HomeMy WebLinkAbout08/01/2024 - Water Commission - AGENDA - Work Session
WATER COMMISSION
WORK SESSION AGENDA
August 1, 2024, 5:30 – 7:30 p.m.
Online via Zoom and in person at 222 Laporte Ave, Colorado River Room
08/01/2024 Agenda Page 1
The Water Commission advises City Council regarding water, wastewater, and stormwater
policy issues such as water rights, planning, acquisition and management, conservation and
public education, floodplain regulations, storm drainage, and development criteria. Read more
at https://www.fcgov.com/cityclerk/boards/water.
This hybrid Water Commission meeting is available online via Zoom, phone, or in person in
the Colorado River Room of 222 Laporte Ave. You may join the meeting beginning at 5:00 p.m.
Participants should join at least 15 minutes prior to the 5:30 p.m. start time.
ONLINE PUBLIC PARTICIPATION:
You will need an internet connection on a laptop, computer, or smartphone, and may join the
meeting through Zoom at https://fcgov.zoom.us/j/99316535721 Webinar ID: 993 1653 5721
(Using earphones with a microphone will greatly improve your audio). Keep yourself on muted
status.
For public comments, the Chairperson will ask participants to click the “Raise Hand” button to
indicate you would like to speak at that time. Staff will moderate the Zoom session to ensure all
participants have an opportunity to comment.
PUBLIC PARTICIPATION BY PHONE:
Please dial +1 720 928 9299 and enter Webinar ID: 993 1653 5721. Keep yourself on muted
status. For public comments, when the Chairperson asks participants to click the “Raise Hand”
button if they wish to speak, phone participants will need to press *9 to do this. Staff will be
moderating the Zoom session to ensure all participants have an opportunity to address the
Water Commission. When you are called, press *6 to unmute yourself.
PUBLIC PARTICIPATION IN PERSON:
To participate in person, individuals should come to the Colorado River Room of 222 Laporte
Ave. There may be needs to limit the number of individuals in the meeting room, and thus
staging for individuals to speak may need to occur in the lobby or outside (weather permitting).
Individuals who wish to speak will line up along the northern wall, maintaining physical
distancing. The chairperson will call upon each participant to speak.
(Continued on next page)
WATER COMMISSION
WORK SESSION AGENDA
August 1, 2024, 5:30 – 7:30 p.m.
Online via Zoom and in person at 222 Laporte Ave, Colorado River Room
08/01/2024 Agenda Page 2
1. CALL TO ORDER (5:30)
2. AGENDA REVIEW
3. COMMUNITY PARTICIPATION (3 minutes per individual)
4. NEW BUSINESS
a. Discussion Items
i. Water Supply Requirement (WSR) and Excess Water Use Fee Increase
(50 minutes)
Jen Dial, Manager, Water Resources
Staff will present to build a shared understanding of the history and purpose
of Water Supply Requirement (WSR) fees and pre-1984 non-residential
water allotments. This presentation will share the analysis of potential
methodologies for WSR fees and assigning pre-1984 non-residential water
allotments, as well as customer engagement opportunities planned for 2024,
including a timeline and identification of impacted parties.
ii. Halligan Water Supply Project Update (30 minutes)
Darren Parkin, Project Manager, Halligan Project
Staff will present on the progress of the Halligan Project, starting with some
of the history and purpose of the project, and then delving into current efforts,
cost estimates, project impacts and benefits, and other details such as
Documents to Share: Any document or presentation a member of the public wishes to
provide to the Water Commission for its consideration must be emailed to JSong@fcgov.com
at least 24 hours before the meeting.
Provide Comments via Email: Individuals who are uncomfortable or unable to access the
Zoom platform or participate by phone are encouraged to participate by emailing comments
to the above email address at least 24 hours prior to the meeting.
If your comments are specific to any of the discussion items on the agenda, please indicate
that in the subject line of your email. Staff will ensure your comments are provided to the
Water Commission.
WATER COMMISSION
WORK SESSION AGENDA
August 1, 2024, 5:30 – 7:30 p.m.
