To: Honorable Mayor and Members of Town Council
Through: David L. Corliss, Town Manager
From: Mark Marlowe, PE, Director of Castle Rock Water
Matt Benak, PE, Water Resources Manager
David van Dellen, PE, Stormwater Manager
Rick Schultz, Water Efficiency Supervisor
Linda Gould, Water Efficiency Specialist
Tina Close, Plan Review Supervisor
Title
Discussion/Direction: Proposed Amendments to Sections 4.04, 13.12, and 15.48.020 of the Castle Rock Municipal Code Related to Water Dedication, Public Services, and Landscape and Irrigation Criteria Manual [Entire Castle Rock service area]
Body
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Executive Summary
The purpose of this memorandum is to seek Town Council direction regarding proposed amendments to Sections 4.04, 13.12, and 15.48.020 of the Town of Castle Rock Municipal Code related to water dedication, public services, and the Landscape and Irrigation Criteria Manual (see Attachment A). A summary of the code changes is provided as Attachment B.
One of Castle Rock Water’s strategic goals is to achieve a per capita demand of 100 gallons per capita per day (gpcd) by 2050. With the current 5-year average at 118.4 gallons per person per day, this would account for an additional 15.5% decrease in water use and essentially would act as a new source of supply.
The one water conservation measure that likely will have the most impact will be a major limitation of turf grass for lawns. This conservation measure was identified in the 2021 Water Resources Strategic Master Plan adopted by Town Council on April 19, 2022. The Town already prohibits the use of Kentucky bluegrass (Poa pratensis) for all new construction turf grass areas. However, with nearly half of the Town’s annual water use still going to outdoor demands, major limitations on turf grasses for new development will be an important way to reduce demands going forward. Instead of turf grass for yards, Castle Rock Water recommends a ColoradoScape design be installed in the front and back yards of new homes. As defined in the Landscape and Irrigation Criteria Manual, ColoradoScape is “[a] natural landscape which uses low to very low water [less than ten (10) inches of water per year] plant material which blends in with the native Castle Rock landscapes. Plant material must be maintained in its natural form, utilizing a combination of hardscape and landscape materials which provide a variety of colors, textures, sizes, shapes and seasonal interest.”
Staff has estimated the reduction in outdoor irrigation necessary to meet the Town’s water conservation goal. If the Town no longer allows turf grass for any new front yards (it is the intention going forward that residential front yards will only be allowed to have a ColoradoScape design); limits backyards to no more than 500 square feet (sf) of irrigated turf; and the assumption is made that 125,000 people will be the ultimate population served, then the Town could see a reduction of 52% of future outdoor water use (based on what the outdoor water use would be without further turf limitations than today). This kind of reduction will allow the Town to achieve its water conservation goal. When present, swimming pools and water features will reduce the total amount of turf allowed by an equal area.
For non-residential customers, including apartment complexes, condominiums, townhomes, home-owners associations (HOA) common areas, and commercial businesses, the focus will be to eliminate non-functional turf. Non-functional turf is defined as those areas of turf where play or recreational activities cannot or do not take place. Passive use areas still will be necessary to walk dogs, recreate, or simply gather informally. Smaller areas of turf still can be installed for these passive uses although other options certainly will be encouraged and considered. ColoradoScape will be required where passive use areas are not in place. ColoradoScape areas will utilize point-source drip, inline drip tubing, or sub-surface drip irrigation.
If the Town’s existing customers (approximately 80,000 people) are able to reduce water consumption from 118 gallons per person per day to 100 gallons per person per day, the water use savings would represent approximately 1,610 acre feet per year (AF/yr). This kind of savings would reduce the need to develop new water supplies, potentially avoiding $56 million to over $72 million in future investments.
