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Home My Public Portal About08-15-2006LUAThis Agenda contains a brief general description of each item to be considered. Copies of the staff reports or other written documentation relating to each item of business referred to on the Agenda are on file in the Office of the City Clerk and are available for public inspection. A person who has a question concerning any of the agenda items may call the City Manager at (310) 603-0220, ext. 200. Procedures for addressinq the Members of the Authority IN ORDER TO EXPEDITE LYNWOOD UTILITY AUTHORITY BUSINESS, WE ASK THAT ALL PERSONS WISHING TO ADDRESS THE AUTHORITY FILL OUT A FORM PROVIDED AT THE DOOR, AND TO TURN IT IN TO THE SECRETARY PRIOR TO THE START OF THE MEETING. FAILURE TO FILL OUT SUCH A FORM WILL PROHIBIT YOU FROM ADDRESSING THE MEMBERS OF THE~.AUTHORITY IN THE ABSENCE OF THE UNANIMOUS CONSENT OF THE AUTHORITY. AGENDA ITEMS ON FILE FOR CONSIDERATION AT THE REGULAR MEETING OF THE LYNWOOD UTILITY AUTHORITY TO BE HELD ON AUGUST 15, 2006 5:00 P.M. COUNCIL CHAMBERS 11330 BULLIS ROAD, LYNWOOD, CA 90262 LETIClA VASQUEZ PRESIDENT CITY OF LYI~W00D AUG 1 0 2006 PM ALFREDDIE JOHNSON JR. VICE PRESIDENT MARIA SANTILLAN MEMBER LOUIS BYRD MEMBER FERNANDO PEDROZA MEMBER EXECUTIVE DIRECTOR N. ENRIQUE MARTINEZ ASSISTANT CITY MANAGER-FINANCE MARIANNA MARYSHEVA SECRETARY ANDREAL. HOOPER TREASURER IRIS PYGATT J. ARNOLDO BELTRAN AUTHORITY COUNSEL 1. CALL TO ORDER OPENING CEREMONIES 2. ROLL CALL OF MEMBERS Louis Byrd Alfreddie Johnson Jr. Fernando Pedroza Maria Santillan Leticia Vasquez 3. CERTIFICATION OF AGENDA POSTING BY SECRETARY PUBLIC ORAL COMMUNICATIONS (Regarding Agenda Items Only) PUBLIC ORAL COMMUNICATIONS IF AN ITEM IS NOT ON THE AGENDA, THERE SHOULD BE NO SUBSTANTIAL DISCUSSION OF THE ISSUE BY THE LYNWOOD UTILITY AUTHORITY, BUT IT IS ALL RIGHT FOR THE LYNWOOD UTILITY AUTHORITY MEMBERS TO REFER THE MATTER TO THE STAFF OR SCHEDULE SUBSTANTIVE DISCUSSION FOR A FUTURE MEETING. (The Ralph M. Brown Act, Government Code Section 54954.2(a) ) MINUTES OF PREVIOUS MEETING: Minutes of May 2, 2006 Minutes of May 16, 2006 Minutes of July 31, 2006 PUBLIC HEARING PUBLIC HEARING REGARDING PROPOSED RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LYNWOOD EVALUATING CURRENT WATER AND SEWER SYSTEMS OPERATIONS AND DETERMINING AND SETTING WATER AND SEWER RATES AND RELATED FEES NECESSITATED FOR SUSTAINABILITY OF SYSTEMS TO PRESERVE AND PROTECT THE PUBLIC HEALTH AND WELFARE COMMENTS: The City last raised its water and sewer rates in 1999 and 1995, respectively. To meet the increasing cost in operating and maintaining the water and sewer infrastructures and the continuing required system improvements and replacement as well as compliance with bond rating agency recommendations, the water and sewer rates need to be increased. RECOMMENDATION: Staff respectfully recommends that the Lynwood Utility Authority: 1) Open the public hearing on the proposed evaluation of current water and sewer systems operations and the setting of water and sewer rates, receive public testimony and StafFs report; 2) Close the public hearing and adopt the proposed Resolution (Attachment "A" to this report) entitled, "A RESOLUTION OF THE LYNWOOD UTILITY AUTHORITY ESTABLISHING WATER AND SEWER RATES AND RELATED FEES FOR THE CITY OF LYNWOOD FOR FISCAL YEARS 2006-2007 THROUGH 2010-2011" should the Authority wish to establish a new schedule of rates for fiscal years 2006-2007 through 2010-2011 at the rates set forth in Exhibit A of the Resolution. ADJOURNMENT The Lynwood Utility Authority meetings will be posted as needed. The next meeting will be held in the Council Chambers of City Hall, 11330 Bullis Road, City of Lynwood, California. AGENDA STAFF REPORT DATE: TO: APPROVED BY: PREPARED BY: August 15, 2006 Lynwood Utility Authority President & Members N. Enrique Martinez, Executive Director Andrea Hooper, City Cle{~ L. Albert Espinoza, Deputy City Clerk SUBJECT: Lynwood Utility Authority Minutes Recommendation: Staff recommends the Lynwood Utility Authority approve following minutes: · Regular Meeting, May 2, 2006 · Regular Meeting, May 16, 2006 · Special Meeting, July 31,2006 Background: N/A Fiscal Impact: N/A Coordinated With: N/A AGENDA FFEM LYNWOOD UTILITY AUTHORITY REGULAR MEETING MAY 2, 2006 The Lynwood Utility Authority of the City of Lynwood met in a regular meeting in the Council Chambers, 11330 Bullis Road on the above date at 6:28 p.m. President Vasquez presiding. Member Byrd, Johnson, Pedroza, Santillan, and Vasquez answered the roll call. Also present were Executive Director Martinez, City Attorney Beltran, and Secretary Hooper. City Treasurer Pygatt was absent. Secretary Hooper announced that the agenda had been duly posted in accordance with the Brown Act. PUBLIC ORAL COMMUNICATIONS (Regarding Agenda Items Only) NONE PUBLIC ORAL COMMUNICATIONS NONE CONSENT CALENDAR It was moved by Member Santillan, seconded by Member Pedroza, to approve the minutes and adopt the Resolution. Item #4 MINUTES OF PREVIOUS MEETING Minutes of April 4, 2006 Item #5 AWARD OF CONTRACT - LYNWOOD SENIOR CITIZEN CENTER FURNITURE PROJECT. G. Daniel Ojeda, Director of Public Works/City Engineer, made a correction to the resolution. He stated that the name of the contractor should be InterServices, not Intelligent Facility Furnishings Inc. and that he will provide a corrected copy of the resolution to the City Clerk. RESOLUTION NO. 2006.004 ENTITLED: A RESOLUTION OF THE LYNWOOD UTILITY AUTHORITY AWARDING A CONTRACT TO INTERSERVICES, IN THE AMOUNT OF $108,006.23 FOR THE LYNWOOD SENIOR CITIZEN CENTER BUILDING FURNITURE PROJECT, PROJECT NUMBER 05-5297; AND AUTHORIZING THE PRESIDENT TO EXECUTE THE AGREEMENT. ROLL CALL: AYES: NOES: ABSTAIN: ABSENT: MEMBERS BYRD, JOHNSON, PEDROZA, SANTILLAN, AND VASQUEZ NONE NONE NONE ADJOURNMENT Having no further discussion, it was moved by Member Byrd, seconded by Vice President Johnson, and carried to adjourn the Lynwood Utility Authority meeting at 6:31 p.m. Leticia Vasquez, President Andrea L. Hooper, Secretary LYNWOOD PUBLIC FINANCE AUTHORITY REGULAR MEETING MAY 16, 2006 The Lynwood Public Finance Authority of the City of Lynwood met in a regular meeting at 11330 Bullis Road on the above date at 5:37 p.m. President Vasquez presiding. Members Byrd, Johnson, Pedroza, Santillan, and Vasquez answered the roll call. Also present were Chief Administrative Officer Martinez, City Attorney Beltran, and City Treasurer Pygatt. Secretary Hooper was absent. Deputy City Clerk Espinoza announced that the Agenda had been posted in accordance with the Brown Act. Item #4 Proclamations/Presentations · City Manager's Report - Announcement of FY 2006/2007 Budget Adoption Schedule - Director of Finance, Marianna Marysheva, gave a timeline on the adoption of the budget. PUBLIC ORAL COMMUNICATIONS (Regarding Agenda Items Only) NONE PUBLIC ORAL COMMUNICATIONS NONE CONSENT CALENDAR It was moved by Member Byrd, seconded by Member Pedroza, to approve the minutes and receive & file the Quarterly Statement on the Conditions of Funds. Item #5 MINUTES OF PREVIOUS MEETINGS: · Regular Meeting - April 18, 2006 Item #6 QUARTERLY STATEMENT ON THE CONDITIONS OF FUNDS Receive & File the Statement of Conditions of Funds Reports for the City of Lynwood, Lynwood RedeveLopment Agency, and Lynwood Information, Inc. ROLL CALL: AYES: NOES: ABSTAIN: MEMBERS BYRD, JOHNSON, PEDROZA, SANTILLAN, AND VASQUEZ NONE NONE ABSENT: NONE CLOSED SESSION Item #7 City Attorney Beltran stated with respect to every item of business to be discussed in Closed Session Pursuant to Section 54956.8 A. CONFERENCE WITH REAL PROPERTY NEGOTIATORS Properties: See listing of properties by Address and Assessor Parcel Numbers in Attachment "A" to this agenda. Authority Negotiator: Authority Members, Chief Administrative Officer, Authority Counsel, Development Services Director and Universal Field Services, Inc. Negotiating: See listing of properties and property owners ("Seller" or "Seller's") in Attachment "A" to this agenda. Under Negotiation: Price and terms of payment - Seeking authority to make offer to Seller's for acquisition of property and, where appropriate, value of immovable fixtures and equipment, provision of appropriate relocation benefits and compensation for potential loss of goodwill to parties legally entitled thereto. It was moved by Member Byrd, seconded by Member Pedroza, and carried to recess to Closed Session at 8:45 p.m. Council reconvened at 11:43 p.m. City Attorney Beltran stated that the Council met on the aforementioned matters and with respect to the following: A. CONFERENCE WITH REAL PROPERTY NEGOTIATORS Properties: See listing of properties by Address and Assessor Parcel Numbers in Attachment "A" to this agenda. Authority Negotiator: Authority Members, Chief Administrative Officer, Authority Counsel, Development Services Director and Universal Field Services, Inc. Negotiating: See listing of properties and property owners ("Seller" or "Seller's") in Attachment "A" to this agenda. Under Negotiation: Price and terms of payment - Seeking authority to make offer to Seller's for acquisition of property and, where appropriate, value of immovable fixtures and equipment, provision of appropriate relocation benefits and compensation for potential loss of goodwill to parties legally entitled thereto. The Members reached consensus (5-0) and provided further instructions to staff regarding the possible disposition of the matter. ADJOURNMENT Having no further discussion, it was moved by Member Santillan, seconded by Member Byrd, and carried to adjourn the regular Lynwood Public Finance Authority meeting at 11:46 p.m. Leticia Vasquez, President Andrea L. Hooper, Secretary LYNWOOD UTILITY AUTHORITY SPECIAL MEETING JULY 31, 2006 The Lynwood Utility Authority of the City of Lynwood met in a special meeting in the Council Chambers, 11330 Bullis Road on the above date at 5:49 p.m. President Vasquez presiding. Member Byrd, Johnson, Pedroza, Santillan, and Vasquez answered the roll call. Aisc present were Executive Director Martinez, City Attorney Beltran, and Secretary Hooper. City Treasurer Pygatt was absent. Secretary Hooper announced that the agenda had been duly posted in accordance with the Brown Act. PUBLIC ORAL COMMUNICATIONS (Regarding Agenda Items Only) NONE PUBLIC ORAL COMMUNICATIONS NONE CONSENT CALENDAR It was moved by Member Byrd, seconded by Member Pedroza, to approve the minutes and adopt the Resolutions. Item t14 MINUTES OF PREVIOUS MEETING · Minutes of June 20, 2006 Item #5 CITY HALL, CITY HALL ANNEX, CITY HALL NORTH REHABILITATION PROJECT (PROJECT NO. 06-5189) RESOLUTION NO. 2006.010 ENTITLED: A RESOLUTION OF THE LYNWOOD UTILITY AUTHORITY AMENDING THE EXISTING CONTRACT WITH WESTGROUP