Online via Zoom and in person at 222 Laporte Ave, Colorado River Room
08/01/2024 Agenda Page 3
permitting and other developments along the timeline of the project.
5. ANNOUNCEMENTS
6. ADJOURNMENT (7:30)
Utilities
700 Wood St.
PO Box 580, Fort Collins, CO 80522
970-212-2900
utilities@fcgov.com
AGENDA ITEM SUMMARY
Date: July 25, 2024
To: Water Commission
Through: Jill Oropeza, Utilities Interim One Water Director
From: Jen Dial, Water Resources Manager
Subject: Water Supply Requirements, Excess Water Use Surcharges, and Pre-1984 Non-
Residential Water Allotments.
BOTTOM LINE
The purpose of this item is to provide Water Commission with information on proposed changes
to the following three related items for Fort Collins Utilities (Utilities) water customers:
Revisions to the Water Supply Requirement (WSR) fee methodology
Revisions to the excess water use surcharge (surcharge)
Assignment of annual water allotments (allotments) for non-residential customers, specifically,
pre-1984 non-residential accounts that currently do not have allotments
Questions for Water Commission to consider are:
1. What general questions do you have about the proposed methodologies?
2. How might you or the community you represent be impacted by these changes?
3. What other input do you have?
RECOMMENDED WATER COMMISSION ACTION
A letter of support for the recommended methodologies for the WSR fee and assigning of
allotment to provide to Council.
BACKGROUND/DISCUSSION
Utilities has been proactive in securing and developing a high-quality, reliable water supply
system since the late 1800s and has implemented policies to ensure the water supply system will
support existing and future water customers through the 2065 planning horizon. These efforts
continue in support of City Council’s priority to Protect Community Water Systems in an Integrated
Way to Ensure Resilient Water Resources and Healthy Watersheds. Financial mechanisms to
help achieve this priority include:
A WSR fee: A one-time development fee required for each new water service
Allotments: Assigned to non-residential, including irrigation-only, accounts based on their
WSR
Water Commission
Aug. 1, 2024
Page 2 of 8
Surcharges: Monthly charges for non-residential customers who exceed their allotment during
a 12-month period
Over the past several years, the cost to develop Utilities’ water supply has increased due to water
scarcity, driven by climate change impacts such as drought and higher regional water demands
and competition. Infrastructure costs have increased as well due primarily to inflation which
contributes to the overall WSR development costs. This prompted staff to reevaluate the WSR
fee and methodology, which was last evaluated in 2022 and set at $68,200 per acre-foot (AF). In
August 2023, staff presented a revised WSR fee methodology to City Council and a proposed fee
and surcharge increase. Following that work session, Council feedback included a desire to see
additional WSR options. Staff evaluated additional methodologies and presented these to Council
on April 9 and July 9, 2024 with the recommendation for a hybrid, cost-based approach (discussed
further below). Council generally supported this approach.
The surcharge amount is determined by the WSR fee and non-residential customers with
allotments are affected by higher surcharges if the fee increases. Of the approximately 3,000 non-
residential water taps, about 1,000 of those water taps were purchased before 1984, when
allotments were established, and therefore do not have an allotment. These accounts are subject
to the regular water rate structure; however, the surcharge does not apply to them. At the April 9
work session, staff recommended assigning allotments to the 1,000 non-residential accounts.
Staff presented several methodologies with the recommendation for a hybrid approach.
WSR: Methodologies, Impacts, Communication and Engagement
Methodologies
According to the American Water Works Association’s ‘Seventh Edition of Water Rates, Fees,
and Charges’, there are three basic methodologies for calculating a WSR fee. They are based on
a water provider’s water rights portfolio, infrastructure, and the ability of the current water supply
system to serve existing versus future customers. These methods include:
Full Buy-In Method: Values the entire existing water supply system, which is expected to
service all current and future customers’ water value. Future customers would then buy into
the entire current system (total value of system/total yield).
Incremental Method: Based on the cost to expand the water supply system to serve future
customers. This fee only reflects the cost of buying water rights and paying for infrastructure
needed to support future customers.
