Loading...
2013 Water Impact Fee PowerPoint1� 1 'a Overview of Presentation Provide an overview of impact fees Review the City's impact fee methodology Development of City's water impact fee Role of Morrison Maierle, Inc (MMI) in Establishing the Impact Fees MMI's role is to update the existing cost -based water impact fees with: Generally accepted practices that comply with Montana law Current water demands and forecasts Council guidelines Annexation Boundary Growth Policy Growth Rates Updated Capital Improvement Plan Defining Impact Fees, Their Objectives and General Approach DefiningImpact Fees Impact fees are capital recoveryA fees that are generally 3 established as one-time charges,..'T�,.,assessed on developers or new water/wastewater customers as a way to recover a part or all of the cost of additional system capacity constructed for their] use. k __ i. V.11, le Financial Objective of Impact Fees Development creates the need for expansion Absent impact fees, the utility would be unwilling or unable to expand facilities and meet growth needs Building moratoriums result when capacity is unavailable for expansion Key Objective — Equity Issue of timing; when new development connects Year 1, 10 and 20 Rates — avoids the need for "old" and "new" customer rates The Timing Issue 50+ years useful life 20-Year Bond 10-Years Now 5-Years Ago 20-Years How do we fairly treat a customer that connects in year 1, 5, 15, 20 and beyond? Impact Fees are Different Than Rates Basis of Rates Basis of Impact Fees How much money does the utility need this year? Cost of Service Analysis Residential Rates Commercial Rates Industrial Rates What is the value of a unit of system capacity? IF Value & Capacity Analysis New customer capacity needs Impact Fee The element of time is the key difference! Basis for Establishing Impact Fees Montana Law 7-6-1601 through 7-6-1604 Provides the legal basis for establishing impact fees Specific ordinance or resolution requirements; required documentation Fee must be reasonably related to and reasonably attributable to the development's share of the cost of infrastructure and improvements made necessary by the new development Advisory Committee — An advisory role to review and monitor the process of calculating, assessing, and spending of impact fees Overview of the City's Impact Fee Methodology ❑ Key Steps to the City's Impact Fee Methodology Determination of system planning criteria Amount of water required to serve a single-family residential customer Establish the planning area 2. Determination of equivalent residential units (ERUs) = Provides number of ERUs and linkage to infrastructure required to serve a specific number of customers Establish the growth rate 3. Calculation of system component costs - Includes both historical and planned future assets 4. Determination of any (debt service) credits Avoid double -charging — once through impacts fees and again within rates Need for the Update Current Fee based on 2006 Report Change in Kalispell Growth Policy Annexation Boundary Growth Rate Water demands Projected volumes on growth rate policy Updated Capital Improvement Plan Reflect the current projected capital needs Boundary 2011 Annexation Boundary -Red 2008 Planning Boundary -Blue —LEGEND hI ALYSLS'MNES o T110 1 51udy A= B! =rp E.,I e_m M,11 Anr.faa.6w�6e.r-Y.v ry Eosi WhIlmfeW Rr FtwiP iKe F+ I IrL KeYU.8 G[Y LO),13 S.adh1 Fivlcpnll 19b�1. F{elapeb ra ru�z€ "!fA'FEfi M/.IMS 1s5N-L511R1 7 � j MORRI ON JJ MAIERL E, fmc Z � : wnn�a�wn aanen Hr+.rc.