HomeMy WebLinkAbout07/17/2024 - Economic Advisory Board - AGENDA - Regular MeetingEconomic Advisory Board
REGULAR MEETING
July 17, 2024, 4:00 p.m. - 6:00 p.m.
HYBRID MEETING OPTIONS
Physical LocaƟon: 300 Laporte Ave CIC Room.
Virtual option via Zoom: https://us02web.zoom.us/j/84688470753
1.CALL TO ORDER
2.ROLL CALL
3.AGENDA REVIEW
4.CITIZEN PARTICIPATION
5.NEW BUSINESS
6.UNFINISHED BUSINESS
a.Water Supply Requirements (WSR), Excess Water Use (EWU) Surcharge, and
Allotments for All Commercial Customers
b.Building Performance Standards (BPS)
7.BOARD MEMBER REPORTS
8.OTHER BUSINESS
9. ADJOURNMENT
07/17/2024 – AGENDA
Headline Copy Goes Here
Water Resources Engineer, P.E.
Donnie Dustin
Utilities Community Engagement Manager
Heather Young
5-15-2024
Water Supply
Requirements and
Pre-1984
Non-Residential Water
Allotments
Katie Collins
Water Conservation Specialist
Headline Copy Goes HerePurpose
1.Build shared understanding of the history and purpose
of Water Supply Requirement fees and pre-1984 non-
residential water allotments.
2.Share staff’s analysis of potential methodologies for
Water Supply Requirement fees and assigning pre-1984
non-residential water allotments.
3.Share planned customer engagement for 2024,
including a timeline and identification of impacted
parties.
4.Answer questions and seek input.
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Headline Copy Goes HereQuestions for the Economic Advisory Board
1)What general questions do you have?
2)How might you or the community you represent be impacted by these changes?
3)What other input do you have?
3
Headline Copy Goes Here
Utilities Water
Service Area
Fort Collins Area Water Districts Map
~36,000 water taps (32,000 customers)
~3,000 are commercial (1,900 customers)
GMA
Major Streets
City Limits
Railroad
ELCO Water District
Fort Collins-Loveland Water District
Fort Collins Utilities (Water)
Sunset Water District
West Fort Collins Water District
Water Districts
4
Headline Copy Goes HerePurpose – Water Supply Requirements and Water Allotments
A form of Water Supply Requirements (WSR) and water allotments
has been in place since the mid-1960s. The purpose is to:
•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 and supply and future potential needs and acquisitions
5
Headline Copy Goes HereTimeline
April 9
Council Work
Session
April/May Aug./Sept.2025Oct./Nov.June/July
TBD
Work Session
Implementation
Council Finance
Committee
Water Commission
and Other Boards
Continue
Engagement
TBD First and Second Reading Regular Meetings
May
Initiate
Engagement
July 16
Council Work
Session
Planning &
Zoning and Other
Boards
Wrap Up
Engagement
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Headline Copy Goes HereWater Supply Requirements, Water Allotments, and Dedication
Water Supply Requirement
Fee paid by new development and some redevelopment to ensure adequate water dedication to serve.
Assessed during development and redevelopment
Water Allotment
A volume of water dedicated to a non-residential user.
Two -thirds of non-residential accounts have assigned allotments.
Based on WSR
Excess Water Use Surcharge
A charge assessed to non-residential accounts with allotments when they exceed their allotment.
Based on Allotment
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Headline Copy Goes HereWSR 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 impacts the value of our water rights
portfolio
8
Headline Copy Goes HereWater Fund Inputs
Water Utility Rates
Rates paid by existing customers
make up approximately 95% of
the water fund revenue.
Development/Redevelopment Fees
New development and redevelopment
within the water service area make up
approximately 5%.
Development/Redevelopment
The rate of development can be
unpredictable and water costs can
play a part in where development
occurs.
Future Storage Cost
Future storage has been identified
through the Halligan Water Supply
Project. Costs estimates of this
project have increased significantly.
Water Rights
Additional water rights necessary
to meet 2065 projected demands.
Additional Storage
Storage is needed for existing
and future use. 5%
95%
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Headline Copy Goes Here
Headline Copy Goes HereOverview of Methodologies
Full Buy-In
•Cost of the entire existing water supply system which is expected to serve all existing and future
customers.
•Future customers buy in to the entire current system (total value of system/total yield).
Incremental
•Cost to expand the water supply system to serve future customers.
•Only reflects the cost of future water rights and infrastructure.
