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HomeMy WebLinkAboutWater Board - Minutes - 02/22/2001FORT COLLINS WATER BOARD MINUTES City Council Liaison Chuck Wanner (present) ROLL CALL February 22, 2001 3:10 — 5:05 p.m. Fort Collins Utilities Training Room 700 Wood Street Water Board Chairman Tom Sanders — 491-5448 Staff Liaison Molly Nortier — 2216700 Water Board Vice Chair John Morris — 491-0185 Members Present (A quorum was present.) Tom Sanders, Chairman, John Moms, Vice Chair, Paul Clopper, Ted Borstad, Rami Naddy, David Lauer, Dave Frick, Joe Bergquist, Robert Ward, Tom Brown Member Absent Bill Fischer (excused) Guests Gene Schleiger, Northern Colorado Water Conservancy District George Reed and Dave Rau — Former Board members Staff Mike Smith, Wendy Williams, Dave Agee, Gale McGaha Miller, Dennis Bode, Jim Hibbard, Bob Smith, Keith Elmund, Owen Randall, Dave Meyer, Susan Hayes, Lori Clements -Grote, Beth Molenaar, Susan Smolnik, John Nelson, Patty Bigner, Dennis Sumner, DeEtta Carr, Molly Nortier Chair Tom Sanders opened the meeting. The following items were discussed: MINUTES David Lauer moved that the minutes of January 25, 2001 be approved as distributed. John Morris seconded the motion. The minutes were approved unanimously. Water Board Minutes February 22, 2001 Page 2 RECEPTION FOR RETIRING MEMBERS DAVID RAU AND GEORGE REED David Rau served 8 years on the former Storm Drainage Board. After the merger of the Storm Drainage Board and Water Board, he served 4 %2 years on the Water Board. He was vice chair of the Storm Drainage Board, and was chair of the Engineering Committee for a brief time before his retirement. He was a knowledgeable and committed member of both boards. George Reed served 8 'h years on the Water and Storm Drainage Boards. He was a leader on both boards. He was the chair of the Storm Drainage Board for several years, and was chair of the Liaison Issues Committee on the Water Board until his retirement. He was a dedicated, active, and enthusiastic member of both boards. Chair Tom Sanders read letters of recognition for George and Dave. Copies of these were attached to the minutes as part of the permanent record. They each received dinners for two at local restaurants of their choice. UPDATE: NORTHERN COLORADO WATER CONSERVANCY DISTRICT Gene Schleiger brought Snotel data as of February 22, 2001, which was distributed to Board members and staff. The data showed comparisons of conditions in 2000, 1999 and 1997. Basically, snow pack is about 25% behind where it was last year in the South Platte Basin. Gene said that Art Douglas from Creighton University, who has done long range forecasting for the District for a number of years, gave a long range forecast about three weeks ago. He said 2001 and 2002 are being projected as being similar to the conditions in 2000. He predicts the years 2003, 2004 and 2005 to be 1955 scenario droughts. Regarding water supply outlooks as of February 1, 2001, the forecasts haven't changed much. "In fact they might have gone down somewhat," he added. He announced that the Spring Water Users meeting for the NCWCD will be held on April 11, 2001 in Longmont at the Raintree Plaza. He urged Board members and staff to try to attend. "There are a number of issues that will be discussed, for example, the quota and some of the fallout from the west slope complaint." Relative to the complaint, the District plans to invite a number of municipalities for a meeting on March 20'h to discuss some of the issues that we face, such as non -charge water, carryover water, and how those should be addressed. "We are going to be looking for some input on that," he said. He related that the District still hasn't heard where the Bureau of Reclamation stands regarding this issue. "It is thought that they will probably fall somewhere in the middle and not take a stand, and that could be a disaster," he contends. "That would force us to litigate against the federal government" The District is in the process of closely examining the Helton/Williamson report that was generated by the west slope, attempting to either substantiate what they have or disprove it. "We think we can refute the major part of what they have," he said, "but unfortunately, it will probably go to a judge to decide." Water Board Minutes February 22, 2001 Page 3 Horsetooth is filling. "However, filling is a relative term since we will be down 100,000 ac-ft. from where it should be when it's full," he added. The District is trying to get it up to roughly 40,000 capacity. Part of the west slope complaint states that we should reserve 20,000 ac-ft of that space, so if there is water on this side we can divert it into Horsetooth. "In case there isn't, tough luck," he remarked. The District hopes to have Horsetooth at the 40,000 ac-ft level by the end of April or first part of May. The Bureau originally was requesting the bids in December for the work on Horsetooth. They made a calculation error in the amount of material that needed to be moved, and were off by about 30%. As a result, the bid opening was delayed. The Bureau received quite a number of bids. The engineer's estimate was $11 %z million, and that is just for the berm and buttress portion of the construction. The bids came in from $7.3 million to $14 million. They are in the process of awarding the contract to Delhur Industries out of Port Angeles, Washington at $7.3 million. Construction should begin in three weeks. The contract will run for roughly 500 days to construct the berms and buttresses. Probably by July they will be soliciting bids to do the berm and buttress work on the three east dams. By the middle of next year, they will be going out to bid for the grout curtain through the middle of the Horsetooth Dam. "We keep pushing for 3-4 years, and they continue to tell us that it will be 4-5 years. When we look at what the long term forecast is, it's not good to be down that low," he stressed. The District has hired Boyle Engineering to do a complete study on the system to determine whether the numbers we are using and the way we are operating is appropriate. Gene asked if there were questions. Mike Smith asked if the contract for the east dams that is going to be bid this summer, is for one contract or three. "It could be either or both," Gene replied. "One major contractor could do it, or it could have multiple contractors." David Lauer asked if the Bureau was 30% high or 30% low on the miscalculation. Gene answered high. "Was it for all the dams?" "Just the north one," Gene said. Tom S. asked if there was anything new on the Windy Gap pipe. "We are going to pressure it up to get it to a point where we feel comfortable to pump some water, if there is any water available over there this spring," Gene replied. He thinks the District has requests for 20,000+ ac-ft. of Windy Gap water this year, if it's available, he added. With the snowpack numbers, that becomes questionable. The District continues to work with specialists in the area of