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HomeMy WebLinkAboutWater Board - Minutes - 11/01/1985MINUTES Special Water Board Meeting November 1, 1985 Members Present Norm Evans, Cuairman, Henry Caulfield, Vice Chairman, Jim O'Brien, Tor] Moore, Dave Stewart, Neil Grigg, John Scott (alt.), Stan Ponce (alt.) Staff Present BiTT--Uarna an, Mike Smith, Dennis Bode, Webb Jones, Jim Hibbard, Ben Alexander, Andy Pineda Members Absent to yLou SSmi—'th, Bill Elliott, Tom Sanders Chairman Norm Evans opened the work session to discuss further the staff report, "Evaluation of Water Demand Management Options." Dennis Bode said that he and Webb Jones had prepared some additional charts and graphs in response to questions at the last meeting. These were distributed with the meeting packets for today. One of the questions was, what percent of our average annual use is currently unmetered? They compiled a table from the water demand model which showed the water use for, different classes of customers -- the quantity that is metered and what is unmetered. Another question was the effect that the report's assumption of 20 inches being applied on newly metered customers' lawns would have on som-? of the analyses. The staff prepared some tables which showed what the effect would be of assuming 16 inches instead of 20, and 24 inches instead of 20. The assumption of the depth applied is a key factor in the economic analysis. Henry Caulfield inquired about this assumption as it relates to the "greenness" rating for lawns, 8 being the highest quality. Mr. Bode said that in the CSU study, the "8" rating uses 24 inches. Mr. Caulfield continued by saying that the enthusiasm in the report about how much Loveland cut their water use is overstated. During that period, he said, Loveland also substantially increased their rates. Mr. Caulfield also asked about the 10 days of weather data from 1934 (Table 5-1 on page 5-2) which were selected as a critical design period. Was there a particular reason to select that period? Mr. Jones explained that weather records indicate that periods similar to this one are experienced approximately every 10 years. Mr. Caulfield believes that if it were a five day period rather than 10 days, storage becomes more useful. Mr. Bode stressed that it was based on a fairly typical period which occurs about every 10 years, not on the extreme event over the last 100 years. Norm Evans suggested that it be worded more carefully. lie brought up the word i Water Board Minutes November 1, 1985 Page 2 conservation which is used in different ways in the report. He pointed out that it is used rather broadly in one place to express the wise use of resources. In another place, it was used to express the notion of reduction in demand. We need to be cautious about how we use these words, he said. Jim O'Brien as':ed Dr. Evans what the Board's approach and scope should be. in arriving at some sort of definitive decision. Individually we ought to raise questions that come to mind as we have read and studied the report, Dr. Evans suggested. We need to know there is a solid base for the staff's computations. This is a work session which means there is not an urgency to finalize anything at this point, he added. Henry Caulfield asked if a date has been set to meet with the City Council. Bill Carnahan said no date has been set. The plan was to prepare the draft report and look at the options and hope that the report would lead to a definitive plan or direction. Ultimately, we need to come up with programs. Mr. Caulfield suggested that before the Water Board finalizes their views and the Council finalizes theirs, this report ought to get out to the public, so there could be a public response. Mr. Carnahan said that the plan was to distribute the draft report to the Board and the Council and that the Board and Council would share their ideas. The final report would have public dialogue and public input. Mr. Caulfield contends that thr�re should be public input before the final report. Tom Moore disagreed with that view. He would not feel comfortable about presenting this report or even a more refined report to the public if the Board can't make a decision themselves. We should make a decision about this one way or another and present it to the Council and let it go at that, he said. Mr. Caulfield said he disagrees that the report should not go to the public at this time. This is not something that people are indifferent about. Mr. Moore said he would like to see the Board make a recommendation and if there are those who feel it isn't proper, they could initiate a public forum. Dave Stewart agreed that the Board ought to come up with a recommended program and say this is what we have looked at and this is how we came to this decision. We need to stand as a unit rather than taking all the options and presenting them to the public, he added. Mr. Caulfield pointed out that there is already a staff commitment to Alternative 2. Mr. Stewart still maintains that the Water Board needs to agree to an alternative. Tom Moore stressed that first the Board needs to decide if they want metering or to remain as we are. Then, if we decide on metering, we decide on the methods and implementation, he said. Dr. Evans commented that the staff and Board are in somewhat of a dilemma since the Council has directed that we go into some phase of a metering program. We initially said our studies were not to decide if we proceed with a metering program, but rather what would be the proper rate structure to protect the green lawn philosophy, etc. However, if the studies indicate that Water Board Minutes November 1, 1985 Page 3 it would not be wise to embark on