Revising Water and Wastewater Impact Fees in a Time of Rapid Change in the West

Transcription

1 Revising Water and Wastewater Impact Fees in a Time of Rapid Change in the West National Impact Fee Conference October 11, 2007 Presented by: Fred McVey, Engineering Service Manager, City of Eugene Douglas Frost, Principal Planner, City of Phoenix Cil Pierce, HDR, Inc., Senior Project Manager 1

2 Introduction Many NIFR sessions focus on calculation methodology & legal/political constraints This session focuses on broader forces that are affecting fee development This session focuses on water, water resource, & wastewater This session draws on experiences from rapidly-growing communities in northwest and southwest US 2

3 Context Calculation of impact fees often requires a diverse range of inputs & assumptions These inputs and assumptions often must be updated to reflect changing economic, environmental, social & technological factors Understanding trends that affect these inputs & assumptions can be critical for preparing & implementing fees that are realistic and appropriate 3

4 Trends Affecting Utility Impact Fees Global market driving material costs up Changing development characteristics Housing size changes and fees Environmental considerations and fees Reclaimed water and impact fees 4

5 Wastewater Trends & Implications Fred McVey 5

6 Categories of Trends Trends change the costs of infrastructure Trends change development s demand on infrastructure capacity Trends affect the way we measure capacity demand (units of measure) 6

7 Three Trends & Wastewater Fees Changes in the characteristics of housing Emerging emphasis on mixed use development Changes in restaurant types affecting wastewater discharge characteristics 7

8 Characteristics of Housing 8

9 Characteristics of Housing Square Feet of Single Family Dwellings Average Square Feet 3,000 2,500 2,000 1,500 1, United States West Year 9

10 Characteristics of Housing Bedrooms in Single Family Dwellings - US bedrooms or less 3 bedrooms 4 bedrooms or more Bedrooms in Single Family Dwellings - West bedrooms or less 3 bedrooms 4 bedrooms or more Percent Distribution Percent Distribution Year Year

11 Characteristics of Housing Number of Bathrooms in Single Family Dwellings - U.S. Percent Distribution Year /2 baths or less 2 baths 2 1/2 baths1 3 baths or more Number of Bathrooms in Single-Family Dwellings West Percent Distribution /2 baths or less 2 baths 2 1/2 baths1 3 baths or more Year 11

12 Characteristics of Housing US Persons per Household 4.00 Average Years Persons per household 12

13 Characteristics of Housing Implications / Issues Gallons per Month Projected Total Area Living Space Sampled Actual Data 13

14 Mixed Use Development Not a New Concept New Emphasis in New Locations Challenges for Impact Fees? 14

15 Mixed Use Development 15

16 Mixed Use Development 16

17 Mixed Use Development Only in Eugene? 17

18 Mixed Use Implications 18

19 New Restaurant Types Example of market and business trends 19

20 New Restaurant Types Modified Rate Schedule 20

21 Wastewater Conclusions Trends affect: - Capacity demand - The way we measure demand - The categories of development recognized in rates Monitoring trends and making adjustments helps ensure adequate and equitable cost recovery 21

22 Select Trends in Phoenix Area Facility Construction Costs Per Unit Water Demand Water Resource Options & Costs 22

23 Facility Construction Costs Tremendous spike in construction costs in past four years Perfect storm related to real estate boom and international economy Housing boom so extreme difficult to even get contractors to bid Demand from Middle East, East Asia & elsewhere pressuring commodity prices 23

24 Facility Construction Costs Both City and developers unable to predict what cost of projects would be Costs rising as much as 60% in two year period for some types of facilities Cost basis for impact fees no longer valid City CIP revenues (rates & fees) stable but expenditures rising rapidly 24

25 $450 Water Main Cost per Foot (2003 & 2006) - Construction Only Based on Black & Veatch Studies Done for City of Phoenix $400 $350 $300 $250 $200 $150 $100 $50 $0 16" 36" 54"

26 Booster Station Costs by Max Capacity (2003 & 2006) - Construction Only Based on Black & Veatch Studies Done for City of Phoenix $5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 5 MGD 15 MGD 30 MGD

27 $25,000,000 Reservoir Costs Based on Capacity (2003 & 2006) - Construction Only Based on Black & Veatch Studies Done for City of Phoenix $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 5 MG 15 MG 30 MG

28 Facility Construction Costs 2003 B&V study underpinning fees no longer useful for projecting costs Water & ww fees too low Developers demand credit based on actual cost, not plan cost City revises fees in 2006 New fees increase significantly in 2006, even with somewhat smaller networks 28

29 Gravity Sewer Cost per Foot (2003 & 2006) - Construction Only Based on Black & Veatch Studies for City of Phoenix $400 $350 $300 $250 $200 $150 $100 $50 $0 18" 30" 42"

30 $4,500,000 Lift Station Cost by Max Capacity (2003 & 2006) - Construction Only Based on Black & Veatch Studies Done for City of Phoenix $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 3 MGD 5 MGD 8 MGD

31 Facility Construction Costs Costs appear to be stabilizing Contractors more eager to bid Housing downturn affecting some costs Commodity costs remain high Zone 5 watermain project originally estimated at $5 million, then $10 million Project now bid at about $7 million 31

32 Per Unit Water Demand Water demand for virtually all types of users is declining Existing households and businesses showing gradual decline in water use New homes & commercial space show marked reduction in water use Decline affects sizing of facilities and need for additional water resources 32

33 Single family water use - FY 1996 to

34 Per Unit Water Demand Decline in demand is coming from multiple sources Landscaping is changing to desert or to mixed grass & exotics more rare Lot sizes are declining; HOA pools more common Internal fixtures & irrigation more efficient Businesses more conscious of use 34

