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HomeMy WebLinkAboutWater Board - Minutes - 08/28/1997WATER UTILITIES BOARD MINUTES August 28, 1997 3:20 - 5:12 p.m. Light and Power Training Room 700 Wood Street COUNCIL LIAISON Chuck Wanner (not present) Me 0 1M1 4 1•r 1-1-1alUPXfj /•SIC STAFF LIAISON Molly Nortier - Phone: 221-6681 MEMBERS PRESENT Alison Adams, Vice Chair, Tom Sanders, George Reed, Joe Bergquist, Bob Havis, Tom Brown Dave Rau, Robert Ward STAFF Mike Smith, Wendy Williams, Dennis Bode, Bob Smith, Kevin Kertig, Michael Ozog, Molly Nortier GUEST John Bigham, Northern Colorado Water Conservancy District MEMBERS ABSENT Paul Clopper, Chairman, David Lauer, Howard Goldman, Dave Frick, John Morris Tom Sanders opened the meeting in place of Paul Clopper who was unable to attend the meeting. The following items were discussed: MINUTES Alison Adams moved that the minutes of July 24, 1997 be approved as distributed. After a second from Bob Havis, the Board voted unanimous approval of the motion. Water Utilities Board Minutes August 28, 1997 Page 2 ELECTION OF VICE CHAIRMAN AND STANDING CONARE= APPOINTMENTS Tom Sanders asked that item 5 on the agenda, election of vice chairman, be moved to first on the agenda so the vice chair can officially preside over the remainder of the meeting. He opened nominations for vice chair. Molly Nortier said that Paul Clopper had asked her to nominate Alison Adams for him since he knew he would not be at the meeting. Ms. Adams consented to be nominated and said she would be glad to serve if elected. Dr. Sanders asked if there were further nominations. Seeing none, the nominations were closed. Alison Adams was elected unanimously as vice chair of the WUB. She then took over chairing the meeting. Molly Nortier noted that it would be unnecessary to make further appointments to the standing committees since they all appear to be well represented. Since the last meeting, Howard Goldman volunteered to join the Conservation and Public Education Committee. She asked if anyone else would like to volunteer for that committee. Joe Bergquist said he would like to be a member. Ms. Nortier announced that Alison Adams agreed to be the chair of the Liaison Issues Committee. Bob Havis announced that, as of the next meeting, he will no longer be living in the Urban Growth Area. Boards and Commission rules prohibit members from remaining on a board or commission when they move out of the UGA. Mr. Havis will submit a letter of resignation prior to the September meeting. Board members and staff expressed their disappoint that Mr. Havis will no longer be able to serve on the Board. John Bigham distributed the NCWCD project storage report as of August 28th. He reported that there is a total of 49, 284 ac-ft of space in the CBT system. If Granby is subtracted out of that it leaves only 4300 ac-ft of storage on the east side. The contract with the BOR states that the District must bring over 155,000 ac-ft this winter. "We are wondering where we are going to put it," he said. The District is releasing about 200 cfs out of Granby, "so we are actually in a spill situation from the standpoint of paper spill because that's way above our normal releases out of Granby. To date we have not put one drop of Willow Creek or Windy Gap water in there; so it's been running down the river. California has received well over 100,000 ac-ft of water that we couldn't collect," he commented. Mr. Bigham went on to say that there was non -charge water on the east side for anyone who needs it. The District is delivering approximately 993 cfs to the east slope out of the total deliveries, but 200 is coming in from the tunnel; that's only 700 cfs which is not many acre feet. He said there has not been a call on the Colorado River this year. It is unusual when a call is not put on the River to pull water out of Green Mountain. Water Utilities Board Nfinutes August 28, 1997 Page 3 In the sheets that were passed out, Mr. Bigham included some of the rainfall amounts for the District through the last 14 days. "We are running about 22% ahead on the average," he said. "Contrary to all the phone calls," he said, "the dam didn't break. Horsetooth is in good shape. There was still 8 or 9 feet of space in there for flood control." However, there was significant damage to the canals in different places, but that's all back in service. "Have we been spilling out of Granby for the last year or so?" Tom Sanders asked. "We have spilled some for several years," Mr. Bigham replied. "Is this the longest period of time that we have had a continuous spill?" Dr. Sanders asked. "I think it probably is; it's equal to or longer," he guessed. Dr. Sanders also wanted to know if the District was cloud seeding a couple of months ago. "We had a five year contract. We seeded two years and we haven't for the last three, so we don't take any credit for the recent heavy rains," Mr. Bigham laughed. Dave Rau asked from what weather station the data comes. "It comes from the District's weather stations," Mr. Bigham replied. "Obviously the Fort Collins data does not come from the CSU station, since there is only 1.69 in. recorded for July," Mr. Rau observed. That concluded the questions for Mr. Bigham. Wendy Williams introduced Michael Ozog who will give a presentation on Wastewater Treatment Plant Investment Fees. The Legislative and Finance Committee met to review the proposed PIFs a couple of weeks ago. There will be a brief report after Mr. Ozog's presentation. Copies of the overheads from the presentation were included in Board packets. W. Ozog began by saying that only the wastewater PIFs will be presented today. "We have investigated the water side, but we are going to hold off on that until we get a report from our consultants regarding the actual capacity of the system," he stated. Introduction Mr. Ozog defined Plant Investment Fees as charges to new customers for the facilities required to serve them. The