a metering program, then that would be proper also. Mr. Caulfield reiterated that if we want to discuss first meters or no meters, and if the decision is meters, which of the alternatives, the Board needs to be prepared to say if it agrees with the staff or select one of the other alternatives. Do we want to have a definite position when we meet with the Council, or do we want to keep ourselves open until after we have met with them, fie asked. Dave Stewart thinks the Board should have a definite tack, but with discussion, that tack could change. If you go in with a lot of options all you do is discuss the options and you accomplish very little, he contends. Bill Carnahan emphasized that the staff has made a recommendation in the draft report, but one of the things the staff wants to do is get the Board's input: Is there something that has been overlooked? Is there something with which you don't agree? Is there another way to look at it? Do you agree with the analysis? To the extent that those issues come forward, the staff is willing to go back and rethink their position and recommendations. In this light, Henry Caulfield suggested that the Board focus on the alternatives before them, plus the rate structures. These are the heart and soul of the policy decision, he said. Jim O'Brien decided that he would make recommendations based on what the staff has recommended. The issue he would like to address is important for future planning and development along the lines of metering. If at some point in time, we are going to participate in a regional water treatment and distribution sy_•teni, and other aspects of regionalization, we must be on some cormon ground with other entities that are on a metering system, so we have some effective means of handling shortages and/or any kind of conservation effort that may be coming forward in times of shortages. A metering program is an important tool in any conservation plan. It will avoid any kind of conflicts of equity during any restrictive use periods. In a long term and broad brush approach, flat rates prolong to a certain degree, the acceptability of the concept that there is an abundant water supply in Fort Collins for development purposes. At a time when population might be much greater than now, that might be an important consideration. As far as metering is concerned, Mr. O'Brien concurred with the staff recommendation with the following modifications: that the third item on page 8-2 which is recommendation No. 2 states that all other unmetered homes should have a meter installed when ownership changes, he would like to add "or within 10 years." It is his contention that the cost of the metering should be borne by the households without meters. Those unmetered customers would have an incremental increase in their monthly bill in order to pay for a meter at the end of 10 years. The City could invest the money to someday pay for the meters. The reason he takes that approach, as opposed to saying that the new metered customers should be bearing the cost of putting meters in the unmetered homes, is that he thinks unmetered customers have been subsidized for some time. By consulting table 7-10 on p. 7-27, he explained that the total average annual 0 0 Water Board Minutes November 1, 1985 Page 4 water use for the flat rate customer is 207,000 gallons, whereas the metered customers's is only 160,000; yet they are paying roughly the sane amount. If that is true, the approximately $1.30 per 1,C00 gal. is almost $1,000 over a ten year period that those people are being subsidized. That would easily pay for the metering. He would like the City to go along that route in some way. He made two more points: 1) Use a rate structure that shows higher incremental use for addditional uses. He referred to the handout that shows the amount of water applied to different lot sizes. We should adopt a rate structure that shows a slight increase in those lines on the chart, or at least be level. 2) The majority of people in town, according to the rate study, think it is a good idea to have green lawns, etc. Mr. O'Brien doesn't like the idea of directly encouraging green lawns, because, he thinks it contradicts the whole concept of going to the Xeriscape type landscaping. Neil Grigg finds the report to be well presented ;nd nearly every question he would have asked has been anticipated and is contained in the study. He referred to Table 7-15 on p. 7-38 for the benefit/cost comparision of metering. He is assuming that staff did their best to analyze what the honest benefit/cost ratios would really be for going to metering. Across the board there is a benefit exceeding 1 even if a meter is installed outside without a yoke which appears to be the most expensive way to go. Based on the B/C study, he is convinced there is a total benefit available to the City for going to metering. Tom Moore's questions, to a certain extent, are answered by these numbers where we have heard hire ask, and honestly so, that he doesn't see the purpose of spending all that money on meters when more water could be purchased with the same amount of money. Or. Grigg can see that point, but when you consider all the factors which fall in the category of benefits on p. 7-34, Table 7-13, we would save capital costs in buying raw water, we would save in water treatment plant capacity, in transmission lines, and also in Operation and Maintenance costs. These result in a substantial benefit. It remains to be asked in the analysis how some of the raw water costs would be assumed by new developers. This is the old water/new water questions. Dr. Grigg is convinced that, basically, metering is a good idea; there are a lot of