DESIGNS, INC. (AMENDMENT NUMBER 2) IN THE AMOUNT OF $18,450 FOR ADDITIONAL ADA IMPROVEMENTS, ELECTRICAL, STRUCTURAL, AND ARCHITECTURAL SERVICES FOR THE CITY HALL ANNEX, CITY HALL, AND CITY HALL NORTH REHABILITATION PROJECT, PROJECT NUMBER 05-5189, AND AUTHORIZING THE PRESIDENT TO EXECUTE THE CONTRACT AMENDMENT. Item #6 LYNWOOD CITY HALL PARKING LOT IMPROVEMENT PROJECT, PROJECT NUMBER 05~5297 RESOLUTION NO. 2006.011 ENTITLED: A RESOLUTION OF THE LYNWOOD U I ~LITY AUTHORITY AWARDING A CONTRACT TO WILLDAN FOR ITS ENGINEERING SERVICES FOR THE DESIGN AND PREPARATION OF CONSTRUCTION DRAWINGS AND SPECIFICATIONS FOR THE LYNWOOD CITY HALL PARKING LOT IMPROVEMENT PROJECT, PROJECT NUMBER 05-5297 AT ITS PROPOSED RATE NOT TO EXCEED $48,600 IN TOTAL AND AUTHORIZING THE MAYOR TO EXECUTE THE AGREEMENT. ROLL CALL: AYES: NOES: ABSTAIN: ABSENT: MEMBERS BYRD, PEDROZA, JOHNSON, SANTILLAN, AND VASQUEZ NONE NQNE NONE ADJOURNMENT Having no further discussion, it was moved by Member Pedroza, seconded Vice President Johnson, and carried to adjourn the special Lynwood Utility Authority meeting at 5:51 p.m. Leticia Vasquez, President Andrea L. Hooper, Secretary AGENDA STAFF REPORT DATE: TO: APPROVED BY: PREPARED BY: August 15, 2006 The Honorable President and Members o,~t,b~l,~vood Utility Authority N. Enrique Martinez, Executive Direct~/~-'~. G. Daniel Ojeda, Director of Public WOrks/City Engineer J. Arnoldo Beltran, City Attorney SUBJECT: Public Hearing Regarding Proposed Resolution of the Lynwood Utility Authority Evaluating Current Water and Sewer Systems Operations and Determining and Setting Water and Sewer Rates and Related Fees Necessitated for Sustainability of Systems to Preserve and Protect the Public Health and Welfare RECOMMENDATION: Staff respectfully recommends that the Lynwood Utility Authority: 1) 2) Open the public hearing on the proposed evaluation of current water and sewer systems operations and the setting of water and sewer rates, receive public testimony and Staffs report; Close the public hearing and adopt the proposed Resolution (Attachment "A" to this report) entitled "A RESOLUTION OF THE LYNWOOD UTILITY AUTHORITY ESTABLISHING WATER AND SEWER RATES AND RELATED FEES FOR THE CITY OF LYNWOOD FOR FISCAL YEARS 2006-2007 THROUGH 20'10-2011" should the Authority wish to establish a new schedule of rates for fiscal years 2006-2007 through 2010-2011 at the rates set forth in Exhibit A of the Resolution. EXECUTIVE SUMMARY: The City of Lynwood provides water and fire protection services to Lynwood residents through approximately 8,800 water services and 1,100 fire hydrants. The water is delivered to users through water facilities consisting of approximately 80 miles of water mains, an above-ground 3 million-gallon water reservoir, seven (7) active wells, and a connection to the Central Basin Municipal Water District (CBMWD) system. Simultaneously, the City provides sewer services to Lynwood residents through approximately 80 miles of 8" sewer mains and 9,900 sewer laterals. The waste water carried by the City's pipelines is discharged into larger sewer trunk lines AGENDA ITEM which are maintained and operated by the Los Angeles County Sanitation District. The operation and maintenance costs for the City water and sewer systems are funded only with the revenue generated by the following three different charges: 1. Water Use Fees (based on the amount of water consumed in hundred cubic foot or "unit") 2. Ready-to-Serve Water Fees (based on the size of the water meter) 3. Sewer Connection Fees (flat rates based on residential or commercial parcels) The water and sewer rates were last increased in 1999 and 1995, respectively. As mentioned in the recently adopted budget for the Authority (for fiscal year 2006-07) a rate increase for both water and sewer services were recommended. The rate increases are necessary in order for the city to: · Maintain a good bond rating status (as recommended by Standard and Poor's, City's bond rating company) · Keep up with increased costs of operation and maintenance · Implement needed CIP projects, and · Maintain a reasonable emergency reserve The proposed increases would mean an additional $9 per month for water charges and $2 per month for sewer. Without the proposed rate increases, the Authority's water fund reserve may be completely depleted and show a negative balance by the end of June 2007. BACKGROUND: This staff report presents an analysis of the current water and sewer systems operations including revenues, expenditures, revenue requirements and utility rates. As part of the yearly process of reviewing the financial condition of the utility enterprise funds, staff this year recommends that the Authority adopt annual changes in utility rates for the Fiscal Years 2006-2007' through 2010-2011 as more particularly set forth in the "Water and Sewer Rate Study Analysis" (the "2006 Study") attached to this report (as Attachment "B" and the enabling resolution. The rate recommendations are based on the recently adopted FY 2006-2007 Budget. The primary cause of the recommended increase in water rates is the significant rise in the past years costs for water purchased from the Central Basin Municipal Water District as well as the significant rise in pumping, storage and delivery cost for water produced from city wells. The increase in sewer rates is 2 which are maintained and operated by the Los Angeles County Sanitation District. The operation and maintenance costs for the City water and sewer systems are funded primarily with the revenue generated by the following three different charges: 1. Water Use Fees (based on the amount of water consumed in hundred cubic foot or "unit") 2. Ready-to-Serve Water Fees (based on the size of the water meter) 3. Sewer Connection Fees (fiat rates based on residential or commercial parcels) The water and sewer rates were last increased in 1999 and 1995, respectively. As mentioned in the recently adopted budget for the Authority (for fiscal year 2006-07) a rate increase for both water and sewer services were recommended. The rate increases are necessary in order for the city to: · Maintain a good bond rating status (as recommended by Standard and Poor's, City's bond rating company) · Keep up with increased costs of operation and maintenance · Implement needed CIP projects, and · Maintain a reasonable emergency reserve The proposed increases would mean an additional $9 per month for water charges and $2 per month for sewer. Without the proposed rate increases, the Authority's water fund reserve may be completely depleted and show a negative balance by the end of June 2007. BACKGROUND: This staff report presents an analysis of the current water and sewer systems operations including revenues, expenditures, revenue requirements and utility rates. As part of the yearly process of reviewing the financial condition of the utility enterprise funds, staff this year recommends that the Authority adopt annual changes in utility rates for the Fiscal Years 2006-2007 through 2010-2011 as more particularly set forth in the "Water and Sewer Rate Study Analysis" (the "2006 Study") attached to this report (as Attachment "B" and the enabling resolution. The rate recommendations are based on the recently adopted FY 2006-2007 Budget. The primary cause of the recommended increase in water rates is the significant rise in the past years costs for water purchased from the Central Basin Municipal Water District as well as the significant rise in pumping, storage and delivery cost for water produced from city wells. The increase in sewer rates is necessary to cover needed infrastructure and capital costs for an aging sewer system. As part of the budget process, staff this year analyzed the condition of and long- term outlook for all funds including the Water Fund. The analyses for the Water Fund reflected in the long-term outlook for the fund. It included a review of available fund balances, state and federal environmental requirements, anticipated capital, infrastructure, and operational requirements, revenues, and a detailed inspection of significant expenditure areas (e.g. the anticipated cost of purchased water, forthcoming regulations related to solid waste disposal and wastewater discharge, etc.). The results of this analytical process led to proposed adjustments to rates, which will generate the revenues necessary to meet planned expenditures in the Water Fund over the next 5 years. The results are included in the 2006 Study and its supporting documentation. If the proposed rates recommended for FY 2006-2007 are approved by the Authority, monthly costs associated with water and sewer rates, and related fees for an average residential customer would increase by less than $9.00 for water and less than $ 2.00 for sewer and related fees, yielding an average monthly utility bill for these services of approximately $ 44.41 at the new rates, instead of the current charge of $34.14 per month. It must be noted, however, that water and sewer rates have not increased in the City for the past 7 and 11 years, respectively. The commercial rates will increase by the same overall percentage as residential rates. For fiscal year 2006-07, at the proposed rate increase, a typical single home family consuming 12.5 units of water per month will pay $38.56/month for water services and $5.85/month for sewer services. Utility rates for FY 2006-2007, as approved by the Authority, will be effective upon adoption of the proposed resolution and will appear on utility bills for service commencing September 1, 2006. The FY 2006-2007 Budget, which includes the full expenditure budget for the Water Fund was reviewed and approved by the Authority on June 20, 2006. Staff does not anticipate that subsequent changes to the FY 2006-2007 Budget will materially impact the rate recommendations. The Water Fund (as the enterprise fund is called) is operated as an independent enterprise, and all expenses and revenues for each service (water and sewer) are accounted for separately from other funds. No revenues from the Water Fund are used to support other City programs or services not related to water and sewer. The City meets most of its annual needs of approximately 6,800 acre-feet through the production from the active water wells in the City. Since the Central Water Basin is an "adjudicated" water basin the City may pump 5,337 acre-feet of water annually. Extraction of the water under the judgment is subject to the payment of a replenishment assessment to the Water Replenishment District of Southern California (WRD) of $134.66 per acre-foot. To make up for the difference in its water needs, the City purchases water imported to the Southern California region by the Metropolitan Water District of Southern California