HomeMy WebLinkAboutSS3 - Wastewater Rate StudyCITY OF
NEWPORT BEACH
- City Council Staff Report
June 9, 2015
Agenda Item No. SS3
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: George Murdoch, Acting Municipal Operations Department Director - (949) 644-
3011, gmurdoch @newportbeachca.gov
PREPARED BY: Rachell Wilfert
PHONE: (949) 644 -3010
TITLE: SS3. Wastewater Rate Study (5:00 p.m.)
ABSTRACT:
The Municipal Operations Department retained the consulting services of HF &H Consultants, LLC
( "HF &H ") to prepare a wastewater (sewer) and recycled water rate study. The purpose of this presentation
is to review the results of the sewer rate portion of the study and propose the adoption of an appropriate
sewer rate.
RECOMMENDATION:
The City has recently hired an outside expert to take a look at the rate structure and capital demands of the
long -term wastewater fund. Staff will go over aspects of the report with the City Council and community. If
the rate structure continues as is without any change, eventually the wastewater reserve fund will be
depleted..
FUNDING REQUIREMENTS:
There is no funding requirement required for this specific action. Should Council move forward with the
formal review and approval of the recommendations, a sewer rate and structure may be established,
unless written protests against the proposed charges are presented by a majority of owners of the parcels
subject to the charges.
DISCUSSION:
Background:
The Municipal Operations Department operates and maintains approximately 197 miles of sewer mains,
4.7 miles of force mains, 4,922 manholes and cleanouts, 25,525 sewer laterals, and 21 sewer lift stations.
Operations, maintenance and repair activities include: sewer line cleaning, root removal, manhole
maintenance and repair, lift station operation and maintenance, sewer line video inspection, as well as
sewer lateral maintenance, repair and replacement. SS34
Funding for maintenance and replacement activities is collected from rate payers through the bimonthly
Municipal Services bill. Salaries, maintenance, operations, and internal service charges are estimated to be
approximately $3.5 million for FY 14 -15. Capital Improvement Projects (CIP) are based upon the Sewer
Master Plan which was last updated in 2009. Funding for master plan projects through the revenue
increases initially provides $500,000 per year for CIP, increasing to $1,300,000 per year at FY 19 -20 to
replace aging infrastructure over a 30 year period.
The estimated revenue for FY 14 -15 is approximately $3.5 million. City Council Policy F -2 sets the sewer
enterprise reserve level at 50% of the annual operations budget which is about $1.5 million. Sewer rates
were last updated in 2006; as the increase in outsourced services, reduced staff, and the amount of capital
replacement projects, the current rates have not been increased in line with rising expenses since that
time.
Rate Study:
In 2013, the City entered into an agreement with HF &H to conduct a Sewer and Recycled Water Rate
Study, the first priority being to identify the recycled water rates. The recycled rates were adopted by City
Council on September 9, 2014 lowering the overall cost to our customers by 50 %. The next phase of the
study was to address the sewer rates. Attachment "A" is a draft report that includes details of the proposed
sewer rate design and the results of the analysis.
Current sewer rate revenue does not provide adequate funding for ongoing operations. FY 14 -15 estimated
ending reserves are approximately $1,865,103. While this is currently above the minimum reserve balance,
in order to fund operating and capital improvement costs, reserve funds would need to be used. This trend
will deplete reserves by 2017 as shown by the dotted green line labeled `Reserves without Rate Increase'
in the attached Figure 1 Projected Fund Balance.
Currently the sewer rates include a monthly fixed fee, commodity charge and two additional surcharges of
$2.00 /month for each additional dwelling unit and $10.00 /month for customers with two -inch or larger water
meters. The proposed rate structure eliminates these surcharges and adds the costs to the monthly fixed
charge.
The proposed rates include:
- Fixed charge - a monthly sewer service charge based on size of water connection.
- Sewer use charge - a monthly charge for all customers based on water use.
Current Structure FY 15 -16 FY16 -17 FY 17 -18 FY 18 -19 FY 19 -20
Monthly Sewer Use Charae
5/8" or 3/4"
$4.50
$7.34
ill
$4.50
$7.34
1 ' /2"
$4.50
$8.07
2"
$14.50
$11.01
2'/2"
$14.50
$11.74
3"
$14.50
$12.47
4"
$14.50
$14.68
6"
$14.50
$16.51
8"
$14.50
$18.34
10"
$14.50
$23.48
Monthly Sewer Use
Charge (Sewer Only Customers)
Rate per Account
$6.25
$12.28
Consumption Charge
$26.30
$28.14
Rate per HCF
$0.35
$0.43
Sewer Surcharges
$2.00 Note
Multi Unit surcharge
$8.22
$8.79
$9.41
$9.88
$8.22
$8.79
$9.41
$9.88
$9.04
$9.67
$10.35
$10.87
$12.33
$13.19
$14.11
$14.82
$13.15
$14.07
$15.05
$15.81
$13.97
$14.95
$16.00
$16.79
$16.44
$17.59
$18.80
$19.76
$18.49
$19.78
$21.17
$22.23
$20.55
$21.98
$23.52
$24.70
$26.30
$28.14
$30.11
$31.61
$13.76
$14.72
$15.75
$16.54
$0.48
$0.52
$0.55
$0.58
Note 1
Note 1
Note 1
Note 1
SS3 -2
(Per DU)
Note 1: Surcharge has been incorporated into the Monthly Sewer Use Charge under the revised structure.
For a comparison of how the new rate structure will affect sample residents, please see Attachment B.
How do we compare?
The chart presented in Figure 2 Neighboring Agency Comparison compares recent charges for sewer
service among similar Orange County agencies, specifically ones that couple a fixed monthly use charge
with a flow -based commodity charge (Costa Mesa and Huntington Beach charge a fixed charge only).
Figure 2 indicates that the City's current and proposed sewer rates track the trend line along with its
neighbors.
Next Steps
Following incorporation of the City Council's comments and recommendations, staff will present and
recommend the proposed sewer rate and structure to the City Council at a regular Council meeting for final
review and approval to move forward with adoption. Staff will be required to issue Proposition 218 notices
to the owners of parcels that are subject to the sewer rate pursuant to California Constitution Article XIII D,
Section 6. There will be a 45 -day public notice period, and all written protests will be received and
tabulated.
Following a public hearing on the proposed sewer rate and structure, the City Council may thereafter
proceed with rate establishment unless written protests against the proposed rate are presented by a
majority of owners of the parcels subject to the rate.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California Environmental Quality Act
( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable
indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in
Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it
has no potential for resulting in physical change to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at
which the City Council considers the item).
ATTACHMENTS:
Description
Attachment A - Rate Study Report
Attachment B - Rate Examples
Figure 1 - Projected Fund Balance
Figure 2 - Agency Comparisons
SS3 -3
ATTACHMENT A
June 9, 2015 - REVISED DRAFT
SS3 -5
CITY OF NEWPORT BEACH
592 Superior Avenue
Newport Beach, CA 92663
Ivg�
r~ �
SEWER AND RECYCLED WATER RATE STUDY
June 9, 2015
HF &H CONSULTANTS, LLC
201 North Civic Drive, Suite 230
Walnut Creek, CA 94596
C H &H CONSULTANTS, LLC All nghts reserved.
Thie document is printed on 100% recycled, pestccwsumer content pepex
SS3 -6
201 N. Civic Drive, Suite 230
Walnut Creek, California 94596
Telephone: 925 /977 -6950
Fax: 925/977 -6955
www.hfh- consultants.com
June 9, 2015
Mr. George Murdoch
Utilities General Manager
City of Newport Beach
592 Superior Avenue
Newport Beach, CA 92663
Subject: Sewer and Recycled Water Rate Study
Dear Mr. Murdoch:
ig Tomorrow's Resources Today
Robert D. Hilton, CMC
John W. Farnkopf, PE
Laith B. Ezzet, CMC
Richard J. Simonson, CMC
Marva M. Sheehan, CPA
Robert C. Hilton, CMC
HF &H Consultants, LLC, is pleased to submit this Sewer and Recycled Water Rate
Study to the City of Newport Beach (City). The report summarizes the analysis that
was conducted to develop the recommended rates. A copy of the rate model is
included in the appendix.
The recycled water revenue increases and recycled water rate design sections presented
in this report summarize the analysis that was previously submitted as a staff report
and presented to City Council on April 29, 2014. The City Council subsequently
adopted, by Resolution 2014 -78 on September 9, 2014, the recommended Recycled
Water rates in compliance with Proposition 218, effective October 9, 2014, and updated
each January 1 thereafter.
The City has demonstrated leadership in improving rate payer equity during a time
when costs are increasing in compliance with regulatory mandates. It has been a
privilege to assist the City with this step forward.
Very truly yours,
HF &H CONSULTANTS, LLC
John W. Farnkopf, P.E.
Senior Vice President
SS3 -8
SS3 -9
City of Newport Beach Sewer and Recycled Water Rate Study
Table of Contents
TABLE OF CONTENTS
1. EXECUTIVE SUMMARY ................................................. ............................... 1
Findings And Recomm mend ations ........................................ ............................... 1
Sewer........................................................................... ............................... 1
RecycledWater .............................................................. ............................... 2
2. INTRODUCTION ........................................................... ............................... 4
StudyPurpose .................................................................... ............................... 4
Rate Making Objectives ....................................................... ............................... 4
Background........................................................................ ............................... 4
Sewer........................................................................... ............................... 4
RecycledWater ............................................................... ..............................4
3. SEWER PROJECTED REVENUE INCREASES ................... ............................... 6
Revenue Requirements ....................................................... ............................... 6
Salaries......................................................................... ............................... 6
Benefits........................................................................ ............................... 6
Operations & Maintenance .............................................. ............................... 6
Internal Services Allocation ............................................. ............................... 7
Operating Reserve Expense ............................................ ............................... 7
Capital Reserve Expense ................................................. ............................... 7
Miscellaneous Costs ....................................................... ............................... 7
Revenue Increases .............................................................. ............................... 7
FundBalance ...................................................................... ............................... 8
MinimumFund Balance .................................................. ............................... 9
TargetFund Balance ...................................................... ............................... 9
4. SEWER RATE DESIGN ................................................. ............................... 10
Current Rate Structure ...................................................... ............................... 10
Proposed Rate Structure .................................................... ............................... 10
Current and Proposed Customer Bill Comparisons ................ ............................... 12
Comparison with Neighboring agencies ............................... ............................... 13
S. RECYCLED WATER PROJECTED REVENUE INCREASES .............................. 15
Revenue Requirements ..................................................... ............................... 15
Operating Expenses ..................................................... ............................... 15
Purchased Recycled Water ............................................ ............................... 15
Pump Station Operating and Maintenance ...................... ............................... 15
Depreciation................................................................ ............................... 15
6. RECYCLED WATER RATE DESIGN ............................... ............................... 17
Current Rate Structure ...................................................... ............................... 17
Proposed Rate Structure .................................................... ............................... 17
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City of Newport Beach Sewer and Recycled Water Rate Study
Table of Contents
Customer Bill Comparisons ................................................ ............................... 20
APPENDIX A. SEWER AND RECYCLED WATER RATE MODEL
TABLE OF FIGURES
Figure 1 -1. Current and Proposed Sewer Rates .......................... ............................... 2
Figure 1 -2. Average Current and Proposed Monthly Sewer Bills .... ...............................
2
Figure 1 -3. Current and Proposed Recycled Water Rates ............. ...............................
3
Figure 3 -1. Annual Revenue Requirement Components .............. ...............................
6
Figure 3 -2. Capital Projects ...................................................... ...............................
7
Figure 3 -3. Projected Revenue Increases .................................. ...............................
8
Figure 3 -4. Fund Balance With and Without Rate Increases ........ ...............................
9
Figure 4 -1. Fixed and Variable Revenue ................................... ...............................
10
Figure 4 -2. Calculation of Monthly Fixed Charges ...................... ...............................
it
Figure 4 -3. Calculation of Sewer Consumption Charge .............. ...............................
11
Figure 4 -4. Five Year Sewer Rate Projections ........................... ...............................
12
Figure 4 -5. Customer Bill Comparison ...................................... ...............................
13
Figure 4 -6. Neighboring Agency Comparison ............................ ...............................
14
Figure 5 -1. Revenue Requirement Projections .......................... ...............................
15
Figure 6 -1. FY 2014 -15 Revenue Requirement by Cost Category ...............................
18
Figure 6 -2. Calculation of Monthly Fixed Charges ...................... ...............................
19
Figure 6 -3. Calculation of Commodity and Pump Station Charges ..............................
19
Figure 6 -4. Five Year Recycled Water Rate Projections .............. ...............................