Hybrid
•Includes a “buy-in” component for the current water supply system and an “incremental” component
for the future water system needs that have not yet been purchased or built.
•Acknowledges future customers will use portions of the current and future water supply systems.
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Headline Copy Goes HereWSR Historical Methodology
›Re-evaluating options
within the hybrid
methodology
›Market vs. cost-based
valuations
›Analysis of current risk
factors
(contingency/safety)
2002-2017
›2018: $17,300/AF
using hybrid method
with market-based
costing
›2020: $21,500/AF,
updated costing
›2021: $22,145/AF,
added 3% inflationary
increase
2018-2021
›$68,200/AF, same
methodology with
updated yields
2022-current
›$6,500/AF, based on
Colorado Big-
Thompson (CBT)
prices
2025-future
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Headline Copy Goes HereCurrent Methodology Overview
HYBRID
Buy-in
Existing water rights
Incremental
Future water rights andinfrastructure
Total cost to
increase reliability
of water supply
Note: Future water supplies do not provide
adequate reliability without existing portfolio
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Headline Copy Goes HereWater Supply Requirement Fee
WSR = Existing Water + Future Water rights & Infrastructure
Can determine past purchase prices and
costs.
Options on how to value:
•Market price in today’s dollars
•Cost of what was paid plus an
adjustment factor
Buy-In
Existing Water Rights
Incremental
Future Water Rights and Infrastructure
Requires modeling and predicting costs
of future water supply needs.
Options on how to value:
•Market-based
•Contingency
•Safety factor
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Headline Copy Goes HereHybrid Method Pricing Options
*Contingency: Captures uncertainties in future costs
**Safety factor: Captures uncertainties in future demand and supplies (e.g., climate change, development types, etc.)
Method Cost (draft)Considerations
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 •Development costs reflect Utilities’
investment in water rights proactively (since
late 1800s)
Cost-based
30% contingency
$59,900/AF •Safety factor removed
•Lower than current fee
•Highest impact to existing customers
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Headline Copy Goes HereMulti-Family Total Water Supply Requirement (Indoor & Outdoor)
2024 Multi-Family
100 bedrooms, 64 dwelling units, 30,504 sq. ft. lot area, 5,535 sq. ft. irrigated area
Provider Dedication Amount
(acre-feet)
Water Fee
($/acre-feet)Cost
Ft. Collins Loveland 15.29 $120,000 $1,228,200
East Larimer County 11.07 $60,600**$670,900
Loveland 10.62 $47,380 $503,200
FC Utilities (MB,30%C,20%S)4.27 $116,500 $497,500
FC Utilities (MB,30%C,NoS)4.27 $97,100 $414,600
Greeley 7.29 $51,500 $375,300
FC Utilities (CB,30%C,20%S)4.27 $71,800 $306,600
Westminster 6.88 $40,400 $278,300
FC Utilities (CB,30%C,NoS)4.27 $59,900 $255,800
**For larger developments,East Larimer County Water District only allows 30% of its WSR to be met with cash and the remainder must be met with acceptable
water rights, thus the cash equivalent listed here is based on the market value of acceptable water rights.
*MCS=Market-based, 30% contingency, 20% safety factor; CCS=Cost-based, Contingency, 20% safety factor; MC=Market-based, contingency, no safety factor;
CC=Cost-based contingency, no safety factor
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Headline Copy Goes HereComparison to Other Providers
15.29 AF
11.07 AF
10.62 AF
4.27 AF
7.29 AF
4.27 AF
6.88 AF
4.27 AF
*MCS=Market-based, 30% contingency, 20% safety factor; CCS=Cost-based, Contingency, 20% safety factor; MC=Market-based, contingency, no safety factor;
CC=Cost-based contingency, no safety factor
FC Utilities (CB,30%C,NoS)
Westminster
FC Utilities (CB,30%C,20%S)
Greeley
FC Utilities (MB,30%C,NoS)
FC Utilities (MB,30%C,20%S)
Loveland
East Larimer County
Ft. Collins Loveland
Multi-Family
(100 bedrooms, 64 dwelling units, 30,504 sq. ft.lot area, 5,535 sq. ft.irrigated area)
17
Headline Copy Goes HereComparison to Other Providers
1.25 AF
1.25 AF
1.25 AF
1.62 AF
1.72 AF
0.70 AF
0.79 AF
1.00 AF
*MCS=Market-based, 30% contingency, 20% safety factor; CCS=Cost-based, Contingency, 20% safety factor; MC=Market-based, contingency, no safety factor;
CC=Cost-based contingency, no safety factor
Loveland
East Larimer County
Ft. Collins Loveland
Westminster
FC Utilities (CB,30%C,NoS)
Greeley
FC Utilities (CB,30%C,20%S)
FC Utilities (MB,30%C,NoS)
FC Utilities (MB,30%C,20%S)
Typical Restaurant
(2,800 sq. ft.)
