HomeMy WebLinkAbout06/26/2024 - Economic Advisory Board - AGENDA - Regular MeetingEconomic Advisory Board
REGULAR MEETING
June 26, 2024, 4:00 p.m. - 6:00 p.m.
Virtual option via Zoom: https://us02web.zoom.us/j/84688470753
1.CALL TO ORDER
2.ROLL CALL
3.AGENDA REVIEW
4.CITIZEN PARTICIPATION
5.APPROVAL OF MINUTES
6.NEW BUSINESS
a. Presentation: Building Performance Standards (BPS) Update
i. Presenters: Katherine Bailey, Project Manager~ 30 minutes
ii. Discussion Board ~ 30 minutes
iii. Optional Read-Ahead: https://ourcity.fcgov.com/bps
7.UNFINISHED BUSINESS
a. Water Supply Requirements (WSR), Excess Water Use (EWU) Surcharge, and
Allotments for All Commercial Customers
8.BOARD MEMBER REPORTS
9.OTHER BUSINESS
10.ADJOURNMENT
06/26/2024 AGENDA
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Economic Advisory Board
REGULAR MEETING
Wednesday, May 15, 2024 4:00 PM
300 Laporte Ave, CIC Room
1. CALL TO ORDER: 4:00 PM
2. ROLL CALL
a.Board Members Present
Tim Cochran
Denny Coleman
Chris Denton
Thierry Dossou
Erin Gray
Val Kailburn
Braulio Rojas
Renee Walkup
b. Board Members Absent
Richard Waal
c. Staff Members Present
Ashley Kailburn, Sr Specialist, Economic Health Office
Erin Sporer, Business Support, Economic Health Office
Heather Young, Community Engagement Manager
Donnie Dustin, Water Resources Engineer
Katie Collins, Water Conservation Specialist
Max Duggan, Public Engagement Specialist
Mariel Miller, Water Conservation Manager
d. Guest(s)
3. AGENDA REVIEW
4. PUBLIC PARTICIPATION
5. APPROVAL OF MINUTES
a. Erin motioned and Tim seconded to approve the April agenda. Motion carried.
7-0-1
6. UNFINISHED BUSINESS
7. NEW BUSINESS
a. Water Supply Requirements, Excess Water Use Surcharge, and
Allotments for all Commercial Customers
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Presented this to Council on April 9th work session, will go back in July.
Implementation would happen in 2025.
Specifically, Fort Collins Utilities Water Service Area
3,000 commercial water taps and about 1,900 customers.
In place since mid-60s
Ensure secure water sources and protect the watershed.
Provide a financial mechanism to ensure current and future assets
are adequate to meet community water supply and service needs.
Balance current needs a supply and future potential needs and
acquisitions. Plan out until 2065.
2/3 of non-residential accounts have assigned allotments, about 1000 taps
that do not have allotments.
Water supply requirement (WSR) methodology
All regional water service providers have a version of a WSR
development fee.
Total fee varies based on water rights portfolio, infrastructure, and
ability to support existing and future customers to meet community
values.
Water scarcity and demand drive the cost of acquiring new water
and impact the value of our water rights portfolio.
Development and redevelopment fees are 5% of revenue rates are the
other 95%. That all goes into one bucket and that is used to pay for future
water rights development, capital projects, infrastructure, etc.
WSR pricing methodologies
Full buy in look at value of entire water supply system.
Incremental cost of that one drop of water acre foot (AF) to provide
that new person coming into system.
Hybrid buy in component and incremental component. What we
have used in the past.
2002 was more incremental, came up with hybrid method later.
In 2002 it cost 6,500/AF and currently costs 68,200/ AF
Looking to re-evaluate options within the hybrid methodology.
Buy in (Existing Water Rights) Options on how to value.
Cost of what was paid plus an adjustment factor.
Incremental (Future water rights and infrastructure) cost considerations
Market-based
Contingency
Captures uncertainties in future costs.
Safety factor
Captures uncertainties in future demand and supplies.
