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Home My WebLink AboutMemo - Read Before Packet - 8/8/2023 - Work Session Agenda Item #2: Updated Powerpoint Presentation On Water Supply Requirements And Excess Water Use Fee UpdatesHeadline Copy Goes Here Utilities Water Director Jason Graham Water Supply Requirements and Excess Water Use Fee Updates August 8, 2023 Jen Dial Utilities Water Resource Manager Headline Copy Goes Here 2 Agenda •Purpose •Water Supply Requirements (WSR) and Excess Water Use (EWU) fees •Evaluation •Frequently Asked Questions •Outreach •Options and considerations •Recommendation •Discussion Headline Copy Goes Here 3 Purpose •Share with City Council the need for WSR and EWU fee increases. •Does Council have any questions regarding the need and evaluation of WSR and EWU fees? •Does Council have any specific direction for outreach and implementation of the WSR and EWU fees? Headline Copy Goes HerePurpose 4 •Utilities has been developing and maintaining a high-quality water system for nearly 150 years. •Our innovative and forward-thinking approach has provided reliable water for our community. •Currently we are focused on: •Maintaining our current water supply system •Supplying a reliable water source •Increasing costs •Climate resiliency (drought, water scarcity, historic weather events) Headline Copy Goes Here 5 Purpose •The market cost of water continues to significantly increase due to: •Scarcity of water in the West •Competition for limited water resources •Storage project costs continue to increase: •Permitting process •Construction costs •Development pays its own way which helps prevent impacts to existing customers Headline Copy Goes HereWhat is an Acre-Foot (AF)? 6 •An AF of water equals about 326,000 gallons, or enough water to cover a football field 1-foot deep. •One acre-foot can supply water to 3-4 single-family homes in Fort Collins per year. Headline Copy Goes Here 7 WSR and EWU Fees WSR Fee •New development and re-development •One-time fee per AF •Buys into the current value of Utilities’ water portfolio, in exchange for water service in perpetuity EWU Fee •Annual fee for commercial allotment customers •Fee per 1,000 gallons over assigned allotment Headline Copy Goes Here Growth Management Area (GMA) Fort Collins Utilities ELCO Water District Fort Collins Fort Collins-Loveland Water District West Fort Collins Water District WSR and EWU Applicability 8 ~11,000 Fort Collins Residents ~137,000 Fort Collins Residents ~24,000 Fort Collins Residents Headline Copy Goes HereEvaluation 9 •Hired FCS Group and West Water Consultants to evaluate •Colorado-Big Thompson Project (C-BT) prices increased 52x in 30 years while inflation increased 2x •Non-C-BT water rights value have increased •Current value at $143,000 AF •Last significant increase was 2021 •$22,145 to $68,200 •Halligan Reservoir expansion costs have almost doubled since 2019 •Should evaluate a minimum of every two years $- $20,000.00 $40,000.00 $60,000.00 $80,000.00 $100,000.00 $120,000.00 $140,000.00 $160,000.00 $180,000.00 Fort Collins WSR vs. C-BT Cost per AF WSR C-BT Headline Copy Goes Here 10 Evaluation Water Rights •Must expand current water storage to fully capture current rights •Expansion of Halligan Water Storage •Equates to $179,500 per AF from water economics standpoint WSR Fee •30,160 AF, valued at > $5 billion •8% available for future growth •Expansion of portfolio planned + Headline Copy Goes Here 11 Evaluation – Regional Comparisons – Apples to Apples? $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 $200,000 Westminster Loveland Fort Collins - Current Greeley Longmont Johnstown Broomfield Ft. Collins-Loveland Water District East Larimer County Fort Collins - Proposed Cost per AF at Avg. Yield vs. Firm Yield Basis Avg. Yield Basis Firm Yield Basis Headline Copy Goes Here 12 Evaluation 4 BR Single-Family 7,300 SF Lot 5,200 SF Outdoor Area Provider Dedication Required (AF) ELCO 0.58 Fort Collins – Loveland 0.56 Broomfield 0.50 Fort Collins 0.31 Johnstown 0.50 Longmont 0.50 Greeley 0.50 Loveland 0.45 Westminster 0.52 Provider Dedication Required (AF) Broomfield 3.52 Fort Collins 1.76 Greeley 2.31 ELCO 0.79 Fort Collins – Loveland 0.70 Loveland 1.00 Longmont 0.76 Restaurant Business 4,000 SF ¾” Meter Tap Provider Est. Avg. Dedication Required per Dwelling Unit (AF) Fort Collins – Loveland 0.22 East Larimer County 0.17 Fort Collins 0.06 Loveland 0.16 Greeley 0.11 Westminster 0.11 Broomfield 0.05 100 Bedrooms 64 Dwelling Units Headline Copy Goes Here 13 Evaluation Headline Copy Goes HereEvaluation – Commercial $53,850$20,460 PROPOSED FEECURRENT FEE RETAIL 3/4” water meter 15,000 SF 0.3 AF Dedication Required $53,850$20,460 PROPOSED FEECURRENT FEE OFFICE 3/4” water meter 15,000 SF 0.3 AF Dedication Required $315,916$120,030 PROPOSED FEECURRENT FEE RESTAURANT 3/4” water meter 4,000 SF 1.76 AF Dedication Required Headline Copy Goes Here 15 Frequently Asked Questions •Does the City plan to purchase more water rights? •Yes, the City is always evaluating potential water rights purchases to expand our portfolio for growth. •Are the fees increasing to pay for the Halligan Water Supply Project? •No, the need to increase the fees exists regardless of Halligan. Halligan is only ~8% of our total water portfolio value. •What do we expect for future water costs? •We expect water costs to continue to go up. •What have you heard from stakeholders? •Internal stakeholders and existing customers have expressed concerns with the rapid increase in cost impacting their ability to do business, especially for affordable housing and small businesses. •How is this related to the water adequacy code updates? •WSR relates to our water rights and storage for customers in Utilities’ service area. Water adequacy determination ensures a water provider can deliver reliable and safe water to their customers. Headline Copy Goes HereOutreach - Inform 16 •Email allotment customers •Email developers in review process •Post notice on Utilities’ website •Water Commission presentation •Planning and Zoning Commission •Chamber of Commerce •Economic Advisory Board Development Review Executive Team Completed 3rd and 4th Quarter 2023 •Communicate with Affordable Housing Board and Building Review Commission •Lunch and Learn •Internal and external e-newsletters Headline Copy Goes HereFuture Water Conversations with City Council 17 •Water Supply Requirement, Excess Water Use fees and water allotments •Halligan Water Supply Project •Xeriscape and Soil Amendment Policy Update – Council priority •Water Efficiency Plan update •Regional water partnerships •Colorado River Compact •Incremental water rate increases •Downtown Stormwater Improvement Plan Headline Copy Goes HereRecommendation 18 •Increase WSR fees from $68,200 to $179,500 per AF starting January 1, 2024 •Increase EWU fees from $16.67 to $43.87 per 1,000 gallons starting January 1, 2024 Headline Copy Goes HereOptions and Considerations 19 1.Move forward with staff recommendation at projected pace and implement fees January 1, 2024 2.Evaluate different payment options for: •Current development review customers •Current customers subject to EWU fees •Small businesses •Most marginalized customers •Affordable housing development 3.Enhance conservation programs to help offset the price of water Headline Copy Goes Here 20 Discussion •Does Council have any questions regarding the need and evaluation of WSR and EWU fees? •Does Council have any specific direction for outreach and implementation of the WSR and EWU fees? Headline Copy Goes HereComparing Multi-Family Property Fees 100 Bedrooms 64 Dwelling Units Fort Collins - Current Broomfield Westminster Greeley Loveland Fort Collins - Proposed East Larimer County Ft. Collins-Loveland Water District Provider EST. Avg. Dedication Required per Dwelling Unit (AF) Fort Collins – Loveland 0.22 East Larimer County 0.17 Fort Collins 0.06 Loveland 0.16 Greeley 0.11 Westminster 0.11 Broomfield 0.05 Some fees may include both indoor and outdoor components Est. Fees per Dwelling Unit