ckly STAFF REPORT Trish Rhay, Assistant Director of Public Works Caitlin Sims, Senior Management Analyst

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1 Subject: Distribution of Water Rates Public Notice Phase 1: Five-Year Rate Review and Adjustment to Address Revenue Phase 2: WEP Unit Capital Charge and Cost of Service Study. With that direction, staff has developed a revised implementation plan that includes a Staff recommends that City Council initiate the public hearing notice process to 1) adopt #2 as detailed in the Report; and 2) authorize a pass-through charge that would allow Attachments: 1. Proposition 218 Public Hearing Notice Caitlin Sims, Senior Management Analyst To: Honorable Mayor & City Council BACKGROUND Fund. The Liaison also recommended that the costs of implementing the Water Wastewater fund at this time. With direction from City Council, staff intends to proceed increases in wholesale water charges for purchasing water from the Metropolitan Water as soon as possible in order to address the immediate revenue needs of the Water Staff also recommends that City Council adopt no rate increase for the with the Cost of Service analysis and development of a water reliability unit charge in District of Southern California (MWD) to be passed through directly to customers if they INTRODUCTION Trish Rhay, Assistant Director of Public Works Liaison Committee recommended that staff move forward with a water rate adjustment At the May 9, 2017, Public Works Liaison Committee Meeting, staff discussed the Meeting Date: September 5, 2017 From: Shana Epstein, Public Works Director water rates not-to-exceed those identified in the five-year water rate proposal Scenario are higher than the adopted budgeted costs, as allowed by Government Code Section Enterprise Plan (WEP) be removed from the analysis. proposed water rate implementation schedule. Based on the presented schedule, the Requirements; and implemented a later time: two-phase process, with Phase 1 to be implemented immediately and Phase 2 to be STAFF REPORT ckly

2 Meeting Date: September 5, 2017 The intent of this implementation plan is to move forward with a rate adjustment as quickly as possible to ensure the rates are achieving the utilities base revenue requirements. The second phase will allow City Council to further consider the revenue requirements needed to address the water reliability investment decisions City Council adopted in the WEP and to complete an updated cost of service study. At this time, in Phase 1, staff is presenting a five-year rate adjustment to address the five-year revenue requirements and proposed authorization to pass-through charges for increases in wholesale water charges for purchasing water from the Metropolitan Water District. Staff is recommending City Council initiate the Proposition 218-required public noticing process. If approved, the notices will be distributed in September 2017, with a public heating on November 7, Rates would be effective on January 1, The Cost of Service analysis for the WEP and associated service charge would be presented in late spring and early summer 2018, for implementation in November DISCUSSION Water Rates Phase I - Revenue Requirement Rates This phase presents five-year water rates that meet the Water Fund s revenue requirements. Staff and the City s financial consultants have reviewed and revised the water rates model developed over the last year to include the current cost projections and expenditures. The City s rates must cover the following: Costs of purchasing water from the Metropolitan Water District ( MWD ); Fixed costs of operating the water system, including distribution lines staff needs to operate and maintain the water system, materials and supplies (which may decrease as water purchases decrease but only minimally) and electricity; Budgeted capital projects such as water main and hydrant replacements, water meter replacements, water treatment plant repairs and upgrades, and reservoir replacement; Debt service payments to repay previously issued water bonds; and City s reserve policy to maintain reserves of at least 50% of the Water Enterprise s operating expenses. Water Fund revenues come predominantly from customer rates, service charges and connection fees (including the Water Capacity Charge and Water Supply Charge). City Council has previously directed some General Fund contributions be used for the Water Enterptise Fund, in order to fund specific water utility projects and to reimburse the Water Enterprise Fund for the below-market rent being charged