20
ACRONYMS
CIP
Capital Improvement Plan
EDU
Equivalent Dwelling Unit; an average single - family residential
customer
EMU
Equivalent meter unit
FY
Fiscal Year
GPD
Gallons Per Day
HCF or CCF
Hundred Cubic Feet of metered water; 748 gallons; a cube of water 4.6
feet on edge
I &I
Inflow and Infiltration; stormwater runoff that enters collection systems
through surface or subsurface connections, cracks, or other openings
O &M
Operations and Maintenance
OCSD
Orange County Sanitation District
OCWD
Orange County Water District
PAYGo
Pay -As- You -Go, in reference to funding capital improvements from
cash rather than from borrowed sources of revenue
SFR
Single Family Residential
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City of Newport Beach Sewer and Recycled Water Rate Study
Table of Contents
ACKNOWLEDGEMENTS
City Council
Edward Selich, Mayor
Diane Dixon, Mayor Pro Tern
Kevin Muldoon, Council Member
Tony Petros, Council Member
Duffy Duffield, Council Member
Scott Peotter, Council Member
Keith Curry, Council Member
City Finance Commission:
Diane Dixon, Mayor Pro Tem
Keith Curry, Council Member
Tony Petros, Council Member
Larry Tucker, Appointed Finance Commission Member
City Staff
George Murdoch, Utilities General Manager
Dan Matusiewicz, Deputy Finance Director
Rachell Wilfert, Management Assistant
HF &H Consultants, LLC
John Farnkopf, Sr. Vice President
Sima Mostafaei, Senior Associate
June 9, 2015
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City of Newport Beach Sewer and Recycled Water Rate Study
Table of Contents
June 9, 2015
Page iv
HF &H Consultants, LLC
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SEWER AND RECYCLED WATER RATE
STUDY
SS3 -14
This page intentionally left blank
SS3 -15
City of Newport Beach Sewer and Recycled Water Rate Study
1. Executive Summary
1. EXECUTIVE SUMMARY
This report summarizes the analysis of the City's sewer and recycled water rates. The
analysis represents a collaborative effort of the City's Staff and consulting team. HF &H
prepared the financial plan model using the City's FY 2015 -16 preliminary operating
budget for sewer, and the FY 2014 -15 preliminary operating budget for recycled water.
FINDINGS AND RECOMMMENDATIONS
we
1. Key Assumptions. Rates were set to generate revenue sufficient to fund the
City's collection system expenses, local capital improvements funded from cash,
and to maintain the City's reserves.
2. Revenue Projections. The revenue increases enable the City to address
collection and pump station improvement projects that were identified in the
City's Sewer Master Plan. These increases enable the City to ramp up PAYGo
funding for capital projects over the next five years; by the fifth year, the rates
will enable the City to fund $1,300,000 per year on a pay -as- you -go cash basis
without issuing debt.
3. Rate Design. The City's current sewer customers pay the sum of the following: a
fixed monthly sewer use charge that is the same for all customers and a
commodity charge based on metered water use during the monthly period. In
addition, for meters 2 -inch or larger, a $10.00 monthly surcharge is assessed, and
for connections servicing two or more dwelling units on the same connection, a
$2.00 per unit per month surcharge is assessed for any additional dwelling units.
We recommend combining the two surcharges into the monthly use charge, and
maintaining the commodity charge. Under the revised rate structure, customers
will pay the sum of only two charges: a monthly sewer use charge, graduated
based on the capacity of the connection, and the commodity charge.
4. Projected Rates. Figure 1 -1 shows the sewer rates that are needed to cover the
projected revenue requirements, and compares the revised structure to the
current structure. In the revised rate structure, the service charges were
graduated using an EMU multiplier that was based on the ratio of $4.50 to $14.50
(the current rate ratio), the effect of which is to increase the service charges for
the larger services. The revised rate structure maintains the consumption charge,
but includes the larger meter and additional dwelling unit surcharges as part of
the monthly sewer use charge.
June 9, 2015 Page 1 HF &H Consultants, LLC
SS3 -16
City of Newport Beach Sewer and Recycled Water Rate Study
1. Executive Summary
Figure 1 -1. Current and Proposed Sewer Rates
Current
Revised
Structure
Structure FY 2015 -16
FY 2016 -17
FY 2017 -18
FY 2018 -19
FY 2019 -20
Monthly Sewer Use Charge
5/8" or 3/4"
$4.50
$5.97
$7.34
$8.22
$8.79
$9.41
$9.88
]"
$4.50
$5.97
$7.34
$5.22
$8.79
$9.41
$9.88
11/2"
$4.50
$6.56
$8.07
$9.04
$9.67
$10.35
$10.87
2"
$14.50
$8.95
$11.01
$12.33
$13.19
$14.11
$14.82
2 1/2"
$14.50
$9.54
$11.74
$13.15
$14.07
$15.05
$15.81
3"
$14.50
$10.14
$12.47
$13.97
'$14.95
$16.00
$16.79
4"
$14.50
$11.93
$14.68
$16.44
$17.59
$18.82
$19.76
6'
$14.50
$13.42
$16.51
$18.49
$19.78
$21.17
$22.23
8"
$14.50
$14.91
$1834
$20.55
$21.98
$23.52
$24.70
10"
$14.50
$19.09
$23.48
$26.30
$28.14
$30.11
$31.61
Monthly Sewer Use Charge (Sewer Only Customers)
Rate per Account
$6.25
$9.99
$12.28
$13.76
$14.72
$15.75
$16.54
Consumption Charge
Rate per HCF
$0.35
$0.35
$0.43
$0.48
$0.52
$0.55
$0.58
Sewer Surcharges
Multi Unit surcharge (per DU)
$2.00
Note 1
Note 1
Note 1
Note I
Note I
Note 1
Note 1: The surcharge has been incorporated into the Monthly Sewer Use Charge under the revised structure.
5. Customer Bills. Figure 1 -2 shows an average monthly residential and non-
residential bill at the current rates, and the average bills over the five year
projection period. In addition to paying the monthly sewer use charge based on
the size of the connection, each customer's monthly bill includes a consumption
charge that is determined by multiplying the consumption charge times the
average monthly residential flow of 11.49 HCF and non - residential flow of 64
HCF, respectively.
Figure 1 -2. Average Current and Proposed Monthly Sewer Bills
Monthly
Flow Current
(HCF) Structure FY 2015 -16 FY 2016 -17 FY 2017 -18 FY 2018 -19 FY 2019 -20
Single Family Residential 11.49 $8.52 $12.28 $13.73 $14.77 $15.73 $16.54
Non - Residential 64.00 $36.90 $38.53 $43.05 $46.47 $49.31 $51.94
Recycled Water
1. Key Assumptions. Rates were set to generate revenue sufficient to fund the
City's recycled water systems operations and maintenance expense, the cost of
June 9, 2015
Page 2 HF &H Consultants, LLC
SS3 -17
City of Newport Beach Sewer and Recycled Water Rate Study
1. Executive Summary
purchasing recycled water from OCWD, and capital replacement expense related
to pump stations and meters.
2. Rate Design. The City's current recycled water customers pay the sum of two
charges: a monthly fixed charge that is based on the size of the connection, and a
commodity charge based on metered water use during the monthly period. The
fixed and commodity charges are based on 80% of the potable water rate. We
recommend unlinking the recycled water rate from the potable water rate and
aligning the recycled fixed and commodity charges with the fixed costs and the
cost of purchased water from OCWD, respectively. In addition to the fixed and
commodity charges, pump station users will be charged a pump station charge
based on the cost to operate and maintain the stations and convey recycled
water.
3. Projected Rates. The rate projections are shown in Figure 1 -3.
Figure 1 -3. Current and Proposed Recycled Water Rates
Current
FY 2014 -15
FY 2015 -16
FY 2016 -17 FY 2017 -18
FY 2018 -19
Monthly Service Charge
5/8" or 3/4"
$13.82
$18.91
$19.29
$19.68
$20.07
$20.47
1"
$23.03
$31.53
$32.16
$32.80
$33.46
$34.13
1 1/2"
$46.06
$63.05,
$64.32
$65.60
$66.91
$68.25
2"
$73.70
$100.88
$102.90
$104.95
$107.05
$109.19
3"
$138.18
$189.15
$192.94
$196.80
$200.73
$204.75
4"
$230.30
$315.25
$321.56
$327.99
$334.55
$341.24
6"
$460.61
$630.50
$643.11
$655.98
$669.10
$682.48
8"
$736.98
$1;008.81
$1,028.99
$1,049.57
$1,070.56
$1,091.97
Monthly Commodity Charge
Rate per HCF
$2.46
$0.86
$0.87
$0.89
$0.91
$0.93
Monthly Pump Station Charge
Rate per HCF
none
$0.36
$0.37
$0.38
$0.38
$0.39
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SS3 -18
City of Newport Beach Sewer and Recycled Water Rate Study
2. Introduction
2. INTRODUCTION
STUDY PURPOSE
The purpose of this study is to update the City's rates to ensure that they generate
sufficient revenue and that the rate structures for sewer and recycled water reflect the
City's current rate - making objectives. The study was commissioned by the City to
evaluate the effect of certain rate structure modifications in response to input from its
customers.
RATE MAKING OBJECTIVES
The City's current rate - making objectives include the following:
• Provide revenue sufficiency and financial stability to cover the projected capital
and O &M costs of providing recycled water and funding the City's Sewer fund.
• Meet the City's operations and capital funds reserve targets for the sewer
enterprise fund.
• Rates should reflect equity of costs in proportion to the level of service.
• Provide for efficient administration and execution of utility billing.
• Minimize "rate shock" overall and to any specific customer class.
• Rates should be clear and understandable to the customers.
• The rates must comply with Proposition 218 and applicable State codes.
BACKGROUND
Sewer
The City provides sewer service to approximately 64,465 customers. The City's existing
sewer collection system consists of a network of forcemain and gravity sewers. This system
is composed of approximately 197 miles of mainline gravity pipes, 4.7 miles of forcemains
with 4,922 manholes and cleanouts, and 25,525 sewer laterals with an approximate length of
121 miles in the public - rights -of -way: The City's service area lies within the OCSD who is
responsible for treating the City's sewer. The City also owns and operates 21 pump stations
in various areas which lift sewer from the lower areas and several island communities for
treatment at OCSD's treatment plant.
Recycled Water
The City currently has five recycled water customers totaling 14 water connections. The
customers include Big Canyon and Newport Beach Country Club golf courses; East
Bluff School, Our Lady Queen of Angels School, and the City which uses recycled water
for irrigation of medians and parks.
In 1991, the City entered into an agreement with OCWD for the distribution and sale of
Green Acres Project water. The agreement stipulates the rules and regulations for the
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City of Newport Beach Sewer and Recycled Water Rate Study
2. Introduction
City to provide recycled water. Included in this agreement is the stipulation that
recycled water rates may not exceed 80% of the potable water rate. The agreement term
is for 25 years with five 5 -year automatic extensions, with an estimated ending term
year of 2041.
The City subsequently entered into 'End User Agreements' for the sale of recycled
water to large customers in 1996 for a 10 -year term. These agreements, now expired,
included provisions that OCWD and the City would provide funding to modify golf
courses and construct pump stations to facilitate the use of recycled water. However, in
2011, the City and the Big Canyon Country Club entered into an agreement that
provided for the delivery and sale of recycled water, and a pump station license
agreement.
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City of Newport Beach Sewer and Recycled Water Rate Study
3. Sewer Projected Revenue Increases
3. SEWER PROJECTED REVENUE INCREASES
REVENUE REQUIREMENTS
Rate analysis begins by determining the revenue requirements that must be met by
rates. For purposes of this study, a ten -year rate projection period was developed using
a spreadsheet model (see Appendix A). However, only the first five years are shown in
Figure 3 -1 for rate - setting purposes. Figure 3 -1 summarizes the major categories
comprised in the revenue requirements, indicating the annual change.
Fiaure 3 -1. Annual Revenue Reauirement Components
Salaries
This cost category includes regular and overtime pay and is projected to increase
gradually at about 3% per year during the projection period. No staff headcount
increases are anticipated; the cost trend is driven primarily by cost of living adjustments
set in labor agreements.
Benefits
This cost category includes health, dental, and vision as well as Other Post - Employment
(OPEB) and Public Employment (PERS) retirement benefits. During the projection
period these costs are projected to increase at about 5% per year. The cost trend is
driven primarily by increases in health care benefit costs set in labor agreements.
Operations & Maintenance
This cost category includes non - personnel related operating and maintenance expenses,
such as electrical utility costs, fuel, and non - capital materials and equipment. During
the projection period, these costs are expected to increase gradually at about 1.73% per
year, based on the five -year historical average of inflation for the Los Angeles area.
June 9, 2015 Page 6 HF &H Consultants, LLC
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FY 2015 -16 FY 2016 -17 FY 2017 -18 FY 2018 -19 FY 2019 -20
Salaries
$ 947,547
$ 975,973
$1,005,253
$1,035,410
$1,066,472
Benefits
575,693
604,478
622,612
641,290
660,529
Operations & Maintenance
995,721
989,549
1,006,668
1,024,084
1,041,800
Internal Services Allocation
670,581
682,182
693,984
705,990
718,203
Operating Reserve Expense
37,497
242,152
214,690
456,257
224,189
Capital Reserve Expense
500,000
750,000
1,000,000
1,000,000
1,300,000
Miscellaneous Costs
33,000
33,571
34,152
34,743
35,344
Total Revenue Requirement
$ 3,760,039
$4,277,905
$4,577,358
$4,897,773
$5,046,538
Salaries
This cost category includes regular and overtime pay and is projected to increase
gradually at about 3% per year during the projection period. No staff headcount
increases are anticipated; the cost trend is driven primarily by cost of living adjustments
set in labor agreements.
Benefits
This cost category includes health, dental, and vision as well as Other Post - Employment
(OPEB) and Public Employment (PERS) retirement benefits. During the projection
period these costs are projected to increase at about 5% per year. The cost trend is
driven primarily by increases in health care benefit costs set in labor agreements.
Operations & Maintenance
This cost category includes non - personnel related operating and maintenance expenses,
such as electrical utility costs, fuel, and non - capital materials and equipment. During
the projection period, these costs are expected to increase gradually at about 1.73% per
year, based on the five -year historical average of inflation for the Los Angeles area.