philosophy is that "growth pays its own way." As a new customer, you are paying for the existing capacity that you will be using. Residential PIFs The next overhead showed a chart that listed water and wastewater PIFs from several front range cities and districts (Louisville, Westminster, Longmont, FCLWD/SFCSD, Greeley, ELCO/Boxelder, Fort Collins and Loveland). "Our fees compare favorably with these entities," he said. "We are actually towards the bottom when you look at the combination of water and wastewater fees for residential customers. As you can see, there is a huge variation. You would expect fast growing areas like Louisville to have very high PIFs." Tom Brown asked about the cities that aren't on the list like Water Utilities Board Minutes August 28, 1997 Page 4 Boulder or Denver, do they not have PIFs? "Most of the front range cities have them. I just didn't include them," Mr. Ozog replied. "Actually, in the Rocky Mountain region, use of PIFs is very common." Wastewater PIFs Need to be Revised Staff believes that the PIFs need to be revised, primarily because they haven't been revised since 1991. Construction costs alone have gone up 19% since then. Also, consumption patterns have changed. The Utility now meters residential customers and uses winter quarter consumption to determine wastewater charges for metered residential customers. If we look at historical PIF charges the relationship between commercial and residential is not equitable. Winter quarter consumption for a 3/4" commercial customer is nearly twice that of a 3/4" residential customer. However, commercial PIFs are only 25% more than residential. "In essence, commercial customers are being subsidized by residential customers," he said. "They are not paying their fair share." Dave Rau asked if staff has looked at commercial customers as a class and the variations within the class. There must be considerable variation when, for example, you get a commercial tap for office space where overall usage is very low, and contrast that with a company like Symbios where water use is very high. "We looked at the individual entities by tap size," Mr. Ozog answered, "and averaged three years of data to get these figures. There is not that much variation among 3/4" commercial customers. There is greater variation among the larger sizes. Mr. Rau wondered how an office complex could use twice as much water as a residence. "I don't know the details of what would be in a particular building," Mr. Ozog. "There is a problem with that because, for example, in some places it would be a `mom and pop' shop where in other places it could be a car wash," he acknowledged. "We need to look at an average because we don't want to have to use a different criteria for each customer, and that's true for single family as well." "When you say commercial, you aren't including industrial, is that correct?" Mr. Brown asked. "That's correct; right now we are just talking about the 3/4" commercial customers," Mr. Ozog responded. "Give some examples of those just so we're clear," Mr. Brown continued. "Restaurants, gas stations, etc.," Ms. Williams replied. Mr. Ozog pointed out that Symbios has a 3" tap and their peak demand could be up to 250,000 gallons a day," he added. "Under the 3/4" taps do you have more than 2 categories?" Mr. Rau asked. "No, there are no real industrial users with a 3/4" tap," Mr. Ozog explained. He added, "the point is, when you look at average WQC between the two groups, there is a large variation." Methodologies The first step in revising the wastewater PIFs is to look at the methodologies that are used to compute PIFs. Essentially there are two: (1) Incremental Cost which is also a marginal cost approach and (2) the Equity Buy -In or average cost approach. The important thing is that both approaches have growth paying its way and are based on cost -of -service. Water Utilities Board Minutes August 28, 1997 Page 5 Incremental Cost This is more forward- looking. New customers are paying for new capacity required to serve them. "If you have to build a new plant for expected growth, basically you are using the incremental approach. You look at the cost of the new plant on a customer basis. In general, all things being equal, it results in higher PIFs compared to the other approach. Essentially this is only appropriate when capacity must be built," he concluded. Equity Buy -In This approach is sometimes considered to be backward looking. New customers are paying for existing capacity required to serve them. In other words, you have enough capacity to serve these customers. They "buy into" the existing system and, as a result, consume the excess capacity. This approach is appropriate when sufficient capacity is available. Which Approach? Mr. Ozog than asked, which approach is appropriate for Fort Collins? The current wastewater system is adequate for near -term growth; the next 5 years. We have limited plans for additional capacity. Therefore, the Buy -In approach is most appropriate. Computing Wastewater PIP Once the approach is selected, the next step is to compute the wastewater PIF. "It's fairly simply," he said. You take the value of the system (all your assets) plus any additions you are going to add to the system while the PIF is in place and divide it by capacity, to get the dollar per gallon charge. Tom Brown asked to move back to the choice between the two approaches. "In referring to the Buy - In approach, are you saying that we won't need any new wastewater treatment capacity for a long time?" "No, as I mentioned earlier, I'm only talking about a five-year period," Mr. Ozog replied. "So after the years 6, 7, and 8, when we might need new capacity, would you switch to the other methodology?" Mr. Brown continued. "Yes, the way we are looking at this is that every five years we will re -visit the PIFs to see what our system is like; if we have to change our methodology, or if we need to add capacity" Mr. Ozog