This evening's workshop.

I call the workshop for August 26th, 2025 to order.

Our first item up is labor negotiations and 2026 collective bargaining agreements update.

Thank you, Mayor Partem and City Council.

Good evening.

I'm here this evening with Sarah Crossle Human Resources Director, as well as Brent Case.

He is a legal counsel for labor negotiations, and we're gonna give you an update on our labor negotiations for 2026 and beyond.

Just to start off, as you're aware, we have collective bargaining with our Lafayette Firefighters who are represented by the IAF, the Association of Firefighters, Local 4620.

And this collective bargaining was initiated in 2016.

In uh 2025, collective bargaining was initiated by the police officers, and they're represented by the FOP or the fraternal order of police, and that's Lodge 3.

We have three-year agreements with both of these parties, and we um aligned them intentionally to have their contracts um negotiated at the same time.

So 2025 is a contact contract negotiation year for both parties.

Um 2026 would be the initial contract year start year for both parties.

Um so we're getting those in place to start next year.

In terms of the status of the bargaining agreements, I'm gonna start with police.

So 2025 negotiations was the first year for police.

The ordinance passed to allow collective bargaining in March of 2025.

They then had to elect their bargaining agents, so their representative, and that happened in um March, and they elected the fraternal order of police to be their bargaining agent.

We that got us a little bit behind in initiating our negotiations, but we started our negotiations in May, and we kicked it off with a review of kind of our current budget conditions here in 2025 so they could sort of see what um the budget status looked like, what our financials look like, and what our 2026 projections were looking like.

And then we had ongoing negotiations for about three months, May through August.

Um we are in the process of final ratification with the um FOP Lodge, and that's currently underway.

So we're we're still meeting with them.

We have some really kind of finer points we're working through with them, but we by and large are in agreement.

We have a tentative agreement on almost everything, and um, we expect in the next week or two to have the final ratification, and then that'll be signed by um FOP and it'll be signed by the city manager only.

So a couple of highlights around this.

So this was a new agreement framework.

So we really spent the bulk of our time just kind of getting that new framework in place and working to align the framework with section 87 of the city code.

So as you might recall, we structured um what's in our city code to reflect largely what's in um the kind of bargaining framework for what we have for fire as well.

And so we focused on what is um what our city HR policies um reflect and compensation philosophies that we've adopted for the city through our class and compensation study.

Um we do, of course, recognize the unique aspects of public safety and policing, and um, so we capture that in the CB kind of in the CBA framework, and um really focus on the benefits, including health, dental, parental leave, military leave, disability benefits, and most other leave benefits.

Um and these really remain the same and are commonly applied for all employees.

So um, we were able to really effectively work with police to um remain, you know, to have in the CBA most of these benefits remain largely the same.

So um we had a lot of good conversations about that, and they're really satisfied with the way that our benefits are and how they're applied across the whole organization, including to um the police officers.

So some of the areas that we did negotiate with them and kind of discuss were of course around wages.

And so 2026 wages that we talked about, we are going to increase the wages that are subject to bargaining 4% over 2025 over 2025 wages in the agreements.

And the CBA will remain in place for the three year period, so through 2028.

However, we did agree to reopen the negotiation around wages for 2027 and 2028.

So we will come back and talk about wages for the 2027-2028 year for those out years next year in April.

Everything else will remain in place for those out years.

Really, for holiday accrual and cashing out use of their holiday.

So we're looking at it kind of a different way of them using their holiday because of the nature of their 24 hour operations and the nature of kind of how they schedule around holidays and how they use holidays and their kind of desire and need to use those holiday hours at different times versus kind of how our typical city employees are.

And then we also talked about specialty pay for some of the different officers and officer roles that they have.

Field training officers, including those who are actively training, doing field training, and then those who are supervisors of field training officers.

Kind of recognition the unique way that in public safety retirement typically happens a little bit on the earlier side.

And so for those officers who serve in public safety for years, this is a new retiree health insurance program that we'll be putting in place for those who are working for the city of Lafayette.

So those are kind of some of the main highlights of the police, and we'll be happy to answer questions at the end.

In FIRE, for 2025 negotiations, we began negotiations a little bit earlier.

We were able to start earlier since we already had a CBA in place and we were kind of working from the existing framework and just looking to make changes from what we had in place.

Represents the fourth CBA agreement with IAF.

And the parties met 10 times over four months.

But really, what it came down to is that we couldn't come to an agreement on a total total package.

And we have reached impasse.

And the primary area where we have been unable to come to agreements is around wages, around salary.

And so we really have a sizable gap in the wages where the firefighters are and where the city is.

And so we now are going to be moving along the process that we have in our code at the point of impasse.

And we'll talk about kind of the next steps here in a minute.

Okay, so next steps for for police for the FOP CBA.

The associated financial impacts will be incorporated into the 2026 budget.

And for IAF, we will be going to mediation with them.

We have that scheduled.

And if mediation is not successful, we will go to arbitration pursuant to the process that we have outlined in our city code.

And we have a placeholder included in our budget at this time that we will keep in place until a settlement is reached.

So that's where we are with the two contracts.

And again, we have Brenn here.

If you have any questions about the process, or if you have any questions for Sarah Brian, we're happy to answer those for you.

Great.

Thank you.

Any members of council have questions of anybody on this panel?

Okay.

Thank you very much.

Appreciate your time.

Moving on to the next item, the 2026 budget introduction.

City manager Doline.

A few moments to get all set up.

That would be much appreciated.

That's everybody can stay where you are.

I'll give you those for these.

Good evening, Mayor and Council, or Mayor Pro Town and Council.

Apologize.

Thank you to the entire team that sits behind me for this.

I happen to do a large part of the presentation, but by no means did I do the large part of the actual work.

We have almost every department head here for any questions that you may have.

You can point them towards our new CFO balls are getting no.

She is in observation, learning and learning as you are of this, which um leads me to also thank our two through this process to co-interim CFOs that really did the bulk and lion's share of this work, and I just really appreciate Morgan and Sarah for being part of this and putting it all together.

And it was a bumpy road just because we have a lot of new faces, but I think we put together a budget that's uh you know fiscally conservative given a lot of the uncertainties that we have.

And so this is our first step in mini to kind of daylight, give a little preview of what we're gonna be presenting in October when we do official public hearings.

So tonight um Morgan will go over the budget process overview.

Sarah will touch on some of our major revenues.

I'll hit on some expenditure.

Um we'll have pauses in between each one of those revenues and expenses, and then we'll do a larger pause and shift out and invite Jeff Arthur, public works director, and our consultant from RAF Tell us to really hit on our utility fees, which have um been periodically reviewed and updated, and then talk about next steps.

So with that, I will turn it over to Morgan.

Good evening.

I am going to start with our budget responsibilities.

So as a refresher, these are in the municipal charter.

The city manager with the assistance of department heads is preparing and submitting a balanced annual budget, which means revenues equal expenditures, and any proposed rates and fees that are going to city council for approval.

The city council approves the budget, budget adjustments, and mill levy to the budget, including any special districts, and city council also adopts fees.

Looking at our budget philosophy, we have that a municipal budget reflects council strategic outcomes, community values, as well as prioritizing services that benefit residents.

Also, with this, it's ensuring legal compliance.

So, again, as we mentioned, balanced budget meaning balance meaning revenues equal expenditures.

We're maintaining adequate reserves, and we're very cautious and judicious with the use of reserves for any one-time expenditures.

Also important to have a flexible and forward-thinking budget.

We're talking about the recommended 2026 budget tonight.

We are in August of 2025 starting this um discussion, knowing that things will likely change between 2026 and tonight.

So just making sure that we have some flexibility built in the weekend.

Going over the budget and calendar process.

Finance is starting projections uh in in May, and management is setting themes for the next year.

In June, department heads are reviewing their expenditures and also looking to develop new requests.

Departments are then presenting those requests to the budget team in July, and the budget team then vets and finalizes requests during that period.

Uh, tonight, here in August, we are at the introduction of the budget to council in September.

We'll be publishing a budget book no later than the 20th to you all, and then in October, we'll have public hearings on the budget and council uh adopting the budget no later than the last Thursday in October.

Right, that's on you.

So I'll be doing a kind of a revenue overview.

Um, so we did this kind of in detail in June.

We did an in-depth look at kind of the economic outlook, and we talked about kind of our major revenue sources focusing on what we had finalized for 2024.

So tonight I'll kind of do a brief brief update of the economic overview and then focus on our major revenue sources with more focus on what we're projecting for 2025 and forecasting for 2026.

So quick update.

Um, you know, we did this in depth in June, and not much has actually changed, right?

We kind of had a pretty uh similar message we're gonna have tonight, and we're just to do a quick overview on the national level.

Um, you know, there's still a lot of concerns.

There's a lot of concerns that the economy is gonna go toward economic downturn, and yet it still hasn't come to this same level of we're not in a recession, right?

There's still some positive outcomes.

So it's still kind of this wait and see and point of uncertainty that we were in in June, we're still here now, right?

Some of the major concerns are inflation.