benefits to it. However, one thing he doesn't have in focus is whether there is a compelling reason to embark on a metering program now as opposed to sometime in the future. One of the principles of planning is, as you plan, you always preserve your options, and going to meters is an option. It will still be an option next year. If we exercise it now, we've "played the metering card," and that sets the course for the future; plus it is an irrevocable decision because the money will be spent. Thus, Dr. Grigg is looking for a persuasive argument of why it needs to be done now. He admitted that one reason is that we have studied it so much that now is the time to act. Dr. Grigg's comments brought up another question from Dr. Evans which My'. Caulfield had raised. Have we determined the trade-off of the benefits that have been shown to a metering program compared with the delay of capital expenditures for peak day capacity? Water Board Minutes November 1, 1985 Page 5 Mr. Bode responded that in terms of future savings, the timing is somewhat important now because of the timing of the next treatment plant expansion that we see after the one that is to be completed in 1988. Without some kind of a program, the next one would need to be on line by 1991-1992, so we need to have a substantial number of customers metered by that time in order to delay that a few years from '91-'92 to '94 or '95. It does get fairly complicated when analyzed, because many of the costs we have now in existing facilities are spread out over a n1imber of years and we have to continue to pay these off. Bill Carnahan added that what this tells you is that you then can begin to manipulate the phasing -- how quickly do you need to do it? That becomes a critical issue. You have a certain amount of time; you may be able to do it over a period of ten years or five years, rather than when an expansion is eminent. You are buying existing capacity that is dedicated to existing customers for new customer's use and that is cheaper than building new capacity. This sets the stage for why you would use plant investment fees to pay for part of it. If we were faced with another addition right away, in order to get the benefits, we would be required to do it in 2 years to release that. capacity. The advantage we have is one of time in being able to stretch the phasing in and out to fit the goal. Mr. Caulfield commented that formally speaking, the benefit/cost analysis and the financial analysis are two different arguments. The argument has been made that from a benefit/cost analysis, there is a positive benefit/cost ratio, but as Mr. Caulfield sees it, we are getting $2,000,000 a year from PIF's. The charges were worked out on these fees by reason of lower costs while moving ahead. You could fit this into the PIF without increasing those fees. Mr. Bode said it really doesn't say there will be no increases. Mr. Carnahan added that this is the phase -in concept. It depends on how quickly you want to do it. Mr. Caulfield said he meant the way it is phased in Alternative 2. Mr. Bode clarified by saying that it is more likely in Alternative 2 that you could do it without substantially increasing the PIF's. Mr. Caulfield said that makes a lot of sense from an administrative point of view. Politically, in contrast to Jim O'Brien's proposal, from the point of getting acceptance in Fort Collins with less controversy, Alternative 2 has the benefit of placing costs largely in the PIF's. That eases it compared to asking the customer to spend $500 of his money upfront to do it. Thus, Alt. 2 has substantial merit. We are only talking about new people, people with existing yokes and purchasers of existing homes without yokes. Alt. 2 says we are willing to ride out the 7 1/2% transfer of real estate hoping that in 20 years or so almost everything that is old will be sold or demolished. By 2010, we can assume 98% metered. Mr. Carnahan verified that the staff tried to approach this in the most logical way in order to ease the impact as much as possible. Henry Caulfield's points spurred Neil Grigg to think about three points that are clear enough to him: 1) Through the Benefit/Cost analysis, it appears that we could conclude a metering program would be good in general for the City based on the difference between economic and financial analysis. It doesn't Water Board Minutes November 1, 1935 Page 6 say when we would do it, just that it is a good idea. 2) We could take the position of recommending the phasing in of a metering program when the financial analysis showed that it would pay relating to expansion, etc. 3) There are some equity issues that relate to new homeowners and old homeowners that the staff has already thought about, but if we could address these in a sensitive way, perhaps we could come up with a program that everybody would be happy with. Dr. Grigg was thinking about the turnover of homes when meters would be required. He referred to Table 7-16 on p. 7-40 which indicates the cost of that and the cost sharing formula. Under Alternate 2, these would be the meters that the homeowners would finance. You could accomplish this without a time limit on when that would have to be done, if the rate structure were adjusted just a little, so a homeowner would get the idea that if he put the meter in, he could save money by conserving, and if that meter could be paid for by distributing it on the monthly bill so it wasn't so painful. This would provide a meaningful incentive to move quickly on some of the existing homes at the same time. Dr. Evans asked for a clarification about when the financial analysis shows It is the tirne to go ahead. Bill Carnahan explained that what the