Body
Department of Utilities
Reference: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRIGHTON, COLORADO, ACTING BY AND THROUGH ITS WATER ENTERPRISE, APPROVING THAT MEMORANDUM OF UNDERSTANDING (MOU) BY AND BETWEEN THE CITY OF BRIGHTON AND BRIGHTON SCHOOL DISTRICT 27J REGARDING NON-POTABLE IRRIGATION CONNECTION AND SERVICE, AND AUTHORIZING THE MAYOR TO EXECUTE THE MOU ON BEHALF OF THE CITY.
To: Mayor Richard N. McLean and Members of City Council
Through: Manuel Esquibel, City Manager
Prepared By: Curtis Bauers, Utilities Director
Date Prepared: August 3, 2015
PURPOSE
To consider the Memorandum of Understanding to allow the City of Brighton to assist the 27J School District in converting its irrigation usage to the non-potable supply, thereby eventually reducing the irrigation usage rate charged to 27J, and immediately relieving that component of demand from the Water Enterprises potable supply.
BACKGROUND
Historically, the City of Brighton has had a special water usage rate charged to schools. This rate was eliminated in the 2015 Rate Schedule. The true Cost-of-Service rate analysis performed in fall of 2014 was unable to support the separate rate which had previously been in place for schools, and the small number of schools made it unrepresentative to attempt to establish a new rate for the customer class, ‘schools’. For that reason, the School District 27J was faced with a fairly substantial increase in the irrigation rate that would be charged beginning in 2015. In an effort to assist 27J with this change, as well as to reduce our overall demands on the potable system, staff evaluated the possibility of utilizing the non-potable system for on-going school demands. As a result, we have determined that four separate 27J locations may reasonably be converted to be supplied by the non-potable system.
These sites are generally known as the two Brighton High School baseball fields, Friendship Park, and landscaping, park and playground area surrounding Southeast Elementary. See the attached map.
The conversion of these sites requires a fairly substantial capital outlay, which is prohibitive to 27J at this time. As such, because of the benefit the potable water demands would recognize from the conversion occurring sooner rather than later, respective staffs have reached a compromise wherein the Water Enterprise would make the initial capital investment for the conversion to the non-potable supply for the 27J properties, while 27J continues to pay the higher potable rates for the irrigation supply, After 5 years, 27J would then begin benefitting from the lower non-potable rate without having to ever make the capital investment.
CRITERIA BY WHICH COUNCIL MUST CONSIDER THE ITEM
FINANCIAL IMPACT
Sufficient funding exists in 2015 approved budget to allow this conversion to occur based on current cost estimates for the activity. Bid summary to authorize this work will come back for Council consideration under separate Resolution. It is currently estimated that the capital outlay will be approximately $78,000. The potable irrigation rate currently paid by 27J for these sites is $8.10/1,000 gallons. In 5 years, the change to a non-potable rate (currently $3/1,000 gallons) will significantly reduce the cost of irrigation to 27J. With the current differential between the two rates ($5.10/1,000 gallons), 27J is estimated to incur a very similar cost over the initial 5 years as if they had performed the capital work themselves.
Stated differently; if 27J could manage to make the capital investment this year of approximately $78,000, it would essentially pay for itself in 5 years. By the Water Enterprise performing the cost to make the conversion, we get the benefit of the decreased potable demand immediately, while not impacting revenues any differently than if 27J had done the project themselves.
STAFF RECOMMENDATION
The MOU addresses a concern that the previous irrigation rate for schools was not defensible, but that the elimination of it places an unanticipated financial burden on School District 27J. It also provides benefit to the overall operation of the Water Enterprise by appropriately expanding the use of our current non-potable supply system to its maximum design and alleviates some pressure on the existing potable supply system. The capital outlay for the conversion is somewhat expensive, but the benefit it provides has similar value, and the capital investment is recouped by maintaining the higher revenue rate over a reasonable time period. Therefore staff recommends approval of the Resolution authorizing the MOU with School District 27J.
OPTIONS FOR COUNCIL CONSIDERATION
• Approve the Resolution as presented
• Reject the Resolution as presented
• Postpone consideration of the Resolution
ATTACHMENTS
• Memorandum of Understanding with SD 27J
• Map of facilities
• Proposed Resolution