Hybrid Method Pricing Options
Market-Based, 30% contingency, 20% safety factor
$116,500/AF
Current Approach with updated costs
Highest impact to developers
Market-based, 30% contingency
$97,100/AF
Safety factor removed.
Cost-based, 30% contingency, 20% safety factor
$71,800/AF
proactively (since late 1800s)
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Recommended to Council and a majority of Council was okay
with this option.
Cost-based, 30% contingency
$59,900/AF
Safety factor removed.
Lower than current fee
Highest impact to existing customers
Staff shared graphs that compare the above options to other providers in
the area for multifamily and commercial type business like a restaurant.
Based on data on what they see in developments they have. They are
confident in what they are asking for.
For example, restaurants use a lot of water compared to office
buildings. Some of the other providers might be undercharging
restaurants or overcharging office buildings. They are looking into
the factors of why there are differences.
Water allotment overview
3,000 nonresidential customers who are eligible for this allotment.
2,000 have allotments; 1,000 do not.
Only nonresidential accounts are subject to allotments and
excess water surcharge fees.
Allotments started to be assigned to accounts in 1984 and were based on
the size of the tap.
2022 Allotments based on business type.
2024 proposing to assign allotments to 1,000 accounts that do not
have one.
Will allow time to adjust use to avoid surcharges.
Not proposing additional WSR costs
Would still be subject to water excess fees and regular
rates.
Updating for consistency, fairness, and conservation
Allotment Methodology
Hybrid (tap and average use)
Selects the greater between average historical use and tap
credit.
Lowest impact
Could assign higher allotment than needed making iti difficult
to identify inefficiencies.
Staff recommended method that Council was supportive of
Tap Credit
Assigns a volume based on meter size.
Most current allotments are assigned with this methodology.
Could underestimate allotments resulting in potential
unwarranted surcharges.
Average Historical Use
Assigns a volume based on average historical water use per
tap.
Have not been assigned this way before.
Could assign a lower allotment compared to the volume
received with a tap credit, under valuing WSR.
Could assign a higher allotment than customer needed
making it difficult to identify water use inefficiencies.
Business Type
Assigns based on business type and specific use.
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Current methodology for setting allotments.
Best reflects actual water use need.
Limited data to fully evaluate impacts.
Time-intensive process
Potential impacts
If all accounts used highest volume recorded in the last five years
15% of accounts assigned would exceed the proposed
allotment.
Average estimate excess water use surcharge per account at
current rate: $5,000
Total excess water use impact = $824,000
We looked at the top 100 of these impacted accounts. 1/3 of
them are restaurants, 1/3 are strip malls/mixed use, and 1/3
was irrigation.
Max use can come from an unexpected leak or something
that happened one year but might not happen again.
Engagement
Phase 1 (April June)
Broad engagement and feedback collection
Phase 2 (July September)
Refine proposal and incorporate feedback.
Phase 3 (October December)
Seek Adoption
Impacted parties.
Market-rate developers, affordable housing developers,
water-
commercial real estate, commercial water customers
(with/without allotments and irrigation only).
Planned engagement.
Council Work Sessions, Board and Commissions, email
communication, existing e-newsletters, survey, seek input
from community groups, webinar and office house for
impacted allotment customers.
Questions
So, these are divided into 2 segments, evaluation of existing cost basis
but then looking forward at the forecast basis for the infrastructure
improvement.
the top of my head but a large portion of it is the buy in component. I
think it is more than half. I would have to verify.
Is the rate based on square footage?
For restaurants we require 145 gallons/sq ft. Between Greeley and
Westminster we ask for less, but their fee is smaller.
Is this an upfront payment or over their lifetime and then they pay a usage
fee on top of this?
It is an upfront payment. Iti s paying for us to go out and get that
Kind of like buying a house. You will still have to pay for the utilities
once you get into the house.
Do you have a comparison to the options for 2025 compared to the
current system? When they replace another restaurant do they have to do
redevelopment, and would they have to pay this fee if they are not doing
anything new to the restaurant?