and distributed through the CBMWD. Annual purchases from CBMWD average approximately 1,500 acre-feet of water per year. The City provides, in addition to the potable water service, sewer services to Lynwood residents through approximately 80 miles of 8" sewer mains and 9,900 sewer laterals. The waste water carried by the City's pipelines is discharged into larger sewer trunk lines maintained and operated by the Los Angeles County Sanitation District No. 1 located on Bullis Road, State Street, Imperial Highway, etc. The wastewater is eventually treated at the County's treatment plan in the City of Carson. As stated above, the water and sewer rates were last increased in 1999 and 1995, respectively. They are listed as follows: Fiscal Year 2005-2006 2006-2007 Water Rate (S/Unit) $ 1.69 $ 2.20 Meter Size (Inches) Ready-to-Serve Charge (S/month) 5/8" to 3/4" $ 8.51 $ 11.06 1" $ 12.77 $ 16.60 1-1/2" $ 25.53 $ 33.19 2" $ 38.29 $ 49.78 3" $ 72.32 $ 94.02 4" $ 127.63 $ 165.92 6" $ 170.17 $ 221.22 8" $ 297.80 , $ 387.14 Fire Line Size (Inches) Fire Line Charge (S/month) 1" $ 4.00 $ 5.20 1-1/2" $ 6.00 $ 7.80 2" $ 12.00 $ 15.60 3" $ 18.00 $ 23.40 4" $ 24.00 $ 31.20 6" $ 36.00 $ 46.80 8" $ 48.00 $ 62.40 10" $ 60.00 $ 78.00 Deposit $ 60.00 $ 78.00 Residential Sewer Rate (S/month) $ 4.50 $ 5.85 Commercial Sewer Rate (S/month) $ 22.50 $ 29.25 4 The fees collected from ratepayers for the water and sewer services are deposited into the Water Enterprise Fund. Table 1 of the 2006 Study shows the history of the Water Fund from fiscal year 1994 to fiscal year 2006. Table 1 shows a general trend of increased operation and maintenance costs ("O&M'). The sustainability of the Enterprise has been helped over the years by bond proceeds from the City and the Lynwood Utility Authority, which has provided capital funds for various capital improvement projects. The increase in O&M cost is expected because of the trend of increases in water rates charged by WRD and CBMWD and the increasing cost of electricity required to operate city water wells. The history of water rates charged by WRD and CBMWD is shown in Table 2 of the 2006 Study. Sources of Water and Water Usa,qe: As indicated earlier the City meets its annual need of approximately 6,800 acre- feet water supply from two sources - (i) ground production from City-owned wells and (ii) imported water purchased from the CBMWD. Ground water production has its unique cost due to the imposition of the replenishment assessment that must be paid to WRD by every pumper in the Central Basin. In addition to the payment of the replenishment assessment, pumping costs and transportation of the extracted water constitute a considerable cost to the City. Purchased water - nearly 1,500 acre feet per year, represents approximately 10% of the Water Fund's projected FY 2006-2007 operating budget. As indicated in Table 2 the City has seen the cost of imported water over the past 5 years go from $457 per acre-foot to $498 per acre-foot. This represents a 9% increase over the five year period with no assurances that imported water will cease to experience these significant cost increases. Actual purchase and sales of water in Lynwood have been relatively fiat over the past few years, due to a number of factors. First, recent population growth in the City has been moderate, due to a near build-out condition. Where residential development has been occurring, it usually replaces existing, albeit not as intense, uses that have their own demands for water and sewer services. These conditions have limited any spike in consumption and, overall, only steady growth in overall demand is expected. Second, water conservation measures have been promoted by the City and the CBMWD, and remodeling work has been to newer plumbing codes using more water efficient fixtures as well as some retrofit programs sponsored by MWD, CBMWD and WRD to introduce more water efficient fixtures such as toilets. Capital Improvement Proiects: The Water System Master Plan prepared in 2005 reviewed the City water system and identified system improvement needs for the City to continue providing efficient and reliable potable water to residents and fire flow in the years to come. The plan identified ways in which to improve the reliability and efficiency of the system which includes eight new water wells and the upgrade of approximately 9 miles of water mains. The plan estimated a total of $17 million in system improvement cost. On the other hand, the last Sewer Master Plan was completed in 1981. Over the last 25 years, the city population has increased from approximately 48,548 to 76,000 people. In addition, many new developments have been brought to the City, such as the Plaza Mexico, Walgreen's and the Pluma Avenue developments. This has added additional demand on the city sewer system that virtually has not been upgraded since its initial construction to meet demand for the growth and legislative mandates for improvements such as the current stringent Waste Discharge Requirements (WDR's) imposed by the Regional Water Board that obligate all cities to maintain and upgrade waste water systems to prevent sewer system overspill events. Such mandates require more frequent line cleaning, more frequent line replacement and up-sizing some sewer mains to ensure adequate capacity. To identify the needed improvements, a new Sewer Master Plan needs to be prepared. The total cost associated with the master plan preparation is estimated at $725,000, which includes $550,000 of sewer main cleaning and video taping. It is estimated that the cost of upgrading the sewer system may amount to as much as $4,000,000. City staff has assessed the need to improve the water and sewer system, taking into account a practical approach to the improvement plan and improvement projects that are already completed or budgeted for. Table 3 of the 2006 Study shows the improvements to the water and sewer systems as assessed by city staff. The total program cost would amount to $14,000,000 in today's dollars. With a ten-year improvement plan, the city would need to set aside approximately $1,400,000 per year for this program (and would, of course, need to adjust the estimated cost for inflation). Discussion & Analysis: Prudent stewardship of public resources and infrastructure like the City's water and sewer systems requires that the City plan for the aging of such facilities. It is not enough for the City to collect funds sufficient to meet the operations and maintenance costs for such critical facilities. Operation of the City's water and sewer systems must, therefore, make adequate provisions for replacement of the infrastructure. In addition to the foregoing, the City is also under additional legal obligations arising from earlier financing arrangements that require the City to set water and sewer rates to meet certain minimum revenue standards. At this time the current water and sewer rates are short of meeting the level of rates required under these agreements and the leading bond-rating agency, Standard and Poor's, has recommended an increase in the rates to meet covenants to bondholders. As previously stated, the last water and sewer rates adjustments were done in 1999 and 1995, respectively. Table 4 of the 2006 Study shows the water and sewer rates presently charged by surrounding cities or water purveyors. As shown in this table, the City of Lynwood water rates are, for the most part, lower than those of other cities. For fiscal year 2006-07, the O&M cost for the Water Maintenance, Sewer Maintenance and Water Billing Divisions, and the capital improvement costs amount to a total of $10,584,157 (see Table 5 of the 2006 Study). This level of expenditure is necessary in order for the City to address the needed improvements in the water and sewer systems. At the current revenue level, this level of expenditure would totally consume the $4,180,693 fund balance and result in a deficit of $344,004 at the end of the fiscal year. In order to meet the expenditure required by the annual operation and maintenance, the improvement plan discussed above, and to maintain a reasonable reserve for the Water Fund, a rate increase for the water and sewer services is necessary. By law, the cost of City-provided services such as water and sewer rates must not exceed the cost of providing the services. The purpose of the MuniFinancial Study and the 2006 Study was to determine (among other matters) the City's actual costs of providing water and sewer services. Conducting periodic reviews of the City's cost of services such as the recent studies was necessary to ensure that the City will continue to meet its cost recovery policies, and to assist City staff in formulating a plan for the gradual transition to a full-recovery policy for the operations of the water and sewer services in the City. Adopting the proposed water and sewer rate schedule will allow the City to meet legal obligations and insure the sustainability of the water and sewer systems well into the future to protect the health and welfare of the public. In order to better inform the public of the need of raising water and sewer rates, staff held a public information meeting on August 3, 2006 at Bateman Hall. The meeting was publicized through the water billing mass mailing, local newspapers, flyers and through the City's website. Approximately fifteen (15) residents attended and participated in the workshop. The questions paused by residents and responses by staff are listed in Attachment "C". Attached for the Authority's review and consideration is a proposed resolution, which amends the City of Lynwood's current water and sewer rates schedule and related fees for Fiscal Year 2006-2007 through 2010-2011. The proposed rates will become effective upon adoption of the draft resolution and ratepayers will begin to see the new rates reflected in their billings from September 1, 2006 forward. Fiscal Impact: The intent of the proposed Resolution is to, ultimately, implement a "revenue neutral" rates - in other words, revenues raised from the rates charged will be used solely to fund the services required, including capital improvement projects for the Water Enterprise Fund. A proposed rate increase schedule for the water and sewer services is presented in Table 5 of the 2006 Study. This schedule calls for a fiat rate increase across the board for both services in varied percentages for different fiscal years, ranging from 30% for FY 2006-07; 15% for FY 2007-08; 5% for FY 2008-09 thru FY 2012-13, and 3% for FY 2013-14 thru FY 2015-16. This rate increase schedule will ensure a $1,400,000 capital improvement budget for each year while maintaining a reasonable fund reserve. Staff recommends adoption of only the initial five-year