To: Honorable Mayor and Members of Town Council
From: Mark Marlowe, Director of Castle Rock Water
Title
Ordinance Amending Titles 3, 4 and 13 of the Castle Rock Municipal Code By Changing the Water and Wastewater System Development Fees and making certain editorial updates to such titles (Second Reading - Approved on First Reading on September 5, 2017 by a vote of 6-0)
Body
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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 and wastewater system development fees and making certain editorial updates to such titles.
The annual study is critical to ensure the utility fully re-evaluates cost 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 budget priorities for operations and capital investments as well as benefits derived from regional partnerships consummated in 2016 and early 2017. Operational priorities included three new water plant operators to allow a transition to 24/7 plant coverage; one new water conservation specialist to help move our long term water goal of an additional 20 percent conservation forward; and one new distribution system worker to help maintain the expanding distribution system. Capital priorities included redrilling of several wells, an increase in budgeted funds for expansion of the wastewater treatment plant to $35 million, a new vac truck for maintenance of the expanding collection system, and continuation of key long term water projects, like WISE, Box Elder and reuse. Once the rates and fees were developed from the budget priorities, recommendations for rates and fees were included in the proposed budget.
Castle Rock Water staff and Caste Rock Water Commission recommend no changes for the rates in 2018. Rates have been and continue to be lower than projected when compared to the 2013 hybrid1 (definition see next page) 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 in 2019 through 2022, the results of the 2017 study predict the need for modest increases of around 3.5 percent in the water resources fee each year in order to continue to fund the long term renewable water plan. For the other funds, modest adjustments of up to 3 percent may be necessary depending on operations and maintenance costs, and needed investments in capital rehabilitations and replacements.
For system development fees (SDFs) related to new development, Castle Rock Water staff and commission recommend an increase of $718 per single family equivalent (SFE), a 3.1 percent increase. This recommendation is consistent with Council’s policy on SDFs. Recent growth has driven the need for additional water and wastewater capital improvements. The portion of SDFs for wastewater is for needed expansion to the treatment plant in the near term and is being driven by an
increase in projected costs for construction of the expansion as well as the fact that the expansion is needed sooner than expected. One other key change to SDFs included in the proposed changes is an adjustment to the criteria for home builders to qualify for the 0.67 SFE SDF.
Data on existing 0.67 SFE homes indicated the need for changes to the requirements to ensure these homes meet the intent of lower water use. Key changes include the need to incorporate maximum allowable irrigable areas, lot size limits, and rough-ins for basement plumbing in the parameters for qualifying for a 0.67 SFE SDF. Castle Rock Water has worked closely with the home builders on these changes.
Continued in Staff Report.
Proposed Motion
“I move to approve the ordinance as introduced by title.”
Attachments
Attachment A: Ordinance
Exhibit 1: Volume 1
Exhibit 2: Volume 2
Staff Report
1 Definition 2013 Hybrid - This is the long term water plan approved by Council in 2013 which included 1,000 acre feet of the more expensive but more reliable WISE project and 2,500 acre feet of the less expensive but riskier Box Elder project for long term water supply. A complete financial analysis of this plan was part of the approval process and projected rates and fees well into the future to ensure affordability for the customers of Castle Rock Water.