HomeMy WebLinkAbout6 - Update, discussion and feedback on the draft City Council Study Session Summary on Water RightsCITY OF BOULDER
WATER RESOURCES ~DVISORY B4ARD
AGEND~ ITEM
1!'IEETING DATE: 117arch 17, 2008
AGENDA TITLE: Llpdate, discussion and feedback on the draft City Council Study
Session Summary on Water Budgets
PRESENTER: Ned Williams, Director of Public Work for Utilities
EYECITTIVE SUl~~IM~R~':
The City Council held a Study Session on Water Budgets on February 12, 2008.
The City l~Ianager has requested feedback fi•am the tiVRAB before making his fmal
decision about next steps. ~s of March 7, when this memo ~~~as finalized, the City Manager
was still reviewing the feedback received at the Study Session and had not yet made a
preliminary decision as to nezt steps and implementation. I eYpect the City Nlanager to complete
his retiriew before the March 17 ~~'R~B meeting. Follo~~~ing the meeting, staff ~~ill transmit this
information, probably via e-mail and web site postings. This information should include the nezt
steps ~i~ith respect to r~~ater budgets changes, including implementation and procedures required
for the Water Budget Rules and City Code.
Staff ~~~ould like to submit a Council agenda item for acceptance of the Study Session summat•y
minutes on Nlarch 19 in order to be included in the _~pril 1, 2008 Council ~genda.
PRELIl1-ZIN~RY CITY C:"OLTNC'IL STUD~' SESSION SUNINL~RY:
PRESENT
City Council: IVlayor Shaun McGrath, Deputy IVlayor Crystal Gray, City Council members Matt
Appelbaum, Nlacon Cowles, ~4ngelique Espinoza, Lisa Nlorzel, Susan Osboi-ne and Ken t~'ilson.
b~'~ter Resources Advisory Board: Chair Jim Knopf, membei•s in the audience: Bill DeC~reo
and Kellv DiNatale.
Staff inembers: City Nlanager Frank Bruno, Deputy City Manager Stephanie Grainger, ~cting
City Attorney Jerry Gordon, Bob Eichem, Robert Williams, Bronwyn t~Veygandt, Carol Linn,
Erin Kintzle, Jody JacoUson, ~1d Joanna Crean.
Consultant: Todd Cristiano, Red ~~il: Consulting
AGEND~ ITE1~2 # P~GE
PURPOSE
The purposes of the Feb. 12, 2448 Study Session were to:
¦ Provide an overview of the new water budget billing methodology;
¦ Discuss the effectiveness of the water budget system based on 2447 data;
¦ Receive feedback from Council on further evaluations related to 1) potential changes to
water budgets and 2) financial/revenue impacts; and
¦ Discuss possible next steps.
OVERVIEW OF THE PRESENTATION AND DISCUSSION
City Manager Frank Bruno began the presentation with opening remarks. Mr. Bruno pointed out
that when City Council first approved the water budgets in December 2444, it was acknowledged
that the Commercial Industrial Institutional (CII) budgets would need to be further evaluated and
potentially changed. The City Manager acknowledged that there was a desire to change the
budget methodology for CII budgets and other customer classes in early 2447. However, he felt
that while he had the authority as City Manager to change the methodology, he wanted Council
to be involved in any changes since there could be revenue impacts. Mr. Bruno emphasized that
the City staff are supportive of making changes to the water budget system in an effort to make it
more successful.
Director of Public Works for Utilities Robert (Ned) Williams introduced the team that has been
involved in water budget implementation, including the Water Resources Advisory Board
(WRAB); staff from the Public Works, Information Resources, Information Technology, City
Attorney's Office, and Finance departments; and Red Oak Consulting. Mr. Williams then
described the new water budget rate structure that was implemented in January 2407. Utility
Billing Supervisor Bronwyn Weygandt reviewed how water budgets are calculated for each
customer class. Mr. Williams summarized the data collected from the first year of water budgets
(2447) and highlighted that the water budget system performed as projected in terms of water use
and revenue.
Ms. Weygandt summarized the concerns and suggestions staff received throughout the first year.
