664 55,991 95% 42,889 1.3% Commercial - Low 1,665 5,122 696,163 216,951 650,854 93% 498,554 15.6% Commercial - Medium 33 204 27,700 8,697 26,092 94% 19,987 0.6% Commercial - High 301 3,431 466,294 148,321 444,963 95% 340,841 10.7% Institutional 77 457 62,049 17,027 51,082 82% 39,129 1.2% Church/Schools 151 627 85,252 23,156 69,468 81% 53,212 1.7% Misc Industrial 11 78 10,565 3,108 9,323 88% 7,141 0.2% Wastewater Only 34 - - - - 85% - 0.0%
Total 16,381 63,203 4,502,239 1,386,295 4,158,885 92% 3,185,706 100.0% 3,185,706 Flow (hcf/yr.)
0.77 Flow Adj. Factor
1. Consumption, accounts and EDUs from FY 23-24.
2. The four consecutive month period of lowest water usage during Fiscal Year 23/24, for each customer class.
3. NBS adjusted the average winter consumption to the outgoing wastewater flows pumped from the City's Moss Avenue Pump Station to the City of Los Angeles' Hyperion Water Reclamation Plant for treatment and disposal.
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Figure 25 summarizes the development of the customer allocation factor.
Figure 25. Development of the Customer Allocation Factor
3.4 Rate Design Analysis
The process of evaluating the sewer rate structure provides the opportunity to incorporate a number of ratedesign objectives and policies, including revenue stability, equity among customer classes, and water conservation. NBS discussed several sewerrate alternatives and methodologies with City Staff over the course of this study, such as the percentage of revenue collected from fixed vs. variable charges and differentiating rates by customer class. Based on input provided by City staff, the proposed rates were developed. The following sections describe this process.
NBS recommends that the City make the following modifications to the sewer rate structure:
Customer Class
Adjusted
Annual Flow
(hcf)
Average
Strength
Factor (mg/l)
Calculated
BOD
(lbs./yr.)
Adjusted
BOD
(lbs./yr.)
Percent of
Total
Average
Strength
Factor (mg/l)
Calculated TSS
(lbs./yr.)
Adjusted TSS
(lbs./yr.) Percent of Total
Single Family 785,090 225 1,101,969 1,149,915 18.7% 225 1,101,969 848,382 18.7% MFR: Duplex + Triplex 100,264 225 140,733 146,857 2.4% 225 140,733 108,348 2.4% MFR: Fourplex + Larger 1,238,949 225 1,739,016 1,814,680 29.5% 225 1,739,016 1,338,830 29.5% MFR : Individually metered 59,649 225 83,724 87,367 1.4% 225 83,724 64,457 1.4% MFR : Mixed Use 42,889 225 60,200 62,820 1.0% 225 60,200 46,347 1.0% Commercial - Low 498,554 150 466,521 486,819 7.9% 150 466,521 359,164 7.9% Commercial - Medium 19,987 600 74,810 78,064 1.3% 600 74,810 57,594 1.3% Commercial - High 340,841 1000 2,126,278 2,218,790 36.1% 1000 2,126,278 1,636,974 36.1% Institutional 39,129 140 34,174 35,660 0.6% 125 30,512 23,491 0.5% Church/Schools 53,212 140 46,474 48,496 0.8% 125 41,495 31,946 0.7% Misc Industrial 7,141 290 12,919 13,481 0.2% 550 24,502 18,864 0.4% Wastewater Only - 225 0 - 0.0% 225 0 - 0.0%
Total 3,185,706 5,886,818 6,142,950 100% 5,889,760 4,534,395 100% Target, from WWTP Data 6,142,950 BOD (lbs./yr.) 4,534,395 TSS (lbs./yr.)
1.04 BOD Adj. Factor 0.77 TSS Adj. Factor
1. Consumption, accounts and EDUs from FY 23-24.
2. Typical strength factors for BOD and TSS are derived from the ASSFC Report for March-April 2018-19 and calculated for Commercial customers with weighted averages.
Source files: ASSFC_Report_March-April_2018-19_to_LASAN.xlsx Biochemical Oxygen Demand (BOD) Total Suspended Solids (TSS) Customer Class
Number
of Accounts 1
Percentage
of Accounts
Single Family 7,541 46.0%
MFR: Duplex + Triplex 1,112 6.8%
MFR: Fourplex + Larger 3,850 23.5%
MFR : Individually metered 1,572 9.6%
MFR : Mixed Use 34 0.2%
Commercial - Low 1,665 10.2%
Commercial - Medium 33 0.2%
Commercial - High 301 1.8%
Institutional 77 0.5%
Church/Schools 151 0.9%
Misc Industrial 11 0.1%
Wastewater Only 34 0.2%
Total 16,381 100%
1. Consumption, accounts and EDUs from FY 23-24.
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1. Increase the fixed revenue recovery modestly from 15% to 20%
2. Update the discharge factor to reflect current consumption patterns.
3. Update the volumetric charges that will be calculated based on each unit of water consumed and multiplied by the discharge factor.
3.4.1 Fixed Charges
The fixed charge recognizes that the sewer utility incurs fixed costs regardless of whether customers send any wastewater into the City’s collection system. There are three factors used to develop the fixed charge:
the number of dwelling units for Residential customers and number of accounts for non-residential customers, and the annual revenue requirement. The bi-monthly fixed charge is calculated by taking the twenty percent fixed multiplied by the annual revenue requirement, then divided by the number of dwelling units (for residential customers) and accounts (for non-residential customers) and billing periods per year.
The fixed charges for each customer class are shown in Figure 27.
3.4.2 Variable Charges
The variable charges, on the other hand, are calculated by taking the additional eighty percent portion of the revenue requirement divided by the estimated sewage volume produced. This sewage volume is the water consumption multiplied by the updated discharge factors calculated in Figure 23. The volumetric charges for each customer class are summarized in the rate design table shown in Figure 28.
As part of the rate study, the City also updated the commodity rates for recycled water to reflect the cost-ofservice analysis. The commodity charges for recycled water customers are shown below in Figure 29. Further details on the development of the commodity charges for recycled water customers are found in Tables 55 through 57 in Appendix A.
Figure 26. Development of Fixed and Variable Charges
Customer Class
No. of
Accounts 1
No. of
Dwelling
Units 1
Estimated
Sewage
Volume2
Revenue
from Fixed
Charges
Revenue
from
Volumetric
Charges
Discharge
Factor
Bi-Monthly
Fixed Charge 3
Volumetric
Charge Per
hcf4
Residential Per DU
Single Family 7,541 7,541 785,090 $ 1,004,543 $ 5,606,900 85% $22.20 $4.92 MFR: Duplex + Triplex 1,112 2,674 100,264 $ 142,529 $ 763,624 90% $8.88 $4.92 MFR: Fourplex + Larger 3,850 40,480 1,238,949 $ 1,631,737 $ 5,461,228 97% $6.72 $4.92 MFR : Individually metered 1,572 1,601 59,649 $ 105,954 $ 810,923 99% $11.03 $4.92 Subtotal 14,075 52,296 2,183,952 $ 2,884,762 $12,642,675 Non-Residential Per Account
MFR : Mixed Use 34 989 42,889 $ 44,277 $ 160,069 95% $217.04 $4.92 Commercial - Low 1,665 5,122 498,554 $ 620,751 $ 2,065,089 93% $62.14 $4.43 Commercial - Medium 33 204 19,987 $ 27,598 $ 118,124 94% $139.39 $6.27 Commercial - High 301 3,431 340,841 $ 650,324 $ 2,515,194 95% $360.09 $7.73 Institutional 77 457 39,129 $ 46,408 $ 138,153 82% $100.45 $4.29 Church/Schools 151 627 53,212 $ 57,822 $ 212,374 81% $63.82 $4.90 Misc Industrial 11 78 7,141 $ 8,532 $ 35,766 88% $129.27 $5.68 Wastewater Only 34 - - $ 14,108 $ - 85% $135.91 N/A
Subtotal 2,306 10,907 1,001,753 $ 1,469,820 $ 5,244,769 -- -- Total 16,381 63,203 3,185,706 $ 4,354,582 $17,887,444 -- --
1. Consumption, accounts and EDUs from Source File: Customer Data 23_24.
2. Estimated sewage volume is annual water consumption multiplied by the discharge factor.
3. Fixed charges are designed to collect 20% of the total revenue requirement. For residential customers, the charges are per dwelling unit.
For non-residential customers, the charges are per account.
4. Volumetric charges are designed to collect 80% of the total revenue requirement.
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Packet Pg. 1095 Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service Rates (5 min)) Water and Sewer Rate Study – City of Santa Monica
Prepared by NBS – May 2025 32
3.5 Current and Proposed Wastewater Rates
Figure 27 and Figure 28 collectively provide the current and proposed current and proposed sewer rates for FY 2025/26 through FY 2029/30 for each customer class. More detailed tables on the development of the proposed sewer rates are documented in Appendix B.
Figure 27. Proposed Wastewater Rates – Fixed Charges
Figure 28. Proposed Wastewater Rates – Volumetric Charges Figure 29. Proposed Recycled Water Rates – Volumetric Charges FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30
Residential ($/Dwelling Unit)
Single Family $19.27 $22.20 $23.76 $25.42 $26.94 $28.56 MFR: Duplex + Triplex $7.76 $8.88 $9.51 $10.17 $10.78 $11.43 MFR: Fourplex + Larger $5.85 $6.72 $7.19 $7.69 $8.15 $8.64 MFR : Individually metered $9.41 $11.03 $11.80 $12.63 $13.39 $14.19 Non-Residential ($/Account)
MFR : Mixed Use $188.39 $217.04 $232.24 $248.49 $263.40 $279.21 Commercial - Low $55.06 $62.14 $66.49 $71.14 $75.41 $79.93 Commercial - Medium $117.07 $139.39 $149.14 $159.58 $169.16 $179.31 Commercial - High $294.27 $360.09 $385.30 $412.27 $437.00 $463.22 Institutional $88.78 $100.45 $107.48 $115.00 $121.90 $129.22 Church/Schools $56.62 $63.82 $68.29 $73.07 $77.45 $82.10 Misc Industrial $108.46 $129.27 $138.32 $148.00 $156.88 $166.29 Wastewater Only $128.54 $135.91 $145.43 $155.61 $164.94 $174.84 Fixed Charges ($/bi-monthly)
Wastewater Rate Schedule Current
Rates
Proposed Wastewater Rates
FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30
Residential
Single Family $4.65 85% $4.92 $5.27 $5.63 $5.97 $6.33
MFR: Duplex + Triplex $4.65 90% $4.92 $5.27 $5.63 $5.97 $6.33 MFR: Fourplex + Larger $4.65 97% $4.92 $5.27 $5.63 $5.97 $6.33 MFR : Individually metered $4.65 99% $4.92 $5.27 $5.63 $5.97 $6.33 Non-Residential
MFR : Mixed Use $4.32 95% $4.92 $5.27 $5.63 $5.97 $6.33 Commercial - Low $4.54 93% $4.43 $4.74 $5.07 $5.38 $5.70 Commercial - Medium $4.76 94% $6.27 $6.71 $7.18 $7.61 $8.07 Commercial - High $6.31 95% $7.73 $8.27 $8.85 $9.38 $9.95 Institutional $4.63 82% $4.29 $4.59 $4.91 $5.20 $5.52
Church/Schools $4.46 81% $4.90 $5.24 $5.61 $5.94 $6.30
Misc Industrial $4.39 88% $5.68 $6.07 $6.50 $6.89 $7.30 Wastewater Only -- 85% -- -- -- -- --
Volumetric Charges ($/hcf) of average winter water consumption) Discharge
Factor
Wastewater Rate Schedule Current
Rates
Proposed Wastewater Rates
FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30
Commodity Charges
All Customers ($/hcf)
Uniform Rate $3.49 $5.21 $6.04 $6.59 $7.18 $7.61
Recycled Water Rate Schedule Current Rates Proposed Rates
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Packet Pg. 1096 Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service Rates (5 min)) Water and Sewer Rate Study – City of Santa Monica
Prepared by NBS – May 2025 33
4. Recommendations and Next Steps
4.1 Consultant Recommendations
NBS recommends the City take the following actions:
• Approve and Accept This Study: NBS recommends the City Council formally approve and adopt this study and its recommendations and then proceed with the next steps outlined below to implement the recommended rate structure. This will provide documentation of the rate study analyses and the basis for analyzing potential changes to future rates. • Implement Recommended Levels of Rate Increases and Proposed Rates: Based on successfully meeting the Proposition 218 procedural requirements, the City Council should proceed with implementing the five-years of recommended rates and rate increases previously shown in Figure 18 (water) and Figure 27 and Figure 28 (sewer). This will help ensure the continued financial health of the City’s water and sewer utilities.
• Adopt Reserve Fund Targets: NBS recommends the City Council adopt the consultant-proposed reserve fund targets described in this study. The City should periodically evaluate reserve fund levels and attempt to maintain the recommended levels for the Operating, Capital Rehabilitation and Replacement, and Debt Reserves.
4.2 Next steps
Annually Review Rates and Revenue – Any time an agency adopts new utility rates or rate structures, those new rates should be closely monitored over the next several years to ensure the revenue generated is sufficient to meet the annual revenue requirements. Changing economic and water consumption patterns underscore the need for this review, as well as potential and unseen changing revenue requirements — particularly those related to environmental regulations that can significantly affect capital improvements and repair and replacement costs.
Note: The attached Technical Appendices provide more detailed information on the analysis of the financial plan, revenue requirements, cost-of-service, and the rate design analyses summarized in this report.
4.3 NBS’ Principal Assumptions and Considerations
In preparing this report and the opinions and recommendations included herein, NBS has relied on several principal assumptions and considerations regarding financial matters, conditions, and events that may occur in the future. This information and these assumptions, including the City’s budgets, capital improvement costs, customer accounts and consumption, and information from City staff were provided by sources we believe to be reliable, although NBS has not independently verified this data.
While we believe NBS’ use of such information and assumptions is reasonable for the purpose of this report and its recommendations, some assumptions will invariably not materialize as stated herein and may vary significantly due to unanticipated events and circumstances. Therefore, the actual results can be expected
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Packet Pg. 1097 Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service Rates (5 min)) Water and Sewer Rate Study – City of Santa Monica
Prepared by NBS – May 2025 34
to vary from those projected to the extent that actual future conditions differ from those assumed by us or provided to us by others.
