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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 10/13/2015 - WATER DEVELOPMENT FEESDATE: STAFF: October 13, 2015 Donnie Dustin, Water Resources Manager Carol Webb, Water Resources/Treatmnt Opns Mgr Lance Smith, Strategic Financial Planning Manager WORK SESSION ITEM City Council SUBJECT FOR DISCUSSION Water Development Fees. EXECUTIVE SUMMARY The purpose of this item is to update the City Council on the Utilities’ water development fees. Staff will present background information on the Utilities current water development fees, which include raw water requirements (RWR) and plant investment fees (PIF), and consider additional studies and next steps for making changes to these fees. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED The Agenda Item Summary and presentation provide background on the Utilities water development fees and potential changes. 1. What questions or feedback does Council have regarding the Utilities’ water development fees? BACKGROUND / DISCUSSION The City of Fort Collins Utilities water service area covers the central portion of Fort Collins. As the City continues to grow into the Growth Management Area, more of the water needs will be met by surrounding water districts (mostly the East Larimer County and Fort Collins-Loveland Water Districts – “Districts”). Most of the discussion relative to water development fees in this document is focused on the Utilities water service area (Attachment 1). However, Utilities is currently meeting with the Districts to discuss the options that may be available for Utilities and the Districts to have more consistent water requirement methodologies. The Utilities’ water development fees consist of two components; raw water requirements (RWR) and plant investment fees (PIFs). RWR are a dedication of water rights or cash-in-lieu of water rights to ensure that adequate water supply and associated infrastructure (e.g., storage reservoirs) are available to serve new development. PIFs are one-time fees paid by developers or builders for the cost of the utility infrastructure (e.g., treatment plant capacity, distribution system, etc.) needed to serve a new development. The Utilities’ water development fees generally reflect lot size, development type and/or size of tap. The Utilities’ current RWR and PIF schedules are attached (Attachments 2, 3, and 4). Raw Water Requirements (RWR) The amount of RWR needed to meet the city’s future water supply needs includes calculating the projected amount of future water use, determining the water rights and/or facilities needed to meet that projected use and adjusting the RWR to acquire the necessary supplies and/or facilities. Calculating the projected amount of future water use depends on projected growth (both population and commercial/industrial) and the water supply planning criteria in the Water Supply and Demand Management Policy, which include the planning demand level (150 gallons per capita per day or “gpcd”), drought criterion (1-in- 50 year) and storage reserve factor (20 percent of annual demand). The Utilities’ water service area population is projected to grow to about 178,000 by the year 2065 (from the current population of about 133,000). In addition, large contractual water use is expected to increase in the future. The Utilities total projected treated water needs October 13, 2015 Page 2 Minimum Meter Size Minimum RWR Annual Allotment (inches) (acre-feet) (gallons/year) 3/4 0.90 293,270 1 3.00 977,550 1-1/2 6.00 1,955,110 2 9.60 3,128,170 3 and above based on projected used are expected to be about 38,400 acre-feet per year by the year 2065, which is about 7,400 acre-feet/year greater than the existing firm yield of about 31,000 acre-feet per year. In order to meet these projected water supply needs, Utilities has been pursuing acquisition of additional storage capacity through the Halligan Water Supply Project. The acquisition of this additional storage would meet the additional water demands, as well as provide a storage reserve for emergency water supply shortages (e.g., pipeline failure). The Halligan project requires a federal permitting process that includes looking at alternatives to the enlargement of Halligan Reservoir, but these alternatives would meet the same needs most likely at a higher cost. Besides acquiring additional storage capacity, Utilities projects a longer term need for some additional water rights to complement the additional storage capacity and some additional raw water (operational) storage to administer the Utilities’ water rights (similar to Rigden Reservoir). The current amount of RWR assessed for residential development is based on a calculation that incorporates indoor and outdoor use components and a water supply factor multiplier. The current residential RWR schedule calculation is: RWR (acre-feet) = 1.92 x [ ( 0.18 x # of units ) + ( 1.2 x net acres ) ] The current amount of RWR assessed