June 9, 2015 Page 6 HF &H Consultants, LLC
SS3 -21
City of Newport Beach Sewer and Recycled Water Rate Study
3. Sewer Projected Revenue Increases
Internal Services Allocation
The City has historically transferred funds from the Sewer Enterprise Fund to the
General Fund as reimbursement for governmental costs incurred by the General Fund
on behalf of the Enterprise. Much of this funding reimburses the General Fund for
salaries, equipment, and program costs associated with general services. During the
projection period, these costs are expected to increase gradually at about 1.73% per year,
based on the five -year historical average of inflation for the Los Angeles area.
Operatina Reserve Exoense
The City transfers rate revenue to its Operating Reserve during the projection period to
smooth out the annual revenue requirements and meet the minimum fund balance
requirement. Please refer to the section titled 'minimum fund balance' in this report for
further discussion of the fund policy.
Capital Reserve Expense
The City's 30 -year capital improvement program planned expenditures are
summarized in Figure 3 -2.
Fiaure 3 -2. Capital Proiects
The City plans to fund these capital improvements with cash from rate revenue. To
accomplish this goal, the program is phased based upon the implementation cost of the
facilities, and the quantity of work the City can reasonably administer each year. The
programmed rate increases over the next five years allow the City to ramp up funding
for capital projects and provide the City approximately $1.3 million annually by FY
2019 -20 with the additional revenue generated from the recommended rate increases.
Miscellaneous Costs
This cost category includes non - capital office and shop equipment. During the
projection period, these costs are expected to increase gradually at about 1.73% per year,
based on the five -year historical average of inflation for the Los Angeles area.
REVENUE INCREASES
To determine how much additional rate revenue is required, the projected revenue
requirements are compared to the revenue from current rates. The revenue from
June 9, 2015 Page 7 HF &H Consultants, LLC
SS3 -22
Project
CIP Project Description
Cost
Collection System Capacity
Improvements
$1,281,391
Collection System Condition
Improvements
$16,648,060
Pump Station Improvements
$11,088,000
Total $29,017,451
The City plans to fund these capital improvements with cash from rate revenue. To
accomplish this goal, the program is phased based upon the implementation cost of the
facilities, and the quantity of work the City can reasonably administer each year. The
programmed rate increases over the next five years allow the City to ramp up funding
for capital projects and provide the City approximately $1.3 million annually by FY
2019 -20 with the additional revenue generated from the recommended rate increases.
Miscellaneous Costs
This cost category includes non - capital office and shop equipment. During the
projection period, these costs are expected to increase gradually at about 1.73% per year,
based on the five -year historical average of inflation for the Los Angeles area.
REVENUE INCREASES
To determine how much additional rate revenue is required, the projected revenue
requirements are compared to the revenue from current rates. The revenue from
June 9, 2015 Page 7 HF &H Consultants, LLC
SS3 -22
City of Newport Beach Sewer and Recycled Water Rate Study
3. Sewer Projected Revenue Increases
current rates also reflects the impact of reduced water demand required of the City's
customers to comply with the State Water Resources Control Board's emergency
regulations. For the City's consumption charges, sewer flows from individual City
customers are not metered; therefore water use data is the closest representation of
flows that customers discharge to the City's system for conveyance and treatment.
Estimating current rate revenue took into account 23,104 currently active meters whose
flow equaled 3,932,915 HCF. We also included the annual surcharge revenue for meters
2" or larger, as well as the surcharge for multiple dwelling units serviced by the same
meter. The resulting rate revenue for FY 2014 -15, prior to rate increases, but net of 0.4%
of bad debt, was estimated at $3,105,332. Based on this estimate, annual revenue
increases were projected as shown in Figure 3 -3.
ure i-s. r-ro eccea rcevenue increases
FY 2015 -16 FY 2016 -17 FY 2017 -18 FY 2018 -19 FY 2019 -20
Revenue Requirement
Revenue from Current Rates"
Difference
Fund Balance (before increase)
Revenue from Increases
Fund Balance (after increase)
0.4%
on conservation efforts
FUND BALANCE
$3,760,039 $4,277,905 $4,577,358 $4,897,773 $5,046,538
$ (654,707) $ (1,172,574) $ (1,472,027) $ (1,792,442) $
$ 1,259,566 $ 320,046 $ (972,663) $ (2,363,872) $ (4,180,01
$ 654,707 $ 1,172,573 $ 1,472,027 $ 1,792,442 $ 1,941,206
$ 1,916,729 $ 2,159,108 $ 2,350,244 $ 2,764,401 $ 2,902,600
revenue and cutbacks to
revenue
The FY 2014 -15 estimated year -end fund balance is projected to be $1,865,000, which is
slightly higher than the minimum operations balance of $1,423,000. Figure 3 -4 shows
the fund climbing toward the target balance throughout the five year rate projection
period, based on the projected revenue increases. Fluctuations in annual flow will
affect revenue generation and the resulting fund balance. The City is advised to
carefully monitor the fund balance in the event of downward fluctuations in flow.
June 9, 2015 Page 8 HF &H Consultants, LLC
SS3 -23
City of Newport Beach Sewer and Recycled Water Rate Study
3. Sewer Projected Revenue Increases
Fiqure 3-4. Fund Balance With and Without Rate Increases
$3.50 Target- &a[ ara.:
(Operations + Capital)
$3.00
w
c
0
$2.50
`
with Rate
w
Increase
0 $2.00
m
C3
c 10 50
mum - Balance
o.
�`•x (Operations)
a
$1.00
.a
,
a
•
•••
$0.50
•alt
$0.00
FY 2014 -15 FY 2015 -16 FY 2016 -17 FY 2017 -18 FY 2018 -19 FY 2019 -20
Minimum Fund Balance
The minimum balance (red line) is the balance that is required to meet the City's
operating expenses during the year. If this minimum balance were maintained, the
Sewer Fund should be able to fund its monthly cash flow over this extended period
without relying on the General Fund for a short -term loan. When the Operations
Reserve balance is below the minimum balance, the likelihood increases that temporary
funding from the General Fund will be required to meet cash flow needs. The City's
reserve policy dictates that the minimum Operations Reserve balance be set equal to
50% of annual O &M expenses.
Target Fund Balance
The proposed revenue increases move the fund balance (solid green line) upward
toward the target balance (blue line). The target balance is the sum of the minimum
balance for operations (red line) plus an allowance for capital projects. This allowance
provides liquidity to fund construction for projects on a pay -as- you -go basis. With
adequate capital reserves, the City is able to pay construction contractors without
encroaching on the Operations Reserve. The allowance is based on the average annual
budgeted capital improvement projects.
June 9, 2015 Page 9 HF &H Consultants, LLC
SS3 -24
City of Newport Beach Sewer and Recycled Water Rate Study
4. Sewer Rate Design
4. SEWER RATE DESIGN
CURRENT RATE STRUCTURE
The City currently has 23,104 active accounts who pay the sum of two charges every
month for Sewer service: a basic service charge of $4.50 per account plus a sewer
consumption charge of $0.35 per HCF based on metered water use during the billing
period. In addition to the charges specified above, customers with a water service
connection of 2 "or greater pay a $10.00 monthly surcharge. Moreover, customers with
more than one dwelling unit that is serviced by the same connection pay a surcharge of
$2.00 for each additional dwelling unit. Lastly, the City's 485 sewer customers who do
not purchase potable water from the City are charged $6.25 per account per month.
PROPOSED RATE STRUCTURE
The proposed rate structure is based on the revenue generated by the current rate
structure and categorizes the revenue into two categories: fixed revenue and variable
revenue. Fixed revenue is considered fixed because it does not vary based on flow,
while variable costs vary because they are based on the amount of water purchased, or
sewage produced and therefore, are solely comprised of the sewer consumption charge.
For the purpose of rate design, the sewer use charge for customers who do not purchase
water from the City was analyzed separately. Figure 4 -1 presents the breakdown of the
current revenue by revenue category:
Current Revenue
Sewer Use Charge (per account)* $36
Grand Total ** $3.117
*Sewer Revenue from customers who do not pur
water from the City of Newport Beach
* *Gross revenues; does not account for bad debt
June 9, 2015 Page 10 HF &H Consultants, LLC
SS3 -25
Fixed Revenue
Sewer Use Charge (per account)
51,247,616
Surcharge (2" meters or greater)
$78,720
Surcharge (per additional DU)
$378,492
Total Annual Fixed Revenue
$1,704,828
Variable Revenue
Consumption Charge (per HCF)
$1,376,520
Total Annual Variable Revenue
$1,376,520
Subtotal
$3,081,348
Sewer Use Charge (per account)* $36
Grand Total ** $3.117
*Sewer Revenue from customers who do not pur
water from the City of Newport Beach
* *Gross revenues; does not account for bad debt
June 9, 2015 Page 10 HF &H Consultants, LLC
SS3 -25
City of Newport Beach Sewer and Recycled Water Rate Study
4. Sewer Rate Design
In order to determine the monthly charge by size of connection, we first converted the
number of active meters to equivalent meter units (EMU) as shown in Figure 4 -2. The
EMU multiplier by meter size is the same multipliers used to determine the fixed
charge by meter size for the current sewer rates; in other words, it is the ratio between
$4.50 to $14.50, or 1 to 3.2. The monthly charge for an EMU of 1.00 is derived by
dividing the total fixed revenue of $1,704,828 by the total number of EMUs, or 23,815.
This quotient was then divided by 12 to convert from an annual charge of $71.59 to a
monthly charge of $5.97. The service charges were then graduated using the EMU
multipliers, the effect of which is to increase the service charges for the larger services.
Note the total annual revenue of $1,704,828 from fixed charges in Figure 4 -2 is equal to
the total annual fixed revenue presented in Figure 4 -1.
Fiaure 4 -2. Calculation of Monthly Fixed Charaes
The sewer consumption charge was derived using the monthly meter readings in HCF
for all customers. Figure 4 -3 presents the derivation of the proposed sewer consumption
charges.
Fi ure 4 -3. Calculation of Sewer Consumption Charge
Current Usage Charge
Cost Category Revenue (HCF) per HCF
Variable Revenue $1,376,520 3,932,915 $0.35
For sewer customers who do not purchase potable water from the City, and therefore,
do not have a proxy for their sewer flows, an average flow per account was derived by
using average water use per single family residential account. The 11.49 HCF average
June 9, 2015 Page 11 HF &H Consultants, LLC
SS3 -26
Total
Monthly
Annual
Total Active
EMU
Total
Service
Fixed
Meter Size
Accounts
Multiplier
EMUS
Charge
Revenue
a
b
a *b
c
a *c *12
5/8" or 3/4"
15,357
1.00
15,357
$5.97
$1,099,342
1"
6276
1.00
6,276
$5.97
$449272
11/2"
364
1.10
400
$6.56
$28,663
2"
886
1.50
1,329
$8.95
$95,137
2 1/2"
1
1.60
2
$9.54
$115
3"
34
1.70
58
$10.14
$4,138
4"
119
2.00
238
$11.93
$17,037
6"
54
2.25
122
$13.42
$8,698
8"
11
2.50
28
$14.91
$1,969
10"
2
3.20
6
$19.09
$458
23,104
23,815
$1,704,828
The sewer consumption charge was derived using the monthly meter readings in HCF
for all customers. Figure 4 -3 presents the derivation of the proposed sewer consumption
charges.
Fi ure 4 -3. Calculation of Sewer Consumption Charge
Current Usage Charge
Cost Category Revenue (HCF) per HCF
Variable Revenue $1,376,520 3,932,915 $0.35
For sewer customers who do not purchase potable water from the City, and therefore,
do not have a proxy for their sewer flows, an average flow per account was derived by
using average water use per single family residential account. The 11.49 HCF average
June 9, 2015 Page 11 HF &H Consultants, LLC
SS3 -26
City of Newport Beach Sewer and Recycled Water Rate Study
4. Sewer Rate Design
use was determined using FY 2011 -12 customer billing data and dividing total single
family consumption by the number of single family accounts. Next, using the revised
rate structure, the $9.99 charge shown in Figure 4-4 represents the average single family
bill per month. It was calculated as the monthly sewer use charge of $5.97 per account
plus the product of the $0.35 consumption charge times 11.49 HCF.
Using the fixed and variable rates as calculated in Figure 4 -2 and Figure 4 -3, a five -year
rate plan was prepared based on the City's Sewer revenue requirements as presented in
Figure 3 -1. The rates included in the 5 -year plan reflect annual rate increases starting in
FY 2015 -16 to keep pace with the increase in the revenue requirements. The proposed 5-
year rate plan is shown in Figure 44.
Fiaure 4 -4. Five Year Sewer Rate Proiections
Note l: The surcharge has been incorporated into the Monthly Sewer Use Charge under the revised structure.