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Packet Pg. 1098 Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service Rates (5 min)) Water and Sewer Rate Study
– City of Santa Monica
Prepared by NBS– May 2025 35
Technical Appendices
These Appendices contain: • Appendix A: Water Rate Study Tables and Figures • Appendix B: Sewer Rate Study Tables and Figures
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Packet Pg. 1099 Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service Rates (5 min)) Water and Sewer Rate Study – City of Santa Monica
Prepared by NBS – May 2025 36
Appendix A. Water Rate Study Tables and Figures
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Packet Pg. 1100 Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service Rates (5 min)) CITY OF SANTA MONICA Financial Plan & Reserve Summary
WATER RATE STUDYFinancial Plan and Reserve Projections
3 Alternative 31 Alternative 1 0.00% 8.00% 7.00% 7.00% 7.00% 7.00% 2 Alternative 2 0.00% 11.00% 9.00% 7.00% 6.00% 6.00%3 Alternative 3 0.00% 20.00% 16.00% 9.00% 9.00% 6.00%4 Alternative 4 0.00% 70.00% 40.00% 3.00% 3.00% 3.00% TABLE 1 : FINANCIAL PLAN AND SUMMARY OF REVENUE REQUIREMENTS FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Sources of Water Funds
Water Rate Revenue
Water Sales Revenue Under Current Rates $ 41,567,286 41,567,286 $ 41,741,869 $ 41,917,184 $ 42,093,237 $ 42,270,028 $ Revenue from Rate Increases 1 8,313,457 - 16,362,812 21,682,921 27,522,040 31,832,092 Subtotal: Rate Revenue After Rate Increases 41,567,286 $ 49,880,743 $ 58,104,681 $ 63,600,106 $ 69,615,276 $ 74,102,120 $ Non-Rate Revenue
Reimbursement from other funds $ 463,500 450,000 $ 477,405 $ 491,727 $ 507,986 $ 520,177 $ Water Neutrality Fee Revenue 1,354,862 1,328,296 1,381,959 1,409,598 1,437,790 1,472,297 Charges for Service (other than Rate Revenue) 767,000 767,000 767,000 767,000 767,001 767,001 Investment Income 221,468 750,000 177,395 147,340 173,573 173,573 Other Revenues 530,000 555,000 530,000 530,000 530,002 470,000 Subtotal: Non-Rate Revenue 3,850,296 $ 3,336,830 $ 3,333,759 $ 3,345,666 $ 3,416,352 $ 3,403,048 $ Total Sources of Funds 45,417,582 $ 53,217,573 $ 61,438,440 $ 66,945,772 $ 73,031,628 $ 77,505,169 $ Uses of Water Funds
Operating Expenses
Salaries and Benefits $ 11,873,093 9,457,601 $ 12,362,633 $ 12,777,742 $ 13,359,453 $ 14,558,417 $ Water Purchases2 5,727,788 5,207,080 6,300,567 6,930,623 7,623,686 7,806,654 Supplies and Expenses 16,733,036 16,503,494 17,082,869 17,374,298 17,747,400 18,052,432 Retirement and OPEB 51,627 49,169 54,209 56,919 59,766 215,663 Interfund Transfers 1,456,843 1,411,672 1,503,367 1,551,285 1,605,655 1,655,982 Subtotal: Operating Expenses $ 35,842,387 32,629,016 $ 37,303,644 $ 38,690,868 $ 40,395,959 $ 42,289,148 $ Other Expenditures
Debt Service (Interfund Loan Repayment) $ 706,367 706,367 $ 706,367 $ 706,367 $ 706,367 $ 706,367 $ Debt Service (Water Revenue Bond) 3,554,587 3,553,187 3,553,587 3,551,863 3,550,175 3,550,362 New Debt Service - - - - 8,361,556 8,361,556
Rate-Funded Capital Expenses 13,438,671 13,337,857 18,676,718 21,436,970 19,042,343 19,803,897 Subtotal: Other Expenditures 17,597,411 $ 17,699,625 $ 22,936,672 $ 25,695,199 $ 31,660,440 $ 32,422,182 $ Total Uses of Water Funds 50,226,427 $ 53,542,012 $ 60,240,316 $ 64,386,067 $ 72,056,400 $ 74,711,330 $ Annual Surplus/(Deficit) (4,808,845) $ (324,439) $ 1,198,124 $ 2,559,704 $ 975,229 $ 2,793,838 $ $ 50,205,182 46,376,131 $ 56,906,557 $ 61,040,401 $ 68,640,048 $ 71,308,282 $ Projected Annual Rate Revenue Adjustment 0.00% 20.00% 16.00% 9.00% 9.00% 6.00%
0.00% 20.00% 39.20% 51.73% 65.38% 75.31%
Debt Coverage After Rate Increase 24.60 18.10 34.17 40.00 3.60 3.88
1. Revenue from rate increases assumes an implementation date of July 1, 2025 and then July 1 each year thereafter.2. Net of water purchases and Arcadia AOP/UV System that is funded with the Gillette-Boeing Settlement Funds (shown in restricted reserves section of Table 2).
RATE REVENUE REQUIREMENTS SUMMARY BudgetNet Revenue Req't. (Total Uses less Non-Rate Cumulative Increase from Annual Revenue Increases Projected
Prepared by NBSwww.nbsgov.com | 800.676.7516
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Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA Financial Plan & Reserve Summary
WATER RATE STUDYFinancial Plan and Reserve ProjectionsTABLE 2 : RESERVE FUND SUMMARY Budget
FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Total Beginning Cash 1 $ 10,290,659 15,376,561 $ 9,966,220 $ 11,164,344 $ 13,724,049 $ 14,699,277 $ Operating ReserveBeginning Reserve Balance $ 12,760,504 $ 7,627,220 7,951,659 $ 8,825,344 $ 9,672,717 $ 10,098,990 $ Plus: Net Cash Flow (After Rate Increases) (4,808,845) (324,439) 1,198,124 2,559,704 975,229 2,793,838 Plus: Transfer in of Settlement Funds to reach targets - - - - - - Transfer Out/In to Capital R&R Reserve - - - (1,712,332) (548,956) (2,320,541) Ending Operating Reserve Balance $ 7,627,22 7,951,659 $ 8,825,344 0 $ 9,672,717 $ 10,098,99 $ 10,572,287 0 $ Target Ending Balance (90-days of O&M) 2 $ 8,960,597 8,157,254 $ 9,325,911 $ 9,672,717 $ 10,098,990 $ 10,572,287 $ Capital Rehabilitation & Replacement Reserve Beginning Reserve Balance $ 1,616,057 $ 1,339,000 1,339,000 $ 1,339,000 $ 3,051,332 $ 3,600,287 $ Plus: Transfer of Operating Reserve Surplus - - - 1,712,332 548,956 2,320,541 Less: Use of Reserves for Capital Projects (277,057) - - - - - Ending Capital Rehab & Replacement Reserve Balance $ 1,339,00 1,339,000 $ 1,339,00 0 $ 3,051,332 0 $ 3,600,287 $ 5,920,82 $ 8 Capital R&R Reserve (3.0% of Net Assets) 1,339,000 $ 1,943,200 $ 2,735,100 $ 3,613,200 $ 4,376,200 $ 4,430,400 $ Rate Stabilization Reserve Beginning Reserve Balance $ 1,000,000 $ 1,000,000 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ Less: Use of Reserves for Operating Expenses - - - - - - Ending Rate Stabilization Reserve Balance $ 1,000,00 1,000,000 $ 1,000,00 0 $ 1,000,00 0 $ 1,000,00 0 $ 1,000,00 0 $ 0 Rate Stabilization Reserve ($1 million) 1 $ 1,000,000 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ Ending Balance $ 9,966,220 10,290,659 $ 11,164,344 $ 13,724,049 $ 14,699,277 $ 17,493,116 $ Minimum Target Ending Balance $ 11,903,797 10,496,254 $ 13,061,011 $ 14,285,917 $ 15,475,190 $ 16,002,687 $ Ending Surplus/(Deficit) Compared to Targets (205,595) $ (1,937,577) $ (1,896,667) $ (561,868) $ (775,913) $ 1,490,42 $ 8 Days Cash On Hand 113 10 107 0 127 10 124 8
SUMMARY OF CASH ACTIVITYUN-RESTRICTED RESERVES
Projected
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Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA Financial Plan & Reserve Summary
WATER RATE STUDYFinancial Plan and Reserve ProjectionsTABLE 3 : RESERVE FUND SUMMARY, CONTINUED Restricted ReservesConnection Fee ReserveBeginning Reserve Balance 1,500,000 $ 1,500,000 $ 1,500,000 $ 1,500,000 $ 1,500,000 $ 1,500,001 $ Plus: Reserve Funding from New Connection Fees 1,500,000 1,500,000 1,500,000 1,500,000 1,500,001 1,500,001 Plus: Interest Income - - - - - -
Less: Use of Connection Fees for CIP (1,500,000) (1,500,000) (1,500,000) (1,500,000) (1,500,000) (1,500,001) Ending Debt Reserve Balance 1,500,00 $ 1,500,00 0 $ 1,500,00 0 $ 1,500,00 0 $ 1,500,001 0 $ 1,500,001 $ Target Ending Balance - $ - $ - $ - $ - $ - $
Reserved for Olympic Sub-basin RemediationBeginning Reserve Balance 3 $ 193,365 $ 3,025,447 1,851,359 $ 4,648,073 $ 4,516,528 $ 4,323,811 $ Plus: Funding from Gillette/Boeing Settlement 4 - - -
Plus: Transfer in from General Fund 4 1,200,000 1,600,000 1,700,000 - - - Plus: Interest Income - - - - - -
Less: Use of Settlement Funds for CIP 4 (1,666,162) (1,564,616) (1,735,616) (1,808,141) (1,916,111) - Less: Borrow Settlement Funds for CIP (interest free) - - - - - - 740,610 740,610 740,610 740,610 740,610 -
Less: Use of Settlement Funds for O&M 4 899,640 882,000 917,633 935,985 982,785 - Less: Transfer to O&M to reach Reserve Targets - - - - - - Plus: Loan RepaymentEnding Olympic Sub-Basin Remediation Fund 1,851,359 $ 3,025,447 $ 4,648,073 $ 4,516,52 $ 4,323,811 8 $ 4,323,811 $ Annual Interest Earnings Rate 5 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Plus: Borrow Settlement Funds for City Yard Master
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Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service
CITY OF SANTA MONICA
WATER RATE STUDY Rate Adjustment Charts and Report TablesCHART 1 $.0 Mil
$10.0 Mil$20.0 Mil$30.0 Mil$40.0 Mil$50.0 Mil$60.0 Mil$70.0 Mil$80.0 Mil$90.0 Mil 2025 2026 2027 2028 2029 2030
Annual Obligations
Fiscal Year Ending June 30
Water Revenue Requirements vs.
Revenue Under Existing and Increased Rates
Cash Funded Capital ExpensesDebt ServiceO&M ExpensesRevenues under Existing RatesRevenues under Adjusted Rates Prepared by NBSwww.nbsgov.com | 800.676.7516
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Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service
CITY OF SANTA MONICA
WATER RATE STUDY Rate Adjustment Charts and Report TablesCHART 2 $.0 Mil
$2.0 Mil$4.0 Mil$6.0 Mil$8.0 Mil
$10.0 Mil$12.0 Mil$14.0 Mil$16.0 Mil$18.0 Mil$20.0 Mil
2025 2026 2027 2028 2029 2030
Fiscal Year Ending June 30
Un-Restricted Cash Balances vs.
Recommended Reserve Targets
Ending Cash Balance (Un-Restricted)Minimum Target Reserve Balance (60 day O&M)Recommended Target Reserve Balance (90 day O&M) Prepared by NBSwww.nbsgov.com | 800.676.7516
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Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service
CITY OF SANTA MONICA
WATER RATE STUDY Rate Adjustment Charts and Report TablesCHART 3
20.00%
16.00%
9.00% 9.00%
6.00%
0%5%
10%15%20%25%
2026 2027 2028 2029 2030
Fiscal Year Ending June 30
Projected Adjustments to Rate Revenue
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Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 1
WATER RATE STUDYOperating Revenue and ExpensesTABLE 4 : OPERATING REVENUE FORECAST Budget 1 Budget 1 DESCRIPTION Basis FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Water Fund, 50
Charges for Service
Water - Commercial Sales 1 41,666,985 $ $ 41,567,286 $ 41,741,869 41,567,286 $ 41,917,184 $ 42,093,237 $ 42,270,028 $ Water - Meter Services/Install 15 750,000 750,000 750,000 750,000 750,000 750,000 750,000 Reimbursement from other funds 2 450,000 450,000 463,500 477,405 491,727 507,986 520,177 Damage Repair Work 15 17,000 17,000 17,000 17,000 17,000 17,001 17,001 Water Capital Facilities Fee 15 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 Water Demand Mitigation Fee 15 - - - - - 1 1
Admin Fee Water Neutrality 2 208,000 214,864 219,161 223,545 228,015 232,576 238,158 In Lieu Fee Water Neutrality 2 780,000 1,000,000 1,020,000 1,040,400 1,061,208 1,082,432 1,108,411 Plan Check Fee Water Neutrality 2 104,000 107,432 109,581 111,772 114,008 116,288 119,079 Inspection Fee Water Neutrality 2 3,099 6,000 6,120 6,242 6,367 6,495 6,650 Subtotal: Charges for Service 45,479,084 $ 45,612,582 $ 45,652,648 $ 45,868,233 $ 46,085,510 $ 46,306,015 $ 46,529,505 $ Interest Income
Internal Dep./Investment 15 750,000 750,000 221,468 177,395 147,340 173,573 173,573 Unrealized Gain (Loss) 15 - - - - - - -
Accrued Investment Income 15 - - - - - - -
Subtotal: Interest Income 750,000 $ 750,000 $ 221,468 $ 177,395 $ 147,340 $ 173,573 $ 173,573 $ Other Revenues
MWD SoCal Water smart Rebate 15 - - - - - 1 320,000
Other Revenues - Misc 15 15,000 15,000 15,000 15,000 15,000 15,000 - Alt Fuel Tax Credit 15 - - - - - 1 150,000
Water - Misc Non-Operating 15 365,000 365,000 365,000 365,000 365,000 365,000 - Baysaver Fees 15 175,000 175,000 150,000 150,000 150,000 150,000 - Subtotal: Other Revenues 555,000 $ 555,000 $ 530,000 $ 530,000 $ 530,000 $ 530,002 $ 470,000 $ TOTAL: REVENUE 1 $ 46,917,582 46,784,084 $ 46,404,116 $ 46,575,628 $ 46,762,850 $ 47,009,589 $ 47,173,078 $ (Draft 5-year Forecast) 2
Prepared by NBSwww.nbsgov.com | 800.676.7516
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Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 1
WATER RATE STUDYOperating Revenue and ExpensesTABLE 5 : REVENUE SUMMARY DESCRIPTION FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Water Fund, 50
Rate Revenue 41,666,985 $ 41,567,286 $ 41,567,286 $ 41,741,869 $ 41,917,184 $ 42,093,237 $ 42,270,028 $ Connection Fee Revenue 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,001 1,500,001 Reimbursement from other funds 450,000 450,000 463,500 477,405 491,727 507,986 520,177 Water Neutrality Fee Revenue 1,095,099 1,328,296 1,354,862 1,381,959 1,409,598 1,437,790 1,472,297 Charges for Service (other than Rate Revenue) 767,000 767,000 767,000 767,000 767,000 767,001 767,001 Investment Income 750,000 750,000 221,468 177,395 147,340 173,573 173,573 Other Revenues 555,000 555,000 530,000 530,000 530,000 530,002 470,000 TOTAL: WATER OPERATING REVENUE 1 $ 46,917,582 46,784,084 $ 46,404,116 $ 46,575,628 $ 46,762,850 $ 47,009,589 $ 47,173,078 $
