Diving Into Water Part Two
What's in the works, gulp
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WELCOME TO PART TWO
If you haven’t seen part one yet please take a look first.
OK LET’S KEEP GOING
Now we step into what happened in the past to look at what has been set in motion and what has been corrected by the city staff with approval by the council.
REMEMBER THAT DEVELOPER WATERY GRAVY TRAIN?
If you haven’t read my report on how developers are required to dedicate a supply of water in order to build in Lafayette I would suggest you stop and read it now. Then after you have stopped screaming and tossing pillows at the wall, come back and continue.
THE GRAVY TRAIN SPIGOT HAS BEEN TURNED OFF
As you can see in the post about the developer’s smoking deal new city staffers discovered the changes that were made by past staffers, and approved by past councils. They brought those findings to the council in November 2020 after digging in deep to get a full picture, and in 2021 after a variety of information was provided the council approved the change in rates for new developments going forward.
HOLD ON, WE STILL HAVE WATER RELATED COMMITMENTS AND PLANS
In order to ensure there is enough water for current and future residents a variety of plans were made, again by a past administration and councils, to increase our water supply. Let’s take a look. I went back to an executive summary from that first presentation given by city staff to the council in November 2020. I am going to copy and paste sections from that summary that detail each part of the plan.
If you want to read the entire summary yourself, great, here it is.
BUT FIRST, WHAT THE HECK WAS GOING ON HERE?
I find the section below (in italics) taken from the 2020 executive summary interesting. 2004 was the last time a water demand study was conducted.
Remember in part one I shared a screenshot from the city website regarding the ballot issue for the Public Safety Tax?
I point you to this section:
“Lafayette, like much of the Front Range, has seen significant growth. Our population has grown from 24,500 to more than 32,400 - a 32% increase - from 2010 to 2020.”
A reminder:
2014 - changes to allow developers to chose to bring their own water or pay cash-in-lieu
2016 - the rate for the cash-in-lieu option was set to low = smoking deal for developers.
In 2014 a consultant was hired to update the study. The city staff asked the consultant to make technical changes to their analysis. The consultant declined. The changes requested were to support lower water demands. Why would staff ask a consultant to change their analysis to lower the water demands during a period of rapid growth and why would the consultant refuse? This ended with no update to the water demand study from 2004.
“Water demands are projected through analysis of current use, history, trends, and anticipated growth. The City last completed a water demand study in 2004. A draft update was produced by a consultant in 2014, but was never finalized or accepted by the City after the consultant declined to make changes to the technical analysis requested by former City staff to support lower water demands. Current staff is developing a request for proposals for a new demand study to be initiated in 2021. The study will consider updated growth projections established through the comprehensive plan, more recent use data and trends, as well as consideration of more modern approaches to assessing supply reliability and drought resilience.
The City has already invested in or committed to a variety of water supply projects based on the 2004 demand study. These include:”
EDITED ON 5/12/23 TO ADD
After I wrote this piece I received an update from our Public Works Director, Jeff Arthur. He gave me new information and costs for the following projects. Find that update here: Diving Into Water Part Two A
GOOSE HAVEN RESERVOIR COMPLEX EXPANSION - INCREASE STORAGE
From the 2020 executive summary:
“Goose Haven Reservoir Complex Expansion
This project involves construction of additional storage capacity at the City’s Goose Haven Reservoir Complex located on SH287 near Jasper Road. The project does not involve “new” water and instead is intended to increase the City’s ability to utilize existing water rights. Under current conditions, there are scenarios where the City has rights to divert additional water from Boulder Creek, but is unable to do so because of lack of storage. A component of the Goose Haven project is the development of a water rights “exchange” that would allow the City to expand its ability to divert water from Boulder Creek through managed discharge of treated effluent from the City’s Water Reclamation Facility. This concept involves construction of an additional reservoir at Goose Haven, a 7-mile pipeline, two pumping stations, and a secondary disinfection system. While the project will have substantially higher operating costs than other water sources, requires substantial new infrastructure, and will only be functional during a limited range of scenarios, it was previously determined to be a viable project.
The Goose Haven Reservoir Complex Expansion remains in various stages of planning, design, financing, and construction. The assumptions previously used to determine costs/benefit focused on creating a perceived inexpensive water source to expedite the pace of development in the City and do not reflect actual City costs. Further, the project involves an unconventional construction contract that reduced the City’s payments during the initial construction period, but requires a significant cash outlay upon completion, including approximately $16M in remaining construction costs and a required dedication of water rights to the construction contractor currently estimated at $15M (or equivalent cash payment to the contractor). The construction of infrastructure required to support the exchange component, including construction of the reuse pipeline, pump stations, and disinfection facility, has been delayed pending development of a funding strategy.”