for commercial development is based on the average use for particular meter (or tap) sizes and includes a water supply factor multiplier. The current commercial RWR schedule is: The water supply factor used in both the residential and commercial RWR schedules is currently 1.92, which means that Utilities requires 1.92 times the amount of the projected water use of a development. Reasons for this factor are to account for treatment and distribution losses in the supply system, variable demands of customers (e.g., higher use during hot, dry years), variable yields of supplies (e.g., less yield in droughts) and variable yield of the different supply sources accepted by Utilities (since some yield better than others). The current water supply factor does appear to consider storage in the water supply system, which is important since storage can use existing water rights to increase the Utilities firm yield (or amount of demand it can meet through the 1-in-50 year drought). The RWR residential and commercial schedules were developed in the 1980s in a study that was conducted with the Districts and was based on water use patterns at the time. Given a reduction in overall water use by Utilities customers of approximately 25 percent in the last decade or so, the values used in these RWR calculations and schedule should be updated. The Districts have agreed to look at these values and consider similar RWR calculation adjustments, the first meeting of which occurred on October 2. As part of this updated study, changes to the water supply factor will also be considered. Additional consideration will need to be given to potential changes of the commercial RWR schedule, since that schedule also sets a minimum annual allotment in which commercial customers that use over the allotment will incur a surcharge rate. Also, there is currently a business inequity among the Utilities commercial customers since Indoor Use Component Outdoor Use Component Water Supply Factor October 13, 2015 Page 3 many of them do not have a minimum annual allotment because no new water service permit has been requested at those premises since before the annual allotments starting being assessed in 1984. Changes to the commercial RWR schedule will create customers with different annual allotments for the same meter size, which could further complicate business inequities and create confusion among some customers. Once the amount of RWR for a development is determined, the RWR can be satisfied through Utilities with either acceptable water rights or cash in-lieu-of water rights (or a combination of both). The water rights currently accepted by Utilities for satisfaction of RWR are attached (ATTACHMENT 5). Although Colorado-Big Thompson Project (“CBT”) units and North Poudre Irrigation Company shares (which include four CBT units per share) are on the acceptable list of water rights, neither of these rights have been turned in to Utilities for RWR satisfaction in over 15 years because of their relative value to other water rights accepted by Utilities. In addition, Utilities cannot purchase CBT units based on Northern Water policy. The water rights Utilities has received in recent years are shares in the irrigation ditches that run through the City, collectively known as the Southside Ditches.1 However, acquiring additional Southside Ditch rights now do very little to increase the Utilities firm yield, since all of them are only available in summer months when the yield of the existing Utilities water rights portfolio are in excess of current (or even future projected) demands in most years. Also, in drought years, the Southside Ditch water rights yield considerably less. Although the Utilities gives the average annual yield of these water rights (in acre-feet per share) toward satisfaction of the RWR, the actual amount of increase in firm yield to Utilities water supplies is minimal. For these reasons, Utilities has been focused on acquiring additional storage (e.g., Halligan Water Supply Project) to better utilize the existing water rights. In consideration of this, Utilities staff believes accepting cash only (instead of a mix of water rights and cash) would be preferable. Once storage is acquired, the cash can still be used to purchase additional rights as needed. Utilities staff will further consider the effects of a cash-only RWR system as it moves forward with additional studies and potential changes to the RWR. The Utilities cash in-lieu-of water rights (“cash”) rate is currently $6,500 per acre-foot of RWR. This fee is an impact fee based on the Utilities’ water supply needs (and not directly related to the market value of water rights). Changes to the rate have previously considered several factors, including the market price of CBT units, the potential value of local water rights (e.g., Southside Ditches) and the mix of water rights and cash that was received through RWR satisfaction. CBT prices were relatively constant