Um, so inflation had gotten to pretty reasonable levels.

Overall, it's actually still at a reasonable level.

The July to July numbers for CPI was 2.7%.

So 2% is ideal, just a little bit above 2% is still seems reasonable okay, but it's creeping up.

So the month to month went up by 0.2, and so a lot of economists are a little bit worried about the rise in inflation and specifically what are the impacts of tariffs, and is that going to cause more inflation?

And real concerns are stagflation or mod recession.

Uh, there's still a lot of concerns about federal policy.

Um, the president and the Fed are still having some disagreements about what interest rate should be.

There's a lot of uncertainty around tariffs.

So this is another thing that are giving economists a lot of pause of what's going to happen in the future.

Um, and while, but just to be clear, while these things are big concerns, another one that's not listed is a softening labor market.

Ultimately, people are still projecting growth in quarter three for the national economy, and so small growth this year.

Uh, if we kind of drill down to Colorado, the message we had in June was you know, Colorado went through a really uh time of great growth where a lot of revenues were increased pretty sizable across the region, a lot of building, a lot of new people moving in, and that Colorado might be in a time of change where this kind of growth is stabilizing, and that's kind of what we're seeing.

So some economic uh indicators are doing better than the federal level, like jobs, we're doing better than they are at the federal.

There's still strong business filings, but revenue is softening, right?

And you're seeing that impact, the state budget, right?

Where there is some real concerns about budget shortfalls.

You might have also seen uh news about the city and county of Denver and their layoffs or the city of Boulder and their hiring freezes.

So you're seeing the impact in certain communities.

Um, but overall, if you kind of isolate those individual organizations, like most uh local governments are seen to be like us, which we'll go through, which is seeing growth just nowhere near the levels we were seeing before, where it's been the last few years, I think the analyzed gross was uh five percent.

So, kind of in summary, we're still in this wait and see, there's a lot of uncertainty.

You know, staff will continue uh to kind of monitor all of this.

We were very cautious of all this information.

We built our budget and tried to find a nice balance of uh being conservative but also making sure that we're looking at the data that we're receiving.

So uh diving into Lafayette and our specific revenues, we're gonna focus kind of on our uh some of our biggest buckets, which is sales and use tax, property tax, and fees for service, and we'll start with sales and use tax.

Um, you've seen this graphic probably before.

We think it's a really helpful kind of uh graph for our residents to show you know when you actually spend a dollar in sales tax, what happens to it in a city?

So as you can see from the graphic, every time a dollar is paid in sales tax, the city of Lafayette gets about 44 cents.

And of that 44 cents, about 34 cents go to the general fund, and the rest is kind of divided between the legacy fund, parks, open space and trails fund, public safety fund, and mental health and human services fund.

So focusing on sales tax to begin, um, recent performance we've talked about before, not just here, but across Colorado and the nation, you know, with the pandemic, sales tax had a huge bump, right?

People were not able to go on vacations and travel, limited in the activities they can use, so people had a lot of time in their hand and some discretionary income, and they bought things.

So the city, just like a lot of places saw a huge bump in sales tax.

You can see that on the table in year 21 and 22 with big increases.

Since 2023, though, it's been a pretty either flat, right?

Either small increases or small decreases.

Um looking at 2025, we're projecting that sales tax will increase by half percent, essentially being flat.

A large part of that though is because of King Supers.

Uh, King Supers, as you know, moved to Erie as part of the nine-mile agreement.

And part of this revenue sharing agreement, um, the initial kind of agreement said that Erie and Lafayette will pay some incentives to help these companies come in.

So before we could collect revenue from King Supers moving, we had to pay off these incentives, and that's what started at the beginning of this year.

Uh, we are past that now.

So we were actually at the point where we are starting to collect revenue from nine mile.

But that did have an impact in terms of you know, for a good portion of this year, we were not collecting sales tax from this agreement because we're paying off incentives.

If you isolate King Supers and you just look at the rest of the city and sales tax, it's been much healthier.

We've seen we're projecting a growth of two and a half percent, two and a half percent.

Um staff took all this information thinking about you know, that we're gonna be starting from now on, we're receiving the full share of the revenue sharing from the nine mile agreement, which includes King Supers, as well as how the rest of the city has been doing, and we're projecting two percent increase in 2026.

This is in line with a lot of the kind of state projections.

I think the state, the last I saw was thinking 1.75 for the so this makes sense that we feel like it's a reasonable and yet uh conservative kind of growth.

Next we'll use this use next, we will move to use tax.

So use tax is kind of a local tax that we impose for the storage use or consumption of tangible personal products.

What when people take basically they buy them and they don't pay sales tax when they buy them, but we charge them use tax when they actually use them in the city.

So the three major buckets of use tax in the city are first building use tax.

This is also called construction use tax sometimes.

So when people uh build buildings, a lot of times they're not paying sales tax on this construction materials, and so we're gonna be charging them use tax on those construction.

The next one is motor vehicle use tax.

This is when people register vehicles.

And finally, the third category is business use tax.

Some other places call this other use tax.

It's kind of a catch-all, right?

Um, if a business, for example, gym wants to update all their gym equipment inside, and they don't pay sales tax on that, we're gonna charge them use tax for using it within our city.

Um, the main thing to talk about before we get into performance is that use tax is a very volatile category, right?

Because depends on how many buildings are being built, what what's our development, how much construction is going on, how many people are buying vehicles or registering new vehicles, right?

Because if you buy a new vehicle, it's gonna be a lot more registration fees than if you're having a vehicle that's 12 years old.

Uh how much are businesses updating their equipment and these types of things.

So the city saw a huge jump in use tax in the years 20 and 21.

We had a lot of development.

You don't see 20 there, but it was another big increase.

You can see though in 2021, it went up 12.8%.

2022, this really decreased that kind of new development slowed down, and we saw a large decrease.

And since then, it's been kind of small increases in 23, 24, and we're projecting a 1.4 increase in 25.

Well, these are positive, ultimately, um, we're still not the level we were at 2020 and 2020.

So for forecasting, you'll see that the number is negative.

Ultimately, it's it's just based on best practice.

When you're budgeting something that's so volatile, you got to think of it kind of uh in expenditures you probably heard of a lot of the time, ongoing compared to one time.

And it's best to kind of approach something like this in the same way.

Whereas when we're budgeting for something that's volatile, we're gonna think of what's our base, what's our ongoing?

What can we reasonably expect to receive every year based on recent performance?

And anything above that can kind of be seen as more as one time and should be more used for one-time expenditures.

So even though the city is saying that we're budgeting our forecast is a negative, it's not necessarily that we're thinking that we're gonna receive less use tax than we did in 2025.

It's just this is good budgeting practice of saying, hey, based on recent trends, this is a number we're fairly certain of that we're gonna receive kind of as ongoing revenue that we're gonna use for ongoing expenditures, and the hope is we get more than that that we use for one time, if that makes sense.

So moving on to property tax.

Um for every dollar that's paid in property tax, the city of Lafayette gets about 18 cents.

Uh, roughly 11 cents of that goes to our general operating, with two cents going to debt service, and about five cents to help pay for our ambulance and fire.

As we discussed in the June workshop, uh the city has been very fortunate to have really good revenue growth and property tax.

Um, so basically, our property tax is determined by the Boulder County, who every two years reassesses the value of properties in the city, and based on this assessment, that's how much property taxes is collected.

Um for prop for assessment years, which are done every other year, the last five assessments, we've actually averaged over 16% increase.

The non-assessed years aren't gonna be that big, so we've averaged about a percent.

Um 2024 was a very big year.

If you there was a lot of legislation going around, Gallagher had actually been not there, and so the city got a huge bump, right?

Our assessed values in 2024 went up 27 over 27%.

2025, this is not a non-assessed year, so there's minimal growth, it went up basically a percent.

So we've already have received our preliminary assessed values from the county, and essentially it's 4%.

And while that's positive, that it's it's a positive, some people are actually seeing flat or 1%.

Uh, this is well below the 16% that we've been averaging over the last five years, right?

So this is when we kind of talked about that softening of revenues.

It's good that it's growing, but it's not the level that we've experienced the last 10 years.

So next we'll move on to fees for serve fee for services.

Um code says that the city establishes certain charges and fees for municipal programs, goods and services to defray the cost of providing such services.

Well, the city provides a lot of fees and charges for services.

We're gonna kind of be focusing on the two major buckets.

So the first one is recreation fees.

These are fees that are collected by our community services department, so it includes swim lessons, uh, rec passes, golf course fees.

So this saw a really large decline during the pandemic, which you know made sense.

A lot of programs were closed, a lot of people were isolating.

Uh, so we saw a big decrease.

Since that time, we've had um four consecutive years of growth.

And 2025 is we're projecting to be our fifth consecutive year.

And you can see we're actually uh projecting that revenues collected by the community services department to increase by 11%.

Uh we believe this is for multiple reasons.

One, yes, usage is up, but we believe usage is up because our department community services department has done a great job of really tailoring programs to the needs of our residents.