pipe construction and installation, trying to determine if there was error on either the construction or installation. He said it's a slow process when the pipe has been in the ground for nearly 18 years. Gene left a copy of an internal memo from the USDA Forest Service, titled "Water for the National Forests and Grasslands — Instream Flow Protection Strategies for the 21" Century." Copies will be made for Water Board and staff. Water Board Minutes February 22, 2001 Page 4 PROPOSED CHANGES TO CROSS -CONNECTION CONTROL ORDINANCE More than six years ago, Water Board recommended, and City Council adopted the City's Cross Connection Control Program. The program requires installation and testing of backflow preventers on all connections which pose a hazard to the distribution system. Jim Hibbard said the approach Utilities staff took was to essentially be the record keeper and enforcer and allow private certified inspectors to actually do the inspection. At the time the program was adopted, staff told Water Board and City Council that the primary focus of our program was going to be the highest hazard connections, which are commercial and industrial accounts. These include the fire sprinkler lines, boiler makeup lines, and carbonated drink supply lines. That portion of the program has been very successful, with over 2,500 devices currently tested annually. John Nelson and his assistant Rich Schneider have surveyed every commercial and industrial application site in the City. "To the best of our knowledge, we have good protection on those services." We have a database of all of them and send out a re -test notice annually. Jim went on to say that, although commercial and industrial was going to be the main focus of our program, we weren't going to totally ignore the residential sprinklers in our system. Since that time, we inspect and test all new residential sprinkler systems as well as go back into older neighborhoods and identify residential sprinkler systems. "We provide an inspection and the first test for those systems free of charge." He said that portion of the program has gone very well, "and we've done a lot of good." We have found a large number of residential sprinkler systems that didn't have any protection on them, had the wrong type of protection or devices that hadn't been tested for 20 years. At this point, the Cross Connection Program has identified over 5,000 of those, and estimate there may be as many as 15,000 in the entire City. Because we have to test those during irrigation season when the water is on, the sheer magnitude of getting them all tested on an annual basis, is starting to become a huge task. Although John and Rich have been able to do a significant amount of public education about the need for these devices and the annual testing, we get considerable feedback from our customers questioning the need for the annual test. Based on that, staff decided to investigate alternatives. What we found was that nobody else in the whole state is requiring annual testing of residential sprinkler systems. A few municipalities have been trying, but the magnitude of what is required if you were to test every residential sprinkler system in the entire state during a 3-4 month irrigation season, has deterred everybody from doing that. At the time that the Water Board and Council adopted these regulations, it was our understanding that the state required annual testing, and yet nobody else seems to be too worried about it. "What we found was that the state essentially backed off from the annual test requirement of the residential irrigation systems, and said that it is basically a plumbing code issue." They acknowledged that it is up to the local entity to adopt, in their plumbing code, what the testing interval would be for residential irrigation systems. In the City's plumbing code, when Building Inspection adopted the state plumbing code, the state deleted the testing interval. Staff interpreted that to mean that it was up to us to decide what is the appropriate interval for testing. Staff determined that for the residential sprinkler systems, where there is no indication of a Water Board Minutes February 22, 2001 Page 5 higher hazard, such as a chemical fertilization injection system, that every three years would provide an adequate level of protection. What staff brought to the Board today was a proposal that we continue to test commercial and industrial back flow prevention devices on an annual basis, and that we change the testing interval for single family residential irrigation systems, from once every year to once every three years. "We feel we can handle sending out that level of notices, follow-up notices and testing with existing resources. We also feel it provides a reasonable level of protection, and will still put us in the lead of all the communities in the state." Jim then asked for questions. He said the Board needs to make a recommendation to the Council to adopt the revised ordinance. Jim emphasized that commercial and industrial irrigation systems and apartment complexes will continue to be tested annually. Paul Clopper asked if there is a provision for a fine. "There is a provision for that because the Council adopts this by ordinance. A violation of this becomes a misdemeanor offense," Jim explained. "We haven't had to do that to my knowledge," he added. John Nelson said it would be a municipal code violation. The judge could set a $20 fine, for example, "but we've never done that," he added. Jim said that when customers, commercial, industrial or residential, receive a second or third notice on a system, we could go to that extreme if we chose, but we haven't in the six years of this program. "If you find a system that isn't working properly, do you tell the customer not to use it until they get it repaired?" Tom S. asked. "When we go out for the initial inspection, we carry certain parts on the truck. If it's something we can fix we fix it and make sure it's up and running," John explained. "We have about a $2000 a year budget that we use for that. Otherwise we direct them where to buy the parts, what parts they need, and a list of people that can fix it for them." Jim clarified that that takes place when the first inspection and test and are done. If Council approves this, we will send the homeowners notices once every three years saying it's time to have their backflow prevention devices tested. On the back of the notice we list the testers in town who have made their presence known to us. After testing, the tester will send us a notice, and we enter it into our database and set the next test date three years out. "How did you pick three years?" Tom Brown asked. "It was based on some data on failure rates, but, because we are still going through the system the first time, we find the failure rate high for devices we haven't seen before. When we have been back for re -testing, the failure rate is down in the 10-15% range," Jim responded. "We haven't had a long