Hybrid Method: Includes a buy-in component that is the portion of the current water supply
system, and an incremental portion that is the portion of the system that has not been
purchased or built yet. It acknowledges that future customers will use both current and future
water supply systems and thus reflects the percentage of the total cost of the current and
future system that will serve those customers.
Utilities has been using a hybrid approach since 2018 and recommends continuing with this
approach. Utilities owns water rights that new customers will rely on, reflecting a “buy-in” portion
of costs. Utilities also needs to build new infrastructure (primarily storage in Halligan Reservoir)
and purchase additional water rights, reflecting an “incremental” portion of costs that will provide
the water supply needed to meet demands through build out in 2065.
The buy-in portion of the WSR fee can be valued with a market-based approach or a cost-based
approach. The current methodology uses a market-based approach. The market-based approach
Water Commission
Aug. 1, 2024
Page 3 of 8
uses the current market value for the existing water rights portfolio based on recent transactions
of water rights. The cost-based approach uses the original purchase price of the water rights
escalated by the Consumer Price Index to reflect their value in today’s dollars.
The cost-based approach results in a lower WSR fee than the market-based approach because
Utilities’ water supplies were generally acquired long ago before recent and significant water rights
cost increases. The incremental portion of the fee uses the market-based approach to value the
water rights that need to be purchased and the future infrastructure that needs to be constructed.
Other factors that can be reflected in the WSR fee include a 30% contingency factor and a 20%
safety factor which are both included in the current methodology. The contingency factor
represents uncertainties in the cost of future water rights and infrastructure. It is not applied to the
buy-in portion of the WSR fee. The safety factor represents uncertainties in future water supply
and demand needs such as potential impacts of climate change and type or rate of development
and redevelopment. It is applied to the entire WSR fee.
Staff evaluated WSR fees using the current hybrid methodology with different approaches of
valuing the “buy-in” component using market values or cost-based values and the inclusion and
omission of a safety factor. Staff deemed the safety factor necessary. At the July 9 work session
staff presented the following options:
Staff recommended the cost-based, 30% contingency, 20% safety factor method, which results
in a fee of $63,800 per AF. That amount is $4,400 per AF less than the current fee of $68,200 per
AF. Council was generally supportive of this methodology moving forward.
Impacts
Future Development/Redevelopment
All water service providers in the region require some form of WSR for development or
redevelopment. The methodologies used and the required water dedications differ making
comparisons challenging.
For most water providers, the cost required from developers depends on:
1. The fee per AF of water ($/AF)
2. The amount of water required (AF)
Where, Total cost = $ per AF of water x the amount of water required (AF)
Utilities currently has a higher fee per AF compared to other water providers in the region.
However, the amount of water required for dedication for different developments is sometimes
less.
Water Commission
Aug. 1, 2024
Page 4 of 8
For example, applying the proposed WSR fee to the amount of water required for a multi-family
development would cost $272,400 in Utilities’ service area compared to East Larimer County
Water District at $670,900 and Fort Collins-Loveland Water District at $1,228,200 (see table
below):
On the other hand, Utilities would require a median cost for an office building and higher costs for
a typical restaurant compared to other water providers. Utilities bases its requirements on
analyses of actual use whereas other providers use different methodologies (like a tap credit,
peak water use, differing time range of historical use, etc.).
Existing Customers: Rates vs. Fees
Monthly water rates and development fees are the two main sources of water fund revenue. Water
development fees can be further broken down into:
1) WSR fee: One-time fee geared toward acquisition of future water rights and construction of
storage and water supply infrastructure projects.
2) Plant investment fee: One-time fee geared toward recovery of the water treatment plant and
distribution system.
A significant portion of water fund revenue is collected from monthly utility rates, equating to
roughly 95% of total revenue each year on average. The remaining 5% comes from development
fees and surcharges, although there are variations in this ratio, and fluctuations are tied to
development (or redevelopment) projects that occur in Utilities’ service area.