explained. "So it makes the actual fee if these two approaches result in a different level of pay, as you suggested. The cost of development would then depend on timing —they are either lucky or unlucky," Mr. Brown observed. "This seems a little mercurial. There ought to be some way to average this out," he asserted. "In other words, perhaps using both approaches --such as some sort of average since, in the long term, that's the way it averages out." "We view it more that our capacity is a fixed asset, and as people use more and more, it's going to get more expensive," Mr. Ozog pointed out. He compared it to having limited gasoline supplies, so people 30 years from now are going to pay a lot more for gasoline, thus allocating that into the present. "In the best of all possible worlds, that's probably the most equitable," he acknowledged. "We can't really forecast what growth is going to be and what capacity will be needed 10 years down the road." Water Utilities Board Minutes August 28, 1997 Page 6 Tom Sanders commented on the existing capacity approach. "We have excess capacity right now. Is that associated with Anheuser-Busch pulling out and treating it themselves?" "We have a contractual obligation with Busch which we have never cut into," Mike Smith responded; "whether they use it or not it's separate." George Reed wondered if it depends on where growth occurs. "In other words, you say we have capacity. If growth went in the wrong direction and we had a flag pole annexation, then it might not be practical to pump that, or you might need additional lift stations to pump it to existing capacity. Have you thought those scenarios out?" "We are surrounded on both sides by districts so we are really limited," Mr. Smith responded. "In general, most systems use the equity -buy in approach. The incremental approach is often used when suddenly there is development in the middle of nowhere, and you have to build a new system to provide service," Mr. Ozog related. Mike Smith provided an example: "A number of years ago the Wastewater Treatment Master Plan was projecting that we might need a new regional facility, and that's being looked at right now. If that were to happen, five years from now, we would need it to build a new 20 mgd treatment facility. That's an ideal case for an incremental approach. Joe Bergquist mentioned the presentation a couple of months ago on the 201 regional plan. It seems that Fort Collins is willing to help the districts build a new facility. "Is that true?" "The information that was presented at that time showed Fort Collins is in a very good position relative to capacity for the future, whereas the districts are facing more pressing problems," Mr. Smith responded. "Whether Fort Collins will participate in the regional facility, even though Fort Collins doesn't need much capacity, is a good question. It may be a question that the Board will have to struggle with." System Value Mr. Ozog went on to say that the system value is based on the book value of the system. It is escalated to capture the replacement value. "We try to capture what the cost would be if we were to build a new system. Then we subtract out any assets that are paid directly by developers or through the rates. We try to make a distinction between operational costs and capacity costs. That gives us a net system value of $169 million," he explained. Dave Rau had a question regarding Mr. Ozog's asset analogy. "Why do we escalate it for replacement value?" he asked. "That's getting pretty close to the incremental approach. If we spend $100 to build something and now it's worth $200; I guess I don't see the City in a profit mode. Any time you are paying more money than it costs you, that looks like a profit to me," Mr. Rau said. "The thought behind it is not how we are going to profit from an asset. That asset is losing value because we are adding more customers to the system," Mr. Ozog responded. "The new customer coming in will be free -riding off the customers 100 years ago, if we leave it at the price of 100 years because they will not be paying the true market value of that asset," he continued. Mr. Smith added that the customer here for 20 years has been paying depreciation on that ever since, whereas the customer coming in today "doesn't pay a nickel of that." Water Utilities Board Minutes August 28, 1997 Page 7 Mr. Brown doesn't see a big difference between the two approaches "if you are, as you say, escalating on current costs, which I think is totally sensible. I'm no longer worried about whether you are using one approach or the other. They seem to come together in my mind, and that's the right way to do it. I won't even ask you what the real differences are between these two approaches," he remarked. Mr. Reed wanted to clarify book value. `Book value is what we paid for it," Mr. Ozog clarified. "In some places book value is what remains after you have taken off annual depreciation," Mr. Reed continued. "This is literally the value that is on the books," Ms. Williams stated. Mr. Brown asked Mr. Ozog to explain the third bullet under system value: "subtracted assets paid directly by developers or through rates." Mr. Ozog explained that some sewer pipes, 3" and under, are actually paid for by developers when an area is developed. Additional Elements Mr. Ozog reiterated that since the PIFs are going to go on for 5 years, staff is adding in the 5-year Wastewater Capital Improvement Program from the Master Plan. "We are keeping the system value current. We then subtract the outstanding principle and divide that by capacity." PIF Charge Using that approach results in the following PIF charge: The charge is ($/day demand (WQ) in gallons): 1998 1999 2000 2M 2M $5.93 $6.02 $6.08 $6.25 $6.27 or an average of $6.11 "One of the issues staffwants to discuss with the Board is do we want to propose a five-year charge or maintain one charge for the whole five years?" Mr. Ozog said. Mr. Brown