by the City of Beverly Hills for two Water Fund-owned properties. Staff evaluated the City s current practice within the rate model, which is to fund all capital projects for 100% accomplishment of all expenditures forecasted in each year. Many organizations have reviewed their capital project expenditures and found that budgeted annual project expenditures were higher than actual expenditures. As such, many agencies have adjusted their funding strategy to ensure rates are not set higher than needed to meet actual expenditures. Dynamic processes such as internal review, contracting requirements and contractor performance often change throughout development, design and construction. Staff evaluated the City s budgeted capital project expenditures against actual performance and found that the accomplishment Page 2 of 8 08/31/201 7

3 Meeting Date: September 5, 2017 rate was less. As such, staff and the City s consultants have adjusted the rate model to fund an 80% capital project accomplishment rate over the next five years. In the future, the City will still need to collect the remaining 20% of funds through future rate setting processes. Finally, the model was updated to reflect the initial cost estimate of $14.2 million to address the newly-identified Hollywood Basin rehabilitation needs and to include the new WEP cost estimates to drill wells in the La Brea Sub-Basin. These cost estimates were presented to City Council at a Study Session on August 22, 2017, and City Council supported moving forward with the project. Staff and the City s financial consultants presented three revenue-requirement rate proposals to the Public Works Commission at its July 24, 2017, meeting for its consideration. These scenarios showed the rates required to fulfill the revenue requirements of each of the following options: (1) Step-Back: Only purchasing water from the Metropolitan Water District of Southern California (MWD); (2) Base: Purchasing water from MWD and producing water at six existing Hollywood Basin wells; or (3) Purchasing water from MWD, producing water at the six existing Hollywood Basin wells, and drilling new wells in the La Brea Sub-Basin. This scenario was presented for information for purposes of comparison. Scenario 2 included the $14.2 million initial cost estimate to rehabilitate the Hollywood Basin wells. Scenario 3 included the $14.2 million Hollywood Basin rehabilitation cost estimate, the revised WEP cost estimates and several General Fund contributions and modified bond issuances to proceed with the WEP. Only Scenario 3 included the cost of purchasing the former Coffee Bean and Tea Leaf property on La Cienega Boulevard in Los Angeles. The Public Works Commission concurred with staff s recommendation that CIPs be budgeted at 80% in the next five years, for the remaining 20% to be incorporated in later years. The Commission also recommended City Council initiate the public noticing process for the Base Scenario 2 by a 4 to 1 vote. One commissioner expressed concern with continuing the phased approach as discussed with the Public Works Liaison Committee in July The Public Works Commission also recommended that City Council closely examine Scenario 3c. Staff presented the Public Works Commission s recommendation to the Public Works Liaison (Vice Mayor Gold and Councilmember Wunderlich) at a meeting on July 31, After discussion, the Liaison concurred with the Public Works Commission s recommendation that City Council incorporate the Base costs those costs for purchasing water from MWD and for producing water at the six existing Hollywood Basin wells into the revenue requirement rates and, as in the rates model, fund the CIPs at 80%. Staff originally presented Scenario 2 to the Public Works Commission at a 3% increase in the first year with a 2% increase in years two through five. The Liaison also recommended that the proposed rate adjustments be modified from what had been recommended by the Public Works Commission in years two through five to be 3% as well. The benefit of increasing the rate adjustment in outer years is that it reduces the need for the Water Enterprise Fund to utilize its reserves. Page 3 of 8 08/31/2017