Routine updates to the WSR fee, as well as the excess water use surcharge, will help Utilities
keep up with increasing costs and provide a recovery mechanism for both current and future
source of supply and water storage projects. The methodology being considered to calculate the
WSR fee will have an impact to existing customers, both now and into the future, as revenue from
these fees are dependent on rate and type of development year to year.
Water Commission
Aug. 1, 2024
Page 5 of 8
Because Utilities is a municipal-owned, cost-of-service utility provider, there is an inverse
relationship between rates and fees. In general, the lower the WSR fee, the more it will impact
customer rates. The higher the fee, the less it will impact rates. The WSR fee also impacts the
source of funding for projects like the Halligan Water Supply Project (Halligan). The impact to
customer rates strongly correlates to the amount of development that occurs. The City’s Planning
Department has two projections for the type of development and associated growth we can
expect, which results in an additional water dedication of either 1,024 or 2,000 AF over the next
40 years. If the recommended WSR fee of $63,800 is implemented, it is projected that Utilities will
collect roughly $4.5 million less in development fee revenue by 2065 compared to requiring the
current fee of $68,200 per AF. This is a decrease of 6.5% in development fees, which would
require roughly a half-percent increase in customer rates to recoup the difference. On average,
staff expect development to pay Utilities for roughly 25 acre-feet of water in cash for development
each year over the long term. In recent years, though, this amount has been much less, which
also drives higher short-term needs to increase rates to stabilize revenue and increase debt
capacity for projects such as Halligan. Currently, Utilities estimates a 7-10% increase in water
rates each year over the next 10 years based on the current fee and average revenue from WSR
and surcharges over the past five years.
Assigning New Allotments to Pre-1984 Non-residential Customers
As noted above, staff recommends assigning allotments to pre-1984 non-residential customers
that do not have one. This will:
Provide consistency across non-residential customers.
Increase fairness by requiring all customers to manage water efficiently and be subject to a
surcharge.
Address these assignments now rather than in the future when WSR and surcharges could
be greater and more challenging for customers to manage. If Utilities does not assign
allotments to those customers, and surcharges increase, the gap between those with
allotments and those without will grow.
Promote water conservation by assigning appropriate allotments and tailoring water efficiency
programs to customers who exceed.
Important considerations:
Staff recommends that when customers receive a new allotment, they would not owe a WSR
fee.
Customers will need time to understand their allotment, how they use water, and how to
budget water use within their allotment.
This does not re-evaluate existing allotments.
Methodologies and Impacts
After evaluating a variety of methods for assigning allotments (summarized below), staff
recommended the hybrid approach. Pros and cons from the evaluation are listed below.
Water Commission
Aug. 1, 2024
Page 6 of 8
1) Hybrid
a. Assigns an allotment based either the tap size or average annual consumption,
whichever is greater.
b. Could assign a higher allotment than needed making it difficult to address or identify
inefficiencies in water use.
c. Lowest impact to pre-1984 customers.
d. 50-75 accounts would have exceeded their allotment in each of the last five years
e. Inconsistent with historic and current code.
2) Tap Size
a. Assigns allotment based on meter size (method used to assign allotments from 1984-
2022).
b. Some customers would receive a disproportionate allotment subjecting them to
surcharges.
c. 80-100 accounts would have exceeded their allotment in each of the last five years
d. Consistent with previous code.
3) Average Annual Consumption
a. Assigns an allotment based on average historical water use per tap (five, seven, or 10
years).
b. Reflects actual water use but doesn’t always reflect or identify inefficiencies in use.
c. Lower impact from surcharges. Unless there’s significant growth or changes in
business use and function, annual consumption is expected to be around the
allotment.
d. 400-560 accounts would have exceeded at least once in the last five years”
e. Inconsistent with current and historical codes.
4) Business Type
a. Allotments are assigned based on the specific use (e.g., number of rooms in a hotel,
square footage of a restaurant, outdoor water demands based on landscape details).
b. More accurate but cannot evaluate the potential impacts to customers without
collecting the data necessary to assign the allotment.
c. Consistent with current code, but inconsistent with majority of existing allotments (only
approximately 44 accounts have been assigned this way since 2022).