We have a very active resident, and uh they've done a great job of kind of seeing where they want and making sure that we expand in the right areas.

Uh, as you are aware, the community services department is going through a fairly in-depth uh fee study update right now.

When that is complete, we'll be coming back to council.

While that process is going on, we've kind of done an initial thing for 2026, which is just saying, hey, we're projecting 3% for now, and when we come back with the fee study adoption, we'll have more information.

The next kind of major bucket is planning and building fees.

So this is also very volatile uh revenue stream because it's once again based on development.

It's kind of like it really flows and ties closely to building use tax.

Uh, the more we build, the more we're gonna collect in these things.

So uh just like building use tax, it's been a big decrease since 2021.

Um, staff is working hard.

So part of this is how much is built, and part of this is also how quickly can we go through the development review process.

Uh, there has been some issues with our development review process, and staff has been working really hard at updating these.

Uh, as you are probably aware, we're implementing new software, we've changed a lot of procedures and processes, and we're already seeing the kind of positive impact of that.

So, 2025 is projected to be the first year where this trend stops of going down, it actually starts to grow.

Um, and we think it's going to continue in 2026 for revenue.

Regarding fees, uh, planning fees, the last time they're actually updated was in 2019.

So long term, the city would like to do a fairly in-depth fee study for planning and make sure that we are recuperating the cost that we need to from when people develop.

But we need to do something in the in-term, right?

Uh it's been long since 2019, a lot of costs have increased, and we've not kept up with it.

So uh staff will be proposing a 9% increase in 2026, and then we'll do the comprehensive uh review of our fees in the future.

Kind of a stopgap.

Just to give you kind of a point of reference.

If we looked at CPI from 2019, it's over 20%.

So this 9%, while large number is less than half of what CPI has grown.

So uh in June, we talked a bit about updating the code for our fees.

Um, you know, this is something that staff has been working on for a while.

Uh there's been a lot of confusion and lack of clarity around our fees schedule and what fees are charged and the process behind it.

And so we are gonna be proposing a change of the fee schedule, which is gonna provide clarity and transparent regarding how fees are established and updated.

Um, it's gonna really centralize the location of these, have a really clear fee schedule that everyone can access and see what they are, um, and just really clarify what roles and where they go.

So when we bring this to council as part of the budget, you'll have much more information.

This is just kind of highlighting once again, just kind of uh let you know we'll be coming.

But ultimately looking at the code, uh it says council shall see the provision is made for the public peace and health and safety of persons and properties, and kind of based on that language, uh you know, we're thinking more the council proof fees will be things about public peace, health and safety, and some examples of what will be listed on there are on this slide.

Whereas city manager fees will be more about operations like rental facilities, uh use and park, things that are more kind of operational.

Uh so these are gonna be established to a new ordinance that comes for uh council's approval with budget.

So just kind of summarize all this.

Um we do think moderate growth in 25 and 26 in revenue, which is a positive, it is below this trend of five plus percent total that we've been seeing, right?

Things are still growing, it's just not at the level that they were before.

We talked about sales and use tax.

You know, 2% is great, but it's nowhere near what was going on post-COVID.

Uh property tax is well below the kind of trend of assess years that we've seen in the past.

And fees for service are actually trending more upwards, but ultimately the whole concept of fee for services is they pay for those services, right?

So this is an area that we can use to build programs and also kind of offset costs that we might not have been offsetting already that the general fund have been supplementing because they declined so badly.

It can't be used to essentially pay for other things outside of those, what those fees are for.

And finally, to kind of end where we started, right?

If economic conditions change, well, this can change drastically, right?

Certain things, property tax take a little bit longer to ship, but sales tax is something you can see in immediate impact.

If the economy is shifting, people aren't gonna go to restaurants, and we're gonna see that really fast.

So staff will always kind of be monitoring this and ready to pivot if we see new information.

And that'll pause for questions.

Great.

Any questions?

Yep, yep.

Thank you.

Counselor Fritlton.

Um first question the 9% for the planning fee increase.

How did we get to that number?

So ultimately we were planning to use CPI, right?

Because that's a pretty established thing that um we could use that.

And we just felt like with all the changes that are going through development review, that proposing a 20% 20 plus percent increase at this moment was not the right time.

Yeah, that we'd rather finish this in depth and really kind of true it up at that point.

Yeah.

Uh so we kind of landed on nine because it seemed like you know, if we keep on not updating it, when we finally do that true up, it's gonna be huge.

So it seems like a hey, this is a step one of two.

Okay.

Let's do something that it's still probably well below what the cost should be, quite honestly, based on how much costs have increased, but at least something to manageable in the mean term.

Okay.

Um I also have a question around the community services.

Um I'm curious around like the philosophy a little bit.

Like when I hear that we increased it by 11%, that's amazing.

Um my question, like if this was a business providing that service, it would probably be how much do we think we can increase our sales revenue next year?

Um obviously you don't want to do that, right?

You want to be realistic.

But how do you balance that with you wanna be realistic, but also maybe it seems like if we could increase by 11%, there's probably opportunity there.

So how do we try to gauge and then drive to that opportunity?

Does that question make sense?

So the 11% is the year over year, not what we increased our fees for, right?

Yeah, just year and year over year.

So legally we can't charge, we are not a business, right?

So we can't charge more than what the service costs.

And so what part of what we're doing with our recreation fee study right now is better determining what does our service cost.

And then that gives you kind of the maximum dollar amount, but then the philosophy piece comes in at um because we're municipal government, the general fund typically subsidizes it, and what's that rate that we want it to be subsidized because we feel like it's a true community value, right?

That affects the whole community, or what's the rate that we want other programs in that same kind of service area to subsidize programs, right?

So I give the example of like a learn to swim program is really good as far as a safety thing and for the community, right?

So maybe we don't want to charge as much as it truly costs, and we subsidize it pretty heavily, but a personal training class, you know, is a very individualized thing, and so we can charge more for that because it helps offset that other community program.

And that's the exercise that we're going through right now that um when we come in October, we'll have the consultants be giving kind of their findings, right?

We're doing a survey and all that piece.

Is that it does help?

I think I'm still maybe the place where I'm yeah, I mean it definitely makes sense that I look.

I probably I should save this question for when we get that back.

So it's okay.

Um but like I guess I would think too that you could say, okay, we are gonna charge a little more for this one that um we feel like the market will allow it, right?

Um, and then use that excess for continuing to to develop those programs, even if we don't fully know what that development looked like yet.

So it's not that you're making money to go back to the general fund.

I recognize you can't do that.

But you could make money, maybe I'm asking a question.

Could you make money to allow for increased flexibility in the future to do a future program that is a it does need to be subsidized?

We just don't know what that program is yet.

Typically, I would say probably not, like from just a legal standpoint, right?

I think you can defend behind your philosophy that the excess charge is going to an adopted philosophy of a current program.

But I mean, we certainly can once we get to that point have that kind of philosophical question.

But that sounds good.

Yeah.

Thank you very much.

I appreciate it.

Are there any other questions?

All right.

All right, great.

Just keep moving along.

Yeah, so we'll shift over to the expenditure interview overview.

And so, you know, as Morgan pointed out in kind of the early budget process, we as a department team kind of think about what some of our priorities are going into the next year's budget.

And so they're listed here.

Um, you know, I think the big piece that I wanted to hit on for tonight is um the last several years that we've provided a budget to council, we've really kind of squeezed the lemon on the revenue side, right?

So we've done cost allocation plan that allows the enterprise funds to pay for general fund services that they would have otherwise paid if they were a business on their own.

We've implemented a sales and use tax program, um, including that economic nexus that we imposed for online purchases.

We've done credit card cost recovery last year.

You guys approved, and we just recently were awarded that um Medicaid EMS supplemental program.

So we've really identified a lot of opportunities in the revenue area, which is kind of that new revenue streams.

This year we felt like um, besides kind of looking at the fees for service and developing you know a program for that, that we really needed to start to focus on the expenditure side.

And so because we were in a lot of flux, like without going to like a very zero-based budgeting program, which we might want to kind of evaluate for next year.

We started um with the help of our senior budget analyst looking at kind of those big obvious areas where people, by no fault of their own, their budget just hadn't been spent, right?

It's kind of the best practice.

I always encourage people you have a budget to spend it.

And as we've shifted kind of operations or as we've added staffing, maybe we didn't cut consultants, right?

And so we really looked at those those areas, and so a lot of what we see tonight um is just kind of those net ads, but we've been able to absorb a lot of other kind of CPI increases by shifting a lot of the budget, I think, between reductions, reallocations.

We found about a million dollars in the general fund that we have kind of moved around to support just those ongoing increases.

So I just wanted to start with that because um, you know, next year I think there's more opportunities.

I think we've maxed out on a lot of the revenue stuff, but I do feel like with having a senior budget on board, a new CFO, we're really gonna dive into those expenses and program areas.

So we touched a little bit on some of the salaries of benefits in the last um presentation, but we were um, as you know, adopted last year our first um citywide compensation philosophy.