for 10 to 12 years until the last few years, with more recent prices around $25,000 per CBT unit. This equates to about $50,000 per acre-foot of firm yield (given a drought yield of 0.5 acre-feet per CBT unit). The cost to acquire additional storage capacity should be a large factor in determining the RWR case rate, since it can increase the Utilities firm yield (and provide other benefits) with existing water rights at much less expense. The current estimated cost to Utilities of the Halligan Water Supply Project is about $41.5 million. Given the approximate 7,400 acre-feet increase in the Utilities’ firm yield, the cost of the Halligan project is around $5,600 per acre-foot of firm yield. It should be noted that alternatives to Halligan that might be selected through the permitting process could cost substantially more (up to four times the cost). In addition to storage costs, staff plans to study and consider the value of the Utilities’ existing water rights and supply facilities in the assessment of the cash rate, as well as a better assessment of the market value of the Southside Ditches (since the Utilities cash rate influences their market value). Utilities staff is engaging consultants to help with these evaluations and need additional time to consider how they may effect potential changes to the RWR. As part of this study and consideration, staff and its consultants will consider a means (e.g., calculation) of setting the cash rate that can be updated more regularly – as well as how these evaluations factor into a potential cash-only RWR system. Plant Investment Fees (PIFs) Plant investment fees cover the additional costs of new development on the treatment plant, transmission and distribution systems. The PIFs and RWR together collect the full costs associated with adding new developments to the existing system. PIFs are reviewed annually with a full update to the PIF model being done every other year before being brought to the City Council. 1 The Southside Ditches include the Arthur Ditch, New Mercer Ditch, Larimer County Canal No. 2 and Warren Lake Reservoir. The Pleasant Valley and Lake Canal is another canal that runs through Fort Collins and is sometimes considered a Southside Ditch. October 13, 2015 Page 4 How PIFs are determined depends on the amount of excess capacity in the utility infrastructure. If there is sufficient excess capacity that new development will not require additional infrastructure, a “Buy-in” method is utilized to set the PIFs. If there is no excess capacity so that new development will require additional capital investment, an “incremental” or marginal method is appropriate. For a utility such as ours which has some excess capacity but also needs to make some capital investments to meet the demands of the community at build-out a combination or “Hybrid” of these two methods is utilized. Next Steps Staff will work with its consultants and the Districts (where appropriate) to study and consider changes to the RWRs that include:  updating RWR calculations for the amount of water required and potential changes to the water supply factor,  potential RWR cash rate changes that incorporate the value of the Utilities’ existing water rights and facilities, the cost of acquiring addition storage capacity and the market value of local water rights (Southside Ditches),  consideration of a cash-only RWR system. It is anticipated that staff will return to City Council in the next several months with an update on these studies and recommendations for potential changes to the Utilities RWR. The first reading of the 2016 PIF ordinances will be considered on November 3, 2015. The ordinances will include adding general plant resources required to effectively operate the administrative aspects of a utility in addition to the plant infrastructure required to directly provide utility service to customers. ATTACHMENTS 1. Fort Collins Area Water Districts (PDF) 2. Residential Raw Water Requirements Schedule (PDF) 3. Non-Residential Raw Water Requirement Schedule (PDF) 4. Water Plant Investment Fee Schedule (PDF) 5. Water Rights and Conversion Factors Accepted by the City for Satisfaction of Raw Water Requirements (PDF) 6. Glossary of Water Resources Terms (PDF) 7. Powerpoint presentation (PDF) ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! Effective January 1, 2015 CITY OF FORT COLLINS UTILITIES RESIDENTIAL RAW WATER REQUIREMENTS (RWR) SCHEDULE 1 Single Family, Duplex & Multi-Family Raw water is required for the increase in water use created by new development and to ensure a reliable source of supply in dry years. The Raw Water Requirement (RWR) formulas listed below include all residential categories: single family, duplex and multi-family dwelling units. Irrigation taps needed for common area greenbelts that are part of Single-Family developments are assessed water rights on a Non- Residential basis by tap size (see Non-Residential RWR Schedule). Irrigation taps for