-1 YtzvvSte $�, F c-; 16 0 Key Financial Assumptions The City's asset records were used to determine the existing assets and the value of those assets. The interest rate used for calculating interest on existing assets is the 10-year treasury note rate as reported by the US Department of the Treasury at closing on November 30th of each year. Up to fifteen years of interest is included in the cost of the existing improvements. The fifteen -year average interest rate is currently 4.25%. As a comparison, the August 2010 Impact Fee non - adopted Final Report used an interest rate of 6.00%. Overview of City's Water System 21,000 current customers Production The City obtains 100% of its water supply from Eight active well sites Storage The City has four storage reservoirs Capital Improvement Plan (CIP) The 2012/2013 Capita Improvement Plan shows projects to be completed over the next five years and future projects to be completed in approximately ten years. 00 M 'b.►�'I Calculation of Impact Fees Determination of system planning criteria , Determination of equivalent residential units (ERU) Calculation of the impact fee for system component costs E, Administrative charge Determination of any impact fee debt credits System Planning The number of equivalent residential units (ERUs) calculation components Projected growth rate of 2.00% 166 gallons per capita day average flow Typical peaking factor of 2.67 Average 2.5 persons per household or ERU Calculation results Planning Criteria Gallons/Day/ERU Planning Criteria Average Day Flow 1 415 Gallons/Day/ERU Peak Day Flow 2 I 1,108 Gallons/Day/ERU (1) From the Kalispell water production reports. (2) Based on a peaking factor of 2.67x Water System Impact Fees ERU Projections Water Production Year Peak 2Day Flow Average' Day Flow Total Additional (MGD) (MGD) ERUs ERUs 2005 9.02 3.38 2006 9.93 3.72 2007 10.79 4.04 2008 10.01 3.75 2009 10.51 3.94 2010 9.09 3.40 8,204 2011 9.38 3.51 8,463 2012 9.56 3.58 8,632 169 2013 9.76 3.65 8,804 173 2014 9.95 3.73 8,981 176 2033 14.50 5.43 13,083 257 2034 14.79 5.54 13,345 262 2035 15.08 5.65 13,612 267 1) 2005 through 201 1 Actual Water Production, 2012 to 2050 projected 2) Average Day Water Production With Peaking Factor Projected growth rate of 2.00%, 1 108 gpd/ERU (peaking),41 5 gpd/ERU (Avg) Peaking = 2.5 person /ERUx1 66 gallons per capita day average flow x 2.67 ERU 201 2-2035 = 4,980 Calculation Of Equivalent Residential Units i ERUs) ❑ The planning horizon of this study was 2012 — 2035 ❑ The number of ERUs added during each year of the study period was made based on a 2% growth rate D Projected ERU/year table is located in final report M Calculations of the Impact Fee for the Maior System Components ❑ In calculating the water impact fee for the City, both existing facility assets, along with planned future CIP were included within the calculation. ❑ The major components of the City's water system that were reviewed for purposes of calculating impact fee were as follows: Source of Supply Pumping Facilities Storage Facilities Transmission and Distribution Mains Administrative Charge Source of Supply The City's source of supply is provided entirely from eight active well sites Details of the calculations for source of supply with present costs are provided in Appendix D of the final report The current wells have a firm capacity of 10.195 million gallons per day (mgd) 2012 peak day demands (9.560 mgd) 2015 peak day demands (10.150 mgd) Grossweiler well addition allocates peak day demands (13.075 mgd) Total Projected ERUs at 2035 Planning Year: Impact Fee (Source of Supply) per ERU: 13,612 $ 212 Pumping Facilities The City currently has pumping facilities at all eight well sites Details of the pumping facilities calculation are provided in Appendix E of the final report Total Projected ERUs at 2035 Planning Year: Impact Fee (Pumping Facilities) per ERU: 13,612 $ 239 Pumping Plant Facility Year Equipment List Original Cost Cost 2012 Existing Pumping Plant 1913 Lawrence Park Pump & Springhouse $ 112,024 $ 209,147 1966 Lawrence Park Pump # 1 & Motor 4,025 9,646 1964 Lawrence Park Pump # 2 & Motor 3,302 7,913 1959 Lawrence Park Pump # 3 & Motor 7,785 18,657 1971 Lawrence Park Chlorine Injector 1,073 2,572 1965 Lawrence Park Furnace 2,129 5,102 1987 L. Park-2 Cylinder Chlorine Scale 3,820 9,155 1951 Depot Park Pump house 3,000 7, 190 1951 Depot Park Pump house Elec. & meter 6,780 