And so, in line with that, um, we've been working with other agencies that are our peer agencies to kind of determine what you know they're looking at, and as you've heard a lot are um kind of fiscally constrained as well.

So we will continue our merit-based program for our city employees where the projected average is three percent.

Again, that's average.

We typically go somewhere between a you know one to four, four and a half percent, and then you average out based upon your merit.

Um, we touched on collective bargaining where we have a tentative agreement with the PD for 4%, and we have a placeholder for the umployees covered under the IAFAFF agreement.

Um benefits for the second year in a row.

We had been fairly lucky, I would say um a couple of years ago, seeing very limited, but nationwide, um, we see pretty substantial increases in health care benefits.

And so we estimate they're close to over 10%.

The unfortunate thing about the timing is we typically don't get those until after the August workshop.

So again, we have a placeholder of there.

Um last year we had pretty high increases as well, and we did some changes to our plan to decrease that.

Again, we might have squeezed the juice a little bit there, but we will evaluate it to try to get that um lower, but we do feel like we can cover it for um this year, and then I think you know, as SERP shifts back over to human resources, one of our goals for next year is to go back out to the market and see.

We have a really great plan and it's valued by the employees, um, but I think we just don't know what else is out there.

So that's one of the things next year that we'll be bringing forward if we feel like there's better opportunities.

Um so again, very limited after several years of a lot of position growth, limited positions being proposed in this 2026 budget.

The first one is um a Dr.

Cog sustainability grant that we are applying for in October, so that's why it says TBD.

Um, but it is the um building policy collaborative jurisdictional sub-award managed by Dr.

Cog through um a federal climate pollution reduction grant.

And so it's really focusing on policy building around climate pollution emissions and what we can do in your codes.

And so this will be largely a position that works out of our planning and building department, but heavily supported by our sustainability department as well.

Next, we have a proposal to reclassify a part-time court clerk to full time.

So the court has historically operated with two and a half FTE, and that's two and a half is actually more recently.

It had been two for quite a while.

But we've seen very significant increase.

You heard from the judge a few months ago in our caseload, but also our case complexity.

And so our number of citations, I think, went nearly 50% from 2024.

I think that's also in conjunction with having a more fully staffed police department.

They tend to go hand in hand.

And so, you know, the court and with the leadership of Judge Bailhash is working to really improve their customer service experience and transition to more of a proactive case management versus reactive.

And so this FTE brings them up to three.

We have significantly higher number of caseloads than our surrounding peers who have at least three positions.

So we feel like this is definitely warranted, if not further evaluation into what the future of that looks like.

A large part of that is we're, as you've seen on the map, surrounded by a lot of highways where people go fast and have a lot of accidents.

So we're hoping council supports this position.

And then the last position is funded out of your dedicated open space funding, but it's a part-time open space programming and outreach position.

So if you remember, last year we looked to begin to identify different ways to diversify our offerings of open space programming and went from a single contractor to more open and variety of contracts and community partners.

And so we also implemented a new volunteer management system within open space that we're going to be piloting and pushing out to other departments that have volunteers.

But I'm pleased to say that they've onboarded nearly 40 new open space volunteers.

So this position would certainly help not fully manage this whole program, but you know, one of the pieces that we're really hoping is to have other staff be more visible on trails and education piece, and this could be focusing more on the volunteers, so it would free up some of our current staff from those current duties to allow for more proactive trail management as well.

So again, the operating expenses, there's really that concerted effort to review the base budgets and uh compare and repurpose where we can.

So we have been able to assisting covering some increased operations, but we do have a few that went beyond that that we'll be highlighting in the next few slides.

Um back on the court, you know, I think for a long time uh we hadn't done a lot of investments in there, and so I think between the staffing positions, uh getting a new judge on on hand has really highlighted some of the needs.

And as you know, we've been doing a lot of technology modernization.

The first one began with our human resources implementation program.

We're working on planning and building, and we really feel like our court case management system is next.

One of their big goals for 2026 is to go paperless.

It's a citywide goal, but it's definitely one area that is heavily papered, and a large part of it is because of the constraints of their current system.

Um, you know, and with that paper kind of system, along with any other sort of paper system, it can lead to a lot of errors.

Um, you know, it puts us at higher risk, and so shifting to uh online platform also allows for uh better customer service for our community members that go through the court system.

We are also pursuing a grant for this to help with the management.

So with the help of IT, um we're looking to see at that.

So we put in a placeholder for this without that grant, but could obviously flux as we receive word on that.

Uh the next thing uh, you know, we talked last year at length about some of our capital facilities, and one of them was the library potentially pursuing an automated um management or automated materials, thank you processor.

And you know, as we really have looked at trends, the trends have really shifted from paper books to online books, and so we don't feel like actually spending a couple million dollars on an automated system would be beneficial, but we do feel like the next step in kind of modernization and being proactive is library RFIDs, so putting them on the strips.

This would really help them with staff capacity, so um kind of faster check-ins, checkouts.

Um, it could also allow us to move forward with uh, you know, you'll see a lot of communities that have vending machines or lockers for material books that we just can't have because we don't have a good tracking system on them as well.

So we're looking to include that for the library that would kind of further along some of the modernization without doing a full-blown remodel.

We also kind of our typical annual network and computer replacement process.

That would kind of make this more of an annualized contribution versus you know ebbs and flows and what the replacement program looks like.

So for this year, we put in money to kind of do that again for one more year, but um this time next year I anticipate that we'll be coming forward with a proposal to increase or include an internal service fund for computer and system replacements.

And then we had uh a few contracts that we just couldn't you know fit into the existing budget reallocations.

Large part of it is our ESMEMS or medical consumables, as we have seen calls increase, those costs have just increased as well.

We also have, for those that don't know, a medical, a contract medical director that helps support the fire department.

And so they're just naturally increasing their cost as well as dispatch that's provided by Boulder County, and then some kind of minor increases in our security and court appointed councils, and then just general inflationary pressures that we didn't absorb through the base budgets.

Uh moving to dedicated funds.

Yes, this is a real picture of a real potato at our um Thomas Farm, but um largely for the dedicated funds, it comes back down to um a lot of what we were seeing in just our general fund as well, is just sort of the inflationary costs.

So within the parks and open space trails, we have just vehicle parts, we have water, we have fuel and legacy as we've discussed before.

Um, you know, as we increased rates to our community as well as ourselves, um, that water subsidy for Thomas Farm has increased.

So we'll be talking more about kind of the future of what that looks like and um if we roll that into rent or not, we did extend that um lease one more year so that we could have more of a robust conversation.

Um, and then the conservation trust.

Uh, typically you will see this used as largely a capital fund, but um as we've seen water increase for parks and not having enough to kind of absorb those offsets.

The conservation trust actually allows us to also pay for water and some operations um stuff.

So we felt like we would put that in there for this year as we tried to kind of better sort out what what our ongoing costs in our post and our legacy fund is.

Um, one thing I'll note for this, and it's not necessarily 2026 but 2025.

So if you recall, we shifted all of our open space operations costs into the legacy fund in 2025.

In prior years, we had been doing a transfer, which one just got confusing, and two wasn't super transparent about what the true cost was.

And once we moved it over to that, we had realized that the parks and open space um reserves had been subsidizing pretty heavily and was not sustainable.

In fact, we would have had to make some substantial cuts if we didn't true up some of those transfers.

So at your next meeting, um, we're gonna be asking for consideration of a budget supplemental for a mid-year one, but part of it will be the legacy fund uh transferring a portion, not the full thing, but just to get the post fund on a more sustainable path and to recognize that it had been absorbing a lot of the open space operational costs.

So we'll explain that in more detail, but I just wanted to give a heads up since we had an opportunity tonight to talk about that.

Um shifting to capital, as I've been mentioning over the last kind of you know, several months operating is pretty limited, pretty tight as far as increases, but we really want to keep capital at the forefront and actively plan for repairs, and so we are trying to include some several large item capital projects in this year's budget.

Uh big one, as you know, and because you adopted several new plans now is um implementing our multimodal transportation plan.

So in recent history, I mean, even back before kind of my time, 2019, we've been focusing on major capital projects versus increasing our maintenance budget.

So we've been spending the money that we have towards major capital projects, including the reconstruction of public road through Old Town, kind of removing those traffic signals, the South Boulder Road Project, 111th intersection, and then most recently the 100 and street, 120th Street and Coal Creek Bridge.

So for 2026, it's not that we're spending more overall, we're just shifting it to ongoing kind of maintenance to help support so kind of our asset management efforts.

So, you know, as you well know, taking care of our existing assets is cheaper in the short term than replacing an entire road.

And so we're using this to kind of rehabilitate our roads more proactively before they need deterioration.

It's also our goal to integrate the Vision Zero action plan that you all recently adopted into our annual programs whenever possible.

So for our street maintenance program, we currently budget and have budgeted for several years 2.6 million.

So we are doubling it next year just to try to get a big push, right?

We might not be able to sustain that number consecutively, but it definitely will help kind of give a broad brush for it.

We're adding transportation safety improvements.

That's a new line item for 300,000.