1. Revenue and expenses from PW_50FundForecast-Water-24-25.2. Source file for Budget: PW_50FundForecast-Water_24-25.
Prepared by NBSwww.nbsgov.com | 800.676.7516
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Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 1
WATER RATE STUDYOperating Revenue and ExpensesTABLE 6 : OPERATING EXPENSE FORECAST DESCRIPTION Basis FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Water Fund, 50
Permanent Employees 3 5,911,102 $ 6,125,331 $ 6,247,838 $ 6,372,794 $ 6,500,250 $ 6,630,255 $ $ 6,829,163 Vacation Lump Sum Pays 15 - - - - - - -
Council/Board Allowance 15 2,572 2,623 2,623 2,623 2,623 2,623 2,623Standby Pay 3 27,562 28,113 28,676 29,249 29,834 30,431 31,344Overtime 3 164,663 167,956 171,315 174,741 178,236 181,801 187,255Temporary Employees 15 - - - - - - - Medicare Employer Contribution 5 83,234 85,747 86,990 88,252 89,531 90,830 99,004Workers' Comp Insurance 4 193,248 200,405 207,561 214,718 229,033 244,303 263,847Medical - Misc. Employee 5 1,009,623 1,080,297 1,188,327 1,307,159 1,437,875 1,581,663 1,724,012 Medical Trust - Misc. Employee 3 114,533 116,812 119,148 121,531 123,962 126,441 130,234 Dental 7 60,868 61,956 63,071 64,206 65,362 66,539 68,535Vision 6 7,436 7,488 7,563 7,639 7,715 7,792 7,909Employee Health Contribution 8 (80,784) (86,437) (95,066) (104,573) (115,030) (126,533) (135,390)Retirement - Misc. Employee 9 1,472,660 1,588,838 1,993,060 2,103,022 2,184,084 2,400,152 3,102,869 Retirement - As Needed 15 - - - - - - -
Unemployment 15 27,244 28,089 28,651 29,224 29,808 30,404 30,404EAP 15 1,007 1,007 1,017 1,027 1,038 1,048 1,048DCAP 15 1,855 1,855 1,855 1,855 1,855 1,855 1,855Life Insurance and AD&D 10 8,897 9,165 9,348 9,535 9,726 9,920 10,417Disability Insurance 6 37,206 38,356 39,507 40,692 41,913 43,170 43,818 EBB Budget Request: Add 1 FTE Water Quality Sup 3- 232,344 239,314 246,494 253,889 248,473 EBB Budget Request: Add 1 FTE AMI Supervisor 3- 211,798 218,152 224,696 231,437 235,092 EBB Budget Request: Add 1 FTE Water Conservatio 3- 208,085 214,328 220,757 227,380 245,443 EBB Budget Request: Add 1 FTE SCADA Supervisor (50/50 Split with WW Fund) 114,059 110,737 117,481 121,005 124,635 Equity Adjustment for ALL POSITIONS (10%) 3- 1,008,645 1,113,084 1,150,498 1,203,047 1,305,827 Salaries and Benefits - SUBTOTAL 9,042,926 $ 9,457,601 $ 11,873,093 $ 12,362,633 $ 12,777,742 $ 13,359,453 $ 14,558,417 $ Prepared by NBSwww.nbsgov.com | 800.676.7516
Exhibit 1 (O&M), 9 of 52
5/28/2025
12.B.a
Packet Pg. 1109
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 1
WATER RATE STUDYOperating Revenue and ExpensesTABLE 7 : OPERATING EXPENSE FORECAST, CONTINUED DESCRIPTION Basis FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Supplies and Expenses
50500001.521000 - ADVERTISING 12 - $ - $ - $ - $ - $ - $ $ - 50500001.521810 - VEHICLES - FUELS / LUBRICATIO 12 25,009 27,510 28,170 28,846 29,539 30,248 30,974 50500001.521820 - CNG/LNG FUEL 12 62,915 94,373 96,638 98,957 101,332 103,764 106,255 50500001.523330 - UTILITIES BILLING SERVICES 15 333,820 345,013 351,913 358,952 366,131 373,453 373,45350500001.523340 - PROPERTY TAXES 2 95,000 96,900 98,838 100,815 102,831 104,888 107,40550500001.523370 - METERED POSTAGE 2 25,859 26,376 26,904 27,442 27,990 28,550 29,23550500001.523420 - INDIRECT COST ALLOCATION 12 2,044,223 2,107,594 2,181,360 2,257,707 2,336,727 2,418,513 2,476,557 50500001.524000 - MEMBERSHIPS AND DUES 2 13,578 13,850 14,127 14,410 14,698 14,992 15,35150500001.524700 - RENT 2- - - - - - - 50500001.524702 - OTHER OPERATING RENTS 2 231,087 235,709 240,423 245,232 250,136 255,139 261,262 50500001.524710 - REIMBURSE ENGINEERING OFF 2- - - - - - - 50500001.525000 - OFFICE SUPPLIES AND EXPENSE 2 16,189 16,513 16,843 17,180 17,524 17,874 18,303 50500001.525001 - DISCOUNTS AVAILABLE 2- - - - - - -
50500001.525002 - DISCOUNTS LOST 2- - - - - - -
50500001.525080 - SPECIAL DEPARTMENT SUPPLIE 2 1,334,125 1,360,808 1,388,024 1,415,785 1,444,100 1,472,982 1,508,334 50500001.525190 - RIDESHARE AND PARKING PRO 2 9,400 9,588 9,588 9,588 9,588 9,588 9,81850500001.525200 - UNIFORM / PROTECTIVE CLOTH 2 42,824 43,680 44,554 45,445 46,354 47,281 48,415 50500001.525320 - UNIFORM RENTAL 2- - - - - - -
50500001.528000 - UTIL - LIGHT / POWER 2 921,174 1,050,138 1,071,141 1,092,564 1,114,415 1,136,703 1,163,984 50500001.528010 - UTILITIES - NATURAL GAS 2 2,120 3,180 3,244 3,308 3,375 3,442 3,52550500001.528020 - UTILITIES - WATER 2 5,160 5,882 6,000 6,120 6,242 6,367 6,52050500001.528030 - WATER PURCHASES 2 4,124,588 5,727,788 5,207,080 6,300,567 6,930,623 7,623,686 7,806,65450500001.528040 - UTILITIES - TELEPHONE 2 99,226 101,211 103,235 105,300 107,406 109,554 112,183 50500001.529040 - VEHICLE MGMT FUND-MAINTE 2 290,401 307,572 314,954 322,513 330,253 338,179 346,295 50500001.529230 - COMPUTER EQUIP/SOFTWARE 2 180,642 159,805 163,001 166,261 169,586 172,978 177,13050500001.529540 - CSB WATER PRODUCTION-O&M 2 100,000 102,000 104,040 106,121 108,243 110,408 113,05850500001.531010 - CONFERENCES/MEETINGS/TRA 2 14,893 15,191 15,495 15,805 16,121 16,443 16,838 50500001.531011 - FOOD PURCHASES 2 2,160 2,203 2,247 2,292 2,338 2,385 2,44250500001.531020 - TRAINING COSTS 2- - - - - - - 50500001.531030 - TRAINING 2 25,566 26,077 26,599 27,131 27,673 28,227 28,90450500001.534000 - BANK FEES 2 5,348 5,455 5,564 5,675 5,789 5,905 6,04650500001.534550 - GENERAL LIABILITY / AUTO 2 342,301 388,755 444,844 483,526 502,867 522,982 535,533 50500001.534570 - PROPERTY INSURANCE 2 476,193 554,384 639,674 710,749 746,286 783,600 802,40750500001.535000 - INTEREST EXPENSE 2- - - - - - - 50500001.535010 - INTEREST EXPENDITURE - BON 2 2,246,130 2,291,053 2,059,579 1,998,588 1,926,863 1,926,864 1,973,108 50500001.536030 - WASTE DISPOSAL (BRINING) 2 700,000 714,000 728,280 742,846 757,703 772,857 791,405 50500001.536050 - REGULATORY AGENCY FEES 2 116,819 119,155 121,538 123,969 126,448 128,977 132,073 50500001.536550 - LEGAL EXPENSE 2- - - - - - -
50500001.536551 - LEGAL EXPENSE CONFIDENTIAL 2 57,000 - - - - - - 50500001.537000 - SCADA O & M 2 60,964 62,183 63,427 64,695 65,989 67,309 68,92450500001.537030 - TRANSFER STATION FEE 2 1,095 1,117 1,139 1,162 1,185 1,209 1,238 Prepared by NBSwww.nbsgov.com | 800.676.7516
Exhibit 1 (O&M), 10 of 52
5/28/2025
12.B.a
Packet Pg. 1110
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 1
WATER RATE STUDYOperating Revenue and Expenses
50500001.550010 - CONTRACTUAL SERVICES 2 1,211,073 927,543 946,094 965,016 984,316 1,004,002 1,028,098 50500001.550200 - EMPLOYEE MEDICAL EXAMS 2 7,886 8,044 8,205 8,369 8,536 8,707 8,91650500001.552010 - PROFESSIONAL SERVICES 2 605,874 617,178 629,522 642,112 654,954 668,053 684,08750500001.552015 - PROF SVCS - WATER CONSERVA 2 90,000 91,800 93,636 95,509 97,419 99,367 101,752 50500001.553150 - EOC - SUPPLIES AND EXPENSES 2- - - - - - - 50500001.555750 - WATER CONSERVATION REBAT 2- - - - - 1 1 50500001.555751 - LAUNDROMAT REBATES 2- - - - - - -
50500001.555752 - LANDSCAPE REBATES 2 220,000 224,400 250,000 250,000 250,000 250,000 256,00050500001.555753 - LANDSCAPE CONSULTANT 2- - - 50500001.555754 - DIRECT INSTALL PROGRAM 2- - - - - - - 50500001.555755 - MWD WTR CONSERV REBATES 2 37,434 38,183 38,947 39,726 40,520 41,331 42,32250500001.555756 - SMMUSD PROGRAM 2- - - - - - - 50500001.555780 - WATER DEMAND MITIGATION 2- - - - - - - 50500001.555790 - BAYSAVER - INDOOR PLUMBIN 2- - - - - 1 1 50500001.555800 - UNRESERVED-PRIVATE OUTDO 2- - - - - - - 50500001.575020 - FURNITURE & FURNISHINGS 2- - - - - - - 50500001.575030 - COMPUTER EQUIPMENT 2- - - - - 1 150500001.575090 - MISCELLANEOUS EQUIPMENT 2- - - - - - - x25671.566380 - DEBRIS REMOVAL 2- - - - - - -
Supplies and Expenses - SUBTOTAL 16,178,076 $ 17,401,503 $ 18,065,572 $ 18,900,278 $ 19,732,100 $ 20,706,809 $ 21,194,809 $ Prepared by NBSwww.nbsgov.com | 800.676.7516
Exhibit 1 (O&M), 11 of 52
5/28/2025
12.B.a
Packet Pg. 1111
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 1
WATER RATE STUDYOperating Revenue and ExpensesTABLE 8 : OPERATING EXPENSE FORECAST, CONTINUED DESCRIPTION Basis FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Supplies and Expenses, cont.
50500002.525080 - SPECIAL DEPARTMENT SUPPLIE 15 50,000 51,000 52,020 53,060 54,122 55,204 55,204 50500002.525081 - CHEMICALS (Charnock) 15 85,000 86,700 88,434 90,203 92,007 93,847 93,847 50500002.525084 - FILTER MEDIA REPLACEMENT 15 100,000 569,732 581,127 592,749 604,604 616,696 616,69650500002.527501 - FIELD EQUIP & TOOLS 15 - - - - - - - 50500002.527502 - ANALYTICAL INSTR CONSUMAB 15 - - - - - - - 50500002.528000 - UTIL - LIGHT / POWER 15 1,111,497 1,267,107 1,292,449 1,318,298 1,344,664 1,371,557 1,371,557 50500002.536030 - WASTE DISPOSAL (BRINING) 15 66,808 68,144 69,507 70,897 72,315 73,761 73,761 50500002.536050 - REGULATORY AGENCY FEES 15 10,953 11,172 11,395 11,623 11,856 12,093 12,093 50500002.550010 - CONTRACTUAL SERVICES 15 1,100,000 866,286 883,612 901,284 919,310 937,696 937,696 50500002.552010 - PROFESSIONAL SERVICES 15 - - - - - - - Supplies and Expenses - SUBTOTAL 2,524,258 $ 2,920,141 $ 2,978,544 $ 3,038,115 $ 3,098,877 $ 3,160,855 $ 3,160,855 $ Supplies and Expenses
50500003.525080 - SPECIAL DEPARTMENT SUPPLIE 15 32,086 $ 32,728 $ 33,383 $ 34,050 $ 34,731 $ 35,426 $ 35,426 50500003.525081 - CHEMICALS (Arcadia WTP) 15 449,126 458,109 467,271 476,617 486,149 495,872 495,872 50500003.525082 - MEMBRANE REPLACEMENT 15 - - - - - - - 50500003.525083 - CARTRIDGE FILTER REPLACEME 15 - - - - - - - 50500003.525084 - FILTER MEDIA REPLACEMENT 15 - - - - - - - 50500003.528000 - UTIL - LIGHT / POWER 15 498,544 568,340 579,707 591,301 603,127 615,189 615,18950500003.536030 - WASTE DISPOSAL (BRINING) 15 77,292 78,838 80,415 82,023 83,664 85,337 85,337 50500003.550010 - CONTRACTUAL SERVICES 15 245,995 250,915 255,933 261,052 266,273 271,598 271,598 50500003.552010 - PROFESSIONAL SERVICES 15 - - - - - - - Supplies and Expenses - SUBTOTAL 3 $ 1,388,930 1,303,043 $ 1,416,709 $ 1,445,043 $ 1,473,944 $ 1,503,422 $ 1,503,422 $ All Other Transactions
50800004.51100C - MOU CONTINGENCY 2- - - - - - 168,802
50800004.513003 - RETIREMENT - MISC. EMPL 15 - - - - - - -50800004.513008 - PERS PAYDOWN SAVINGS - - - - - 1 -50800004.514001 - OPEB PAYMENT ARC 10 85,496 89,771 94,260 98,973 103,921 109,117 85,53150800004.514002 - REIMBURSEMENT FROM OPEB 10 (38,669) (40,602) (42,632) (44,764) (47,002) (49,352) (38,669) Retirement and OPEB - SUBTOTAL 3 $ 49,169 46,827 $ 51,627 $ 54,209 $ 56,919 $ 59,766 $ 215,663 $ Prepared by NBSwww.nbsgov.com | 800.676.7516
Exhibit 1 (O&M), 12 of 52
5/28/2025
12.B.a
Packet Pg. 1112
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 1
WATER RATE STUDYOperating Revenue and ExpensesTABLE 9 : OPERATING EXPENSE FORECAST, CONTINUED DESCRIPTION Basis FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Environmental Reimbursement 2 900,874 $ 940,385 $ 968,597 $ 997,654 $ 1,027,584 $ 1,061,560 $ $ 1,087,038 MWD Recycled Water Rebate 2 9,696 9,929 10,167 10,411 10,661 10,917 11,179Reimbursement General Fund SCADA 2 91,119 94,518 97,354 100,274 103,282 106,697 109,258Transfer Out - Engineering Reimb. 2 256,525 266,905 274,912 283,160 291,654 301,298 308,529Transfer Out - Water/Wastewater Reimbursment 2 302,051 313,541 322,947 332,636 342,615 353,943 362,438Transfer Out - GIS Analyst for PW 3 43,527 28,528 29,384 30,265 31,173 32,204 33,170Transfer Out - Admin Analysis Reimb 3 3,466 3,590 3,698 3,809 3,923 4,053 4,174Transfer Out - WTR Res Prot Spec Xfer 3 73,877 76,970 79,279 81,657 84,107 86,888 89,495Transfer Out - ADA Coord Reimb 3 73,877 76,970 79,279 81,657 84,107 86,888 89,495Transfer-In Water/Wastewater Transfer 15 (287,109) (303,664) (312,774) (322,157) (331,822) (342,793) (342,793) Transfer-In from General Fund - Low Income Disc. 15 (96,000) (96,000) (96,000) (96,000) (96,000) (96,000) (96,000) Interfund Transactions - SUBTOTAL 3 $ 1,411,672 1,371,903 $ 1,456,843 $ 1,503,367 $ 1,551,285 $ 1,605,655 $ 1,655,982 $ TOTAL : WATER OPERATING EXPENSES 1, 2, 3 $ 32,629,016 30,467,033 $ 35,842,387 $ 37,303,644 $ 38,690,868 $ 40,395,959 $ 42,289,148 $ TABLE 10 : FORECASTING ASSUMPTIONSINFLATION FACTORS 4 Basis FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Customer Growth 5 1 -- -- 0.00% 0.42% 0.42% 0.42% 0.42% General Cost Inflation 2 -- -- 2.40% 2.40% 2.40% 2.40% 2.40%Salary Inflation 3 -- -- 3.00% 3.00% 3.00% 3.00% 3.00%Workers' Comp Insurance 4 -- 0.00% 8.00% 8.00% 8.00% 8.00%Medical, Misc. Employees 5 -- 5.90% 7.95% 9.00% 9.00% 9.00%Medical Inflation 6 -- 1.50% 1.50% 1.50% 1.50% 1.50%Dental Inflation 7 -- 3.00% 3.00% 3.00% 3.00% 3.00%Employee Heath Contribution 8 -- 6.86% 7.00% 7.00% 7.00% 7.00%Retirement 9 -- 24.17% 25.97% 27.17% 28.59% 29.28%Insurance 10 -- -- 5.00% 5.00% 5.00% 5.00% 5.00%Property Insurance 11 -- 10.00% 10.00% 10.00% 10.00% 10.00%Energy 12 -- -- 2.40% 2.40% 2.40% 2.40% 2.40%Chemicals 13 -- -- 2.40% 2.40% 2.40% 2.40% 2.40%Fuel 14 -- -- 3.00% 3.00% 3.00% 3.00% 3.00%No Escalation 15 -- -- 0.00% 0.00% 0.00% 0.00% 0.00%
1. Revenue and expenses from PW_50FundForecast-Water-24-25.2. Source file for Budget: PW_50FundForecast-Water_24-25.3. Not Used.4. Inflation factors estimated by City.5. Customer growth estimated in 2015 Urban Water Master Plan. Source file: Item 22-UWMP_Final_2015.pdf, Page 13 of pdf.