enough period of testing residential systems to be able to interpret the data. Three years was basically a compromise. Our intention is to monitor and gather that data, and see if what we are doing is supported by the data." John Nelson related that we have15,000 systems, which is about every other household. "We have sent out a little over 3,500 notices in a spring/summer time period, so we determined that we could handle about 5,000 with existing staff." Jim concluded that it is a balance of resources and level of protection. "It's not based on, for example, `is a 10% failure rate okay and 12% is not. "' "Will you get data back if a homeowner gets it tested?" Tom Brown asked. "The Water Board Minutes February 22, 2001 Page 6 tester, when he fills out his report, indicates whether it failed or passed and what parts he used, etc. to fix it," Jim replied. "There is a test report that they submit to us that we enter into the database." "Is one of the reasons you are making it every three years, because of there being so many residential systems in the City?" David Lauer asked. "That's part of the reason," Jim answered. "Have you thought about taking a third of them and doing it on a rotating basis, so each year you test a third of them, rather than trying to do all of them at once every three years?" David suggested. "That's how it would work," John replied. "We won't be trying to test all of them at once. It will be a rotation, where eventually we will get it spread out more evenly," he added. "Do you have any idea about how many systems get installed without permits?" Dave Frick asked. "We get permits on about 400, so there are probably that many that get installed. It may be less now, because we try to watch that," John responded. "We work with the building department, the meter shop and other City staff." Jim said what they found is that neighbors like to tell on other neighbors. In other words, they will say, "If I have to have mine tested, my neighbor has to have his tested too." He added that once they learn the reason for the testing, they are more accepting of the concept. John also added that staff does a lot of public education. ACTION: Motion and Vote Paul Clopper moved that the Water Board recommend to Council the adoption of the changes to the Cross Connection Control Regulations. After a second from John Morris, the motion passed unanimously. MODIFICATIONS TO LOCAL WASTEWATER DISCHARGE LIMITATIONS According to the background information included in Water Board packets, the Utilities' Industrial Pretreatment Program is required by the EPA to control the discharge of pollutants from industrial and commercial sources in order to prevent pass -through of pollutants and interference with water reclamation facility operations. Federal pretreatment regulations require the City to develop technically based pollutant limitations that are protective of treatment facility operations and infrastructure, receiving water quality, biosolids quality, and worker safety. The limits must be periodically reviewed and evaluated using the current EPA Region VIII Strategy for Developing Technically Based Local Limits. The City Utilities have developed these limits using the current EPA guidelines. When developing technically based local limits, the amount of each pollutant that can be allowed to enter the water reclamation facility is determined using the most stringent applicable environmental standard and the fate of the pollutant through the treatment process. That amount is known as the Maximum Allowable Headworks Loading or MARL. A known portion of the MAHL is contributed by domestic wastewater sources. Another known portion is used to account for low-level background concentrations of pollutants in the receiving stream. Another portion is reserved as a safety and growth factor. The remaining portion of the MAHL is allocated to industrial and commercial sources based on the volumes of wastewater they discharge. Water Board Minutes February 22, 2001 Page 7 The limits applied to significant industrial users are typically concentration -based limitations. Development of limitations applicable to commercial businesses is a new EPA requirement. They are mass limitation expressed in pounds per day. These limitations, applicable to commercial dischargers, can be implemented by imposing specific limitations or other requirements on commercial dischargers when needed to assure the City's Water Reclamation Facilities do not receive more of a pollutant than the facilities are able to treat. This assures compliance with state and federal standards. Changes in the EPA guidelines, stream standards, wastewater volumes and treatment facility operations have all contributed to changes to the City's local limits. Some limitations have been made more stringent, some have been made less stringent, and some limitations have been eliminated. Staff has worked closely with, and received approval from, EPA Region VIII during the local limit development process. Attachment 1 in the packet, was a table that compared the existing local limits and the proposed limits applicable to significant industrial users. Attachment 2 listed the proposed local limits applicable to significant industrial users as they will appear in the City Code. The bottom half of Attachment 2 listed the new pollutant loading limits applicable to commercial dischargers. David Meyer, Pollution Control Services Manager, began be saying that in his summary in the packet, he tried to give the Board a general idea of what the hndustrial Pretreatment Program is about and how local limits are developed and why. In some of the additional material, Dave was focusing a little more directly on the process of developing local limits. He then took the Board through the main points. As stated above, the Industrial Pretreatment Program is required to follow guidelines that are published by the EPA. The first step in the process is to identify all of the environmental regulations that are applicable for each of the different pollutants. He referred to the flow chart, using lead as an example. There are three standards that apply: a Chronic Water Quality standard; (0.0109 mg/L) Acute Water Quality Standard (0.28 mg/L); Biosolids Standard (840 mg/kg). In the local limit development process, we then use a variety of formulas to calculate the Allowable Headworks Loading. The Allowable Headworks Loading is the amount of the pollutant we can allow to enter the wastewater treatment plant and still meet the environmental standards. Dropping down in the flow chart from the Chronic Water Quality Standard, we end up with an Allowable Headworks Loading for lead based on that standard, of (14.6 lbs/day). For the Acute Water Quality Standard, we end up with (366 lbs/day), and (10.2 lbs/day) based on the Biosolids Standard. The next step is to look at those numbers and pick the lowest one (the most restrictive standard), and that is known as the Maximum Allowable Headworks Loading (MARL). From