And then last year we asked for one-time traffic signal repairs.

We're making that ongoing one, at least until we get ahead of some of those replacements.

And then our sidewalk maintenance fund remains the same, but as a reminder, it is funded through the sidewalk maintenance fee that residents pay on the utility bill.

So big emphasis in transportation and multimodal support for next year.

Also shifting towards some of our public safety fund.

As you guys know, we are moving forward with three large capital projects, but we also know that there's other facilities that are aging, including our fire station one.

Now, this is not a project that will likely be in the 34 million dollar range that needs bond support.

But because we had already done those studies in the other facilities, we don't know what this looks like yet, but it's likely probably several million dollars that we'll need to plan for in the future, but likely not need to go out for a bond for.

But we wanted to at least be proactive, kind of counselor Footland, to your point.

I remember you being like, How did we get here for some of these projects?

Right?

It was because it wasn't proactive.

So we want to get ahead of this and start to look at this aging facility.

Uh you know, it was built in just a different time when fire service looked different, but it has a lot of opportunities on the site.

Um, you know, right now, like the the workout facilities in the apparatus bay, probably not best practice, but that bay is incredibly tall, and so we've seen other fire stations add enclosed mezzanine for it.

So there's just a lot of opportunities that we could incrementally chip at.

Um we also don't really have a training space that's department wide, um, and so we but we have land, right?

And so there's different module pieces that you could look at to not do a full training center like Louisville Fire District does, but you know, something that allows us to do something more regularly.

So we're not entirely sure what the design budget could look like.

We anticipate usually it's about 10% of what a total cost is, which might be around three million, but we wanted to put a placeholder at least to get an RFP, and then if we need to come back, we can have a conversation about whether that's still a priority.

But I do think it's prudent for us to start to better understand what our long-term plan is for some of our aging facilities.

Um we also are requesting to replace our rifles within the police department.

This would be funded out of the public safety fund.

Um, I have to read this because the years are staggering staggering.

So we replaced or we received these in 2015 as part of a um Colt MI rifles or sorry US government military surplus program, but these are rifles that were manufactured in 1967.

And we're not the only ones, but um, you know, as this was a big push by the federal government where we provided them, but as they've aged, you know, even 10 years since we bought them, we're finding that they just are a lot heavier than the current ones, not as flexible.

Um, rifles have been utilized in the King Supers massacre, for example.

Um, and so they're really important when you have those kind of uh big big events, and so this would be replacing those to make them kind of more suitable.

Uh they can be flexible based upon size, so it's not a one-size-fits-all, you actually can fit it to your liking.

And then just general facilities.

So I put a map just showing how many facilities we have, right?

And so we try to each year do kind of citywide replacements.

We're doing uh boilers at the library and police, citywide um door controls, fire alarm monitoring.

We recently kind of implemented an annual parking lot repair program for our city facilities.

Uh we also talked last year about doing a three-year phase generator replacement, um, and in some cases just adding a generator, not necessarily even replacing it.

We also talked last year about doing a three-year phase generator replacement, um, and in some cases just adding a generator, not necessarily even replacing it, and then um you know, one of the kind of major sustainability items is doing some of our LED conversions in our facilities within our community services types of funds.

Um, so this is again where the conservation trust is largely capital, but we are continuing on with our annual park replacement program at your Yarrow Playground next year.

Um, also looking to uh replace two of our paddle boats.

We um want to incrementally kind of phase out and get ones that are more modern, have shade structures for the community members that use them.

And then replace the Festival Plaza shade sales, they are original to uh that area and have seen significant fading, so just replace those, and then several um pretty significant water park projects.

So, as you know, when we did the 2016 bond, it did not touch the lat pool, and so we have a lot of areas there that are close to if not beyond life life cycle um process, so working on that, including also adding an additional shade structure.

If you go there during the summer, there is very limited shade and it can get very hot and all that concrete.

Within golf, um, we are looking towards um they have a wall raw water line that um is becoming end of lifespan as well.

So looking at that um replacement and some maintenance on that, as well as some uh it's minor equipment but large dollar amounts, uh, a material spreader, a rough mower, and a surrounds mower, which are different.

And then I just wanted to note um because we are underway with a proposed bond question in front of the members.

It is important when you have something like that that you also have contingency planning.

So this is not included in the 2026 budget, but it may be something shall the bond not pass that we'll revisit with council to discuss because there are some critical infrastructure needs within the existing buildings that are included in the bond package right now.

So I don't want to double budget for them, but you know, City Hall might need a roof replacement, um, including some replacements of its public access doors and fire alarm monitoring.

The service center in the fleet bay areas uh would need a plasma welder that's at the end of its life, uh duckless HVAC and some additional modular space, and then the recreation center.

We are currently experiencing leakage from our uh pool boilers and um some concerns with the um ability for the UV filter.

So just wanted to give council a heads up and the community heads up on that these are items that came up through this budget process, but we punted on them uh pending the outcome.

So again, we've seen rising costs in a lot of it, but we've actually really tried to do a good job reviewing our actual versus budgeted expenditures, and then um really focusing on kind of those core operations with limited additional expenses besides some cap major capital items that are needed.

So I'm happy to take any questions before we shift over to utilities.

We have two yeah.

Um the first one is the one with the slide we just talked about.

So the capital improvements on the three facilities that are on the bond ballot.

Are you saying those are things that you are holding on?

And if they if the if it passes, then we won't be doing those.

That's correct.

So I did not include them in the 2026 budget, but we have capacity to add them during a supplemental next year if we need because the roof is um we probably have leaking right now from the recent rainstorm, so there are pretty critical stuff, but we didn't want to do them now if we were gonna be doing something in a year or so.

Okay.

The second question I had is I'm not sure if I heard you correctly, but there was one position, and I'm not sure if it's being funded by the climate pollution reduction grant, or it's being hired to uh work on the climate.

Thank you.

Yes, so it is a $600,000 grant over I believe five years, and we anticipate getting a couple hundred thousand next year, and that would fund the position to achieve the aim of the grant, which is to do policy work around um pollution reduction.

So it would not come out of general fund if we do not receive the grant, we would not move forward with it.

Okay.

So now what's happening is you get the grant and then they pull it from you.

So do we have a plan if that happens?

Is that that is that something we address next year?

Should we get the grant?

Yeah, I think it then it comes back to council to say is this a general fund priority or not.

Okay, yeah, thank you.

And when we hire these positions, we make it very clear it's grant funded and subject to funding allocation so that we don't set ourselves up for having a person on board that thought they were here in perpetuity as well.

Yes.

And I only asked that because in the next few months, every grant is going to have a termination clause in it.

Good question.

Okay.

Especially grants connected to the IRA and talking about climate.

Maybe.

Actually, it's for all.

So if the Office of Management Budget is gonna say termination for if it doesn't meet the uh agency's priorities anymore.

So yes, it's a it's a different way to think and uh adapt.

Yep.

Um okay, my question.

So you mentioned capital repair.

Great, talked a lot about that.

That's awesome.

And also capital replacement.

What's our philosophy around capital replacement?

Do we do we are we able to fit it in budgets?

How do we think about that?

And maybe uh help me understand what that means as well first.

Make sure I'm on the same page.

Yeah, so um capital replacement is largely around lifespan, right?

So you talk about the the two mowers that we had for a golf course, right?

That they're there's a typical lifespan or typical mileage on those, and so we try to identify it's gonna hit in 2026, so therefore we try to build up funds to do that piece of it, right?

Great.

So that's a replacement.

What we um have not in what you see, and the reason kind of for the conversations around the capital bond is that we don't have the major facilities.

So we I think we have a fairly good equipment replacement program, shall I say?

We don't have major facility replacements, and so a lot of that is what we're doing is more of the repair.

Um the HVAC breaks in you know the senior center.

We're gonna go to repair that because it's maybe cheaper at this point than a full replacement.

Yeah.

Understood.

So it's an art, not a science of whether you do repair or replacement, and it's kind of the cost benefit and we're adding funding.

I do I mean the budget impacts would be vast, but do we think about um we need a fire station in 10 years?

We should start saving now for that fire station.

Do we do things like that for like those larger facility or those larger assets replacement?

We do that as well to an extent.

To an extent and and to the extent I will say that it is likely as a community now the growth bills may affect this dramatically.

Um is that I think we did that work and we realized we're probably an agency that or you know, municipal government that we'll only ever need one library.

Yeah.

We'll only ever really need one rec center.

I think we've done a work that says we're probably good at two stations for fire stations.

So I don't know that we have in our future major net new, but it could be to the point of the fire station one.

It needs some serious help to make it more modern.

So it might not be a scrape and scrape, but yeah, it could be some you know, multi-million dollars, probably not in the tens of million dollars types of projects that we're now starting to try to plan for so that we don't get ourselves in a good multi-million dollar situation.

Yeah, I'm glad we're planning for that.

Because I mean there's lots of infrastructure that we need to think about in that way, right?

Obviously, I'm talking to the team that thinks about all this.

Um so I'm glad we're thinking about that.

