HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 12/02/2014 - SECOND READING OF ORDINANCE NO. 136, 2014, AMENDINAgenda Item 19
Item # 19 Page 1
AGENDA ITEM SUMMARY December 2, 2014
City Council
STAFF
Steven Catanach, Light & Power Operations Manager
Lance Smith, Strategic Financial Planning Manager
Janet McTague, Utilities Project Engineering Supervisor
SUBJECT
Second Reading of Ordinance No. 136, 2014, Amending Chapter 26 of the City Code Regarding Calculation
and Collection of Development Fees Imposed for the Construction of New or Modified Electric Service
Connections.
EXECUTIVE SUMMARY
This Ordinance, adopted on First Reading on November 18, 2014, by a vote of 3-2 (Nays: Weitkunat, Troxell;
Campana recused; Poppaw absent) revises the City Code provisions relating to Electric Development Fees, in
particular, Electric Capacity Fee Charges. The Ordinance clarifies that the fees due are based on the rates
effective on the date of final payment.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on Second Reading.
ATTACHMENTS
1. First Reading Agenda Item Summary, November 18, 2014 (w/o attachments) (PDF)
2. Ordinance No. 136, 2014 (PDF)
Agenda Item 20
Item # 20 Page 1
AGENDA ITEM SUMMARY November 18, 2014
City Council
STAFF
Steven Catanach, Light & Power Operations Manager
Lance Smith, Strategic Financial Planning Manager
Janet McTague, Utilities Project Engineering Supervisor
SUBJECT
First Reading of Ordinance No. 136, 2014, Amending Chapter 26 of the City Code Regarding Calculation and
Collection of Development Fees Imposed for the Construction of New or Modified Electric Service
Connections. (Option A or B)
EXECUTIVE SUMMARY
The purpose of this item is to revise (Option A) or clarify (Option B) the City Code provisions relating to Electric
Development Fees, in particular, Electric Capacity Fee Charges. The Ordinances clarify that the fees due are
based on the rates effective on the date of final payment, but Council is presented with two options on how the
fees are to be collected.
Option A: Option A is a timing change from current Code requirements. This option requires that 100% of
the Electric Capacity Fee (ECF) be payable prior to the Utility initiating construction of the electric
distribution system. Rates in effect at the time of payment would apply. Currently, only 50% of the fee is
payable prior to construction with the remainder due prior to the electric system being energized. Option A
also addresses how invoices issued prior to the adoption of this ordinance would be addressed.
Option B: Option B does not change the timing of current Code requirements. It requires at least 50% of
the Electric Capacity Fee (ECF) to be paid as a deposit prior to the Utility initiating construction of the
electric distribution system. The remaining ECF (final payment) would be due prior to the system being
energized. Rates in effect at the time of final payment would apply to the entire development. Because
Option B is not a change from current practice or intent of the current code, it would apply to all invoices
issued before or after the adoption.
No changes to the Electric Development Fee amounts are proposed as part of this ordinance. The ordinance
changes the verbiage only. 2015 Electric Development Fee rate amounts are being adjusted in Ordinance No.
155, 2014 which was approved on first reading on October 21, 2014 and is scheduled for second reading on
November 18, 2014.
STAFF RECOMMENDATION
Staff recommends adoption of Option A of the Ordinance on First Reading.
BACKGROUND / DISCUSSION
Light and Power crews construct the electric distribution system to serve all new developments in the city
limits. The developer is responsible for the costs of this construction. The fees to recover the cost are adopted
by Council by Ordinance and are codified in Chapter 26 Sections 26-473 through 26-475 of the City Code.
ATTACHMENT 1
Agenda Item 20
Item # 20 Page 2
The current Code language requires developers to pay 50% of the fees prior to the Utility beginning
construction of the electric system and the remaining 50% prior to the system being energized. This 50-50
payment has been the practice for at least 40 years. The current Code language also addresses the situation
where the fees have increased between the time they are invoiced and the time they are paid, stating “If there
is an increase in said fees between the time of application for electric service and the actual payment of the
fees, the fee rates in effect at the time of payment shall apply.”
Staff has consistently interpreted this to mean the rates at the time of final payment shall apply; however, it has
recently been interpreted by others to read that rates in effect at the time of the first 50% payment would apply.
Both Option A and B of this ordinance rewrite the Code to avoid this confusion and conflict in the future. In
each option, the fees in effect at the time of final payment would apply.
Two options are being presented for Council consideration. Option A revises the City Code to make the full
Electric Capacity Fee (ECF) payable prior to the Utility scheduling construction of the electric distribution
system to serve the development. This option has the following benefits over the existing language and Option
B:
Option A avoids any possible confusion as to what fee is applicable and is easier for staff to administer.
Xcel Energy, who provides natural gas service throughout the City, has revised its construction policies to
require that the electric system be installed and energized prior to installation of Xcel’s natural gas system.
This change requires that the electric system be energized much sooner than was needed in the past.
Maintaining the 50-50 policy would require the ECF balance to be paid shortly after the first 50% in order to
get the electric system energized prior to Xcel’s work. Because of this recent change in construction
sequence, a single payment prior to construction should not result in any additional burden on the
developers’ cash flow.