The table below illustrates the impacts to customers had the account had the allotment volume
proposed by the hybrid method.
Water Commission
Aug. 1, 2024
Page 7 of 8
The accounts most likely to be impacted are those with variable use due to factors such as
weather, patronage and unique use. Irrigation-only, including City Parks, taps serving multiple
tenants (e.g. strip malls), and restaurants are uses that may experience greater impacts.
Additionally, there are some unique account types including City Parks, large water use accounts,
and some HOAs that may experience greater impacts and require more in-depth analysis and
customer outreach.
CITY FINANCIAL IMPACTS
Annual revenue from development fees is directly tied to development and redevelopment within
Utilities’ water service area, which can vary greatly from year to year. Any changes to the WSR
fee will impact the amount recovered for source of supply and storage projects in both the near
term and long term. A change in the WSR is also directly tied to the amount collected in
surcharges, and as customers exceed their annual allotment, helps ensure recovery for
undersized WSR amounts received at time of development.
For those pre-1984 accounts, roughly 5-7% of those accounts may exceed their allotments in any
given year. Using current EWU rates, this could result in additional surcharge collection up to
$250,000 annually.
PUBLIC OUTREACH
Utilities reached out to customers and community members who could potentially be impacted
by these decisions, including developers, community groups, Boards and Commissions, existing
customers, and non-residential customers who would be assigned an allotment. In general, the
feedback received has been positive or neutral, with most groups interested in better
understanding their specific situation. Tactics for outreach included:
Our City engagement website
Direct email and mail
Webinar for potential new allotment customers
Internal staff lunch and learn
Dedicated office hours appointments by request
NEXT STEPS
Water Commission
Aug. 1, 2024
Page 8 of 8
Staff will bring an ordinance for City Council first reading for the implementation of a hybrid,
cost-based method for calculating the WSR fee and assigning allotments using the hybrid
method in October.
Headline Copy Goes Here
Water Resources Manager
Jen Dial
Water Supply
Requirements and
Pre-1984
Non-Residential
Water Allotments
Aug. 1, 2024
Headline Copy Goes HerePurpose
1. Build shared understanding of the history and
purpose of Water Supply Requirement (WSR)
fees and pre-1984 non-residential water
allotments.
2. Share staff analysis of potential
methodologies for WSR fees and assigning
pre-1984 non-residential water allotments.
3. Share customer engagement for 2024,
including a timeline and identification of
impacted parties.
4. Answer questions and seek feedback.
2
Headline Copy Goes HereQuestions for Water Commission
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 HerePurpose: WSR and Water Allotments
A form of 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
4
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
5
Headline Copy Goes HereTimeline
April 9
Work Session
April/May Aug./Sept.2025Oct./Nov.June/July
ImplementationContinue
Engagement
First and
Second Reading
Regular Meetings
Initiate Engagement
Economic Advisory
Board
Fort Collins Area
Chamber of
Commerce
July 9
Work Session
Boards and
Commissions,
Affordable
Housing Focus
Group
Wrap Up
Engagement
Headline Copy Goes HereWater Supply Requirements, Water Allotments, and Surcharges
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
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%.
Headline Copy Goes HereWater Rates and Fees
WSR
Commercial
Developers
Residential
Developers
Excess Water
Use
surcharges
Non-residential
customers with
annual water
allotments
Plant
Investment
Fees
Commercial
Developers
Residential
Developers
Rates
Residential
Commercial
Headline Copy Goes Here
WSR Pricing Methodologies
Headline Copy Goes HereOverview of Methodologies
Full Buy-In
• Value 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
12
Headline Copy Goes HereWSR Historical Methodology
› Recommending
$63,800/AF using
hybrid, cost-based
methodology
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, 20%
safety factor, 30%
contingency
2022-current
›$6,500/acre-feet (AF),
based on Colorado
Big-Thompson (CBT)
prices
October 2024
13
Headline Copy Goes HereCurrent Methodology Overview
HYBRID
Buy-in
Existing
water rights
Incremental
Future water
rights and
infrastructure
Total cost to
increase reliability
of water supply
Note: Future water supplies do not provide
adequate reliability without existing portfolio
14
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 CPI
• Safety factor
Buy-In
Existing Water Rights
Incremental
Future Water Rights and Infrastructure
Requires modeling and predicting costs
of future water supply needs.