Like, is there a certain rule of thumb that we apply to those really high dollar things?

Like you know, it lives for 25 years, so I need to put away whatever that percentage should be each year.

Does that question make sense?

Yeah, that makes sense.

I don't know that at least for general fund assets that we have gotten that robust, I'll say, and we're gonna be talking about it in a minute.

We've done much better at utility funds, but even then with the way cost estimations have been, right?

When we thought of a building being, you know, 15 million five years ago, it's a hundred million.

And so that's also the challenge sometimes that you run into the gaps.

Your best plans can sometimes still not achieve it, but I do think it's one of the areas, you know, the general fund facilities, right?

Here, fire stations, senior center, uh library, rec center, like we are trying to do a better job.

We just got too far behind that we couldn't do it in one kind of fail swoop without some assistance.

But we do do it to a different level in the utilities.

Okay, great.

Thank you.

Anyone else questions?

No.

Great.

We are gonna do a quick staffing transition so we don't get too crowded up here.

Good evening there, members of council.

So I'm gonna do just a brief introduction and recap of a couple of things we covered at the June workshop, and then handing things off to Todd Cristiano with Reftel's Financial Consultants.

So just briefly at the June workshop, we gave you kind of a some preliminary info about projected revenues and projected expenditures in the three utility enterprises.

Generally the revenue side, things are looking kind of as we had predicted.

It's still very much dependent on the weather, and we continue to see that.

But even with the changes we've made in rates, we're not seeing dramatic changes in behavior.

We've added some uncertainty, I think, around how growth projections have changed recently in terms of understanding how revenue is likely to evolve with timing of build-out and our mix of residential commercial.

But revenues are kind of what we expected.

Projected expenditures are just continue to be incredibly volatile.

We continue to struggle with our infrastructure reaching the end of its useful life and requiring emergency repair and replacement.

Interest rates have increased dramatically, which makes a difference as we look to take on debt.

There's been a lot of legal action related to some of the regional water projects that we're involved in, which has caused both time and money implications.

And again, as we try to plan for future expenditures, having some lack of clarity on how many people will need to be served and what types of uses have makes it an additional challenge.

So I want to just give a couple examples just to give you a reminder of the order of magnitude of some of these things we're looking at.

So the water reclamation facility back in 2019, our engineer at the time had predicted that that the probable cost of that was about 15 million dollars.

By the time we got to 2021 and had a set of plans and went out to bonds, it had escalated to 46 and a half million dollars.

And now we are moving into the final phases of that, and because it's been a multi-year project, some of those things have we haven't been able to get pricing until more recently, and we're now seeing the impacts of both cost escalation and tariffs on that.

So those are really huge percentages on a big regulatory mandated project.

Water treatment is is probably even more extreme case.

Um estimated that to be about five million dollars.

Um we updated that in 2022 to 25, and the work we had done last year with a new consultant put that somewhere in the 150 million dollar range, um, and that's not including finding a new site because it determined that the site we had was not suitably sized, and then finding a new facility will also have some additional cost to get the water from wherever the facility goes back into the city's transmission and distribution system.

So I mean those are really colossal number changes.

Um another big factor when we bonded for the water reclamation facility back in 2021.

Interest rates were you know at record lows.

We got 2.3% on that.

We're probably looking at in 2026 if we're able to go out for the water treatment facility, something more like five percent.

When you look at that, what that costs over the life of a bond on a hundred and fifty million dollar project, um, it's a huge difference.

At 2.5 on a 30-year, we'd be looking at paying like 63 million dollars in interest on 150 million dollars.

Uh at 5%, it's almost as much in interest as the project cost.

So just that shift that we really have no control of in terms of of what the market's done will have a big impact on how we need to come up with funding moving forward.

Um, and then finally, as I mentioned, um there have been a lot of major issues in the region with environmental lawsuits against major water projects.

Um, one recent example is the Northern Integrated Supply Project or NISP.

The decision of the project partners was to settle a lawsuit with a group over that that settled for 100 million dollars.

Lafayette is about four and a half percent of that project, so that's four and a half million dollars for Lafayette to resolve that issue and move forward with permitting.

That project is up to over 2.1 billion dollars overall, with us being a portion of that, and the timing and phasing of construction has gotten increasingly uncertain just with all the the costs associated with that.

So that's sort of setting the stage for what we brought in Raff Talis to help us untangle.

Um we were really so Todd will have all the answers.

Um they have been helping us work through this.

So as you know, Rap Dallas has helped us on our last two rate studies.

This time around, we were really fortunate to get Todd to personally manage the project for us.

He is nationally recognized as an expert in this, does this work all over the country and the region, and um I'm gonna hand it over to him to talk all about our rates and fees and what our plan is to try to tackle some of these challenges.

Wow, these are really high.

Jeff, you stole my entire introduction.

Uh good mayor, members of council, Todd, Christiana, refellis.

Tonight we'll be summarizing uh the results of the work you've been doing with Jeff as he had just mentioned, and we're walking through some of those, some of those numbers.

So you can see we've got an agenda here.

Uh, we talked about a couple of items, really the financial plan, the impact to customer rates and bills, and then we'll talk a little bit about uh tap fees as well.

And these are all preliminary numbers.

I believe we're coming back to you in October with some final numbers, so those will be sharpening our pencils between now and then based on your comments and feedback tonight.

And like Jeff mentioned, uh, we're a nationwide firm.

We have offices across the US and create, including Colorado with a strong presence here.

In fact, a lot of my clients are your neighbors.

Um we've been uh had the opportunity to work with Lafayette in the past, not only on the utility side, but also on the general government side.

We did a council retreat with some council members, and maybe some of you were part of that as well.

So it's a pleasure to be back here.

Why are rate studies important?

We get this question quite a bit.

What is a rate study and why are they important?

Well, we want to make sure that the utilities are financially sufficient, not just for one year but over a period of time, considering all the capital improvement program projects like Jeff had mentioned, can be fully funded while minimizing the impact to uh to ratepayers.

And more importantly, a rate study can help promote fairness and equity.

And when I talk about equity, that has a kind of a couple different definitions behind it.

But in terms of this, we're talking about proportionality, meaning that customers are paying their proportionate share of cost to provide them service because each customer class, residential, irrigation, multifamily, commercial, all place different types of demands on the system, and there's a different cost incurred in order to provide that service.

So that proportionality and fairness is very important.

But also it supports the long-term planning with the ability to look ahead into the future, look into that crystal ball and say what do we need to do today to start planning for the future because unlike many other industries, uh water wastewater are very capital intensive, and it takes a long time to design design and build and operate these major facilities.

So it's not just a short-term making decisions year by year.

You have to decision you make today is going to impact you five, six years down the road.

So some of the utility challenge today, it says water, but really it applies to wastewater and stormwater for that matter.

Obviously, inflationary pressures, we've heard that quite a bit, stringent regulatory requirements, but more importantly, rate increase fatigue.

Um I'm tired of things going up, and nobody likes a rate increase.

But uh water, wastewater, stormwater services are critical services to the public, and we need to make sure that we maintain a level of service in order to do that.

And unfortunately, that does cost money.

But the whole idea with the rate studies to help minimize that impact to customers by looking at various funding sources to order kind of smooth out any sort of jumps in uh capital capital needs.

Obviously, climate shift's the number one, another one just by the rain tonight and other things that have been going on.

Uh, Jeff mentioned the future borrowing terms and borrowing terms today, and just the increasing cost for reinvestment capital and and the frequency in which you have to do it.

Uh, we're seeing more and more Colorado utilities having to invest a lot more in repair and replacement.

If you look across the US, it kind of started on the East Coast and kind of gradually came this way just based on the age of the cities and whatnot.

So, a lot of the utilities here have been uh really having to ramp up the repair and replacement.

So, all those forces are really pushing down on utilities, and obviously, to keep rates low, you know, it's that balancing act.

Uh, we talked a little bit about CPI and inflation tonight.

This graph right here is three lines.

The black line is the CPI or the consumer price index from the Bureau of Labor Statistics.

It's a general indication of inflation over the past couple of years.

As you can see, it's got a little bit of an uptick in the past few years.

But within that CPI is a basket of goods that it measures, everything from diapers to raw chicken and everything else, but also water and sewer bills.

And you can see the amber colored line of water and sewer bills that pulled that out.

That's been increasing at a much higher level than CPI.

And a lot of that has to do with a lot of utilities were able to take advantage of free capital federal grants back in the 70s and 80s.

All that has uh reached its useful life and they're having to restart and rebuild those facilities.

And I just wanted to contrast it against electricity.

Uh, electricity always seems to be going up quite a bit, but when you look at the uh when you look at the curve here, it's not quite as much as water, which is a little surprising to me, but um it's just across the US, they just seem to fluctuate more.

But the water and sewer, this is across the US.

So a lot of utilities, if not every utility is facing this problem.

And looking once again, the American Waterworks Association, which is one of the foundational organizations for supporting water utilities, produces a state of the water industry every year or every two years, where they interview hundreds upon hundreds of utility managers saying, what are the top things that keep you up at night?