common area greenbelts of Multi-Family developments are not assessed additional water rights since water rights collected for the buildings include the overall net acreage of the development which contain all lots, spaces, private streets, parking and common areas. When calculating the number of acre-feet of water needed to satisfy the Raw Water Requirement (RWR), select the appropriate formula listed below. If the net acres are unknown, add the square footage of all lots together and divide by 43,560, the number of square feet in an acre of land. STANDARD RESIDENTIAL RWR FORMULA RWR = Raw Water Requirement in acre-feet Net Acres = Area of development in acres, excluding public street rights-of-way, city maintained tracts and rights-of-way, ditches, railways or other areas typically maintained by persons other than the owner of the premises or an agent of the owner. RWR = 1.92 x [(.18 x Number of Dwelling Units) + (1.2 x Net Acres)] When used for the following categories, the formula above can be simplified as shown: Single Family: RWR = .3456 + (2.304 x Net Acres) max. lot area 1/2 acre or 21,780 sq.ft. Duplex: RWR = .6912 + (2.304 x Net Acres) Multi-Family (3 units or more): RWR = (.3456 x No. of Units) + (2.304 x Net Acres) RWR MAY BE SATISFIED BY ANY ONE, OR COMBINATION OF THE FOLLOWING: x Water rights (stock) acceptable to the City based on current conversion factors x City of Fort Collins water certificates x Cash at the rate of $6,500 per acre-foot of RWR If the Raw Water Requirement (RWR) is satisfied with water stock or city water certificates, transactions are completed at the Utilities before a water service permit is issued. If satisfied with cash, payment is made at Neighborhood and Building Services upon issuance of a building permit. 1 Summarized from Sections 26-129, 26-148 and 26-150 of the Code of the City of Fort Collins. ATTACHMENT 2 Effective: February 25, 2015 CITY OF FORT COLLINS UTILITIES NON-RESIDENTIAL RAW WATER REQUIREMENT (RWR) SCHEDULE 1 For Water Services Not Included in the Residential Category Raw water is required for the increase in water use created by new development and to ensure a reliable source of supply in dry years. Non-residential service shall include without limitation all commercial, industrial, public entity, group housing, nursing homes, fraternities, hotels, motels, commonly owned areas, club houses, and pools. The minimum Raw Water Requirement (RWR) for water services up to 2-inches in diameter is shown below. The RWR for services 3-inch and larger are based on the applicant’s estimate of actual use, provided that such estimate is first approved and accepted by the General Manager. Options for satisfying the RWR include turning over water rights to the City in the form of water stock or city water certificates, OR paying the equivalent cash-in-lieu-of amount. Equivalent Cash Minimum Meter Size Minimum RWR Payment at Annual Allotment (inches) (acre-feet) * $6,500/acre-foot (Gallons/Year) 3/4 0.90 or $ 5,850 293,270 1 3.00 or $ 19,500 977,550 1-1/2 6.00 or $ 39,000 1,955,110 2 9.60 or $ 62,400 3,128,170 3 and above Based on use * acre-foot = 325,851 gallons of water RWR MAY BE SATISFIED BY ANY ONE, OR COMBINATION OF THE FOLLOWING: x Water rights (stock) acceptable to the City based on current conversion factors x City of Fort Collins water certificates x Cash at the rate of $6,500 per acre-foot of RWR If the RWR is satisfied with water stock or city water certificates, transactions are completed at the Utilities before a water service permit is issued (refer to schedule of water rights and conversion factors acceptable to the City). If the RWR is to be satisfied with cash, payment is made at Neighborhood and Building Services upon issuance of a building permit. ANNUAL ALLOTMENT/SURCHARGE (related to Monthly Billing) The RWR establishes an annual gallon allotment for each tap and subsequent monthly water account. A surcharge of $3.06 per 1,000 gallons will be assessed on a customer’s monthly water bill when an account uses more water in a given calendar year than the gallons allotted for a particular tap size. The surcharge rate is billed in addition to the customer’s regular monthly tiered water rate. Once the annual allotment has been exceeded and the water surcharge appears on an account, the surcharge will continue to be billed each month through the end of that calendar year. Additional water stock, city certificates, or cash may be turned in to increase the annual allotment. 