The new turf limits would go into effect on January 1, 2023 for all new homes issued building permits after that date. Because the new turf limits would take water conservation for new homes to a much higher level than current standards in the Town, the incentive programs currently being offered for water efficient new homes would become irrelevant. This includes Castle Rock Water’s 0.67 Single Family Equivalent (SFE) tap program and the Water Efficiency Plan (WEP) program. As part of the change to the new turf limits, Castle Rock Water recommends the discontinuation of these two programs. Instead, new homes after January 1, 2023, would pay reduced system development fees (SDFs) consistent with the fact that these homes will use less water than the current SFE. Staff proposes that all new homes after January 1, 2023 will have the potential to pay SDFs consistent with the 0.6 of an SFE which is the equivalent amount of water that these new homes are expected to use. Final SDFs will still be calculated based on equivalent flow through the meter, and as such, houses with significantly more fixtures may see SDFs above 0.6 of an SFE. SDFs will be calculated on a prorated scale from 0.67 SFE to 1.0 SFE similar to how they are currently calculated for WEPs. This will result in a potential savings of over $16,000 per new home on SDFs based on proposed 2023 SDFs for the various enterprise funds.
Castle Rock Water also recommends changes to the groundwater bank tracking requirements. Homes built under these new code changes will debit the water bank for a typical development based on the water demand requirement determined at the time of plat or site development plan approval and would be amended if changes are made after approval.
Due to the importance of ensuring the correct landscape is installed for both the front and backyards of new homes, Castle Rock Water will be strongly incentivizing that home builders install both the front and back yards. This is because it will cost Castle Rock Water staff significant labor and time to ensure that backyards, when installed by new residents, meet the new requirements. It is much more cost effective from a Castle Rock Water labor standpoint to have this work done by the home builder instead of the new home owner. In addition, this approach will ensure that landscapers that have the Qualified Water Efficient Landscaper (QWEL) training and registration with the Town do the work. Finally, having the home builders install the backyards will ensure that the water budget for each home actually matches the landscape installed. If home builders choose not to install both the front and backyards, then they will not receive the above described discounted SDF and will instead be required to pay the full fees associated with 1.0 SFE. In addition, these home builders will still be required to provide a backyard landscape design for the house that will set the initial water budget for the house and that the new homeowner can have installed.
Notification and Outreach Efforts
Castle Rock Water staff presented the information to:
• The Economic Development Council (EDC) on May 10, 2022 and June 17, 2022
• The EDC Water Subcommittee on December 17, 2021, January 21, 2022, February 18, 2022, March 18, 2022, April 15, 2022, May 20, 2022, June 17, 2022, July 15, 2022 and August 19, 2022.
• Town of Castle Rock Contractor’s Luncheon, introduced on December 15, 2021, re-introduced on March 16, 2022, with a formal presentation on May 18, 2022, and additional outreach on August 17, 2022.
• The Homebuilders Association on May 10, 2022 and May 24, 2022.
• The Developer’s Roundtable on August 17, 2022.
• The Economic Development Council Executive Board on August 18, 2022.
The concept also was part of presentations made to different organizations on the 2021 Water Resources Strategic Master Plan, including the Rotary Club of Castle Rock, the Chamber of Commerce’s Government Interest Committee, the Republican Breakfast, the Developers Roundtable several times and at an Open House at Castle Rock Water.
History of Past Town Council, Boards & Commissions, and Other Discussions
The concept was presented to the Castle Rock Water (CRW) Commission on February 23, 2022 and March 23, 2022 as part of presentations on the 2021 Water Resources Strategic Master Plan. The CRW Commission was supportive of the concept.
This concept was first introduced to Town Council on April 19, 2022 as part of the discussion and approval of the 2021 Water Resources Strategic Master Plan.
CRW Commission reviewed the ordinance at the August 31, 2022 meeting and recommended Council approval of the ordinance as introduced by staff.