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So let me start by saying the current fee is a 5-10% difference. It is
pretty close. We are not changing the amount we are asking for from
say a restaurant.
If a restaurant moves into an existing building with an existing tap,
there is no reevaluation of the WSR, nothing triggers that. The only
time you are paying the WSR is if you are getting a new service. So,
getting a new tap or upsizing a tap. That is when it triggers.
The water tap is attached to the property?
Yes, it has already been developed and there should be an
redevelop it, you would get credit for a tap already being there.
Residential is a similar requirement. For multifamily is based on the
number of bedrooms. For single families it is based on the lot size.
If you have a couple of acres and have a small home, is it based on the
structure or the lot.
If it is a single-family home, our requirements are based on lot size.
Even if you have wild grass growing?
We have had questions about that, but we have to protect
against someone saying we are not going to use that much
water and then someone else moving in and they will use a
ton.
Can you talk a little bit about change of use so if something would trigger
redevelopment for commercial business so if a restaurant was going into
an office space.
So, it would not trigger the WSR to change. We did have that
provision in code back when we adopted that ordinance in 2021.
Essentially what happened was every small change on a
and problematic. Council approved removing that provision. Bottom
line is the WSR is evaluated when a new tap, new service, or larger
tap is needed.
If a current commercial unit has an allotment and say an
office building and that allotment is fairly small, and a restaurant
moves in, that restaurant is probably going to start accruing these
excess water use fees. They can be significant. And vice versa if an
office space moves into a restaurant there could be a high allotment.
I thought it said they could apply to have that changed. So rather
Yes. They can choose to purchase more water but there
would not be an automatic requirement.
So if an office space moves into a restaurant and there is a high
allotment but they are not using it that much, what would happen
there?
There is no penalty if they are underusing it. The allotment
will always live with the property. We do not sell allotments
back. To tie it back to WSR to increase your water allotment,
you would buy more WSR at that rate we are talking about.
You can increase your allotment by any gallon volume, but
you pay at WSR.
Will there be equipment change fees, like needing a bigger meter?
There might be. The meter charge is separate.
Could that be a clause or even a selling point for someone buying that
there is a certain amount of allotments? Could it be hidden from the
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buyer?
It could be. If someone was looking to buy a property for a
restaurant, it would probably be a benefit to have a property with an
allotment of water that could handle that use vs moving into an office
space and having to pay a lot in water fees. We work with
commercial real estate brokers, and we try to educate them on that
but sometimes that does come as a surprise to people.
To segway into the next section, we do see that as an inequity
Business A and B can be the exact same but one has an allotment
and that one can be charged for an extra amount.
Security issues are important to every utility. How do you guard against
different types of terrorism, ex poisoning water, blowing up a damn, etc.
How much do you consider that?
That is not something I or anyone here deals with. That is more on
the water treatment facility side of things. I know they have protocols
as there are federal requirements in place to try and prevent those
are, but we are highly aware of
those kind of things, even cyber security is a big concern. They get
training on a constant basis around all these things. Our treatment
plant looks like a prison with cameras, fences, etc.
Curious about the 1,000 and why there is that backlog. Is it just takes time
and money to do that. Are these relatively new nonresidential businesses?
They are all pre-1984 taps that have not changed size since then.
Would you use that data of averages and businesses after you get
assigned to reevaluate your industry types? It is possible it would show
you something.
I know at the time we adopted that code there was analysis done on
an existing set of known accounts with known business types. I think
we could do that work and hopefully come out pretty similar to what
we calculated at that time.
Are there just some of the accounts that use a ton of water?
We looked at the top 100 of these impacted accounts. 1/3 of them
are restaurants, 1/3 are strip malls/mixed use, and 1/3 was irrigation.
Clarification Even if you have an allotment do you pay an annual fee or
upfront one-time cost?
If you have an allotment and if you are assigned an allotment, you
year, just if
you exceed your allotment. You still pay a regular water rate every
month depending on how much you use. The fee upfront is to set up
your access to it.