there he referred to the pie chart (MARL Allocations) included with the packets. This parallels the next set of boxes in the flow chart. It illustrates how the MAHL is allocated. "We are required by the EPA to factor in an amount for a safety margin and for growth. The last time we did the local Water Board Minutes February 22, 2001 Page 8 limits study was in 1992-93. At that time we used a 25% factor for safety and growth, which is what we did again this year," he explained. A known amount of the Allowable Headworks Loading is used by domestic sources. "We have measured the concentration of lead in domestic only discharges. We multiply that concentration by the volume that is discharged from domestic sources, to determine the amount to allocate to domestic sources. He went on to say that for some pollutants there is a low background level in the receiving water. For lead, that piece of the pie is 0. What we are left with after subtracting the safety factor, domestic background, and receiving water background from the MARL, is an amount that we can allocate to industrial and commercial sources. We divide that amount between industrial and commercial sources based on the ratio of flows received from industrial and commercial sources. Using that ratio of flow and the remaining amount of MARL, we calculate a local limit that applies to significant industrial users, which are generally the larger industries to which we issue permits. The local limits for industry are concentration -based limits, in mg/L. Commercial sources are more complicated. This is a new requirement that the EPA has developed as a part of the local limit development process. "It's a good one. In the past we never really knew how to handle commercial sources," he acknowledged. It was ignored or lumped into the industrial sector. There are ways now to look at commercial separate from the industrial sources. "The way we do that is to publish a maximum load limit from commercial sources, and that would be in lbs/day. We can impose restrictions on commercial dischargers as we need to in instances where we find the amount of a pollutant entering the wastewater treatment plant is beginning to approach or exceed the MARL. In cases like that we could then impose concentration based limitations on specific sectors of commercial dischargers —those that actually discharge that pollutant. The reason we impose limitations only on specific sectors is, if we were to set a local limit that applied to all commercial dischargers, the large discharge volume would result in a limit that was so small that those who actually discharge that pollutant, would not be able to meet the regulation. Dave asked if there were questions. "If you measure at the wastewater treatment plant to determine the commercial load limit, how can you determine what commercial locations are responsible for going over that limit?" David Lauer asked. "Generally it's a matter of knowledge about the business that they do," Dave replied. "For example, for mercury, we know that dentists' offices are the main contributor in the commercial sector. For silver, we know that it's dentists' offices, photo labs and medical facilities that do x-rays. For lead, we know that it's the radiator shops." Rami Naddy asked if there aren't certain limits that they already can't exceed, for example, RCRA hazardous waste regulations for mercury. Dave explained that what requlations apply can be a complicated question "The hazardous waste regulations apply to the federal definition of a solid waste, and that doesn't include sanitary waste. What the federal government did to fill that Water Board Minutes February 22, 2001 Page 9 gap in the regulations was create the Industrial Pretreatment Program. It's our responsibility to set those limits for discharges to our sanitary sewer system." It appeared to Tom Sanders that staff was only loosening three or four of the local limits: Chromium total, mercury, zinc and pH. "You are doing this primarily because you see there is no effect on the workings of the wastewater treatment plant and its operations, is that correct?" he asked. "Yes, it's a matter of how the math works out. The first critical step is calculating that Allowable Headworks Loading," Dave responded. "Then everything else kind of falls in place based on that number," he added. There are multiple reasons for these numbers changing from year to year. One of the biggest ones is the removal efficiency at the wastewater treatment plant. Most of these limits are for metals. The removal efficiency refers to the amount of metal that ends up in the biosolids compared to the amount that ends up in the wastewater effluent. That factor changes with changes in the flows received at the treatment facility, and with changes in the proportion of industrial flows and domestic flows. "Are you concerned, primarily, with the effluent quality going into the River rather than sludge quality?" Tom S. asked. "No, we put equal weight on all of those things," Dave replied. "and we enforce the limitations as based on the standard that is the most stringent." Gale McGaha Miller added that in the example using lead, it was the biosolids standards that drove the local limit. "You can't just look at the concentration of the environmental standard. Whether one is more stringent than the other, not only is determined by the actual numbers, but also by the removal efficiency. If you have a very low biosolids standard, but it's for a metal that doesn't end up in the biosolids, in a large proportion, then that standard probably isn't going to be what drives the local limit," Dave explained. "Is there any industry or entity in Fort Collins that is not going to have to treat as much because of the changes in the standards?" Tom S. asked. "No, generally what you find is in industry that is regulated, they have to treat their wastewater. In the treatment process, you are either successful or you're not. Generally you don't find an industry that would discharge near a limit. They have to be well below it. Precise control is too difficult," Dave emphasized. "We aren't raising any limits to the extent that it's going to have that kind of an impact on any industry. Conversely, there aren't any industries out there, at this time, that are going to have to improve their treatment to meet the new limits," he added. However, the margin for error will be smaller in come cases. Copper is being reduced from 1 mg/L to 0.5, and that certainly affects metal finishers, such as Woodward Governor. "The only thing that is significant is mercury, which is three times higher as far as concentration is concerned," Tom S. commented. "Mercury is an interesting one," Dave acknowledged, "in part because we are talking about such tiny quantities. The only permitted significant industrial user that we see any mercury from, is the hospital. Most mercury is discharged by the commercial sector: dentists, laboratories, and in fact for the hospital it's their