WINDY GAP FIRMING PROJECT - IMPROVE RELIABILITY
From the 2020 executive summary:
“Similar to the Goose Haven project, the Windy Gap Firming Project represents an effort to improve the reliability of water supply from an existing source. The Windy Gap project diverts water from the Colorado River basin and delivers it to the front range through much of the same infrastructure used to deliver C-BT. The size of the actual Windy Gap Reservoir is such that it has not been able to provide a reliable yield. The firming project involves construction of a new reservoir called Chimney Hollow that will allow additional storage during wet years that can then be delivered to the front range during dry years. The City had initially planned to fund its share of project construction through a one-time payment of approximately $6M in 2020. Based on the lack of a clear financial plan to fund the city’s overall water needs, the City recently signed an agreement to finance the project over 30-years with an annual debt service of approximately $600,000.”
GROSS RESERVOIR EXPANSION - INCREASE SUPPLY
From the 2020 executive summary:
“Gross Reservoir is owned and operated by Denver Water. Denver Water is currently pursuing the permitting and legal processes to significantly expand the reservoir to help meet its long-term water supply needs. In partnership with the City of Boulder, the City of Lafayette negotiated an agreement in which Denver Water will provide capacity in the expanded reservoir to support in-stream flows in South Boulder Creek and delivery of water to Baseline Reservoir during winter months. The City’s participation in the Gross Expansion involves a relatively small amount of water and a relatively minor expenditure, but was determined to be of unique strategic value in supporting the City’s overall portfolio. Construction costs are estimated at approximately $2.4M.”
NORTHERN INTEGRATED SUPPLY PROJECT (NISP) - INCREASE SUPPLY
From the 2020 executive summary:
“Similar to Windy Gap, NISP is a proposed regional project led by Northern Water. NISP involves construction of several major reservoirs and pipelines that will divert and capture water from the Colorado River and deliver it to communities on the Front Range. As a partner in the project, the City is assessed for costs associated with design and permitting on an ongoing basis. Current estimates are that the City’s share of actual construction will be approximately $67M. This level of cost would need to be financed with an annual debt service payment of approximately $6.7M annually for 30 years. An additional $20M in costs for pipe infrastructure to deliver NISP water to the City is also anticipated.”
CHECK OUT THE STATED USES FOR THE CASH-IN-LIEU CONTRIBUTIONS FROM DEVELOPERS
Remember they were getting a fabo deal paying way, way, way less than the cost of water. Now look at what other uses are specified for that money. Not only was it to be used for buying water rights, (actual water) but also for the purchase of raw water storage (reservoirs) or capital improvements to enhance storage for raw water.
From the 2020 executive summary:
“Water rights cash-in-lieu payments may only be used to defray costs associated with increasing water supply (specifically, purchase of water rights, purchase of raw water storage space, or financing the construction of capital improvement projects designed to enhance the city's raw water storage capabilities) and may not be used to offset general operating costs for the water utility. (Code Sec. 120-94(c).)”
2020 TOTAL ESTIMATED COSTS FOR ALL THE PROJECTS
Factor in that construction costs have most likely increased since then.
From the 2020 executive summary:
“The City’s estimated outstanding costs for water supply projects is approximately $143M (not including the substantial dollars spent to date).
Major water supply projects include: NISP $87M
Windy Gap Firming $6M ($600,000 debt service to be paid annually over 30 years = $18M total)
Goose Haven Reservoir Complex Expansion $47.5M
Gross Reservoir Expansion $2.4M
When considering debt financing, a rough rule of thumb is that a $1M bond requires $100,000/year in debt service payments. As with any other types of debt, the total amount paid is substantially more than the construction cost due to interest payments.”
WHO PAYS? REMEMBER THESE ARE ENTERPRISE FUNDS, THE CUSTOMERS PAY
This is the situation the current staff and council are faced with.
CHANGES IN THE TIERS
Apologies for not having this info at hand but somewhere along the line since 2020 the council approved adjusting the amount of water within each tier. If someone really wants that info I can ask staff.
JANUARY 2023 5% RATE INCREASE
From the city website:
Karen, I read both Parts 1 & 2 of the Water Issue in Lafayette. I like the humor and sarcasm sprinkled throughout the articles. This is a very serious issue for the City, and the prospect of significant water bill increases curently and in the future are real. Not much we can do about it except pay the piper, I think. So, I'll pay my monthly water bill with a smile on my face :)