Discussion
The Town of Castle Rock resides in a semi-arid, high desert climate receiving only 15 inches of annual precipitation on average. Much of the turf grass that has been planted around the community may require twice that amount of water to survive. Because of the demand that irrigating turf grass places on our water resources, Castle Rock Water has been offering rebates for turf removal since 2009. Other entities around the front range have similar programs, such as Centennial Water and Sanitation District serving Highlands Ranch, and the City of Aurora. In fact, Aurora has passed an ordinance requiring no turf in front yards and a 500 sf limit of turf in backyards similar to what Castle Rock is proposing. The turf replacement trend has now found state-wide support with the passage of House Bill HB22-1151 in June 2022. This new law provides an estimated four million dollars to be spent over the next two years to help land owners convert their yards from turf to xeriscape (similar to the Town’s ColoradoScape) landscapes. Some of the monies will be allocated to local governments (such as Castle Rock), who have existing turf replacement programs.
Reducing the amount of plant material that requires irrigation in Castle Rock’s service area also will help with water demand management. The Town has used mandatory water management for landscape irrigation since 1985 by providing an alternating irrigation schedule. Castle Rock’s water demands in the summer often spike to 4 to 5 times of what the demands are during the winter months putting strain on the water treatment, pumping, storage, and distribution infrastructure around the community.
For many years, Castle Rock Water has offered what is called the “0.67 SFE program.” Under this current program, a home that is not covered under a Water Efficiency Plan (WEP), that has a potential maximum flow rate through a meter of 20 gallons per minute (gpm) or less (which includes fixture counts for in-home and outdoor irrigation) and less than 1,400 square feet (sf) of total irrigated area will currently save $12,297 in system development fees (SDF). Homes built under the 0.67 SFE program require the home builder to install both the front yard and the backyard landscaping at the time of construction. Currently, there are 1,957 homes with a 0.67 SFE designation in Castle Rock.
A WEP home is given a 2 gpm credit for the indoor domestic water, which in many cases, allows them to meet a 0.67 single family equivalent (SFE) category. If the total indoor gpm, with 2 gpm credit plus outdoor irrigation is less than 20 gpm, they are charged for 0.67 SFE. If a home is over 20 gpm, the Town prorates the system development fee (SDF) between the actual SFE and 1 SFE. Those savings could be up to $12,297. To date, the Town has not had a WEP home go over 0.79 SFE, which equates to a savings of $7,826. WEP homes also have to provide front and back yard landscape, but do not have to meet the 1,400 sf total irrigated area, since they follow the water efficiency plan stipulations. To date, there are 345 homes with a WEP designation. Both the 0.67 SFE and WEP programs no longer will be relevant with the proposed changes to the landscape requirements. As such, the ordinance amendments described in this memorandum recommend discontinuation of the programs and removal of the incentives offered under them.
It is important to note that there will be an incentive under the new landscape criteria that will replace these existing incentives. Most houses under the new landscape criteria will achieve a 0.6 SFE designation by achieving a maximum flow rate through the meter of 18 gpm and will pay SDFs consistent with 0.6 of an SFE. SDFs will still be calculated based on the maximum calculated flow rate through a meter so homes with more fixtures may not achieve 18 gpm. CRW is recommending that we prorate fees between 0.67 SFEs and 1.0 SFE similar to what is currently done for houses built under a WEP. Potential savings on proposed 2023 SDFs could be as high as $16,000, higher than the maximum savings offered today under the 0.67 SFE Program and the WEP. This incentive will only be offered if a home builder installs both the front and backyard landscape consistent with Castle Rock Water’s existing incentive programs.
Castle Rock Water contracted with Norris Design, a local landscape and irrigation design and consulting firm, to prepare a series of lot-specific typical designs and water use analysis for ColoradoScape designs. Their scope includes a comprehensive design guideline (see Attachment C). These typical designs were used to estimate actual water use for the new homes. The calculated values are approximately half of a typical home in Castle Rock.
From this design guideline, cost estimates were solicited from several local production installation contractors. The preliminary estimates received have indicated the cost of ColoradoScape to be equal to or less than the cost of a similar traditional turf-centric landscape (see Attachment D). An in-depth landscape and irrigation design has been created and currently is being distributed to the same group of contractors for further cost comparison. The reduced SDF will also help cover any additional costs for home builders to install a ColoradoScape.
