HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 04/18/2006 - SECOND READING OF ORDINANCE NO. 047, 2006, AUTHORI ITEM NUMBER: 21
AGENDA ITEM SUMMARY DATE: April 18, 2006
FORT COLLINS CITY COUNCIL STAFF: Jim Hibbard
Roger Buffington
SUBJECT
Second Reading of Ordinance No. 047, 2006, Authorizing an Addendum to the Existing
Intergovernmental Agreement with the Fort Collins-Loveland Water District, Extending for Five
Years the Time for Annexations of Subdivisions to be Eligible Under the Agreement.
RECOMMENDATION
Staff recommends adoption of the Ordinance on Second Reading with no changes.
EXECUTIVE SUMMARY
Ordinance No. 047, 2006, authorizes an addendum to the existing Intergovernmental Agreement
with the Fort Collins-Loveland Water District,extending for five years the time for annexations of
subdivisions to be eligible under the agreement. The Ordinance was unanimously adopted by
Council on First Reading on March 21, 2006. On April 4, Council voted to postpone the
consideration of the Second Reading of Ordinance No.047,to the regular meeting of April 18. The
postponement was the result of questions expressed by Council about the difference between the
City's and District's water development fees, the fee the City charges the District for treated water
per the IGA, and whether or not the City's fees recover the City's total cost of providing service in
accordance with the IGA.
ATTACHMENTS
Memorandum from Michael Smith, Utilities General Manger dated April 12, 2006
6aUtilities
electric • stormwater • wastewater • water
City of Fort Collins
MEMORANDUM
Date: April 12, 2006
To: Mayor and City Council Members
Thru: Darin Atteberry, City Manager a
From: Michael Smith, Utilities General Manager��
Re: Ordinance No. 047 - IGA with the Fort Collins-Loveland Water District
Ordinance No. 047, 2006, would authorize an addendum to the existing
Intergovernmental Agreement with the Fort Collins-Loveland Water District,
extending for five years the time for annexations of subdivisions to be eligible
under the agreement. The first reading of the ordinance was unanimously adopted
by Council at the March 21 , 2006 Council meeting. At the April 4 Council
meeting, the Council voted to postpone the consideration of the second reading of
Ordinance No. 047, to the regular Council meeting of April 18. The postponement
was the result of questions expressed by Council about the difference between the
City's and District's water development fees, the fee the City charges the District
for treated water per the IGA, whether or not the City's fees recover the City's
total cost of providing service in accordance with the IGA, and other related issues.
Questions and Answers
Question: What is the staff recommendation?
Answer: The staff recommends the Council adopt Ordinance No. 047, 2006, on
second reading. The staff believes the City fees referenced in the IGA recover our
costs and are fair and equitable.
Question: What is the purpose of the IGA?
Answer: The sole purpose of the IGA, which was approved by Council in April
2001, was to accommodate the development (within the city limits) of higher
density zoning (associated with the adoption of City Plan and the Fossil Creek
700 Wood St. • PO. Box 580 • Fort Collins, CO 80522-0580 • (970) 221-6700 • FAX (970) 221-6619 • TDD (970) 224-6003
e-mail: utilities@fcgov.com . www.fcgov.com/utilities
Reservoir Area Plan) in areas served by the Water District. The Water District's
development fees for multi-family units and small single family lots were, and still
are, much higher than the City's water development fees. This differential in fees
was viewed by developers as a significant obstacle in attempting to develop
feasible and affordable residential projects. As a result of this situation, a group of
developers approached the City and Water District seeking to resolve the problem.
Discussions between the City, Water District and local developers ultimately lead to
the adoption of the IGA.
Question: How much difference is there between the City's water development
fees and the District's fees?