schedule of rate adjustments to get the City to the 2010-2011 Fiscal year. It is not until the 2010- 2011 Fiscal Year that the Water Fund reaches stability with a nominal surplus in the projected budget of $400,000. Moreover, as the various elements of the budget are monitored over time and the need for adjustments is presented any projections beyond five years will, by necessity, require further adjustments particularly if a financially prudent practice of building up a Rate Stabilization Fund is considered in future budgets. Coordinated With: Public Works Department Finance Department City Manager's Office City Attorney's Office Attachments: Attachment "A" - draft resolution establishing water and sewer rates and related fees. Attachment "B" - City of Lynwood 2006 Water and Sewer Rate Study Analysis. MuniFinancial Study RESOLUTION NO. A RESOLUTION OF THE LYNWOOD UTILITY AUTHORITY ESTABLISHING WATER AND SEWER RATES AND RELATED FEES FOR THE CITY OF LYNWOOD FOR FISCAL YEAR 2006- 2007 THROUGH FISCAL YEAR 2010-2011 WHEREAS, City staff has analyzed the operations of the City's water and sewer facilities, and has considered the information available from City records as well as the studies of MuniFinancial, and based on said information has prepared a comprehensive "Water and Sewer Rate Study Analysis" that analyzed the City water and sewer systems operations and costs associated therewith, and recommended water and sewer rates, and related fees, for Fiscal Year 2006-2007 through Fiscal Year 2010-2011" (the "2006 Study"); and WHEREAS, the 2006 Study is a comprehensive evaluation of the City's water and sewer systems and makes recommendations to replace deficient, inadequate and obsolete infrastructure and thereby improve each system's operational performance, efficiency, longevity and sustain its reliability now and nto the future; and WHEREAS, the 2006 Study identified over $9 million of capital ~mprovement projects for the water system, which are capital replacements and improvements ranked as either high or medium projects that are required to fulfill current operational responsibilities and not driven by future development; and WHEREAS, in addition to capital improvements to the water system, the current operations and maintenance ("O & M") and indirect support costs of the water system exceed the revenues presently generated from ratepayers as evidenced by the 2006 Study; and WHEREAS, the Capital Improvement Program Water Projects Schedule includes the high and medium ranked projects considered in the 2006 Study; and WHEREAS, it is the City's policy to recover costs reasonably borne for services provided at the policy level approved by the City Council as set forth in § 6-4.4 of the Lynwood Municipal Code; and WHEREAS, the 2006 Study estimated $4 million of capital improvement projects for the sewer system, which are capital replacements and improvements ranked as either high or medium projects that are required to fulfill current operational responsibilities and not driven by future development; and WHEREAS, in addition to capital improvements to the sewer system, the current operations and maintenance ("O & M") and indirect support costs of the sewer system exceed the revenues presently generated from ratepayers as evidenced by the 2006 Study; and WHEREAS, the Capital Improvement Program Sewer Projects Schedule includes the high and medium ranked projects considered in the 2006 Study; and WHEREAS, it is the City's policy to recover costs reasonably borne for services provided at the policy level approved by the City Council as set forth in § 6-4.4 of the Lynwood Municipal Code; and WHEREAS, the City Council adopted the 2006 Study on August 15, 2006 as part of the public hearing on this Resolution; and WHEREAS, pursuant to Government Code §66016, the specific fees to be charged for services must be adopted by the City Council by resolution or ordinance, after providing notice and holding a public hearing; and WHEREAS, notice of public hearing has been provided pursuant to Government Code § 6062a, copies of the 2006 Study and supporting documentation including but not limited to the MuniFinancial Study have been made available to the public, oral and written presentations have been made and received and the required public hearing held; and WHEREAS, all requirements of California Government Code §66016 and §66018 are hereby found to have been complied with; and WHEREAS, the Lynwood utility Authority is vested with the authority to impose reasonable rates and charges for municipal services in accordance with provisions of California law. NOW THEREFORE, the Lynwood Utility Authority (the Authority) does hereby find, order, and resolve as follows: SECTION 1. The Authority adopts in their entirety all findings, recitals and determinations identified above, including reports such as the 2006 Study, as though set out in full here at.. SECTION 2. The Authority hereby overrules all oral and written protests an approves the attached Proposed Schedule of Water and Sewer Rates and Related Fees for Fiscal Year 2006-2007 through Fiscal Year 2010-2011 to adjust and increase the monthly water and sewer rates and related fees to the amounts specified in said Schedule. SECTION 3. The Authority finds that adoption of this resolution is exempt from the requirements of the California Environmental Quality Act pursuant to Public Resources Code Section 21080(b)(8) and further advises that the modifications of the rates contained herein are for the purposes of (1) meeting operating expenses, including employee wage rates and fringe benefits; (2) purchasing or leasing supplies, equipment or materials; (3) meeting financial reserve needs and requirements; (4) obtaining funds for capital projects l0 necessary to maintain current service levels; and (5) obtaining funds necessary to maintain intra-city transfers. SECTION 4, That this Resolution shall become effective immediately upon its adoption and shall be operative commencing with all billings rendered on or after September 1, 2006, and shall apply to all utility services covered by this resolution which are rendered on or after the date of adoption of this resolution. PASSED, APPROVED and ADOPTED this __ day of ,2006. LETICIA VASQUEZ, President City of Lynwood ATTEST: ANDREA L. HOOPER, Secretary N. ENRIQUE MARTINEZ Executive Director APPROVED AS TO FORM: APPROVED THIS CONTENT: Authority Counsel G.DANIEL OJEDA, P.E. Director of Pubic Works/City Engineer ]! STATE OF CALIFORNIA ) ) SS. COUNTY OF LOS ANGELES ) I, the undersigned, Secretary of the Lynwood Utility Authority do hereby certify that the above and foregoing resolution was duly adopted by the Lynwood Utility Authority at a regular meeting held in the City Hall of said City on the day of AYE$: NOES: ,2006, and passed by the following vote: ABSENT: Secretary, Lynwood Utility Authority STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) I, the undersigned Secretary of the Lynwood Utility Authority, and Clerk of the City Council of said City, do hereby certify that the above and forgoing is a full, true and correct copy of Resolution No. on file in my office and that said resolution was adopted on the date and by the vote therein stated. Dated this day of ,2006. Secretary, Lynwood Utility Authority 12 CITY OF LYNWOOD PUBLIC WORKS DEPARTMENT WATER AND SEWER RATE STUDY .~,NALYSIS Prepared by: G. Daniel Ojeda, P.E. Director of Public Works/ City Engineer June 22, 2006 H:\WOP~DFILE~PUBWORKS\UTILITY~Uti06003WATER KATE ADJUSTMENTS STUDY.doc CITY OF LYNWOOD PUBLIC WORKS DEPARTMENT WATER AND SEWER RATE STUDY ANALYSIS BACKGROUND: The City of Lynwood is a California Local Government operating as a municipal corporation. It is empowered to provide various services that include water, sewer, and recreational services, among others. The City is required to operate its water and sewer utility facilities in accordance with various laws, regulations and business practices. The City of Lynwood provides water to Lynwood residents and fire protection services through approximately 8,800 water services and 1,100 fire hydrants. The water is delivered to users through water facilities consisting of approximately 80 miles of 4"-16" water mains, an above-ground 3 million-gallon water reservoir, seven (7) active wells, and one connection to the Central Basin Municipal Water District (CBMWD) systems. The City meets most of the annual water demand of 6,800 acre-feet through the production from the seven active water wells. The City has 5,337 acre-feet/year of water rights from the Water Replenishment District of Southern California (WRD). The City makes up the difference by importing approximately 1,500 acre-feet of water per year from the CBMWD. At the same time, the City provides sewer services to Lynwood residents through approximately 80 miles of 8" sewer mains and 9,900 sewer laterals. The waste water carried by the City's pipelines is discharged into larger sewer trunk lines (maintained and operated by the Los Angeles County Sanitation District No. 1) located in Bullis Road, State Street, and Imperial Highway, etc. The waste water is eventually treated at the County's treatment plant in the City of Carson. The operation and maintenance cost for the City water and sewer systems ara funded primarily with the revenue generated by the following three different charges: 1. Water Use Fees (based on the amount of water consumed in hundred cubic foot or "unit") 2. Ready-to-Serve Water Fees (based on the size of the water meter) 3. Sewer Connection Fees (flat rates based on residential or commercial parcels) H:\WORDFILE~PUBWORKS\UT[LITY~Uti06003WATER RATE ADJUSTMENTS STUDY doc 2 The water and sewer rates were last increased in 1999 and 1995, respectively. They are listed as follows: 1. Water Use Fees: $1.69/unit 2. Ready-to-Serve Water Fees: 5/8"- 3/4" $8.51/month 1" $12.77/month I ~" $25.53/month 2" $38.29/month 3" $72.32/month 4" $127.63/month 6" $170.17/month 8" $297.80/month 3. Sewer connection Fees: Residential: $4.50/month Commercial: $22.50/month WATER ENTERPRISE FUND HISTORY: The fees collected for the water and sewer services are deposited into the Water Enterprise Fund. The attached Table 1 shows the history of the Water Enterprise Fund from fiscal year 1994 to fiscal year 2006. Table 1 shows a general trend of increased operation and maintenance costs (O&M) and the capital improvement projects (CIP's) expenditure for various years. The increase in O&M cost is expected because of the increasing trend in water rates charged by the WRD and the CBMWD, the increasing cost of electricity required to operate the city's water wells, and personnel costs. The general trend of increasing operation and maintenance costs has also been cited