4 Key Cost Total Additional GF Bond Rate Adjustments Scenario Assumptions Contribution Issuance 1/1/2018 1/1/2019 1/1/2020 1/1/2021 1/1/2022 below: The associated rate increases recommended by the Public Works Liaison are shown Page 4 of 8 08/31/2017 *Assumes 1 Meter ** Assumes 1 % Meter Single-Family Residential Customer commercial customers. below are customer impacts for single-family residential, multi-family residential and Based on the water rate proposal for Scenario 2 and the proposed wastewater rates, Estimated Bill Impacts the next five years. The current revenue streams are sufficient to support all projected expenditures. Analysis shows that the Wastewater Enterprise does not require any rate increase for. Costs for maintaining, operating and rehabilitating the City s collection system. wastewater treatment and capital improvement investments to the Hyperion. Forecasted payments to City of Los Angeles Bureau of Sanitation for the following: Treatment Facility; The same analysis was completed for the Wastewater Enterprise. Expenses include Waste water Rates Meeting Date: September 5, Base $0 $0 3.0% 3.0% 3.0% 3.0% 3.0% [1] All scenarios assume 80% of CIP budget for rate setting purposes [21 All scenarios assume contribution from General Fund assumed to be made during 2017 [3] All scenarios assume bond to be issued during FY 2019/20 Water Wastewater Total (Water + Wastewater) Usage Current Proposed Current Proposed Current Proposed Service Volumetric Service Volumetric 10 HCF 125 Gals/Day $43.36 $39.00 $44.66 $40.17 $87.38 $87.38 $ $ OHCF 374 Gals/Day $43.36 $ $44.66 $ $87.38 $87.38 $ $ HCF 686 Gals/Day $43.36 $ $44.66 $ $87.38 $87.38 $ $ HCF 1496 Gals/Day $75.16 $ $77.41 $ $87.38 $87.38 $ $ HCF 1870 Gals/Day $75.16 $1, $77.41 $1, $87.38 $87.38 $1, $1,471.81

5 Usage Current Proposed Water Wastewater Total (Water + Wastewater) Service Volumetric Service Volumetric Current Proposed Current Proposed Multi-Family Residential Customer (5 Unit Complex) Page 5 of 8 08/31/2017 an updated Cost of Service study to ensure that each customer is paying the appropriate implementation of the Plan. Phase 2 would then include two elements: Completion of The study would include the most updated WEP costs and schedule based on the amount for his/her water and development of a capital charge for WEP implementation. Public Works Commission and City Council to determine next steps and timeline for The first step in this Phase 2 process will be to review the elements of the WEP with the Phase 2 of Service Study with WEP date of the adjustment. sewer service to adopt a schedule of fees or charges authorizing automatic adjustments charge that would allow increases in wholesale water charges for purchasing water from wastewater treatment. Staff recommends that City Council authorize a pass-through increase by 4% in 2018, 2019, 2020 and 2021, and that these rates will increase by 3% Government Code Section allows an agency that provides water, wastewater or that pass through increases in wholesale charges for water, sewage treatment or budgeted costs. The water rate model anticipates that the Tier 1 Rates from MWD will Pass- Through *Assumes 1 Meter $ $33, $666.96** $34, $35, $35, $69, $70, Commercial Customer *Assumes 1 Meter **Assumes 1.4 Meter Meeting Date: September 5, HCF/Unit 50 Gals/Day $43.36 $78.00 $44.66 $80.34 $ $ $ $ HCF/Unit 100 Gals/Day $43.36 $ $44.66 $ $ $ $ $ HCF/Unit 200 Gals/Day $75.16 $ $77.41 $ $ $ $1, $1, HCF/Unit 262 Gals/Day $75.16 $ $77.41 $ $ $ $1, $1, Water Wastewater Total (Water + Wastewater) Usage Current Proposed Current Proposed Current Proposed Service Volumetric Service Volumetric 237 $43.36* $ * $ $ $ $ * $ $44.66* $ $ $ $ $43.36* $ $44.66* $ $ $ $1, Gals/Day 90 HCF Gals/Day 25 HCF Gals/Day 19 HCF $ $ $1, Gals/Day **Assumes 6 Meter MWD to be passed through directly to customers if they are higher than the adopted in Customers must be notified not less than thirty (30) days prior to the effective Cost

6 Community Engagement engagement process to ensure that water customers are aware of the increases and the reasons for the increases and have the opportunity to ask questions. Staff s proposed process on July 24, 2017, and at the Public Works Liaison Committee on July 31, Page 6 of 8 08/31/2017 reliability unit charge to be presented to the Public Works Commission in April or May to complete this re-evaluation of the WEP. At this time, staff anticipates that the review undertaken since the establishment of the original water utility. The City will increase its water supply. However, it is important to weigh these benefits against the costs. current usage patterns. The WEP will be one of the largest water investments the City of Beverly Hills has drought resiliency and water supply and emergency storage by expanding our local November affected parcels submit a protest vote, the rate increase cannot move forward. Staff has developed a comprehensive public hearing