Option A eliminates the rare situation where the developer pays the first 50% of development fees, the
electric distribution system is completely built, and then the project is delayed or abandoned. When this
occurs, Light and Power resources are tied up to finance 50% of the costs of the construction until such
time that the project is revived.
Option B is merely a rewrite of current Code to make the language clearer. Under this option, the first 50%
payment would be considered a deposit required before the construction would be scheduled. The ECF
balance would be due prior to the system being energized. The ECF due at time of final payment would be
based on the fees in effect on the date the final payment was made with a credit for any previous payments or
deposits.
Either option would be made effective 10 days after second reading. Option A allows for invoices issued prior
to the effective date, including any currently outstanding invoices, to continue to be paid on a 50-50 basis at
current rates until January 1, 2015. Any unpaid invoices as of that January date would then become 100%
payable prior to construction continuing and/or energization of the electric system at the Electric Development
Fee rates in effect at the time of payment.
Ordinance 136, 2014 was originally discussed by City Council on October 7, 2014. At that time several issues
were of concern to Councilmembers and the Ordinance was postponed to November 18, 2014 to allow for
additional public outreach with the development community.
One concern expressed at the October 7th discussion focused on the timing of these payments and the timing
of construction for the development’s electric system. Each option of the ordinance has been revised to
address this concern. The Light and Power Project Engineering Staff and Field Service Crews are in close
contact with the developers throughout the project. Utility construction is completed according to a detailed
utility construction schedule (typically based on the depth of the Utility) as specified by the Electric
Construction Rules and Regulations. Once payment has been received and all required work by other utilities
and the developer is completed in accordance with the schedule, the Light and Power Utility will commence
construction. Should the work load of Light and Power crews be such that construction cannot begin when all
Agenda Item 20
Item # 20 Page 3
requirements are met and the electric construction is requested, the development projects will be constructed
in the order in which the payments are received. This clarification has been added to each option of the
proposed ordinance.
FINANCIAL / ECONOMIC IMPACTS
Neither option changes the amount of electric development fees due for any project. However, Option A
requires the full ECF to be paid before the electric distribution system can be scheduled for construction.
BOARD / COMMISSION RECOMMENDATION
The Energy Board discussed this topic at its October 2, 2014 Board Meeting. The following motion was
passed unanimously: “Energy Board recommends City Council adopt Option A of the Ordinance being
presented for first reading on October 7, 2014 making changes to the City Code regarding the electric capacity
fee.”
PUBLIC OUTREACH
Out-of-city customers were notified of the proposed ordinance and a public notice was issued in the
Coloradoan. A letter was sent to 25 developers explaining the two options and inviting the developers to an
open house to review the changes and provide feedback. No comments were received on either option.
ATTACHMENTS
1. Energy Board Minutes, October 2, 2014 (PDF)
2. Electric Development Project Timeline (PDF)
3. Electric Contractor Letter (PDF)
4. Powerpoint presentation (PDF)
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ORDINANCE NO. 136, 2014
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AMENDING CHAPTER 26 OF THE CODE OF THE CITY OF FORT COLLINS
REGARDING CALCULATION AND COLLECTION OF DEVELOPMENT FEES IMPOSED
FOR THE CONSTRUCTION OF NEW OR MODIFIED ELECTRIC SERVICE
CONNECTIONS
WHEREAS, the City Council is empowered and directed by Article XII, Section 6, of the
City Charter to fix, establish, maintain and provide for the collection of such rates, fees or
charges for utility services furnished by the City as will produce revenues sufficient to pay the
costs, expenses and other obligations of the electric utility, as set forth therein; and
WHEREAS, pursuant to City Code Sections 26-473 through 26-475, the City imposes
development fees, including an Electric Capacity Fee and a Building Site Charge, on parties
developing properties for which new or modified electric service is required; and
WHEREAS, custom and practice of the Electric Utility has been to calculate
development fees based on the rates adopted by City Council in effect at the time the fees are
paid in full; and
WHEREAS, custom and practice of the Electric Utility has also been to collect
development fees in installments that allow a developer to pay a deposit prior to the Utility
constructing the new service, and then pay the remainder of the fees prior to the Utility
energizing the new service; and
WHEREAS, during 2014, Electric Utility staff evaluated the description of the
development fee calculation and collection process in light of questions posed by developers and
changes in industry practices; and
WHEREAS, Electric Utility staff recommends the description of how the development
fees are calculated and collected be clarified in the City Code to better reflect the custom and
practice of the Electric Utility with regard to administration of such fees and scheduling of
associated construction work; and
WHEREAS, Electric Utility staff also recommends updating the manner in which the
City collects development fees for new or modified electric service connections to require full
payment before the City schedules construction of the service; and
WHEREAS, based on the foregoing, it is the desire of the City Council to amend Chapter
26 of the City Code to clarify and update the process for calculation and collection of
development fees imposed for the construction of new or modified electric service connections.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
Section 1. That Section 26-473(a) of the Code of the City of Fort Collins is hereby
amended to read as follows:
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Sec. 26-473. Electric development fees and charges.
