Utility Committee Agenda and Packet 2020 10 13

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Improvement Expenditure based on the year we think it's going to happen for the multi -projects, i.e. SWSP pipeline project is a multi -year project where we spread it out. • Page 30 — Modeled Tap Fees, Mr. Peterson said he knew there were some concerns about what was in the tap fees and explained this shows our current tap fees for both water and sewer tap fees. Councilmember Lipton asked how the years 2023 to 2026 are calculated. Mr. Peterson explained these projections are tied into what Finance does and coordination with Building Safety and Development. Then we assign the projects we are aware of and then assign tap fees associated with that. So this is the current estimated planning projection for what we think the new development will be coming into the City. Mr. Kowar stated there are other large developments that aren't in these numbers because they aren't approved yet. Councilmember Lipton said what about the normal background stuff that's in the planning background, i.e. CTC, McCaslin Blvd. corridor, etc. that are already in the horizons. Mr. Kowar said that Planning is trying to be conservative with their projection with reality in that we are working on per parcel versus percentage of development per year. Mr. Peterson added these have a high level of confidence and over estimating is risker for the utility. Mr. Peterson continued saying there is some level of conservative to make sure we provide an accurate number that the committee can rely on. Councilmember Lipton stated his concern is the smoothing model for water rates where we'll inflate the early term rates in order to support those conservative back term assumptions. Committee continued discussing and Mr. Watson added that the conservative approach was agreed on years ago just as Mr. Peterson has explained. He did say that we could add some rolling averages. Councilmember Lipton continued saying he'd like to see a different approach and suggested staff continue discussing and come up with an alternative on the averaging. Mr. Kowar said we could try that but the challenge as a utility is where water starts getting serious in the next 10- 20 years in Colorado and we are going to run out on availability and prices are going to sky rocket. Then associated with that we have some large pieces of land that can flip on us and we don't know when. We are trying to stay conservative because we are worried if tap fees go away the rates start to climb. Councilmember Lipton suggested that Mr. Kowar, Mr. Watson and Mr. Zuccaro talk about this and bring back a worse case, best case scenario. Mr. Kowar said they will bracket so we can see what the impact on the various rates will be. Councilmember Fahey agreed and added that we should be conservative considering 11