staff is saying is that you do it as soon as you can afford to without impacting the P1F's, etc., as opposed to setting some kind of an arbitrary target that says in 10 years we will be at 50% which might force you into doing some things that you couldn't afford to do. Webb Jones pointed out that the financial tables on pp. 7-44 and 7-45 are graphically illustrated in the extra handouts that the Board members were given. Dr. Grigg commented on what Mr. Carnahan said. There are two points on the financial analysis which are, when the decision is made to begin the program and how fast it goes. He thinks when the program starts is the critical decision that will result in a lot of visibility for the Water Board. Mike Smith referred the Board to the Peak Day Demands for Metering Alternatives, Figure 7-3 on p. 7-33. Mr. Bode explained that it is basically saying that all future customers will be metered, all homes with yokes will be metered within a 3 year period approximately, as well as the change in ownership at the 7 1/2% rate for alternative 2 and it shows the other alternatives also. Neil Grigg said that from that graph, we can show the actual financial savings from the policy we were talking about and that covers the savings on treated water. Mike Smith explained that it might answer your timing question when you look at how close those lines are when you start out and how they grow apart as you go down the road. If we are looking at an expansion in '91-'92, and you waited until 1990 to implement the program, you wouldn't have a lot of peak day savings and you probably couldn't delay the expansion. Dr. Grigg thinks that when we go to the Council as a Board and as a staff, if we could present a persuasive case for why we have made our conclusions, Water Board Minutes November 1, 1985 Page 7 both for metering in general and the timing --when it would start and how it would Phase in --that would be a strong argument. Tom Moore asked for a clarification of Table 7-13 on p. 7-34, particularly the savings for water treatment plant capacity. Mr. Bode explained that the savings are based on the difference in peak day capacity that we project to be needed between the flat rate customer and a metered customer. That is the 377 gallons per customer per day, essentially for that peak day. We used a unit cost of 75 cents per each gallon of treatment plant capacity. We are saying a metered customer needs 377 gallons less than a flat rate customer, and at 75 cents per gallon, that is a benefit of $282. Webb Jones clarified that the 75 cents is based on current construction costs to build the treatment plant and associated facilities. If you take the peak day of 1936 gal/day for a flat rate customer times the 75 cents, the capital costs for a flat rate customer is about $1452, whereas the capital costs for a metered customer that uses 1559 gallons on a peak day is $1169. The difference is $282. Tom Moore asked how many days in the year have we been near the capacity of our plant. It seems to Mr. Moore that we are trying to cut off the peaks, and metering doesn't appear to be the tool that does it. Bill Carnahan stated that what we are trying to do here is not reduce the demand, we are displacing capacity. Instead of the unmetered customer needing X amount of capacity, if he is metered, his demand is reduced and that capacity can be used by someone else whether we are at the peak or 50% or whatever level we are in the plant; more customers are using the same capacity. Mr. Moore asked if there is a graph or chart that shows this. Webb Jones said this summer was somewhat unusual in that we saw several consecutive days of near peak day demands. Andy Pineda related that there were about 10 days straight that we were above 40 mgd and 15 days total of above 40 mgd. Dr. Grigg was interested in Mr. Moore's point. He asked if there is any kind of a demand management scheme we could follow that would allow us to meet those peak day demands without the additional capacity, (e.g.). Would it be feasible to place some pressure reducing valves in the system and activate them on those days; instead of delivering at 80 psi, deliver at 40 psi for a few days.? Mr. Smith responded that to manage demands either by not giving water to the customers or by the customer not using it, is not very acceptable. By not allowing the customer to use it, you are forced to implement restrictions. By restricting the flow, you are in control, the customer isn't; they become irritated. Tom Moore believes that this is exactly what you are trying to control with meters; the amount of water used and basically, over a very few days. He said that 90% of the time we aren't that concerned with the amount of water people use. We are trying to control it by financial incentives which is the wrong approach. Dave Stewart argued with that by saying no, it is the cost of service; they are paying for what they are using, and that is the basis for the whole thing. "If they want to water their lawns 10 inches a day they can, but they will pay for 'it," he added, Tom Moore contends, if we have the water Water Board 1•1 i notes November 1, 1985 Page 8 and capacity there, people might as well be using it. It doesn't cost us any more to deliver it or not to deliver it. It only costs us more when we reach a peak in time when we are forced to build bigger plants, he stressed. Henry Caulfield interjected by saying that this was the point that gave the City Council the impetus to ask for the expansion of the City's conservation program by developing a phased metering program. If you can shave your peak and delay building a plant by reason of water that has been released, you are saving money. Tom Moore asked how we shave the peak; 90% of the time we don't need to worry about it. This last sunnier was unusual in that we had 15 days when we were concerned about it. A water meter doesn't accomplish this unless you go out and look at it every day. Neil Grigg responded that implicit in this proposal is the staff's answer to that. 1) We can't show it by controlling demand because people will complain so we are following a policy of furnishing the water they demand. 