You pay a rate up to a certain amount and then after that amount
you pay the additional charge on top of the rate you are paying.
Interested in understanding the bigger context in terms of climate change
and water rights in this area. I am assuming that safety margin is to
account for some of that and protect that water usage. From what I
understand with water utilities, water is undervalued, that will help but how
is it considering climate risk, time frame, is it considering how things are
worsening faster, etc.
factor is applied to the fee. The way I have thought about that is we
need to collect more money because we might need to go out and
purchase more than we were planning for today because of the
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impacts. Going back to a question, if you look at the amount of water
we asked for, it is low compared to others and when we made
changes a few years ago, we took out a factor from the demand
side, the amount of water we were asking for a safety factor. It was
very confusing for customers who wanted to increase their
allotment. We lost some of the factor of safety in there. That is why
we applied it to the fee to make that change. This is not an exact
science. One acre foot of water today might not yield one acre foot
of water in 2026. That is where the drought and climate come in.
So, you presented to Council in April, you are going back in July. The
similar to this and you are asking for approval
to get those 1,000 businesses an allotment. So, my question is when you
presented in April, did you get push back? Why are you going back in
July?
We were always planning on going back in July. It is really kind of
this iterative process with Council. We had our first work session
and we wanted to get direction really broadly on where we were
headed and now as we get engagement, we are going to refine what
we are going to propose to them and there will be a work session
where we can discuss that. If that all goes well and based on their
feedback, that will factor into what we propose in the fall for a final
recommendation.
So, are you looking for a recommendation from us to provide to
Council?
If you have one yes, and we are really seeking input on the
business side and your own lived experiences. Could be
more informal than a memo.
Is there a way to see if you are getting close to your allotment per month
so you can be more proactive rather than reactive?
We have what we call our My Water System. Anyone with a Fort
Collins utilities water account can log into it and track down to their
daily, hourly use. That tool is available. You can set notifications for
your use as well, which is tied to our advanced metering
infrastructure. I think there is a 24-hour delay for the data to get into
My Water, but you can look at your actual use. That is one way to
have allotments now, and have an allotment in the future, that is one
of the tools we really want to introduce to these customers and how
them how to use it and help them understand what the allotment is,
where to find your water use, etc. We have tools to look at how
much water you anticipate using and how to budget for that.
Is that for residential too?
Yes, all residential accounts get it.
Can I ask about the affordable housing developers. If there is going to be
anything to offset those extra costs for them. Also, curious if any of the
funds you raise, you mentioned that it is to pay for future infrastructure,
does that include any natural infrastructure or forest management that
could potentially impact water supplies or how does that work?
No it generally goes towards strict water supply stuff. Your rates go
towards watershed specialists and utilities that are looking out for
the health of forest and taking water quality samples working with
coalitions around here. For example, after Cameron Peak Fire, that
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funds that heather showed, the big pot, some of that money went to
do mitigation. It is different pools of money. As a utility, I think there
is legislation behind it. We have to be very specific about what the
money can go towards. We certainly care about all of it though.
For the first part of your question, there is some charter and Taber
language that prevents you from offsetting one group with another
with development fees. As part of our engagement, we are talking to
some affordable housing groups. There is a pot of money that
developments can apply for that can offset overall development
specifically to water supply
requirement fees, but we are in conversation with that group to see if
that could extend to something like this.
The pot of money comes from where?
It is a general fund from tax revenue in Fort Collins. It is in the
social sustainability group.
You spent some time talking about the fact that the fee was going to go
more time talking about these 1,000 customers. I just want to ask exactly
what problem you are trying to solve and why you are trying to solve it.
Which problem are you trying to solve?
