To: Honorable Mayor and Members of Town Council
From: Mark Marlowe, P.E., Utilities Director
Anne Glassman, Business Solutions Manager
Title
Ordinance Amending Titles 3, 4, and 13 of the Castle Rock Municipal Code by Changing the Water and Storm Water Monthly Services Charges and Fees, the Renewable Water Resource Fees, the Water and Wastewater System Development Fees and the Storm Water Development Impact Fee, and Making Certain Administrative Updates to Definitions and Provisions Related to Application for Service, Information Provided to Customers, Utility Discontinuance Liens, Utility Service Disconnection Procedures, Customer Dispute and Appeal, and Limitations on Disconnection (Second Reading)
Body
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Approved on first reading with a vote of 6 to 1 with no changes.
Executive Summary
The purpose of this memorandum is to request Town Council approval of an ordinance Amending Titles 3, 4, and 13 of the Castle Rock Municipal Code by Changing the Water, Wastewater and Storm Water Monthly Services Charges and Fees, the Renewable Water Resource Fees, the Water and Wastewater System Development Fees and the Storm Water Development Impact Fee, and Making Certain Administrative Updates to Definitions and Provisions Related to Application for Service, Information Provided to Customers, Utility Discontinuance Liens, Utility Service Disconnection Procedures, Customer Dispute and Appeal, and Limitations on Disconnection.
The annual study is critical to ensure the utility fully re-evaluates costs of service, updates financial plans to ensure revenue requirements going into the future are based on the best available current information and provides for the most competitive rates and fees possible for our customers given our current cost of service. This study has incorporated a recent success story where Castle Rock Water has successfully issued fixed rate revenue bonds to replace the variable rate certificates of participation (COP). This success has locked in an interest rate of 2.505 percent, which is significantly lower than the 3.35 percent that was previously used for the long term rate and fee modeling. The impact has been immediate reducing the recommended water resources rate increases from 3.5 percent to 3.0 percent for the next four years.
Utilities staff recommends no changes for the wastewater rates for 2017. An increase of 4.0 percent or $0.27 for the stormwater rate is recommended for the average residential customer. For the Water Resources rate, based on direction from the Utilities Commission and Council, staff evaluated the option of increasing variable charges in Tiers 1, 2, 3 and 4 water rates instead of increasing the fixed water resources charge. By raising the variable (volumetric rate) $0.07 on Tier 1, $0.14 on Tier 2 and $0.21 on both Tier 3 and 4, the rate required revenues for long term water are met. Staff’s recommendation is to use this option due to the perception that this helps increase customer equity in paying for long term water. It also helps drive conservation and efficiency efforts. Data indicates price is the strongest driver of conservation. These changes result in a 1.0% increase on a typical annual residential bill.
The good news is that rates have been lower than projected when compared to the 2013 hybrid (Box Elder / WISE alternate source of supply projects) long term renewable water plan approved by Council in 2013. This positive result has been driven by keeping operating expenditures and needed capital investments under budget, successful implementation of regional partnerships, and creative approaches to optimize the utilities finances.
Going forward, the results of the 2016 Study predict the need for continued modest increases of around 3.0 percent in the water resources fee each year in order to continue to fund the long term renewable water plan. Future needed capital investments for stormwater infrastructure indicate the need for 4.0 percent increases each year from 2018 to 2021.
For SDFs related to new development, Utilities recommends an increase between $396 and $493 (depending on which watershed in which the development is proposed) per single family equivalent (SFE), a 1.8 to 2.2 percent increase. This recommendation is consistent with Town Council’s policy on system development fees (SDFs). Recent growth has driven the need for additional water, water resources and stormwater capital improvements and a ramping up of the portion of the SDFs for wastewater for needed expansions to the treatment plant in the near term.
Continued in the Staff Report.
Proposed Motion
“I move to approve the ordinance as introduced by title.”
Attachments
Attachment A: Ordinance
Exhibit 1: Vol. 1
Exhibit 2: Vol. 2
Staff Report