notice that provides information about the Attachment 1. information and see what their specific bill impacts would be; proposed water rates increase, shows the resulting water bills for average customers The water rates proposal has been developed in close consultation with the Public Preliminary Design Report and would update customer class allocations based on Completion of the Preliminary Design Report for the Central Basin Wells is the ideal time The public hearing would be held in September 2018, with rates effective in Works Commission; the item was presented to the Commission at a meeting so that staff could receive the Commission s recommendation to begin the public hearing notice 2017, Study Session. community outreach plan includes the following elements: a.m. as an additional opportunity for the public to learn and provide input. Municipal Gallery; increase, to include links to all related Commission and City Council reports and presentations; Your Dollars at Work campaign, which was presented to City Council at the August 22, Proposition 218 requires that the City complete a protest hearing prior to the adoption of and provides more details about the water utilities projects as part of the Department s Meeting Date: September 5, 2017 of the WEP will be completed in fall 2017, with a revised cost of service study and water a water rate increase and that the City mail a notice to all parcel owners, notifying them of the protest hearing, at least 45 days prior to the hearing. If at least 50 percent of the In addition to the legally-required noticing, staff will complete a robust community Webpage on the City s website specifically dedicated to the proposed water rate Online bill impact calculator that allows customers to input water usage Presentations at homeowner groups, Beverly Hills Chamber of Commerce and Civic Association and other groups upon request; Social media engagement (i.e. Facebook & Twitter); Article in City-wide and Department Newsletter; Advertisements in local newspapers; Informational Town Hall Meeting on October 2, 2017, at 6:00 p.m. in the City Hall Discussion at Public Works Commission Meeting on October 12, 2017, at 8:00 All of these opportunities are included in the draft Heating Notice, which is included as

7 Meeting Date: September 5, 2017 Should City Council authorize staff to move forward, the schedule would proceed as follows: Phase 1 Revenue Requirement Rates Public Notice Distributed September 22, 2017 Community Outreach. Community Meetings Chamber of Commerce. Social Media (Facebook, Twitter) September/October Newsletter. Newspaper Water Rate Consideration at Public Works October 12, 2017 Commission Water Rates Town Hall Meeting October 2, 2017 Public Hearing (ist Reading) November 7, 2017 Public Hearing (217d reading) November 21, 2017 Rates Effective January 1, 2018 Phase 2 Cost of Service Study & Water Reliability Charge Development Cost of Service Analysis January March 2018 FISCAL IMPACT In Fiscal Year , projected revenues are $33.1 million; the revenue requirement for the Scenario 2 (Base) is $38.2 million. The table below provides the projected total revenue and revenue requirement for five years for Scenario 2, through Fiscal Year In years the Revenue Requirement exceeds Total Revenue, the Water Enterprise Fund will draw from reserves. The total revenue presumes that the recommended Scenario 2 rate increase goes into effect on January 1 of each calendar year. FY FY FY FY FY Total $33,080,922 $35,007,103 $36,734,059 $38,535,750 $40,415,540 Revenue Revenue $38,230,462 $39,544,025 $35,168,001 $35,861,196 $36,989,621 Requirement The revenue requirement for the Water Fund is the amount of funding that is required to operate the water utility, including operations, CIP funding, debt service requirements and Water Enterprise Reserve requirements. Page 7 of 8 08/31/2017

8 Meeting Date: September 5, 2017 RECOMMENDATION The Public Works Commission recommends that City Council: 1) Adopt water rates not-to-exceed those identified in the five-year water rate proposal Scenario #2 as detailed in the Report; and 2) Authorize a pass-through charge that would allow increases in wholesale water charges for purchasing water from MWD to be passed through directly to customers if they are higher than the adopted budgeted costs, as allowed by Government Code Section Approved By Page 8of8 08/31/2017