Prepared by NBSwww.nbsgov.com | 800.676.7516
Exhibit 1 (O&M), 13 of 52
5/28/2025
12.B.a
Packet Pg. 1113
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 2
WATER RATE STUDYCapital Improvement Plan ExpendituresTABLE 11 : CAPITAL FUNDING SUMMARY CAPITAL FUNDING FORECAST Budget
FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Grants $ - - $ - $ - $ - $ - $ Use of SRF/WIFIA Loan Proceeds - 19,965,408 18,974,012 58,248,855 7,486,151 37,078,807Use of New Revenue Loan Proceeds - - - - - -Use of Settlement Funds 2 1,666,162 1,564,616 1,735,616 1,808,141 1,916,111 - Use of Capital Rehabilitation and Replacement Reserve 277,057 - - - - -Use of Connection Fee Reserve 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,001Rate Revenue 13,337,857 13,438,671 18,676,718 21,436,970 19,042,343 19,803,897Total Sources of Capital Funds 16,679,530 $ 36,570,242 $ 40,886,347 $ 82,993,966 $ 29,944,605 $ 58,382,705 $ Uses of Capital Funds
Total Project Costs $ 36,570,242 16,679,530 $ 40,886,347 $ 82,993,966 $ 29,944,605 $ 58,382,705 $ Capital Funding Surplus (Deficiency) - $ - $ - $ - $ - $ - $ New SRF/WIFIA Loan Proceeds $ 19,965,408 - $ 18,974,012 $ 58,248,855 $ 7,486,151 $ 37,078,807 $ Future Revenue Bond Proceeds Settlement Funds 2 $ 1,564,616 $ 1,666,162 $ 1,735,616 $ 1,808,141 $ 1,916,111 $ - Policy Choice 2025 2026 2027 2028 2029 2030
1 No Loan Funding $ - $ - $ - $ - $ - $ - 2 $105 million Loan Funding 14,430,464 - 11,669,900 50,000,485 - 29,977,507 3 $139 million Loan Funding 18,974,012 19,965,408 58,248,855 7,486,151 37,078,807 3 CAPITAL IMPROVEMENT PROGRAM FUNDING OPTIONSPolicy Choice 2025 2026 2027 2028 2029 2030 1 100% CIP Funding $ 16,679,530 $ 36,570,242 $ 40,886,347 $ 82,993,966 $ 29,944,605 $ 58,382,705 2 75% CIP Funding 12,509,648 31,035,297 33,582,235 74,745,596 22,458,454 51,281,406 3 50% CIP Funding 8,339,765 25,500,353 26,278,123 66,497,226 14,972,303 44,180,106 4 25% CIP Funding 4,169,883 19,965,408 18,974,012 58,248,855 7,486,151 37,078,807 1 $ 1
Capital Improvement Program Funding Choice 2025 2026 2027 2028 2029 2030Effective Annual Funding Amount $ 36,570,242 16,679,530 $ 40,886,347 $ 82,993,966 $ 29,944,605 $ 58,382,705 $ Funding Sources
Plan CIP Alternative
Projected
Plan Loan Funding Alternative
Prepared by NBSwww.nbsgov.com | 800.676.7516
Exhibit 2 (CIP), 14 of 52
5/28/2025
12.B.a
Packet Pg. 1114
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 2
WATER RATE STUDYCapital Improvement Plan ExpendituresCAPITAL IMPROVEMENT PROGRAMTABLE 12 : CAPITAL IMPROVEMENT PROGRAM COSTS (IN CURRENT-YEAR DOLLARS) Project Description 1 2025 2026 2027 2028 2029 2030
C259075.589000 (No Tyler Account) - BOOSTER PUMP STATION FOR 500-FC5004600.689000 - ANNUAL STREET/PARK PARKING LOT 250,000 250,000 250,000 250,000 250,000 C5004840.689000 - VALVE STUDY/REPLACEMENT 150,000 150,000 150,000 150,000 150,000 C5004840.689000 - WATER MAIN REPLACEMENT 7,500,000 2,500,000 8,800,000 9,000,000 9,550,000 C5004850.689000 - CITY FORCES-WATER MAIN REPL PR 322,841 307,468 338,983 355,933 373,729 C5004870.689000 - NON-POTABLE WATER MAIN EXPANSI 1,500,000 1,306,298 1,500,000 2,500,000 3,000,000 C5004870.689520 - NON-POTABLE WATER MAIN EXPANSIC5004870.689740 - NON-POTABLE WATER MAIN EXPANSIC5005010.689000 - WATERRESOURCESTENANTIMPROVEC5005030.689000 - HANSEN8SOFTWAREUPGRADEC5005050.689000 - SCADASYSTEMSUPGRADEC5005070.689000 - CALIFINCLINECONSTRUCTIONC5005170.689000 - AUTOMETERREADINGPILOTPROJC5005250.689000 - WATERSYSTEMIMPROVEMENTC5005320.689000 - SANVICBOOSTERSTEMERGENC5005330.689000 - UTILITYBILLINGSOFTWARE 422,607C5005350.689000 - CHARNOCKWELLFIELDRESTORATIONC5005350.689000 - GMPC5005410.689000 - CITY YARDS PROJECTC5005650.689000 - COLORADOAVEESP-WATERMAINC5005710.689000 - EXPOWATERBETTERMENTSC5005840.689000 - WATERSYSTEMSDATAINTEGRATIONC5005850.689000 - BOOSTERPUMPCHARNOCKH2OFACC5005870.689000 - WATERMAINREPLACE-OLYLOOPC5005880.689410 - OLYMPIC SUB-BASIN REMEDIATION 700,000 664,976 700,000 700,000 700,000 C5006050.689410 - OLYMPIC SUB-BASIN WELL HYDROLOC5006120.689000 - CLIMATEACTIONPLANC5006130.689000 - SUSTAINABLEURBANWATERMASTERC5006140.689000 - GROUNDWATERMANAGEMENTPLAN 265,022 C5006390.689000 - IRRIGATIONCONTROLLERREPLAMNTC5006400.689000 - TURFANDIRRIGATIONIMPROVEMNTC5006840.689000 - EPAWATERMAINREPLACEMENTC5006940.689000 - ARCADIA WATER PLANT MEMBRANE R 1,500,000 1,500,000 C5007180.689000 - COASTAL SUBBASIN BORINGSC5007260.689000 - Redrill Santa Monica Well #3 223,280 C5007260.689410 - REDRILL SANTA MONICA WELL #3-GC5007330.689000 - SUSTAINABLE WATER INFRASTRUCTUC5007330.689740 - SUSTAINABLE WATER INFRASTRUCTU Prepared by NBSwww.nbsgov.com | 800.676.7516
Exhibit 2 (CIP), 15 of 52
5/28/2025
12.B.a
Packet Pg. 1115
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 2
WATER RATE STUDYCapital Improvement Plan Expenditures
C5007350.689000 - WATER FACILITY CONTROLLER ANDC5007370.689000 - ARCADIA REVERSE OSMOSIS (RO) RC5007410.689000 - ARCADIA VAPOR PHASE GRANULAR AC5007460.689410 - CITY/USGS MONITORING WELL & NUC5007620.689000 - RESERVOIR IMPROVEMENTS 2,731,382 5,600,000 2,000,000 1,000,000 C5007630.689000 - CITY/USGS NUMERICAL FLOW MODEL 1,200,000 400,000 800,000 C5007650.689000 - ARCADIA ENHANCED RO RECOVERYC5007660.689000 - DINSAR STUDYC5007740.689000 - ARCADIA CAPACITY EXPANSION ANDC5007740.689740 - ARCADIA CAPACITY EXPANSION ANDC5007750.689000 - OLYMPIC WELLFIELD RESTORATIONC5007750.689410 - OLYMPIC WELLFIELD RESTORATIONC5007750.689740 - OLYMPIC WELLFIELD RESTORATIONC5007760.689000 - GROUNDWATER RESILIENCY WELLC5007760.689740 - GROUNDWATER RESILIENCY WELLC5007940.689000 - ROOFTOP FALL PROTECTION AND ACC5008010.689520 - CITYWIDE MUNICIPAL DRINKING WAC5008040.689000 - CONSTRUCTION MGMT SOFTWARE 10,000 10,000 10,000 10,000 15,000 C5008050.689000 - GREEN SAND MEDIA REPLACEMENT 500,000C5008060.689000 - OLYMPIC WELLS EQUIPPINGC5008060.689520 - WATER DEMAND MITIGATION FEEC5008060.689740 - OLYMPIC WELLS EQUIPPINGC5008080.689000 - SM GROUNDWATER BASIN SUSTAINABC5008200.689740 - AMI SMART WATER METERSC5008530.689000 - ARCADIA PLANT FENCING 606,000 1,000,000 C5008540.689000 - ELECTRICAL-ARCADIA & CHARNOCK 1,000,000 1,000,000C5008550.689000 - GREEN SAND FILTER SCAFFOLDING 1,000,000 1,000,000C5008560.689000 - GROUNDWATER WELL SM11I (100% Funded by Grant)C5008570.689000 - GROUNDWATER WELL SM12I 5,600,000 1,332,787C5008580.689000 - GROUNDWATER PLAN SUST IMPL. 150,000 150,000 150,000 150,000 200,000C5008590.689000 - INFRASTRUCTURE CONDITION/ASSETC5008600.689000 - WATER & WASTEWATER MASTER PLAN 1,000,000 C5008780.689000 - Roof and HVAC AWTP 700,000 C5009790.689000 - Water TI City Yards 300,000 750,000 I5000010.689000 - FLEETVEHICLEREPLACEMENTPROG 652,700 632,400 655,050 665,750 699,038I5000020.689000 - TELECOMMUNICATIONSSERVICES 61,282 59,501 63,116 65,005 68,255 I5000030.689000 - COMPUTEREQUIPMENTREPLACPROG 80,474 68,169 86,169 92,316 96,932 NEW CIP - Airport Wells 2 & 3, Civil Work & Pipeline to ArcadiaNew CIP - Olympic Wellfield Management (Professional Services)NEW CIP - Retrofit Vault (Booster Pump Arcadia)NEW CIP - SWIP $11M shortage (shifted all to Wastewater) New CIP - AMI Smart Water Meters (split 50/50 with wastewater fund) Prepared by NBSwww.nbsgov.com | 800.676.7516
Exhibit 2 (CIP), 16 of 52
5/28/2025
12.B.a
Packet Pg. 1116
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 2
WATER RATE STUDYCapital Improvement Plan Expenditures
C5009050.689000 - GROUNDWATER WELL IMPROVEMENTS 700,000 3,500,000 1,000,000 5,500,000 New CIP - Charnock 18 ReplacementNew CIP - Reservoir Improvements (Mt. Olivette, San Vincente, and Riviera)New CIP - Bond Funded Projects (refer to Revenue Bond Tab) (.689740) - BALANCE unbudgeted so farC5009040.689000 - ARCADIA OPS BUILDING REPLACEME 800,000 1,000,000 9,000,000 9,000,000New CIP - Nonpotable Water Main Expansion C5009020.689000 - ONE WATER PLANSalt Nutrient Management Plan /CIPIDEA0001259 50,000 100,000Network Upgrades /CIPIDEA0001261C5009070.689410 - OLYMPIC AWTF REMEDIATION 917,633 899,640 935,985 954,705 1,002,440 Prepared by NBSwww.nbsgov.com | 800.676.7516
Exhibit 2 (CIP), 17 of 52
5/28/2025
12.B.a
Packet Pg. 1117
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 2
WATER RATE STUDYCapital Improvement Plan ExpendituresTABLE 13 : CAPITAL IMPROVEMENT PROGRAM COSTS (IN CURRENT-YEAR DOLLARS) Project Description 1 2025 2026 2027 2028 2029
Future CIP Costs 24,502,573CIPS Funded through Pay-Go or WIFIA Loan (note the amounts in in addition to the green highlighted items from the CIP list above) C5007620.689000 - RESERVOIR IMPROVEMENTS
Riviera 12,010,159
Mt Olivette 20,999,443
San Vincente 25,858,861
Arcadia WTP Improvements
Arcadia WTP - New Lab (in addition to C5009040.689000 - Arcadia OPS Building Replaceme 5,000,000 5,000,000 Arcadia Reservoir Replacement 9,758,084
Direct Potable Reuse (Pipeline, Pump Station, 3 mgd Ozone) 6,000,000 2,000,000 10,000,000 Total: CIP Program Costs (Current-Year Dollars) $ 21,494,930 16,679,530 $ 27,539,303 $ 30,193,709 $ 26,605,394 $ 24,502,573 $ Total: CIP Loan Funded Program Costs (Current-Year Dollars) $ 14,010,159 - $ 11,000,000 $ 45,757,527 $ - $ 25,858,861 $ Total: CIP All Program Costs (Current-Year Dollars) $ 35,505,089 16,679,530 $ 38,539,303 $ 75,951,236 $ 26,605,394 $ 55,861,434 $ Prepared by NBSwww.nbsgov.com | 800.676.7516
Exhibit 2 (CIP), 18 of 52
5/28/2025
12.B.a
Packet Pg. 1118
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 2
WATER RATE STUDYCapital Improvement Plan ExpendituresTABLE 14 : CAPITAL IMPROVEMENT PROGRAM COSTS (IN FUTURE-YEAR DOLLARS) Project Description 1 2025 2026 2027 2028 2029 2030
C259075.589000 (No Tyler Account) - BOOSTER PUMP STATIO $ - - $ - $ - $ - $ - $ C5004600.689000 - ANNUAL STREET/PARK PARKING LOT 250,000 $ 257,500 $ 265,225 $ 273,182 $ 281,377 $ - $ C5004840.689000 - VALVE STUDY/REPLACEMENT 150,000 $ 154,500 $ 159,135 $ 163,909 $ 168,826 $ - $ C5004840.689000 - WATER MAIN REPLACEMENT 2,500,000 $ 7,725,000 $ 9,335,920 $ 9,834,543 $ 10,748,609 $ - $ C5004850.689000 - CITY FORCES-WATER MAIN REPL PR 307,468 $ 332,526 $ 359,627 $ 388,938 $ 420,635 $ - $ C5004870.689000 - NON-POTABLE WATER MAIN EXPANSI 1,306,298 $ 1,545,000 $ 1,591,350 $ 2,731,818 $ 3,376,526 $ - $ C5004870.689520 - NON-POTABLE WATER MAIN EXPANSI - $ - $ - $ - $ - $ - $ C5004870.689740 - NON-POTABLE WATER MAIN EXPANSI - $ - $ - $ - $ - $ - $ C5005010.689000 - WATERRESOURCESTENANTIMPROVE - $ - $ - $ - $ - $ - $ C5005030.689000 - HANSEN8SOFTWAREUPGRADE - $ - $ - $ - $ - $ - $ C5005050.689000 - SCADASYSTEMSUPGRADE - $ - $ - $ - $ - $ - $ C5005070.689000 - CALIFINCLINECONSTRUCTION - $ - $ - $ - $ - $ - $ C5005170.689000 - AUTOMETERREADINGPILOTPROJ - $ - $ - $ - $ - $ - $ C5005250.689000 - WATERSYSTEMIMPROVEMENT - $ - $ - $ - $ - $ - $ C5005320.689000 - SANVICBOOSTERSTEMERGEN 422,607 $ - $ - $ - $ - $ - $ C5005330.689000 - UTILITYBILLINGSOFTWARE - $ - $ - $ - $ - $ - $ C5005350.689000 - CHARNOCKWELLFIELDRESTORATION - $ - $ - $ - $ - $ - $ C5005350.689000 - GMP - $ - $ - $ - $ - $ - $ C5005410.689000 - CITY YARDS PROJECT - $ - $ - $ - $ - $ - $ C5005650.689000 - COLORADOAVEESP-WATERMAIN - $ - $ - $ - $ - $ - $ C5005710.689000 - EXPOWATERBETTERMENTS - $ - $ - $ - $ - $ - $ C5005840.689000 - WATERSYSTEMSDATAINTEGRATION - $ - $ - $ - $ - $ - $ C5005850.689000 - BOOSTERPUMPCHARNOCKH2OFAC - $ - $ - $ - $ - $ - $ C5005870.689000 - WATERMAINREPLACE-OLYLOOP - $ - $ - $ - $ - $ - $ C5005880.689410 - OLYMPIC SUB-BASIN REMEDIATION 664,976 $ 721,000 $ 742,630 $ 764,909 $ 787,856 $ - $ C5006050.689410 - OLYMPIC SUB-BASIN WELL HYDROLO - $ - $ - $ - $ - $ - $ C5006120.689000 - CLIMATEACTIONPLAN - $ - $ - $ - $ - $ - $ C5006130.689000 - SUSTAINABLEURBANWATERMASTER - $ - $ - $ - $ - $ - $ C5006140.689000 - GROUNDWATERMANAGEMENTPLAN 265,022 $ - $ - $ - $ - $ - $ C5006390.689000 - IRRIGATIONCONTROLLERREPLAMNT - $ - $ - $ - $ - $ - $ C5006400.689000 - TURFANDIRRIGATIONIMPROVEMNT - $ - $ - $ - $ - $ - $ C5006840.689000 - EPAWATERMAINREPLACEMENT - $ - $ - $ - $ - $ - $ C5006940.689000 - ARCADIA WATER PLANT MEMBRANE R - $ 1,545,000 $ - $ - $ 1,688,263 $ - $ C5007180.689000 - COASTAL SUBBASIN BORINGS - $ - $ - $ - $ - $ - $ C5007260.689000 - Redrill Santa Monica Well #3 $ - 223,280 $ - $ - $ - $ - $ C5007260.689410 - REDRILL SANTA MONICA WELL #3-G - $ - $ - $ - $ - $ - $ C5007330.689000 - SUSTAINABLE WATER INFRASTRUCTU - $ - $ - $ - $ - $ - $ C5007330.689740 - SUSTAINABLE WATER INFRASTRUCTU - $ - $ - $ - $ - $ - $ C5007350.689000 - WATER FACILITY CONTROLLER AND - $ - $ - $ - $ - $ - $ Prepared by NBSwww.nbsgov.com | 800.676.7516
