To: Members of the Castle Rock Water Commission
From: Mark Marlowe, P.E., Director of Castle Rock Water
Title
An Ordinance Amending Titles 3, 4, and 13 of the Castle Rock Municipal Code By Changing Stormwater Development Impact Fees, Water Resources System Development Fees, Water System Development Fees, Wastewater System Development Fees, Water Resources, Stormwater and Wastewater Rates, Meter Set Fees; and Making Certain Editorial Updates to Such Titles (2nd Reading) [Entire Town of Castle Rock and extraterritorial service areas]
Town Council Agenda Date: December 7, 2021
Body
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Executive Summary
The purpose of this memorandum is to request Town council approval on second reading of an ordinance amending titles 3, 4 and 13 of the Castle Rock Municipal Code by changing Stormwater Development Impact Fees, Renewable Water Resources System Development Fees, Water System Development Fees, Wastewater System Development Fees; Water Resources, Stormwater and Wastewater rates; meter set fees and rates for bulk water; and making certain editorial updates to such titles (Attachment A).
The Ordinance was developed from the staff recommendations presented to Council at the September 7, 2021 Council meeting and then updated after first reading in response to additional rates and fees modeling, the need to issue debt to avoid future large rate increases on existing customers, the changing environment with respect to competition for renewable water rights, the continued high growth rate in Town, and the need to move major capital projects forward to meet both growth and water quality challenges. The Specific changes include:
Water Fund
• No change in Water Rates
• 41.4% increase in Water System Development Fees (originally 7% increase in first reading with a ramp up to 41.4% over 5 years)
Water Resources Fund
• 3% increase in the Water Resources Rate
• 43% increase in the Renewable Water Resources System Development Fee (originally 15% increase in first reading with a ramp up to 43% over 5 years)
Stormwater Fund
• 2.5% increase in the Stormwater Rate
• 49.3% increase in Stormwater Development Impact Fees in Plum Creek (originally 8% increase in first reading with a ramp up to 49.3% over 5 years)
• 22.5% increase in Stormwater Development Impact Fees in Cherry Creek (originally 4% increase in first reading with a ramp up to 22.5% over 5 years)
Wastewater Fund
• 5% decrease in Wastewater Rates
• 22% increase in Wastewater System Development Fees (originally 4% increase in first reading with a ramp up to 22% over 5 years)
In order to develop the recommended changes to rates and fees for 2022, Staff completed the 2021 Annual Rates and Fees Study (Attachments B, C, D, E, & F). The annual study is critical to ensure Castle Rock Water fully re-evaluates the cost of service and updates the financial plans so that revenue requirements and resulting rates and fees are based on the best available current information going into the future.
The attached Staff Report (Attachment G) provides details on the rates and fees study and the development of the staff recommendations.
Notification and Outreach Efforts
Staff presented the changes to the proposed system development fees from first reading to second reading to the Developer’s Roundtable on November 17th, 2021. The Economic Development Council sent the power point presentation from the Developer’s Roundtable out to their full contact list after the meeting.
History of Past Town Council, Boards & Commissions, or Other Discussions
On November 23, 2010 with its adoption of the 2011-2015 Rates and Fees, Town Council requested annual updates each year thereafter with Castle Rock Water (CRW) Commission participation and Town Council adoption of endorsed recommendations. CRW Commission reviewed at least one aspect or component of the annual rates and fees study process and the 2020 and 2021 rates and fees studies at each of their meetings from October 2020 to August 2021 to provide staff with input. For a complete list of topics, please see the CRW Commission agendas.
On May 26, 2021, CRW Commission reviewed the Customer Characteristics Analysis for the 2021 rates and fees study with staff.
On July 28, 2021, the results of the 2021 annual rates and fees study were presented to CRW Commission by staff for discussion and direction. Generally, the CRW Commission was supportive of staff recommendations.
On August 25, 2021, the results of the 2021 annual rates and fees study were again presented to CRW Commission by staff. CRW Commission unanimously recommended Town Council approval of the rates and fees as presented by staff which are the same rates and fees recommendations presented in this memo.
On September 7, 2021, staff presented the proposed 2022 rates and fees to Town Council for discussion and direction. The general direction from Council was to finalize the proposed rates and fees with an ordinance and bring that back to Council for consideration at the September 21, 2021, meeting.
On September 21, 2021, staff presented the proposed 2022 rates and fees to Town Council on first reading. Council approved the proposed rates and fees and associated ordinance on first reading.
Budget Impact
The budget impact of the change in the recommended system development fees from first reading to second reading is an estimated $7.9M in 2022. This change will have cascading effects into subsequent budget years and needed rates and fees adjustments in those future years. The amount of debt that will need to be issued to meet capital needs for growth will be cut in half while ensuring that needed future rates and fees increases remain reasonable (3 to 5% per year)
Staff Recommendation
Staff and CRW Commission recommend approval of the ordinance as presented.
Proposed Motion
“I move to recommend to Town Council approval of the Ordinance as presented”
Attachments
Attachment A: Ordinance (2nd Reading)
Attachment B: Volume 1 (Rates) Draft
Attachment C: Volume 1 Appendix C: Customer Characteristics Memo
Attachment D: Volume 1 Appendix D: Volume 1 Stantec Review Letter
Attachment E: Volume 2 (System Development Fees) Draft
Attachment F: Volume 2 Appendix C: Volume 2 Stantec Review Letter
Attachment G: Staff Report