You were subsidizing developers water use for years
A slightly edited Nextdoor post I wrote in 2021
WRITTEN ON NEXTDOOR IN 2021
I wrote this in 2021 to inform residents about a serious issue with our water. At the end of the post I provided contact information for people to write to the council or call in during the meeting when council would be voting on the issue I describe here.
It was a pleasure to be in the room as Mayor Harkins read message after message into the record asking council to approve the water rate increase, which they did 7-0. I have attended a gazillion council meetings but I have never heard this many messages come in on a single topic before, all in support.
I am sharing this piece on Substack because I think it’s important background information to have as we face potential water rate increases coupled with ongoing concerns about a lack of water. I expect to be linking to this piece in future reports on water.
Well dear Nextdorians, there will be no neutral comments from me in this post! The bad news is that you will join me in being livid as you read this. The good news is I waited months to bring this to you until there was action you could take and that time is now. I hope you will help.
So grab your blood pressure meds, a glass of your favorite calming beverage or perhaps a hit of some ganja and read on. For my own amusement I will attempt to use as many water related words as I can.
YOU HAVE BEEN SUBSIDIZING DEVELOPERS WATER FEES FOR YEARS!
(Take your first calming sip right now!)
HOW THIS WAS UNCOVERED - DRIP, DRIP, DRIP
Yup it’s true we have been subsidizing developers. If it wasn’t for a change in staffing at city hall we may never know about this. But within the last couple of years we have a new city administrator, public works director, planning and building director and city attorney.
As the new staff started to dig into their positions it was discovered that the previous administration, with approval by some previous councils, set up a sweetheart water deal for developers. Or as the city administrator has called it “a smoking deal”. *insert scream here, take a drink, read on*
BACK IN THE DAY - BRING YER OWN WATER
This whole water deal is very complex in Colorado, it includes sellers, brokers, buyers, water shares, acre feet and other mind numbing details which I am going to try and avoid as best as I can. It’s been compared to real estate if that gives you any idea.
Anyway, when I was active in the past, developers were required to bring their own water to the table for their developments. In some circumstances they were allowed to pay cash-in-lieu instead. In other words this is what water costs, you guys give the city the money and the staff will get the water. This was not the norm. The norm was bring yer own water.
SUDDENLY IN 2014 DEVELOPERS ARE GIVEN A CHOICE
In 2014 the council passed a resolution that said hey developers why don’t you decide if you want to bring your own water or if you want to give us cash-in-lieu instead. Weird. I have wondered for years why this changed.
SORRY BUT I HAVE TO SPRINKLE IN SOME BORING NUMBERS AND DETAILS HERE
( Take another couple of sips of that fine beverage, ahhh there you go)
For the most part our water comes from the Colorado Big Thompson Project (C-BT)
Shares in the C-BT are purchased and added to the city’s water portfolio.
As you can imagine the cost of water ebbs and flows, high snowpack more water, low snowpack less water. Each year the amount of water and cost per share, is set by the Northern Colorado Water Conservancy District Board of Directors.
Lafayette sets its water dedication based on the assumption that one share will yield .07 acre foot (AF) of water a year.
Each single family home requires .5 AF, multi-family with no outdoor irrigation is .25 AF. Assuming .7 AF per share it takes 1.4 shares to gain the 1 AF needed for two single family units.
WATCH OUT FOLKS WE HIT THE RAPIDS HERE! TAKE ANOTHER DRINK.
Alrighty then. In 2016 the council approved a staff recommendation to set the cash-in-lieu for developers water rights at $18,900 per acre-foot. Got that? That's where it stayed.
However in the council packet for their Aug 17th 2021 meeting staff reports that the fair market value of a unit of C-BT water in 2016 was $26,488 per unit (or $37,840 per acre-foot based on a 0.7 acre-foot yield per unit). So it appears the rate set in 2016 was low to begin with.
When our new staff members started assessing all this they got a shock because the current cost of a share in C-BT today is $60,000 per unit or $85,714 per acre-foot based on a 0.7 acre-foot yield per unit. That is a huge difference. So dear readers, if you are a developer and you have been given the option to chose to bring your own water or pay cash-in-lieu what are you going to do?
Think of how many homes are in these new developments all over town. They are paying cash-in-lieu at $18,900 per acre-foot instead of $85,700. What a gravy train.
At the time Lafayette’s cash-in-lieu amount was one of the lowest in the region.
DON’T PUT YOUR GLASS DOWN IT GETS MORE OUTRAGEOUS.