2) We could shave peaks by creating more treated water storage. However, the staff believes the plan we are following now is an optimum plan -- a trade-off between treated water storage and treatment capacity. Dave Stewart added that it won't work without education. If you have a metered system that, won't shave the peak by itself; you must educate in addition to that. Tom Moore cr-rtends that the education is important and the meters aren't. He doesn't think a meter that is read once a month is a controlling tool, plus it controls financially; for the people who have money it doesn't matter as much. This has social ramifications. Stan Ponce said that the demand is an issue we are faced with currently, but we also must consider that we aren't dealing with unlimited resources down the road. That is another issue we are confronting with this conservation type measure. Tom Moore disagrees. He doesn't feel the conservation of water relates to this. He explained that he, as a property owner, has given the City one equivalent share of CBT water and "I .rant my 320,000 gallons back. It is not that much, however if there is only a 6/10 delivery and 5% system loss, but I still should get 190,000 gallons," he claims. Neil Grigg said in Dennis Bode's analysis of present worth of the costs, he has taken the 377 gallons per day per customer and extended that out as an every year savings, and that is valid. However, if you look at our demand schedule, it is increasing continuously into the foreseeable future. our strategy is not to have enough treatment capacity to meet this every year plus a little bit following that line; our strategy must be to have more than that and go for, awhile until we get close to the demand and then develop more capacity. So, if we put on here what we. are going to build, it will look like a stair step. Therefore, at any given time, until we get close to the time when we are nearer capacity, we have reserve capacity and will be able to meet the treated water demands out of the reserves. The idea of taking this constant increment over a long period of time, and calling that the benefit, is more valid for a flat demand where you just build a little extra treatment Water Board Minutes November 1, 1.985 Page 9 capacity, than it is for this growing demand where there is a stair step. It is possible if we did a dynamic financial study to look at what we are really saving by staging our building, that the benefits would be different than the ones w, are looking at in the benefit/cost analysis. Dennis Bode acknowledged that the analysis shown in the report is a rather simplified look at the benefit/cost relationship and not a dynamic analysis. Bill Carnahan added that it is also offset by using current capacity costs. As you look at the increments, you assume each will cost a little more, and that would tend to offset the other way too. Mike Smith responded to Neil Grigg's comments. He said he thought he was right in that if you do the dynamic model and you compound the delay for each expansion and add the value of the money, then the analysis that was done is probably more conservative. Dr. Grigg stressed that a dynamic financial study could be convincing in terms of real money savings. Pike Smith also responded to Tom Moore's question about the delivery of his water. Fie said that he thinks we could do that but the equity and cost of service must be taken into account. We will deliver your water but if we would actually charge ,you what it costs us, the flat rates would go up significantly. Mr. Smith went on to say that you would ask the same question, why do I have to pay this? That is what it costs. You may say I want to drop my demand. The only way that can be done is by not using the water and al loiring us to measure what you use. Norm Evans wanted a clarification on Mr. Smith's statement that the flat rate is not paying the cost of service. Mr. Smith explained that if you look at the cost of service, the flat rate people are being subsidized by the metered customers. This information came from the rate study. Jim O'Brien said that was the point he alluded to previously, the difference between the 207,000 gallons and the 160,000. Yet both metered and unmetered customers pay essentially the same cost of service. Henry Caulfield pointed out a recommendation separate from Alternative 2 that we do increase the rate of the flat rate customer. Are we convinced by tl�e rate study, etc. that this is what we want to do? The reduction in demand will be affected by that adjustment. This is part of what the Board has to prepara itself for. Are we in favor of that or not? That relates to what Tom Moore is concerned about. It is a separate question, but related. Tom Moore conceded that if flat rate isn't paying their fair share, their rates should be raised. He asked if the metered customers alluded to throughout the study are residential, if so how many residences is tit? Dennis Bode answered that there are about 17,000 unmetered customers. There are only about 200-300 metered single family homes and duplexes. Tom Moore asked how we can compare those 200-300 who have meters to the whole range of flat use people. Dave Stewart explained