HomeMy WebLinkAboutTB Study Session 2010-12-14
Town of Estes Park, Larimer County, Colorado, December 14,
2010
Minutes of a Study Session meeting of the TOWN BOARD of the Town
of Estes Park, Larimer County, Colorado. Meeting held at Town Hall in
Rooms 202 & 203 in said Town of Estes Park on the 14th day of
December, 2010.
Board: Mayor Pinkham, Mayor Pro Tem Levine, Trustees
Blackhurst, Elrod, Ericson, Koenig and Miller
Also Attending: Town Administrator Halburnt, Deputy Town Administrator
Richardson, Town Attorney White, Director Zurn,
Superintendents Boles and Stechien, Utilities Engineer
Bergsten, Town Clerk Williamson
Absent: None
Mayor Pinkham called the meeting to order at 4:00 p.m.
DRAFT REPORT OF COST OF SERVICES ANAYLYSIS FOR WATER & ELECTRIC.
Utilities Engineer Bergsten reviewed the process for changing utility rates. He stated
HDR was hired to perform a cost of service analysis and rate study for both water and
electric. He introduced Cil Pierce, Kevin Lorentzen and Sarah Clark of HDR. Ms.
Pierce reviewed the presentation and stated a comprehensive rate study consists of
assessing the revenue requirements, cost of service, and rate design. Financial
planning considerations included a review of debt service coverage ratios, minimum
reserve levels, financing capital projects and adequately funding the
renewal/replacement of existing infrastructure to maintain level of service in the most
cost effective manner.
Ms. Pierce reviewed the water utility capital improvement plan for 2010 through 2015
with an estimated cost of $3.98 million in projects and an average cost per year of
$663,000. She stated without a rate adjustment, the Town would potentially need to
implement a 38.5% increase to meet depreciation, costs of service and debt service in
2015. The proposed rate adjustments of 6.4% in 2011 and 6.8% for 2012-2015 would
increase the funding for capital improvements through rates from $150,000 in 2010 to
$550,000 in 2015; however, the full depreciation of the system would be $680,000 by
the end of 2015, a $130,000 shortfall. Without rate increases the Town would be below
the required 1.1 debt service ratio to cover the current bond. HDR would recommend
the board consider a debt service ratio of 1.25 in order to receive high bond ratings for
future bonding. The average urban residential customer’s bill would increase $2.80 per
month per year. HDR recommends an across the board rate adjustments due to the
level of change, with interclass adjustments increasing the impacts. HDR also reviewed
the water rate structure and recommended the Town maintain the current structure and
adjust the rates to meet American Water Works Association (AWWA) meter capacity
ratings for all customer rates. This would significantly increase the cost to customers
with a 1 ½ inch to 4 inch services; therefore, HDR presented a three year gradual
implementation of the increase. Future bulk water customer rates should be increased
as they connect to the system to stabilize rate revenues over time. Ms. Pierce stated
the numbers in the financial plan are dependent on assumptions; therefore,
conservation by customers could affect the rates proposed and likely require additional
increases to rates in the future to fund depreciation.
Ms. Pierce reviewed the Light and Power capital improvement plan for 2010 though
2015 with an estimated $7.6 million in projects and an average cost per year of $1.28
Town Board Study Session – December 14, 2010 – Page 2
million. Funding of the capital improvements from rates would be 99% of projected
depreciation expense by 2015, with a transition from $600,000 in 2011 to $950,000 by
2015. The proposed rate adjustments for present rate structure would by 2.8% in 2011
and 1.4% for 2012-2015. The rate adjustments would allow for a healthier debt service
ratio and meet O&M through 2015. A review of the rate structure confirmed the Town
should maintain the basic rate structure and consider gradually increasing customer
base charge over a three year period. It was proposed in addition to the increase in
rate charges, to implement a minimum bill for residential and small commercial
customer classes, thereby providing revenue stability. Ms. Pierce stated that growth
and inflation have increased the costs compared to the past rate studies. Utilities with a
higher number of customers are able to spread out the cost to keep costs down for the
average customer.
HDR reviewed the system development fees and water rights fees in conjunction with
the cost of service study. Ms. Pierce stated the fees are one time charges paid by new
customers to connect to the system and are uncommon for electric systems. The
Town’s current $4,940 system development fee is adequate at this time for water
customers. Water right fees are currently $5,450 and could be increased by $100 to
meet the study’s suggested $5,550.
Trustee Miller commented on the need to review the proposed capital improvement
plans for both utilities in a public meeting prior to considering rate increases. A special
Town Board meeting on January 18, 2011 would be held to review the plans. Ms.
Pierce stated water rates need to increase to meet debt service in addition to the capital
improvement plan.
BOND PARK DRAINAGE
Director Zurn stated the Bond Park stakeholders have been reviewing the design for
phases I and III of the Bond Park Master Plan. There is no storm sewer system within
the entire block of Elkhorn Avenue adjacent to the park; therefore, drainage has driven
the design that includes a swale in the middle of the park. Staff has discovered a utility
easement on Lot 1A, Schwery Amended Plat, adjacent to the park, that runs to the river,
which was dedicated to the Town through EPURA during the creation of the riverwalk.
The installation of a storm sewer system could address runoff within the entire area,
allow for park sod underdrain system and allow the use of porous pavement drainage
system. The cost could range from $96,000 to $183,000 including contingency. The
consensus of the Board was to address the long term storm water issue in the area
through the creation of a sewer system as outlined above and to use the same
engineering firm to keep costs down.
There being no further business, Mayor Pinkham adjourned the meeting at 6:30 p.m.
Jackie Williamson, Town Clerk