in two other recent studies done by MuniFinancial and Pacific Municipal Consultants earlier this year. The history of the water rates, charged by the WRD and the CBMWD is shown in the attached Table 2. CAPITAL IMPROVEMENT PROJECTS: The Water System Master Plan prepared in 2005 reviewed the city water system and identified system improvement needs for the City to continue providing efficient and reliable potable water and fire flows to the residents of Lynwood in the years to come. The plan identified the need to drill eight new water wells to replace the existing seven wells and to upgrade approximately 9 miles of water mains. The plan estimated a total of $17 million in system improvement costs. H:\WORDFILELPUBWORKS\UTILITYXUti06003WATER RATE ADJUSTMENTS STUDY.doc 3 Conversely, the last Sewer Master Plan study was completed in 1984. Over the last 22 years, the city's population has increased from approximately 48,548 to over 69,000 people (2000 U.S. Bureau of the Census). In addition, many new developments have come to the City, such as the Plaza Mexico shopping center, Walgreen's drug store and the Pluma Avenue commercial developments. According to the 2001 Southern California Association of Governments' Growth Forecast; the City's population is projected to reach 79,000 by the year 2020. This has added additional demand on the city sewer system that virtually has not been upgraded since its initial construction. The lack of any improvements to the sewer system is further emphasized by the current stringent Waste Discharge Requirements 0NDR's) imposed by the Regional Water Board that obligate all cities to maintain and upgrade waste water systems to prevent sewer system overspill events. This requires more frequent line cleaning, line replacement, and up-sizing of some sewer mains to ensure adequate capacity. To identify the needed improvements, a new Sewer Master Plan study needs to be prepared. The total cost associated with the master plan preparation is estimated at $725,000, which also includes $550,000 of sewer main cleaning and video taping. It has been estimated that the cost of upgrading the sewer system may amount to $4,000,000 (estimated at 10% of the sewer system replacement costs). City Public Works staff has assessed the need to improve the water and sewer systems, taking into account a practical approach to the water and sewer improvement plans and improvement projects that are already completed or projects that are budgeted for in the current CIP Program. The attached Table $ shows the improvements to the water and sewer systems as assessed by city staff. The total program cost amounts to over $13 million. This includes $2,573,500 budgeted for water and sewer improvements in FY 2006-07, with over $10 million remaining in 2006 dollars for improvements in subsequent years. At an average inflationary rate of 3% per year, this sum would amount to over $14 million in the next ten years. The city would therefore need to set aside approximately $1,400,000 per year for this program. Proposed Rate Adjustments: As stated in the Background, the last water and sewer rates adjustments took place in 1999 and 1995, respectively. The attached Table 4 shows the water and sewer rates being charged by some surrounding cities and other water purveyors. As shown in this table, the City of Lynwood water rates are lower than most of the other cities shown in the table. In fact, the City's rate is approximately 15% below the average of the rates listed. For fiscal year 2006-07, the O&M cost for the Water Maintenance, Sewer Maintenance and Water Billing Divisions, and the capital improvement costs amount to a total of $10,584,157 (see Table 5). This level of expenditure is necessary in order for the City to address the needed improvements in the water H:\WORDFILEkPUBWORKS\UTILITYXUti06003WATER RATE ADJUSTMENTS STUDY doc 4 and sewer systems. It should be noted that the indirect costs to operate the City's water and sewer system is also included in the Water Maintenance Division operating budget as determined in a recent study conducted by MuniFinancial. At the current revenue level, this level of expenditure would totally consume the $4,180,693 fund balance and result in a deficit of $344,004 at the end of the fiscal year. In order to meet the expenditure required by the annual operation and maintenance activities, the capital improvement plan discussed above, and to maintain a reasonable reserve for the Water Enterprise Fund, a rate increase for the water and sewer services is necessary at this time. A proposed rate increase schedule for the water and sewer services is presented in Table 5. This schedule calls for a fiat rate increase across the board for both services in varied percentages for different fiscal years, ranging from 30% for the upcoming FY 2006-07; 15% for FY 2007-08; 5% for FY 2008-09 thru FY 2012- 13, and 3% for FY 2013-14 thru FY 2015-16. This rate increase schedule will ensure approximately $1,400,000 of capital improvement dollars for each year while maintaining a reasonable fund reserve. At this time, we are only proposing approval of a 5-year fee plan; starting in FY 2006-2007 through FY 2010-2011. This is being proposed due to the uncertainty in regulatory requirements and other economic factors that may affect the operating program costs. Below is a comparison of average monthly charges for water and sewer customers using 12 units of water per month (the typical user's average) at the current and proposed rates. · 12 Units of water used · Ready-to-Serve %" Meter · Sewer fees Total: G. Daniel Ojeda, P.E. Director of public Works/ City Engineer June 22,2006 FY 2005-06 FY 2006-07 Net (CurrentS/mo) (Proposed S/mo) Increase(S/mo) $20.28 $26.40 $ 6.12 $ 8.51 $11.06 $ 2.55 $ 4.50 $ 5.85 $ 1.35 $33.29 $43.31 $10.02 H:\WORDFiLE~PUBWORKS\UTILiTY~Uti06003WATER RATE ADJUSTMENTS STUDY.doc 5 Z IAI Z ,, PROPOSED WATER AND SEWER CAPITAL IMPROVEMENT PROJECTS WATER PROJECTS: Capital Improvement Proiects to Be Implementsd in FY 2006-07: Water Reservoir Study Water Well No. 6 Abandonment Water Well No. 8 Rehabilitation Water Well No. 11 Rehabilitation Booster No. 2 Rehabilitation Water Meter Replacement Water Main Valve Replacement Water Reservoir Inspection / Maintenance Chlorination System Conversion Water Main Improvement Citywide LAN Project Sub-Total: $ 100,000 $ 50,000 $ 200,000 $ 200,000 $ 30,000 $ 125,000 $ 105,000 $ 25,000 $ 200,000 $ , 800,000 $ 13,500 $ 1,848,500 Capital Improvement Projects to Be Implemented in Subsequent Fiscal Years: Upgrade Water Mains Construct 2 New Water Wells Install SCADA System Water Meter Replacement Abandon 4 Water Wells SEWER PROJECTS: $ 2,480,000 $ 4,000,000 $ 120,000 $ 581,000 $ 92,000 Sub-Total: $ 7,273,000 Capital Improvement Projects to Be Implemented in FY 2006-07: Sewer Main Cleaning / Video $ 550,000 Sewer System Master Plan Study $ 175,000 Sub-Total: $ 725,000 Capital Improvement Proiects to Be Implemented in Subsequent Fiscal Years: Sewer Mainlines Upgrade / Capacity Enhancement $ 3,310,000 Sub-Total $ ' 3,310,000 GRAND TOTAL: (in 2006-07 dollars) $ 13,156,500 Total FY 2 006-07 ClP Budget (in 2006 dollars) $ 2,573,500 Total FY 2007-08 thru FY 2015-1 t6; ClP (in 2006 dollars) $ 10,583,000 Total FY 2007-08 thru FY 2015-16; CIP costs plus 3% CPI/year $ 14,225,000 Say $ '14,000,000 TABLE 3 watersewerCIP's I.U 0 < (3 0 LU IJJ CITY OF LYNWOOD COST Al,LOCATION PLAN MAY 24, 2006 FINAL REPORT MuniFinancial Corporate Office: 27368 Via Industria Suite 110 Temecula, CA 92590 Tel: (951) 587-3500 Tel: (800) 755-MUNI (6864) Fax: (961) 587-3510 Office Locations: Anaheim, CA Lancaster, CA Oakland, CA www.muni.com Phoenix, AZ Sacramento, CA Seattle, WA TABLE OF OONTENT~ Table of Contents ............................................................................................................... i Executive Summary .......................................................................................................... Table ES 1: Total Indirect Cost Summary .................................................................. Table ES2: Distribution of Total Indirect Costs ........................................................ 2 Chart ES 1: Total Indirect Cost Percentage ................................................................ 2 Introduction ....................................................................................................................... 3 Methodology ...................................................................................................................... 4 Cost Allocation Analysis ................................................................................................... 5 City Council ..................................................................................... : .............................. 6 Table 1: City Council Budget and Allocation Summary ............................................ 6 Table 2: Total Allocable City Council Budget ........................................................... 7 City Clerk ..................................................................................................................... 8 Table 3: City Clerk Budget and Allocation Summary ........................................ ii.....i 8 Table 4: Total Allocable City Clerk Budget ............................................................... 9 City Treasurer ............................................................................................................... 10 Table 5: Treasurer Budget and Allocation Summary ............................................... 10 Table 6: Total Allocable Treasurer Budget .............................................................. 11 City Attorney ................................................................................................................. 12 Table 7: City Attorney Budget and Allocation Summary ........................................ 12 Table 8: Total Allocable City Attorney Budget ........................................................ 13 City Manager ................................................................................................................ 14 Table 9: City Manager Budget and Allocation Summary ........................................ 14 Table 10: Total Allocable City Manager Budget ...................................................... 15 Finance & Administration ............................................................................................ 16 Table 11: Finance & Administration Budget and Allocation Summary ................... 16 Table 12: Total Allocable Finance & Administration Budget .................................. 17 Human Resources ......................................................................................................... 