During the public outreach process for the proposed landscaping changes, some stakeholders expressed concerns regarding potential impacts to foundation design for residential construction. The Town has consulted with Ground Engineering to provide a geotechnical opinion regarding this matter. Based on this consultation, Castle Rock Water believes home builders can develop appropriate designs for foundations based on the new turf limits.
Finally, Castle Rock Water retained Wright Water Engineers, Inc., to perform an engineering analysis of stormwater implications due to the proposed limitations of irrigable turf area. This analysis is necessary to understand the potential impacts to storm drainage infrastructure and water quality on residential development as a result of restricting the maximum allowable turf and implementing ColoradoScape landscape standards. Castle Rock Water should have the results of their study by December 2022.
Budget Impact
There is no significant anticipated additional cost to the Town if Council approves the proposed code amendment. Some minor administrative work may be needed. The major impacts are to revenues from SDFs and savings on future water resources capital project needs. Since homes built under the new code will use significantly less water, a reduced SDF as low as 0.6 of the current SDF is being proposed. This will reduce SDF revenues by millions of dollars. If Castle Rock Water achieves its goal in additional water conservation, however, the savings in future capital investment needs could be $56 to $72 million based on present values. The proposed changes will help reduce outdoor water usage and, therefore, reduce the total amount of renewable water needed in the future and reduce the future peak water demands placed on the system to meet the summer irrigation demands of the community. The changes will also push some capital investments further out into the future. All of these impacts will save both existing rate payers and future customers on rates and fees. This is because less infrastructure and smaller infrastructure can be installed which ultimately will be less costly to operate and maintain and rehabilitate and replace in the long term.
For 2022, the SDFs for 0.67 SFE homes are $24,771 and for a standard ¾” tap home are $37,068. Average monthly water use for 0.67 SFE homes has been 5.04 kgal/month and for a standard ¾” tap home is 7.72 kgal/month. Preliminary calculations for the proposed new residential program indicate that estimated outdoor annual water usage will be 12,550 gallons on average. This is about 41% of the current estimated outdoor annual water use of a current 0.67 SFE home and the new program would have an estimated total annual water use of approximately 70% of a current 0.67 SFE home. This means new houses under the program will be approximately 0.47 SFE homes relative to our standard ¾” tap assuming the estimates by Norris Design hold true. In recognition of this, staff is proposing to allow the system development fee for new homes subject to the new requirements after January 1, 2023, to go as low as $25,231.80 which is 60% the proposed 2023 standard ¾” tap for Water, Wastewater and Renewable Water. Castle Rock Water will continue with our annual rates and fees study and update future SDFs for homes meeting the new standard in accordance with the result of the future studies.
In 2021, there were 404 homes of the total 959 built that were 0.67 and WEP homes. If we assume the same percentage of homes will be 0.67 and WEP homes in 2023, then system development fee revenues will be reduced by an estimated $7.4 million assuming that SDFs in 2023 are the same as they are in 2022. The good news is future capital costs also will be reduced significantly to serve the new homes as a result of the large reduction in water use. Furthermore, operating revenues will be reduced for new homes constructed after 2023 relative to existing homes due to the reduced outdoor usage and the fact that indoor water rates are lower than outdoor water rates. Revenues for these future houses are estimated to be 60% of current typical homes. These revenues and the required capacities for new capital projects will be incorporated into future rates and fees studies.
Recommendations
“I move to approve the changes as proposed, and direct staff to bring the Ordinance for Council consideration at the September 20, 2022 Council Meeting.”
Attachments
Attachment A: Draft Ordinance
Exhibit 1: Draft Manual
Attachment B: Summary of Changes to the Manual
Attachment C: ColoradoScape Design Guidelines
Attachment D: Cost Evaluations on Coloradoscape verse Turf