CURRENT AND PROPOSED CUSTOMER BILL COMPARISONS
Figure 4 -5 presents a comparison of monthly customer bills using the current rate
structure and the recommended revised rate structure. The rates used to calculate the
revised bills are the FY 2015 -16 charges presented in Figure 44. It is notable that current
customers who are subjected to the multiple dwelling $2.00 monthly surcharge will
experience a decrease in their monthly bill. This occurs based on the revisions to the
June 9, 2015 Page 12 HF &H Consultants, LLC
SS3 -27
Current
Revised
Structure
Structure
FY 2015 -16
FY 2016 -17
FY 2017 -18
FY 2018 -19
FY 2019 -20
Monthly Sewer Use Charge
5/8" or 3/4"
$4.50
$5.97
57.34
$8.22
$8.79
$9.41
$9.88
P
$4.50
$5.97
$7.34
$8.22
$8.79
$9.41
$9.88
11/2"
$4.50
$6.56
$8.07
$9.04
$9.67
$10.35
$10.87
2"
$14.50
$8.95
$11.01
$12.33
$13.19
$14.11
$14.82
21/2"
$14.50
$9.54
$11.74
513.15
$14.07
$15.05
$15.81
3"
$14.50
$10.14
$12.47
S13.97
$14.95
$16.00
$16.79
4"
$14.50
$11.93
$14.68
SM44
$17.59
$18.82
$19.76
6"
$14.50
$13.42
$16.51
$18.49
$19.78
$21.17
$22.23
8"
$14.50
$14.91
$18.34
$20.55
$21.98
$23.52
$24.70
10"
$14.50
$19.09
$23.48
$26.30
$28.14
$30.11
$31.61
Monthly Sewer Use Charge (Sewer Only Customers)
Rate per Account
$6.25
59.99
$12.28
$13.76
$14.72
$15.75
$16.54
Consumption Charge
Rate per HCF
$0.35
$0.35
$0.43
$0.48
$0.52
$0.55
SO IN
Sewer Surcharges
Multi Unit surcharge (per DU)
$2.00
Note 1
Note 1
Note 1
Note 1
Note 1
Note I
Note l: The surcharge has been incorporated into the Monthly Sewer Use Charge under the revised structure.
CURRENT AND PROPOSED CUSTOMER BILL COMPARISONS
Figure 4 -5 presents a comparison of monthly customer bills using the current rate
structure and the recommended revised rate structure. The rates used to calculate the
revised bills are the FY 2015 -16 charges presented in Figure 44. It is notable that current
customers who are subjected to the multiple dwelling $2.00 monthly surcharge will
experience a decrease in their monthly bill. This occurs based on the revisions to the
June 9, 2015 Page 12 HF &H Consultants, LLC
SS3 -27
City of Newport Beach Sewer and Recycled Water Rate Study
4. Sewer Rate Design
monthly sewer use charge. The graduated rates, based on meter capacity, better reflect
associated flow assumed per dwelling unit, and its equivalent.
Fiaure 4 -5. Customer Bill Comparison
COMPARISON WITH NEIGHBORING AGENCIES
Based on available sources, Figure 4 -6 shows the recent charges for sewer service
among similar Orange County agencies, specifically ones that charge a fixed monthly
use charge coupled with a flow -based commodity charge. Larger agencies tend to have
lower rates because they can take advantage of economies of scale and have a larger
base of customers over which to distribute fixed costs. Figure 4 -6 indicates that the
City's current and proposed sewer rates track the trend line along with its neighbors
(identified with red diamonds in Figure 4 -6).
June 9, 2015 Page 13 HF &H Consultants, LLC
SS3 -28
Numberof
Average
Current
FY 15 -16
Dwelling
Monthly
Monthly
Monthly
Difference
Customer Name
Meter Size
Units
Flow(HCF)
Bib
Bill
(S)
Single Family Residential (low flow)
5/8" - 1"
1
2
$ 5.20
$
8.20
$3.00
Single Family Residential (avg flow)
5/8"-1"
1
11
$ 8.35
$
12.07
$3.72
Single Family Residential (high flow;
5/8"-1"
1
16
$ 10.10
$
14.23
$4.13
Multi Family Residential
3"
55
243
$ 209.55
$
117.09
($92.46)
Commercial
4"
1
595
$ 224.75
$
270.82
$46.07
Commercial
8"
141
2,074
$ 1,022.40
$
911.20
($111.20)
Commercial
6"
1
1,584
$ 568.90
$
698.42
$129.52
COMPARISON WITH NEIGHBORING AGENCIES
Based on available sources, Figure 4 -6 shows the recent charges for sewer service
among similar Orange County agencies, specifically ones that charge a fixed monthly
use charge coupled with a flow -based commodity charge. Larger agencies tend to have
lower rates because they can take advantage of economies of scale and have a larger
base of customers over which to distribute fixed costs. Figure 4 -6 indicates that the
City's current and proposed sewer rates track the trend line along with its neighbors
(identified with red diamonds in Figure 4 -6).
June 9, 2015 Page 13 HF &H Consultants, LLC
SS3 -28
City of Newport Beach Sewer and Recycled Water Rate Study
4. Sewer Rate Design
$20
$15
m
t $10
c
$5
re 4 -6.
■ Buena Park
■ Seal Beach
Newport Beach - E Garden Grove SD
Proposed
■ Huntington each
Irvine Ranch W
Newport Beach - Current
■ La Habra
E Costa Mesa SD
0 Fullerton
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000
Population of Service Area
.
June 9, 2015
Page 14
HF &H Consultants, LLC
SS3 -29
City of Newport Beach Sewer and Recycled Water Rate Study
5. Recycled water Projected Revenue Increases
S. RECYCLED WATER PROJECTED REVENUE INCREASES
REVENUE REQUIREMENTS
The City's FY 2013 -14 revenue requirement served as the basis for determining the
revenue requirement projections through FY 2018 -19. Figure 5 -1 summarizes the
sources and assumptions for the data as well as the projected expenditure trends:
Figure 5 -1. Revenue Requirement Projections
Operating Expenses
This cost category includes administration and overhead expenses that are calculated as
10% of the total recycled water revenue requirement and 1% of the budgeted general
fund overhead charged to the water fund, respectively. During the projection period,
the City's operating expenses are projected to increase gradually at about 1.73% per
year, based on the five -year historical average of general inflation for the Los Angeles
area.
Purchased Recycled Water
This cost category for FY 13 -14 was based on the actual water purchases in FY 12 -13
multiplied by the cost of purchased water from OCWD of $360 per acre foot. During the
projection period, the City's purchased water costs are projected to increase gradually
at about 1.88% per year, based on the five -year historical average of OCWD purchased
water charges per acre foot.
Pump Station Operating and Maintenance
This cost category for FY 13 -14 was based on the actual cost of inspections, scheduled
and corrective maintenance, source changeovers and pump station rehabilitation and
maintenance as provided by the city. During the projection period, the City's pump
station operating and maintenance costs are expected to increase gradually at about
1.73% per year, based on the five -year historical average of general inflation for the Los
Angeles area.
Depreciation
This cost category includes replacement costs for pump station facilities and water
meters. The annual pump station facility replacement cost was based on $600,000 in
June 9, 2015 Page 15 HF &H Consultants, LLC
SS3 -30
FY 13 -14
FY 14 -15
FY 2015 -16 FY 2016 -17 FY 2017 -18 FY 2018 -19
Operating Costs
$ 40,488
$ 41,188
$ 41,901
S 42,626
$ 43,363
$ 44,114
Purchased Recycled Water
167,598
173,417
179,438
182,810
186,245
189,745
Pump Station Operating & Mainte
39,408
47,218
48,104
49,007
49,927
50,864
Depreciation
17,500
17,543
17,587
17,632
17,67
17,724
Total Revenue Requirement
$ 264,994
$ 279,366
S 287,030
$ 292,075
$ 297,213
$ 302,446
Operating Expenses
This cost category includes administration and overhead expenses that are calculated as
10% of the total recycled water revenue requirement and 1% of the budgeted general
fund overhead charged to the water fund, respectively. During the projection period,
the City's operating expenses are projected to increase gradually at about 1.73% per
year, based on the five -year historical average of general inflation for the Los Angeles
area.
Purchased Recycled Water
This cost category for FY 13 -14 was based on the actual water purchases in FY 12 -13
multiplied by the cost of purchased water from OCWD of $360 per acre foot. During the
projection period, the City's purchased water costs are projected to increase gradually
at about 1.88% per year, based on the five -year historical average of OCWD purchased
water charges per acre foot.
Pump Station Operating and Maintenance
This cost category for FY 13 -14 was based on the actual cost of inspections, scheduled
and corrective maintenance, source changeovers and pump station rehabilitation and
maintenance as provided by the city. During the projection period, the City's pump
station operating and maintenance costs are expected to increase gradually at about
1.73% per year, based on the five -year historical average of general inflation for the Los
Angeles area.
Depreciation
This cost category includes replacement costs for pump station facilities and water
meters. The annual pump station facility replacement cost was based on $600,000 in
June 9, 2015 Page 15 HF &H Consultants, LLC
SS3 -30
City of Newport Beach Sewer and Recycled Water Rate Study
5. Recycled water Projected Revenue Increases
construction costs, amortized over 40 years. The annual meter replacement cost was
based on the American Water Works Association's standard cost of $259 per meter per
year, amortized over 15 years. During the projection period, the City's pump station
facility replacement costs are held constant at $15,000 per year, while the meter
replacement costs are projected to increase gradually at about 1.73% per year, based on
the five -year historical average of inflation for the Los Angeles area.
June 9, 2015
Page 16 HF &H Consultants, LLC
SS3 -31
City of Newport Beach Sewer and Recycled Water Rate Study
6. Recycled Water Rate Design
6. RECYCLED WATER RATE DESIGN
The following section was previously submitted as a separate report dated April 24,
2014. The City Council subsequently adopted the recommended rates in compliance
with Proposition 218, effective October 9, 2014. The following text summarizes the rates
documented in the April 2014 report and subsequently adopted by the City Council.
CURRENT RATE STRUCTURE
The City currently has five recycled water customers totaling 14 connections. These
customers pay the sum of two charges every month for water service: a basic service
charge based on the size of the service connection plus a commodity charge based on
metered water use during the billing period. In 1991, the City entered into an agreement
with OCWD for the distribution and sale of recycled water. The agreement stipulated
that the recycled water rate may not exceed 80% of the potable water rate. It is the City's
current practice to charge customers 80% of the potable water rate based on that
agreement.
PROPOSED RATE STRUCTURE
Under the new rate structure, the recycled water rates will no longer be linked to 80% of
the potable water rates. The proposed rate structure is based on the FY 2014 -15 revenue
requirement, and categorizes the expenses into three categories: fixed costs, variable
costs and pump station - related costs. Fixed costs are considered fixed because they do
not vary based on flow, and include the annual cost of meter reading and replacement,
as well as administrative and overhead. Variable costs vary because they are based on
the amount of water purchased, and therefore, are solely comprised of the annual cost
of purchased water from OCWD. Pump station - related costs are comprised of
inspections, maintenance, and rehabilitation & replacement that are directly related to
the pump stations. Figure 6 -1 presents the breakdown of the FY 2014 -15 revenue
requirement by cost category:
June 9, 2015 Page 17 HF &H Consultants, LLC
SS3 -32
City of Newport Beach Sewer and Recycled Water Rate Study
6. Recycled Water Rate Design
ure 6 -1. FY 2014 -15 Revenue Requirement by Cost I
FY2014 -15
xed Costs
Administration
$25,433
Overhead
$12,208
Meter Reading
$1,514
Meter replacement
$2,543
Other agency fees
S21135
)tal Fixed Costs
4
ariable Costs
Purchased Water $173,417
Aal Variable Costs $173,417
Pump Station Costs
Inspections $7,021
Maintenance $13,109
Rehab & Replacement $42,087
Total Pump Station Costs $62,218
Total Revenue Requirement „ $279,366
In order to determine the monthly charge by size of connection, we first converted the
number of active meters to equivalent meter units (EMU) as shown in Figure 3 -2. The
EMU multiplier by meter size is the same multipliers used to determine the fixed
charge by meter size for potable water rates. The monthly charge for an EMU of 1.00 is
derived by dividing the total fixed costs of $43,732 by the total number of EMUs or
192.70. This quotient was then divided by 12 to convert from an annual charge of
$226.94 to a monthly charge of $18.91. The service charges were then graduated using
the EMU multipliers, the effect of which is to increase the service charges for the larger
services. Note the total annual revenue of $43.732 from fixed charges in Figure 6 -2 is
equal to the total fixed costs presented in Figure 6 -1.
June 9, 2015 Page 18 HF &H Consultants, LLC
SS3 -33
City of Newport Beach Sewer and Recycled Water Rate Study
6. Recycled Water Rate Design
Fiaure 6 -2. Calculation of Monthly Fixed Charges
The commodity and pump station charges were derived using the FY 2012 -13 monthly
meter readings in HCF for all customers, and FY 2012 -13 monthly meter readings for
pump station customers in HCF, respectively. Figure 6 -3 presents the derivation of the
proposed commodity and pump station charges for FY 2014 -15:
Figure
6 -3. Calculation of Commodity and Pump Station C
Total
FY14 -15
FY14 -15
Monthly
FY 14 -15
Cost Category Costs
Active
EMU
Total
Service
Annual
Meter Size
Accounts
Multiplier
EMUS
Charge
Revenue
a
b
a *b
c
a *c *12
5/8" or 3/4"
0
1.00
0
$18.91
$0
1"
0
1.67
0
$31.53
$0
1 1/2"
0
3.33
0
$63.05
$0
2"
8
5.33
42.67
5100.88
$9,684
3"
3
10.00
30.01
$189.15
$6,810
4"
0
16.67
0
$315.25
$0
6"
2
33.34
66.68
5630.50
$15,132
8"
1
53.34
53.34
S1,008.81
$12,106
14
192.70
$43,732
The commodity and pump station charges were derived using the FY 2012 -13 monthly
meter readings in HCF for all customers, and FY 2012 -13 monthly meter readings for
pump station customers in HCF, respectively. Figure 6 -3 presents the derivation of the
proposed commodity and pump station charges for FY 2014 -15:
Figure
6 -3. Calculation of Commodity and Pump Station C
:harges
Using the FY 2014 -15 rates as calculated in Figure 6 -2 and Figure 6 -3, a five -year rate
plan was prepared based on the City's recycled water revenue requirements as
presented in Figure 5 -1. The proposed five -year rate plan is shown in Figure 64.