18 Table 13: Human Resources Budget and Allocation Summary ............................... 18 Table 14: Total Allocable Human Resources Budget ............................................... 19 Building Maintenance ................................................................................................... 20 Table 15: Building Maintenance Budget and Allocation Summary ......................... 20 Table 16: Total Allocable Building Maintenance Budget ........................................ 21 Building and Equipment Depreciation ......................................................................... 22 Table 17: Total Allocable Building and Equipment Depreciation Expenses ........... 22 Allocation of Central Service Department Expenditures ............................................ 23 MuniFinancial i Table 18: Total Indirect Cost Summm'y ....................................................................24 MuniFinancial ii EXECUTIVE .c; U M MARY Tkis cost allocation plan summarizes a comprehensive analysis completed for the City of Lymvood, CalSfornia (the "City") to determine the appropriate allocation of costs from City central set,rices departments to all other departments. The primaty objective is to allocate costs from departments generally known as "central services departments" because they provide services and support to "operating departments" that conduct the operations necessary to serve the community. To ensure that all costs associated with the provision of central services are appropriately allocated to the respective operational departments, we have analyzed and identified all central service expenditures and determined which are allocable to operational departments as indirect costs, otherwise known as overhead. Additionally, this report describes the methodology used for distributing costs associated with the operation of each of the central services expenditures, as allocated to each of the operating departments, for cost recovery. Table ES1 below presents the total indirect costs to be allocated to the operating departments. Adding the total allocable budget of each central services department with the total Building and Equipment Depreciation Expense results in a total indirect cost of $6,733,351. Table ES2 shows the total indirect costs allocated to each department. Chart ES1 illustrates the corresponding percentage of the total indirect costs allocated to each department. TABLE ES I : TOTAL INDIRECT COST SUMMARY Total Allocable Budget Central Services Deparmaents: City Council $ 502,900 City Clerk 269,976 City Treasurer 174,850 City Attorney 540,000 City Manager 1,544,782 Finance & Administration 820,426 Human Resources 1,t 38,999 Building Maintenance 1,311,477 Total Building/Equipment Depreciation 429,940 Total Indirect Costs $ 6,733,351 Sources: City o f Lynwood; MuniFinancial. MuniFinancial TABLE: I:'S2: DISTRIBUTION OFTOTAL INDIIRE:OT COSTS Indirect Cost Percent i Public Safety $ 1,066,899 15.84% Quality of Life 357,453 5.31% Public Works 328,223 4.87% Engineering 169,129 2.51% Water Utility 862,854 12.81% Sewer Utdity 224,950 3.34% Redevelopment Agency 267,812 3.98% Development Services 320,390 4.76% Recreation & Community Services 1~760,428 26.14% Capital Improvement Proiects 1,375,214 20.42% Total $ 6,733,351 100.00% ~ Percentage derived by dividing the indirect cost allocated to each department by the total indirect cost. Sources: City ofLynwood; Mun/Financial. CHART ES'I : TOTAL INDIRI:'BT COST P£RBI:'NTAEiE: Engineering 2.51% Community Services 4.76% 26.14% Redevelopment Agency 3.34% Water Utility 3.98% t 2,81% MuniFinancial 2 I NTRI3 DU EITID N In the early 1970's, the cost allocation plan concept was introduced to many government agencies by identifying the indirect costs related to providing services, and allocating them to direct cost programs in a fair and equitable manner. Since then, local governments have found that through this process, city departments that are supported substantially by other departments can be allocated their fair share of the City's overhead costs. City governments have administrative and general management departments and related cost centers, known as central services departments. These central services departments provide services to operating departments and cost centers. These operating departments provide services directly to the community. A city may allocate a portion of the costs of the central services departments to the operating departments to more accurately represent the costs of the operating departments and to permit a more accurate calculation of fees charged by the operating departments. The purpose of this study is to determine the appropriate level o'f all central services department costs allocable to each of the operating departments. MuniFinancial METHODOLOGY The methodology used in the Cost Allocation Plan is based on the methods of the federal Office of Management and Budget ("OMB"). OMB Circular A-87 describes five different methods for allocating indirect costs. The double step down method, chosen for tkis study, is considered the most accurate and equitable method described in Circular A-87. The double step down method utilizes two steps to allocate indirect costs. In the first step, central services department expenditures are identified and allocated as indirect costs to all other departments including both central services departments and operating departments. The second step allocates indirect costs from the central services departments just to the operating departments. MuniFinancial 4 COST ALLOCATION ANALYSIS There are eight (8) departments that comprise the City's Central Services Departments. These are: City Council, City Clerk, City Treasurer, City Attorney, CiD, Manager, Finance & Admidistration, Human Resources, and Building Maintenance. Also included in this analysis are building and equipment depreciation allocations. Costs from these central services departments are distributed to operating departments to ensure that the City is maximizing the recovery of general fund indirect costs from its various enterprises and other chargeable funds. Indirect costs are not always identifiable with a specific operating program, but are incurred for a }oint purpose that benefits more than one cost objective in the City. Common examples include finance, procurement, human resources and utility costs, and others such as postage and telephones that are sometimes budgeted in non-departmental accounts and utihze allowance costs (sim/lar to depreciation schedules for capital assets). Cost. s associated with building and equipment depreciation expensds iflcurred by the central services departments are allocable to the operating departments as an in lieu charge on equipment and on city buildings. Both braiding and equipment depreciation charges are calcu]ated by amortizing the total asset value over their useful byes. The following, is a description of each of the central service departments, a description of the methodology used in allocating indirect costs to operating departments, and a table for each central services department showing the methodology utilized in allocating indirect costs to operating departments. MuniFinancial 5 CITY COUNCIL The primary responsibility of the City Council is to determine the best uses of the City's financial and human resources by providing policy direction and enacting municipal legisLation. But in addition to legislative and policy decisions, the City Council deals with a number of administrative functions such as serving in a quasi-judicial role on certain administrative appeals and directing the administration in its policy decisions through the City Manager for delegation to appropriate City staff. Due to this, we estimate that ninety percent (90%) of the City Council's budget is allocable to the operating departments, while the remaining ten percent (10%) is not allocable. The allocable portion of the City Council budget is distributed to all other departments based upon each department's percentage of the total City personnel and operation costs as shown in Tables 1 and 2. The ten percent (10%) of the budget that is not allocable is considered to be time that the City Council spends on ceremonial duties that is reasonably subsidized by the General Fund. TABLE 1 : CITY I~I3UNnlL BUDGET AND ALLDDATInN BUiVliVlARY Table 1 below summarizes the Total Department Budget, Total Allocable Funds, provides a Percent Allocation Detail for the disttibufion of allocable funds. Table 1: City Council Cost Detail ~ources of Funds: ~ General Fund Total Department Budget 558,778 558,778 365,278 193,500 558,778 558,778 558,778 55,878 502,900 502,900 Uses of Funds:: Personnel Cost Operations Expenses Total Department Budget &Llocable Funds: General Fund Total Percent Allocation Detail: 10.0% Unallocable 90.0% Total Personnel & Operating Budgets Total Allocable and From City of Lyn,vood Fiscal Year 2006 07 Budget. MuniFinancial TABLE 2: TOTAL ALLOWABLE OITY ODUN[~IL BUD~£T Table 2 below provides an account of how the total allocable amount of tt~e City Council budget should be distributed to each operating department. Departments City Council City Clerk City Treasurer City Attorney City Manager Finance & Admirdstration Human Resources Building Maintenance Pubhc Safety ~uahty of Life Pubhc Works Engineering Water Ufil/ty Sewer Util/ty Redevelopment Agency Development Services Recreation & Community Services Capital Improvement Proiects Total Total Personnel & Operating Budgets $ 558,778 269,976 174,850 540,000 1,544,782 820,426 1,138,999 1,311,477 1,549,358 2,352,168 446,166 6,483,378 820,628 2,115,328 2,090,486 3,701,947 14,964,379 Dept. % 2 1.07% 0.51% 0.33% 1.03% 2.95% 1.56% 2.17% 2.50% 22.02% 2.96% 4.49% 0.85% 12.37% 1.57% 4.03% 3.99% 7.06% 28.54% · Mlocation 3 $ 5,360 2,590 1,677 5,180 14,817 7,869 10,925 12,579 110,756 14,861 22,562 4,280 62,I88 7,871 20,290 20,052 35,508 143,536 $ 52,430,037 100% $ 502,900 ~ ~Mlocation based on the total personnel & operating budgets of each department. 2 Percentage derived by dividing the total departmental personnel & operating budgets by the total City personnel & operating budgets. 3 Dollar amount allocable to each City department based upon the total personnel & operating budget of each department. 