HomeMy WebLinkAboutMemo - Mail Packet - 07/23/2024 - Memo from Jen Dial re July 9, 2024 Work Session Summary: Water Supply Requirements, Excess Water Use Surcharges, Pre-1984 Non-Residential Water AllotmentsUtilities
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WORK SESSION MEMORANDUM
Date: July 16, 2024
To: Mayor and City Councilmembers
Through: Kelly DiMartino, City Manager
Tyler Marr, Deputy City Manager
From: Jen Dial, Water Resources Manager
Subject: July 9, 2024 Work Session Summary: Water Supply Requirements, Excess Water
Use Surcharges, and Pre-1984 Non-Residential Water Allotments
BOTTOM LINE
The purpose of this memo is to document the summary of discussions during the July 9, 2024
Work Session on Water Supply Requirements (WSR), Excess Water Use surcharges
(surcharges), and pre-1984 non-residential allotments. All Councilmembers were present and
in-person.
DISCUSSION SUMMARY
Water Supply Requirements
Staff provided revised WSR fees for two methodologies:
Cost-based, 30% contingency, 20% safety factor (cost-based): $63,800/acre-foot (AF)
Market-based, 30% contingency, 20% safety factor (market-based): $110,700/AF
Staff recommended the cost-based methodology. This amounts to a fee of $63,800/AF, which is
lower than what was presented at the April 9 Work Session (this decrease was noted as a
possibility) and lower than Fort Collins Utilities’ current fee of $68,200/AF. Financial impacts for
this 6.5% decrease were presented and would cause a one-time 0.5% increase to customers
over the 40-year City Plan building horizon.
Docusign Envelope ID: 307C179B-E588-41D3-9FA7-65842F1E028E
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Assignment of Pre-1984 Non-Residential Allotments
Staff provided an update on the impacts to customers using the hybrid method to assign
allotments. Staff recommended assigning allotments based on the greater of an account’s 1989
tap credit or five-year historical use.
Discussion
Councilmembers sought clarification on aspects of the WSR fee and allotments that were
addressed as well as a request for a summary on impact and development fees over time. As
part of the April 9, 2024 Work Session, staff summarized the combined Capital Expansion Fee
(CEF); Transportation Capital Expansion Fee (TCEF); Utilities Impact Fees, including WSR,
Plant Investment Fees (PIFs) and electric capacity fees; and development review and building
permit costs. That included a range of estimates for the ongoing WSR analysis. The tables
below reflect the recently updated WSR estimates and present a summary of the total fee
component of development activity costs for both a multi-unit residence and a detached,
single/duplex residence example.
2025
Actual Study Proposed
CEF 8,591$ 8,824$ 8,992$ 9,764$ 10,310$ 12,223$ 12,650$
TCEF 6,586$ 6,623$ 7,115$ 7,621$ 8,185$ 8,106$ 8,390$
Dev Review/Permits/Other 2,532$ 3,314$ 2,792$ 2,792$ 2,792$ 2,792$ 2,890$
Water PIF 4,084$ 4,192$ 4,393$ 4,807$ 5,162$ 5,081$ 5,259$
Water Supply Requirement 13,869$ 14,285$ 22,813$ 22,813$ 22,813$ 22,813$ 21,342$
Wasterwater PIF 3,590$ 3,698$ 3,824$ 4,168$ 4,476$ 4,339$ 4,491$
Stormwater PIF 1,119$ 1,153$ 1,197$ 1,305$ 1,402$ 1,397$ 1,446$
Electic Capacity Fee 2,855$ 3,025$ 3,764$ 4,391$ 4,716$ 5,041$ 5,217$
Combined Fees 43,226$ 45,114$ 54,891$ 57,662$ 59,856$ 61,792$ 61,684$
Percentage Change Baseline 4.4%21.7%5.0%3.8%7.2%7.0%
vs. 2020 vs. 2021 vs. 2022 vs. 2023
City Charged Fees: Single/Duplex Residence Example (1,890 sq. ft. floorplan)
Type 2020 2021 2022 2023 2024
Docusign Envelope ID: 307C179B-E588-41D3-9FA7-65842F1E028E
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Please note that 2024 above is presented for both actual adopted rates as well as the study
update amounts. For 2025, the rates presented reflect the 2024 study/model updates plus a
projected assumption of 3.5% for inflation during 2024.
Below illustrates a timeline of the WSR fee since 2002:
2002-2017: $6,500 per acre-foot; cost was based on Colorado-Big Thompson unit
prices.
2018: $17,300 per acre-foot; used the same hybrid method proposed in April and July
2024 but used a market-based costing for both the buy-in and incremental components.
2020: $21,500 per acre-foot; used the hybrid method with updated Halligan Project costs
and future water rights costs.
2021: $22,145 per acre-foot; added a 3% inflationary increase.
2022: $68,200 per acre-foot; continued to use the hybrid method but used different
model assumptions including a 1) higher firm yield, 2) applied 20% safety factor which
wasn’t included in 2018-2021 WSR fees, and 3) increased contingency from 25% to
30%
NEXT STEPS
Staff will bring an ordinance for first reading for the implementation of a hybrid, cost-based
method for calculating the WSR fee and assigning allotments using the hybrid method on
October 15, 2024.
CC: Jill Oropeza, Interim One Water Director
Docusign Envelope ID: 307C179B-E588-41D3-9FA7-65842F1E028E