laboratory that is a source of mercury as well." Mercury discharges will have to be addressed on the commercial side, using the new commercial load limit. Water Board Minutes February 22, 2001 Page 10 Joe Bergquist asked how the smaller businesses are tested. "For the local limits study, we identified interceptors that receive wastewater from a variety of different businesses. We don't go out and sample and test discharges from commercial businesses in general. It's a matter of identifying those that potentially are causing problems, like mercury discharges from dentists," Dave concluded. Rami Naddy asked if the limits are based on the most restrictive standard. "Yes," Dave answered. "These limits are based on biosolids concentrations?" Rami continued. "In some cases," Dave said. "In other cases they would be based on a chronic water quality standard, or an acute water quality standard," Dave replied. Rami asked about a pH of 11. "Coming from a biological perspective, doesn't that raise a red flag?" he wondered. "We have had numerous requests from industries to raise the upper end of our pH. In the past we've always said no. The EPA sets the lower limit for pH, which is 5.0. They don't address the upper limits. Quite a few cities along the front range have raised their upper limit, in fact some of them have done away with it entirely. What we did was calculate the maximum percent of industrial flow that we receive from industries that might discharge high pH wastewater, and, in this town, that's mostly the breweries. We took samples of their brewery effluent, raised the pH to 11, mixed it with the total influent at the appropriate percentage, and observed the change in pH. It raised the pH of the mixture to about 9.0. The wastewater manager said that was going to be okay. It will actually be a benefit because it will add a little alkalinity, which we currently have to spend money for chemicals to do that anyway," Dave explained. ACTION: Motion Joe Bergquist moved that the Water Board recommend to the Council that they accept staff s recommendation for the modifications to local wastewater discharge limitations. Paul Clopper seconded the motion. David Lauer asked about the limitation for fluoride as far as treating water. There was no number listed. "Is that in concert with our other discussion about fluoride?" "The change in the fluoride limit wasn't made in connection with the other issues related to fluoride. The decision to drop the limit was pretty much dictated by the fact that there are no state or federal standards that apply to our discharge, and therefore, there is no way to calculate a local limit; there isn't any applicable limit," Dave responded. Rami had another question about the mercury level. From his experience, mercury problems tend to be a food chain effect. Mercury bio-accumulates in the food chain. "Raising the standard seems like the wrong thing to do." "We are raising the industrial discharge limit from 300 to 900 parts per trillion, so we are raising from almost nothing to a little more than almost nothing," Dave explained. "The quantity of mercury that we see coming into the wastewater treatment plant each day, is about 13 grams of mercury in 15 million gallons of wastewater. The biggest source of that appears to be domestic sewage and discharges from dentists' offices. The local limitation that we are raising from 300 to 900 parts per trillion, doesn't affect either one of those sectors. There is no legal way for us to control discharges from households; the domestic Pi Water Board Minutes February 22, 2001 Page 11 wastewater. The new limitation of 900 parts per trillion, will apply only to the large significant industrial users. We currently don't have any that discharge mercury with the exception of the hospital. The other dischargers of mercury are all in the commercial sector, and that is being controlled by the new part of the local limits package that allows us to develop the programs we need to control mercury. We are anticipating that we will be implementing some mercury control programs that will affect the commercial sector, similar to what we did with silver about 10 years ago," Dave concluded. A Board member asked if we should address mercury in a different way than we do other metals. The development of these limits is essentially a mathematical process and the part that is definitely set is the quantity that we have that we can allocate to the industrial and commercial sector. We get to decide how much of that we give to industry and how much we give to commercial. We considered what we needed to do there. We started with the ratio of flows of industry versus commercial. That ratio is roughly 25% industry and 75% commercial. If we set the limits based on these ratios, the addition of one new large industrial discharger could have a very significant effect on the pollutant loading, and we would have to immediately lower the limit. "What we decided to do was give industry another 25% of portion of the pie, so a significant industry was allocated a little less than 50% and commercial a little more, about 53%. We used this rationale uniformly for all the different metals. Dave was uncomfortable to have to defend a change only for mercury. An industry might say, that's not how you do it for lead; why are you doing it that way for mercury? It would be much harder to defend," Dave explained. "Will you be able to say, this is the decision we have made for all metals?" Joe Bergquist asked. "Yes, the EPA has been working on developing this new process for the last year or two. We have been closely involved in that. I expect they are not going to have any problems with our decisions. They are already aware of the approach we are using," Joe also asked why there are no limits for fluoride. Dave reiterated that there are no environmental standards that apply to the receiving waters or to the biosolids. "If they come up with one, will it be added?" Joe continued. "Yes," Dave replied. ACTION: Vote Chair Sanders called for the question. The Board voted unanimously for the motion. STORMWATER FINANCING ALTERNATIVES Background The subject of Stormwater financing alternatives has been discussed at several Board meetings. In 1998, the Water Board and Council approved a city-wide approach to financing stormwater improvements. Based on estimated total city-wide costs of $68 million, it was estimated that construction of the City's stormwater improvements could be completed within a 15-year time period. Based on models developed at that time, this could be done with monthly fees going up around 50% from 1998 levels. In the meantime, the City was updating the master plans for all the drainage basins. Water Board Minutes February 22, 2001 Page 12 In 1998, the estimated cost of the improvements in the Canal Importation Basin was approximately $24 million. Now that the City has adopted new rainfall standards, and a new master plan for this basin is nearly complete, the costs are approaching $50 million. In the Old Town Basin, costs, which were estimated at $14 million in 1998, are estimated to reach $20 million. At their January meeting, the Board discussed 4 financing alternatives. The Board voted unanimously to support two motions: one that staff look at a blended approach for financing for the original 15-years construction period and also that staff consider equivalent "pay-as-you-go" to be completed in 20 years. They asked staff to bring additional scenarios to the February meeting for the Board's consideration. At today's meeting, Dave Agee reminded the Board that they asked staff to look at a scenario where there would do a combination of pay-as-you-go and borrowing to accomplish these stormwater improvements within the 13 years left in the original schedule of 15 years. "Staff came up with that scenario," he said. He used two graphs that were distributed at the meeting to explain it. One other part of that, as the Board suggested, was any borrowing for the improvements would not extend beyond 20 years. "When I looked at that, it didn't make any sense to extend it out even that far. What would happen is it would have artificially required us to keep our rates higher than they would need to be out in that last 5-year period because of bond coverage requirements," Dave explained. What he did was structure the bond issue for a combination scenario over a 15-year period of time, assuming a 6% interest rate and $30 million. That would have to be borrowed next year to stay within the guidelines. Debt Scenario The debt scenario was represented by a red line. Basically, what would have to happen is that the City would be required to increase the rates by about 70% in 2002, and then increase by another 11-12%, up to the point where fees would be about $26 per month, and hold that out to 2013. At that time we would have all the construction done. This would be a 15-year construction scenario. Then it begins to drop down. "It can't drop all the way because we still have some more debt to pay off. Eventually, in both these scenarios, the rates could actually end up at less than what customers are currently paying, which is $8.13. Dave then referred to the blue line, which was pay-as-you-go. It has a very steep curve to begin with. It starts from the $8.13 level, and goes up to almost $20 right at the beginning, which is about a 140% increase. Things flatten out, and are fairly flat until the year 2013, at which time it is completed. At that time the fees drop down and we are just into M&O. What Dave discovered in doing these, is that borrowing doesn't really do anything for us as far as speeding up the construction schedule. "All it does is cost us money, which is about $15 million in additional interest," he stated. "If we borrow $30 million in January 1, 2002, we are going to have design, among other things to go through before we begin any construction," he stressed. "To think that we could borrow $30 million and get it all spent within that year, is extremely unrealistic," he contends. "Given that, we would be a lot better off if we were to go Water Board Minutes February 22, 2001 Page 13 with a 15-year construction schedule and pay-as-you-go, rather than a debt. Those areas where the red line is above the blue line, would make it a total of $15-16 million more in cost. Dave continued by returning to some of what was covered at the last meeting, where things were extended out instead of getting things built within the next 13 years. We would have things built out by the year 2025. "As you can see, the slopes aren't nearly as severe on either scenario; the red being the debt, which is a combination of pay-as-you-go and debt. In a strictly pay-as-you-go scenario, which is the blue line, rates go up fairly rapidly, but then level out. He didn't show this out beyond the year 2025. What happens at that point is that we get everything built and that line can come way down because we go back into the O&M mode on the pay-as-you-go scenario. With the debt scenario, that line is going to continue out not flat, but is going to slope down very gradually because we are going to have debt service out to 2045. "It looks like, if we do the 25- year, it would make more sense to do it on a pay-as-you-go basis, rather than on a debt finance basis," he concluded. Total Effect on Utility Bills Another chart showed the effect on the total Utility bill. "When they get their bills people don't say, `My stormwater bill has gone up 25-50% or whatever."' He looked back at the City's Utility bill in1985 as a base year, and compared our bills with inflation. The blue line was inflation. Starting in 1985, you can see that up to the present where the total Fort Collins Utility bill is currently $85, which is less than inflation would have been since 1985. However, if we do this scenario with pay-as-you-go, where we are going to jump the rates up 140% in stormwater, starting in 2002, plus the other rate increases that are already planned, at 2005, we are almost going to be bumping inflation. "It's still not bad," he said, "but certainly not below the inflation line as we have been in the past." As part of the discussion, we need to think about how this impacts the overall Utility bill. The chart illustrated that there is an impact. If you get up around $25-26, for stormwater, some people are going to have a higher stormwater bill than wastewater, or in some cases, even water. Dave acknowledged that this was the worst case scenario of what it would look like. He said there has been some discussion among staff as to whether we can get all of this done within the next 13 years, and that is definitely an issue. "Frankly, staff thinks, perhaps the 25- year scenario is more likely for us to be successful." Dave mentioned something that wasn't brought up at the last meeting. "On top of the $120 million we are talking about, by the time the improvements would all be built, with inflation, it will be $150 million. On top of that, we have a 1 % Art in Public Places contribution to make, which is $1.5 million. We will want to hear from you on that, but not today," he said. Board Discussion Joe Bergquist wondered if other Utility rates, besides stormwater, are going to be going up dramatically. "We have looked into the future on water and wastewater and we expect water to be 6% a year for at least a few more years, and wastewater 2%. If anything, we are trying to keep Water Board Minutes February 22, 2001 Page 14 those lower," Dave responded. "The electric rates are the only ones that have been fairly stable," he added. "In fact, the 1% increase that we had this year, is the first increase in several years." He said he can't predict a new regulation or something else that might increase other utility rates. "At least in terms of what our master plans show, we don't need large increases in water and wastewater for awhile," he assured the Board. Tom Brown asked how much the market can bear. Council Member Chuck Wanner said the