4 Total City Council budget allocable to City departments. MuniFinancial 7 OITY The City Cterk's Office provides the citizens of Lynwood, City Council, and staff with access to public records and ensures that all facets of agenda preparation are completed and meetings are conducted according to law. One hundred percent (100%) of the City Clerk budget is reasonably allocated among other departments based on each department's percentage of the total City personnel and operation costs as shown in Tables 3 and 4. TABLE 3: r. ItY E:LERK BUDGET AND ALLOCATION SUMMARY Table 3 below summarizes the Total Department Budget, Total Allocable Funds, and provides a Percent Allocation Detail for the distribution of allocable funds. Table 3: City Clerk Cost Detail Sources of Funds: ~ General Fund Total Department Budget 269,976 269,976 198,626 71,350 269,976 269,976 269,976 269,976 269,976 Uses of Funds: ~ Personnel Cost Operations Expenses Total Department Budget Allocable Funds: General Fund Total Percent Allocation Detail: 100.0% Total Personnel & Operating Budgets Total Allocable From City of Lynwood Fiscal Year 2006-07 Budget MuniFinancial 8 TABLE 4: TOTAL ALLOCABLE CITY E;LEI~K BUDGET Table 4 below provides an account of ho~v the total allocable amount of the City Clerk budget should be distributed to each operating department. Departments City Council City Clerk City Treasurer Zity Attorney City Manager Finance & Administration Human Resources Public Safety Quality of Life Public Works Engineering Water Utility Sewer Utility Redevelopment Agency Development Services Recreation & Community Services Capital Improvement Projects Total Personnel & Operating Budgets $ 558,778 269,976 174,850 540,000 1,544,782 820,426 1,138,999 1,311,477 11,546,910 1,549,358 2,352,168 446,166 6,483,378 820,628 2,115,328 2,090,486 3,701,947 14,964,379 Dept. % 2 1.07% 0.51% 0.33% 1.03% 2.95% A.56% 2.17% 2.50% 22.02% 2.96°/c 4.49% 0.85% 12.37% 1.57% 4.03% 3.99% 7.06% 28.54% Allocation 3 $ 2,877 1,390 900 2,781 7,954 4,225 5,865 6,753 59,458 7,978 12,112 2,297 33,385 4,226 10,892 10,764 19,062 77,056 Total 4 $ 52,430,037 100% $ 269,976 ocauon based on the total personnel & operating budgets of each department. 2 Percentage derived by dividing the total departmental personnel & operating budgets by the total City personnel & operating budgets. 3 Dollar amount allocable to each City department based upon the total personnel & operating budget of each department. 4 Total Ctty Clerk budget allocable to City departments. MuniFinancial 9 EIlTY TREASURER The elected City Treasurer is responsible for the management of all cash and ali invested public funds for the City of Lynwood. One hundred percent (t00%) of the Treasurer budget is allocable to all other departments based upon each department's percentage of the total City personnel and operation costs as shown in Table 6. TABLE S: TREABURER BUDI~ETAND ALLFII~ATIr~N SUMMARY Table 5 below summarizes the Total Department Budget, Total Allocable Funds, and provides a Percent Allocation Detail for the distribution of allocable funds. Table 5: City Treasurer Cost Detail Sources of Funds: 1 General Fund Total Department Budget 174,850 174,85~0 148,044 26,806 174,85~0 174,850 174,85o 174,850 174,850 Uses of Funds: ~ Personnel Cost Operations Expenses Total Department Budget Allocable Funds: General Fund Total Percent Allocation Detail: 100,0% Total Personnel & Operating Budgets Total Allocable From City o f Lynwood Fiscal Year 2006-07 Budget. MuniFinancial 10 TABLe 6: TOTAL ALLOE:ABLE TREASLIRER BLIDBeT budget should be dSstributed to each operating department. Departments Total Personnel Dept. % 2 Allocation City Council $ 558,778 1.07% City Clerk 269,976 0.51% 900 City Treasurer 174,850 0.33% 583 City Attorney 540,000 1.03% 1,801 City Manager 1,544,782 2.95% 5,152 Finance & Administration 820,426 1.56% 2,736 Human Resources 1,138,999 2.17% 3,798 Maintenance 1,311,477 2.50% 4,374 Public Safety Quality of Life Public Works Eng/neering Water Util/ty Sewer Utility Redevelopment Agency Development Services Recreation & Community Services Capital Improvement Projects 2.96% 4.49% 0.85% 12.37% 1.57% 4.03% 3.99% 7.06% 28.54% 11,546,910 1,549,358 2,352,I68 446,166 6,483,378 820,628 2,l 15,328 2,090,486 3,701,947 14,964,379 38,508 5,167 7,844 1,488 21,621 2,737 7,054 6,972 12,346 49,905 Total 4 $ 52,430,037 100°/o $ 174,850 1 A~ocation based on the total personnel & operating budgets of each department. Percentage derived by d/vid ng the total departmental personnel & operating budgets by the total City personnel & operallng budgets. 3 Dollar amount allocable to each City department based upon the total personnel & operating budget of each department. Total C~ty Treasurer s budget allocable to City departments. MuniFinancial 11 CITY ATT(] RN EY The City Attorney is responsible for advising City Council regarding orchnances, resolutions, and contracts before the Council The Office also provides legal advice to the Planning Commission, Park Planning Commission, Traffic Commission, City departments and other agencies, boards and committees, as well as drafting ordinances, contracts, resolutions and agreements. The City Attorney's office represents the City in litigation matters and prosecutes violators of City laws. As the City Attorney provides services to that rdate to all aspect of government business, one hundred percent (100%) of the City Attorney's General Fund budget is allocated among the other City departments based upon their percentage of the total City personnel and operation costs as shown in Table 8. TABLE 7: CitYATTGRNEY BUDGET AND ALLGCATIDN SUMMARY Table 7 below summarizes the Total Department Budget, Total Allocable Funds, provides a Percent Allocation Detail for the distribution of allocable funds. Table ?: City Attorney Cost Detail Sources of Funds: ~ General Fund Total Department Budget $ 540,000 $ 540,000 $ 540,000 $ 540,00O $ 540,000 $ 540,000 $ 540,000 $ 540,000 Jses of Funds: ~ Operations Expenses Total Department Budget allocable Funds: General Fund Total Percent Allocation Detail: 100.0% Total Personnel & Operating Budgets Total P~tlocable and From City of Lynwood Fiscal Year 2006 07 Budget. MuniFinancial 12 TABLE El: TOTAL ALLDCABLE E:ITY ATTORNEY BiJDGET Table 8 below provides an account of bow the total allocable amount of the City Attorney budget should be distributed to each operating department. Total Personnel & Departments Operating Budgets Dept. City Coundl City Clerk City Treasurer City Attorney City Manager Finance & Administration Human Resources Maintenance Quality of Life Public Works Engineering Water Utility Sewer Utility Redevelopment Agency Development Services Recreation & Community Services o°apital Improvement Proiects '$ 558 269,976 . 174,850 540,000 1,544,782 820,426 1,138,999 1,311,477 11,546,910 1,549,358 2,352,168 446,166 6,483,378 820,628 2,115,328 2,090,486 3,701,947 14,964,379 i .07% 0.51% 0.33% 1.03% 2.95% 2.17% 2.50% 22.02% 2.96% 4.49% 0.85% 12.37% 1.57% 4.03% 3.99% 7.06% 28.54% Allocation 3 $ 5,755 2,781 1,80l 5,562 15,910 8,450 11,731 13,507 118,927 15,958 24,226 4,595 66,775 8,482 21,787 21,531 38,128 154,125 Total 4 $ 52,430,037 100% $ 540,000 1 Allocation based on the total personnel & operating budgets of each department. 2 Percentage derived by div ding the total departmental personnel & operating budgets by the total City personnel & operating budgets. 3 Dollar amount allocable to each City department based upon the total personnel & operating budget of each department. Total City Attorney s budget allocable to City departments. MuniFinancial 13 CITY MANAGER The Cit3, Manager is appointed by the City Council to enforce its laws, to direct the daily operations of the City, to prepare and monitor the City budget, to advise the City Council on policy issues, and to implement the policies and programs initiated by the City Council. One hundred percent (100%) of the City Manager's budget is reasonably allocated among other departments based on each department's percentage of the total City personnel and operation costs as shown in Tables 9 and 10. TABLE cj: CitY MANAGer BUDGet AND ALLOCATION BUMMARY Table 9 below summarizes the Total Department Budget, Total Allocable Funds, provides a Percent Allocation Detail for the distribution of allocable funds. and Table 9: City Manager Cost Detail Sources of Funds: ~ General Fund Total Department Budget Uses of Funds: ~ Personnel Cost Operations Expenses Total Department Budget Allocable Funds: General Fund Total Percent Allocation Detail: 100.0% Total Personnel & Operating Budgets Total Allocable 1,544,782 1,544,782 918,289 626,493 1,544,782 1,544,782 1,544,782 1,544,782 1,544,782 From City of Lynwood Fiscal year 2006 07 Budget MuniFinancial 14 TABLE: 1 C]: TOTAL ALLOI.?,ABLE: E]ITY IVIANABE:R BUDGE:T Table 10 below provides an account of how tine total allocable amount of tl~e City Manager budget should be distributed to each operating department. Departments City Council Zity Clerk City Treasurer City Attorney City Manager Finance & Administration Human Resources Bu/lding Maintenance Public Safety Quality of Life Public Works Bngineering Water Utility Sewer Utility Redevelopment Agency Development Services Recreation & Community Services Capital Improvement Projects Total Personnel & $ 558,778 269,976 174,850 540,000 1,544,782 820,426 1,138,999 1,311,477 11,546,910 1,549,358 2,352,168 446,166 6,483,378 820,628 2,115,328 2,090,486 3,701,947 14,964,379 Dept. % 2 1.07% 0.5I% 0.33% 1.03% 2.95% .1.56% 2.17% 2.5O% 22.02% 2.96% 4.49% 0.85% 12.37% 1.57% 4.03% 3.99% 7.06% 28.54% Allocadon3 $ 16,464 7,954 5,152 15,910 45,515 24,173 33,559 38,641 340,214 45,650 69,304 13,146 191,024 24,179 62,325 61,593 109,073: 440,906 Total4 $ 52,430,037 100% $ 1,544,782 ~ Allocation based on the total personnel & operating budgets of each department. 2 Percentage derived by dividing the total departmental personnel & operating budgets by the total City personnel & operating budgets. 3 Dollar amount allocable to each City department based upon the total personnel & operating budget of each department. 