asked if the future numbers, the $6.02, $6.08, etc., are based on expected increases in replacements costs. "They are based primarily on the CIP (Capital Improvement Program)," Mr. Ozog replied, "and also to pay off principle, etc. I'm not really escalating the system value in that five years. We're adding assets to it and also, we are paying off debt," he added. "So you're not counting the expected increase in replacement value adjusted for inflation?" Mr. Brown asked. "I didn't make any forecasts for inflation," Mr. Ozog answered. "Then the PIF charge is based on expected demand?" Mr. Rau asked. "This charge now is based totally on capacity," Mr. Ozog said. "The next step will be based on charging for expected usage. One good thing about this approach is if someone comes in, e.g. a chip manufacturer, and they know what their demand is expected to be based on their experience in other plants, we can say use this figure and develop a PIF charge that is very specific to their usage." Mike Smith said there is a formula in the Code for computing PIFs for larger taps which will have to be revised. Mr. Brown wanted to know why the numbers go up. "They go up because of the Capital Water Utilities Board Minutes August 28, 1997 Page 8 Improvement Program," Mr. Ozog replied. "That's the five-year wastewater capital projects that you have seen as part of the budget, and as new capital projects come on line, they are factored in. "If you're not accounting for inflation, why does the fee go up?" Mr. Rau continued. "Because we are adding non -capacity related assets to our system through the CIP," Mr. Ozog responded "The capacity is already there," Mr. Smith added. "It doesn't make sense to me, if you don't account for inflation, why it costs more in 2001 to treat a gallon of wastewater," Mr. Rau persisted. "There are things in the CIP that are strictly O&M: maintenance on a plant, replacing filters, etc. and that adds cost," Mr. Ozog explained. Mr. Smith cited an example: Improvements are being made at the Mulberry Plant that don't increase the capacity of the facility, but they enhance the treatment by keeping up with the regulations and standards, so the value of the system is increasing. "These CIP numbers that go out to 2001, are they in 1997 dollars or what you expect the costs to be through those years?" Tom Brown asked. "They are in present dollars," Mr. Ozog replied. "So, by the time you get to 2001, it's actually going to cost more than what it says here?" Mr. Brown continued. "Yes, because of inflation," Mr. Ozog acknowledged, "but we don't expect it to be more than 2 or 3% per year. "That amounts to about 15% and that's not trivial," Mr. Brown contends, "and that's just the CIP, not the replacement value, which also goes up each year." Mr. Ozog said inflation could be factored in but he hadn't done so; "I would much rather come back at the end of five years and say we missed inflation so when we escalate the system value, we will capture it back. I think in terms of the impact on the base charge, and the charge per customer, I don't think inflation is a large factor," he stressed. "What's the 1997 rate in dollars per day demand?" George Reed asked. "Mstorically it has been done on a gallons per day basis, so I can't answer that question," Mr. Ozog replied. "You asked the Board to consider either increasing these rates each year or going to an average for the five years," Mr. Reed began. "I think I would like to know how much of an increment that would involve today," "I think how it impacts a customer is more useful than just looking at per gallon per day," Mr. Rau observed. "Since the variation is due to the CIP, 1997 is probably slightly less than what 1998 is," Mr. Smith pointed out. Mr. Reed said that a part of the CIP was treating to higher standards, but how about the kind of improvements that might reduce some of the operating charges? "We replaced chlorination systems with disinfections, and in sludge handling, they are replacing some old digester lids to capture the gas," Mr. Smith pointed out as an examples. Residential WW PIF Mr. Ozog went on to say that, "now that we have a per gallon charge, we need to figure out a way to get a schedule of wastewater PIFs." The residential sector (and all sectors) are based on Winter Quarter Consumption (WQC). The average WQC for single family residential is 180 gallons per day. "We got that from the billing records," he said. Water Utilities Board Minutes August 28, 1997 Page 9 Recommended PlYs for Residential Multiplied by $6.11, gives us a PIF charge of $1,113 for single family, which is actually a 30% decrease. Residential duplex would be $1,787, a 35% decrease. The Multi -family PIF would be $1,124, a 13% decrease. The decrease is primarily due to when these were originally done, they weren't based on winter quarter consumption. "At that time we didn't have very many metered customers," he pointed out. Commercial WW PlIF Mr. Ozog said that the same procedure is used to calculate the commercial WW PIE The average daily WQC for 3/4" commercial customers is 420 gallons per day. That compares to 180 gallons for a single family. Since there is considerable variation in usage among the larger meter sizes, the PIF is based on their flow rate relative to the 3/4". Recommended PIER for Commercial The same procedure is used to calculate the commercial as for residential. "We take the 420 x $6.11 which gives us a PIF charge for 3/4" of $2,596, a 30% increase. For our current rates, the difference between commercial and residential is only 25% whereas the WQC is actually twice as much. "You would expect the commercial to begin paying more," he said. Dave Rau presented an example for clarification: "Suppose I wanted to build a widget manufacturing facility. Do you ask me what my water demand is going to be and then calculate my PIF, or do you base my PIF on how much water can be pushed through a certain tap? PIFs for larger taps