Cost considerations:
• Market-based
• Contingency
• Safety factor
15
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.)
16
ConsiderationsCostMethod
• Increased by Consumer Price Index over time
• Added infrastructure to buy-in component
• Higher rate impact to existing customers
$63,800/AFCost-based
30% contingency*
20% safety factor**
• Current approach with updated costs
• Higher impact to developers
• Lower rate impact to existing customers
$110,700/AFMarket-based
30% contingency*
20% safety factor**
Headline Copy Goes HereMulti-Family Total Water Supply Requirement (Indoor & Outdoor)
2024 Multi-Family
100 bedrooms, 64 dwelling units, 30,504 sq. ft. lot area, 5,535 sq. ft. irrigated area
CostWater Fee
($/AF)
Dedication Amount
(AF)Provider
$1,228,200$120,00010.24Ft. Collins Loveland
$670,900$60,600**11.07East Larimer County
$503,200$47,38010.62Loveland
$472,700$110,7004.27FC Utilities (MB,30%C,20%S)
$375,300$51,5007.29Greeley
$272,400$63,8004.27FC Utilities (CB,30%C,20%S)
$278,300$40,4006.88Westminster
**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
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
FC Utilities (CB,30%C,20%S)
Westminster
FC Utilities Current
Greeley
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)
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,20%S)
Greeley
FC Utilities Current
FC Utilities (MB,30%C,20%S)
Typical Restaurant
Headline Copy Goes HereFinancial Impacts
• Estimate 1,024 or 2,000 AF
of water dedication
remaining
• 25 AF/year on average
• Recently less
• Proposed method at $63,800/AF
• $4.5 million less revenue
• 0.5% rate increase over 40 years
• At current fee ($68,200) expect 7-10%
rate increase from 2025-2033
assuming five-year average of revenue
from WSR and surcharges
• ~5% of total
water fund
20
Headline Copy Goes Here
*Contingency: Captures uncertainties in future costs
**Safety factor: Captures uncertainties in future demand and supplies (e.g., climate change, development types, etc.)
21
ConsiderationsCostMethod
• Increased by Consumer Price Index over time
• Added infrastructure to buy-in component
• Higher rate impact to existing customers
$63,800/AFCost-based
30% contingency*
20% safety factor**
• Current approach with updated costs
• Higher impact to developers
• Lower rate impact to existing customers
$110,700/AFMarket-based
30% contingency*
20% safety factor**
Summary: Hybrid Method Pricing Options
Headline Copy Goes Here
Methodology for Assigning
Remaining Non-residential Water
Allotments
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 2025 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
23
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
24
Headline Copy Goes HereAllotment Methodology Overview
ImpactsHistoryDescriptionMethod
•Lowest impact
•Could assign a higher allotment than
needed making it difficult to
identify inefficiencies
Selects the greater between
average historical use and
tap credit
Hybrid
(Tap and Avg. Use)
• Could underestimate allotment resulting in
potential unwarranted surcharges
Most current allotments
assigned with this
methodology
Assigns a volume based on
meter size
Tap Credit
• 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
Have not assigned this
way
Assigns a volume based on
average historical water use
per tap (e.g., five years)
Average
Historical Use
• Best reflects actual water use need
• Limited data to fully evaluate impacts (44
customers assigned this way)
• Time-intensive process
Current methodology
for setting allotments
Assigns based on business
type and specific use (e.g., #
rooms in hotel, square
footage of restaurant,
landscape details, etc.)