16,249 2000 Chlorine Room Addition 7,550 15,192 1951 Depot Pump#1 4,644 11, 130 1959 Buffalo Hill Booster Station 2,150 5, 153 1956 Buffalo Hill Booster Motor 4,870 11,671 1965 Armory Well Pump house 2,744 6,576 2000 Chlorine Room Addition 7,839 15,774 1965 Armory Pump/ Motor 7,293 17,478 1965 Armory Well Flow Meter 1,972 4,726 1975 Armory Well Muesco Valve 4,995 11,971 1967 Telemetry System 30,140 72,232 1974 Buffalo Hill Booster Station 22,678 54,349 1999 Buffalo Hill Fuel Tank 8,117 17,313 1986 B.H. Pressure Transducer System 5,330 12,774 1979 B.H. Well Turbine Pump 107,930 258,661 1985 Buffalo Hill Flow meter 1,979 4,743 1990 Remodel Lawrence Park Pump house 37,130 88,984 1991 Buffalo Hill Flow meter 2,467 5,912 1992 Buffalo Hill Telemetry System 60,276 144,455 1999 Telemetry System Upgrade 3,945 8,414 1998 Northside Pump house and Telemetry 501,757 1,134,424 2001 Noffsinger/Chlorine Room 6,249 11,862 2001 2002 Noffsinger Upgrade 4,148 7,874 2002 Standby Power Upgrade 249,924 447,576 2005 Wtr Supply Electrical Safety Syst Upgrade 346,497 521,003 2008 Grandview System Improvements 33,105 41,794 2011 Telemetry System wide upgrades 31,286 33,163 Total Existing Pumping Plant $ 1,640,953 $ 3,25Q836 Total ERUs 2035 13,612 Pumping Plant Impact Fee per ERU $ 238.83 Storage Facilities The City currently has four storage reservoirs with a total storage volume of 6.5 million gallons Details of the storage facilities calculation are provided in Appendix F of the final report Total Projected ERUs at 2035 Planning Year: Impact Fee (Storage Facilities) per ERU: 13,612 $ 417 Storage Facilities -A - Original Cost Year Equipment List Cost 2012 Existing Storage Plant 1958 Buffalo Hill Standpipe $ 48,117 $ 89,834 1914 Reservoir#1 24,031 $ 44,866 1952 Reservoir # 2 73,691 $ 137,580 1957 Reservoir Covers 97,577 $ 182,175 1965 Buffalo Hill Elevated Storage Tank 111,970 $ 209,046 1982 Buffalo Hill to Reservoir pipe 11,042 $ 20,615 2001 Water Reservoir Roof 420,128 $ 664,077 1914 Reservoir # 1 Land 715 $ 1,335 1935 Noffsinger Land 1,500 $ 2,800 1939 Monteath Land 650 $ 1,214 1952 Reservoir # 2 Land 1 $ 2 2009 Sheepherder's Hill 3,812,072 $ 4,319,060 Total Existing Storage Plant Future Storage Plant beyond 2035 beyond 2035 beyond 2035 Total Future Storage Plant Total Storage Plant Total ERUs 2035 North Kalispell Reservioir 1 West Kalispell Reservior z South Kalispell Reservior 3 Distribution Storage Plant Impact Fee per ERU 1 - See Table 5-16 City of Kalispell Water Facility Plan Update - 2008 2 - See Table 5-18 City of Kalispell Water FacilityPlan Update - 2008 3 - See Table 5-20 City of Kalispell Water FacilityPlan Update - 2008 $ 4,601,494 $ 5,672,604 $ 5,672,604 13,612 16.75 Transmission and Distribution The City's transmission/distribution network consists of numerous lines of 8-inch, 10-inch, 1 2-inch, 1 6-inch, and 20-inch diameter mains Inventory existing and planned transmission/distribution Interest charges up to 15 years on historical investments Two component for calculation Recoupment and Capital Improvements within existing system Recoupment costs within the existing system Costs associated with existing transmission and distribution facilities that have excess capacity. Cost determined by percent capacity for additional ERU from 2012 to 2035. Exclusions Contribution from Developers, improvement districts, or grants Six inch or smaller mains Main replacements that are not growth related NOMENNOM6,416J38 Total Projected Additional ERUs at 2035 Planning Year: 4,980 Impact Fee ( Recoup Trans. & Dist.) per ERU: $11288 w Transmission and Distribution Continued ❑ Capital Projects within the Existing System Capital Projects are projected 10 year into the future Detail of the Capital Projects costs are also summarized in Appendix G of the final report Total Projected Additional ERUs at 2035 Planning Year: 4,980 Impact Fee ( CIP Trans. & Dist.) per ERU: $ 289 ❑ Total Transmission and Distribution Impact Fee Trans. &Dist. Recoup