18
Headline Copy Goes HereSummary: Hybrid Method Pricing Options
Method Cost Considerations
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 •Development costs reflect Utilities’
investment in water rights proactively (since
late 1800s)
Cost-based
30% contingency
$59,900/AF •Safety factor removed
•Lower than current fee
•Highest impact to existing customers
19
Headline Copy Goes Here
Headline Copy Goes HereWater Allotment Overview
•Proposing to assign
allotments to ~1,000
accounts that do not
have one (1/3 of total)
•Not proposing
additional WSR costs
•Allow time to adjust
use to avoid
surcharges
1965-1984
•Required volume
based on tap size
•Began to assign
allotments to non-
residential accounts
1984
•Allotments based
on business type
2022
•Required volume of
water based on acre of
land served
•No allotments were
assigned
2024
22
Headline Copy Goes HereWhy Update Now?
•Consistency
•Subject to same requirement for all customers
•Fairness
•Customers without allotments can use as much water as
they desire without surcharges
•Does not capture costs for water supply system use that is
above what was paid for through a WSR fee
•A higher WSR fee and surcharges increases the inequity
between customers who are subject to surcharges and
those who are not
•Conservation
•Programs and incentives for customers that would
regularly go over their allotment
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Headline Copy Goes HereAllotment Methodology Overview
Method Description History Impacts
Hybrid
(Tap and Avg. Use)
Selects the greater between
average historical use and
tap credit
•Lowest impact
•Could assign a higher allotment than
needed making it difficult to
identify inefficiencies
Tap Credit Assigns a volume based on
meter size
Most current allotments
assigned with this
methodology
•Could underestimate allotment resulting in
potential unwarranted surcharges
Average
Historical Use
Assigns a volume based on
average historical water use
per tap (e.g., 5 years)
Have not assigned this
way
•Could assign a lower allotment compared
to the volume received with a tap credit,
undervaluing 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 (e.g., #
rooms in hotel, square
footage of restaurant,
landscape details, etc.)
Current methodology
for setting allotments
•Best reflects actual water use need
•Limited data to fully evaluate impacts (44
customers assigned this way)
•Time -intensive process
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Headline Copy Goes HerePotential Impacts
25
If all accounts used highest volume recorded in
the last five years:
•15% of accounts would exceed proposed
allotment
•Average estimated EWU per account at current
rate: $5k
•Total EWU impact = $824k
1989 TAP CREDIT
91%
5YR AVG
(2019-2023)
9%
SOURCE OF PROPOSED ALLOTMENT
Headline Copy Goes Here
Headline Copy Goes HereWork Directly with Impacted Parties
•Involve impacted parties in developing and refining alternatives for:
•WSR
•EWU surcharges
•Allotment assignments
•Goals:
•Keep impacted parties informed of project timeline, how to be involved, and decisions made
•Seek input on potential impacts to customers and community members
Phase 1 (April – June)
Broad engagement and
feedback collection
Phase 2 (July – Sept.)
Refine proposal and
incorporate feedback
Phase 3 (Oct. – Dec.)
Seek adoption
28
Headline Copy Goes HereImpacted Parties
•Market-rate developers
•Affordable housing developers
•Water-intensive businesses (breweries, restaurants,
etc.)
•Homeowner’s Associations
•Commercial real estate
•Commercial water customers
•With allotments
•Without allotments
•Irrigation only
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Headline Copy Goes HerePlanned Communications and Engagement Opportunities
•Council Work Sessions
•Boards and Commissions
•Email communication
•Existing e-newsletters
•Survey
•Seek input from community groups
•Webinar and office hours for impacted allotment
customers
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Headline Copy Goes Here
Headline Copy Goes HereQuestions
1)What general questions do you have?
2)How might you or the community you represent be impacted by these changes?
3)What other input do you have?