And I've circled them here, it's repair and replacement, and these have been the top five for the past 10 years.

So it's not going away, it's here to stay.

And as prices increase for a variety of reasons, it's gonna become more and more difficult to help justify those costs going up because they need to be replaced.

Pipes are at a site, out of mine, and nobody really cares until sewer backs up in your basement.

So uh that makes it even more of a challenge to get those funding to get those replaced.

Uh so our area of focus, Jeff mentioned, obviously a financial plan.

We look at a long-term financial plan.

We we talked through rate design, and I'll go into a little more detail in just a moment, and then we update your tap fees with some of the recent capital projects that are going to be happening that Jeff mentioned.

So let's talk financial plan.

Um is simply looking at your revenues versus expenditures, making sure that your revenues are sufficient to meet your expenditures.

When we talk about revenues, we mean water rate, revenue or wastewater rate revenue, tap fees, loans, bonds, uh, grants, um, or any sort of other miscellaneous revenues like turn-on, turnoff fees and hydrant uh rentals and all that sort of thing.

We need to balance that against against your expenditures, which is OM expenses, uh, ongoing repair and replacement, and debt service if you have some debt, which you you do.

Uh that all works under this umbrella of meeting certain criteria, and because you have bonds, this is very important.

One is reserve levels.

You want to maintain a minimal minimum amount of funds in the bank should something go wrong that is unexpected or unanticipated, plus bond covenants when you shoot bonds, usually typically have a requirement for that.

The other one is debt service coverage ratios.

That's just telling the bondholders that we have enough money to pay uh the debt service so you can get paid as well.

It's the inverse of debt to income ratio when you buy a house, which is very important to the bankers.

Um, so it's important to maintain those coverage ratios, and sometimes rates need to be increased just to meet those coverage ratios, not for any sort of repair and replacement capital projects just to meet those coverage ratios.

So we go through all these machinations and optimization of the financial plan to find what's the best level of revenue adjustments, if any at all, to help fund all these, all these costs over not just one year but multiple years.

And one of the things we have to consider is not only the financial risk of doing or not doing system-like interest rates, that sort of things, but the operational risk.

If we do zero percent increases for the next five years, what's the operational risk and consequence of failure or something?

Nobody wants to boil uh have a boil water order.

So it's kind of balancing that and it is a delicate balance of trying to find out you know, how do we maintain the system, maintain a great level of service while minimizing the impact to customers.

One thing that we did with this study, and we had done with the previous study, but I think we actually went into a little more detail was capital project delivery optimization and best practices.

This is basically uh in-depth look, kind of an outside looking in look by one of our engineers to come in and evaluate your capital program looking at are you doing the right amount of repair and replacement?

Are you doing the right repair and replacement?

And have you done all these other things ahead of that in order to do the repair and replacement?

So, for example, um, before you replace a sewer main, you obviously probably want to TV that line to make sure that it's broken or has a leak.

So uh we come in and we did we did some work there, we helped uh Jeff and staff determine uh appropriate spending levels based on industry best standards, which is a which I think is a great way to make sure that you have proper funding to do what you need to do with repair and replacement.

So we spent quite a bit of time on that.

And what it also does, it helps optimize the capital plan in the sense that we can move things around to better flow of funds uh in the future to help minimize any sort of revenue adjustment.

There are um oh I took that one slide out, so pardon me.

So here's some capital uh plan totals for uh each utility.

You can see that water utility is the greatest with that uh the new water treatment plant, NISP, uh that construction costs, and just a variety of other miscellaneous things that add up to about 400 million dollars.

Some of those will be funded by tap fees, some of that's repair and replacement funded by rates.

Wastewater utility, uh, we are just finishing up the water reclamation facility, so those costs have kind of been incurred.

We do have a lot of ongoing repair and replacement cost, and I added it up about 2.3 million dollars a year of you know, manhole replacement, TVing lines and clean sewer cleaning, those sorts of things that need to be done on a regular basis.

And stormwater utility has about 25 million.

What's interesting about stormwater is that we don't have equal annual repair and replacement.

We're actually ramping up our repair and replacement in the stormwater program from approximately 300,000 to 1.6 million over about five or six years because apparently there's quite a bit of work to be done to get that up to a great level of service.

So all those forces result in how are we going to fund all these things?

So I've got three bar charts, they're all the same for water, wastewater, and stormwater, but I just want to give an indication of for 2026.

This is how the revenues expenditures are shaking out.

So on the left here, this bar shows our expenditures that we need to fund from rates or and miscellaneous revenues and that sort of thing.

We have our OM, 10 million dollars, debt service payments 1.4.

The debt service will be dropping off in the next couple of years.

And uh our capital repair and replacement type projects that should be funded by rates, not tap fees, about 25 million dollars.

How do we fund all of that?

Well, we have our current rate revenue that we're getting at 18 million dollars.

Uh we have a change in reserves, and that's just a fancy way of saying that instead of trying to fund all these expenditures with a larger increase, we're gonna be drawing down some of the funds we have in the bank to minimize that revenue adjustment.

So that's what the change in reserves is.

So as a result, we're looking to get an additional 2.9 million dollars from an annual revenue increase.

And then there's some non-rate revenue to help fund that as well.

So that's how we look at the one year, but that $2.9 million dollars of additional rate revenue is uh we don't put the blinders on, look at just one year.

We look multiple years and say, well, how do we need to balance this to where we're not doing a spike in three years of you know X percentage?

Uh so we had to kind of smooth that out.

But this is where we ended up for 2026 for water.

Uh wastewater, very similar.

I'll just show this uh both bars there.

Again, we're drawing down the reserves to help minimize the revenue adjustment for 2026.

Um, that doesn't mean that we're gonna run out of funding.

Um, some of these uh reserves have been have been collected to help repair and replacement projects that need to continue to be done, and we're gonna continue to uh maybe draw down reserves, but then our revenue adjustments, the cumulative impact of revenue adjustments will help maintain that reserve level.

So we're not planning on dipping below our reserves.

Uh we're just gonna use those wisely and balance those to where we can minimize the rate increases.

And again, with stormwater here, uh rate revenue is the primary source of funds here.

We're looking for about 200,000 in additional rate revenue.

Uh, in this one, change in reserves is on the other bar, which means that the revenue adjustment here is actually gonna help build some reserves because we want to try to keep those revenue adjustments equal, smooth and steady as we can, and considering those larger stormwater projects in the future, building the reserves now helps mitigate a spike in an increase in two or three years.

And again, these are preliminary.

We might come back and make some adjustments to the capital plan, see a little bit of shift in some of these numbers.

So here's a typical uh monthly residential bill.

We've got three levels of consumption here.

Uh water, 3,000 gallons and wastewater 3,000 gallons.

That's kind of a winter or indoor type usage.

And about let me see here, if I can read it.

I think about 45% of bills, bills, not customers use 3,000 gallons or less throughout the year.

So you could have one customer that uses 3,000 gallons for 12 months.

Um, and this is each of these are going up in aggregate about 12%.

Um so when you look at the total combination of rate increases across the three different utilities, it's about 12% on each of these.

So from $100 to $112, about $12 increase.

And it does increase as you go along.

Um, the middle one, $6,000 gallons, that's the average user, and 3,000 gallons wastewater.

It stays the same at wastewater because that's basically indoor water, it's going back to the trip plant.

And then 10,000 gallons usage, that's kind of a higher or summer usage, so you might see that in June, July or August or something, but maybe not for a period of six months.

Talk a little bit about rate design here.

So the bill, the typical bills I just showed you, are based on the rates that are shown here.

And these are kind of out of context because they don't mean a lot unless you get your bill and look at the values on your bill.

But we can see where we're where we're headed here.

These are across the board increases for water, wastewater, and stormwater.

Now, one of the things that Jeff and I had talked about was looking at the volumetric rates, and you can see here it's got five tiers.

And I've got the tier thresholds listed here, but it's just for residential.

They do vary by the different meter size of commercial.

But I want to show residential because that is your biggest class here.

We had looked at potentially adjusting some of these tier thresholds just a little bit to recognize some of the changes in water use habits from some of the residential customers from what we've seen in the previous study.

So we might have an adjustment here, which might change somebody's bill up or down a little bit more than what you just saw on the previous slides.

Wastewater here, we're keeping the same structures.

Again, it's an across the board increase, and you can see the volumetric rates for residential and non-residential are both tiered as well.

As you contribute more wastewater to the to the plan, you're charge more incrementally.

And stormwater is a fixed charge per unit, which is pretty stagnant, and then the non-residential is per acre.

One item to note as part of our scope of work, we did bring in one of our stormwater experts to help uh the city look at some billing auditing and things like that to find, make sure that everything was being aligned correctly with the billing uh your billing system, and that's pretty much done.

We're waiting on the final results.

Let's talk about tap fees.

Now, obviously, tap fees are a little bit different than user rates, user rates are what you pay on a monthly basis, tap fees are what you pay to buy into the system.

Uh, there's a number of criteria required with tap fees at the end of the day.