Exhibit 2 (CIP), 19 of 52
5/28/2025
12.B.a
Packet Pg. 1119
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 2
WATER RATE STUDYCapital Improvement Plan Expenditures
C5007370.689000 - ARCADIA REVERSE OSMOSIS (RO) R - $ - $ - $ - $ - $ - $ C5007410.689000 - ARCADIA VAPOR PHASE GRANULAR A - $ - $ - $ - $ - $ - $ C5007460.689410 - CITY/USGS MONITORING WELL & NU - $ - $ - $ - $ - $ - $ C5007620.689000 - RESERVOIR IMPROVEMENTS 2,731,382 $ 2,060,000 $ 5,941,040 $ 1,092,727 $ - $ - $ C5007630.689000 - CITY/USGS NUMERICAL FLOW MODEL - $ 412,000 $ 1,273,080 $ 874,182 $ - $ - $ C5007650.689000 - ARCADIA ENHANCED RO RECOVERY - $ - $ - $ - $ - $ - $ C5007660.689000 - DINSAR STUDY - $ - $ - $ - $ - $ - $ C5007740.689000 - ARCADIA CAPACITY EXPANSION AND - $ - $ - $ - $ - $ - $ C5007740.689740 - ARCADIA CAPACITY EXPANSION AND - $ - $ - $ - $ - $ - $ C5007750.689000 - OLYMPIC WELLFIELD RESTORATION - $ - $ - $ - $ - $ - $ C5007750.689410 - OLYMPIC WELLFIELD RESTORATION - $ - $ - $ - $ - $ - $ C5007750.689740 - OLYMPIC WELLFIELD RESTORATION - $ - $ - $ - $ - $ - $ C5007760.689000 - GROUNDWATER RESILIENCY WELL - $ - $ - $ - $ - $ - $ C5007760.689740 - GROUNDWATER RESILIENCY WELL - $ - $ - $ - $ - $ - $ C5007940.689000 - ROOFTOP FALL PROTECTION AND AC - $ - $ - $ - $ - $ - $ C5008010.689520 - CITYWIDE MUNICIPAL DRINKING WA - $ - $ - $ - $ - $ - $ C5008040.689000 - CONSTRUCTION MGMT SOFTWARE 10,000 $ 10,300 $ 10,609 $ 10,927 $ 16,883 $ - $ C5008050.689000 - GREEN SAND MEDIA REPLACEMENT - $ - $ 530,450 $ - $ - $ - $ C5008060.689000 - OLYMPIC WELLS EQUIPPING - $ - $ - $ - $ - $ - $ C5008060.689520 - WATER DEMAND MITIGATION FEE - $ - $ - $ - $ - $ - $ C5008060.689740 - OLYMPIC WELLS EQUIPPING - $ - $ - $ - $ - $ - $ C5008080.689000 - SM GROUNDWATER BASIN SUSTAINAB - $ - $ - $ - $ - $ - $ C5008200.689740 - AMI SMART WATER METERS - $ - $ - $ - $ - $ - $ C5008530.689000 - ARCADIA PLANT FENCING 606,000 $ 1,030,000 $ - $ - $ - $ - $ C5008540.689000 - ELECTRICAL-ARCADIA & CHARNOCK 1,000,000 $ 1,030,000 $ - $ - $ - $ - $ C5008550.689000 - GREEN SAND FILTER SCAFFOLDING 1,000,000 $ 1,030,000 $ - $ - $ - $ - $ C5008560.689000 - GROUNDWATER WELL SM11I (100% Fund $ - - $ - $ - $ - $ - $ C5008570.689000 - GROUNDWATER WELL SM12I 1,332,787 $ - $ 5,941,040 $ - $ - $ - $ C5008580.689000 - GROUNDWATER PLAN SUST IMPL. 150,000 $ 154,500 $ 159,135 $ 163,909 $ 225,102 $ - $ C5008590.689000 - INFRASTRUCTURE CONDITION/ASSET - $ - $ - $ - $ - $ - $ C5008600.689000 - WATER & WASTEWATER MASTER PLAN - $ - $ - $ 1,092,727 $ - $ - $ C5008780.689000 - Roof and HVAC AWTP 700,000 $ - $ - $ - $ - $ - $ C5009790.689000 - Water TI City Yards 300,000 $ 772,500 $ - $ - $ - $ - $ I5000010.689000 - FLEETVEHICLEREPLACEMENTPROG 632,400 $ 672,281 $ 694,943 $ 727,483 $ 786,773 $ - $ I5000020.689000 - TELECOMMUNICATIONSSERVICES 59,501 $ 63,120 $ 66,960 $ 71,033 $ 76,822 $ - $ I5000030.689000 - COMPUTEREQUIPMENTREPLACPROG 68,169 $ 82,888 $ 91,417 $ 100,876 $ 109,098 $ - $ NEW CIP - Airport Wells 2 & 3, Civil Work & Pipeline to Arcadia $ - - $ - $ - $ - $ - $ New CIP - Olympic Wellfield Management (Professional Service$ - - $ - $ - $ - $ - $ NEW CIP - Retrofit Vault (Booster Pump Arcadia) - $ - $ - $ - $ - $ - $ NEW CIP - SWIP $11M shortage (shifted all to Wastewater) - $ - $ - $ - $ - $ - $ New CIP - AMI Smart Water Meters (split 50/50 with wastewat $ - - $ - $ - $ - $ - $ C5009050.689000 - GROUNDWATER WELL IMPROVEMENTS - $ 721,000 $ 1,060,900 $ 3,824,545 $ - $ 6,376,007 $ Prepared by NBSwww.nbsgov.com | 800.676.7516
Exhibit 2 (CIP), 20 of 52
5/28/2025
12.B.a
Packet Pg. 1120
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 2
WATER RATE STUDYCapital Improvement Plan Expenditures
New CIP - Charnock 18 Replacement - $ - $ - $ - $ - $ - $ New CIP - Reservoir Improvements (Mt. Olivette, San Vincente $ - - $ - $ - $ - $ - $ New CIP - Bond Funded Projects (refer to Revenue Bond Tab) ( $ - - $ - $ - $ - $ - $ C5009040.689000 - ARCADIA OPS BUILDING REPLACEME 1,000,000 $ 824,000 $ - $ 9,834,543 $ 10,129,579 $ - $ New CIP - Nonpotable Water Main Expansion - $ - $ - $ - $ - $ - $ C5009020.689000 - ONE WATER PLAN - $ - $ - $ - $ - $ - $ Salt Nutrient Management Plan /CIPIDEA0001259 100,000 $ 51,500 $ - $ - $ - $ - $ Network Upgrades /CIPIDEA0001261 - $ - $ - $ - $ - $ - $ C5009070.689410 - OLYMPIC AWTF REMEDIATION 899,640 $ 945,162 $ 992,986 $ 1,043,232 $ 1,128,255 $ - $ Prepared by NBSwww.nbsgov.com | 800.676.7516
Exhibit 2 (CIP), 21 of 52
5/28/2025
12.B.a
Packet Pg. 1121
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 2
WATER RATE STUDYCapital Improvement Plan ExpendituresTABLE 15 : CAPITAL IMPROVEMENT PROGRAM COSTS (IN FUTURE-YEAR DOLLARS) Project Description 1 2025 2026 2027 2028 2029 2030
Future CIP Costs - - - - - 28,405,198 0 - - - - - - CIPS Funded through Pay-Go or WIFIA Loan (note the amounts - - - - - - 0 - - - - - - C5007620.689000 - RESERVOIR IMPROVEMENTS - - - - - - 0 - 12,370,464 - - - - 0 - - - 22,946,658 - -
0 - - - - - 29,977,507 0 - - - - - - Arcadia WTP Improvements - - - - - - 0 - - 5,304,500 5,463,635 - - 0 - - - 10,662,922 - -
- 2,060,000 6,365,400 10,927,270 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 0 - - - - - - 0 - - - - - -
- - - - - -
0 - - - - - - 0 - - - - - - 0 - - - - - - 0 - - - - - - 0 - - - - - - 0 - - - - - - 0 - - - - - - Future CIP Costs 2 - - - - - - Reduction in CIP - - - - - -
Total: CIP Program Costs (Current-Year Dollars) $ 22,139,778 16,679,530 $ 29,216,447 $ 32,993,481 $ 29,944,605 $ 28,405,198 $ Total: CIP Loan Funded Program Costs (Current-Year Dollars) $ 14,430,464 - $ 11,669,900 $ 50,000,485 $ - $ 29,977,507 $ Total: CIP All Program Costs (Current-Year Dollars) $ 36,570,242 16,679,530 $ 40,886,347 $ 82,993,966 $ 29,944,605 $ 64,758,712 $ 00000000
Prepared by NBSwww.nbsgov.com | 800.676.7516
Exhibit 2 (CIP), 22 of 52
5/28/2025
12.B.a
Packet Pg. 1122
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 2
WATER RATE STUDYCapital Improvement Plan ExpendituresTABLE 16 : FORECASTING ASSUMPTIONS Economic Variables 2 2025 2026 2027 2028 2029 2030
0.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Cumulative Construction Cost Multiplier from 2025 1.03 1.00 1.06 1.09 1.13 1.16
1. FY 2018/19 - 2028/29 given from City and assumed for future years. Source file: Item 17-FYE2019_CIP_Budget.pdf, Pages 147-148 in Water Fund 50 and 50(25)Fund Forecast - Water (May 2019) - Final-5-15-19.xlsx, "Capital (CIP)" tab. Updates made to CIP on 04.30.2019 per source file: Santa Monica Water Rate Model (20190430).xlsx
2. Construction inflator is based on the most current 10 year average of the Engineering News-Record Construction Cost Index. Source: www.enr.com/economics Annual Construction Cost Inflation, Per Engineering News Record Prepared by NBSwww.nbsgov.com | 800.676.7516
Exhibit 2 (CIP), 23 of 52
5/28/2025
12.B.a
Packet Pg. 1123
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 3
WATER RATE STUDYDebt ServiceTABLE 17 : INTERFUND LOAN DEBT OBLIGATIONS Budget
FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Interfund Loan (City Yards Master Plan, Injection Well & Non-potable Water Main Expansion)1 Principal Payment $ 706,367 706,367 $ 706,367 $ 706,367 $ 706,367 $ 706,367 $ Subtotal: Annual Debt Service 706,367 $ 706,367 $ 706,367 $ 706,367 $ 706,367 $ 706,367 $ Coverage Requirement ($-Amnt above annual payment) 100% 100% 100% 100% 100% 100%Reserve Requirement (total fund balance) $ 706,367 706,367 $ 706,367 $ 706,367 $ 706,367 $ 706,367 $ Water Revenue Bonds (Series 2021) Principal Payment $ 1,495,000 1,435,000 $ 1,555,000 $ 1,625,000 $ 1,685,000 $ 1,750,000 $ Interest Payment 2,059,587 2,118,187 1,998,587 1,926,863 1,865,175 1,800,362 Subtotal: Annual Debt Service 3,553,187 $ 3,554,587 $ 3,553,587 $ 3,551,863 $ 3,550,175 $ 3,550,362 $ Coverage Requirement ($-Amnt above annual payment) 100% 100% 100% 100% 100% 100%Reserve Requirement (total fund balance) $ 3,554,587 3,554,587 $ 3,553,587 $ 3,551,863 $ 3,550,175 $ - $ TABLE 18 : SUMMARY OF INTERFUND LOAN DEBT OBLIGATIONSExisting Annual Debt Service $ 4,260,954 4,259,554 $ 4,259,954 $ 4,258,229 $ 4,256,542 $ 4,256,729 $ Existing Annual Coverage Requirement 100% 100% 100% 100% 100% 100% Existing Debt Reserve Target $ 4,260,954 4,260,954 $ 4,259,954 $ 4,258,229 $ 4,256,542 $ 706,367 $ Annual Repayment Schedules Projected
Prepared by NBSwww.nbsgov.com | 800.676.7516
Exhibit 3 (Debt), 24 of 52
5/28/2025
12.B.a
Packet Pg. 1124
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA EXHIBIT 3
WATER RATE STUDYDebt ServiceFUTURE DEBT FINANCING ASSUMPTIONS Long-Term Debt Terms Private Debt SRF/WIFIA Loan
Issuance Cost 2.00% 2.00%Annual Interest Cost (%) 5.00% 4.00% *Project operational before repayment starts Term 30 30 Start Year 3 of the Rate PeriodDebt Reserve Funded? No NoCoverage Requirement (% above annual pmt) 125% 120% FUTURE DEBT OBLIGATIONSAnnual Repayment Schedules 2025 2026 2027 2028 2029 2030SRF/WIFIA Loan Repayment Schedule Principal Payment $ - - $ - $ - $ 2,578,024 $ 2,681,145 $ Interest Payment - - - - 5,783,532 5,680,411
Subtotal: Annual Debt Service $ - - $ - $ - $ 8,361,556 $ 8,361,556 $ Principal Payment 2 $ - - $ - $ - $ - $ - $
Interest Payment 2 - - - - - -
Subtotal: Annual Debt Service $ - - $ - $ - $ - $ - $
Grand Total: Future Annual Debt Service $ - - $ - $ - $ 8,361,556 $ 8,361,556 $ Grand Total: New Annual Coverage Requirement $ - - $ - $ - $ 10,033,867 $ 10,033,867 $ Grand Total: Future Debt Reserve Target $ - - $ - $ - $ - $ - $ Prepared by NBSwww.nbsgov.com | 800.676.7516
Exhibit 3 (Debt), 25 of 52
5/28/2025
12.B.a
Packet Pg. 1125
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service
CITY OF SANTA MONICA
WATER RATE STUDYCurrent Rate ScheduleTABLE 19 : CURRENT WATER RATE SCHEDULECurrent Water Rate Schedule FY 2019/20
Overall Increase in Rate Revenue 20.00%
Bi-Monthly Fixed Service ChargesSingle Family Residential 3/4 inch $11.101 inch $11.101.5 inch $15.642 inch $21.10 All Other Customers
3/4 inch $13.42
1 inch $13.421.5 inch $20.292 inch $28.543 inch $50.534 inch $75.276 inch $143.988 inch $391.36 Fire Service Charges
1.5 inch $42.612 inch $64.253 inch $132.764 inch $258.986 inch $583.528 inch $1,016.2510 inch $1,521.10 Commodity Charges
All Customers ($/hcf)
Tier 1 $3.78Tier 2 $4.39Tier 3 $6.25
Water Rate Schedule
Prepared by NBSwww.nbsgov.com | 800.676.7516
Exhibit 4 (Current Rates), 26 of 52
5/28/2025
12.B.a
Packet Pg. 1126
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA Function and Classification
WATER RATE STUDYCost of Service AnalysisTABLE 20 : CLASSIFICATION OF EXPENSES FY 2025/26 COM GW PW CONSV CAP CA FP COM GW PW CONSV CAP CA FP Water Fund, 50Salaries and Benefits
