City Council Minutes 2019 11 25 - Laserfiche WebLink

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City Council Meeting Minutes November 25, 2019 Page 3 of 6 Councilmember Lipton asked how this lines up with the Comp Plan. Director Kowar stated it is aligned with the Comp Plan. Councilmember Lipton stated he thought population growth in the Comp Plan was not estimated to go up that much and Council can control things such as landscaping and other options to reduce water use. Director Kowar stated the City can do that, but our current regulations don't require that. Mayor Pro Tem Maloney stated that is a policy decision Council could make. Mayor Stolzmann stated the Utility Rate Task Force did discuss this, but felt regulations could be an over reach. She added the Council would have to decide how people should use their water and that discussion wasn't where we wanted to go. Councilmember Lipton stated now with water costing what it does, we should have to address this. There should be ways to incentivize less use. Mayor Pro Tem Maloney stated it is difficult not to discuss water rates with tap rates. We have a pay as you go system for rates. But with tap fees it is different as it includes the cost of transporting and producing water. Director Kowar noted the plan is based on 6700 acre feet. Staff follows drought conditions and watches water demand. He noted how water would be affected by a multiple year drought and what options would be available to the City to implement. He added climate change will likely affect all this planning as well as storage and outdoor water usage. Director Kowar reviewed the model currently used for setting the water use rates and the options the City has for financing options: Pay as you go, debt financing, tap fees; and up- front costs provided by the project. Director Kowar reviewed finances and how debt affects water rates. More debt may drive rates up too high. Director Kowar reviewed the tap fee methodology. Equity method: Achieve capital equity between new and existing customers. Assess new customers a fee to approximate the equity or debt -free investment position of current customers. The financial goal is to achieve a level of equity from new customers by collecting a fee representative of the average equity attributable to existing customers. Incremental Cost Method: New development paying for the incremental cost of the system capacity needed to serve the new development. This approach mitigates the cost impact of new growth on existing customers' user rates. Charge a fee for new customers sufficient to allow customer user rates to be revenue neutral with respect to growth of the system. This includes allowing developers to bring their own water to the table at development time. It would have to be Marshall water or CBT for us to accept it. He reviewed the cost of water acquisition noting the cost has increased significantly and we are competing against all of our neighbors for the same CBT water.