To address these concerns, staff and WRAB together developed the following options for
changing the budgets:
¦ Multifamily Residential Budgets:
o Adjustments for number of bedrooms (up to 5 bedrooms)
¦ CII Budgets:
o Allow customers to choose from a "menu" of four budget types:
¦ Average Monthly Use (AMU)
¦ Historical Monthly Use (HMU)
¦ Indoor-Outdoor
¦ Efficiency Standard
¦ Irrigation-Only Budgets:
o Include public right-of--way (ROW)
¦ Looped Water Systems:
o Combine water meters for budgeting and billing purposes
AGENDA ITEM # PAGE
Mr. Williams explained that making all the changes would result in an on-going annual revenue
reduction of $1,272,000. To offset this revenue reduction, staff could reduce capital projects,
reduce maintenance projects, reduce operational programs, decrease reserves, increase rates or
combine all these options.
Jim Knopf, Chair of the WRAB, presented WRAB's thoughts and ideas related to water budgets
and emphasized that no customer class should subsidize or be subsidized and that all customers
should pay the cost of service. He also explained WRAB's support for the changes to the water
budgets as outlined earlier in the presentation.
Mr. Williams concluded the presentation by recognizing that Council, the City Manager and the
community must find the right balance between the cost of additional enhancements to water
budgets and their added value to the water budget program.
COUNCIL RESPONSES
Following the presentation, Council members were asked to provide feedback on:
¦ Options to change the water budget program as presented at the Study Session.
¦ Feedback on ideas for addressing the projected $1.2 million revenue reduction (if all
changes are made).
Overall, there seemed to be general support for making some changes to the water budgets. The
areas where there appeared to be agreement from Council members on changes included:
¦ Looped Water Systems: combine water meters for budget and billing purposes.
¦ Irrigation-Only Accounts: include public ROW.
The areas where there appeared to be general agreement from Council members on changes, but
also some concerns included:
¦ Multifamily Residential Changes to Budgets:
o Concerns about subsidizing.
o Concerns about vacancy rates.
o Concerns about zoning allowance regarding the number of unrelated persons in a
dwelling.
The areas where there appeared to be multiple concerns from Council members included:
¦ CII Changes to Budgets:
o Concerns about subsidizing.
o Concerns about missing the conservation message.
o Support for moving forward with changes now, but the need for a better solution
in the future.
Council did not support increasing monthly water rates in 2008 in order to address the $1.2
million revenue shortfall if all the proposed changes are made. Council wanted to make a
decision in the next year or two based on revenue impacts. Some Council members also
indicated that the Utilities Division needs to review expenses and find efficiencies rather than
raising rates.
AGENDA ITEM # PAGE
Additional concerns and issues that Council members raised during the water budget discussion
included the following:
¦ Moving to real-time evapotranspiration (ET).
¦ Integrating the results of the Plant Investment Fee (PIF) study.
¦ Ratcheting down the water application rate as irrigable area increases for all customer
classes (not just single-family residential).
¦ Including public ROW for all accounts (not just irrigation-only).
¦ Requiring CII accounts to have irrigation-only meters for all large outdoor irrigation
areas.
¦ Fixing "common sense" issues now.
¦ Concerns about subsidizing customers if changes are made.
Questions that Council members asked during the presentation but were not answered in the
Study Session are provided below. Staff will provide the answers to these questions in a future
study session or Weekly Information Packet (WIP).
¦ Do municipal accounts have water budgets? Do we subsidize city departments' water
use? (Response in a future WIP ((a project is currently underway to develop and report
departmental water use/budgets}).
¦ How will the Carter Lake Pipeline, replacing water meters, Town of Nederland's
Wastewater Treatment Plant, and buying non-Colorado River water supplies impact
rates? (Response in a future WIP).
¦ How will the Plant Investment Fee (PIF) Study, Source Water Master Plan, and water
budgets come together? (Response at the April 22 Study Session on PIFs).
NEXT STEPS
(Currently under review and development by the CityNlanager)
AGENDA ITEM # PAGE
CITY OF BOULDER
CITY COUNCIL AGENDA ITEM
MEETING DATE: April 1, 2008
AGENDA TITLE: Consideration of a motion to accept the February 12, 2448 Study
Session summary regarding Water Budgets.
PRESENTERS: Robert Williams, Director of Public Works for Utilities
Carol Linn, Utilities Financial Manager
Bronwyn Weygandt, Utilities Billing Services Supervisor
EXECUTIVE SUMMARY:
The purpose of this agenda item is to accept the summary of the City Council study
session on water budgets. The purpose of the study session ~i-~as to provide council with
information about water budgets and to discuss the effectiveness of water budgets based
upon 2447 data. The study session as also an opportunity for council to provide
feedback on potential changes to the water budget system and to discuss possible next
steps.