are individually determined," Mr. Ozog said. "If I wanted to put up an office building and I don't know what my water consumption will be, I would still be stuck with a 3/4" even though I may never come close to using that amount of water," Mr. Rau asserted. "That is the way the current system works," Mr. Ozog acknowledged. Mike Smith pointed out that there is that same discrepancy for the residential PIF. "You do an average and recognize that it's not total equity," he admitted. Mr. Reed said, suppose three years after Mr. Rau built his office building, he decided he needed a 1 1/2" tap instead of 3/4", "is he then going to have to pay an incremental difference between the one he paid for and the new one?" "He will get credit for the old one and pay for the new one," Mr. Smith answered. Strength Mr. Ozog said that the next step was to investigate strength. "We did that by taking the total system value and allocating it to flow, BOD and TSS." That allocation is then used to compute charges for strength greater than domestic. Both the BOD and TSS charges go up by 10%. Conclusion Mr. Ozog concluded that the revised PIFs capture the current cost of growth and are equitable across customer classes and among existing and new customers. Water Utilities Board Mmutes August 28, 1997 Page 10 Residential Revised PIFs Compared M Louisville $4,088 Longmont $2,800 South Fort Collins Sanitation District $1,975 Boxelder $1,900 Westminster $1,614 Fort Collins EXISTING $1,600 Greeley $1,288 Fort Collins PROPOSED $19113 Loveland $1,080 Mr. Ozog said that since residential PIFs decrease, Fort Collins actually drops down on the list a bit beneath Greeley. 1" Commercial Revised PIFs Compared WrA Longmont $7,290 Louisville $7,010 Fort Collins PROPOSED $6.491 Boxelder $5,175 Fort Collins EXISTING $59100 South Fort Collins Sanitation District $4,988 Loveland $4,120 Westminster $2,674 Greeley $2,150 In teens of commercial, Mr. Ozog used 1" instead of 3/4". Many cities don't even make a distinction between a 3/4" commercial and a 3/4" residential, "so it would be inappropriate to compare our more finely tuned method to people who don't make the distinction," he said. The existing PIF for Fort Collins is $5,100; it would be increasing to $6,491.`Basically we are above Boxelder, but below Longmont and Louisville," he pointed out. He also pointed out that there is a wide range among PIFs. "We must suppose that cities like Greeley and Westminster are subsidizing growth for their commercial customers to some extent," Tom Brown observed. "They're doing something," Mike Smith agreed. Issues for the Water Utilities Board Water Utilities Board Minutes August 28, 1997 Page 11 Mr. Ozog said that staff is looking for the Board to approve the methodology. "We also have two questions:" Do we phase the increase for commercial customers or implement the full increase? Commercial is going up 30%. We could extend that out, for example, to 10% for 3 years. Do we assess the PIFs on a yearly basis or once every 5 years? Joe Bergquist asked if the commercial PIFs would be increased to discourage growth, or is it being done to capture more money? "Basically, the increase is strictly to capture the true costs; PIPS haven't been changed in five years. In terms of whether we are subsidizing growth or pushing for growth, we are doing neither," he stressed. "We are seeing the costs shift from residential to commercial," Mr. Smith added; "residential is going down, while commercial is going up." He suspects, on the water side, we might be seeing the opposite. Mr. Brown said, as far as charging commercial 30% all at once or making it a 3-year graduated process, "do you expect big problems if you do it all at once?" "We're not recommending phasing the increase; it was one of the issues that was raised at the committee level," Ms. Williams responded. "You have dealt in the past with fee increases; do you expect that there would be an outcry?" Mr. Brown continued. "There will be some people with whom we will have some problems," Mr. Smith said. "With a decrease in residential, it will probably be a mixed bag. "In terms of growth paying its way, I would think if you are going to phase in the increase to commercial customers, you should phase in the decrease to the residential customers, so on average, at least, growth is paying its way," Mr. Brown suggested. "I don't like stepping down the residential fees. In a sense it should have been done years ago, but we didn't have the data until now because of winter quarter billing due to metering," he explained. "Waiting longer to get it right doesn't make sense to me," he asserted. George Reed thinks it would be best to move ahead all at once even though he knows for some it would be a sore point. Compared to the magnitude of a commercial project, it would be relatively small. He related that for Kodak (where he works) the domestic waste is considerably less than residential. It seems to him that the increase is probably based more on the use of Winter Quarter Consumption than the actual fact that commercial establishments are creating more wastewater. Mr. Rau said that reasoning was in line with his thoughts. "As someone who spends a lot of time with commercial office space, those taps are sized by the fire demand, not by the water usage," he asserted. "Mr. Ozog based it on metered use," Robert Ward pointed out. "It's based on how much water you can jam through the tap," Mr. Rau insisted. "The rates are based on actual winter quarter consumption," Mr. Ozog stressed. "I asked you if it was based on the tap size or the actual use," Mr. Rau recalled. "The fee for the 3/4" tap is based on what other people on a 3/4" tap are using," Mr. Ozog stated. "It's the average of all of our existing 3/4" customers, so you are going to have a mix," Ms. Williams explained; "you will have restaurants mixed in with office buildings." "With winter Water Utilities Board Minutes August 28, 1997 Page 12 