balance seems to be struck for him with the 25-year pay-as-you-go. "You don't get the benefits as quickly, but you don't waste as much money in interest, and you don't have as long a drawn out payback as you do on the 15-year," he stated. "Also it seems to be an appropriate response to the fears we have of a 100-year storm event." Tom Sanders agrees that the pay-as-you-go is a good idea. "I think jumping up to $22 at the beginning is tough. The only thing good about it is that people still have a memory of the '97 flood." Chuck added that the rationale is good. You are paying for what you get. Paul Clopper pointed out that there is a concern among staff that physically trying to complete improvements in a 15-year time frame would be a stretch. "When you go out to 25 years, what are you doing with inflation? It's not always going to be like it is currently," Dave Frick observed. The advantage of 25 years is that there probably would be one or two dips in that period where you could actually get some more work done for the money available. $5 million in 2001, costs nearly $10 million out to 2025 if you inflate the $120 million figure that we are using as a ballpark figure," Dave Agee explained. Tom S. said in 25 years surely the new construction will be compatible with this system, "in that we will not overload it, and will not be in the 100-year track anymore." "It's certainly the intent," Owen Randall answered. "New areas are not much of a problem but taking care of past sins is," Mike Smith remarked. Jim Hibbard said that a good portion of the $120 million is for retrofit. "Some of it is for newer areas too, but that is out of proportion to the retro-fit." Dave Agee pointed out that about $50 million will come out of the $120 million for the Canal Importation Basin. Dave Lauer asked if staff is in agreement now to try to do it in 15 years even if it's pay-as-you- go. "Does a $22 fee sound realistic?" "I think the remaining 13 years scenario is going to be very tough financially, and in terms of actually getting the work done," Dave Agee replied. "Based on my discussions with Mike Smith, I think staff is leaning towards the 25-year scenario, rather than 15. As far as pay-as-you-go, we are very concerned about continuing to load the operating budget of the Stormwater fund with debt. At this point we are paying 60-70% a year in debt service. That just doesn't make sense." "Is there an upper limit by ordinance or policy with the City about that?" Tom Sanders asked. "No, we have to follow what is called bond coverage requirements. Our current bond ordinance requires that you take all your revenue less operating expenses, and that has to cover debt service 1.25 times. That's basically what we are bound by; existing and new bond ordinances. Water Board Minutes February 22, 2001 Page 15 Mike Smith said there are two issues with the 15-year. "I don't think we could do a good job that quickly, and I don't think the impact on our ratepayers is wise. I couldn't personally recommend that to the Council," he stressed.. David Lauer emphasized that we need a combination. "If you are paying 8% for the $120 million just in pure debt service, why go back and revisit that? If we are given a month to mull this over, and we have basically four scenarios, and we know that two of them are pretty much unrealistic when it comes to actually getting the work done in a 13-year period of time, then what are the real alternatives?" he asked. Is there something in between a 13 and 25-year scenario that we should consider?" "You could always come up with that, but I think the shorter you go, the more impact there will be on the rates," Dave A. responded. "Also, when you are talking about 25 years, there is nothing to keep you from making a change in 5 or 10 years," Tom Brown said. "The other thing we like about it," Dave A. said, "is that when you get tied into debt, you are required to pay that no matter what happens. If you are on a pay-as-you-go basis, and something happens in the economy, or whatever, you can always slow down or stop. You have more control over it as opposed to debt." Joe Bergquist asked if staff thinks they can start building faster if they adjust the rates. Paul Clopper jumped in and said, if staff is comfortable with the 25-year pay-as-you-go option, and the Water Board agrees, is there any reason why we couldn't make a recommendation today? Tom Sanders said the Board is free to make a motion, even though staff said we have another month to make a decision. ACTION: Motion Paul Clopper moved that the Board recommend to Council that they adopt the 25-year pay-as- you-go stormwater financing alternative. Tom Brown seconded the motion. Chuck Wanner asked if there was some chance that we could do this with the current Council. "I say that because we have, essentially bought into this process, and it might be easier than with a new Council," he said. "It probably could be done with this Council," Mike Smith replied. "We are basically saying that this is a policy issue and this is the way we want to approach it," he said. "The rates will be set in the fall," Jim Hibbard pointed out. Dave Agee said the plan was to bring this along with the Canal Importation Master Plan. Mike S. said Canal Importation has some political problems. "We can either combine it with this or separate them," he said. He acknowledged that it is a tough decision. Chuck Wanner suggested separating them. "That might be a good strategy," Mike Smith said. Dave A. thinks, in order to get Council up to speed to make this decision, we are going to have to talk about where these numbers came from as far as the $50 million, which leads into Canal Importation. "It looks a little troubling to me to get there," he stated. Dave Frick asked if there was a reason we are not jumping the rates a little faster on the 25-year scenario to begin with. "Mainly because we don't need to in order to get started with construction," Dave A. replied. "We are borrowing $10 million this year to get started on a set of projects that we will be able to do in the next several years. Between that and starting new projects that we will put on the drawing board in 2002, it is sufficient. "It wouldn't allow us to shorten it to 23 years? Dave Frick continued. "Anything is possible," Dave A. replied. "We have Water Board Minutes February 22, 2001 Page 16 been fairly conservative on interest earnings, etc. If growth would go crazy we could get some extra money," he noted. "We are not going to preclude that we wouldn't speed that up if conditions were right," he concluded. Tom Brown had a question. "If we use the 25-year pay-as-you-go, does that require this particular line on the graph, or some other?" "I wouldn't want to say that this is exactly how it's going to end up," Dave A. responded. "Again we are dealing with fuzzy numbers. This is just an approach or a philosophy. We are not saying these are going to be the numbers," he emphasized. David Lauer asked if we are saying that