Permanent Employees $ 1,187,089 6,247,838 $ 312,392 $ 312,392 $ 937,176 $ 3,123,919 $ 312,392 $ 62,478 $ 19.0% 5.0% 5.0% 15.0% 50.0% 5.0% 1.0% Vacation Lump Sum Pays $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% Council/Board Allowance $ 525 2,623 $ 105 $ 131 $ 393 $ 1,312 $ 131 $ 26 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% Standby Pay $ 5,735 28,676 $ 1,147 $ 1,434 $ 4,301 $ 14,338 $ 1,434 $ 287 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% Overtime $ 34,263 171,315 $ 6,853 $ 8,566 $ 25,697 $ 85,658 $ 8,566 $ 1,713 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% Temporary Employees $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% Medicare Employer Contribution $ 17,398 86,990 $ 3,480 $ 4,350 $ 13,049 $ 43,495 $ 4,350 $ 870 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% Workers' Comp Insurance $ 41,512 207,561 $ 8,302 $ 10,378 $ 31,134 $ 103,781 $ 10,378 $ 2,076 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% Medical - Misc. Employee $ 237,665 1,188,327 $ 47,533 $ 59,416 $ 178,249 $ 594,163 $ 59,416 $ 11,883 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% Medical Trust - Misc. Employee $ 23,830 119,148 $ 4,766 $ 5,957 $ 17,872 $ 59,574 $ 5,957 $ 1,191 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0%Dental $ 12,614 63,071 $ 2,523 $ 3,154 $ 9,461 $ 31,536 $ 3,154 $ 631 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0%Vision $ 1,513 7,563 $ 303 $ 378 $ 1,134 $ 3,781 $ 378 $ 76 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0%Employee Health Contribution $ (19,013) (95,066) $ (3,803) $ (4,753) $ (14,260) $ (47,533) $ (4,753) $ (951) $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% Retirement - Misc. Employee $ 398,612 1,993,060 $ 79,722 $ 99,653 $ 298,959 $ 996,530 $ 99,653 $ 19,931 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0%Retirement - As Needed $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0%Uniform/Tool Allowance $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% Unemployment $ 5,730 28,651 $ 1,146 $ 1,433 $ 4,298 $ 14,325 $ 1,433 $ 287 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% EAP $ 203 1,017 $ 41 $ 51 $ 153 $ 509 $ 51 $ 10 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0%DCAP $ 371 1,855 $ 74 $ 93 $ 278 $ 928 $ 93 $ 19 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% Life Insurance and AD&D $ 1,870 9,348 $ 374 $ 467 $ 1,402 $ 4,674 $ 467 $ 93 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% Disability Insurance $ 7,901 39,507 $ 1,580 $ 1,975 $ 5,926 $ 19,753 $ 1,975 $ 395 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% EBB Budget Request: Add 1 FTE Water Quality Superviso $ 46,469 232,344 $ 9,294 $ 11,617 $ 34,852 $ 116,172 $ 11,617 $ 2,323 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% EBB Budget Request: Add 1 FTE AMI Supervisor $ 42,360 211,798 $ 8,472 $ 10,590 $ 31,770 $ 105,899 $ 10,590 $ 2,118 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% EBB Budget Request: Add 1 FTE Water Conservation Coo $ 41,617 208,085 $ 8,323 $ 10,404 $ 31,213 $ 104,043 $ 10,404 $ 2,081 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% EBB Budget Request: Add 1 FTE SCADA Supervisor (50/5 $ 22,147 110,737 $ 4,429 $ 5,537 $ 16,611 $ 55,369 $ 5,537 $ 1,107 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% Equity Adjustment for ALL POSITIONS (10%) $ 201,729 1,008,645 $ 40,346 $ 50,432 $ 151,297 $ 504,323 $ 50,432 $ 10,086 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% Salaries and Benefits - SUBTOTAL $ 2,312,140 11,873,093 $ 537,402 $ 593,655 $ 1,780,964 $ 5,936,546 $ 593,655 $ 118,731 $ 19.5% 4.5% 5.0% 15.0% 50.0% 5.0% 1.0% Fire Protection Basis of Classification Budget Categories Total Revenue Reqt. Base Commodity Groundwater Capacity Customer Purchased Water Conservation Prepared by NBSwww.nbsgov.com | 800.676.7516
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Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA Function and Classification
WATER RATE STUDYCost of Service AnalysisTABLE 21 : CLASSIFICATION OF EXPENSES, CONTINUED FY 2025/26 COM GW PW CONSV CAP CA FP COM GW PW CONSV CAP CA FP Water Fund, 50Supplies and Expenses
50500001.521000 - ADVERTISING $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.521810 - VEHICLES - FUELS / LUBRICATION $ 5,634 28,170 $ 1,127 $ 1,409 $ 4,226 $ 14,085 $ 1,409 $ 282 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.521820 - CNG/LNG FUEL $ 19,328 96,638 $ 3,866 $ 4,832 $ 14,496 $ 48,319 $ 4,832 $ 966 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.523330 - UTILITIES BILLING SERVICES $ - 351,913 $ - $ - $ - $ - $ 351,913 $ - $ 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 0.0%50500001.523340 - PROPERTY TAXES $ 19,768 98,838 $ 3,954 $ 4,942 $ 14,826 $ 49,419 $ 4,942 $ 988 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.523370 - METERED POSTAGE $ 5,381 26,904 $ 1,076 $ 1,345 $ 4,036 $ 13,452 $ 1,345 $ 269 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.523420 - INDIRECT COST ALLOCATION $ 436,272 2,181,360 $ 87,254 $ 109,068 $ 327,204 $ 1,090,680 $ 109,068 $ 21,814 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.524000 - MEMBERSHIPS AND DUES $ 2,825 14,127 $ 565 $ 706 $ 2,119 $ 7,064 $ 706 $ 141 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.524700 - RENT $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.524702 - OTHER OPERATING RENTS $ 48,085 240,423 $ 9,617 $ 12,021 $ 36,063 $ 120,212 $ 12,021 $ 2,404 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.524710 - REIMBURSE ENGINEERING OFFICE $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0%50500001.525000 - OFFICE SUPPLIES AND EXPENSES $ 3,369 16,843 $ 674 $ 842 $ 2,526 $ 8,422 $ 842 $ 168 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.525001 - DISCOUNTS AVAILABLE $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.525002 - DISCOUNTS LOST $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.525080 - SPECIAL DEPARTMENT SUPPLIES $ 277,605 1,388,024 $ 55,521 $ 69,401 $ 208,204 $ 694,012 $ 69,401 $ 13,880 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.525190 - RIDESHARE AND PARKING PROGRAM $ 1,918 9,588 $ 384 $ 479 $ 1,438 $ 4,794 $ 479 $ 96 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.525200 - UNIFORM / PROTECTIVE CLOTHING $ 8,911 44,554 $ 1,782 $ 2,228 $ 6,683 $ 22,277 $ 2,228 $ 446 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.525320 - UNIFORM RENTAL $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.528000 - UTIL - LIGHT / POWER $ 214,228 1,071,141 $ 42,846 $ 53,557 $ 160,671 $ 535,570 $ 53,557 $ 10,711 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.528010 - UTILITIES - NATURAL GAS $ 649 3,244 $ 130 $ 162 $ 487 $ 1,622 $ 162 $ 32 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.528020 - UTILITIES - WATER $ 1,200 6,000 $ 240 $ 300 $ 900 $ 3,000 $ 300 $ 60 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.528030 - WATER PURCHASES $ - 5,727,788 $ - $ 5,727,788 $ - $ - $ - $ - $ 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% 0.0%50500001.528040 - UTILITIES - TELEPHONE $ 20,647 103,235 $ 4,129 $ 5,162 $ 15,485 $ 51,618 $ 5,162 $ 1,032 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.529040 - VEHICLE MGMT FUND-MAINTENANC $ 62,991 314,954 $ 12,598 $ 15,748 $ 47,243 $ 157,477 $ 15,748 $ 3,150 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.529230 - COMPUTER EQUIP/SOFTWARE MAIN $ 32,600 163,001 $ 6,520 $ 8,150 $ 24,450 $ 81,501 $ 8,150 $ 1,630 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0%50500001.529540 - CSB WATER PRODUCTION-O&M $ (20,808) 104,040 $ 104,040 $ 5,202 $ 15,606 $ - $ - $ - $ -20.0% 100.0% 5.0% 15.0% 0.0% 0.0% 0.0%50500001.531010 - CONFERENCES/MEETINGS/TRAVEL $ 3,099 15,495 $ 620 $ 775 $ 2,324 $ 7,747 $ 775 $ 155 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0%50500001.531011 - FOOD PURCHASES $ 449 2,247 $ 90 $ 112 $ 337 $ 1,124 $ 112 $ 22 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0%50500001.531020 - TRAINING COSTS $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0%50500001.531030 - TRAINING $ 5,320 26,599 $ 1,064 $ 1,330 $ 3,990 $ 13,299 $ 1,330 $ 266 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0%50500001.534000 - BANK FEES $ 1,113 5,564 $ 223 $ 278 $ 835 $ 2,782 $ 278 $ 56 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0%50500001.534550 - GENERAL LIABILITY / AUTO $ 88,969 444,844 $ 17,794 $ 22,242 $ 66,727 $ 222,422 $ 22,242 $ 4,448 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.534570 - PROPERTY INSURANCE $ 127,935 639,674 $ 25,587 $ 31,984 $ 95,951 $ 319,837 $ 31,984 $ 6,397 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.535000 - INTEREST EXPENSE $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 0.0% 20.0% 50.0% 5.0% 1.0%50500001.535010 - INTEREST EXPENDITURE - BONDS $ 411,916 2,059,579 $ 82,383 $ - $ 411,916 $ 1,029,789 $ 102,979 $ 20,596 $ 20.0% 4.0% 0.0% 20.0% 50.0% 5.0% 1.0%50500001.536030 - WASTE DISPOSAL (BRINING) $ 174,787 728,280 $ 182,070 $ - $ 145,656 $ 182,070 $ 36,414 $ 7,283 $ 24.0% 25.0% 0.0% 20.0% 25.0% 5.0% 1.0%50500001.536050 - REGULATORY AGENCY FEES $ 24,308 121,538 $ 4,862 $ 6,077 $ 18,231 $ 60,769 $ 6,077 $ 1,215 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.536550 - LEGAL EXPENSE $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.536551 - LEGAL EXPENSE CONFIDENTIAL $ - - $ - $ - $ - $ - $ - $ - $ 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% 0.0%50500001.537000 - SCADA O & M $ 12,685 63,427 $ 2,537 $ 3,171 $ 9,514 $ 31,713 $ 3,171 $ 634 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.537030 - TRANSFER STATION FEE $ 228 1,139 $ 46 $ 57 $ 171 $ 570 $ 57 $ 11 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.550010 - CONTRACTUAL SERVICES $ 189,219 946,094 $ 37,844 $ 47,305 $ 141,914 $ 473,047 $ 47,305 $ 9,461 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.550200 - EMPLOYEE MEDICAL EXAMS $ 1,641 8,205 $ 328 $ 410 $ 1,231 $ 4,102 $ 410 $ 82 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.552010 - PROFESSIONAL SERVICES $ 125,904 629,522 $ 25,181 $ 31,476 $ 94,428 $ 314,761 $ 31,476 $ 6,295 $ 20.0% 4.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500001.552015 - PROF SVCS - WATER CONSERVATION $ - 93,636 $ - $ - $ 93,636 $ - $ - $ - $ 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0%50500001.553150 - EOC - SUPPLIES AND EXPENSES $ - - $ - $ - $ - $ - $ - $ - $ 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% 50500001.555750 - WATER CONSERVATION REBATES $ - - $ - $ - $ - $ - $ - $ - $ 25.0% 4.0% 0.0% 15.0% 50.0% 5.0% 1.0% 50500001.555751 - LAUNDROMAT REBATES $ - - $ - $ - $ - $ - $ - $ - $ 25.0% 4.0% 0.0% 15.0% 50.0% 5.0% 1.0% 50500001.555752 - LANDSCAPE REBATES $ 62,500 250,000 $ 10,000 $ - $ 37,500 $ 125,000 $ 12,500 $ 2,500 $ 25.0% 4.0% 0.0% 15.0% 50.0% 5.0% 1.0% Conservation Fire Protection Basis of Classification Customer Budget Categories Total Revenue Reqt. Base Commodity Groundwater Capacity MWD Purchased Prepared by NBSwww.nbsgov.com | 800.676.7516
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Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA Function and Classification
WATER RATE STUDYCost of Service Analysis
50500001.555753 - LANDSCAPE CONSULTANT $ - - $ - $ - $ - $ - $ - $ - $ 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 0.0%50500001.555754 - DIRECT INSTALL PROGRAM $ - - $ - $ - $ - $ - $ - $ - $ 25.0% 4.0% 0.0% 15.0% 50.0% 5.0% 1.0%50500001.555755 - MWD WTR CONSERV REBATES $ - 38,947 $ - $ - $ 38,947 $ - $ - $ - $ 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0%50500001.555756 - SMMUSD PROGRAM $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 0.0% 20.0% 50.0% 5.0% 1.0%50500001.555780 - WATER DEMAND MITIGATION REBAT $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 0.0% 20.0% 50.0% 5.0% 1.0% 50500001.555790 - BAYSAVER - INDOOR PLUMBING $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 0.0% 20.0% 50.0% 5.0% 1.0% 50500001.555800 - UNRESERVED-PRIVATE OUTDOOR PL $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 0.0% 20.0% 50.0% 5.0% 1.0% 50500001.575020 - FURNITURE & FURNISHINGS $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 0.0% 20.0% 50.0% 5.0% 1.0% 50500001.575030 - COMPUTER EQUIPMENT $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 0.0% 20.0% 50.0% 5.0% 1.0% 50500001.575090 - MISCELLANEOUS EQUIPMENT $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 0.0% 20.0% 50.0% 5.0% 1.0% x25671.566380 - DEBRIS REMOVAL $ - - $ - $ - $ - $ - $ - $ - $ 20.0% 4.0% 0.0% 20.0% 50.0% 5.0% 1.0% Prepared by NBSwww.nbsgov.com | 800.676.7516
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Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA Function and Classification
WATER RATE STUDYCost of Service AnalysisTABLE 22 : CLASSIFICATION OF EXPENSES, CONTINUED FY 2025/26 COM GW PW CONSV CAP CA FP COM GW PW CONSV CAP CA FP Water Fund, 50Supplies and Expenses, cont.