that in the rate study, they used Fort Collins -Loveland Water District which is south of Fort Collins and Water Board Minutes November 1, 1985 Page 10 encompasses the same range as Fort Collins, plus, they compared it to other communities along the front range. Mr. Moore still contends that the flat rate customers are not overusing the amount of water they have given to the City. Bill Carnahan asked, are we not mixing consumption with demand in that case? It is perfectly okay to use all that you gave, but it depends on when you use it. Mr. Moore responded that one of the cost/benefit factors is that we. are reducing water use by 47,000 gal. of water per year. He said that that figure was invalid for existing customers because they have already given water to the City, and it will continue to be given to the City. Mike Smith related that we did a study on raw water requirements recently and in that report it showed that raw water requirements for flat rate customers w,as considerably higher than for metered customers. When the raw water requirements were adopted, they were based on the metered customers, not on flat rate customers. Now, when a residential customer ties in they are giving us the amount of water as if they were metered. Tom Moore still questioned the number. Dennis Bode explained that the number Mr. Moore is referring to is based on the difference between water used by metered and unmetered customers. Some existing customers may have turned in more than they use. The flat rate customer uses 47,000 gallons more than the metered customer. When that is converted to a raw water requirement you need to multiply that number by approximately 1.6 to cover the variation from year to year; both supply and demand. The cost of the additional raw w-.ter is included in the cost of $4.00 per 1,000 gal. If you look at future costs for a customer coming on and the amount of raw water they need to turn in, this reflects the type of difference we see. Mr. Moore doesn't think the total system demand shows that. Mr. Bode said the 47.1 is based on the two numbers you see on p. 7-27 which is the 207,000 versus the 160,000. The difference is the 47,000. When we say a flat rate customers uses 207,000, we multiply that by 1.6 to get the raw water requirement. Thus, a customer would need to turn in 331,000 gallons, or just over 1 acre foot of raw water. As a class of people are flat rate customers overusing what they have given to the City, Mr. Moore asked again. Are these people using more than 17,000 acre feet of water (assuming they each turned in one acre-foot)? Mr. Bode answered that 17,000 at 60% yield would be a use of about 10,000 acre feet. Water use at 207,000 gal. per customer would also work out close to 10,000 acre-feet per year. Stan Ponce said, in the future this may change. Mr. Bode said that in the past the amount of water turned in may have been adequate, this was true, but as you continue on, you would begin to see a difference between what is being turned over and the requirement for the flat rate customer. Tom Moore said he concedes that metered customers use less water than flat rate, but are flat rate customers using more than they are entitled to? Water Board Minutes November 1, 1'�)85 Pa(e 11 Dr. Evans said the answer is, right now apparently not, but the statement is made somewhat loosely -- that flat rate customers are paying their full amount is evidently not a correct statement. Dennis Erode explained that there are two different issues here -•• one is UZI costs to serve that customer. It appears, from the study, that the flat rat. - customer is not paying his full cost of service and is being subsidized by commercial and multi -family. The other issue is the rats water requirement. If you look at the rates and projected use, you can determine the same thing. Dr. Evans asked, have we answered Torn Moore's question? From a delivery standpoint no; from the raw water requirement standpoint, there appears to be enough. Mike Smith pointed out that for new customers, raw water requirements are based on metered consumption so the flat rate customer today is not giving the City enough water to serve to-em. Tom Moore, replied that if we are not requiring enough water, we have a basic problem. Dave Stewart commented that we also need to be compatible with the District because of our inter -governmental agreements. Jim O'Brien coimnented that we need to show sensitivity to the public in assimilating the cost of metering etc. The lesson that we were supposed to learn from the book "Saving Water in a Desert City," is if you use a sledge hammer approach, you are going to get some negative feed back; but if you have a mechanism by which to implement a price structure, then you can see over the long term there will be some response to that. It is a double edged sword -- you can have an effective price struture, but not have a good tool to implement it. The second thing is if we did have the tool to implement it, we can use a price structure in the future to possibly avoid the sledge hammer approach in bringing a new plant on line. Mike Smith stated that with regard to Tom Moore's question on water rights, there were two or three reasons for deciding to use the metered water rate: 1) New homes someday would be metered. 2) If we did charge the raw water, requirement such that it was increased sufficiently to provide the water, developers would say, "I am going to pay the lower amount and meter that property." 