revising water and wastewater impact fees in a time of...
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Revising Water and Wastewater Impact Fees in a Time of Rapid Change in the West
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 EugeneDouglas Frost, Principal Planner, City of PhoenixCil Pierce, HDR, Inc., Senior Project Manager
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Introduction
Many NIFR sessions focus on calculation methodology & legal/political constraintsThis session focuses on broader forces that are affecting fee development This session focuses on water, water resource, & wastewaterThis session draws on experiences from rapidly-growing communities in northwest and southwest US
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Context
Calculation of impact fees often requires a diverse range of inputs & assumptionsThese inputs and assumptions often must be updated to reflect changing economic, environmental, social & technological factorsUnderstanding trends that affect these inputs & assumptions can be critical for preparing & implementing fees that are realistic and appropriate
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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
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Wastewater Trends & Implications
Fred McVey
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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)
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Three Trends & Wastewater Fees
Changes in the characteristics of housing
Emerging emphasis on mixed use development
Changes in restaurant types affecting wastewater discharge characteristics
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Characteristics of Housing
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Characteristics of Housing
Square Feet of Single Family Dwellings
0500
1,0001,5002,0002,5003,000
1973
1977
1981
1985
1989
1993
1997
2001
2005
Year
Ave
rage
Squ
are
Feet
United StatesWest
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Bedrooms in Single Family Dwellings - West
0
20
40
60
80
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
Year
Perc
ent D
istr
ibut
ion
2 bedrooms or less
3 bedrooms
4 bedrooms or more
Bedrooms in Single Family Dwellings - US
0
20
40
60
80
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
YearPe
rcen
t Dis
trib
utio
n
2 bedrooms or less
3 bedrooms
4 bedrooms or more
Characteristics of Housing
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Characteristics of Housing
Number of Bathrooms in Single Family Dwellings - U.S.
0
20
40
60
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
YearPe
rcen
t Dis
trib
utio
n
1 1/2 baths or less
2 baths
2 1/2 baths1
3 baths or more
Number of Bathrooms in Single-Family Dwellings West
0102030405060
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
Year
Perc
ent D
istr
ibut
ion
1 1/2 baths or less
2 baths
2 1/2 baths1
3 baths or more
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Characteristics of Housing
US Persons per Household
0.00
1.00
2.00
3.00
4.00
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
Years
Ave
rage
Persons per household
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Characteristics of Housing
Implications / Issues
0370
8161195
15851977
23822780
32804000
010002000300040005000600070008000
ProjectedSampled Actual Data
Total Area Living Space
Gal
lons
per
Mon
th
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Mixed Use Development
Not a New Concept – New Emphasis in New Locations
Challenges for Impact Fees?
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Mixed Use Development
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Mixed Use Development
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Mixed Use Development
Only in Eugene?
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Mixed Use Implications
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New Restaurant Types
Example of market and business trends
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New Restaurant Types
Modified Rate Schedule
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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
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Select Trends in Phoenix Area
Facility Construction Costs
Per Unit Water Demand
Water Resource Options & Costs
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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
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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
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Water Main Cost per Foot (2003 & 2006) - Construction OnlyBased on Black & Veatch Studies Done for City of Phoenix
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
16" 36" 54"
2003 2006
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Booster Station Costs by Max Capacity (2003 & 2006) - Construction OnlyBased on Black & Veatch Studies Done for City of Phoenix
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
5 MGD 15 MGD 30 MGD
2003 2006
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Reservoir Costs Based on Capacity (2003 & 2006) - Construction OnlyBased on Black & Veatch Studies Done for City of Phoenix
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
5 MG 15 MG 30 MG
2003 2006
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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
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Gravity Sewer Cost per Foot (2003 & 2006) - Construction OnlyBased on Black & Veatch Studies for City of Phoenix
$0
$50
$100
$150
$200
$250
$300
$350
$400
18" 30" 42"
2003 2006
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Lift Station Cost by Max Capacity (2003 & 2006) - Construction OnlyBased on Black & Veatch Studies Done for City of Phoenix
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
3 MGD 5 MGD 8 MGD
2003 2006
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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
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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
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Single family water use - FY 1996 to 2007
0
50
100
150
200
250
