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HomeMy WebLinkAbout1993-037-03/16/1993-WATER CONSERVATION ZERO INTEREST LOAN PROGRAM RESOLUTION 93- 37 OF THE COUNCIL OF THE CITY OF FORT COLLINS ADOPTING A ZERO INTEREST LOAN PROGRAM FOR THE PURPOSE OF WATER CONSERVATION WHEREAS, on April 7, 1992, the Council adopted Resolution 92-63, establishing water demand management policies for the purpose of promoting water conservation; and WHEREAS, the Council hereby finds and determines that the promotion of water conservation through the establishment of a Zero Interest Loan Program would serve a valid public purpose; and WHEREAS, a Zero Interest Loan Program would help to decrease the per capita daily demand for water through the use of more efficient plumbing and fixtures; and WHEREAS, the City Council requested staff to prepare a Zero Interest Loan Program for the purpose of promoting water conservation, and WHEREAS, the Water Board has reviewed and recommended approval of the program as set forth in the "Procedures for Obtaining Zero Interest Loans" dated February 1993, attached hereto as Exhibit "A" and incorporated herein by this reference (the "Zero Interest Loan Program") . NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the Zero Interest Loan Program is hereby approved and established for the purpose of promoting water conservation; Section 2. That the Director of the water and wastewater utility is hereby authorized to make such minor procedural adjustments to said program as may, from time to time, be necessary in order to effectively administer the program. Passed and adopted at a regular meeting of the Council of the City of Fort Collins held this 16th day of March, A.D. 1993. Mayor ATTEST: City Clerk EXHIBIT A PROCEDURES FOR OBTAINING ZERO-INTEREST LOANS FROM WATER & WASTEWATER UTILITY The purpose of this memorandum is to outline the process involved in obtaining a zero-interest loan from the Water & Wastewater Utility, to pay for water service line replacements, repairs to lealdng pipes or plumbing fixtures, or installing ultra-low flush toilets. Resolution 90-147, approved by City Council on November 20, 1990, directed Utility staff "to investigate the feasibility of a zero interest loan program for customers with an inferior or corroded water service line that should be replaced at the time of the installation of the meter pit." On April 7, 1992 Resolution 92-63 was also approved by City Council, directing Utility Staff and the Water Board to "develop a zero-interest loan program for the installation of qualified water conservation measures." This zero-interest loan program is intended for metered customers who: (1) have galvanized, inferior, or corroded service lines that are in need of replacement as determined by Water Utility _ representatives; (2) have lealdng pipes or plumbing fixtures in need of repair; or (3) wish to reduce their water consumption by installing ultra-low flush toilets (51.6 gallons/flush). This loan program is contingent upon appropriation of funds by the City Council. Loans will be subject to the availability of funds. PROGRAM GUIDELINES: 1. Funds for loans to replace service lines are included in the Water Capital Project budget of the Transmission and Distribution Division, account no. 502-066000-529960 64000. Funds for loans to repair lealdng pipes or plumbing fixtures or to install ultra-low flush toilets are included in Water Minor Capital account no. 502-014300-529290. Requisitions for loan payments should be charged to these accounts. 2. Customers are eligible for a loan if the following criteria are met: (1) the customer is the owner of the building which is a single family home or duplex that receives both water and sewer service from the City of Fort Collins, and (2) the building is metered or in the process of becoming metered, and (3) the customer has during the last five (5) years, had no delinquent charges due on any utility service provided by the City of Fort Collins, and (4) it is determined by Water Utility representatives that; (a) the customer's service line is galvanized, inferior, or corroded, or(b) there are leaking pipes or plumbing fixtures in the home, or (c) the existing toilet(s) use 3.5 gallons or more of water per flush. 3. Loans to replace water service lines will be limited to the labor and material costs associated with replacing the water service between the curb stop and shut-off valve. The Utility will pay for replacing the service line between the curb stop and main if it also needs to be EXCERPT FROM WATER BOARD MINUTES February 19, 1993 Zero Interest Loan Program Draft Ordinance Wendy Williams reported that the information the Board received in their packets was reviewed by the Conservation and Public Education Committee, and in fact was an outgrowth of some of the work they had been doing. The Utility currently has a zero interest loan program in place, but it is limited to service line replacement loans. We have been requested to look at expanding that program to include some water conservation sorts of things, she said. We looked at a number of water conservation measures and decided that at this time, the only one we wanted to apply it to was replacing 3.5 gallon toilets with ultra low flush models, she explained. She went on to say that the Utility has also expanded this program to include replacing leaking pipes or plumbing fixtures. In the original zero interest program, you could only apply for the loan in the process of being metered. We have since decided that it is in the best interest of the Utility to make the program available to people who have a corroded service line, so they could go back and replace it. Those are the major changes to the existing program. In 1992 we processed 17 loans under this program, she continued. The average loan was for about$900, and the Utility loaned a total of$18,000. Approximately $20,000 has been set aside for replacement of service lines, and another $20,000 was set aside for repairing leaking plumbing fixtures and upgrading toilets. Ms. Williams explained that the draft ordinance will need to go to City Council because there are enough changes to the original program that the Council needs to decide that there is a broader public purpose served for a program like this, so we aren't considered to be making a donation due to the loss of interest money. We have some maximums set on the extended program which we didn't have in the earlier loan program, she related. The maximum loan amount for service line replacement is $1,500; for interior plumbing it's $1,000; and $500 is the maximum for the installation of ultra low flush toilets. While it is a zero interest loan program, she continued, we are proposing to collect an administrative fee, but that would be only on loans greater than $500, so that's basically just the service line replacement loans. Ray Herrmann moved that the Water Board recommend approval of the draft ordinance to extend the zero interest loan program. Terry Podmore seconded the motion. President Grigg asked for discussion. 