(a) Any person desiring to connect to the City's electric distribution system, or to
construct any structure to be served by said electric distribution system, shall pay
to the utility all applicable electric development fees and charges as described in
this Division prior to construction of the electric distribution system to serve said
connection, whether such connection or the property served is inside or outside of
the corporate limits of the City, in addition to any other applicable fees and
charges described in this Article. Notwithstanding the foregoing or any provision
of this Article to the contrary, said fees and charges may be paid over time to the
extent that the deferral of all or any portion of such payment has been approved
by the City Council by resolution. Said development fees shall consist of an
Electric Capacity Fee ("ECF") to recover the allocated cost of the electric
distribution system attributable to the new or modified service requested and a
Building Site Charge ("BSC") to recover the cost of installing on-site electric
service facilities to the user's side of the point of delivery.
. . .
Section 2. That Section 26-474(a) of the Code of the City of Fort Collins is hereby
amended to read as follows:
Sec. 26-474. Residential electric development fees and charges.
(a) An Electric Capacity Fee ("ECF"), calculated as set forth in this section and
representing the cost to construct the electric distribution system infrastructure for a new
or modified residential service shall be paid prior to the scheduling of any construction
work required to provide said service. The ECF shall be determined based upon the most
current construction information and the ECF charges in effect at the time of full
payment.
(1) In the event of a customer request for revision to the system requirements
for a new or modified service, construction of infrastructure improvements will
cease until the customer has made payment in full of an updated ECF, including
any increased construction costs associated with the revised system requirements;
such increased amount, if any, shall be paid at the ECF rates in effect at the time it
is paid in full.
(2) Notwithstanding the foregoing, the ECF for any new or modified service
for which an invoice has been issued on or before December 15, 2014, shall be
due in full and must be paid no later than December 31, 2014, in order for
construction of related infrastructure improvements to continue. If payment in
full based upon the ECF charges in effect as of December 15, 2014, is not
received in 2014, no further construction of infrastructure improvements or
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energizing of the subject service shall occur until the full ECF is paid based on the
rate in effect at the time of full payment.
. . .
Section 3. That the current Section 26-474(c) of the Code of the City of Fort Collins
is hereby renumbered as Section 26-474(d).
Section 4. That a new Section 26-474(c) of the Code of the City of Fort Collins is
hereby adopted to read as follows:
(c) The utility will schedule and commence construction of a new or modified
electric service upon receipt of payment in full of the associated electric development
fees, and per the Utility Installation Sequence as defined in the Electric Construction
Policies Practices and Procedures. If the utility is unable to commence construction when
requested due to utility workload backlogs, the utility will schedule and commence the
construction of new or modified electric service projects in the same order in which full
payments are received.
Section 5. That Section 26-475(a) of the Code of the City of Fort Collins is hereby
amended to read as follows:
Sec. 26-475. Nonresidential electric development fees and charges.
(a) An Electric Capacity Fee ("ECF"), calculated as set forth in this section and
representing the cost to construct the electric distribution system infrastructure for a new
or modified nonresidential service shall be paid prior to the scheduling of any
construction work required to provide such service. The ECF shall be determined based
upon the most current construction information and the ECF charges in effect at the time
of full payment. The customer shall also be responsible for secondary service installation
from the point of delivery to the service panel.
(1) In the event of a customer request for revision to the system requirements
for a new or modified service, construction of infrastructure improvements will
cease until the customer has made payment in full of an updated ECF, including
any increased construction costs associated with the revised system requirements;
such increased amount, if any, shall be paid at the ECF rates in effect at the time it
is paid in full.
(2) Notwithstanding the foregoing, the ECF for any new or modified service
for which an invoice has been issued on or before December 15, 2014, shall be
due in full and must be paid no later than December 31, 2014, in order for
construction of related infrastructure improvements to continue. If payment in
full based upon the ECF charges in effect as of December 15, 2014, is not
received in 2014, no further construction of infrastructure improvements or
energizing of the subject service shall occur until the full ECF is paid based on the
rate in effect at the time of full payment.
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. . .
Section 6. That the current Sections 26-475(c) and (d) of the Code of the City of Fort
Collins are hereby renumbered as Sections 26-475(d) and (e), respectively.
Section 7. That a new Section 26-475(c) of the Code of the City of Fort Collins is
hereby adopted to read as follows:
(c) The utility will schedule and commence construction of a new or modified
electric service upon receipt of payment in full of the associated electric development
fees, and per the Utility Installation Sequence as defined in the Electric Construction
Policies Practices and Procedures. If the utility is unable to commence construction when
requested due to utility workload backlogs, the utility will schedule and commence the
construction of new or modified electric service projects in the same order in which full
payments are received.
Section 8. That the amendments to Chapter 26 of the City Code contained herein
shall go into effect for all invoices paid on or after December 15, 2014.
Introduced, considered favorably on first reading, and ordered published this 18th day of
November, A.D. 2014, and to be presented for final passage on the 2nd day of December, A.D.
2014.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 2nd day of December, A.D. 2014.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk