HomeMy WebLinkAboutMemo - Mail Packet - 10/31/2023 - Memorandum From Jen Dial Re: August 8 City Council Work Session Update – Water Supply Fees, Excess Water Use And Water AllotmentsDocuSign Envelope ID: 19A13E05-276C-4215-A503-9F197C31D3AF
Utilities
electric · stormwater · wastewater · water
PO Box 580
Fort Collins, CO 80522
970.212.2900
V/TDD: 711
utilities@fcgov.com
fcgov.com/utilities
MEMORANDUM
Date: Oct. 25, 2023
To: Mayor and City Councilmembers
Through: Tyler Marr, Deputy City Manager
Kendall Minor, Utilities Executive Director
Jason Graham, Director of Water Utilities
From: Jen Dial, Water Resources Manager
Subject: August 8 City Council Work Session Update – Water Supply Fees, Excess Water
Use, and Water Allotments
Bottom Line
In August 2023, staff presented updated consultant work regarding Water Supply Requirement
(WSR) and Excess Water Use (EWU) fees. Based on the conversation and feedback, staff is
convening an internal team to review and develop options that balance the values and goals of
the community along with the needs of the water utility. Staff anticipates this work occurring
throughout 2024 and targeting 2025 implementation.
Background
The WSR is a development fee collected to pay for the water necessary to serve either a new
development or redeveloped commercial properties that require a larger tap. These fees
generate revenue to provide reliable water resources, including water rights and storage, to
ensure future growth is not paid for by existing rate payers. The WSR pays for a defined
amount of water, which is translated into an annual water allotment.
Utilities also charge EWU fees to customers who exceed their water allotment. Customers
may increase their water allotment at any time by paying WSR fees or by providing City water
certificates and credits. However, most customers who exceed their water allotment choose to
pay EWU fees as opposed to a much larger, one-time WSR fee.
Both fees are typically reviewed and updated every 2-3 years. Unlike other water utility fees and
rates (plant investment fees, water rates, and wastewater rates), which are based on planned
capital improvement projects, the WSR and EWU fees are based on the cost of water and
infrastructure which has been, and continues to be, very dynamic.
Next Steps
Because of the complexity and potential scale of proposed increases, staff will be developing
separate work streams to work in parallel to develop options for assigning new water allotments
as well as determining appropriate WSR and EWU fees for Utilities customers.
DocuSign Envelope ID: AD483C41-AE70-4051-9A17-D400FC7BC967
DocuSign Envelope ID: 19A13E05-276C-4215-A503-9F197C31D3AF
A staff core team with expertise in water resources, conservation, finance, utility fees, customer
community relations, communications, marketing, development review, and water law will spend
the next several months exploring various methods to determine the appropriate fee structures
that align with City and community needs. This work will include looking at internal process
improvements, developing alternatives, and outreach.
A project plan has been developed to ensure the core team applies a community-wide lens to
the process and options to be provided to Council. The project plan focuses on a balanced
approach to ensure the water utility can provide the water needs of our customers without
putting an unnecessary burden on development, especially affordable housing and small
businesses.
Staff anticipates scheduling Council work sessions in Q2 and Q3 of 2024 leading up to potential
code adoption in Nov. 2024. Any fee increases would go into effect Jan. 1, 2025.
Engagement efforts will include outreach to:
• Existing allotment customers
• Relevant Boards and Commissions
• Developments far along in the review process that would be affected by a WSR
increase.
• Other impacted groups such as developers, commercial real estate brokers, and
Homeowner’s Associations
• The public through engagement opportunities such as listening sessions and open
houses
• The public through information on the City’s website, including an OurCity page to better
drive and track engagement.
Allotment Changes
While most Utilities water customers already have an assigned allotment that is subject to EWU
fees, about 1,720 Utilities commercial customers do not have an allotment because they
received a water tap before the allotment program began in 1984. This disparity leads to less
equitable administration of EWU fees and is related to a potential EWU fee increase. Beginning
in the 4th quarter of 2023, staff will develop a timeline for seeking input from impacted
customers, calculating allotments, assigning allotments, and implementing a communications
plan, which would include work sessions with Council.
Summary
The cost of delivering safe and reliable water to our community continues to rise. Fort Collins’
population is expected to keep growing, and Utilities must find a way to pay for future water
demands and infrastructure, including storage, while supporting our community values as a
municipal-owned Utility. Challenging factors include managing higher costs for construction,
permitting, and infrastructure, much of which is outside the City’s control. The City is committed to
working with the community, staff and Council to develop options that balance the values and
goals of the community along with the needs of the water utility.
DocuSign Envelope ID: AD483C41-AE70-4051-9A17-D400FC7BC967