Loading...
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. 2 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 6 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 7 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% 9 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. 11 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 12 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 13 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 14 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 $59,900/AF •Safety factor removed •Lower than current fee •Highest impact to existing customers 15 Headline Copy Goes HereMulti-Family Total Water Supply Requirement (Indoor & Outdoor) 2024 Multi-Family 100 bedrooms, 64 dwelling units, 30,504 sq. ft. lot area, 5,535 sq. ft. irrigated area Provider Dedication Amount (acre-feet) Water Fee ($/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 16 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 23 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 24 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 29 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 30 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% 24 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