50500002.525080 - SPECIAL DEPARTMENT SUPPLIES $ 9,884 52,020 $ 2,601 $ - $ 10,404 $ 26,010 $ 2,601 $ 520 $ 19.0% 5.0% 0.0% 20.0% 50.0% 5.0% 1.0%50500002.525081 - CHEMICALS (Charnock) $ 43,333 88,434 $ 44,217 $ - $ - $ - $ - $ 884 $ 49.0% 50.0% 0.0% 0.0% 0.0% 0.0% 1.0%50500002.525084 - FILTER MEDIA REPLACEMENT $ 168,527 581,127 $ 29,056 $ - $ - $ 348,676 $ 29,056 $ 5,811 $ 29.0% 5.0% 0.0% 0.0% 60.0% 5.0% 1.0%50500002.527501 - FIELD EQUIP & TOOLS $ - - $ - $ - $ - $ - $ - $ - $ 29.0% 5.0% 0.0% 0.0% 60.0% 5.0% 1.0%50500002.527502 - ANALYTICAL INSTR CONSUMABLES $ - - $ - $ - $ - $ - $ - $ - $ 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% 0.0%50500002.528000 - UTIL - LIGHT / POWER $ 439,433 1,292,449 $ 129,245 $ - $ - $ 646,225 $ 64,622 $ 12,924 $ 34.0% 10.0% 0.0% 0.0% 50.0% 5.0% 1.0%50500002.536030 - WASTE DISPOSAL (BRINING) $ 30,583 69,507 $ 34,753 $ - $ - $ - $ 3,475 $ 695 $ 44.0% 50.0% 0.0% 0.0% 0.0% 5.0% 1.0%50500002.536050 - REGULATORY AGENCY FEES $ - 11,395 $ - $ - $ - $ 11,395 $ - $ - $ 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0%50500002.550010 - CONTRACTUAL SERVICES $ 44,181 883,612 $ - $ - $ - $ 830,595 $ - $ 8,836 $ 5.0% 0.0% 0.0% 0.0% 94.0% 0.0% 1.0%50500002.552010 - PROFESSIONAL SERVICES $ - - $ - $ - $ - $ - $ - $ - $ 5.0% 0.0% 0.0% 0.0% 94.0% 0.0% 1.0% 50500003.525080 - SPECIAL DEPARTMENT SUPPLIES $ - 33,383 $ - $ - $ 33,383 $ - $ - $ - $ 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% 50500003.525081 - CHEMICALS (Arcadia WTP) $ 228,963 467,271 $ 233,636 $ - $ - $ - $ - $ 4,673 $ 49.0% 50.0% 0.0% 0.0% 0.0% 0.0% 1.0%50500003.525082 - MEMBRANE REPLACEMENT $ - - $ - $ - $ - $ - $ - $ - $ 49.0% 25.0% 0.0% 25.0% 0.0% 0.0% 1.0%50500003.525083 - CARTRIDGE FILTER REPLACEMENT $ - - $ - $ - $ - $ - $ - $ - $ 49.0% 50.0% 0.0% 0.0% 0.0% 0.0% 1.0%50500003.525084 - FILTER MEDIA REPLACEMENT $ - - $ - $ - $ - $ - $ - $ - $ 29.0% 5.0% 0.0% 0.0% 60.0% 5.0% 1.0% 50500003.528000 - UTIL - LIGHT / POWER $ 110,144 579,707 $ 28,985 $ 28,985 $ 86,956 $ 289,853 $ 28,985 $ 5,797 $ 19.0% 5.0% 5.0% 15.0% 50.0% 5.0% 1.0% 50500003.536030 - WASTE DISPOSAL (BRINING) $ 19,300 80,415 $ 20,104 $ - $ 16,083 $ 20,104 $ 4,021 $ 804 $ 24.0% 25.0% 0.0% 20.0% 25.0% 5.0% 1.0%50500003.550010 - CONTRACTUAL SERVICES $ - 255,933 $ - $ - $ - $ 240,577 $ 12,797 $ 2,559 $ 0.0% 0.0% 0.0% 0.0% 94.0% 5.0% 1.0% 50500003.552010 - PROFESSIONAL SERVICES $ - - $ - $ - $ - $ - $ - $ - $ 5.0% 0.0% 0.0% 0.0% 94.0% 0.0% 1.0% Supplies and Expenses - SUBTOTAL $ 3,465,019 22,460,824 $ 1,249,546 $ 6,197,545 $ 2,196,794 $ 8,105,989 $ 1,084,934 $ 160,997 $ 15.4% 5.6% 27.6% 9.8% 36.1% 4.8% 0.7% Groundwater Conservation Fire Protection Basis of Classification MWD Budget Categories Purchased Total Revenue Requirements Base Commodity Capacity Customer Prepared by NBSwww.nbsgov.com | 800.676.7516
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Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA Function and Classification
WATER RATE STUDYCost of Service AnalysisTABLE 23 : CLASSIFICATION OF EXPENSES, CONTINUED FY 2025/26 COM GW PW CONSV CAP CA FP COM GW PW CONSV CAP CA FP Water Fund, 50Retirement and OPEB
50800004.51100C - MOU CONTINGENCY - - - - - - - - 0.0% 0.0% 0.0% 0.0% 94.0% 5.0% 1.0%50800004.513003 - RETIREMENT - MISC. EMPL - - - - - - - - 0.0% 0.0% 0.0% 0.0% 94.0% 5.0% 1.0%50800004.514001 - OPEB PAYMENT ARC - 94,260 - - - 88,604 4,713 943 0.0% 0.0% 0.0% 0.0% 94.0% 5.0% 1.0%50800004.514002 - REIMBURSEMENT FROM OPEB TRUST - (42,632) - - - (40,074) (2,132) (426) 0.0% 0.0% 0.0% 0.0% 94.0% 5.0% 1.0% Retirement and OPEB - SUBTOTAL $ - 51,627 $ - $ - $ - $ 48,530 $ 2,581 $ 516 $ 0.0% 0.0% 0.0% 0.0% 94.0% 5.0% 1.0% Conservation MWD Purchased Fire Protection Basis of Classification Total Revenue Requirements Base Commodity Capacity Customer Budget Categories Groundwater Prepared by NBSwww.nbsgov.com | 800.676.7516
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Packet Pg. 1131
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA Function and Classification
WATER RATE STUDYCost of Service AnalysisTABLE 24 : CLASSIFICATION OF EXPENSES, CONTINUED FY 2025/26 COM GW PW CONSV CAP CA FP COM GW PW CONSV CAP CA FP Water Fund, 50Environmental Reimbursement $ - 968,597 $ - $ - $ - $ 968,597 $ - $ - $ 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% MWD Recycled Water Rebate $ - 10,167 $ - $ - $ 10,167 $ - $ - $ - $ 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0%Reimbursement General Fund SCADA $ - 97,354 $ - $ - $ - $ 96,380 $ - $ 974 $ 0.0% 0.0% 0.0% 0.0% 99.0% 0.0% 1.0% Transfer Out - Engineering Reimb. $ 137,456 274,912 $ - $ - $ - $ 137,456 $ - $ - $ 50.0% 0.0% 0.0% 0.0% 50.0% 0.0% 0.0% Transfer Out - Water/Wastewater Reimbursment $ 161,474 322,947 $ - $ - $ - $ 161,474 $ - $ - $ 50.0% 0.0% 0.0% 0.0% 50.0% 0.0% 0.0%Transfer Out - GIS Analyst for PW $ - 29,384 $ - $ - $ - $ 29,090 $ - $ 294 $ 0.0% 0.0% 0.0% 0.0% 99.0% 0.0% 1.0% Transfer Out - Admin Analysis Reimb $ 1,849 3,698 $ - $ - $ - $ 1,849 $ - $ - $ 50.0% 0.0% 0.0% 0.0% 50.0% 0.0% 0.0% Transfer Out - WTR Res Prot Spec Xfer $ 39,640 79,279 $ - $ - $ - $ 39,640 $ - $ - $ 50.0% 0.0% 0.0% 0.0% 50.0% 0.0% 0.0%Transfer Out - ADA Coord Reimb $ - 79,279 $ - $ - $ - $ 77,694 $ - $ 1,586 $ 0.0% 0.0% 0.0% 0.0% 98.0% 0.0% 2.0% Transfer-In Water/Wastewater Transfer $ - (312,774) $ - $ - $ (312,774) $ - $ - $ - $ 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% Transfer-In from General Fund - Low Income Disc. $ - (96,000) $ - $ - $ - $ (95,040) $ - $ (960) $ 0.0% 0.0% 0.0% 0.0% 99.0% 0.0% 1.0% Interfund Transactions - SUBTOTAL $ 340,418 1,456,843 $ - $ - $ (302,607) $ 1,417,138 $ - $ 1,893 $ 23.4% 0.0% 0.0% -20.8% 97.3% 0.0% 0.1% Total Operating Expenses $ 6,117,577 35,842,387 $ 1,786,948 $ 6,791,199 $ 3,675,152 $ 15,508,204 $ 1,681,170 $ 282,137 $ 17.1% 5.0% 18.9% 10.3% 43.3% 4.7% 0.8% Groundwater Conservation MWD Purchased Fire Protection Basis of Classification Budget Categories Total Revenue Requirements Base Commodity Capacity Customer Prepared by NBSwww.nbsgov.com | 800.676.7516
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Packet Pg. 1132
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service CITY OF SANTA MONICA Function and Classification
WATER RATE STUDYCost of Service AnalysisTABLE 25 : CLASSIFICATION OF EXPENSES, CONTINUED FY 2025/26 COM GW PW CONSV CAP CA FP COM GW PW CONSV CAP CA FP Debt Service PaymentsDebt Service (Interfund Loan Repayment) $ - 706,367 $ - $ - $ - $ 706,367 $ - $ - $ 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% New Debt Service - - - - - - - - 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0%Total Debt Service Payments $ - 706,367 $ - $ - $ - $ 706,367 $ - $ - $ 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% Capital ExpendituresRate Funded Capital Expenses $ 6,517,756 13,438,671 $ - $ - $ - $ 6,719,336 $ - $ 201,580 $ 48.5% 0.0% 0.0% 0.0% 50.0% 0.0% 1.5%TOTAL REVENUE REQUIREMENTS $ 12,635,333 49,987,425 $ 1,786,948 $ 6,791,199 $ 3,675,152 $ 22,933,906 $ 1,681,170 $ 483,717 $ 25.3% 3.6% 13.6% 7.4% 45.9% 3.4% 1.0%Less: Non-Rate Revenues Water Fund, 50
Water - Commercial SalesWater - Meter Services/Install $ - (750,000) $ - $ - $ - $ (750,000) $ - $ - $ 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0%Reimbursement from other funds - (463,500) - - - (463,500) - - 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0%Damage Repair Work - (17,000) - - - - (17,000) - 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% Water Capital Facilities FeeWater Demand Mitigation FeeAdmin Fee Water Neutrality - (219,161) - - (219,161) - - - 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% In Lieu Fee Water Neutrality - (1,020,000) - - (1,020,000) - - - 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% Plan Check Fee Water Neutrality - (109,581) - - (109,581) - - - 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0%Inspection Fee Water Neutrality - (6,120) - - (6,120) - - - 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0%Internal Dep./Investment - (221,468) - - - (221,468) - - 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0%Unrealized Gain (Loss) - - - - - - - - 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0%Accrued Investment Income - - - - - - - - 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0%MWD SoCal Water smart Rebate - - - - - - - - 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0%Other Revenues - Misc - (15,000) - - - (15,000) - - 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% Alt Fuel Tax Credit - - - - - - - - 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% Water - Misc Non-Operating - (365,000) - - - (365,000) - - 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0%Baysaver Fees - (150,000) - - (150,000) - - - 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0%NET REVENUE REQUIREMENTS $ 12,635,333 46,650,595 $ 1,786,948 $ 6,791,199 $ 2,170,290 $ 21,118,938 $ 1,664,170 $ 483,717 $ Allocation of Revenue Requirements 100.0% 27.1% 3.8% 14.6% 4.7% 45.3% 3.6% 1.0% TABLE 26 : ADJUSTMENTS TO CLASSIFICATION OF EXPENSES
Adjustment for Current Rate Level Total COM GW PW CONSV CAP CA FPFY 2025/26 Target Rate Rev. After Rate Increases 49,880,743 $ Projected Rate Revenue at Current Rates 41,567,286 $ FY 2025/26 Projected Rate Increases 20%Adjusted Net Revenue Req'ts 49,880,743 $ 13,510,220 $ 1,910,679 $ 7,261,431 $ 2,320,563 $ 22,581,241 $ 1,779,399 $ 517,211 $ Percent of Revenue 100.0% 27.1% 3.8% 14.6% 4.7% 45.3% 3.6% 1.0% Groundwater Conservation MWD Purchased Fire Protection Basis of Classification Budget Categories Total Revenue Requirements Base Commodity Capacity Customer Prepared by NBSwww.nbsgov.com | 800.676.7516
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Packet Pg. 1133
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service
CITY OF SANTA MONICA
WATER RATE STUDYWater Cost of Service AnalysisTABLE 27 : SINGLE FAMILY RESIDENTIAL METER CHARACTERISTICS Average
Bi-Monthly
Con./Acct (hcf)
Peak
Bi-Monthly
Con./Acct (hcf)
FY 2023/24 FY 2023/24
3/4 inch 3,105 17.2 20 1.151 inch 3,285 27.8 34 1.221.5 inch 1,117 45.7 57 1.252 inch 73 67.4 101 1.50Total 7,580 26.5 32 1.21
1. Consumption and Meters from source file: Customer Data 23 24 TABLE 28 : MULTI-FAMILY RESIDENTIAL METER CHARACTERISTICS Average
Bi-Monthly
Con./Acct (hcf)
Peak
Bi-Monthly
Con./Acct (hcf)
Average
Bi-Monthly
Con./Unit (hcf)
Peak
Bi-Monthly
Con./Unit (hcf)
FY 2023/24 FY 2023/24 FY 2023/24 FY 2023/24
3/4 inch 1,699 3,216 13 14 6.9 7.4 1.07
1 inch 1,825 5,706 22 23 6.9 7.2 1.05
1.5 inch 2,380 18,462 56 61 7.2 7.9 1.09
2 inch 496 9,070 133 148 7.3 8.1 1.113 inch 61 2,753 311 334 6.9 7.4 1.07 4 inch 31 2,791 487 594 5.4 6.6 1.22
6 inch 13 2,716 1,026 1,245 4.9 6.0 1.21
8 inch 2 422 1,376 1,668 6.5 7.9 1.21
Total 6,507 45,136 48 44 6.9 7.6 1.10
1. Consumption and Meters from source file: Customer Data 23 24 Peaking
Factor
Number of Units
Meter Size Number of Meters Peaking
Factor
Meter Size Number of Meters
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Packet Pg. 1134
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service
CITY OF SANTA MONICA
WATER RATE STUDYWater Cost of Service AnalysisTABLE 29 : WATER USAGE BY CUSTOMER CLASS Customer Class
Consumption, Actual
(hcf)
FY2023/24
Consumption,
Projected
(hcf)
FY2025/26
FY 2023/24
Percent of
Total Volume,
Actual
FY 2025/26
Percent of
Total Volume,
Projected Conservation
Factor
Single Family 1,205,301 1,145,036 26.1% 26.1% 27% 0.95Multi Family 1,867,992 1,774,592 40.4% 40.4% 37%Commercial 1,356,790 1,288,951 29.4% 29.4% 29%Municipal 128,057 121,654 2.8% 2.8% 3%Irrigation 64,322 61,106 1.4% 1.4% 4%Total 4,622,086 4,390,523 100.0% 100.0%Recycled Water 5,285 5,285 0.1% 0.1%
1. Consumption and Meters from source file: Customer Data 23 24 TABLE 30 : PEAK BI-MONTHLY WATER USAGE
Customer Class
Peak Bi-Monthly
Use FY2023/24
(hcf)
Average BiMonthly Use
FY2023/24
(hcf)
Bi-Monthly
Peaking
Factor
FY 2023/24
Bi-Monthly Max
Capacity Factor
Single Family 243,441 201,383 1.21 27.0%Multi Family 333,610 312,168 1.07 37.0%Commercial 259,773 226,775 1.15 28.8%Municipal 31,368 21,782 1.44 3.5%Irrigation 32,844 12,322 2.67 3.6%Total 901,230 774,370 1.16 100.0%Recycled Water 7,950 1,458 5.45 82.4%