32
Program Manager, Energy Services
Katherine Bailey
Building
Performance
Standards (BPS)
6-26-24
BPS Benefits
ComfortHealth
Safety Resilience
Building A
Building B
Building C
Bu
i
l
d
i
n
g
E
n
e
r
g
y
U
s
e
Baseline
Year
Interim
Target
2030
Target
Time
Most powerful direct policy action to reduce emissions by 2030
By 2030: slightly less impactful than all City efficiency programs combined
Buildings account for more than 2/3 of our community carbon emissions
Community Benefits
Community Contributors
Community contributors shaped BPS policy recommendations
Equity
Engagement BPS ExpertsTask Force
Industry
Experts
Technical Committee
Community
Voices
Building
Science
Experts
Experienced
Consultant
Community-
Based
Organizations
Climate Equity
Committee
Scoped
Work
Other
Jurisdictions
Non-profit
and Federal
Groups
Business
Groups
Environmental
Groups
Boards and
Commissions
Structural Recommendations
•Covered Buildings
•5,000 square feet: multi-family (MF)
and commercial
•Buildings 5,000-10,000 square
feet have more attainable
targets,timelines
•Efficiency Targets
•Energy Use Intensity (EUI)
•Maximum flexibility
•Resources and Support
•Education, technical, financial
•Adjustments
•Additional assistance for
under-resourced buildings
Task Force recommendations are published at ourcity.fcgov.com/BPS
Alternative Compliance Options
Alternate Pathways
Caps
Renewables
Adjustments
Timeline
Target
Alternate pathways provide options for buildings that cannot meet EUI targets
Waivers
BPS Overview: Covered Buildings in Fort Collins
Building
Size
Building
Count
Building
Count
Reduction Target Reduction Target Reduction Target Upgrade Cost
(Per Square Foot)
Number of
buildings
Buildings
that need to
act
Compliance
requirement
timeline
Individual
reduction cap
Average reduction
to target
5,000-
10,000
square feet
310 200 (65%)2035 15%9%$4.11 to $4.56
10,000+
square feet
780 520 (66%)2030 25%13%$4.69 to $5.05
State
covered
50,000+
square feet
80 60 (77%)2030 29%17%$4.40 to $4.74
Based on 2023 reported benchmarking data; some buildings are campuses which include multiple structures
Wealth of Resources
Technical
Assistance
Financing
Education
Funding
Current
•Assessments
•Advising
Future
•Resource hub
•Technical hub
•Financial hub
•BPS assessments
•Training Help Center support
Current
•Beneficial financing structures
(green lending options)
Future
•City partnerships to fill
gaps
•Opportunity navigators
Current
•C-Pace Epic Tool
•BETTER Tool
•Assessments
(Utilities, Xcel)
Future
•Targeted, whole-building
assessment with next steps
and projected EUI impact
Current
•Inflation Reduction Act
•State dollars
•Local rebates
Future
•More rebates, incentives
•Potential federal grants
•CEO partnership
Additional Support
Work Underway
•Outline which Fort Collins buildings
need more resources
•Engage with building representatives
to isolate barriers to efficiency
Projected Additional Resources
•Educational, technical, financial,
enhanced engagement strategies
Check Back In
•Partner with the community to ensure
resources are offered in a way that’s
accessible to all building
representatives
Cost Benefit Study
When considering only energy savings, BPS implementation has a projected benefit of $0.85 for every $1 in cost
spent between 2024-2035. When factoring in the avoided social cost of greenhouse gas emissions, such as
health effects, property damage from climate-related natural disasters, and the disruption of energy systems, the
benefit increases to $3.18 for every $1 in cost.
Cumulative over a 10-year period
Cost Benefit Analysis: Owner and Occupant Benefits
•“Green” buildings or buildings with higher-than-average efficiency
have demonstrated occupancy rates up to 18% higher than average,
greater occupancy retention, and a 5.9% higher net operating
income.
•Reductions in onsite energy demand can lead to energy bill
averages at approximately 35% lower than those of an average
office building.
•Due to market demand, building owners can charge higher
premiums for leased spaces.
•Green building upgrades may add between 2%-17% to a building’s
resale value.
•Building operating costs can drop 30% following green building
upgrades, and maintenance costs may decrease 25-30% as well.
12
Administrative Program Costs/MTCO2e Avoided
Utilities 2023 Energy Services portfolio of programs achieves an average of
$31 per MTCO2e avoided
•Individual projects and efforts ranging from $10 to $150 per MTCO2e avoided
•Income qualified program $126 /MTCO2e
•Benchmarking $11/MTCO2e
Building Performance Standards projected costs/MTCO2e:
$10 to $40/MTCO2e avoided
•Incorporating a range of advanced technical support (offered to ¼ to 100% of
covered buildings)
•Incorporating additional incentives of up to $2 million/year
13
Bottom-up Data Analysis Approach
How do we calculate building targets, savings, and costs?