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10 DRAFT NOTICE OF PUBLIC HEARING FOR PROPOSED WATER SERVICE CHARGES INCREASE DRAFT The City of Beverly Hills hereby gives notice of a public hearing to consider increased charges for water services to its customers, as set forth on the Rates Tables on page 2. The new charges are proposed to be effective January 1, 2018, January 1, 2019, January 1, 2020, January 1, 2021, and January 1, In addition, the City proposes to authorize automatic adjustments that pass through the adopted increases or decreases in wholesale charges for water purchased from the Metropolitan Water District of Southern California (MWD). The charges have been developed with input from the City s Public Works Commission, comprised of Beverly Hills residents. This proposal was presented to the City Council on September 5, 2017, and all information on this public process is available at This notice, all materials and presentations related to the proposed water rates, and responses to frequently asked questions are also available at and at the Beverly Hills City Clerk s Office at 455 N. Rexford Drive (Room 290), Beverly Hills during published business hours. If you need assistance determining the amount of increase for your property, you can use the Bill Impacts Calculator at or call (310) PUBLIC HEARING NOTICE IS HEREBY GIVEN that the City Council will hold a public hearing on the proposed increase in water charges at the following place and time: NOVEMBER 7, 2017 AT 7:00 P.M. CITY COUNCIL CHAMBERS 455 N. REXFORD DRIVE; BEVERLY HILLS, CA At the public hearing, the City Council will hear and consider all objections or protests to the proposed water rate increase. Any property owner or property tenant that is directly responsible for the payment of water service charges (each, a water customer ) may submit a written protest against the proposed increased. Written protests may be delivered to the City Clerk at the public hearing prior to the end of the public hearing or may be mailed or personally delivered to the City Clerk at City Hall, 455 N. Rexford Drive (Room 290), Beverly Hills, CA Protests that are mailed or delivered to City Hall must be received by the City Clerk before 5:00 p.m. on November 7, A majority protest exists if, at the end of the public hearing, there are written protests submitted by a majority of the water customers subject to the proposed increase. No more than one written protest per parcel of property will be counted in calculating a majority protest. The City Council cannot adopt the proposed increase if a majority protest exists. No late postmarks will be accepted and ed, faxed, or photocopied protests will not be counted. A written protest must include all of the following to be considered in determining a majority protest: 1.Clearly state opposition to the increase in the water charge(s); 2.Name of the owner or customer of record who is submitting the protest; 3.Identification by street address or utility account number of the parcel with respect to which the protest is made; and 4.Original signature and legibly printed name of the owner or customer of record who is submitting the protest. Oral comments at the public hearing will not be counted in the determination of a majority protest unless accompanied by a written protest. Dear Valued Customer: The City of Beverly Hills has been delivering drinking water to customers for more than a century and is committed to providing around the clock, reliable and quality service. As a public enterprise, the Water Utility is self-supporting, largely through revenues generated by rates paid by our customers. Your money is directly re-invested into the Water Enterprise to pay for the water that you use every day for drinking, bathing, cooking, and outdoor watering. Your money also funds other less visible expenses like long-term debt payments, planning, and environmental compliance. Thank you to all our customers for answering the call to conserve during this last drought and being good stewards of our water future. The City is now embarking on ambitious efforts to reinvest in our infrastructure and continue to produce local water in the City as well as being a member of the Metropolitan Water District for the majority of our water supply. Local water production helps to protect the City s water supply and diversifies our water supply portfolio to increase reliability. Asking our customers to pay more is never easy, but these incremental increases will assist in investing and reinvesting in critical infrastructure. If you have any questions, we invite you to attend a Town Hall informational meeting on Monday, October 2 at the Municipal Gallery at City Hall, 455 N. Rexford Avenue, at 6 p.m. or visit our informational page at Sincerely, Shana E Epstein