When we pay our water bills it goes into a specific fund which can only be spent on water related projects. Also as an extra twist, we cannot just move money into this fund from somewhere else.
Due to all the growth we are having, we have to expand our water storage, processing etc. to meet the demand. There are a few large projects on the horizon with cost estimates of over $100M.
If the developers are building more homes but not paying their fair share into the water fund, (we are talking a lot of coin here) you and I are on the hook for these bills to expand our facilities. Due to the developers projects we need expansion while we also still need to water our gardens and take showers, long after they have collected their profits and moved on. We would each have to splash in more of our own cash to cover this. (read rate increases)
If we don’t have enough money to fund these projects the city will have to take on debt which anyone with a mortgage knows costs a lot more in the long run. Again that is on the backs of us, the existing rate payers.
SOME WORDS FROM OUR CITY ADMINISTRATOR
Here’s a statement from a presentation by City Administrator Fritz Sprague to the council back in November 2020. “Over the last 10 years, the implementation of the cash-in-lieu ordinance and associated resolutions appears to have been geared towards expediting development. While this approach has resulted in a number of development agreements, some of which may provide significant benefit to the City, there does not appear to have been a strategy to address the cost difference between what is desirable to encourage development and the City’s actual cost to acquire the water necessary for such development.”
DEVELOPERS CRY TEARS OF PROTEST
In November 2020 staff brought a resolution to council raising the cash-in-lieu fees to market rate prices. Developers turned out to protest the rate increase.
Developers said this will slow development and no one will want to build here. Many dropped in a mention of the impact on affordable housing even though they may never have built that in Lafayette before. ( I suspect the former staff member who now works for the development community gave out notes on what buzz words to use). A Boulder County Housing Authority representative did speak about the Willoughby Corner attainable housing project and the impact the raise would have on financing.
A couple of important comments from staff during the council discussion.
Public Works Director Jeff Arthur “ We’re trying to close a gap of $12 to $13 million a year in a fund that only brings in $12 to $13 million a year. If we don’t recover that through additional development fees that all falls on the rate payers”. “The downside of not adjusting this now is that every new development that comes in with the subsidized rate is additional revenue that we have to pick up from our existing rate payers”
City Administrator Fritz Sprague said he has heard the arguments that raising fees brings development to a screeching halt 3 times in his career and it doesn't bear out.
Council postponed the vote asking staff to bring more information.
STAFF FLOODS COUNCIL WITH DATA, KNOWLEDGE AND TOOLS
Staff conducted a number of council workshops, brought in affordable housing builders, and commissioned studies to provide the council with the information needed. At the bottom of this post I have provided links should you want to dig in more. But bottom line they have shown council the rate increase is needed, that there are many tools in the box to provide affordable housing options regardless of this water rate increase and that our water rates are well below other communities.
Staff have also set up a format to handle the switch over period as some projects are already in motion, and where they sit on this rate increase needs to be specified. 40 North and Sundar phase 2 appear to be the most likely to have the increase applied. Councilor Mangat seemed to have some concern over these two developments paying the increase although I couldn’t quite understand his points. Mayor Harkins pointed out that some of these are going to be million dollar homes. Clearly these two projects are not affordable housing but market rate and above, so personally I am fine with not subsidizing their water with my money. How about you?
THE GOOD NEWS! THE NEXT STEP: YOU SATURATE COUNCIL WITH SUPPORT FOR RAISING THE RATES AND REMOVING THE “DEVELOPER CHOICE” OPTION!
On August 17, 2021 the council will be voting on the water rate increase and also to once more require developers to bring their own water. I expect the development community to be out in full force speaking against this. We need to let council know we want them to vote in favor of these changes as they face the developers.
Here is the council agenda and associated documents
ADDITIONAL BACKGROUND AND INFORMATION TO DIVE INTO IF YOU CAN'T SLEEP
November 23rd 2020
Council workshop
May 24th 2021 Council workshop
Economic Planning Systems presentation on cash-in-lieu and development feasibility
This is a 71 page analysis
July 26th Council workshop
Water Dedication Cash-In-Lieu Draft Resolutions and Exception Options
COUNCIL VOTED TO APPROVE THE RATE INCREASE IN 2021
Just a reminder that this was written in 2021 and council did vote to approve the increase. But I think this piece has important background information that I want to make available to you as the water discussion continues.
Karen has a wealth of history and knowledge about Lafayette. This website is an amazing source of information about current topics of importance that affect all Lafayette residents. It is a must read!
Thank goodness for Karen Norback!