•Benchmarking data from 1350 Fort Collins building Portfolio Manager reports
•Cross referenced with 54,000 Larimer County tax parcels, 74,000 electric
services, 77,000 City GIS addresses
•Aggregating to 46,000 buildings with unique identifiers
•Resulting in 200+ data fields/building
•Incorporating national energy data, local potential studies, reported data from
other jurisdictions, detailed local project data (Efficiency Works Business)
14
Violations
Role of Fines
Fines in regulatory programs are designed to drive engagement and compliance. To
achieve this, fines need to be slightly higher than the projected cost of compliance.
Recommendation:
•$0.70 kBtu (thousand British thermal unit) of non-compliance
•A building that is very close to its target will have a small fine, and one farther
from its target would have a larger fine.
•Citations reoccur until the building owner takes action or total amount of penalty is paid.
•Building owner action triggers a cure period.
•Cure periods allow for the cessation of citations when and if a building owner
takes action toward reaching their efficiency target.
BPS is not a revenue generator
Proposed Next Steps
Adoption (Summer 2024?)
Refine BPS requirements with
Council
Resource Gathering (Summer-December)
Secure and customize required
resources
Implementation (January 2025)
Begin offering education and
resources; notifications begin
Adoption:
Adoption well in advance of targets provides building owners more time to meet requirements.
Resource Gathering:
Successful implementation depends on resources for all buildings, with emphasis on under-resourced
buildings. Staff are ready to build out educational, financial, and technical resource hubs.
Implementation:
Resources developed will be shared widely with the expectation of more support needed for individual
building owners close to interim and final target dates.
Building Owner and Community Engagement: Next Steps
Target DateImplementation
Consult
Inform
•Usefulness and accessibility of
resources
•Additional challenges/gaps?
•Requirements and next steps
•Tools for success
•How to find support Plan
Do
Check
ActCommunity
contributor inputAll resources
Program Manager, Energy Services
Katherine Bailey
Additional Context
18
Case Studies
Status Occupancy
Type
Purpose Estimated
Cost/SF
Completed Office
Moderate energy
savings required
(9% reduction)
$2.85
Completed Multifamily
Housing
Energy savings cap
(25% reduction)$4.44
Completed Retail Store
Energy savings cap
(25% reduction)$4.36
Underway Strip Mall Energy savings cap
(25% reduction)TBD
Case studies provide examples for other building owners
Case studies are provided on the most common property use types covered by the proposed BPS
Fort Collins Efficiency Strategy
Utility Rates
Incentives
Financing
Other City Fees
Distribution Grid
Contractors
& Workforce
Advanced Grid
Management
Education
Awareness
Transparency
Technical Assistance
Policies
Building Codes
Standards
Some levers can be used to make
progress toward goals across
several segments of the community,
while others are more unique to a given
segment.
•Existing buildings impacts recognized
by economic and behavioral levers.
•New construction impacts mostly
recognized in advancement of building
energy code.
Areas of Impact
BPS, a proposed regulatory lever,
identifies building energy use targets that
building owners would be required to
meet. BPS success will also depend on
economic, behavioral, and infrastructure
resources.
Building Performance
Standards (BPS)
BPS Alignment with Strategy
Policies
Building Codes
Standards
Emissions
Avoided vs 2005
Pathway Group
2030
Electricity 27.10%
Buildings 16.70%
•Performance 16.10%
•Construction 0.30%
•Electrification 0.30%
Transportation 4.40%
Industry 4.10%
Waste 1.60%
Land Use 0.10%
BPS and Our Climate Future
Buildings account for more than two-thirds of our local greenhouse gas emissions
Our Climate Future (OCF) Goal:
Reduce greenhouse gas emissions 80% below 2005 baseline levels by 2030
Live Better: Big Move 6
Emissions
Avoided vs 2005
Pathway Group
2030
Electricity 27.10%
Buildings 16.70%
•Regulatory 8.90%
(BEWS, BPS)
•Economic 7.80%
Transportation 4.40%
Industry 4.10%
Waste 1.60%
Land Use 0.10%
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Covered Multi-family Buildings
Recommended Definition
§12-202 of the Municipal Code: Covered buildings include
apartment and condominium buildings three stories or more in
height above grade
•150 multi-family buildings
•100 need to take action to meet recommended
target
•Average reduction to target aligns with other property use
types
•Cost per square foot is lower than other property use types
due to size of covered buildings:
For More Information, Visit
THANK YOU!
ourcity.fcgov.com/bps