Attached is a surnmaiy of the issues discussed and the questions that were asked at the
study session. There were several unanst~~ ered questions asked at the study session that
staff indicated it ould follo~~ -up on and respond to council These questions are
identified in the attachment along with staff s proposal for how the questions will be
addressed.
T1ie study session summary «as presented to the Water Resources Advisory Board
(~?VRAB} on ~-larch 17, 2008. The ~?VRAB feedback and comments were: (to be
completed after the ~~'R_~B meeting}
STAFF RECO11lMENDATION:
Staff recommends that City Council accept the summary of the Feb. 12, 2448 study
session on water budgets.
Approved By:
Frank W. Bruno,
City 1Vlanager
ATTACHMENTS:
¦ Attachment A -Feb. 12, 2448 Study Session Summary on Water Budgets
AGENDA ITEM # PAGE 1
ATTACHMENT A
Feb. 12, 2008
Study Session on Water Budgets Summary
PRESENT
City Council: Mayor Shaun McGrath, Deputy Mayor Crystal Gray, City Council
members Matt Appelbaum, Macon Cowles, Angelique Espinoza, Lisa Morzel, Susan
Osborne and Ken Wilson.
Water Resources Advisory Board: Chair Jim Kopf, members in the audience: Bill
DeOreo and Kelly DiNatale.
Staff members: City Manager Frank Bruno, Deputy City Manager Stephanie Grainger,
Acting City Attorney Jerzy Gordon, Bob Eichem, Robert ~Arilliams, Bronwyn ~~'eygandt,
Carol Linn, Erin Kintzle, Jody Jacobson, and Joanna. Crean.
Consultant: Todd Cristiano, Red Oak Consulting
PURPOSE
The purposes of the Feb. 12, 2008 study session ~i-ere to:
¦ Provide an overview of the new water budget billing methodology;
¦ Discuss the effectiveness of the water budget system based upon 2007 data;
¦ Receive feedback from council on fui-the~r evahxations related to 1) potential
changes to water budgets and 2) financial/'revenue impacts; and
¦ Discuss possible next steps.
OVERVIE«' OF THE PRESENTATION AND DISCUSSION
The presentation began with opening remarks made by City Manager Frank Bruno. The
city manager pointed out that when water budgets were first approved by City Council in
December 2004, it ~i-~as ackiio~i-~ledged that the Commercial Industrial Institutional (CII)
budgets would need to be further evaluated and potentially changed. The city manager
acl~iowledged that there was a desire to change the CII (and other customer classes)
budget methodology in early 2007; however, he felt that while he had the authority as
city manager to change the methodology, he wanted council to be involved in the
proposed changes because council had given the original policy guidance on the water
budget methodology for customer classes and because there could be significant revenue
impacts. Mr. Bruno emphasized that the city staff are supportive of making changes to
the water budget system.
Director of Public Works for Utilities Robert (Ned} Williams introduced the team that
has been involved in the water budget implementation, including the Water Resources
Advisory Board (V4'RAB); staff from the Public Works, Information Resources,
Information Technology, City Attorney's Office, and Finance departments; and Red Oak
Consulting. Mr. V4~illiams then explained the new water budget rate structure that was
implemented in January 2007, and Utility Billing Supervisor Bronwyn Weygandt
AGENDA ITEM # PAGE 2
reviewed how water budgets are calculated for each customer class. Mr. Williams
continued the presentation by summarizing the data that was collected fi•om the first year
(2447) of water budgets and highlighted that the water budget system performed as
projected in terms of water use and revenue.
The concerns and suggestions staff received throughout the first year were summarized.
To address these concerns, staff and WRAB together developed the following options for
changing budgets:
¦ Multifamily Residential Budgets:
o Adjustments for number of bedrooms (up to 5 bedrooms)
¦ CII Budgets:
o Allow customers to choose from a "menu'' of four budget types:
¦ Average Monthly Use (AI~ILT)
¦ Historical Monthly Use (HI~ILT) i
¦ Indoor-Outdoor
¦ Efficiency Standard
¦ Irrigation-Only Budgets:
o Include public right-of--way (RO~~')
¦ Looped Water Systems:
o Combine water meters for budgeting and billing purposes
To make all of the above changes would result in an ongoing annual revenue reduction of
$1,272,044. There are several options to offset this revenue reduction, including reduce
capital projects, reduce maintenance projects, reduce operational programs, decrease
reserves, increase rates or use a combination of all options.
The chair of the ~A'ater Resources Advisory Board («TRAB) Jim Knopf explained
WRAB's thoughts and ideas related to water budgets and emphasized that no customer
class should subsidize another nor be subsidized and that all customers should pay the
cost of serf--ice. He also explained WRAB's support for the proposed changes to the water
budgets.