Business Type
Headline Copy Goes HerePotential Impact
In the last five years, number of new allotment accounts with
taps three inches or lower that would have:
154 (50-75 each year) Been charged an EWU surcharge
41 Exceeded allotment three or more years
6 Paid an annual surcharge more than $20,000
Total EWU surcharges collected in each of the last five years would have been $135,000 - $250,000 at the
2024 EWU rate.
Headline Copy Goes HerePotential Impacts
Estimated sum of
EWU in max year
Number of accounts
paying EWU in max
year
Top three business
types most likely
impacted
$169,54531Irrigation
$62,47422Mixed use (strip malls)
$111,50838Restaurants
Headline Copy Goes HerePotential Impacts
Under this methodology, most customers would not be
significantly affected
Courses of Action
• Recommend a one-year grace period where surcharges
would not be assessed.
• Engage with customers one-on-one over the coming months.
• Explore exception process.
• Encourage conservation projects as appropriate.
Considerations
• Large accounts
•HOAs
• City Parks accounts
Headline Copy Goes Here
Customer Engagement
Headline Copy Goes HereDesired Outcomes
• Build relationships
• Help customers understand their
unique circumstances
• Seek feedback to improve
project decision
• Deliver feedback to core team to
incorporate into decision making
Headline Copy Goes HereCommunication and Engagement
Project update through email and mail
•Developers and interested parties
•Customers who have exceeded their allotment
Notified potential new allotment customers in
person, email, and mail
•Included information on proposed allotment size
Our City page
•Questionnaire
Webinar
•Education for potential new allotment customers
Lunch and Learn
•Internal staff
Ongoing
•One-on-one office hours
Headline Copy Goes HereFeedback We Have Heard
• Minimal concerns with assigning allotments
• Questions from customers to help them understand how they will be impacted by changes
• Considerations for affordable housing providers
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?
33
Headline Copy Goes Here
34
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.)
ConsiderationsDraft CostMethod
• Current approach with updated costs
• Highest impact to developers
$116,500/AFMarket-based
30% contingency*
20% safety factor**
• Safety factor removed$97,100/AFMarket-based
30% contingency
• Development costs reflect Utilities’
investment in water rights proactively (since
late 1800s)
<$68,200/AFCost-based,
30% contingency
20% safety factor
• Safety factor removed
• Lower than current fee
• Highest impact to existing customers
$59,900/AFCost-based
30% contingency
35
Headline Copy Goes HereBreakdown of a Bill
Headline Copy Goes Here
Halligan Project Manager
Darren Parkin
Halligan Project:
Overview and
Update
Aug.1, 2024
Headline Copy Goes HereHalligan Water Supply Project Purpose
Why?
•Provide water to current and future customers
•30,500 acre-feet existing firm yield, 38,400 acre-feet projected future demand
•Increase reliability and resiliency of our water supply, especially in times of prolonged drought
and climate change uncertainties
•Gain storage to capture the water rights we own
What?
•Enlarge existing reservoir by building a replacement dam
•Stored water would serve Utilities’ service area’s residents and businesses
Headline Copy Goes HereHalligan Water Supply Project Big Picture
•Existing dam built in 1909 by North
Poudre Irrigation Company
•Federal permitting process started
in 2006
•Project will expand the existing
6,400 acre-feet reservoir, by
~8,200 acre-feet
•14,600 acre-feet total capacity
•New dam construction to start as
early as 2026
•The project is currently the most
cost-effective option to meet
Utilities' water storage and supply
needs
Headline Copy Goes HereExisting Versus New
Existing dam
•78’ high, 350’ length,8-foot crest width
•Two 34” outlet pipes
•12,000 cubic feet per second (CFS)spillway
capacity
•Cyclopean masonry and slip form concrete
New dam
•144.5’ high, 1,000’ length, 26-foot crest width
•One 42” outlet and one 24” outlet
•104,000 CFS spillway capacity
•Roller Compacted Concrete
(RCC)construction