11 Beverly Hills Customers Proposed Water Rates Effective Date Proposed Bi-Monthly Water Service Charge & Volume Rates 1/1/2018 1/1/2019 1/1/2020 1/1/2021 1/1/2022 Meter Size Bi-Monthly Service Charge (For All Customers) 1 or Smaller $44.66 $46.00 $47.38 $48.80 $ /2 $77.41 $79.74 $82.13 $84.59 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Meter Size Bi-Monthly Fire Service Charge 2 or smaller $27.20 $28.02 $28.86 $29.72 $ /2 $40.56 $41.78 $43.03 $44.32 $ $59.08 $60.85 $62.68 $64.56 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $1, $1, $1, $1, $1, Volume Rates ($ per HCF) Single-Family Residential Tier 1 0 up to 10 $4.02 $4.14 $4.26 $4.39 $4.52 Tier 2 Over 10 up to 55 $5.30 $5.46 $5.63 $5.80 $5.97 Tier 3 Over 55 up to 120 $8.36 $8.61 $8.87 $9.14 $9.41 Tier 4 Over 120 $16.15 $16.63 $17.13 $17.65 $18.18 Multi-Family Residential Tier 1 0 up to 4 Per Dwelling Unit $4.02 $4.14 $4.26 $4.39 $4.52 Tier 2 Over 4 up to 9 Per Dwelling Unit $5.30 $5.46 $5.63 $5.80 $5.97 Tier 3 Over 9 up to 16 Per Dwelling Unit $8.36 $8.61 $8.87 $9.14 $9.41 Tier 4 Over 16 Per Dwelling Unit $16.15 $16.63 $17.13 $17.65 $18.18 Non-Residential $6.86 $7.07 $7.28 $7.50 $7.72 *HCF (hundred cubic feet) = 748 gallons Outside City Customers Proposed Water Rates Effective Date Proposed Bi-Monthly Water Service Charge & Volume Rates 1/1/2018 1/1/2019 1/1/2020 1/1/2021 1/1/2022 Meter Size Bi-Monthly Service Charge (For All Customers) 1 or Smaller $55.83 $57.50 $59.23 $61.00 $ /2 $96.77 $99.67 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Meter Size Bi-Monthly Fire Service Charge 2 or smaller $34.00 $35.02 $36.07 $37.15 $ /2 $50.71 $52.23 $53.79 $55.41 $ $73.86 $76.08 $78.36 $80.71 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $1, $1, $1, $1, $1, Volume Rates ($ per HCF) Single-Family Residential Tier 1 0 up to 10 $5.01 $5.16 $5.31 $5.47 $5.63 Tier 2 Over 10 up to 55 $6.63 $6.83 $7.04 $7.25 $7.47 Tier 3 Over 55 up to 120 $10.45 $10.77 $11.09 $11.42 $11.77 Tier 4 Over 120 $20.18 $20.78 $21.41 $22.05 $22.71 Multi-Family Residential Tier 1 0 up to 4 Per Dwelling Unit $5.01 $5.16 $5.31 $5.47 $5.63 Tier 2 Over 4 up to 9 Per Dwelling Unit $6.63 $6.83 $7.04 $7.25 $7.47 Tier 3 Over 9 up to 16 Per Dwelling Unit $10.45 $10.77 $11.09 $11.42 $11.77 Tier 4 Over 16 Per Dwelling Unit $20.18 $20.78 $21.41 $22.05 $22.71 Non-Residential $8.58 $8.84 $9.10 $9.38 $9.66 *HCF (hundred cubic feet) = 748 gallons

12 Sample Average Beverly Hills Customers Bill Impacts Single-Family Home - 22,440 Gallons (30 HCF); Lot Size = 8000 Square Feet - 1 Meter Current 1/1/2018 1/1/2019 1/1/2020 1/1/2021 1/1/2022 Stormwater - Residential Single $17.56 $17.56 $17.56 $17.56 $17.56 $17.56 Refuse - Residential Single $83.20 $83.20 $83.20 $83.20 $83.20 $83.20 Refuse - Alley Maintenance $21.76 $21.76 $21.76 $21.76 $21.76 $21.76 Wastewater $87.38 $87.38 $87.38 $87.38 $87.38 $87.38 Water - Meter Charge BH $43.36 $44.66 $46.00 $47.38 $48.80 $50.27 Water - Residential Single BH $ $ $ $ $ $ Total Bi-Monthly Bill $ $ $ $ $ $ Cost per Day Increase $0.09 $0.10 $0.10 $0.10 $0.10 Multi-Family Dwelling (5 units) Gallons per Unit (8 HCF per Unit) - 1 Meter Current 1/1/2018 1/1/2019 1/1/2020 1/1/2021 1/1/2022 Stormwater - Multi-Family $36.30 $36.30 $36.30 $36.30 $36.30 $36.30 Refuse - Multi-Family $ $ $ $ $ $ Refuse - Alley Maintenance $ $ $ $ $ $ Wastewater $ $ $ $ $ $ Water - Meter Charge BH $43.36 $44.66 $46.00 $47.38 $48.80 $50.27 Water - Multi-Family BH $ $ $ $ $ $ Total Bi-Monthly Bill $ $ $1, $1, $1, $1, Cost per Day Increase $0.11 $0.12 $0.12 $0.12 $0.13 Commercial Office - 14,212 Gallons (19 HCF)* - 1 Meter Current 1/1/2018 1/1/2019 1/1/2020 1/1/2021 1/1/2022 Stormwater - Commercial $ $ $ $ $ $ Wastewater $ $ $ $ $ $ Water - Meter Charge BH $43.36 $44.66 $46.00 $47.38 $48.80 $50.27 Water - Commercial BH $ $ $ $ $ $ Total Bi-Monthly Bill $ $ $ $ $ $ Cost per Day Increase $0.08 $0.09 $0.09 $0.09 $0.10 *Subject to Sewer Strength Surcharge; commercial customers receive a separate monthly refuse bill. PROPOSED PASS-THROUGH. At the public hearing on November 7, 2017, the City Council will consider a pass-through charge that would allow increases in wholesale water charges for purchasing water from MWD to be passed through directly to customers if they are higher than the adopted budgeted costs. Wholesale purchased water costs fluctuate for a variety of reasons that are beyond the control of Beverly Hills. Rather than budgeting higher costs at this time and increasing water charges more now, this pass-through