4 Total C~ty Manager budget allocable to City departments. MuniFinancial 15 FINANE;E & ADMliqlSTRATIE)N The mission of the Finance & Administration Department is to responsibly manage the City's financial resources; to report timely, accurate financial information; and to provide quality service to the City Council, City' Manager, City departments, and the public. The department works closely with the elected City Treasurer to meet the shared goals of appropriate internal controls, prudent investment of City resources, and cost effective financial services. One hundred percent (100%) of the Finance & Admirdstrafion Department budget is allocable to all other departments based upon each department's percentage of the total City personnel and operation costs as shown in Table 12. TABLE 1 1: FINANCE & ADMINISTRATION BUDGET AND ALLOCATION S U M MARY Table 11 below summarizes the Total Department Budget, Total Allocable Funds, and provides a Percent Allocation Detail for the distribution of allocable funds. Table 11: Finance & Administration Cost Detail Sources of Funds: x General Fund Total Department Budget $ 820,426 $ 820,426 $ 639,793 180,633 $ 820,426 · $ 820,426 $ 820,42~6 $ 820,426 $ 820,426 Uses of Funds: 1 Personnel Cost Operations Expenses Total Department Budget Allocable Funds: General Fund Total Percent Allocation Detail: t00.0% Total Personnel & Operating Budgets Total/Mlocable From City of Lynwood Fiscal Year 2006-07 Budget. MuniFinancial 16 TABLE I 2: TOTAL ALLO[::ABLE: FINANBE & ADMINISTRATIDN BUDGET Table 12 below provides an account of hoxv the total allocable amount of the Finance & Administration budget should be distributed to each operating department, Total Personnel & Departments Operating Budgets Dept. % 2 Allocation 3 City Council City Clerk City Treasurer City Attorney City Manager Finance & Administration Human Resources Public Safety Quality of Life Public Works Engineering Water Udl/ty Sewer Utility Redevelopment Agency Development Services Recreation & Community Services Capital Improvement Projects Total 4 $ 558,778 269,976 174,850 540,000 1,544,782 820,426 1,138,999 1,311,477 11,546,910 1,549,358 2,352,168 446,166 6,483,378 820,628 2,115,328 2,090,486 3,701,947 14,964,379 1.07% 0.51% 0.33% 1.03% 2.95% 1.56% 2.17% 2.50% 2.96% 4.49% 0.85% 12.37% 1.57% 4.03% 3.99% 7.06% 28.54% $ 4,225 2,736 8,450 24,173 12,838 17,823 20,522 180,686 24,244 36,807 6,982 101,452 12,841 33,10l 32,712 57,928 234,163 $ 52,430,037 100% $ 820,426 ~ Allocation based on the total personnel & operating budgets of each department. 2 Percentage derived by dividing the total departmental personnel & operating budgets by the total City personnel & operating budgets. 3 Dollar amount allocable to each City department based upon the total personnel & operating budget of each department. Total F nance & Admmastrauon s budget allocable to City departments. MuniFinancial 17 HUMAN RESDU RE:ES The Human Resources Department is responsible for ali job recruitments and labor relations for positions with the City of Lynwood. The department also ensures the City's hmnan resource policies and practices are consistent with Federal and State Reguiations. As the Human Resources Department provides employee relation services, one hundred percent (100%) of the department's budget is allocated to departments based upon the number of FuLl Time Equivalent (FTE) employees in each department as shown in Table 14. TABLE ] 3: HUMAN REBnUR{gES BUDGET AND ALLGCATInN BUMMARY Table 13 below sumFnarizes the Total Department Budget, Total Allocable Funds, provides a Percent ALlocation Detail for the distribution of aLlocable funds. and Table 13: Human Resources Cost Detail Sources of Funds: ~ Generxl Fund $ 1,138,99 Total Department Budget $ 1,138,999 lses of Funds: ~ Personnel Cost $ 214,839 Operations Expenses 924,160 Total Department Budget $ 1,138,999 allocable Funds: General Fund $ 1,138,99 Total $ 1,138,999 Percent Allocation Detail: 100.0% Totxl FTE 1,138,999 Total Allocable $ 1,138,999 From City of Lynwood Fiscal Year 2006-07 Budget MuniFinancial 18 TABLe ] 4: TOTAL ALLOBABLE HUMAN RESOURE:EB BUDGET Table 14 below provides an account of- how tbe total al2ocable amount of- the Human Resources budget should be distributed to each operating department. Departments Zity Council City Clerk City Treasurer City Attorney City Manager Finance & Administration Human Resources Publ/c Safety Quality of Life Public Works Engineering Water Utility Sewer Utility Redevelopment Agency Development Services Recreation & Community Services Capital Improvement Projects Total FTE ~ 12.00 4.00 2.00 10.00 26.00 21.00 11.00 40.0C 18.00 18.00 7.00 20.00 95.00 5.00 Dept. % 2 4.15% 1.38% 0.69% 0.00% 3.46% 9.00% 7.27% 3~s1% 0.00% 13.84% 0.00% 6.23% 6.23% 0.00% 2.42% 6.92% 32.87% 1,73% I5,765 7,882 39,412 102,471 82,765 43,353 157,647: 70,941 70,941 27,588 78,823 374,412 19,706 Total 4 289.00 100% $ 1,138,999 ~ Number of Full T~me Equivalent (' FTE ) employees in each department based upon data received from the City. 2 Percentage derived by dividing the total number of FTE employees in each department by the total 3 Doilar amount allocable to each City department based upon the number of FTE employees in each department. 4 Total Human Resources budget allocable to City departments. MuniFinancial 19 BUILDING MAINTENANOE The Building Maintenance DMsion provides maintenance services for all City buildings. Areas of service include custodial, carpentry, plumbing, electrical, painting, mechardcal repairs, and installations. As the Building Maintenance Division provides maintenance services to City buildings, one hundred percent (100%) of the department's budget is allocated to departments based upon the total square footage occupied by in each department as shown in Table 14. TABLE 1 5: BUILDING MAINTENANI:E BIJDBETAND ALLOCATION SummaRY Table 15 below summarizes the Total Department Budget, Total Allocable Funds, and provides a Percent Allocation Detail for the distribution of allocable funds. Table 15: Building Maintenance Cost Detail Sources of Funds: ~ General Fund Total Department Budget 1,311,477 1,311,477 678,671 632,806 1,311,477 1,311,477 1,311,477 1,311,477 1,311,477 Uses of Funds: ~ Personnel Cost Operations Expenses Total Department Budget Allocable Funds: General Fund Total Percent Allocation Detail: 100.0% Total Square Footage Total Allocable From City of Lynwcod Fiscal Year 2006 07 Budget. MurdFinancial 20 TABLE: I 6: TOTAL ALLI]OABLE BUILDINI3 rV'IAINTWNANBE: BLIDBE:T Table 16 below provides an account of bow the total allocable amount of the Building Maintenance budget should be distributed to each operating department. Departments City Council City Clerk City Treasurer City Attorney City Manager Finance & Admirdstration Human Resources Bu/lding Maintenance Public Safety Quality of Life Public Works Engineering Water Utility Sewer Utility Redevelopment Agency Development Services Recreation & CommuvSty Services Capital Improvement Projects Total Square Footage ~ 1,315.44 600.23 760.33 9,235.22 7,787.29 974.00 11,010.00 11,010.00 2,625.00 14,680.00 14,680.00 3,652.50 2,625.00 75,825.00 Dept. % 2 0.84% 0.38% 0.48% 0.00% 5.89% ~4.97% 0.62% 7.02% 0.00% 7.02% 1.67% 9.36% 9.36% 2.33% 1.67% 48.36% 0.00% Atlocation 3 $ 11,004 5,021 6,360 77,253 65,141 8,148 92,100 92,100 21,958 122,799 122,799 30,553 21,958 634,282 Total4 156,780.00 100% $ 1,311,477 ~ Total square footage occupied by each department based upon data received from the City. 2 Percentage derived by dividing the square footage of each department by d~e total square footage of all deparunents. 3 Dollar amount allocable to each City department based upon the total square footage occupied by each department. .,Total Building Maintenance budget allocable to City departments. MtmiFinancial 21 BIJiLDINB AND E~IUIPMENT DEPREBIATI[3N Table 17 below provides an account of how the total allocable amount of Building and Equipment expenses should be distributed to each department based on the Depreciation schedules provided by the City. TABLE 1 '7: TOTAL ALLOCABLE BUILDING AND Ei:;]UIFIMENT DEPRECIATION EXPEN ct EE~ Total Depreciation Departments Allocation ~ Dept. % 2 Allocation 3 City Council $ 12,446 2.89% $ 12,446 City Clerk 988 , 0,23% 988 City Treasurer 709 0.16% 709 City Attorney 0.00% City Manager 13,608 3.17% 13,608 Finance & Administration 16,203 3.77% 16,203 Human Resources 1,413 0.33% 1,413 3uildin~ Maintenance 135,883 31.6i% 135,883 Public Safety 19,884 4.62% 19,884 QuaLity of Life 19,454 4.52% 19,454 Public Works 2,213 0.51% 2,213 Engineering 11,980 2.79% 11,980 Water Utility 32,160 7.48% 32,160 Sewer Utility 0.00% Redevelopment Agency 4,402 1.02% 4,402 Development Services 6,385 1.49% 6,385 Recreation & Community Services 152,213 35.40% 152,213 Capital Improvement Projects 0.00% Total 4 $ 429,940 100% $ 429,940 ~ Allocation based on the City's Building and Equipment Depreciation Schedules. 2 Percentage derived by dividing the Total Building and Equipment Depredation by department by the Total Building and Equipment Depreciation. 3 DoLlar amount allocable to each City department based upon Depreciation Schedule. 4 Total Building and Equipment Depreciation. MuniFinancial 22 ALLOP. ATIDN OF CENTRAL SERVICE DEPARTMENT EXPENDITURES The double step down method is utiJized to allocate indirect costs. In the first step, central services department expenditures are identified and allocated as indirect costs to all other departments, including both central services departments and operating departments. The second step of a full-cost allocation plan is known as the 'close out' step. This step allocates the indirect costs from the central services departments to the operating departments. Once the 'close out' step has been completed, all central services costs will have been passed on to operating departments. Table 18 on the following page summarizes this process by calculating the total indirect costs for the central services departments, subtracting them out, and then allocating them to the operaring departments. The footnotes in Table 18 describe how this process is accomplished. MuniFinancial 23 PROPOSED WATER AND SEWER RATES INCREASES PUBLIC INFORMATION MEETING AUGUST 3, 2006 Questions and Answers Q: A: Q: A: Q: Q: Q: Q: Why Lynwood sold water to the City of Inglewood and what happened to the money? Staff is not aware of this situation. The City of Lynwood does not sell water to other cities. What did the City accomplish with the money raised by the last rate increases? and the money that will be raised? Water main line improvements, water meter replacement, water valve replacement, fire hydrant upgrade, booster pump rehabilitation, upgrading chlorination systems How can tree roots get into sewer lines when lines are cleaned often? Cleaning does not stop tree roots from growing or prevent tree roots from entering a sewer line. Under certain conditions tree roots infiltrate a sewer line in a matter of weeks Why city officials stated that the City is in good financial status and now water and sewer rates need to be increased? The General Fund is indeed in good standing; however, the Water Fund in question is not. The Water Fund which is also an enterprise needs to be self-sufficient and that is why water and sewer rates need to be increased Why does the City use the money to pay for maintenance only? That is not correct. The City does use the Water funds for capital improvement projects, such as water main replacement, new well construction, water meter replacement, etc. Why does the City also charge for sewer fees on my Property Tax bill? The sewer fee on your property tax bill is for the Los Angeles County Sanitation District. All residents, whose sewage is treated by the County, Are obligated to pay this fee. ATTACHMENT "C"