•Water surface elevation only increases by
26 feet
Headline Copy Goes Here
5
Halligan Reservoir Enlargement
253 to 391 surface acres
Headline Copy Goes Here
Federal Permitting
Process Began
2006
Draft Environmental
Impact Statement (EIS)
Released
2019
EIS Public Comment
Period
2019-2020
Fish and Wildlife
Mitigation and
Enhancement Plan
Approval
2023
Final EIS Released
2023 Larimer County 1041
2024
60% Design
2024
401 Water Quality
Certification
2025
Final Design
2025
Record of Decision
(Federal Permitting
Process Complete)
2026
Construction
Commencement
2026-2027
Operational
2028-2029
Project Timeline
Headline Copy Goes HereCurrent Total Cost Estimate: $308 Million
Headline Copy Goes HereStorage and Conservation Working Together
•Water Supply and Demand Policy: managing the
level of demand and efficient use of a scarce and
valuable resource
•Predicting what customers will use
•Conservation and efficiency: programs, City code
•Benefits: use less water, lower water bills
•Limitations: conservation helps flatten the curve
when demand is high but without a place to hold
water, it won’t be there when you need it
•Challenge: Growing population
•Water Supply and Demand Policy: ensuring
an adequate, safe and reliable supply of
water for beneficial use
•Water rights primarily from Horsetooth
Reservoir (Colorado River) and Cache la
Poudre River
•Water Supply Storage: Horsetooth, Joe
Wright and Halligan enlargement (proposed)
•Benefits: saves water for when you need it
•Limitations: inadequate storage
•Challenges: climate change, drought and
scarcity, value/cost, adequate supply
Supply Demand
8
Headline Copy Goes HereProject Impacts
•Water quality
•401 certification
•Seasonal inundation of
¾-mile stream channel
•Wetlands
•Inundation and creation of
wetlands
•Special status species
•Preble’s Meadow Jumping
Mouse, Big Horn Sheep
•Temporary construction activities
Headline Copy Goes HereOverall Project Benefits
Provides a safe, reliable
water supply.
Most cost-effective
option to meet needs.
Year-round flows on the
North Fork leading to
fishery and habitat
improvements.
Replaces an aging dam.
Gravity-fed – no energy
or greenhouse gas
emissions.
Uses existing reservoir
instead of building a
new one.
Headline Copy Goes HereEnvironmental Benefits
Zero-Flow River Conditions
Proposed River Conditions (5 CFS)
•Several measures will be included in the project
to avoid, minimize, and improve impacts on
stream functions:
•Winter Release Plan (3 CFS)
•Summer Low-flow Plan (5 CFS)
•3-day Peak flow bypass
•Ramping rate limitations
•Improves water temperatures
•Attempt to protect releases using
the Protected Mitigation Releases statute
•These provide flow-related benefits to about
22 miles of the North Fork of the Poudre River
Headline Copy Goes HereLarimer County 1041 Permit
•Colorado law authorizes local jurisdictions to identify,
designate, and regulate areas and activities of State
interest through this local permitting process
•Public comment period
•Application encompasses all aspects of the project
•Halligan will not go through the City of Fort Collins’ 1041
process
Headline Copy Goes HereLarimer County 1041 Timeline
Application
submitted
60 days
Completeness review
by Larimer County
Reviewing agencies
provide comments
45 days
City staff report to
Larimer County
Planning Commission
City staff report to
Board of County
Commissioners
Planning Commission
hearing
Board of County
Commissioners
hearing(s)
Decision
expected
Winter
2024-25July 11, 2024
Headline Copy Goes HereProject Enhancements
Fish Passage at the Fort Collins Intake at
Gateway Park
•Increase connectivity for trout, other large-
bodied fish on the Main Stem of the Cache la
Poudre River
•Diversion structure currently acts as a
barrier to fish movement, preventing
migration
•Compensate for impacts to the Main Stem
fisheries associated with flow change from
the Halligan Project
Project Site
Fort Collins
Poudre Canyon Rd.
Headline Copy Goes HerePassage Design
•Provide reliable
upstream fish passage
and additional
connectivity upstream
of the intake
•The City will consult with
Colorado Parks and
Wildlife
Headline Copy Goes Here
Questions?
fcgov.com/halligan