The reason that these two topics are linked is because there is a
range for water supply requirements. Our upper end was 116,000
gallons and then that tracks with those excess water users. As water
supply requirements increase, the disparity between the customers
also increases. What we wanted to avoid happening was waiting too
long to assign the 1,000 customers all this, and then suddenly you
have really high excess water use surcharges. We wanted to be a
little more proactive and assign that now. If they wanted to purchase
more water supply requirements, they could do it at the lower rate.
currently have allotments are coming in at that higher rate. It makes
sure the system is set up for the future in a fair and equitable way. I
think the WSR conversation is around making sure that we are
utility and so it is making sure we are charging people what it costs
us to procure that.
even notice. Once our fee started going up, we got a lot of calls
asking about it. We have been trying to work for years, we just
and some with none. For the fee, this is just the cost, it is not
necessarily a problem. Allotments are a problem. Exclusive of
business or not.
I mean we can guess. We are not talking about a significant
total.
Board express importance of cleaning up codes and fine tuning them.
Can we revisit affordable housing. Are you working with some other entity
or group that played a role in it?
That is really more of the social sustainability effort and any
offsetting work that the City is doing lives in that space. But I think
available for affordable housing, and we are related to that because
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affordable housing developments do pay utility fees. I would say the
strategic work around affordable housing, less us.
Board expressed concern about fees without any building makes
housing unaffordable. Stressed importance of subsidies.
Utilities is a cost-based organization, we are not making a
place, but I think there
might be something. We are just charging what it costs. I
certain legal requirements to say we are going to charge
some of our customers more so that other customers get a
break. That is where it becomes more general fund.
I agree but there is a larger economic issue because there is
a problem, and everything is connected. There are other
economic costs involved that we need to find ways to make
affordable for new and young people.
There are other districts that want an acre foot of water
through a house despite how big or small the house is. Our
requirements are sized so if you are a smaller lot or
multifamily there are big savings there. So at least our
requirements are sized to help address some of that. You are
going to see more density, good or bad, but that drives costs
down for affordability.
You all have a responsibility to deliver water, right? On one hand we are
all assuming that we will always have water. In that case everything
sounds pretty good. But it has happened in the United States that some
houses have run out of water. That is what you are tasked with solving,
not whether houses are affordable. That is a lot for you to take on.
here to cut back. Generally we do so with outdoor water use. When
densifying those lawns go away. We have a whole water supply action
plan that talks about what level of restrictions, what we ask the community
to cut back on whether its volume or car washes, etc.
Board commented the City has done a great job with xeriscaping I would
the City has saved by being more proactive with xeriscaping. Might be
interesting to know.
When are you going back to City Council and what are going to be the
main challenges?
We are going back July 9th . From my perspective, I work on the
engagement side of things, so how do we pull together all the
community voices and then come up with a plan that tries to mitigate
balancing act.
Board is interested in discussing a memo at next meeting.
You mentioned Halligan, what is the timing and schedule for that. Is that
for Fort Collins Utilities only?
We just got our final environmental impact statement. The two big
remaining things are water quality certification from the state and the
can start construction. We may be sued just like other projects and
that could delay things.
8. BOARD MEMBER REPORTS
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9. STAFF REPORTS
10. OTHER BUSINESS
a. Denny The addition of the landline bus service that had direct access to the airport
is a great business asset. Interested in finding out they will be adding stops and
services.
b. Denny A lot of time was spent on the Land Use Code and caused a lot of angst in
the community. Did no one pay attention to the State level; why spend time on it for it
to be wiped out by the state?
Council was aware but thought the local rule if more restrictive, supersedes the
state. Some things changed in office along the way.
Another similar situation is the school consolidation. Professionals said this is
what the city needs and had data to prove it but when the stakeholders were
loud, they changed their minds. It seems like they are thinking about the next
election and not what is best for the City. At some point you have to be
responsible, if it is the best decision for the City.
The problem is it is a political play. There is local responsibility if something
happened at state level, we could readjust but what are we doing to explain to
the next generation.
The board also discussed affordable housing, subsidizing, and how there are
many ways to approach it.
11. ADJOURNMENT
a. (6:00PM)
Minutes approved by a vote of the Board/Commission on XX/XX/XX
Building Energy Use