HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 06/20/2000 - SECOND READING OF ORDINANCE NO. 66, 2000, AMENDING AGAGENDA ITEM SUMMARY ITEM NUMBER: 13
DATE: June 20, 2000
FORT COLLINS CITY COUNCIL STAFF
• Dennis Bode
SUBJECT:
Second Reading of Ordinance No. 66, 2000, Amending Chapter 26 of the City Code Relating to
Fees for Raw Water Requirements for the Water Utility.
RECOMMENDATION:
Staff and the Water Board recommend adoption of the Ordinance on Second Reading.
EXECUTIVE SUMMARY:
This Ordinance, which was unanimously adopted on First Reading on June 6, 2000, increases the
cash rate charged developers for satisfaction of raw water requirements from $3,500 to $4,500
per acre foot. The cash rate, which is adjusted periodically to reflect the current price of raw
water, is also the basis for a surcharge paid by nonresidential customers for water used in excess
of their annual allotment.
AGENDA ITEM SUMMARY ITEM NUMBER: 16
DATE: June 6, 2000
FORT COLLINS CITY COUNCIL STAFF:
• Dennis Bode
SUBJECT:
First Reading of Ordinance No. 66, 2000, Amending Chapter 26 of the City Code Relating to
Fees for Raw Water Requirements for the Water Utility.
RECOMMENDATION: j)f
Staff and the Water Board reco C6p!o)oP0rdYic First Reading.
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FINANCIAL IMPACT:
It is expected that during the second half of 2000 the Utility will have approximately 100-acre
feet of raw water requirements satisfied by developers through cash payments in-lieu-of water
rights. Based on this, the ' " eas 0 p acre foot would increase the
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amount of cash received by ut $1 00. a ve s into a water rights fund where
it is kept in reserve for the de opme pur s f additio water rights. f
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EXECUTIVE SUMMARY:
This Ordinance will increase the cash rate charged developers for satisfaction of raw water
requirements from $3,500 to $4,500 per acre foot. The cash rate, which is adjusted periodically
to reflect the current price of ra er, i so asis a charge paid by nonresidential
customers for water used in cess eir al " e proposed changes are to be
effective August 1, 2000.
BACKGROUND:
When satisfying the City's raw water requirements, developers have the option of paying cash
instead of turning over water rights. The cash rate, in-lieu-of water rights, is periodically
adjusted to reflect the market price of water rights in this area. The last adjustment in the City's
cash in-lieu-of rate was in January 2000 when it was adjusted from $2,700 to $3,500 per acre
foot. Since that time water prices have increased significantly causing a need to consider
another increase in the City's cash in-lieu of price.
The price of Colorado-Big Thompson (CBT) units normally sets the trend in water prices in this
area, since there is enough market activity to establish the going price. During the last couple of
years, CBT prices have increased quite dramatically. In January 1998 the price was
approximately $2,800 per unit (each unit delivers from .5 to 1.0 acre feet per year). In January
DATE: June 6, 2000 2 ITEM NUMBER: 1
2000 it was approximately $8,000 per unit. Recent sales have been reported from about $12,000
to $15,000 per unit. The rapid increase in price appears to be because of numerous CBT water
purchases by many communities in the Northern Colorado Water Conservancy District. Many
communities and water districts in this area have relied primarily or solely on CBT water so they
have increased their cash in-lieu-of prices to keep up with CBT prices. With the large increase
in prices during the last several months, the raw water costs for many area developers have
increased dramatically. Many of the cities and water districts in this area presently have cash
rates that exceed $10,000 per acre foot. The attached graph illustrates the changes in the price of
CBT units,North Poudre Irrigation Company (NPIC) shares and the City's cash in-lieu-of rate.
The City's cash rate needs to b t a eva�l 'll able, City to purchase or develop
enough water to meet the w r de m s of new ev p en Local developers that build in
the City of Fort Collins Wa Utility ervic t ver shares in a number of local
irrigation companies to satisfy 'te em ts. Beca of this, it is appropriate to focus
on the cost of acquiring local stocks or developing other local projects when adjusting the City's
cash in-lieu-of rate. In recent months the City has received primarily cash and very little water
stock. This is an indication that the price of local stocks is approaching or exceeding the present
cash in-lieu-of rate of $3,500 per acre foot. Another consideration is the cost of developing
independent water supply projects in the Poudre Basin. Although there is still considerable
uncertainty regarding the cost and the yield of such projects, it is believed that the cost would
exceed$4,000 per acre foot of firm yield.
Taking all the above factors i i ie that the cash rate should be
raised from $3,500 to $4,500 r acre t. A al -family lot of 8,000 square feet
in the Utility service area has aw wa re q nt of.77 re feet. If a developer chooses to
pay cash instead of turning in ri - the r ater requirements, the cost for
such a lot would increase from about $2,695 to $3,465. The proposed increase in the cash rate
would go into effect for all permits issued on or after August 1, 2000.
The City Code provides that nonresidential customers pay a surcharge on water used in excess of
their annual allotment. As this charge is based on the in-lieu-of cash rate, it also needs to be
increased from $1.65 to $2.12 per one thousand gallons. The proposed increase in the surcharge
would go into effect for all billings issued on or after August 1, 2000.
The Water Board discussed ite is 1 e g and recommended that the
cash in-lieu-of rate be incre ed fro 3,50 t 0 acre foot and the surcharge be
increased from$1.65 to $2.12 r tho s d g n