3) Nobody warmed to raise the raw water requirement that substantially. Mr. Moore commented that enough water up until this time, has been turned in. Mr. Smith said yes, the 3 acre feet per acre has served us well for a long time. Henry Caulfield asked what the 3 acre feet per acre requirement boils down to. What is the single family requirement now as opposed to previously? For an 8,000 sq. ft. lot, they are required to turn in .64 acre feet, and possibly four houses could be on that acre, so it turns out to be about 2.56 acre feet per acre. On the other end where we were requiring 3 acre feet for a multi -family development, now we are requiring 4,5 or 6 acre feet per acre. Water Board Minutes November 1, 1985 Page 12 Neil Grigg asked for a summary of the book, "Saving 'dater In A Desert City." Henry Caulfield replied that you need to read it to get the message. He went on to explain about the situation in Tucson, the City about which the book was written. The point is City officials must be very sensitive to what they are doing and how they do it. Molly Nortier announced that she ordered a number of those books for Water Board and Council over two months ago and they still have not arrived. Stan Ponce asked, after all this discussion, where is the Board going with this question? Dr. Evans is pleased with the questions that have been raised and discussed today. He admitted that he still has some questions and wondered if others did too. John Scott said he likes the first three sections of the report and goes along with the staff on metering, rate structure and education. He thinks Jim O'Brien's proposal regarding charging unmetered, homes, investing it and using those funds to install meters after 10 years, is good. On raw water use, he asked if there are any public health issues on its use in close proximity to residential areas. Mr. Smith said that we use raw waiver now for some parks and golf courses. Jim O'Brien commented that the pipes for raw water in a dual system would have to be buried deeper in case of a rupture. Mr. Smith said it is not as much a risk as with sewer lines. Dave Stewart added that most of the dual water systems, are blown out in the winter. During the summer the system doesn't follow the water lines because the raw water lines go to the green areas. The State has certain requirements, he added. Jim O'Brien stressed that this system is definitly worth looking at for the future. Henry Caulfield asked about dual systems in Arizona. Dave Stewart said in some areas he is familiar with, they irrigate by flooding their lawns with raw ditch water. He added that there has to be an incentive for the developer to include this kind of system. Mr. Caulfield said •it could be made into a savings for the developer. Jim O'Brien said that he understands that the Water Board will soon receive a study that has been prepared on sewer rates etc. If we go to a water metering situation, it may be practical at that point to look at the rate structure on sewer costs. Mike Smith and Bill Carnahan related that the consultant is aware of the water study and the implications that metering may have. That is one of the areas he is addressing. Mr. O'Brien asked for a rough figure for the average household relative to the amount of water that is assessed for sewage treatment costs for indoor use. Mr. Bode referred to p. 7-27, table 7-10. The indoor use for an average family may be around 80,000 gal. The total is about 200,000, so about 40% of the water used returns to the sewer. Water board iiim.it2S November 1, 1485 Page 13 Jim O'Brien asked what kind of incremental monthly costs we would have to bill flat rate uses in order to make up the $450 at the end of a 10 year period with the inflated costs taken into account. Could that be done? Dennis Bode said that would be fairly easy to calculate. The two factors needed would be the inflation rates of the cost and the interest rate you would use to earn on that money. Henry Caulfield reviewed what the Board needs to decide. They must decide among the alternatives or some variation of the alternative. Jim O'Brien has proposed a slight variation on Alt. 2. The others are the increased rate for flat rate customers, education and Xeriscape, and the use of raw water. Jim O'Brien brought up the "green Lawn" concept. Henry Caulfield wished to explore that, His position has been that the people of Fort Collins wanted it this way and therefore, they should have it, and this was borne out by the questionnaire with the rate study, he added. The second point is that Denver, Arizona and other places need to worry about conservation of water, but, fundamentally, we don't have to. We have a lot of water here. If we are willing to buy it away from the farmers, we can develop more water if that is an economic proposition. The idea of not having enough water for the "green lawn" syndrome is a fallacy. Next, Xeriscape is fine as long as it is tasteful. He doesn't see why we should promote getting rid of green lawns. Jim O'Brien's response was that he. has no problem with people wanting green lawns. He just doesn't think that it is acceptable to actively promote that, and on the other hand adhere to a Xeriscape concept. Mr. Carnahan presented the staff's logic in making the statement on Xeriscape. This plan contains a recommendation for a phased metering approach which says people are going to pay for what they use. That would imply that people would want to do the best job they can, or do what they want to do at the lowest possible cost. You are now giving them the tool to control what they pay and chat they do with what they get. Now, there is no incentive to do that. It is flat raise. You might as well use all you can use. With metering, you are putting the customer more in control of what they want to do. We think, as a Utility that we have some obligation to help them do what they want