1 Summarized from Sections 26-129, 26-149, and 26-150 of the Code of the City of Fort Collins. ATTACHMENT 3 Effective February 20, 2015 CITY OF FORT COLLINS UTILITIES WATER PLANT INVESTMENT FEE (PIF) SCHEDULE 1 The Water Plant Investment Fee (PIF) is a one-time development fee collected to pay for growth related capital expansion costs of water supply, storage, transmission, treatment and distribution facilities. The fee varies with the number of dwelling units and the lot area served for residential users, and with the size of the water meter for non-residential users. City Code requires that each building have its own water service tap. Payment of the PIF is made at Neighborhood and Building Services upon issuance of a building permit. RESIDENTIAL WATER PIF 2 : SINGLE FAMILY, DUPLEX & MULTI-FAMILY Single Family (5/8 x 3/4" tap) $720 + $0.32 per sq.ft. of lot area = PIF Duplex & Multi-Family $540 (per L.U.) + $0.25 per sq.ft. of lot area = PIF *Water Meter – same as non-residential water meter prices listed below Note: When calculating Water PIF’s for Multi-Family Subdivisions, net acreage of the development is divided among the total number of living units to arrive at an approximate lot size per living unit (L.U.). NON-RESIDENTIAL WATER PIF 2 : COMMERCIAL & IRRIGATION Water Meter Size Water PIF *Water Meter or Irrigation Meter 3/4" $ 7,000 $ 304.00 $ 304.00 1" $ 19,050 $ 362.00 $ 362.00 1-1/2" $ 41,600 $ 605.00 $ 757.00 2" $ 64,410 $ 668.00 $ 856.00 3" and above Based on peak day demand Buy from distributor Buy from distributor Included in the meter charge is one trip for meter installation by the City. If more than one trip is needed for meter installation, an additional charge will be billed. IRRIGATION TAPS: Payment of Water PIF’s, along with satisfaction of the Raw Water Requirement in Multi-Family developments, provides for one residential water tap per building, and in addition, an adequate number of irrigation taps to serve common areas. Irrigation taps for common areas in Single Family and Commercial developments pay the Non-Residential Water PIF and Raw Water Requirement fees according to tap size. Irrigation taps 1-1/2 inch and larger requiring turbine meters are billed meter charges indicated above. TAP INSTALLATION: Water taps on all new water mains are to be installed by the contractor. Taps on existing water mains may be installed by the City and will be billed on a labor and material basis upon completion. 1 Summarized from Sections 26-120 & 26-128. Schedule C of the Code of the City of Fort Collins 2 Development review charges also apply ATTACHMENT 4 Effective January 1, 2015 CITY OF FORT COLLINS UTILITIES WATER RIGHTS AND CONVERSION FACTORS ACCEPTED BY THE CITY FOR SATISFACTION OF RAW WATER REQUIREMENTS (RWR) Arthur Irrigation Company (see Note) 3.442 Acre-Feet / Share Larimer County Canal No. 2 (see Note) 42.687 Acre-Feet / Share New Mercer Ditch Company (see Note) 30.236 Acre-Feet / Share North Poudre Irrigation Company 5.00 Acre-Feet / Share NCWCD Units (CBT – Colo. Big Thompson) 1.00 Acre-Feet / Unit (share) Pleasant Valley and Lake Canal Company 39.74 Acre-Feet / Share Warren Lake Reservoir Company 10.00 Acre-Feet / Share City of Fort Collins Water Certificates Face Value of Cert. (in acre-feet) City of Fort Collins Josh Ames Certificates 0.5625 Acre-Feet per certificate or each certificate can satisfy 1/8 acre of land Note: The City does not accept treasury shares (inactive shares held by these companies) as of December 18, 1992. A provision in the final decree of Water Court Case No. 92CW129 prohibits the City from acquiring such treasury shares and using them for municipal purposes. ATTACHMENT 5 1 Glossary of Water Resources Terms 1-in-50 Year Drought Criterion - criterion adopted in the current Water Supply and Demand Management Policy that defines the level of risk for the City’s water supply system; a drought is a period of below average runoff that can last one or more years and is often measured by its duration, average annual shortage and cumulative deficit below the average; a 1-in-50 drought corresponds to a dry period that is likely to occur, on average, once every 50 years; although the Poudre River Basin has several drought periods in its recorded history, it is difficult to assess whether any of these droughts were equal in magnitude to a 1-in-50 drought; the 1985 Drought Study developed the 1-in-50 drought used in assessing the Utilities water supply system; this drought period is six years long and has a cumulative deficit of 550,000 acre-feet, which represents annual river volumes that are about 70% of the long-term average for the Poudre River; see also “Statistically Based Drought Analysis” Acre-Foot or Acre-Feet (AF) - volume of water equal to about 326,000 gallons; one acre-foot can supply around three to four single family homes in Fort Collins per year; for storage comparison the maximum volume of Horsetooth Reservoir is about 157,000 acre-feet Active Capacity - the usable capacity of a reservoir for storage and regulation of inflows and releases that does not include any capacity below the reservoir’s lowest outlet (which is known as dead capacity) Carryover - used in reference to storage; it is the ability to save water in storage for use at a later time, most notably in following years Change in Water Right - used to refer to changing water rights under Colorado water law from agricultural to municipal