per ERU: $11288 Trans. &Dist. CIP per ERU: $ 289 Impact Fee (Trans. &Dist.) per ERU: $ 1,577 Extension to Existing Systems A third component of the transmission and distribution facility impact fee is the cost related to extensions to the existing system that are necessary to accommodate future growth. The September 20 7 2 Water Impact Fee Summary (Appendix H) provides a proportional cost of these improvements based on the improvements that are shown within the 2011 Growth Policy annexation boundary. A summary of these costs and this calculation is shown in the summary report. The total impact fee related to extensions to the existing system to accommodate future growth is $17,583,247, or $3,531 per ERU. Cost reviewed by Impact Fee Advisory Committee (IFAC). These costs may be included in or excluded from the impact fee analysis based on recommendations from the Impact Fee Advisory Committee and as set by City policy. The IFAC reviewed the extension costs and recommended not including the cost in the 2013 water impact fee total. Debt Service Credits and Administrative Fee Debt Service Objective- Avoid the potential double payment of capacity related capital -once within impact fees and again within the rates Based on current growth projections, the water impact fee will collect sufficient funds to cover the debt service related to growth Credit is the present value of future growth -related debt service payments; $O/ERU credit Administrative Fee Under Montana statute, allow up to a 5% administrative fee Followed guidance from the City Council in 2010 draft final report 5% water administrative equates to $122 per ERU Net Allowable Water Impact Fee Total Allowable Fee Based on the sum of the component costs calculated The City, as a matter of policy, may charge any amount up to the allowable impact fee, but not over that amount Charging an amount greater than the allowable impact fee would not meet the nexus test of a cost -based impact fee Table 5-4 ErAllowable Water .. Description Total Source of Supply $212 Pumping Facility $239 Storage Facility $417 Transmission and Distribution Mains $1,577 Administrative Cost at 5% $122 Total Impact Fee $2,567 Water Impact Fee by Meter Size .._ Allowable ES-2 Comparison Between the Current Fee and the Meter Size Current Water Impact Fee Proposed Fee jo Proposed Water Impact Fee Residential $2,213 $2,567 1" 5,533 $6,418 1-%" 11,066 $12,835 2" 17,705 $20,536 3" 35,411 $41,072 4" Calculated Calculated The charge for one (1) ERU is $2,567 The impact fees are then "weighted" by meter size to reflect potential capacity use of the larger sized meters This "weighting" by meter size is based upon the safe operating capacity of the meter Summary The water impact fees developed and presented are based on the engineering design criteria of the City's water system, the value of the existing assets, future capital improvements and generally accepted ratemaking principles Next Step Council Discussion Adoption ????Development and Summary of the Water Impact Fee ❑ The water facility plan provides an update to the water system portions of the City of Kalispell Water, Sewer, and Storm Drainage System Facility Plan, completed in July 2002. 2006 and 2008 the City chose to update their facility plan to analyze potential growth and effectively plan for growth while protecting water and environmental resources. i The area studied in the 2006 and 2008 Water Facility Plan is represented in Figure 1-6 — Water and Sewer Impact Fee Update. The basis of planning was to determine the requirements for the next 50 years in areas that the City will have to provide water service as growth continues. �i On March 7, 2011 the City Council adopted an annexation policy that significantly revised the previous annexation boundary. This report uses the annexation policy boundary for the planning boundary and adjusted Capital Improvement Projects to meet the infrastructure needs in the expanded service area.