300
350
400
450
500
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
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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
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Per Unit Water Demand
Data indicated major shift in 1997-2003 for new home use
Average use by all SF down to 400 GPD in 2006
New SF subdivisions show average use of only 300-350 GPD in 2006
New base used for 2006 update – only 315 GPD
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3076,7771999-20042006Laveen
3111,6211999-20042006North Gateway -
Tramonto
3361,222Built in 90's2006Desert View - SB 7
3591,375Built in 90's2006Desert View -
Basin H05
3612,742Built in 90's2006Desert View -
Basin H07
3554,160Built in 90's2006Desert View -
Basin H08
31547,5131999 and Later2003-05City of Phoenix
401345,833All SF2006City of Phoenix
Average Demand (GPD)
Approximate
Number of Units
Type of Units
Time PeriodArea
Single Family Water Use Data - Annual Average Day
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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
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Assumed Acre Feet per Single Family Unit: Water Resource Acquisition Fee Studies
0.36
0.38
0.4
0.42
0.44
0.46
0.48
0.5
Arthur Young - 1988 Red Oak - 2006
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Water Resource Options & Costs
Phoenix, like many other western communities, initially was dependent on nearby surface suppliesSalt River Project brings water from Verde & Salt river systems – series of reservoirsGroundwater also used but not sustainable; rapidly declining sourceColorado (CAP) water increasingly important
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INFRASTRUCTURE PLANNING AREA
CURRENT CITY LIMITS
SURFACE WATER SYSTEMS
WATER TREATMENT PLANTWATER RECLAMATION PLANT
ACTIVE WELLS
Phoenix Water Planning Boundaries
SALT RIVER PROJECT "MEMBER” LANDS
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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
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Phoenix Water SourcesTypical Year
Groundwater (from Phoenix wells) - 3%
Reclaimed Water - 7%
Salt/Verde Surface Water - 54%
Colorado River – 36%
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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)
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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)
Current and Future Water SuppliesGeneral Plan (Moderate Shortage Conditions)
0
100,000
200,000
300,000
400,000
500,000
600,000
Acr
e Fe
et
SRP (On-Project only)
Groundwater
Additional CAP
CAP
ExistingReclaimed
System
McMullen Groundwater Future
Supplies
Additional SRP
Additional Reclaimed
Current
Supplies
Current and Future Water SuppliesGeneral Plan (Moderate Shortage Conditions)
0
100,000
200,000
300,000
400,000
500,000
600,000
Acr
e Fe
et
Current and Future Water SuppliesGeneral Plan (Moderate Shortage Conditions)
0
100,000
200,000
300,000
400,000
500,000
600,000
Acr
e Fe
et
SRP (On-Project only)
Groundwater
Additional CAP
CAP
ExistingReclaimed
System
McMullen Groundwater Future
Supplies
Additional SRP
Additional Reclaimed
Current
Supplies
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Estimated Capital Costs Associated with Various Potential Water Resources ($2007 Dollars)Malcolm Pirnie/Red Oak Associates Report
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
CAP Reallocation GRIC Lease McMullen Valley Northern Rec Plants Agua Fria
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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.
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Water Resource Options & Costs
As cheap, easy surface water sources are used up, cost of water acquisition will rise dramaticallyIn some western areas costs rising to $20,000 acre/foot.Reclaim/recharge, desalination, etc. are pricey – conservation is still good optionCurrent fees based on average weighted costs – as CAP is used up, fee will rise
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Water Fee Implementation Options
Meter size – > 2-inch on actual projected usage
Fixture count
Percent usage
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Meter Size < 2-inch Meter Example
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)System
Meter SizeWeighting Factor
[1]Development
Charge
5/8" X 3/4" 1.00 $4,3803/4" 1.00 4,380
1 1.67 7,3151 1/2 3.33 14,585
2 5.33 23,345----------------------- ----------------------- -----------------------
3 10.00 43,8004 16.67 73,0156 33.33 145,9858 53.33 233,585
10 76.67 335,81512 112.50 492,750
Notes:[1] Weighting factor based on AWWA meter equivalencies
Water System Development Charge Calculation Results
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Fixture Count Approach
Source of Supply/Treatment $850Storage 217Transmission/Distribution 509General Plant 14Debt Service Credit (26)Total $1,563 Plus: Administrative Cost (5%) 78Net Allowable Water Impact Fee $1,641
Water Impact Fee Calculation Results
Weighting Base Cost PerMeter Size Factor [1] Fee Fixture
5/8" 1.00 $1,641 0 - 203/4" 1.00 1,641 21 - 35 $54.70
1 1.50 2,462 36 - 65 54.70 1 1/2 2.50 4,103 66 - 180 35.67
2 5.00 8,205 181 - 360 27.35 3 8.00 13,128 361 - 800 26.11 4 15.00 24,615 801 - 1800 16.41 6 25.00 41,025 1800 - 4600 14.65
[1] Weighting factor based on AWWA 5/8" meter equivalencies.
Fee Implementation Method by Meter Size (inches) and Fixture CNumber of
Fixtures
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Contract Meters: Monitoring Percent Usage
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Economic and Housing Trend Impacts
Increase in condo dwellingsCreates challenges to fee implementation
Metered separatelyUsage differs from single familyWW flows may be more similar
Second/third/vacation homesSimilar demand by fixturesLess annual usageCreates larger peak on system
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Environmental Trends: Sustainability
Green Development:
Grey water systems
Rainwater harvesting
Others
Some of the challenges
Desire to support sustainability
CreditsEquity to the few vs. ease of administration
Longevity/functionality of improvements
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QUESTIONS