quarter, you pull out the irrigation factor," Bob Havis pointed out, "which is more reflective of what the wastewater demand is," Mr. Rau added. Bob Havis recalled that staff was talking recently about infiltration into the sewer lines impacting our wastewater treatment. "It just seems intuitively that you would have a lot more infiltration from residential than commercial." "Infiltration goes in during the wet times and out during the dry times," Mr. Brown noted. "Would it be possible to keep the residential fairly steady and not decrease it so much?" Mr. Bergquist wondered. "I think you would have an equity issue there," Alison Adams said. "And it's not based on cost of service," Ms. Williams added. "The whole point about this is trying to address the equity issue," Ms. Adams stressed. Ms. Adams said that Howard Goldman, chair of the Legislative & Finance Committee, is not here to report on all the details that the Committee discussed, but she remembered that one recommendation from the Committee was to go with the automatic increase and not phase it in over a three-year time period. "We felt that we were already behind the curve on the equity issue and why delay the inevitable." "My suggestion is a one time increase too. People are going to complain no matter what you do," Dave Rau contends. Ms. Adams said there are two issues to be decided. "We can vote on them separately or combine them," she said. "The second issue was to use an average of $6.11- ($/day demand WQ) over the five years or gradually increase it," she said. ACTION: MOTIONS AND VOTES Tom Brown moved that the Board recommend that staff implement the 301/o commercial PIF increase all at once, not incrementally. Tom Sanders seconded the motion. The motion passed unanimously. Dave Rau asked if staff plans to evaluate the PIFs every five years, and have a sliding scale over that 5-year period or evaluate them every five years and raise them an average of about the same for five years. "We would just bump them up," Mr. Ozog replied. "The question is do we do it once or every year for 5 years," Ms. Williams reiterated. "Staff doesn't really have a preference," she said. Alison Adams asked the Board to turn to graphic 13. "The issue is if you want to use the $6.11 average over five years, or do you want to start in 1998 with $5.93 and end up with $6.27 in the year 2002." Bob Bergquist moved that the Board recommend that the PIF charge be based on the $6.11 average over five years instead of phasing it year by year through 5 years. Tom Sanders seconded the motion. Tom Brown said he would vote against that. He thinks we should use the individual numbers as you calculate them each year because it is consistent with the whole process staff is using of calculating these fees based on actual costs when they occur. Bob Havis asked if staff would anticipate changing these numbers in the next five years. "We can always come back, if in the third year, they were out of whack, and revisit them," Dr. Sanders suggested. "That's a good reason for Water Utilities Board Minutes August 28, 1997 Page 13 doing it one year at a time, if things really change after the third year," Mr. Brown believes. "That's two years of charging the wrong fee," he stressed. "If our capital projects for the next five years really change, then we would go back and look at that number," Ms. Williams assured the Board. "This is based on the 5-year capital plan that you have seen. Ms. Adams called for the question. The motion carried 7-1. Mr. Smith recalled that some members were concerned about not taking inflation into account. Dave Rau encouraged staff to include it. "It only makes sense to acknowledge inflation because, otherwise, you are charging the full cost of growth," Mr. Brown stated. The consensus of the Board was that staff consider inflation in the numbers, perhaps 2 '/z - 3%. Mike Smith mentioned that staff may need to check with City legal staff to see how they want staff to accomplish this, but there will be an acknowledgment, in some way, about inflation. • 1Ul ' • ' • k9i IR�l• ; In their packets, Board members received a memo from the City Manager on the City Council's 1997-99 Policy Agenda. He related that the document represents the City Council's vision of the policy work which it plans to accomplish during the next two years. "It represents a broad and ambitious set of goals which touch each service which the City provides." The City Manager said that the boards and commissions have a role to play in the successful completion of Council's policy plan. He asked each board and commission to submit a memorandum outlining how each group believes that its work will support the accomplishment of the agenda by answering the following questions: • What projects is your board or commission working on that relate to items on the policy agenda? • What advisory roles of your board should the City Council utilize in accomplishing its specific policy goals? • What resources from City staff would be helpful in providing this support and advice? Wendy Williams pointed out the six policy themes the Council has identified: Planning for Land Use, the Environment and Transportation Sense of Community Economic Vitality and Sustainability Intergovernmental Cooperation Financial Policies Utilities and Telecommunications Water Utilities Board Minutes August 28, 1997 Page 14 "The Council wants to know how the Board can support these goals," she said. They have asked for that input by September 15th." She asked the Board if they have determined which projects the Board should be involved in, after reviewing these six themes. Utility staff has not been involved in developing the policy agenda, she related. Robert Ward said that what the Water Supply Committee has been doing fits right in with some of these issues. "We have been debating some of them, but we never really resolved any of them," he said. Mike Smith pointed out that the policies blend in with