June 9, 2015
Page 19
HF &H Consultants, LLC
SS3 -34
FY12 -13
FY14 -15
FY14 -15
Usage
Charge
Cost Category Costs
(HCF)
per HCF
Variable Costs $173,417
202,793
$0.86
Pump Station Costs $62,218
172,426
$0.36
:harges
Using the FY 2014 -15 rates as calculated in Figure 6 -2 and Figure 6 -3, a five -year rate
plan was prepared based on the City's recycled water revenue requirements as
presented in Figure 5 -1. The proposed five -year rate plan is shown in Figure 64.
June 9, 2015
Page 19
HF &H Consultants, LLC
SS3 -34
City of Newport Beach Sewer and Recycled Water Rate Study
6. Recycled Water Rate Design
Fiaure 6 -4. Five Year Recvcled Water Rate Proiections
CUSTOMER BILL COMPARISONS
Figure 6 -5 presents a comparison of monthly customer bills using the current rate
structure and the recommended revised rate structure. The rates used to calculate the
revised bills are the Year 1 charges presented in Figure 6 -4. It is notable that all current
recycled water customers will experience no less than a 44% bill decrease with the
recommended structure change.
Figure 6 -5. Customer Bill Comparison
Average
Current
FY 2014 -15
FY 2015 -16
FY 2016 -17
FY 2017 -18 FY 2018 -19
Monthly Service Charge
Flow
Monthly
Monthly
Difference
5/8" or 3/4"
$13.82
$18.91
$19.29
$19.68
$20.07
$20.47
1"
$23.03
$31.53
$32.16
$32.80
$33.46
$34.13
1 1/2"
$46.06
$63.05
$64.32
$65.60
$66.91
$68.25
2"
$73.70
$100.88
$102.90
$104.95
$107.05
$109.19
3"
$138.18
$189.15
$192.94
$196.80
$200.73
$204.75
4"
$230.30
$315.25
$321.56
$327.99
$334.55
$341.24
6"
$460.61
$630.50
$643.11
$655.98
$669.10
$682.48
8"
$736.98
$1,008.81
$1,028.99
$1,049.57
$1,070.56
$1,091.97
Monthly Commodity Charge
Rate per HCF
$2.46
$0.86
$0.87
$0.89
$0.91
$0.93
Monthly Pump Station Charge
Rate per HCF
none
$0.36
$0.37
$0.38
$0.38
$0.39
CUSTOMER BILL COMPARISONS
Figure 6 -5 presents a comparison of monthly customer bills using the current rate
structure and the recommended revised rate structure. The rates used to calculate the
revised bills are the Year 1 charges presented in Figure 6 -4. It is notable that all current
recycled water customers will experience no less than a 44% bill decrease with the
recommended structure change.
Figure 6 -5. Customer Bill Comparison
Average
June 9, 2015 Page 20 HF &H Consultants, LLC
SS3 -35
Monthly
Current
Revised
Flow
Monthly
Monthly
Difference
Difference
Customer Name
Meter Size
(HCF)
Bill
Bill
($)
( %)
Newport Beach Country Club
6"
6,650
$16,820
$8,717
($8,103)
-48%
Our Lady Queen of Angels
2"
151
$446
$230
($215)
-48%
Big Canyon Country Club
8"
5,256
$13,668
$5,504
($8,164)
-600/.
Big Canyon Country Club
6"
2,463
$6,518
$3,625
($2,894)
-440/.
Eastbluff School
3"
321
$928
$464
($464)
-5001.
June 9, 2015 Page 20 HF &H Consultants, LLC
SS3 -35
APPENDIX A. SEWER AND RECYLED WATER RATE MODEL
SS3 -36
SS3 -37
HF&H COnsuttenfs, LLC Newport Beach Bawer 54.282015 SS3 -38
.Y142015 1:47
PM Page 1 0/11 tA. Summery
Al 8
I C I D
I E I F F G H I I I J
I K L I M
I N 1 O
City of Newport Beach
Sewer Rate Study
Table 1A, Summary
_.L
_.L
3
4
5
Projected
6
Fiscal Year..
FY 2015 -16 FY 2016 -17 FY 2017.18 FY 2018 -19 FY 2019 -20 FY 2020 -21
FY 2021 -22 FY 2022 -23 FY 2023 -24
FY 2024 -25
7
Revenue Increases
Cumulative Increase
- Sewer
23.0% 12.0% 7.0% 7.0% 5.0% 3.0%
23.0% 37.8% 47.4% 57.7% 65.6% 70.6%
3.0% 1.0% 1.0%
75.7% 77.4% 79.2%
1.0%
81.0%
8
10
11
Salaries & Benefits
Operating Costs
Miscellaneous
Internal Service Allocation
i r i FY 2020-21
$ 1,523,240 $ 1580,451 $ 1,627,865 $ 1,676,701 $ 1,727,002 $ 1,778,812
995,721 989,549 1,006,668 1,024,084 1,041,800 1,059,823
33,000 33,571 34,152 34,743 35,344 35,955
670,581 682,182 693,984 705,990 718,203 730,628
r i 2023-24
$ 1,832,176 $ 1887,141 $ 1,943,755
1,078,158 1,096,811 1,115,785
36,577 37,210 37,854
743,268 756,127 769,208
FY 2024-25
$ 2,002,068
1,135,088
38,508
782,515
12
13
14
15
16
Storm Drain Operating
$0 $0 $0 $0 $0 $0
$0 $0 $0
$0
17
Storm Drain Capital
Sewer Operating Reserve Expense
Sewer Capital Reserve Expense
$0 $0 $0 $0 $0 $0
$37,497 $242,152 $214,690 $456,257 $224,189 $292,715
$500,000 $750,000 $1,000,000 $1,000,000 $1,300,000 $1,300,000
$0 $0 $0
$363,692 $330,122 $294,882
$1,300,000 $1,300,000 $1,300,000
$0
$257,919
$1,300,000
18
19
20
$ 3,760,039 $ 4,277,905 $ 4,577,358 $ 4,897,773 $ 5,046,538 $ 5,197,933
$ 5,353,871 $ 5,407,410 $ 5,461,484
$ 5,516,099
21
Annual increase 13.8% 7.0% 7.0% 3.0% 3.0%
3.0% 1.0% 1.0%
1.0%
22
23
24
zs
Year End Fund Balances -Funds 530 and 540
26
$4.0
� ♦
27
Reserves with Rate
Target Balance Increase
28
79
30
$3.5
(Operations +Cap'
31
32
d
c $3.0
O
U `
33
34
`♦
35
36
�
♦♦
a$0.5 `
37
38
C $2.5
39
♦
40
� $2.0
m
Re
41
42
inimum glance
FV 2019 -20 FY 2020 -21 FV 2021 -22 F
43
44
00
�`♦
(Operations)
45
v
C
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
Ti
62
63
64
65
fib
HF&H COnsuttenfs, LLC Newport Beach Bawer 54.282015 SS3 -38
.Y142015 1:47
PM Page 1 0/11 tA. Summery
♦x
� ♦
LL
d
U `
`♦
N ♦
♦♦
a$0.5 `
`1 Reserves without Rate
♦ Increase
♦
$0.0 ♦
FV 2014 -15 FV 2015 -16 F
FV 2016 -17 FV 2017 -18 FY 2018 -19 F
FV 2019 -20 FY 2020 -21 FV 2021 -22 F
FV 2022 -23 FV 2023 -24 FV 2024 -26
PM Page 1 0/11 tA. Summery
HF&H Consultants, LLC
5/14/2015 1:47 PM
Page 2 of 11
Newport Beech Sewer 04.28.2015
1B General
SS3 -39
A I B
C D E F
G
H
I
J
K
L
M
N
1
City of Newport Beach
2
Sewer Rate Study
3
Table 1B. General
5
For acted
fi
FY 2015 -16 FY 2016.17 FY 2017 -18 FY 2018 -19
FY 2019 -20
FY 2020 -21
FY 2021 -22
FY 2022 -23
FY 2023 -24
FY 2024 -25 Source
Notes
7
Factors
8
a. Interest an Reserve Balance
0.75% 0.75% 0.75% 0.75%
0.75%
075%
0.75%
0.75%
0.75%
0.75%
City Estimate
To Table 4
9
b. General inflation
Per Budget 1.73% 1.73% 1.73%
1.73%
1 ]3%
1.73%
1.73%
1.73%
1.73%
US Statistics, LA Area &year average To Table 2
10
c. Personnel Increases
Per Budget 3.0% 3.0% 30%
3.0 %.
3.0%
3.0%
30%
3.0%
30%
Estimate
To Table
11
d. Benefits cost increases
Per Budget 5.0% 5.0% 5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
Estimate
To Table
12
e. Percent of Bad Debt
0.4% 0.4% 0.4% 0.4%
0.4%
0.4%
0.4%
0.4%
0.4%
0.4%
Based on City's Fund Worksheet
To Table 3A,3B
13
L Utilities Increases
Per Budget 1.73% 1.73% 1.73%
1.73%
1 ]3%
1.73%
1.73%
1.73%
1.73%
14
g. Pct. increase in Sewer Accounts
0.00% 0.00% 0.00% 0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
To Table 3A
15
h. Pct. increase in Water Consumption (for flaw charge)
2.00% 0.00% 0.00% 0.00%
0.00%
040%
0.00%
0.00%
000%
0.00%
To Table 2,8
16
1. Percentage increase in Recycled Water Use
0.00% 0.00% 0.00% 0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
To Table 2,3B
17
j. Construction cost inflation
Per Budget 2.00% 200% 2,00%
2.00%
200%
2.00%
2.00%
2.00%
2.00%
City Estimate
To Table 2B, 5
18
k. Percent increase in purchased recycled water rate
1.58% 3.47% 1.88% 1.88%
1.88%
188%
1.88%
1.88%
1.88%
1.88%
OCWD$ /AF 5 -year Average
To Table 28
19
20
21
Reserve Policies
22
Operations Fund
Purpose
Working capital for O &M cash flow during the year.
23
24
Funding priority
Highest. If not maintained, interfund loans are needed.
25
Minimum balance
50% of annual O &M is
26
27
Infrastructure Replacement Funds
Purpose
For wastewater master plan construction projects.
28
29
Funding priority
Second highest.
30
Target balance
No Minimum or Maximum. Should be reviewed periodically
31
32
Model Tables Included
33
Table 1A. Summary
34
Table 1B. General
35
Table 2A. Revenue Requirement Projection - Sewer
36
Table 2B. Revenue Requirement Projection- Recycled
Water
37
Table 3A. Revenue Increases - Sewer
38
Table 3B. Revenue Increases- Recycled Water
39
Table 4. Reserves
40
Table S. CIP
41
Table 7A. Rate Revenue -Sewer
42
Table 7B. Rate Revenue - Recycled Water
HF&H Consultants, LLC
5/14/2015 1:47 PM
Page 2 of 11
Newport Beech Sewer 04.28.2015
1B General
SS3 -39
HF&H Consultants, LLG Newport Beach Sewer04.28.2015 SS3 -40
5/14@015 1.47 PM Peg. 3 of 11 Mq Rev Reemt - Sewer
A B
C
D
E
F
G
H
I
J
K
L
N o
1
City of Newport Beach
2
Sewer Rate Study
3
Table 2A. Revenue Requirement Projection -Sewer
4
5
Table l8
Budgeted
Projected
6
Factors
FY 201546
FY 2016 -17
FY 2017 -18
FY 2018 -19
FY 2019 -20
FY 2020 -21
FY 2021 -22
FY 202243
FY 2023 -24
FY 2024 -25 Notes
7
OPERATING
EXPENSES
8
Salaries
7000
and Benefits
SALARIES - MISC
C.
$ 861,812
$887,666
$914,296
$941,725
$969,977
$999,076
$1,029,049
.$1,059,920
$1,091,718
$1,124,469
9
10
7020
SALARIES - PART TIME
tl.
-
$0
$0
$0
$0
$0
$0
$0
$0
$0
11
7040
OVERTIME, MISC & 1/2 TIME
c.
45,000
$46,350
$47,741
$49,173
$50,648
$52,167
$53,732
$55,344
$57,005
$58,715
12
7062
NIGHT DIFF, MISC
d.
-
$0
$0
$D
$0
$0
$D
$0
$0
$0
13
7063
CERTIFICATION PAY
C.
5,735
$5,907
$6,084
$6,267
$6,455
$6,648
$6,848
$7,053
$7,265
$7,483
14
7080
CALL BACK PAY
c.
35,000
$36,050
$37,132
$38,245
$39,393
$40,575
541,792
$43,046
$44,337
$45,667
15
7114
CELL PHONE STIPEND EXP
d.
6,421
$6,742
$6,944
$7,153
$7,367
$7,588
$7,816
$8,050
$B,292
$8,541
16
7210
HEALTH /DENTALIVISION
tl.
24O,625
$252,656
$26O,236
$268,043
$276,084
$284,367
$292,898
$301,685
$310,735
$320,057
17
7223
ANNUAL OPEB COST
d.
41,826
$43,917
$45,235
$46,592
$47,990
$49,429
$50,912
$52,440
$54,013
$55,633
18
7227
RHS $2.50 CONTRIB
d.
7,350
$7,718
$7,949
$8,187
$8,433
$8,686
$8,947
$9,215
$9,492
$9,776
19
7290
LIFE INSURANCE
J.