to do whether that is Xeriscape or a blue grass lawn. We need to be in a. position to tell those people how to most effectively get the best mileage out of that water to do what they want to do. We are not saying they must put in Xeriscape. If they want blue grass, we will provide inforrv.,ation on how much water they should apply and when they should apply it for a pleasingly green lawn. How can you conserve, because you are now going to pay based on what you use? The emphasis on Xeriscape is a bit overstated. We plan to do a lot of other things. The demonstration garden is merely to say that there may be an alternative to blue grass. The customer can decide if that is an acceptable alternative to him, and do his own economic analysis. According to Jim O'Brien, the people who have been subsidized over all this time should be starting to pay back. If they haven't been paying an Water Board Minutes November 1, 1985 Page 14 acceptable amount compared with the metered people, then the difference has already run into the thousands of dollars. Norm Evans used the analogy of building a house near the airport and then complaining about the noise. We had a system in place, and after we began tinkering with it, we are trying to go back and say, "you have been subsidized all these years, so you need to start paying it back." Dr. Evans has problems with that. Jim O'Brien said there is a long term perspective which possibly has not been considered. Actually the water that has been used in the Fort Collins area from the Poudre has had a great impact on the lower Platte River system. We are now in negotiations with Dearer, Nebraska, etc. as to what projects are going to go and which ones aren't in order to maintain some kind of minimum stream flow in the lower Platte system to keep it as a functioning system in Nebraska. Anything we can do at this point to better manipulate our future is in our best interests. Henry Caulfield explained the new perspective with regard to water rights in the context of endangered species. The present establishment's legal position in Colorado is you can't beat the endangered species act. The effort now is not only to get the junior rights, but, also to insist that anybody who wants to have better rights than that in order to have a minimum flow, is going to have to buy the rights to preserve the endangered species. The establishment position is that we must force the Federal Government to abide by the water allocation system of the states which means in Colorado, if the government wants rights better than junior rights, they must buy them. What that means, if they are going to buy water rights to increase the flows, the price of water is going to go up, in the long run. N211 Grigg concluded that he is persuaded on the basis of the study, that there is an urgent matter on the table, and that if we don't move with some kind of metering policy in the near future, the needed expansion we are looking at now, will have to be done as early as 1991. If we went in a. 10 mgd increment., roughly the cost would be about $7 1/2 million. If we could defer that for three years, as we might be able to looking at figure 7-3, and if the interest race was roughly 10%, we would be looking at about $2.2 million in savings of interest right there if we could move ahead fairly soon. It seems to Dr. Grigg that the action of the Board ought to be one where we would bind ourselves as a Water Board under some kind of schedule of adopting a policy. We are probably not ready to decide on the alternatives or adopt a policy this afternoon. If we could decide when we are going to vote on that alternative and when we are going to bind ourselves into a policy that this would be responsible action on our parts. Chairman Evans accepted that as a positive suggestion to consider. He suggested that each member come with his or her proposal or modification of how we proceed, perhaps a modification of No. 2 or whatever else each person would find desirable. Henry Caulfield pointed out something he said needs to be considered -- the difference in strategy involved in Alternative 2 versus Water Board Minutes November 1, .1985 Page 15 Alternatives 3 and 4. In Alt. 2 you are creating a good atmosphere from the developer's point of view. The PIF's that are now being paid will be available for this purpose; there will be no charge over and above the current PIF's to go to metering. On the other hand, in 3 and 4, you are saying the opposite. You are increasing the cost to new home owners and those with yokes. Look over at the two right hand columns and the situation is reversed. Costs for 3 and 4 are much less than the cost under 2 for the homes without yokes. This is appealing to different publics. We need to bear this in mind. Which groups in the community are going to be burdened more than other groups? There is a marked difference in those two proposals. Dr. Evans summarized that it was a very good and productive meeting and that each of the Water Board members should come to the November 15 meeting with proposals or modifications of how the Board should proceed with regard to the alternatives. The meeting was adjourned at 5:10 p.m. Frater--Board Secretary — 41 CJ CITY OF FORT COLLINS WATER UTILITIES MEMORANDUM To: City Clerk From: Molly Nortier, Water Board Secretary %YJ-A Re Special Meeting Date: October 29, 1985 There will be a special meeting of the Water Board on Friday, November 1, 1985, at 3:00 p.m. in the Light and Power Conference Room, '700 Wood Street to discuss the Report: "Evaluation of Water Demand Management Options." WATER UTILITIES 700 Woad Street • P.O. Box 580 . Fort Collins, Colorado 80522 . 1303) 221-6681 221-6685