Answer: Please refer to the following example:
Raw Water Water Plant Total Total
Requirement Investment (per unit)
Fee
4-Plex City $15,600 $8,100 $23,700 $5,925
District $30,000 $12,000 $42,000 $10,500
12-Plex City $39,000 1 $16,0001 $55,0001 $4,583
District 1 $90,0001 $36,0001 $126,0001 $10,500
Single City $4,309 $2,930 $7,239 $7,239
Family' District 1 $12,5001 $5,0001 $17,5001 $17,500
(1) 6,000 square foot lot
Question: Why are the water development fees for the District and City so
different?
Answer: As one can see, the District's raw water requirement (RWR) is
significantly higher. Staff believes the primary reason the District's RWR is higher
is that the District has traditionally relied on using CBT (Colorado Big Thompson)
water which is more expensive than the southside ditch water which the City
accepts (along with other water sources) for development. Prior to the
construction of the Pleasant Valley Pipeline in 2004, the District's only raw water
source was Horsetooth Reservoir (CBT water).
With regard to plant investment fees, there does not appear to be any obvious
reason why fees are different other than one is left with the impression that the
District's development related capital costs are higher than the City's... or they
maybe using a different method of calculating their plant investment fees. The
City's water plant investment fees were recently updated (January 1, 2006) after
2
extensive study and review by the staff, Water Board and City Council. You may
recall that the water plant investment fees for residential customers were increased
about 16%, effective January 1, 2006.
Question: What would be the result of increasing the City's water development
fees for any development which occurs in the area specified in the IGA?
Answer. There are a couple of things which would occur as the result of
increasing the water development fees within the area outlined in the IGA:
• The cost of development would increase...which would more than likely
increase the cost of housing.
• The City (Utilities) would generate some additional income in excess of
what was anticipated.
Question: Is the City recovering the cost of treating and delivering water to the
District in accordance with the IGA?
Answer., Yes. The fee the City charges the District for treated water per the IGA
is about $1.53 ($1.529) per 1,000 gallons. This fee is based on the "cost of
service" which is an allocation of both fixed and variable costs associated with
providing treated water to the District. The following is a list of the various cost
components included in the rate we charge the District for treated water.
Cost Component Approximate Rate
% of Total
Treatment Expense (fixed cost) 54% $0.83
Water Quality (fixed cost) 5% $0.08
Transmission (fixed cost) 3% $0.05
Payments & Transfers (fixed cost) 10% $0.15
Admin & General Services (fixed cost) 11 % $0.17
Capital Replacements (fixed cost) 7% $0.10
Treatment Expense (variable cost) 4% $0.06
PILOT (variable cost) 6% $0.09
Total 100% $1 .53
Question: Is there any impact on existing customers as a result of the IGA?
Answer: Yes. Adding a new customer (such as the District per the IGA) results in
a redistribution of the fixed costs over a larger customer base...which in fact, is a
benefit to existing customers. One could make the argument that basing the
3
monthly fee to the District on cost of service results in additional revenue which is
distributed over the total customer base. So the bottom line is that the fee the City
charges the District for treated water, per the IGA , not only recovers our costs but
also benefits existing rate payers.
Question : How does the rate paid by the City residents within the IGA area
( served by the District ) compare with the rate paid by other City customers ?
Answer: Please refer to the graph below. As you can see the rates (for single
family customers) are almost the same.
City Rate vs FCLWD-IGA Rate
$300.00 -- -- - - T
" 4 ma INI XI
.
i
$200.00 --_--
m /
rn /
t / s
Y /
cO /
L /
$100.00 • ' —
/
/ s : I
/
/
/
$50.00 — — -- - -- -- -
1
1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96 101
Monthly Water Use (1 ,000 Gallons)
�— — City 3 Tier Rate --- FCLW D-IGA
Cc : Diane Jones , Deputy City Manager
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ITEM NUMBER: 12
AGENDA ITEM SUMMARY DATE: March 21, 2006
FORT COLLINS CITY COUNCIL STAFF: Jim Hibbard
Roger Buffington
SUBJECT rnpy
First Reading of Ordinance No. 047, 2006, Authorizing an Addendum to the Existing
Intergovernmental Agreement with the Fort Collins-Loveland Water District, Extending for Five
Years the Time for Annexations of Subdivisions to be Eligible Under the Agreement.
RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading. The District's Board of Directors
unanimously approved the extension and the City's Water Board unanimously recommends Council
approve the extension.
FINANCIAL IMPACT
Since the adoption of this IG the Cittje water t investment fees and raw water
requirements (at the City's pre g ilders developers for most properties
developing within this area. For these properties,the City sells water to the District for resale to its
customers. The City charges the District a bulk rate determined annually based upon the City's
costs of service, currently$1.529 per thousand gallons including a 6% Payment in Lieu of Taxes.
This will result in approximately$20,000 in general fund revenue for 2006.
EXECUTIVE SUMMARY
Under the provisions of the existing Intergovernmental Agreement, certain developing properties
in the Fort Collins-Loveland Water District service area have the option of meeting either City or
District water development requirements. The Agreement specifies that the properties were within
the City limits at the time of the Agreement or must be annexed into the City within five years from
the date of the Agreement to b ible e ' 1yyeeriod is nearly passed. The
Agreement allows for two five ar e e ions p hich properties can annex and
be eligible.
BACKGROUND
In March 1998, the Fossil Creek Reservoir Area Plan was adopted by the Fort Collins City Council
and the Latimer County Planning Commission. This Plan was the result of a joint study completed
by the City and County Planning Departments. The primary objective of the Plan was to establish
March 21, 2006 -2- Item No. 12
a land use framework which would direct future urban development towards the Fort Collins city
limits while preserving open lands and critical natural areas around the Fossil Creek Reservoir.
Land within the Fossil Creek igas
sY
n the service area of the Fort
Collins-Loveland Water Distri The op not oriented toward the higher
densities required by the Area an. Thundeat by the fact that the District
does not accept stock in the so e ies, the water historically used to
irrigate land in the planning area. As a result of this situation,the landowners in the area approached
the City and the District with a request which would facilitate the higher densities required by the
Area Plan and efficiently use the water historically used for agricultural irrigation.
As a result of that request, in April 2001, the City and the Fort Collins-Loveland Water District
(FCLWD) entered into an Intergovernmental Agreement (IGA) under which the City would sell
treated water to the District for resale to its customers within the City limits in an area located south
of Harmony Road, east of the Union Pacific Railroad, west of County Road 7 and north of County
Road 34. Since the adoption of this IGA,the City has collected water plant investment fees and raw
water requirements(at the City's prevailing rates)from builders and developers for most properties
developing within this area. For these properties, the City sells water to the District at a bulk rate
determined annually based upon the City's costs of service (currently$1.529/1,000 gallons).
The option for developers to sat" C' w r r is and the resulting water sold
by the City to the District ap s on eli e b vis which the IGA defines as those
subdivisions in the IGA area t were the y would annexed into the City within five
years of the date of the Agreeme e A s allo o five-year extensions of the time
period to establish eligibility by annexation. The IGA required that any such extension of this time
period must be approved by City Council.
This arrangement established by the IGA has worked well for the City,the FCLWD and land owners
within the area. It has been helpful in encouraging the higher density residential development to
occur farther north of Fossil Creek Reservoir and thereby preserving more open space around the
reservoir.
The City and the District have recently received requests from property owners and developers to
extend the period to become eligible by annexation for an additional five years. On February 22,
2006,the FCLWD Board unanimously approved this extension to the agreement,and at its meeting
on February 23,2006,the Water Board voted unanimously to recommend approval of an addendum
to the IGA extending this period an'additional five years.