1,260
$1,323
$1,363
$1,404
$1,446
$1,489
$1,534
$1,580
$1,627
$1,676
20
7295
EMPASSISTANCE PROGRAM
d.
292
$307
$316
$325
$335
$345
$355
$366
$377
$388
21
7370
WORKERS' COMP, MISC
d.
27,356
$28,724
$29,586
$30,473
$31,387
.$32,329
$33,299
$34,298
$35,327
$36,386
22
7373
COMPENSATED ABSENCES
J.
30,163
$31,671
$32,621
$33,600
$34,608
$35,646
$36.716
$37,817
$38,952
$4%120
23
7425
MEDICARE FRINGES
d.
13,739
$14,426
$14,859
$15,304
$15,764
$16,237
$16,724
$17,225
$17,742
$18,274
24
7439
PIERS MISC EE CNTRBN
d.
69,326
$72,792
$74,976
$77,225
$79,542
$81,928
$84,386
$86,918
$89,525
$92,211
25
7440
PERS MISC ER CNTRBN
d.
70,255
$73,768
$75,981
$78,260
$80,608
$83,O26
$85,517
$88,083
$90,725
$93,447
26
7445
EE RET CNTRBN MISC
d.
(107,277)
(5112,641)
($116,020)
($119,501)
($123,088)
($128,778)
($130,582)
($134.499)
($138,534)
($142,690)
7
7446
PIERS UNFND LIAR MISC
d.
174,357
$183,075
$188,567
$194,224
$200,051
$206,052
$212,234
$218,601
$225,159
$231,914
28
Total Salaries and Benefits
1,523,240
1,580,451
1,627,865
1,676,701
1,727,002
1,778,812
1,832,176
1,887,141
1,943,755
2,002,068
29
38%
30%
30%
3D%
3.0%
3.0%
30%
30%
3.0%
30
Ooeratine
8003
Costs
GENRATR MAINT & REPR
b.
$ 17,500
$17,803
$18,111
$18,424
$18,743
$19,067
$19,397
$19,732
$20,074
$20,421
31
32
8004
CERT & MEMBERSHIP
b.
5,500
$5,595
$5,692
$5,790
$5,891
$5,992
$6,096
$6,202
$6,309
$6,418
33
8D20
AUTOMOTIVE SERVICE
b.
45,000
$45,779
$46,570
$47,376
$48,196
$49,030
$49,878
$50,741
$51,618
$52,511
34
8030
MAINT & REPAIR - EQUIP
b.
4,000
$4,069
$4,140
$4,211
$4,284
$4,358
$4,434
$4,510
$4,588
$4,668
35
8040
MAINT& REPAIR - BUILDING
b.
4,662
$4,743
$4,825
$4,908
$4,993
$5,079
$5,167
$5,257
$5,348
$5,440
36
8060
PUBLICATIONS & DUES NOC
b.
1,000
$1,017
$1,035
$1,053
$1,071
$1,090
$1,108
$1,128
$1,147
$1,167
37
8070
RENTAVPROP & EQUIP NOC
b.
1,000
$1,017
$1,035
$1,053
$1,071
$1,090
$1,108
$1,128
$1,147
$1,167
38
8080
SERVICES -PROF & TECH NOC
b.
31,084
$31,622
$32,169
$32,725
$33,291
$33,867
$34,453
$35,049
$35,656
$36,273
39
8100
TRAVEL & MEETINGS NOC
b.
1,000
$1,017
$1,035
$1,053
$1,071
$1,090
$1,108
$1,128
$1,147
$1,167
40
8105
TRAINING
b.
9,250
$9,420
$9,583
$9,749
$9,918
$10,089
$10,254
$10,441
$10,622
$10,806
41
8112
UTILITIES - TELEPHONE
f.
8,700
$8,851
$9.004
$9,159
$9,318
$9,479
$9,643
$9,610
$9,980
$10,152
42
8114
UTILITIES - NATURAL GAS
f.
1,000
$1,017
$1,035
$1,053
$1,071
$1,090
$1,108
$1,128
$1,147
$1,167
43
8116
UTILITIES - ELECTRICITY
f.
68,000
$69,176
$70,373
$71,591
$72,829
$74,089
$75,371
$76,675
$7B4O01
$79,351
44
8118
UTILITIES - WATER
f.
20,000
$20,346
$20,698
$21,056
$21,420
$21,791
$22,168
$22,551
$22,942
$23,338
45
8140
SUPPLIES - OFFICE NOC
b.
350
$356
$362
$368
$375
$381
$388
$395
$401
$408
46
8155
WASTEWATER ROOT CUTTING
b.
16,601
$16,888
$17,180
$17,478
$17,780
$18,088
$18,400
$18,719
$19.43
$19,372
47
8158
CCTV MAINTENANCE PROGRAM
b.
67,036
$88,542
$90,073
$91,632
$93,217
$94,630
$96,470
$98,139
$99,837
$101,564
48
8159
GREASE CNTRL DEVIINSPEC
b.
79,544
$80,920
$82,320
$83,744
$85,193
$86,667
$88,166
$89,691
$91,243
$92,822
49
8160
MAINT & REPAIR NOC
b.
211,007
$214,657
$218,371
$222,149
$225,992
$229,902
$233,879
$237,925
$242,041
$246,228
50
8184
MAINT - SCADA
b.
25,252
$25,689
$26,133
$26,585
$27,045
$27,513
$27,989
$28,473
$28,966
$2%467
51
8185
SEWER MANHOLE LINING PRGM
b.
75,000
$76,298
$7/,617
$78,960
$80,326
$81,716
$83,130
$84,568
$86,031
$87,519
52
8186
PUMP STATION MAINTENANCE
b.
13,000
$13,225
$13,454
$13,686
$13,923
$14,164
$14,409
$14,658
$14,912
$15,170
53
8187
ALLEY LATERAL REPL PRGM.
b.
43,500
$44,253
$45,018
$45,797
$46,589
$47,395
$48,215
$49,049
$49,898
$50,761
54
8188
SEWER MANHOLE MAINT PRGM
b.
37,601
$38,251
$38,913
$39,588
$40,271
$40,968
$41,677
$42,398
$43,131
$43,877
55
8189
TREE ROOT FOAMING
b.
85,000
$86.471
$87,966
$89,488
$91,036
$92,611
$94,214
$95,843
$97,501
$99,188
56
8197
UTILITIES FAC MAIN PROGM
b.
20,375
$20,727
$21,086
$21,451
$21.822
$22,199
$22,564
$22,974
$23,372
$23,776
57
8200
SPECIAL DEPT SUPPLIES NOC
b.
15,000
$15,260
$15,523
$15,792
$16,065
$16,343
$16,626
$16,914
$17,206
$17,504
58
8204
UNIFORM EXPENSE
b.
5,000
$5,087
$5,174
$5,264
$5,355
$5,448
$5,542
$5,638
$5,735
$5,835
59
8239
CONCRETE MATERIALS
b.
2,000
$2,035
$2,070
$2,106
$2,142
$2,179
$2,217
$2,255
$2,294
$2,334
60
8240
TOOLS, INSTRUMENTS, ETC
b.
2,500
$2,543
$2,587
$2,632
$2,678
$2,724
$2,771
$2,819
$2,868
$2,917
61
8298
OTHER AGENCY FEES
b.
30,000
$30,519
$31,047
$31,584
$32,130
$32,686
$33,252
$33,827
$34,412
$35,008
62
8310
SOFTWARE LICENSE RENEWAL
b.
29,249
$29,755
$30,270
$30,793
$31,326
$31,868
$32,419
$32,980
$33,551
$34,131
63
Total Operating Costs
995,721
989,549
1,006,668
1,024,084
1,041,800
1,059,823
1,078,158
1,096,811
1,115,785
1,135,088
64
-06%
1.I%
1.7%
1.7%
1.7%
1.7T.
1.7%
1.7%
1.7%
65
Internal
8022
Service Allocations
EQUIP MAINT ISF
h.
$ 144,204
$146,699
$149,237
$151,818
$154,445
$157,117
$159,835
$162,600
$165,413
$168,275
66
67
8024
VEHICLE REPLACE ISF
b.
206,622
$210,197
$213,833
$217,532
$221,296
$225,124
$229,019
$232,981
$237,011
$241,112
68
8318
IT ISF OPERATING CHARGE
b.
68,252
$69,433
$70,634
$71,856
$73,099
$74,364
$75,650
$76,959
$78,290
$79,645
69
83191T
ISF STRATEGIC CHARGE
b.
17,874
$18,183
$18,498
$18,818
$19,143
$19,475
$19,811
$20,154
$20,503
$20,858
70
8330
SVC CHARGE- ADMINISTRATIVE
b.
223,084
$226,943
$230,869
$234,864
$238,927
$243,060
$247,265
$251,543
$255,894
$260,321
71
8340
GENERAL INSURANCE
b.
10,545
$10,727
$10,913
$11,102
$11,294
$11,489
$11,688
$11,890
$12,096
$12,305
72
Tonal ISF Allocation
670,581
682,182
693,984
705,990
718,203
730,628
743,268
756,127
769,208
782,515
HF&H Consultants, LLG Newport Beach Sewer04.28.2015 SS3 -40
5/14@015 1.47 PM Peg. 3 of 11 Mq Rev Reemt - Sewer
HF&H Consuilarla, LLC Newpont Beach Sewer04.28.2015 SS3 -41
5/14@015 1147 PM Pan. 4 of 11 Pq Rev Ra9mt - Sewer
Al B I C
D I
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0
1
City of Newport Beach
2
Sewer Rate Study
3
Table 2A Revenue Requirement Projection -Sewer
4
5
Table I
Budgeted
Projected
6
Factors
FY 2015 -16
FY 2016 -17
FY 2017 -18
FY 2018 -19
FY 2019 -20
FY 2020 -21
FY 2021 -22
FY 202243
FY 2023 -24
FY 2024 -25
Notes
73
Miscellaneous
9000 OFFICE EQUIPMENT
b.
2,000
$2,035
$2,070
$2,106
$2,142
$2,179
$2,217
$2,255
$2,294
$2,334
74
75
9010 COMPUTER EQUIPMENT
b.
5,000
$5,087
$5,174
$5264
$5,355
$5,448
$5,542
$5,638
$5,735
.$5,835
76
9200 SHOP EQUIPMENT
b.
1,000
$1,017
$1,035
$1,053
$1,071
$1,090
$1,108
$1,128
$1,147
$1,167
77
9300 EQUIPMENT, N.O.C.
b.
25,000
$25,433
$25,872
$26,320
$26,775
$27,239
$27,710
$28,189
$28,677
$29,173
78
Total Miscellaneous Expenses
33,000
33,571
34,152
34,743
35,344
35,955
36,577
37,210
37,854
38,508
]9
80
Non -0Op.nd'na Revenue
5860 DAMAGE TO CITYPROPERTY
b.
$ -
$0
$0
$0
$0
$0
$0
$0
$0
$0
81
82
5870 REVENUE, NO C.
b.
$0
$0
$0
$0
$0
$0
$0
$0
$0
83
Total Non - Operating Revenue
84
Net Revenue Requirement (before Reserve Expense)
$ 3,222,542
S 3,285,753
$ 3,362,668
$ 3,441,516
$ 3,522,349
$ 3,605,218
$ 3,690,179
$ 3,777,288
S 3,866,602
$ 3,958,180
85
20%
23%
2.3%
2.3%
2.4%
24%
24%
24%
2.4%
66
RESERVE EXPENSE Tol(From)
87
Ops Support- Storm Orain Budget
88
Operations
b.
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0 Fmm
Tads 1A
89
Capital Projects
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0 From
T.W. 1A
90
Operating Reserve
37,497
242,152
214,690
456,257
224,189
292,715
363,692
330,122
294,882
257,919 Fmm
T.a.4
91
Infrastructure Replacement
500,000
750,000
1,000,000
1,000,000
1,300,000
1,300,000
1,300,000
1,300,000
1,300,000
1,300,000 Fmm
Taels4
92
Subtotal, Reserve Expense
$ 537,497
$ 992,152
$ 1,214,690
$ 1,456,257
$ 1,524,189
$ 1,592,715
$ 1,663,692
$ 1,630,122
$ 1,594,882
$ 1,557,919
93
94
Net Revenue Requirement
$3,760,039
$4,277,905
$4,577,358
$4,897,773
$5,046,538
$5,197,933
$5,353,871
$5,407,410
$5,461,484
$5,516,099 To T.ele as
95
tae%
70%
7 u
10%
3p%
3.0%
10%
to%
fo%
HF&H Consuilarla, LLC Newpont Beach Sewer04.28.2015 SS3 -41
5/14@015 1147 PM Pan. 4 of 11 Pq Rev Ra9mt - Sewer
Rate Study
2B. Revenue Requirement Projection - Recycled Water
Inpecu es
Table l6
Budget
$3,511
$3,571
$3,633
$3,696
$3,760
Projected
$3,891
$3,959
$4,027
Scheduled Production Maintenance
b.
Factions
FY 2015 -i6
FY 2016.17
FY 2017-18
FY 2019.19
FY 2019.20
FY 2020 -21
FY 2021.22
FY 2022.23
FY 2023 -N
FY 2024.25 F
ared Recycled Water Coats
1,579
$1606
$1.634
$1662
$1691
$1 ]20
$1,750
$1,780
51,611
$18,13
Conerbe Maintenance
b.
Purchased Water -OCWO
i,k
$ 167,598
$ 173,417
$179,438
$182,810
$4,268
$106,245
$169,745
$193,311
$196,943
$200,644
$204,414
Other agency fees
b.