1. Based on bi-monthly billing data (peak day data not available).
Prepared by NBSwww.nbsgov.com | 800.676.7516
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Packet Pg. 1135
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service
CITY OF SANTA MONICA
WATER RATE STUDYWater Cost of Service AnalysisTABLE 31 : NUMBER OF METERS BY CUSTOMER CLASS Customer Class Number of Meters Percent of Total
Single Family 7,580 41.2%Multi Family 6,507 35.4%Commercial 2,160 11.7%Municipal 191 1.0% Irrigation 662 3.6%
Fire 1,297 7.1%
Total 18,397 100.0%Recycled Water 29 0.2%
1. Consumption and Meters from source file: Customer Data 23 24 Prepared by NBSwww.nbsgov.com | 800.676.7516
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Packet Pg. 1136
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service
CITY OF SANTA MONICA
WATER RATE STUDYWater Cost of Service Analysis/Rate DesignTABLE 32 : METER EQUIVALENCY FACTORS 3/4 inch 30 1.00 30 1.00
1 inch 50 1.00 50 1.00
1.5 inch 100 2.00 100 2.00
2 inch 160 3.20 160 3.203 inch 320 6.40 350 7.004 inch 500 10.00 700 14.006 inch 1,000 20.00 1,600 32.008 inch 2,800 56.00 2,800 56.00 10 inch 4,200 84.00 4,200 84.00
1. Meter flow rates are from AWWA M-1 (Seventh Edition) Table B-2.2. Fire Service meter flow rates are from AWWA M-6 Table 5-3.
Displacement Meters Displacement Meters
Compound Class I Meters Fire Service Type I & II
Turbine Class II Meters Turbine Class I Meters
Meter Size Meter
Capacity (gpm)
Equivalency
to 1-inch
Meter Capacity
(gpm)
Equivalency to 1-
inch
Standard Meters Fire Service Meters
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Packet Pg. 1137
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service
CITY OF SANTA MONICA
WATER RATE STUDYWater Cost of Service Analysis/Rate DesignTABLE 33 : ALLOCATION OF WATER REVENUE REQUIREMENTS Variable Costs
Base Commodity $ 13,510,220 27.1%Groundwater 1,910,679 3.8% MWD Purchased Water 7,261,431 14.6%
Conservation 2,320,563 4.7%
Fixed Costs
Capacity 22,581,241 $ 45.3%
Customer 1,779,399 3.6%
Fire Protection 517,211 1.0%
Net Revenue Requirement 49,880,743 $ 100%
TABLE 34 : ALLOCATION OF NET REVENUE REQUIREMENTS
Single Family 6,099,653 $ 733,154 $ - $ 3,523,059 $ 498,248 $ 1,893,563 $ 605,133 $ 13,352,810 $ 26.8% Multi Family 8,358,944 $ 629,372 $ - 5,460,085 $ 772,191 $ 2,934,669 $ 937,844 $ 19,093,104 $ 38.3% Commercial 6,508,877 $ 208,920 $ - 3,965,858 $ 560,870 $ 2,131,557 $ 681,190 $ 14,057,273 $ 28.2% Municipal 785,954 $ 18,474 $ - 374,306 $ 52,936 $ 201,181 $ 64,292 $ 1,497,144 $ 3.0%Irrigation 822,929 $ 64,030 $ - 188,012 $ 26,590 $ 101,052 $ 32,294 $ 1,234,907 $ 2.5%Fire 4,883 $ 125,449 $ 517,211 (1,101) $ (156) $ (592) $ (189) $ 645,505 $ 1.3%Total Net Revenue Requirement 22,581,241 $ 1,779,399 $ 517,211 $ 13,510,220 $ 1,910,679 $ 7,261,431 $ 2,320,563 $ 49,880,743 $ 100% Groundwater MWD Purchased
Water
% of COS Net
Revenue
Req'ts Conservation
Classification Components (Variable Costs)
Cost of Service
Net Rev. Req'ts Customer Classes
Customer Classes
Base
Commodity Fire Protection
Classification Components (Fixed Costs)
Capacity Customer
Cost of Service Net Revenue
Requirements (FY 25/26)
Proposed Rates
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Packet Pg. 1138
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service
CITY OF SANTA MONICA
WATER RATE STUDYWater Cost of Service Analysis/Rate DesignTABLE 35 : SUMMARY OF FIXED REVENUE REQUIREMENTS C.O.S.
Rev. Req't
% of C.O.S.
Rev. Req't.
% Fixed
Revenue
% Variable
Revenue
Revenue from
Volumetric
Charges
Revenue from
Hydraulic Capacity
Charges
Revenue from
Customer Costs
Single Family 13,352,810 $ 26.8% 19% 81% $ 1,803,879 10,815,776 $ 733,154 $ Multi Family $ 38.3% 19,093,104 19% 81% $ 2,998,318 15,465,414 $ 629,372 $ Commercial $ 28.2% 14,057,273 19% 81% $ 2,461,962 11,386,391 $ 208,920 $ Municipal $ 3.0% 1,497,144 19% 81% $ 265,983 1,212,687 $ 18,474 $ Irrigation $ 2.5% 1,234,907 19% 81% $ 170,602 1,000,275 $ 64,030 $ Fire $ 1.3% 645,505 100% 0% $ 520,056 - $ 125,449 $
Total 49,880,743 $ 100% 20.0% 80.0% 39,880,543 $ 8,220,802 $ 1,779,399 $ TABLE 36 : CALCULATION OF SINGLE FAMILY BI-MONTHLY FIXED METER SERVICE CHARGESProposed Fixed Charges Number of Meters by
Class and Size 3/4 inch 1 inch 1.5 inch 2 inch Total
Single Family 3,105 3,285 1,117 73 7,710
Total Meters/Accounts 3,105 3,285 1,117 73 7,580Hydraulic Capacity Factor 1.00 1.00 2.00 3.20 Total Equivalent Meters 3,105 3,285 2,234 234 8,858
Bi-Monthly Fixed Service Charges
Customer Costs ($/Acct/bi-month) $16.12 $16.12 $16.12 $16.12Capacity Costs ($/Acct/bi-month) $33.94 $33.94 $67.88 $108.62 Total Bi-Monthly Meter Charge $50.06 $50.06 $84.00 $124.74Annual Fixed Costs Allocated to Bi-Monthly Meter Charges Customer Costs $ 733,154 Capacity Costs 1,803,879
Total Fixed Meter Costs $ 2,537,034
Annual Revenue from Bi-Monthly Meter Charges
Customer Charges $ 317,733 300,323 $ 108,039 $ 7,061 $ $ 733,154 Capacity Charges 669,001 632,343 454,961 47,573 1,803,879 Total Revenue 932,666 $ 986,734 $ 563,000 $ 54,634 $ 2,537,034 $ Customer Class
Proposed Rates
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Packet Pg. 1139
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service
CITY OF SANTA MONICA
WATER RATE STUDYWater Cost of Service Analysis/Rate DesignTABLE 37 : CALCULATION OF BI-MONTHLY FIXED METER SERVICE CHARGESProposed Fixed Charges Number of Meters by
Class and Size 3/4 inch 1 inch 1.5 inch 2 inch 3 inch 4 inch 6 inch 8 inch Total Multi Family 1,699 1,825 2,380 496 61 31 13 2 6,507
Commercial 580 492 542 349 117 54 22 4 2,160
Municipal 30 9 28 69 36 15 4 - 191
Irrigation 214 200 148 87 8 4 1 - 662
Total Meters/Accounts 2,523 2,526 3,098 1,001 222 104 40 6 9,520 Hydraulic Capacity Factor 1.00 1.00 2.00 3.20 6.40 10.00 20.00 56.00 Total Equivalent Meters 2,523 2,526 6,196 3,203 1,421 1,040 800 336 18,045 Bi-Monthly Fixed Service Charges
Customer Costs ($/Acct/bi-month) $16.12 $16.12 $16.12 $16.12 $16.12 $16.12 $16.12 $16.12Capacity Costs ($/Acct/bi-month) $54.46 $54.46 $108.93 $174.29 $348.57 $544.64 $1,089.29 $3,050.01 Total Bi-Monthly Meter Charge $70.58 $70.58 $125.05 $190.41 $364.69 $560.76 $1,105.41 $3,066.13Annual Fixed Costs Allocated to Bi-Monthly Meter Charges Customer Costs $ 920,796 Capacity Costs 5,896,866
Total Fixed Meter Costs $ 6,817,661
Annual Revenue from Bi-Monthly Meter Charges
Customer Charges $ 244,320 244,030 $ 299,645 $ 96,819 $ 21,472 $ 10,059 $ 3,869 $ 580 $ $ 920,796 Capacity Charges 825,463 824,483 2,024,770 1,046,763 464,299 339,858 261,429 109,800 5,896,866 Total Revenue 1,068,513 $ 1,069,784 $ 2,324,416 $ 1,143,582 $ 485,771 $ 349,917 $ 265,298 $ 110,381 $ 6,817,661 $ Prepared by NBSwww.nbsgov.com | 800.676.7516
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Packet Pg. 1140
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service
CITY OF SANTA MONICA
WATER RATE STUDYWater Cost of Service Analysis/Rate DesignTABLE 38 : CALCULATION OF BI-MONTHLY FIRE METER SERVICE CHARGESProposed Fixed Charges Number of Meters by
Class and Size 1.5 Inch 2 Inch 3 Inch 4 Inch 6 Inch 8 Inch 10 Inch Total Fire 1,270 15 8 4 - - - 1,297
Total Meters/Accounts 1,270 15 8 4 - - - 1,297
Hydraulic Capacity Factor 2.00 3.20 7.00 14.00 32.00 56.00 84.00 Total Equivalent Meters 2,540 48 56 56 - - - 2,700
Bi-Monthly Fixed Service Charges
Customer Costs ($/Acct/bi-month) $16.12 $16.12 $16.12 $16.12 $16.12 $16.12 $16.12Capacity Costs ($/Acct/bi-month) $64.20 $102.73 $224.72 $449.43 $1,027.27 $1,797.73 $2,696.59 Total Bi-Monthly Meter Charge $80.32 $118.85 $240.84 $465.55 $1,043.39 $1,813.85 $2,712.71Annual Fixed Costs Allocated to Bi-Monthly Meter Charges Customer Costs $ 125,449 Capacity & Fire Protection Costs 520,056 Total Fixed Meter Costs $ 645,505
Annual Revenue from Bi-Monthly Meter Charges
Customer Charges $ 1,451 122,837 $ 774 $ 387 $ - $ - $ - $ $ 125,449 Capacity Charges 9,245 489,238 10,786 10,786 - - - 520,056 Total Revenue 612,075 $ 10,696 $ 11,560 $ 11,173 $ - $ - $ - $ 645,505 $
1. Consumption and Meters from source file: Customer Data 23 242. Meter flow rates & hydraulic capacity ratio are from AWWA M-1 (Seventh Edition) Table B-2.
3. Customer costs are allocated to each customer by dividing the total customer costs by the total number of customers.4. Capacity costs are allocated by meter size and the hydraulic capacity of the meter.
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Packet Pg. 1141
Attachment: Santa Monica Water and Sewer Rate Study Report [Revision 2] (7063 : Wastewater Service
CITY OF SANTA MONICA
WATER RATE STUDYCustomer DataWater Supply DataTABLE 39 : SUMMARY OF WATER SUPPLY RECORDS Fiscal Year SM Water (MG)
MWD
Purchased
Water (MG)
% MWD
Purchased
SM Water
(hcf) MWD Purchased Water (hcf) Total Supply (hcf) SM Supply Purchased Water FY 2021/22 1,711 1,731 49.7% 2,313,609 2,287,408 4,601,017 50% 50%FY 2022/23 2,948 446 86.9% 596,215 3,940,234 4,536,449 13% 87% FY 2023/24 2,758 751 78.6% 1,003,406 3,686,909 4,690,316 21% 79% TABLE 40 : SUMMARY OF WATER SUPPLY COSTS
Total Cost
Treated /
Delivered
Local Resource Credit Readiness To Serve Charge Capacity Charge Conservation Debit / Credit Misc. Debit / Credit FY 2021/22 2,848 8,743 $ 3,709,521 $ (5,820) 2,618,428 $ 953,981 $ 249,700 $ (106,767) $ - $ 30% 70% FY 2022/23 3,651 11,209 $ 4,517,630 $ (12,075) 3,438,014 $ 816,955 $ 214,515 $ 60,222 $ (0) $ 24% 76%FY 2023/24 4,155 12,755 $ 4,889,873 $ (14,670) 4,041,328 $ 705,657 $ 156,920 $ 637 $ (0) $ 18% 82% FY 2024-25* 1,599 4,907 $ 1,625,431 $ (3,975) 1,410,343 $ 341,407 $ 66,120 $ 15,300 $ - $ 26% 87% Source file: Well and Demand Report.
* Data is for July 2024 - December 2024 only.
Fiscal Year % Fixed % Variable Total Volume (HCF)
Total Volume
Treated /
Delivered
(AF)
Total Invoice
Cost
Variable Fixed
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Proposed Volume Charges-3 Tiers