mechanism will be used when actual needs are known. YOUR UTILITY BILL Your bi-monthly utility bill includes charges for water, wastewater, stormwater, and solid waste services. WATER: Sum of (1) the fixed meter charge, which is based on meter size, and (2) volumetric charge, which is based on the amount of water used during the billing period. In master-metered buildings with a single bill, for the volumetric charge, the number of dwelling units serves as a multiplier to set the tiers. WASTEWATER: For residential customers, the charge is per residential unit. For commercial customers, the charge is the sum of (1) a fixed charge and (2) a quantity/quality charge based on the volume of water used. Some commercial customers are also assessed an additional strength surcharge based on the volume of water used. STORMWATER: Flat rate per residential unit for residential customers and a flat rate for non-residential customers. SOLID WASTE: For single-family residential customers, the charge is a sum of a refuse fee, which is based on the lot size, and a flat alley maintenance fee. For multi-family residential customers with alley service, the charge is the sum of a refuse fee and alley maintenance fee, both of which are charged based on the number of residential units. Commercial and multi-family customers with bin service receive a monthly refuse bill based on the size of bin and the number of times per week that refuse is collected. Those customers that live in West Hollywood are only charged for water services on the Beverly Hills bill. The proposed changes at this time are only to the water charges on your bill. To see how the proposed rates may change your bill, please visit to explore the Bill Calculator Tool. WILL THE DROUGHT PENALTY SURCHARGE IMPACT RATES? The drought penalty surcharge ended in June 2016, so customers no longer see that charge on their utility bills. Beginning in May 2015, a penalty surcharge was imposed for those customers that did not reduce their water consumption by at least 30% compared to While this drought has been declared over, the City will continue to face droughts and water conservation remains a priority for the City. However, since the proposed rates are based on the amount of water projected to be sold and the amount of wastewater to be cleaned, using less water will decrease revenues. As part of the cost of service study to be completed in the spring of 2018, the City will also consider different funding alternatives to address revenue gaps during future droughts and periods of reduced water consumption.

13 IMPORTANT CUSTOMER INFORMATION PROPOSED WATER CHARGES EXPLORE: Customer information and Bill Calculator Tool at SHARE: Facebook, Twitter LEARN: Attend an Informational Town Hall Meeting on October 2, 2017 at 6:00 p.m. at the City Hall Municipal Gallery, 455 N. Rexford Drive, Beverly Hills. Attend the Public Works Commission Meeting on October 12, 2017, at 8:00 a.m. at Beverly Hills City Hall, 455 N. Rexford Drive, Room 280A, Beverly Hills. ATTEND: The Public Hearing for the proposed rate increase is on Tuesday, November 7, 2017, at 7:00 p.m. at the City Council Meeting, 455 N. Rexford Drive, City Council Chambers, Beverly Hills. The Beverly Hills water system is made up of 171 miles of pipeline, 11 reservoirs, 4 water wells, and a water treatment plant. The Public Works Department is responsible for maintaining, expanding, and rehabilitating this aging infrastructure to ensure that all customers continue to receive the highest-quality water. These new and rehabilitation projects are possible because funding from the water rates is re-invested into the water capital improvement programs for projects to maintain, expand, and rehabilitate the system. The following charts show the City s current capital investment forecast. WATER CAPITAL INVESTMENT PROJECTS THROUGH FISCAL YEAR 2022 CITY OF BEVERLY HILLS Department of Public Works 345 Foothill Road Beverly Hills, CA WATCH: Tune into Beverly Hills Television Channel 10 on November 7 to watch the City Council meeting or view the meeting live online at LISTEN: Interested in a presentation by Beverly Hills staff about the proposed rates and our water and wastewater infrastructure? Contact AskPW@beverlyhills.org to schedule a presentation for your group. QUESTIONS: Contact Customer Service at AskPW@beverlyhills.org or (310) Asset & System Management $659,000 Water Efficiency $1,060,703 Right-of-Way Infrastructure $1,100,000 Treatment $4,343,203 Pump Stations & Reservoirs $4,950,000 Wells $15,352,103 Waterlines $17,750,000