$ 2000
$2935
$2,070
$$106
$789
$2,142
$2,179
$2,217
$2,255
$2,294
$2,334
Administration
d
25,000
$25,433
$25,872
$26,320
$21348
$26,775
$27,239
$27,710
$28,189
$28,677
$29,173
Overhead
b.
12,000
$12,208
$12419
$12,634
35,145
$12,852
$13,075
$13,301
$13,531
$13,765
$14,003
Meter Reading
b.
1,488
$1514
$1,540
$1.567
$1 594
$1621
$1,649
$1678
$1 707
$1,736 4 hourelmoMh Q$31Ihr
Total - Shared Recycled Water COSts
208,086
214,605
221,339
225.436
229,609
233859
238,187
242,596
247,087
251,661
Inpecu es
b. $
3,451
$3,511
$3,571
$3,633
$3,696
$3,760
$3,825
$3,891
$3,959
$4,027
Scheduled Production Maintenance
b.
1,877
$1,909
$1.943
$1,975
$2,1110
$2,045
$2,080
$2,116
$2.153
$2,190
Scheduled SCACA Maintenance
b.
1,579
$1606
$1.634
$1662
$1691
$1 ]20
$1,750
$1,780
51,611
$18,13
Conerbe Maintenance
b.
3.851
$3,918
$3,985
$4,054
$4,124
$4,196
$4,268
$4,342
$4,417
$4,494
Source Changeovers
b.
700
$712
$724
$737
$750
$763
$776
$789
$803
$817
Pump Station RehablMaimenance( pumper motors)
j.
11,280
$18,11
$18,956
$19,335
$19,722
$20,116
$20,519
$20,929
$21348
$21775 (pumps,motors)
Teal - Big Canyon Country Club
22,738
30,241
30,814
31,398
31,994
32,600
33,219
33,849
34,491
35,145
93.0%
1.8%
19%
1.9%
1.8%
1H%
1.B%
1.9%
18%
Inpec0on,
b. $
3,451
$3,511
$3,571
$3,633
$3,696
$3,760
$3,825
$3,891
$3,959
$4,027
Scheduled Production Maintenance
b.
1,468
$1,432
$1,457
$1,482
$1,508
$1,534
$1,561
$1,588
$1,615
$1,643
Scheduled SCACA Maintenance
b.
1,184
$1204
$1,225
$1247
$1268
$1,290
$1,312
$1335
$1358
$1382
Cmmrbe Maintenance
b.
2987
$3,039
$3,091
$3,145
$3,199
$3,254
$3,311
$3,368
$3,426
$3,486
Source Changeovers
b.
700
$712
$724
$737
$750
$763
$776
$789
$803
$817
Pump Station RabablMaintemme. (pumps motors)
j.
6,9ag
$7.079
$7,220
$7,365
$7,512
$7,662
$7,816
$7,972
$6,131
$8294 (pumps, motor.)
Total- Newport Beach Country Club
16,670
16,977
17,290
17,609
17,933
18,264
18,600
18,943
19,292
19,648
I..
f.a%
I..
1.a%
f.a%
18%
I..
1.9%
18%
Subtotal: Opera0nR Expenses S 247.494 S 261.80 $ 269.443 $ 274.443 S 279.535 $ 284,723 $ 290.006 S 295.308 $ 300,870 $ 306.454
SB% 26% 19% 1.9% 1.9% iH% I..
Pump Station Facility Replacement
$15,000 $15,000 $15,000 $15,000 $15,000 $15,000
$15,000 (mot, walls, concrete)
$2,917 $259lmeter year -City estimate (15- yr servlce lire)
1.36
eP98 Conawrent,, i leeod fiaace Salve, 04,26.2015 $$3 -42
4`14420151:47PM Pe9eSWll 2B. Rev RegmrPq Recyued
HFBH Consultants, LLC
511 2 15 1-47 PM
Paga 6 of
N-ca -f Basch Sewer 04 282015
3A. Revenue lncr - Sewer
SS3 -43
A
B
C
D
E
F
G
H
I
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K
L
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1
City of Newport Beach
2
Water Rate Study
3
Table 3A. Revenue Increases - Sewer
4
Months
5
in 1st FY of
Est. Actual
Projected
6
rate increase'
FY 2013.14
FY 201546
FY 2016 -17
FY2017d8
FY 2018.19
FY2019 -20
FY 2020.21
FY 2021 -22
FY2022 -23
FY 2023.24
FY 2024 -25
Notes
7
8
Revenue from Rates without Rate Increases
Revenue from Conant Rates
$3,117.723
$3,117,723
$3,117,723
$3,117,723
$3,117,723
$3,117,723
$3,117.723
$3,117,723
$3,117,723
$3, 117,723
FYlV4 from Table 7A', Table 16, g.
9
10
Bad Debt Expense
($12,391)
($12,391)
($12,391)
($12,391)
($12,391)
($12,391)
($12,391)
($12,391)
($12,391)
($12,391)
11
Net Revenue
5 3,105,332
$ 3,105,332
S 3,105,332
5 3,105,332
$ 3,105,332
S 3,105,332
5 3,105,332
$ 3,105,332
S 3,105,332
5 3,105,332
12
Net Revenue Requirements
$3,760,039
$4,277,905
$4,577,358
$4,897,773
$5,046,538
$5,197,933
$5,353,871
$5,407,410
$5,461,484
$5,516,099
From Table
135urplue1(Deficit)
before rate increase
($854,707)
($1,172,574)
($1,472,027)
($1,792,442)
($1,941,208)
($2,092,802)
($2,248,540)
($2,302,079)
($2,356,1521
($2,410,767)
To Table
14
15
Revenue from Rates with Rate Increases
16
Increase In Revenue from Rates
23.0%
12.0%
7.00%
7.0%
5.0%
3.0%
3.0%
1.0%
1.07.
1.0%
From Table 1A
17
Cumulative Increase
206%
372%
468%
571%
61.9%
667%
71.74
734%
75.2%
769i%
To Table 1A
18
Total Revenue from Existing Rates
19
Revenue from Conant Rates
$ 3,105,332
$ 3,105,332
$ 3,105,332
$ 3,105,332
$ 3,105,332
$ 3,105,332
$ 3,105,332
$ 3,105,332
$ 3,105,332
$ 3,105,332
20
Revenue from Rate Increases
21
FYI 5- 16(edective 811115)
11
$654707
$714,226
$714,226
$714,226
$714,226
$714.226
$714,226
$714,226
$714.226
$714,226
22
FY16- 17 (effective 711116)
12
$458,347
$458,347
$458,347
$458,347
$458,347
$458,347
$458,347
$458,347
$458,347
23
FY17- 18 (effective 711117)
12
$29 %453
$299,453
$299,453
$299453
$299,453
$299,453
$299,453
$299,453
24
FY18- 19 (effective 711118)
12
$320,415
$228,868
$228.868
$228,868
$228,868
$228,868
$228.868
25
FY19- 20(e1fective 711119)
12
$240,311
$240,311
$240,311
$240,311
$240,311
$240,311
26
FY20 -21 (effective 711120)
12
$151,396
$151,396
$151,396
$151,396
$151,396
27
FY21- 22 (effective 71121)
12
$155,938
$155,938
$155,938
$155,938
28
FY22- 23 (egective 71122)
12
$53,539
$53,539
$53,539
29
FY23 -24 (e1fective 711123)
12
$54,074
$54,074
30
FY24 -25 (effective 711124)
12
$54,615
31
Subtotal- Revenue from Rate Increases
$654,707
$1,172,573
$1,472,027
$1,792,442
$1,941,206
$2,092,602
$2,248,540
$2,302,079
$2,356,153
$2,410,768
32
Total Rate Revenue
$ 3,117,723
$3,760,039
$4,277,905
$4577,358
$4,897,773
$5,045537
$5,197,933
$5,353,871
$5407,410
$5,461,484
$5,516,099
FY13-14from Table7A
33
Net Revenue Requirements
$ 2,845,911
$3,760,039
$4277,905
$4,577.358
$4,892773
$5046.538
$5,197.933
$5,353.871
$5.407,410
$5,461,484
$5,57099
From Table2
34
Surplual(Deficit) after Rate Increase
$271,012
(so)
($0)
($0)
(so)
($0)
$0
(so)
(so)
$0
$0
To Table4
35
36
- Estimated k ofmon(hs of collections in FYin which ate increase takes place
37
HFBH Consultants, LLC
511 2 15 1-47 PM
Paga 6 of
N-ca -f Basch Sewer 04 282015
3A. Revenue lncr - Sewer
SS3 -43
118H Ccropm rte, LLC
5'1.2015 1071.
va9.7oI>f
Neeport9eeeh$e -us Aitme
. Ravance In. -Reef.
SS3 -44
A
8 I
C I
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1
City of Newport Beach
2
Water Rate Study
3
Table 3B. Rise enua Increases - go ... led Water
Month.
5
In 1st FY of
Est Actual
Projected,
6
rat, increase'
FY 2012 -13
FY 2015 -16
FY 2016 -17
FY 209 -18
FY 2018 -19
FY 2019 -20
FY 2020 -21
FY 2021 -22
FY 202233 FY 2023 -24
FY 202485
#REFI
Note.
7
8
Revenue from Rates without Rate Increases
Revenue from Current Rates
$522,123
$522,123
$522,123
$522,123
$522,123
$522,123
$522,123
$522,123
$522,123
$522123
#REFI
Fb,12 -13 fm. Table IS; Table 18. 1.
9
10
Bad Debt Expense
$0
$0
$0
$o
$0
$0
$o
$0
$0
$0
#REFI
11
Net Revenue
3 522,123
$ 522,123
11 522,123
$ 522,123
$ 522123
$ 522,123
$ 522123
$ 522.123 $
522,123
$ 522,123
#REFI
12
Net Revenue Requirements
$264,994
$279,366
$287.030
$292075
$297,213
$302,446
8307,777
$313,207
$318,738
$324,371
#REFI
F(13 -14 from City, escalated, by CPI
13
Surplusl(Defcft) before rate increase
$257,129
$242,758
$235,092
$230,048
$224,910
$219,676
$214,346
$208,916
$203,385
$197,752
#REF!
14
15
Revenue from Rates with Rate Increases
16
Increase in Revenue from Rates
0.D%
.50.0%
0.0%
0.0%
0.0%
0.0%
D.0%
0.0%
0.0%
D.0%
0.0%
17
Cumulative lectures
00%
.5001%
-500%
-500%
-5001t
-500%
-500%
500%
-500%
-500%
#REF'
18
Total Revenue from Existing Rates
19
Revenue from Current Rate.
$ 522,123
$ 522,123
$ 52$123
$ 522,123
$ 522,123
$ 522,123
3 522,123
$ 522123 $
522,123
3 522,123
#REF!
20
Revenue from Rate Increases
22
FY14.15(effective 711114)
12
($261.061)
(5261081)
($261.081)
($261 061)
($261061)
(V61,051)
($261 061)
($261.061)
($261 081)
#REF!
23
F(15- 16(effectew 711115)
12
$0
$0
$0
$0
$0
$0
$0
$0
#REFI
24
FY16- 17(effective 711116)
12
$0
$0
$0
$D
$o
$0
$D
#REFI
25
Fill 7- 18(affective Vill 7)
12
$0
$0
$0
$o
$0
$D
PRIDE!
26
FY18- 19(effective 711118)
12
$0
$0
$0
$0
$0
#REF.
27
FY19- 20(effective 711119)
12
$0
$0
$0
$0
#REF!
28
FUC-21 (e6esty. 711120)
12
$0
$0
$0
6RER
29
FY21- 22 (egeviive Ili l2l)
12
$0
$0
#REFI
30
FY22- 23 (effective 711 M)
12
$D
#REF!
31
FY23- 24 (effective 711 23)
12
#REF!
32
Subtotal - Revenue from Rate Increases
$0
($261,061)
($261,061)
($261,061)
($261,061)
($281,081)
($261,061)
($261,061)
($261,061)
($261,081)
#REFI
33
Total Rata Revenue
$ 51
$522,123
$281,061
3261061
$261,061
$261,061
$261,061
$261,061
$261,061
$261,061
$261,061
#REF!
34
Net Revenue Requirements
$264,994
$279366
5287,030
$292075
$297213
$302046
5307,777
$313207
$318,738
$324,371
41REFI
35
Surplu.l(Deficit) after Rata Increase
$522,123
$257,129
($18,305)
($25,969)
($31,013)
($36,152)
($41,385)
($46,718)
($52.140)
($57,678)
($63,310)
#REFI
To Table
36
37
- Estimated #ofmonths of collections In FY in which sale Increase
takes place
38
118H Ccropm rte, LLC
5'1.2015 1071.
va9.7oI>f
Neeport9eeeh$e -us Aitme
. Ravance In. -Reef.