the WUB Work Plan. He suggested that the Board provide a copy of their workplan which includes items which support the Council's policies. "They have asked specific questions. Do you think they will be satisfied if we don't answer those?" Ms Adams wondered. "I like your suggestion," she said, "given the late date of receiving this." Members of the Board agreed that they should have been involved in the process while the policy agenda was being developed, since the Board's role is to advise the Council on policy matters. Because it is too late to provide that kind of input, and the Board does not have time to consider the document in depth due to the short time frame, the Board asked that Chairman Paul Clopper and staff prepare a memorandum stating the Board's position, and point out the areas within the 6 policy themes that are consistent with the Board's 1997 Work Plan, and attach the work plan. Board members then suggested some of the specific areas that fit in with the work plan. Treated Water Production Summary Dennis Bode reported that for July the City used 4,656 ao-ft of treated water. That's 110% of what we projected. "If it wouldn't have been for the last four days, we would have been about 15% above average. We dropped considerably in August. For the year we are about 97% of what we projected, so we are close to average." Report on Flood Bob Smith, Stormwater Utility Manager, began by showing some overheads of weather data from the State Climatologist. "We began the month of July with such hot and dry conditions that we tested the treated water capacity at the WTF. At the end of July we had so much rain that we tested both the wastewater plant and the storm drainage system," he said. He then showed the radar images from 8:00 p.m. through 10:15 p.m. The rainfall was pretty widespread. The more intense areas were in the west part of town. "If you take the 8:00 and 10:15 images, and place 10:15 over 8:00, you can see that the storm hadn't moved. What we had was a monsoon condition. Moisture was coming from the Gulf of Mexico hitting the mountains and dumping on the front range. There wasn't an upper level disturbance to move it on east. Water Utilities Board Mmutes August 28, 1997 Page 15 The next overhead listed the storm totals. There were areas of 14, 12, and 10 inches. East of I-25 there was very little rain. Usually in most storms the intense rain period happens at the beginning and tapers off near the end. This one was just the opposite. "We had intense rainfall at the beginning that filled up the facilities and more intense rain came and cascaded through everything like it wasn't there.,' In the 500 year episodes there were discharges of 2500 cfs. At Drake Rd. and Spring Creek, which is where the new bridge is, we had flows of 4200 cfs which is over a 500-year flood episode. "Basically, the system was designed for a 100-year flood." "In terms of the Stormwater Utility, we are glad it didn't happen five years ago." Mr. Smith said. At Taft and Drake there was once a retirement home called Shamrock Manor. The water there was 10- 15 ft. deep. "We moved the structures out of there last year. Water was going over the railroad embankment at Prospect at least 2 ft. deep. The USGS will be mapping the high water marks and will determine discharges. Dave Rau recalled the flack that the Stormwater Utility received when they moved people out of some of those areas. "If those people hadn't been moved, there would have been a lot more deaths," he said. "We also re -enforced the railroad embankment where the mobile home parks are. Part of our analysis was what it would be like with a train going across if we had a flood. That's exactly what happened. Some cars actually tipped over. We determined that a 500-year storm would not go over the top of the embankment. Mike Smith said that the City has received considerable criticism from citizens who suffered flood damage. "They are saying we could have prevented the damage. Robert Ward thinks it would be a good idea to take all the newspaper articles from the days when people protested the measures to prepare for a 100 year flood, and print those now while this devastating flood is fresh in everyones' minds. "That sets the stage for future arguments when you start doing the next plan," he said. There is a desire now to correlate the debates and arguments from before, and then correlate them with what happened to help give validity to the plans that are being developed, and gain support from the public. "People can make those decisions, but they have to realize the risk they run," Mr. Rau said. "When we did the Old Town improvements, we told people that we could do it fast, or they could pay for it, or we can phase it in, but in the meantime, they were going to get wet," he recalled. "We're hearing the other side now," Mike Smith and Bob Smith both related. "I don't think you'll have any problems for the next 5 years to design for a 100-year flood or more," Tom Sanders believes."This is a good time to suggest some improvements, because we are in the process of doing our design criteria," Bob Smith said. "One thing we want to consider is to have a different design standard for critical facilities," he stressed. Water Utilities Board Minutes August 28, 1997 Page 16 "Is there any discussion about whether our estimates of where the 100 or 500-year flood plain are, are correct?" Mr. Brown asked. "It seems that in this vicinity there have been three or four 500-year events in the past 30 years," he pointed out. "It seems peculiar to me. "I think they are localized and it's just a statistical representation," Mr. Rau commented. "Think of how many streams come out of the mountains," Robert Ward said, "there are 500 streams that could produce floods. Every year you could expect one of those 500 to have a 500-year flood." Mr. Rau said that Front Range hydrology is driven by high intensity, short duration storms. "It's not like other places