To: Honorable Mayor and Members of Town Council
From: Michael J. Hyman, Town Attorney
Title
Ordinance Amending the Castle Rock Municipal Code by the Adoption of a New Title 21 Entitled “Guidelines and Regulations for Matters of State Interest” (Second Reading - Approved on First Reading on September 21, 2021 by a vote 7-0)
Body
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Executive Summary
In 1974, Colorado enacted House Bill 1041, also known as the Areas and Activities of State Interest Act, §§ 24-65.1-101, et seq., C.R.S. (the “Act”), which gives local governments additional authority for planning decisions related to areas or activities of statewide concern. This bill allows communities to identify, designate, and regulate those activities and areas through a local permitting process commonly known as “1041 regulations.” These regulations are different than any other special development review process in that they give local governments authority to regulate projects that may otherwise be out of their jurisdiction or control.
Adoption of 1041 regulations will provide a regulatory framework to help protect the Town against the negative impacts that development outside of the Town might have on the Town’s watershed, as well as its existing water, wastewater and transportation infrastructure. A Town permit would be required as a pre-condition to any:
1. Development located wholly or partially within an area around interchanges involving arterial highways as designated on the approved Areas Around Interchanges map;
2. Site selection of arterial highways and interchanges and collector highways located wholly or partially within Town boundaries; or
3. Site selection and construction of major new domestic water and sewage treatment systems and major extensions of existing domestic water and sewage treatment systems located wholly or partially within the Town’s Watershed Protection District as designated on the approved Watershed Protection District map.
The permitting process will require a permit applicant to demonstrate appropriate and reasonable mitigation efforts that are necessary to protect Town infrastructure and environmental features prior to the development proceeding.
It should be noted that 1041 regulations are used by many Colorado local governments to protect themselves from the negative impacts of development proposals outside their immediate jurisdiction. Indeed, a 2017 study commissioned by the Colorado Department of Local Affairs shows that at least 32 counties and 67 municipalities have adopted 1041 regulations since the adoption of the Act.
One primary area of concern for the Town arises when there is a proposal for urban level development in the unincorporated area of the county that is adjacent to or surrounded by the Town and, as such, is in the immediate vicinity of the Town’s watershed and existing water, wastewater, and transportation infrastructure. If such development were to occur absent 1041 regulations, the Town will suffer long-term adverse impacts from the development without the ability to require any mitigation of such impacts from the developer.
For example, Town streets that are already congested will experience the impact of additional vehicular traffic generated by the development. Wells drilled to serve the development may negatively affect the Town’s existing wells and water rights, as well as its ability to utilize aquifer storage and recovery. Discharge of wastewater from the development into the Town’s watershed could threaten the safety of the Town’s drinking water supply. In each instance, the Town and its existing residents will be left with the financial burden of making whatever improvements to Town water, wastewater, and transportation facilities are needed to address these issues.
Conversely, if the development were to occur within Town boundaries, it would be accomplished in accordance with Town standards that take into account such impacts. Necessary improvements to the Town’s street network and water and wastewater systems would be funded by the developer through a combination of property taxes assessed by a developer district and impact fees paid to the Town. Groundwater underlying the development would be dedicated to the Town to help serve future Town residents. In return, the development would have access to an ever-growing and more dependable supply of renewable water from the Town’s water system. The ability of the Town to require a developer to obtain a 1041 permit would effectively achieve a similar result.
History of Past Town Council, Boards & Commission, or Other Discussions
The use of 1041 regulations was first discussed with the Town Council at the January 12, 2021 Study Session on land use. The Town Council expressed its support and gave Town staff general direction to prepare draft regulations for future consideration.
At the July 20, 2021 regular meeting, Town staff presented draft 1041 regulations to the Town Council. The Town Council gave direction to Town staff to move forward with outreach to the community regarding the proposed regulations.
An update on the proposed 1041 regulations is scheduled for the September 22, 2021 meeting of the Castle Rock Water Commission.
Notification and Outreach Efforts
On August 2, 2021, Town staff held an open house at Town Hall on the proposed 1041 regulations for the purpose of receiving public comments and questions sharing information with local citizens and the development community.