SS3 -44
HFaH CO..#.sls, UG Newport Basch Sewer 04.282015 SS3 -45
5142015 1:47PM Page8ofll 4. Reserves
B1 C
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City of Newport Beach
Sewer Rate Study
Table 4. Reserves
Budgeted
FY 2014.15
FY 2015 -16
FY 2016 -17
FY 2017.18
FY 2018 -19
Projected
FY 2019 -20 FY 2020.21
FY 2021 -22
FY 2022 -23
FY 2023.24
FY 2024 -25
Notes
__L
_.L
3
4
5
6
Sewer Operating Reserve Funds With Rate
Revenue Increase
Annual increases
Cumulative increase
Operations Fund
Beginning Balance
Surplusl(Defidt)
Transfers (to) /from
Revenue Requirement
Infrastructure Replacement Fund
Subtotal - Transfers
Subtotal- Fund Balance
Estimated Interest Earnings
Increase (5301
23.0%
23.0%
$1,170,008
($0)
37,497
$37,497
$1,207,505
$8,916
12.0%
37.8%
$1,216,421
($0)
242,152
$242,152
$1,458,572
$10,031
7.0%
47.4%
$1,468,604
(SO)
214,690
$214,690
$1,683,293
$11,820
7.0%
57.7%
$1,695,113
($0)
456,257
($400,000)
$56,257
$1,751,370
$12,924
5.0%
65.6%
$1,764,294
(SO)
224,189
($250,000)
($25,811)
$1,738,482
$13,135
3.0%
70.6%
$1,751,618
$0
292,715
($300,000)
($7,285)
$1,744,333
$13,110
3.0%
75.7%
$1,757,443
($0)
363,692
($300,000)
$63,692
$1,821,135
$13,420
1.0%
77.4%
$1,834,554
($0)
330,122
($300,000)
$30.122
$1,864,676
$13,872
1.0%
79.2%
$1,878,549
$0
294,882
($225,000)
$69,882
$1,948,431
$14,351
1.0%
81.0%
$1,962,782
$0
257,919
($225,000)
$32,919
$1,995,701
$14,844
From Table lA
From Table 3A
To Table 2
(toufrom below
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Ending Balance
Minimum Balance
1,170,008
S1422956
$1,216,421
$1,611,271
$1,468,604
$1,642,877
$1,695,113
$1,681,334
$1,764,294
$1,720,758
$1,751,618
$1,761,174
$1,757,443
$1,802,609
$1,834,554
$1,845,090
$1,878,549
$1.888,644
$1,962,782
$1,933,301
$2,010,545
$1.979,090
50 %of...) O&M
22
23
Sewer Infrastructure Replacement Reserve
Beginning Balance
Capital Improvement Projects
Transfers (to)lfrom
Revenue Requirements
Operations Fund
Subtotal - Transfers
Subtotal- Fund Balance
Estimated Interest Earnings
(540)
$695,095
($500,000)
$500,000
$0
$500,000
$695,095
$5,213
$700,308
($765,000)
$750,000
$0
$750,000
$685,308
$5,196
$690,504
($1,040,400)
$1,000,000
$0
$1,000,000
$650,104
$5,027
$655,132
($1,061,208)
$1,000,000
$400000
$1,400,000
$993,924
$6,184
$1,000,108
($1,407,162)
$1,300,000
$250,000
$1,550,000
$1,142,946
$8,036
$1,150,982
($1,435,305)
$1,300,000
$300,000
$1,600,000
$1,315,677
$9,250
$1,324,927
($1,464,011)
$1,300,000
$300,000
$1,600,000
$1,460,916
$10,447
$1,471,363
($1,493,291)
$1,300,000
$300,000
$1,600,000
$1,578,071
$11,435
$1,589,507
($1,523,157)
$1,300,000
$225,000
$1,525,000
$1,591,350
$11,928
$1,603,278
($1,553,620)
$1,300,000
$225.000
$1,525,000
$1,574,658
$11,917
From Table 5
From Table 1A
(to)Rrom above
24
25
26
27
28
29
30
31
32
33
Ending Balance
Target Balance
695,095
S1500.000
$700,308
$1,500,000
$690,504
$1,500000
$655,132
$1.500,000
$1,000,108
51,500,000
$1,150,982
$1,500,000
$1,324,927
$1.500,000
$1,471,363
$1,500,000
$1,589,507
$1500,000
$1,603,278
$1.500,000
$1,586,575
$1,500,000
Average Annual CIP(per 20-Y
341
35
Recycled Water Infrastructure Replacement
Revenue Increase
Annual increases
Cumulative increase
Beginning Balance
Surplus/(Deficit)
Reimbursement to Water Fund
Subtotal - Funtl Expenditures
Subtotal- Fund Balance
Estimated Interest Earnings
Reserve
0.0%
-
$257,129
$0
257,129
$964
-
60.0%
258,094
($18,305)
$0
239,789
$1,867
--
0.0%
241,656
($25,969)
$0
215,687
$1,715
0.0%
217,402
($31,013)
$0
186,388
$1,514
0.0%
187,902
($36,152)
$0
151,751
$1,274
0.0%
153,025
($41,385)
-�
$0
111,640
$992
0.0%
112,632
($46,716)
--
$0
65,916
$670
0.0%
66,586
($52,146)
`-
$0
14,440
$304
0.0%
14,744
($57,676)
$0
(42,932)
$0
0.0%
(42,932)
($63,310)
$0
(106,242)
$0
From Table 3B
From Table 3B
36
37
38
39
40
41
42
43
44
45
46
47
48
49
Ending Balance
$258,094
$241,656
$217,402
$187,902
$153,025
$112,632
$66,586
$14,744
$42,932
$106,242
HFaH CO..#.sls, UG Newport Basch Sewer 04.282015 SS3 -45
5142015 1:47PM Page8ofll 4. Reserves
HF&H Consultants, LLC Newport Beach Sewer 04.28.2015
51142015 1:47 PM Page 9 of 11 5. CIP
SS3 -46
A I B
C
D
E
F
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I
J
K
L M
1
City of Newport Beach
Water Rate Study
Table 5. CIP
Project # Project Name
FY 2015.16
FY 2016.17 FY 2017.18
FY 2018.19
FY 2019.20 FY 2020 -21
FY 2021 -22 FY 2022.23 FY 2023.24 FY 2024.25 Total Cost
2
3
4
_.L
6
C2002049 Grade Adjustments: Sewer Manhole Covers
C7002005 Saint James Rd. Sewer Relocation
C6002016 SCADA System Upgrade
C7001003 WW Master Plan Improvements
Additional Capital Funding
Total Projects
Total Operating
Total Replacement
Total Unfunded
Total Annual Project Cost
Construction COST Inflation
Inflated Operating Total
Inflated Replacement Total
Inflated Unfunded Total
Source: City of Newport Beach WW CIP 13 -14
$100,000
$225,000
$100,000
$75,000
$0
$500,000
$0
$500,000
$0
$500,000
0.0%
$0
$500,000
$0
$750,000
$750,000
$0
$750,000
$0
$750.000
2.0%
$0
$765,000
$0
$1,000,000
$1,000,000
$0
$1,000,000
$0
$1,000,000
2.0%
$0
$1,040,400
$0
$1,000,000
$1,000,000
$0
$1,000,000
$0
$1,000,000
2.0%
$0
$1,061,208
$0
$1,300,000
$1,300,000
$0
$1,300,000
$0
$1,300.000
2.0%
$0
$1,407,162
$0
$1,300,000
$1,300,000
$0
$1,300,000
$0
$1,300,000
2.0%
$0
$1,435,305
$0
$1,300,000
$1,300,000
$0
$1,300,000
$0
$1,300,000
2.0%
$0
$1,464,011
$0
$1,300,000
$1,300,000
$0
$1,300,000
$0
$1,300,000
2.0%
$0
$1,493,291
$0
$1,300,000
$1,300,000
$0
$1,300,000
$0
$1,300,000
2.0%
$0
$1,523,157
$0
$ 100,000
$ 225,000
$ 100,000
$ 75,000
$1,300,000 $ 10,550,000
$1,300,000 $11,050,000
$0 $ -
$1,300,000 $ 11,050,000
$0 $
$1,300,000 $11,050,000
2.0%
$0 $ -
$1,553,620 $ 12,243,155
$0 $ -
7
6
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
HF&H Consultants, LLC Newport Beach Sewer 04.28.2015
51142015 1:47 PM Page 9 of 11 5. CIP
SS3 -46
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HF&H Consultants, LLC Newport Beach Sewer 04.28.2015
51142015 1:47 PM Page 11 of 11 7B. Rate Revenue - Racy Water SS3.48
A
B
C
D
E
F
G
H I J K
L M
N
O
1
City of Newport Beach
Sewer Rate Study
Table 7B. Rate Revenue - Recycled Water
Breakdown of Recycled Water Costs
Fixed Costs (borne regardless of flow)
Variable Costs (related to flow)
Pump Station Costs
Total - Recycled Water Costs
Total Metered Flow
Total Pump Station Flow
Charge per HCF - All Customers
Charge per HCF - Pump Station
Mo. Service Charge
5/8" or 3/4"
1"
11/2"
2"
3"
4"
6"
8"
Newport Beach Commodity Charge (per HCF)
Pump Station Charge (per HCF)
Total Recycled Water Revenue
IPer GAP Workbooks - Monthly Meter Reads
July
August
September
October
November
December
January
February
March
April
May
June
Total Active
Accounts
(excid City)
0
0
0
1
1
0
2
1
5
202,793
Total
FY12 -13
31,828
31,058
13,620
11,962
6,881
675
4,032
6,369
12,458
26,488
29,488
27,934
202,793
Current
Monthly
Service Annual
Charge Revenue
$ 13.82 $ -
$ 2103 $ -
$ 46.06 $ -
$ 73.70 $ 884
$ 138.18 $ 1,658
$ 230.30 $ -
$ 460.61 $ 11,055
$ 736.98 $ 8,844
$ 22,441
$ 2.46 $499,682
$522,123
CC Usage Total
FY12 -13 FY11 -12
27,605 30,285
26,326 31,311
10,963 11,132
9,778 8,502
5,541 3,082
579
3,188 6,156
5,282 7,140
10,791 9,481
22,844 12,562
25,733 29,175
23,796 28,180
172,426 177,006
85%
FY14 -15
$43,732 From Tabla 7B
173,417 From TablaP
62,218 From Table 2B
$279,366
202,793 From earow
172,426 From Betow
$0.86
$0.36
Revised
Total Monthly
Active EMU Total Service Annual
Accounts Multiplier EMUS Charge Revenue
0 1.00 0 $18.91 $0
0 1.67 0 $31.53 $0
0 3.33 0 $63.05 $0
8 533 42.673 $100.88 $9,684
3 10.00 30.005 $189.15 $6,810
0 16.67 0 $315.25 $0
2 33.34 66.677 $630.50 $15,132
1 53.34 53 $1,008.81 $12,106
14 193 $43,732
$0.86 $173,417
$0.36 $62,218
$279,366 To Table 3B
To Table 2B
Water
Rates
$ 17.27
$ 28.79
$ 57.58
$ 92.12
$ 172.73
$ 287.88
$ 575.76
$ 921.22
Water
Multiplier
1.00
1.67
3.33
5.33
10.00
16.67
33.34
53.34
_L
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
HF&H Consultants, LLC Newport Beach Sewer 04.28.2015
51142015 1:47 PM Page 11 of 11 7B. Rate Revenue - Racy Water SS3.48
HF &H Consultants, LLC
201 N. Civic Drive, Suite 230
Walnut Creek, CA 94596
SS3 -49
ATTACHMENT B
Example of Implemented Rate Structure
Meter Size r
1
5/8 in
111111111111W
2 in
6 in
6 in
Usage(HCF)
15
446
Fixed Fee Charge $
1608
Fixed Fee Charge
$
4.50
$
14.50
$
14.50
Variable Fee Charge
$
0.35
$
0.35
$
0.35
Total Monthly Charge
$
9.75
$
170.60
$
577.30
Total Bi- Monthly Charge
$
19.50
$
341.20
Meter Size
1
5/8 in
2 in
2 in
6 in
ii
Usage(HCF)
15
446
Fixed Fee Charge $
1608
Fixed Fee Charge
$
7.34
$
11.01
$
16.51
Variable Fee Charge
$
0.43
$
0.43
$
0.43
Total Monthly Charge
$
13.79
$
202.79
$
707.95
Total Bi- Monthly Charge
$
27.58
$
405.58
Meter Size
Ir
5/8 in
2 in
2 in
6 in
6 in
Usage(HCF)
15
446
Fixed Fee Charge $
1608
Fixed Fee Charge
$
8.79
$
13.19
$
19.78
Variable Fee Charge
$
0.52
$
0.52
$
0.52
Total Monthly Charge
$
16.59
$
245.11
$
855.94
Total Bi- Monthly Charge
$
33.18
$
490.22
Meter Size I=
5/8 in
2 in
6 in
Usage(HCF)
15
446
1608
Fixed Fee Charge $
9.88
$
14.82
$
22.23
Variable Fee Charge $
0.58
$
0.58
$
0.58
Total Monthly Charge $
18.58
$
273.50
$
954.87
Total Bi- Monthly Charge $
37.16
$
547.00
SS3 -50
Figure 1— Projected Fund Balance
$3.50 Target Balance
(Operations + Capital)
$3.00
N
C
O
$2.50 Reserves with Rate
5 Increase
a
$2.00
To `.
m
c $1.50
LL Minimum Balance
(Operations)
d \
v $1.00
L \
a \
\
$0.50 \� \�
Reserves without
Rate Increase
$0.00 \\
FY 2014 -15 FY 2015 -16 FY 2016 -17 FY 2017 -18 FY 2018 -19 FY 2019 -20
SS3 -51
Figure 2 — Neighboring Agency Comparisons
$20
$15 D
m
c $10
c
0
$5
$0
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000
Population of Service Area
SS3 -52
■ Buena Park
■ Seal Beach
� Newport Beach - ■Garden Grove S
Proposed
■ Huntington Beach
� Newport Beach - Current ■
■ La
Habra
■ Costa Mesa SD
■ Fullerton
SS3 -52