35 Per Unit Water Demand Data indicated major shift in for new home use Average use by all SF down to 400 GPD in 2006 New SF subdivisions show average use of only GPD in 2006 New base used for 2006 update only 315 GPD 35

36 Single Family Water Use Data - Annual Average Day Area Time Period Type of Units Approxi mate Number of Units Average Demand (GPD) City of Phoenix 2006 All SF 345, City of Phoenix and Later 47, Desert View - Basin H Built in 90's 4, Desert View - Basin H Built in 90's 2, Desert View - Basin H Built in 90's 1, Desert View - SB Built in 90's 1, North Gateway - Tramonto , Laveen ,

37 Per Unit Water Demand Decline rate in new home water use will slow Average SF use (all) will continue to fall with structural changes & higher rates Decline will probably slow, then stop, as easy changes done Trend will contribute to lower water fees, other things being equal 37

38 Assumed Acre Feet per Single Family Unit: Water Resource Acquisition Fee Studies Arthur Young Red Oak

39 Water Resource Options & Costs Phoenix, like many other western communities, initially was dependent on nearby surface supplies Salt River Project brings water from Verde & Salt river systems series of reservoirs Groundwater also used but not sustainable; rapidly declining source Colorado (CAP) water increasingly important 39

40 Phoenix Water Planning Boundaries CURRENT CITY LIMITS INFRASTRUCTURE PLANNING AREA SALT RIVER PROJECT "MEMBER LANDS ACTIVE WELLS SURFACE WATER SYSTEMS WATER TREATMENT PLANT WATER RECLAMATION PLANT 40

41 Water Resource Options & Costs City divided into two areas for supply purposes On-project areas served by SRP Off-project areas served by CAP & other Most new growth in off-project areas CAP allocations limited Two more major CAP allocations 41

42 Phoenix Water Sources Typical Year Reclaimed Water - 7% Groundwater (from Phoenix wells) - 3% Colorado River 36% Salt/Verde Surface Water - 54% 42

43 Water Resource Options & Costs SRP and CAP surface waters cost $600 to $2,000 per acre foot (capital cost) Other options cost considerably more Water Resource Acquisition Fee Update identified several alternatives McMullen Valley Northern rec plants and recharge Agua Fria (rec water recharge) 43

44 SRP and CAP surface waters cost $600 to $2,000 per acre foot (capital cost) 600,000 Other options Additional cost Reclaimed considerably more 500,000 Supplies Water Resource Additional Acquisition CAP Fee Update Additional SRP 400,000 identified several alternatives Acre Feet Existing McMullen Valley Reclaimed 300,000 Current and Future Water Supplies General Plan (Moderate Shortage Conditions) CAP Northern rec plants and recharge 200,000 Supplies Agua Fria (rec water recharge) 100,000 System McMullen Groundwater Groundwater SRP (On-Project only) Future Current 0 44

45 Estimated Capital Costs Associated with Various Potential Water Resources ($2007 Dollars) Malcolm Pirnie/Red Oak Associates Report $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 CAP Reallocation GRIC Lease McMullen Valley Northern Rec Plants Agua Fria 45

46 Water Resource Options & Costs WRAF Update (Malcolm Pirnie/Red Oak) projected alternative sources at $3,000 acre/foot or more Other options not priced by update are greater than $5,000 acre/foot Initial internal cost estimates of reclaimed non-potable irrigation at $5,000+ acre/ft. 46

47 Water Resource Options & Costs As cheap, easy surface water sources are used up, cost of water acquisition will rise dramatically In some western areas costs rising to $20,000 acre/foot. Reclaim/recharge, desalination, etc. are pricey conservation is still good option Current fees based on average weighted costs as CAP is used up, fee will rise 47

48 Water Fee Implementation Options Meter size > 2-inch on actual projected usage Fixture count Percent usage 48

49 Meter Size < 2-inch Meter Example Water System Development Charge Calculation Results Source of Supply $2,379 Storage 393 Distribution 1,416 General Plant 191 Debt Service Credit 0 Total $4,378 Net Allowable Water SDC $4,380 Sample SDC by Meter Size (inches) Meter Size Weighting Factor [1] System Development Charge 5/8" X 3/4" 1.00 $4,380 3/4" , , / , , , , , , , ,750 Notes: [1] Weighting factor based on AWWA meter equivalencies 49

50 Fixture Count Approach Water Impact Fee Calculation Results Source of Supply/Treatment $850 Storage 217 Transmission/Distribution 509 General Plant 14 Debt Service Credit (26) Total $1,563 Plus: Administrative Cost (5%) 78 Net Allowable Water Impact Fee $1,641 Fee Implementation Method by Meter Size (inches) and Fixture C Weighting Base Number of Cost Per Meter Size Factor [1] Fee Fixtures Fixture 5/8" 1.00 $1, /4" , $ , / , , , , , [1] Weighting factor based on AWWA 5/8" meter equivalencies. 50

51 Contract Meters: Monitoring Percent Usage 51

52 Economic and Housing Trend Impacts Increase in condo dwellings Creates challenges to fee implementation Metered separately Usage differs from single family WW flows may be more similar Second/third/vacation homes Similar demand by fixtures Less annual usage Creates larger peak on system 52

53 Environmental Trends: Sustainability Green Development: Grey water systems Rainwater harvesting Others Some of the challenges Desire to support sustainability Credits Equity to the few vs. ease of administration Longevity/functionality of improvements 53

54 QUESTIONS 54