we aren't going to have a flood within this 25 years. "There is one chance out of five," Tom S. pointed out. "And we are saying that it is more valuable to do it this way and save the City $15 million in debt service in order to take 10 years longer to complete the work, than to protect people from a severe flood?" David continued. "Or raise the rates faster," Joe added. "That's the safer way, which is risk versus real dollars," Tom S. said. Dave Frick said, on the other hand, we will probably build based on priorities. The highest priorities get built first. ACTION: Vote Chair Sanders called for the question. The Board voted unanimously for the motion. PROPOSED SURPLUS WATER RENTAL RATES Each year, after the irrigation companies have established their annual assessment rates for water shares, the Water Board recommends to the City Council the rental rates for the City's surplus raw water. A table was included in the packets that showed the assessment rates as set by the irrigation companies and the rental rates set by the City for 1998 through 2000, as well as proposed rates for 2001. The per acre-foot prices for the proposed rental rates were also shown for 2001. According to staff, the proposed rental rates for 2001 are based on several factors, including past rental rates in the area, current assessments, and anticipated supply and demand conditions. With the exception of Colorado Big Thompson Project (CBT), Joe Wright Reservoir and Reusable Effluent, water cannot be rented from one ditch company system into another. Therefore, for these systems, the rental market is limited to individuals under each ditch and the rental price is largely dependent upon assessments, as well as the supply and demand within each irrigation system. This causes considerable variation in prices per acre-foot among the various supply sources. Beth Molenaar said that the rental prices for CBT, North Poudre Irrigation Company (NPIC) and Water Supply and Storage Company shares are based primarily on market rental rates since there is an active rental market for these shares. Typically, about 90% of the water rented by the City is from these three sources. With the limited rental markets for the other sources, the rental prices are based primarily on assessment rates. Beth continued by saying that there aren't any major changes this year. There is a slight increase in most of the rates. "One sizable increase is in our reusable types of water," she said. This includes Joe Wright Reservoir water and Reusable Effluent. "There is a tremendous market for Water Board Minutes February 22, 2001 Page 17 that water right now," she said. Staff learned recently that some other municipalities are charging more than our proposed $75 per ac-ft. "Last year we brought in about $460,000 in rental revenue," Beth reported. That was primarily because we had a 100% quota on CBT water, and we were able to rent a lot of that. Because we had such a dry season all the way through the summer, there were still customers out there who were willing to pay for it late in the season," she added. Dave Frick asked how much reusable water is normally requested from the City. With all the substitute supply plans it's about at 500-600 ac-ft.," Susan Smolnik replied. "Is there anybody that is renting the water from us and selling it to someone else?" Tom Sanders asked. "The only case in which that happens, is, for example, Larimer and Weld will sometimes rent a block of CBT water and then they will re -rent that at the same price to their share holders," Beth responded. "To my knowledge, we don't rent to anyone who's making a profit by re - renting it," she added. ACTION: Motion and Vote John Morris moved that the Water Board recommend to City Council that they approve the proposed rental rates. Joe Bergquist seconded the motion. Further Discussion Mike Smith said there is an issue that may come from Council on this. In recent years there has been some discussion about how we select those who are allowed to rent the water. Currently, it is rented via a lottery when there is not enough to go around. Mike said that we are still interested in the discussions about the policy procedure for renting the water, but in the meantime, we need to get the rates adopted, because the season is upon us. "We don't want to see this held up because someone is interested in trying a different policy," he stressed. He hoped that the Water Board would concur with staff to continue to use the current procedure while looking at other policies. He emphasized that we need to adopt the proposed rental rates first. John Moms, who made the motion and Joe Bergquist who seconded it, agreed to amend the motion to say that, in addition to approving the 2001 rental rates, that the Board recommend that staff continue to follow existing policies for this rental season. Robert Ward informed the Board that the Larimer/Weld Water Issues Group still exists. They are into a number of discussions about creating a water bank in Northern Colorado, and that concept will result in having to come to grips with a lot of the issues that have been brought to the table about rental policies. He thinks it would be premature for Fort Collins to try to establish something different, while this larger group continues to deal with many of those same issues. Tom Sanders pointed out that apparently the state legislature is introducing some bills relating to this. Robert said there are two bills that deal with water banking. Tom suggested that the Legislative and Finance Committee look into this. "Given all this, I think Mike Smith's suggestion is very appropriate," Robert Ward concluded. Water Board Minutes February 22, 2001 Page 18 ACTION: Vote The Board voted unanimously to recommend the approval of the rental rates and to continue the existing policy for allocating rental water this rental season. STAFF REPORTS Treated Water Production Summary Dennis Bode reported that staff recently made projections for this coming year based on an average year. For January, the City used about 1,586 ac-ft. of treated water. "It's still early, so we'll see how the year goes," Dennis commented. He pointed out on the back of the treated water data, a graph of the Joe Wright Reservoir Snotel Site. There is one line that reflects below average snow for Joe Wright. The other lines are minimum and maximum over almost a 20-year period. Water Board 2000 Annual Report The Board thanked Molly Nortier for a good report. COMMITTEE REPORTS Paul Clopper, chair of the Engineering Committee, reported that the Committee met and talked about fluoridation. Committee members decided that they will gather more information and meet again next month. There were no other committee reports. OTHER BUSINESS Tom Sanders announced that next month will be Molly Nortier's last meeting. She will be retiring after more than 23 years with the Utilities. ADJOURNMENT Since there was no further business, the meeting was adjourned at 5:05 p.m. Water Board(Secretary