Department of Utilities
Reference: Water Dedication Updates and Extraterritorial Service
To: Mayor Gregory Mills and Members of City Council
Through: Michael P. Martinez, City Manager
Prepared By: Scott Olsen, Director of Utilities
Date Prepared: March 26, 2026
PURPOSE
Requesting City Council enact an ordinance to amend Articles 13-4 and 13-12 related to water dedication requirements and extraterritorial utility service.
BACKGROUND
This item was originally presented for a first reading at the March 17, 2026 City Council Meeting.
City staff is seeing a demand for higher density products in the City, which may allow for more affordable housing. Current City Code requires the same water dedication for densities of 11 units per acre and higher. Water Resources staff worked with consulting engineers to evaluate water usage data for more dense products. During this analysis, data also demonstrated that water dedication requirements for slightly less dense products could be reduced as well. These proposed updates remain unchanged from the first reading.
In addition to the above amendments related to water dedication, staff has identified instances in which approving requests for extraterritorial utility service may benefit the City and Utility. Following the first reading on March 17, 2026, various City Council members requested several revisions to the proposed ordinance. No motion was made to give clear direction from a majority of City Council. Staff have addressed these revisions by attaching a revised version of the ordinance with the following changes from first reading:
• Extraterritorial service rate has been revised from 2X to 1.5X the in-City rate.
• Extraterritorial service is subject to written agreement approved and executed by the City manager, instead of City Council.
• Extraterritorial service is subject to the below conditions:
o Payment of all other fees or charges and requiring water dedication.
o Any additional conditions as deemed necessary by the City Manager.
o All conditions and obligations are binding on future property owners, successors and assigns.
• Extraterritorial service may be denied if such service would constitute an undue burden on the City.
STAFF RECOMMENDATION
City staff recommend adoption of the ordinance, as revised from the first reading.
OPTIONS FOR COUNCIL CONSIDERATION
• Approval of original ordinance from first reading.
• Approval of alternate ordinance proposed at this final reading.
ATTACHMENTS
• Ordinance from first reading
• Ordinance revised for final reading
• Redline of proposed revisions from first reading
• PowerPoint presentation