water use; see also “Legal Return Flows or Return Flow Obligations” CIP - short for Capital Improvement Project, which typically refers to a project to improve Utilities facilities (e.g., treatment plant capacity expansion) Colorado-Big Thompson (CBT) Project - a Bureau of Reclamation project that brings water from the Colorado River basin to the east side of the continental divide via a tunnel and the Big Thompson River to several locations including Horsetooth Reservoir; operated by the Northern Colorado Water Conservancy District (or Northern Water); Fort Collins Utilities currently owns 18,855 units of the 310,000 total units in the CBT project Cubic Feet per Second (cfs) - volumetric flow rate equal to one cubic foot flowing every second; for comparison, an average peak flow rate on the Poudre River at the Lincoln Street gage (downtown) is around 1,900 cfs and a median winter-time low flow rate in December at the same location is around 7 cfs ATTACHMENT 6 2 Direct Flow Rights - water rights that can be taken for direct use, as opposed to storage rights that can be taken for later use; see also “Senior Water Rights” DEIS or EIS - short for Draft Environmental Impact Statement; a report detailing the findings of the NEPA permitting process; report can be reviewed by public for their comments which are typically addressed in a Final Environment Impact Statement; see also “NEPA” ELCO - short for East Larimer County Water District; see also “Tri-Districts” FCLWD - short for Fort Collins-Loveland Water District; see also “Tri-Districts” Firm Yield - a measure of the ability of a water supply system to meet water demands through a series of drought years; for the Fort Collins Utilities, this means being able to meet the planning demand level and storage reserve factor through the 1-in-50 year drought criterion; see also “1-in-50 Year Drought Criterion”, “planning demand level” and “storage reserve factor” GMA - short for Growth Management Area, which is the planned boundary of the City of Fort Collins’ future City limits gpcd - short for gallons per capita per day; a measurement of municipal water use; for the Fort Collins Utilities, gpcd is calculated based on the total annual treated water produced at the Water Treatment Facility for use by all Water Utility customers (minus large contractual customers and other sales or exchange agreements) divided by the estimated population of the Water Utility’s service area and 365 days LEDPA - short for Least Environmentally Damaging Practicable Alternative, which is what is allowed to be permitted through the NEPA permitting process; see also “NEPA” Legal Return Flows or Return Flow Obligations - refers to legal requirements when changing water rights from agricultural to municipal use; this process requires obtaining a decree from Colorado Water Court that involves detailed analysis of the historic agricultural water use, including the water diversions, amount used by the crops, and the return flow patterns of the water not used by the crops; terms in the decree to prevent municipalities from taking more water than was historically taken and replacing return flows in the right amount, location and time to prevent injury to other water rights NEPA - short for National Environmental Policy Act; federal legislation that established environmental policy for the nation; it provides interdisciplinary framework for federal agencies to prevent environmental damage and contains “action-forcing” procedures to ensure that federal agency decision-makers take environmental factors into account NISP - short for Northern Integrated Supply Project 3 Northern Water or NCWCD - short for Northern Colorado Water Conservancy District (NCWCD); Northern Water operates the Colorado-Big Thompson (CBT) Project and is involved in several other regional water projects on behalf of their participants; see also “Colorado-Big Thompson (CBT) Project” NPIC - short for North Poudre Irrigation Company; an irrigation company that supplies water to farmers north of Fort Collins and is the owner of all water currently stored in Halligan Reservoir; the City currently owns about 36% of the shares in the company NWCWD - short for North Weld County Water District; see also “Tri-Districts” Planning Demand Level - level of water use (demand) in gpcd used for water supply planning purposes that is a factor in determining the amount of water supplies and/or facilities needed; see also “gpcd” PIF (or PIFs) - short for Plant Investment Fee(s), which are one-time fees assessed on developments for the cost of the utility infrastructure needed to serve that development RWR - short for Raw Water Requirements, which requires new development to turn in water rights or cash-in-lieu of water rights to support the water needs of that development; cash is used to increase the firm yield and long-term reliability of the City’s supply system (e.g., purchase additional storage capacity) Storage Reserve Factor - refers to a commonly used engineering principle in designing water supply systems to address short-term supply interruptions; as defined in the Water Supply and Demand Management Policy, the storage reserve factor incorporates having 20 percent of annual demands in storage through the 1-in-50 drought which equates to about 3.5 months of winter (indoor) demands or 1.5 month of summer demands Senior Water Rights - refers to Colorado water law’s use of the “prior appropriation” or priority system, which dictates that in times of short supply, earlier water rights decrees (senior rights) will get their water before others (junior rights) can begin to use water, often described as “first in time, first in right” Southside Ditches - refers to the irrigation ditches that run through the City of Fort Collins, including the Arthur Ditch, New Mercer Ditch, Larimer County Canal No. 2 and Warren Lake Reservoir; the Pleasant Valley and Lake Canal is another ditch that runs through Fort Collins and is sometimes considered a Southside Ditch Tri-Districts - the combination of the three regional water districts East Larimer County (ELCO), Fort Collins-Loveland (FCLWD) and North Weld County (NWCWD) Water Districts; these districts share the same water treatment plant called Soldier Canyon Filter Plant, which is located adjacent to Fort Collins Utilities’ Water Treatment Facility Water Rights Portfolio - the mix of water rights owned by a water supplier; typically includes water for direct use, as well as for storage for later use; for the Fort Collins 4 Utilities, includes City owned water rights, owned and/or converted shares in agricultural rights, storage rights at Joe Wright Reservoir, and ownership in the CBT project Water Supply Factor - refers to a multiplying factor used in the assessment of raw water required by developers to reflect issues that tend to reduce the average yield of the water supplies provided to a water supplier (e.g., system losses, variable demands, etc.) WSDMP - short for Water Supply & Demand Management Policy, which provides Fort Collins Utilities guidance in balancing water supplies and demands Yield or Water Rights Yield - refers to the amount of water that is produced from a water right; the yield of water rights vary from year to year depending on the amount of water available (i.e., low or high river runoff) and the priority of the water right; see also “Firm Yield” and “Senior Water Rights” Water Development Fees City Council Work Session October 13, 2015 1 ATTACHMENT 7 Water Supply Discussion Timeline May 12 - City Council Work Session Water Supply Reliability and Storage Update PURPOSE: - Background on the water supply planning policies and processes. - Update on activities related to water storage and reliability. June 8 - Futures Committee Water Supply Planning Policy PURPOSE: - History, present, and future options; July 14 - City Council Work Session Water Supply Planning Policy PURPOSE: - History, present, and future options Oct. 13 - City Council Work Session Water Development Fees PURPOSE: Review Raw Water Requirements and Plant Investment Fees for new development; compare with requirements in surrounding water districts; consider potential changes to Utilities’ requirements. 2 Overview • Update: Water Supply Planning in GMA • Raw Water Requirements (RWR) • Plant Investment Fee (PIF) • Next Steps 3 Water Supply Planning in GMA Update • July 14 Direction: explore similar water supply policies with Districts; consider risks to Utilities • Districts have agreed to consider/collaborate on: • Addressing water supply for Affordable Housing • Studying consistent water requirement methodologies (met on October 2) • Establishing consistent conservation programs • September 1 Council Direction: Scoping for a regional water authority 4 5 This work session focuses on Utilities water service area; will continue working with Districts. Direction Sought What questions or feedback does Council have regarding the Utilities’ water development fees? 6 Water Development Fees: General • Raw Water Requirements (RWR) • Dedication of water rights or cash-in-lieu to ensure adequate supply for new development • Plant Investment Fees (PIFs) • One-time fees for cost of utility infrastructure needed to serve a new development • Utilities’ fees reflect lot size and development type (e.g., residential, commercial, etc.) 7 Determining Raw Water Requirements (RWR) 1. Determine future water supply needs (rights/facilities) • Water Supply & Demand Management Policy - Policy criteria applied to projected growth 2. Consider water rights and/or facilities needed • Incorporate existing supplies/facilities 3. Adjust RWR to acquire necessary supplies (or cash equivalent) • Consider new name: Water Supply Requirements 8 Utilities: Future Water Supply Needs • Population: ~133,000 (2015) ~178,000 (2065) • Large contractual use increases • Breweries, manufacturing • 2065 supply needs: ~38,400 acre-feet/year • Existing firm yield: ~31,000 acre-feet/year • Need additional: ~7,400 acre-feet/year 9 • Storage: Halligan Water Supply Project • Permitting process may result in a more expensive alternative • Long-term: some additional water rights • Not as effective without storage • Long-term: some additional raw water (operational) storage • Similar to Rigden Reservoir 10 Utilities: Meeting Water Supply Needs Current Residential RWR Schedule RWR (acre-feet) = 1.92 * [(0.18 * # of units) + (1.2 * net acres)] 11 Water Supply Factor Indoor Use Component Outdoor Use Component These values need updating to consider lower use; being studied with Districts. • Based on average use of meter size; includes Water Supply Factor • Values need updating to consider lower use Minimum Meter Size Minimum RWR Annual Allotment (inches) (acre-feet) (gallons/year) 3/4 0.90 293,270 1 3.00 977,550 1-1/2 6.00 1,955,110 2 9.60 3,128,170 3 and above based on projected used 12 Current Commercial RWR Schedule Water Supply Factor • Currently 1.92 and considers: • System losses (treatment and distribution) • Varying demands (more use in hot/dry years) • Varying supplies (e.g., less yield in droughts) • Different supply sources (some yield better) • Storage not considered in water supply factor • Storage can use existing water rights to increase firm yield 13 Current Satisfaction of RWR • RWR can be met with combination of: • Acceptable water rights • Cash in-lieu-of water rights 14 Diminished Yield of Water Rights • Utilities has acquired many rights over time • Most yield in summer months only - Yields are in excess of demands • Additional water rights (without storage) do little to increase firm yield • Partial reason for discontinuing water banking • Should consider cash only to focus on acquiring storage • Can still purchase rights, once storage is acquired 15 Flow Month 16 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Monthly Amount (Acre-Feet) Fort Collins Utilities Water Supplies and Demands: Effect of Adding Water Rights Southside Ditch Supplies Other Direct Flow Rights Future Demand 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Monthly Amount (Acre-Feet) Fort Collins Utilities Water Supplies and Demands: Effect of Adding Water Rights Additional Southside Ditch Supplies Southside Ditch Supplies Other Direct Flow Rights Future Demand 17 Only small amount usable without storage. RWR Cash In-Lieu-Of Rate • Impact fee (based on needs, not just market values) • Currently $6,500 per acre-foot of RWR • Previously considered: • CBT units & local water right costs; mix of rights and cash • Future potential considerations: • Cost to acquire additional storage capacity • Value of existing water rights and facilities • Cash value equation that can be updated regularly • Basis for excess water use surcharge 18 Market Value of Colorado- Big Thompson (CBT) Project Units $- $5,000 $10,000 $15,000 $20,000 $25,000 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Year Price per Unit for Colorado-Big Thompson Project Units Data provided by Northern Water. 19 Plant Investment Fees (PIFs) What are PIFs? • Development fee (how growth pays its own way) • Impact fee (how ratepayers are made whole) How are they set? • Buy-in • Incremental • Hybrid (Utilities method) When are they adjusted? • Reviewed annually; Council biennally 20 Plant Investment Fees (PIFs) 21 Value of current infrastructure Value of new infrastructure Capacity of existing infrastructure Capacity of new infrastructure Next Steps • November 3 and 17: 2016 PIF ordinances • Next few months: Regional Water Authority scoping • November 1: Initial scoping memo • Next several months: • Study/update RWR calculations (with Districts) • Study/update RWR cash rate • Return to Council for potential RWR changes 22 Direction Sought What questions or feedback does Council have regarding the Utilities’ water development fees? 23 Thank You 24 ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! INTERSTATE 25 S SHIELDS ST S COLLEGE AVE S TAFT HILL RD E VINE DR S TIMBERLINE RD LAPORTE AVE E PROSPECT RD S LEMAY AVE E DOUGLAS RD W DRAKE RD STATE HIGHWAY 392 N OVERLAND TRL E MULBERRY ST E DRAKE RD S COUNTY ROAD 5 COUNTY ROAD 54G N US HIGHWAY 287 N SHIELDS ST W MULBERRY ST W PROSPECT RD S OVERLAND TRL E COUNTY ROAD 30 ZIEGLER RD W TRILBY RD E HORSETOOTH RD N COUNTY ROAD 23 W COUNTY ROAD 38E CARPENTER RD S COUNTY ROAD 23 E LINCOLN AVE N TAFT HILL RD E COUNTY ROAD 38 W HORSETOOTH RD TURNBERRY RD W ELIZABETH ST N LEMAY AVE TERRY LAKE RD S COUNTY ROAD 19 N COUNTY ROAD 5 S CENTENNIAL DR GREGORY RD GIDDINGS RD W LAUREL ST KECHTER RD S US HIGHWAY 287 E COUNTY ROAD 54 E COUNTY ROAD 52 / Fort Collins Area Water Districts 012345 0.5 Miles Water Districts East Larimer County Water District Fort Collins Loveland Water District Fort Collins Utilities (Water) Sunset Water District West Fort Collins Water District !!City Limits GMA Major Streets Railroads Figure Updated: 9/23/2015 ATTACHMENT 1