Recently,a homeowners assoc ion ofOoParo
it tin the agreement area served by
FCLWD and South Fort Colli Sanitd a ncern over the District'smonthlyrates. In its response, staff in d,. is elected to office by District
property owners,must consider their request to adjust rates. The IGA between the City and FCLWD
is not the instrument that determined which utility would provide water and wastewater service to
their subdivision. In short, whether the eligibility period in the IGA is extended or not does not
solve or make worse the rate issue raised.
March 21, 2006 -3- Item No. 12
ATTACHMENTS
1. City/FCLWD IGA Area
2. Water Board Minutes
ORDINANCE NO. 047, 2006
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AUTHORIZING AN ADDENDUM TO THE EXISTING INTERGOVERNMENTAL
AGREEMENT WITH THE FORT COLLINS-LOVELAND WATER DISTRICT,
EXTENDING FOR FIVE YEARS THE TIME FOR ANNEXATIONS
OF SUBDIVISIONS TO BE ELIGIBLE UNDER THE AGREEMENT
WHEREAS, in March 2001, the City Council adopted on second reading Ordinance No.
035, 2001, authorizing the Mayor to enter into an Intergovernmental Agreement("IGA") between
the City and the Fort Collins-Loveland Water District ("District") for the Sale and Delivery of
Potable Water; and
WHEREAS, the City and the District entered into the IGA on April 16, 2001; and
WHEREAS,pursuant to the IGA,the City sells and delivers potable water to the District to
then be used by the District to provide water service to the District's customers in approved
subdivisions and developments that are located south of Harmony Road, east of the Union Pacific
Railroad tracks, west of County Road 7 and north of County Road 34 extended east (the "Service
Area"); and
WHEREAS,in addition,pursuant to the IGA,the City collects raw water and fees consistent
with the City's raw water and plant investment fees from those annexing property owners in the
Service Area that opt to arrange for service from the District through the City; and
WHEREAS, it is the expressed intent and understanding of the City and the District that the
only subdivisions and developments in the Service Area that will be eligible to receive the benefit
of the City's obligations under the IGA,and for which the City will be obligated under the IGA,are
those that have been annexed into the City or, if not already annexed,those that are annexed within
five years of the date of the IGA, unless such five year period is extended by mutual agreement of
the parties for up to two additional five year periods as provided in the IGA; and
WHEREAS the Dis
trict's s raw water requirements for providing water services to its
�1 P g
customers continue to be more costly than the City's raw water requirements because the District's
primary source of water is Colorado Big Thompson Water("CBT Water"); and
WHEREAS,the City owns more diverse water rights including stock in the south-side ditch
companies whose water was historically used to irrigate the agricultural land in the Service Area;
and
WHEREAS, because use of the south-side ditch company stock to satisfy raw water
requirements is a more effective use of water and encourages the development of urban densities
desired by the City in the Service Area, the District and impacted property owners have asked the
City to enter into an addendum extending the initial five year period for annexation of properties
within the terms of the IGA for an additional five year period; and
WHEREAS,pursuant to C.R.S.Sections 29-1-203(1),governmental entities in Colorado are
authorized to cooperate and contract with one another to provide any function, service or facility
lawfully authorized to each of the cooperating and contracting governmental facilities.
NOW,THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT
COLLINS as follows:
Section 1. That the extension of the period for eligible annexations under the IGA for
an additional five year period is in the best interest of the City and its citizens and is necessary for
the public's health, safety and welfare.
Section 2. That the extension of the period for eligible annexations under the IGA and
performance by the City of its associated obligations under the IGA,including the collection of raw
water and fees as therein provided, are hereby approved.
Section 3. That the Mayor is hereby authorized to execute an addendum to the IGA
consistent with the terms of this Ordinance.
Introduced, considered favorably on first reading, and ordered published this 21 st day of
March, A.D. 2006, and to be presented for final passage on the 18th day of April, A.D. 2006.
Mayor
ATTEST:
City Clerk
Passed and adopted on final reading this 18th day of April, A.D. 2006.
Mayor
ATTEST:
City Clerk