in the Country that are governed by wide areas of long-lasting drenching storms." Mike Smith said that he and Bob Smith have been to a number of neighborhood meetings, and there was only one developer in all of those. It will be interesting to tell developers, "where were you when citizens were expressing their concerns?" Mr. Rau pointed out that we could design for a 1000-year flood and lower our risk considerably, but we would spend enormous amounts of money. "Some victims are realizing that," Mr. M. Smith acknowledged, "but most of the ones who continue to be irate, haven't come to grips with the whole thing." Dr. Sanders pointed out that the engineering profession is capable of doing risk analyses and compromising the design. "Maybe we should seriously consider looking at the actual costs of these storms and then getting into optimal values. Bob Smith thinks it would make a good research project. "That optimal depends on which discount rate you choose," Mr. Brown remarked. Dr. Sanders agreed. "As engineers we don't do the analyses because nobody wants to pay the money to do it," he contends. "You take a step towards that when you look at critical facilities, and say `Do we design for a higher level?"' Mr. Rau advised."Part of that formula is, what do you do with the undeveloped ground in between where you have those damage areas?" Bob Smith pointed out. George Reed recalls that several people on the Storm Drainage Board at the time when they were discussing the situation with Old Town said, "I know those people called for a pay-as-you-go 23-year program, but we know that 5 years from now there is going to be a disaster there, and everybody is going to forget that that was the program. And, Old Town is a fully developed area. Maybe we ought to take a lesson from this and decide whether that is the best way to handle planning for floods." Tom Sanders stated that most people aren't even aware that they are in a floodplain. "There is the expectation that the City has done all these analyses and that it's all been taken care of," Mr. Ward commented. "What they don't appreciate, and maybe this is an excellent opportunity to do it, is to inform the public that there are certain standards for which the City has designed. People in the market to buy houses and other real estate should appreciate what the City has chosen to use as a design standard, and we should emphasize that people accept a certain amount of risk when they purchase real estate in certain areas," he explained. He added that the real estate community is probably going to be upset when we put out those plots and show where certain condominiums, e.g. • Water Utilities Board Minutes August 28, 1997 Page 17 may be in flood prone areas. "As a result of this flood, however, I like to think that they might be more willing to work with the City to try to develop appropriate improvements," he added. "One of the things we are hearing from citizens," Bob Smith began, "is about flood insurance. Many have gone to their agents to ask about flood insurance and they have been talked out of purchasing it because the agents say they don't need it or it's too costly. We need to educate the insurance agents about this," he emphasized. "We have told people that they may not be in the flood plain but we recommend that they have flood insurance." "If I were a home buyer and I wanted to find out if some property was at risk for floods, could I come to the City and see a map that would point that out?" Tom Brown asked. "If it's a 100 or 500-year area, you can come in and we will show you a map of what it looks like," Mr. B. Smith replied. "The citizen can actually get a copy of the map." Dave Rau says he does that all the time now with real estate. "More people are interested now!" "We estimate that we've had about a million dollars damage to our facilities," Mr. Smith went on to report. "We are in the process of going through what is called a Disaster Survey Report (DSR) where you fill out a form for each site and estimate the costs," he said. "The Feds will pay about 75% and the local contribution is 25%." Dr. Sanders asked if the City anticipates law suits with this. "Yes, I'm sure we will have them," Bob Smith said. Robert Ward asked if there is a committee or group in Water Utilities that could be responsible for educating the public about flood risks. Mr. B. Smith said that the Stormwater Utility has a "Flood Awareness Week," each year in May. "One thing we learned is that the end of July and the first of August is when the monsoon weather condition occurs." Report on Mandatory Metering Program Wendy Williams reported that staff took the mandatory metering program proposal to the City Council and it was approved unanimously on first reading. The second reading will be on September 2nd. Ms. Williams said the installations will start on the west part of the City. Regional 201 Study Mike Smith said there should be an update at the September meeting. The consultant is currently looking at options. Reminder of Council Work Session on Board Functions ;Mike Smith reminded the Board that the Work Session with the Council on Board Functions will be on September 9th. It should be first on the agenda beginning at 6:00. Molly Nortier will send out a notice to members. Water Utilities Board Minutes August 28, 1997 Page 18 COMMITTEE REPORTS There were no committee reports. Alison Adams reported that she attended another meeting of the Northern Colorado Regional Water Coalition. She supplied minutes from their June meeting and handouts of the mission statement and three objectives. In September she will give an update as to what might happen in November that might spark some interest. Robert Ward reported that the Mayor's Water group had another meeting too. "I'm not sure where the group is going, but they continue to talk," he said. Since there was no further business, the meeting was adjourned at 5:12 p.m. Water Utilities B and Secretary