Mr. V4'illiams concluded the presentation by recognizing that Council, the city manager
and the community has to find the right balance between the cost of additional
enhancements to water budgets and the added value to the water budget program.
COUNCIL RESPONSES
Following the presentation, council members were asked to provide feedback on:
¦ Options to change the water budget program as presented at the study session.
¦ Feedback on ideas for addressing the projected $1.2 million reduction in revenue
(if all changes are made).
Overall, there seemed to be general support for making changes to the water budgets. The
areas where there appeared to be general agreement from the council included the
following:
¦ Looped Water Systems: combine water meters for budget and billing purposes.
AGENDA ITEM # PAGE 3
¦ Irrigation-only Accounts: include public ROW.
The areas where there appeared to be general agreement from council to proceed with
changes, but where there were some concerns expressed include:
¦ 11~Iultifamily Residential Changes to Budgets:
o Concerns about this class being subsidized by other classes.
o Concerns about vacancy rates.
o Concerns about zoning allowance regarding the number of unrelated
persons in a dwelling.
The area where there did not appear to be clear agreement was on the
commercial/industrial/institutional (CII) class and included:
¦ CII Changes to Budgets:
o Concerns about the class being subsidized by other classes.
o Concerns about not encouraging or "incentivizing" ~i-~ater conservation
goals of water budgets by allowing historical use to continue.
There seemed to be general support for mot%ing forward no~~~ with some change to this
CII class, but with the caveat that a better solution or approach should be considered in
the future. Under the "Next Steps" section of the memorandum, staff has outlined a
proposed approach to start this process.
Regarding how to handle the $1.2 million ret--enue shortfall if all the proposed changes
were made, council did not indicate inte~re~st in increasing monthly water rates in 2008.
Council generally seemed to support adopting a "wait and see" approach to the potential
revenue impacts and making a decision in the next. year or two after actual impacts, if
any, are realized. There was also interest. in having the Utilities Division undertake a
review of expenses and find efficiencies before considering raising rates.
Additional issues that were raised during the study session and that staffwill further
consider and analyze as part of its work plan for 2008 and beyond include the following:
¦ Move to real-tune evapotranspiration (ET).
¦ Integrate the results of the Plant Investment Fee (PIF) study.
¦ Ratchet down the water application rate as the irrigable area increases, for all
customer classes (not just single-family residential).
¦ Include public ROW for all accounts (not just irrigation-only).
¦ Require CII accounts to have irrigation-only meters for all large outdoor irrigation
areas.
¦ Fix "common sense" issues now.
¦ Concerns about subsidizing customers if changes are made.
Questions that were asked by council members during the presentation but were not
answered in the study session are identified below. Staff will provide the answers to these
questions in upcoming Weekly Information Packet (WIP) items or at a future study
session.
AGENDA ITEM # PAGE 4
¦ Do municipal accounts have water budgets? Do we subsidize city departments'
water use? A project is currently underway to develop and report departmental
water use/budgets. More information will be provided in a WIP.
¦ How will Carter Lake Pipeline, replacing water meters, Town of Nederland's
Wastewater Treatment Plant, and buying non-Colorado River water supplies
impact rates? (WIP)
¦ How will the Plant Investment Fee (PIF) Study, Source Water Master Plan, and
water budgets come together`? (Apri122 study session on PIFs.)
NEXT STEPS
Based on council feedback at the study session, staff is proceeding to implement water
budget changes as noted below. In response to council feedback, staff is also further
evaluating the relationships between the Rau Water Master Plan, Water Budget and Plant
Investment Fees to determine if refinements to options andior potential phasing of future
changes to water budgets, particularly for CII customers, may also advance goals and
objectives. All computer billing system programming changes and public information
notices will take approximately 45-90 days to complete. ~-Zany ofthe~ changes may be
implemented in time for the June utility bill, which will capture the beginning of the
three-month (June, July and August) peak irrigation season. For any changes which are
not implemented until later, staffwill make the changes retroactive to the June bill and
provide a credit, if applicable, for those changes requested in 2008 by each customer.
Changes to Methodologies for Customer Classes:
¦ IVlultifamily Residential Adjustments ~~-i11 be~ allo~~ ed for number of bedrooms
(up to 5 bedrooms).