Notice of the September 21, 2021 public hearing regarding the designation of areas and activities of state interest and the adoption of 1041 regulations was published in the August 19, 2021 edition of the Douglas County News Press and posted on the Town website.
Budget Impact
There will be a budget impact in terms of the additional staff time that will be required to manage the new regulatory process
Discussion and Staff Recommendations
The first step in the process of adopting 1041 regulations is the designation public hearing. The purpose of the hearing is to formally designate areas or activities of state interest. According to the Act, the Town Council must take into account:
1. All testimony, evidence and documents taken and admitted at the hearing;
2. The intensity of current and foreseeable development pressures in the Town;
3. The boundaries of the proposed area of state interest; and
4. Reasons why the particular area or activity is of state interest, the dangers that would result from uncontrolled development of any such area or uncontrolled conduct of such activity, and the advantages of development of such area or conduct of such activity in a coordinated manner.
Town staff recommends that the Town Council designate the following area of state interest:
1. Areas around interchanges involving arterial highways as designated on the Areas Around Interchanges map presented at tonight’s meeting.
Town staff further recommends that the Town Council designate the following activities of state interest:
1. Site selection of arterial highways and interchanges and collector highways located wholly or partially within the municipal boundaries.
2. Site selection and construction of major new domestic water and sewage treatment systems and major extensions of existing domestic water and sewage treatment systems located wholly or partially within the Watershed Protection District as designated on the Watershed Protection District map presented at tonight’s meeting.
The second step in the process is to adopt regulations that govern the issuance of 1041 permits. According to these regulations, each permit applicant is required to meet with the Town Manager or the Manager’s designee prior to submitting an application. The purpose of the meeting is to discuss the location and nature of the proposed project, the degree of impacts associated with the proposed project, and mitigation proposed to offset such impacts. Following such meeting, the permit application and all accompanying materials are submitted to the Town, along with the permit application fee.
Once the application is determined to be complete, referrals are sent to the appropriate county, state, and federal agencies. A public hearing on the application is also scheduled before the Town Council. Notice of the hearing is given to the applicant and all interested parties. A staff report is prepared for the Town Council to consider no less than seven days prior to the hearing.
A quasi-judicial hearing is conducted before the Town Council in accordance with the requirements set forth in Section 17.04.090 of the Castle Rock Municipal Code. If the Town Council determines that the standards in the 1041 regulations are satisfied, it will approve the application. Conversely, if the Town Council determines that the application fails to satisfy any one of the standards it shall deny the application, or it may approve the application with conditions determined necessary to comply with applicable standards in the 1041 regulations.
Town staff recommends that the Town Council approve the ordinance presented at tonight’s meeting adopting a new Title 21 of the Castle Rock Municipal Code entitled “Guidelines and Regulations for Matters of State Interest.”
Update for Second Reading
At its September 21, 2021 meeting, Town Council designated the following activity of state interest:
Site selection and construction of major new domestic water and sewage treatment systems and major extensions of existing domestic water and sewage treatment systems located wholly or partially within the Watershed Protection District as designated on the Watershed Protection District map (the “Map”).
A question was raised as to whether the Map could be expanded to include territory occupied by the Town’s waterworks and water supply in the Cherry Creek Watershed. CR Water Director Mark Marlowe informed the Town Council of his intention to do so prior to next regular meeting of the Town Council.
Section 4.02.020 of the Castle Rock Municipal Code provides that the official Castle Rock Watershed Protection District Map may be updated administratively from time to time to reflect current water facilities and diversions. That update has been made and the revised Map is now published on the Town website. Town staff recommends that the Town Council take action to adopt the revised Map and approve the ordinance presented at tonight’s meeting on second and final reading.
Proposed Motions
Motion 1 -
“For purposes of designating the site selection and construction of major new domestic water and sewage treatment systems and major extensions of existing domestic water and sewage treatment systems as an area of state interest, I move to adopt the Watershed Protection District map presented at tonight’s meeting.”
Motion 2 -
“I move to adopt Ordinance No. 2021-028 as presented on second and final reading.”
Attachments
Attachment A: Ordinance
Exhibit 1: Areas Around Interchange Map
Exhibit 2: Watershed Protection District Map (updated for 2nd reading)
Attachment B: Public Notice Affidavit