1 Dr. Grigg reviewed how the zero interest loan program came about. In April of 1992 the Council approved the Demand Management Resolution and directed the Water Board Conservation and Public Education Committee to develop a water conservation zero interest loan program, a draft of which we are reviewing today. The next step for the Council will be to approve the loan program with the guidelines included in the information distributed in the packets. Ms. Williams again reviewed the changes from the original ordinance. Dr. Grigg asked how much interest the City has lost. Ms. Williams said that staff estimates if we had to borrow the $20,000 for 12 months, that would be a discounted interest cost to the City, assuming 5.5%, of about $850. Dr. Grigg observed that our cost for implementing this program is not overwhelming when you consider everything that's going into it. Tom Brown asked who is eligible for a loan; are there any financial qualifications? The only financial qualification, and it isn't truly that, is that you can't have been delinquent on paying monthly utility bills for the last five years, Ms. Williams replied. Income level is not a consideration, she added. MaryLou Smith added that "staff's and the Committee's presumption was that the amounts are low enough that those who will want to take advantage of this are primarily those who are low income and really need to have a loan in order to do this." Staff reported to the Committee the need for a loan program to repair leaking pipes and plumbing fixtures. Mark Casey asked if the loans last year were all for service lines or leaky plumbing fixtures. Ms. Williams said the program last year was limited to service line replacements. On leaky plumbing fixtures, what does that include? he asked. There really aren't any limitations for interior plumbing, she said. "What happens if you get requests above the$20,000 you have set aside?" Mr. Dow asked. Ms. Williams said the ordinance states that it is limited to the availability of funds, "but we can certainly transfer money between the two zero-interest programs. Since this is going to the Council, Mr. Podmore began, one of the things we need to be aware of, in terms of what's eligible, is that it does not include some of the expressed views of some of the Council for some of the conservation measures that could be included, but that we have elected not to include, so we may get some discussion on that when they take it up. "What was the rationale for not having a maximum income level?" Mr. Dow asked. The City could take some heat for loaning money with no interest to someone who has a large income, he said. When the Committee discussed it, they saw it as a conservation incentive, and so it didn't matter what your income level was; it still benefitted the system as a whole to promote conservation, Ms. Williams responded. "And from a practical point of view," MaryLou Smith added, "we felt like the amounts were going to be low enough that there would be very few people who would bother with this loan if they had a high income. Also, considering the process of having to get financial information from each applicant, it would cost us so much time, we thought it wasn't worth it," she explained. 2 Ms. Smith wanted to explain a little more about what Terry Podmore brought up: the conservation measures that aren't included in the zero interest loan program. She said the Committee had looked at several ideas for other kinds of improvements that would perhaps help us to conserve more water, and "it isn't that we didn't think those weren't worth looking at, but we wanted these first; later we may look at some others," she said. We are doing some things in the other areas of the demand management resolution that we think are more important, and will save more water than some of the items that came before the Committee for zero interest loans. Paul Clopper mentioned that someone who removes their blue grass lawn and puts in water conserving grass or plants is an example. "That's a good example," Ms. Smith responded, "and we certainly are open to looking at those possibilities later." Ms. Smith also commented that another good example would be someone who might want to amend their soil to increase the water retention capabilities. "We put that one off because we are studying that right now to determine, from a practical standpoint, if that really does help to conserve water." Tim Dow had a question about the third sentence of paragraph three on page two: "Payment to a licensed plumber will be made after meter is set, but not later than 45 days after work is completed if utility is unable to schedule installation before that time." Does the actual distribution of the funds go to the contractor that actually does the work or is it to the homeowner? It goes directly to a licensed plumber, Ms. Williams replied. Mark Casey asked if the repayment is included in the customer's monthly bill. "That was the intent when the program was first set up, but unfortunately our utility billing system currently is not able to do that; that is a long term goal," Ms. Williams explained. Customers are currently issued payment coupons. Mr. Casey thinks the program is well thought through and he wondered if in addition to foregoing the interest or the cost of capital, there certainly must be some administration charge in terms of the time involved in processing these loans. The administration fee is set at $25.00, Ms. Williams replied, and it's probably ; little low. "We were concerned that the fee not be so high as to negate the zero interest concept." Mr. Casey also had a concern about the loan for leaky plumbing fixtures. He thinks it is more broadly construed than is necessary. For example, would a hot water heating system qualify? No, Ms. Williams answered. The fact that's it's leaking would not mean that we would replace your hot water heater; the pipes to it, but not the heater. President Grigg called for the question. The motion to recommend approval of the zero interest loan program, as extended, passed unanimously. 3