LJse an indoor allocation of 4,000 gal/living unit, up to and including a
t~i~o-bedroom unit, as the basis. Customers could apply for an adjustment
if the nurnber of bedrooms i11 a living unit exceeded two, in which case, an
additional bedroom ~~~ould receive an additional 1,000 gal/unit/month.
The total monthly indoor allocation per unit would not exceed 7,000
gallons per unit, «hich is the indoor allocation for single-family
residential customers. All adjustment requests for bedrooms would need to
be submitted by the property owner, and the city would accept the owner's
signature as validation of the number of bedrooms.
¦ Commercial Industrial Institutional (CII) -CII customers will be allowed the
choice of one of the following options. A customer would only be able to change
options one time per calendar year:
o Ali-ZU (Average Monthly Use) -This is the current methodology used for
all CII accounts. It is defined as the historical average annual use divided
by 12 so that every month has the same budget. The AIVIU will be the
default methodology unless a customer requests to switch to one of the
other three approved options.
o HA~IU (Historical Monthly Use) -This option is defined as the historical
monthly water use for each month (January three-year historical average
AGENDA ITEM # PAGE 5
¦ HMU will result in monthly wastewater charges based on all water
used, which could include water used for irrigation (this is not a
change to the current practice).
Staff agrees with the concern expressed by some council members at the
study session that moving to the HMU approach does not encourage water
conversation as it uses historically monthly use as the basis on the water
budget. If a commercial account has had an inefficient water system use
this use will form the basis for the HMU and does not encourage
conservation.
To address this issue, staff will look into ways to further encourage water
conservation for the HMU option as well as for all the other
"methodology" options for all user classes and will return to council with
this information. Staff will assess the actual use and revenue impacts from
the HMU changes for the remainder of 2008 and for 2009, will analyze
this data and provide council with conservation options in 2009 during the
development of the 2010 budget. If council selects Borne additional
conservation options to implement, these changes could be implemented
in 2010.
o Indoor/Outdoor -This option is defined as an indoor allocation based on
the most recent Average t~L~inter Consumption (AWC) and an outdoor
allocation based on irrigable area (including public ROW), using an
application rate of 15 gallons per square foot (gpsf} per irrigation season
and shaped based on historical monthly Evapotranspiration (ET} with an
additional one percent allocation in the winter months.
¦ Indoori0utdoor ~~~i11 result in wastewater charges based on AWC
only, thus avoiding wastewater charges on outdoor water use.
(This is a change from current practice for wastewater charges on
CII accounts but is similar to single-family residential accounts).
o Efficiency-Standard Budget -This option is determined by a specif°ic
review of the customer's indoor and outdoor uses based on reasonable and
documented efficiency standards, as determined by a registered
professional engineer's evaluation and audit of the customer's water use,
facilities and practices. The professional engineer's recommendation of
the Efficiency-Standard water budget to be used will be reviewed and
approved by the city prior to its implementation and use. During 2008, the
city will use the Planning and Development Services Schedule of Fees to
recover costs associated with its review and approval process for this
option. During 2008, the city uses a billing rate of $131/hour for these
AGENDA ITEM # PAGE 6
types of services and there will be a one-hour minimum charge to review
the professional engineer's report and recommendation.
¦ Irrigation-Only -The public right-of--way (ROW) will automatically be included
and added to the irrigable area for all irrigation-only accounts, as this area is often
a large area for this account type.
¦ Looped Water Systems -Water meters will be cornbined for budgeting and billing
purposes.
Some customers in the multifamily, CII and in•igation-only customer
classes have a "looped" water system in hich multiple water meters are
used in an effort to increase reliability and to provide redundancy to their
water system.
Revise the Water Budget Rules
The city manager has authority to approve and revise ~~'ater Budget Rules in order to
implement the changes listed above, except for the ordinance changes described in the
following "bullet." As with all rule changes, the public will have an opportunity to
comment before the rules are finalized. It is anticipated that the revision process will
begin in early April.
¦ An ordinance to change the city code will be presented to council for first reading
in April. An ordinance is required so that the CII Indoor-Outdoor option can
result in wastewater charges based on AWC only, thus avoiding wastewater
charges on the outdoor water use.
Water Conservation Considerations and Assessment
As was me~ntione~d above in the CII customer class changes, during 2008 ai7d 2009, staff
will monitor and evaluate the effectiveness of water budgets and its impact on water
conseri--ation. Potential changes to water budgets to all classes (single family,
multifamily, CII and irrigation-only) that «~i11 further encourage water conservation will
be identified in 2009 for consideration during the 2010 budget process.
AGENDA ITEM # PAGE 7