There needs to be a rational nexus between what the new development is paying and what they're getting, um, and it needs to be in proportion to the capacity they require to serve them.

There is a Colorado State statute that outlines some general criteria for impact fees.

It is pretty broad.

Um, when you look at other impact fee statutes across uh Arizona, Utah, Idaho, or Montana, they have much more strict rules.

It's pretty broad here, but it falls in line with industry standards, and that's what we followed when we looked at the uh tap fees for the three utilities.

Um obviously it's a one-time fee for capacity or new development if you're increasing your capacity.

So if you're a brewery and you buy one of those old gas stations, you go from a three-quarter inch to a two-inch meter, you may pay an uh incremental tap fee there.

And it really focuses on the value of the system, the water system.

If you think about all the facilities in the water system, the treatment plant, to treat storage tanks, the major transmission mains, pump stations, those sorts of things, and the capacity of that system.

So we look at those two variables and come up with a unit cost, and then we apply that unit cost to a demand profile for a single family or three-quarter inch equivalent meter based on what their demand requirements are, whether it's 200 gallons per day or 300 gallons per day, multiply those numbers together to get our tap fee for three-quarter inch meter and scale that based on meter size.

Um it does represent the cost of capacity to serve a new new development, and that's the whole goal is to receive that money to be able to provide that service to that development.

So some of our preliminary tap fee findings, uh, water uh meter tap fee, the maximum supportable, and by maximum supportable, I mean that's the fee that the city could adopt that's supported by numbers, calculations, and industry methodologies.

Um the city does not have to adopt that number, they can adopt up to that number, and that's usually uh that does happen quite a bit from utilities that might transition it in over a couple of years.

Um, that's popular.

Uh the wastewater tap fee is going up just a little to six thousand five hundred and thirty dollars.

Uh, so not a lot of change there.

Really, the drivers for the water is obviously some of the NISP construction costs, the pipeline and the new water treatment plant and a couple other growth-related projects.

Uh, like Jeff mentioned, the increased borrowing costs that are out there for funding those larger treatment plant projects.

Uh, and just a we could look at this again tomorrow and probably come up with a different number just based on uh the way things are fluctuating so much.

One thing I do want to mention is we excluded the water resources and water rights costs.

That's a whole other fee, cash and loo and all those, all that terminology.

That's separate from this.

This is just infrastructure related tap fees.

Um so, yes, definitely a jump in the uh tap fees.

Now, one other thing to consider, uh, depending on how you adopt these fees, many utilities will just scale those fees each year by an index, be it CPI, usually an engineering index like the engineering news record, uh, which mimics more of a construction type cost into indices, so you can uh design these fees, kind of set it and forget it, let it accumulate over the next couple years and review it about every five years, which is what we recommend for utilities at the level of maturity that the city of Lafayette is in.

Um, so some finally, so to conclude here, uh we looked at the financial plan.

We looked to develop a long-term financial plan with minimizing revenue adjustments, but being able to fund those capital projects that are needed uh to maintain a level of service.

Um we've kept rate structure design the same so far, but make some minor tweaks to that between now and October.

And finally, we updated the tap fees to kind of reflect current cost to buy into both the water and wastewater system.

There are no stormwater uh tap fees at this time.

Uh and so we are probably gonna sharpen our pencils a little bit and come back to you in October with some final numbers, and um so that's it for me.

I'll answer any questions.

Great questions, Councilor Sampson.

So a three-quarter meter water tap fee sounds like it would go to about a thousand five hundred square foot house.

So I'm just wondering, it seems like we're building houses bigger than that in Lafayette.

What is a one-inch meter water tap fee?

What do you what is gonna be the rate increase proposed?

Um I don't have it on me, but I can get that for you in what kind of what kind of size.

So most of our customers are are three-quarter.

It's um we've moved toward using an industry standard practice of sizing based on plumbing fixture counts.

Okay.

Um, and so there's actually a curve to that because it's based on the peak demand.

So if you have six bathrooms, the odds of using all the bathrooms at the same time decrease.

So some of the some of the bigger houses, some of our outside city customers um with really large houses or really large irrigation, sometimes get up into the one inch, but most are actually the the three-quarter.

Um it's it's baked on based on the peak instantaneous demand, so it does sort of taper.

Okay, okay.

Thank you.

Councilor Friedman.

Um I have a few questions.

Um I have a question about the increase in cost for the water treatment design or facility, not design, the facility.

Is that so we went from you know tens of millions to 150 million?

Um did that come also with like a change in size that we realized we needed.

Um so we for many many years used the the same engineer.

Um, and we have um since started going out and hiring consultants projects specific.

Yeah, um we have run into a lot of cases where that the estimates have been quite low.

Um so I think some of those things are just a reflection of kind of practices at the time.

Regulations have changed, technology has changed.

I mean, it's still it's kind of hard to comprehend it going from five million to 150 million.

Yeah, um, you know, so one of the the biggies is like the originally the plan was to put a small plant on the black diamond site behind Walmart.

Um, you know, the consultant we brought in uh last year looked at that, and it just it doesn't it doesn't fit there with kind of modern treatment technology and the space we need.

Um we are we haven't landed on technology because we're still trying to figure out the best site, but in in all likelihood we will have pretty similar treatment technology to the existing plant.

Um we don't really have you know water quality issues that warrant something super high end.

There are some some different things because of regulatory standards that we'll need to consider.

Um but it's interesting and talking to peer communities and Todd maybe able to chime in as well.

But we have have a lot of folks.

We actually saw an article in the the newspaper of one of our neighbors saying they were gonna build a 25 million dollar plant.

And so I called and said, hey, what's the capacity of that?

And it was like, no, that's that was our estimate, but we're looking at more like 200 million.

So it's not unique, and I don't know if you're seeing that throughout, or if you have any thoughts on kind of what the reason might be.

Increasing costs, absolutely.

Um water supply projects have probably the biggest talk of the town around here.

What what we have seen as a result of those increasing costs is utilities around the area have been increasing rates double digits, whereas seven, maybe ten years ago, a seven percent was you know questionable, but some of the utilities we present I present to, it's more of a we have no choice.

We have we have to do this.

And uh probably the past couple of handful have been double digit increases.

I mean, not like 99%, but you know, yeah, plus ten.

And um, and so it's uh everyone is feeling the pinch, even not just on large projects, but also just the smaller pay and replacement things too.

Yeah.

Let's talk more about water supply.

So NISP is yeah, a challenging one, I think.

Um I guess I I feel like I had heard rumors or read that potentially some of the larger NISP shareholders, I don't know how what we call them participants, participants are potentially backing out.

So, and we are in pretty the partners are all in pretty regular communication with northern water to sort of understand that.

I don't think anyone is actually officially withdrawn from it.

Um so and there's a lot of complications of that is if somebody pulls out, they basically have have lost their investment to date, which would be a pretty big decision.

Um, you know, and then basically the permits for the project are based on a statement of need.

So if if someone pulls out, really we'd have to find a replacement to make that work.

One of the one of the big things that is causing concern is um in part because of the cost escalation, Northern is looking at whether they need to break the project into two phases and basically build Glade Reservoir first, get that up and running, and then build Galton Reservoir.

Um that is kind of different challenge for different partners.

For us, it's a little concerning because it's basically we'd be getting half the water for about 75% of the cost, and we would have to build our pipeline to deliver that water, even though we wouldn't get the full amount.

Um, so there's a a lot of conversations on the partners of how do we I think we need to make it work, and it's just sort of figuring out how do we get everyone back to the table and figure out what that looks like.

Um but I think at this point nobody's officially dropped out, but there was definitely some some media suggesting that folks were looking at that.

Um I wasn't gonna step in, but I literally just came off a bus with Northern Water, and they brought up NISP and said two of the partners are stepping in.

One of them is Fort Collins.

Okay.

So they also said it's it should work.

They want it to work.

Uh, and I don't that was literally today.

So I don't know if there's other news.

I'd yeah, I just wanted to add that because that's what they just told us on a bus.

Yeah, and I think there just may be some subtleties to that.

So one of so kind of where we're at with this is they're now looking at us for us to sort of sign the allotment contracts to move forward.

And I think Fort Collins and um I'm not trying to remember the other one, but it might be low.

They both had a lot of concerns about hey, we don't want to sign a severance.

They don't, they're like concerned with signing a contract for something that's not delivering what everyone understood it was gonna deliver.

Um, but I I'm still optimistic that things will circle back and we'll find a viable way to do this because there isn't you know, there isn't another option.

It's not like everyone can go, I mean, short of a really massive buy and dry effort, um, which has historically not been palatable in Colorado, and there's strong agricultural roots and um you know 90% of the water in the state goes to AG, but I don't think um it would be palatable for the front range to dry up the ag in the state.

So that was the other thing they said.

Thank you.

I'm sure there's more to come there.

Yeah, I'm certain there will be.

Yeah, I appreciate the information.

Um I'm curious in terms of the numbers that you showed us for water in terms of the tiers and the percentage increases.

Um I'm curious what the percentage increases for each tier are for volume use for water in terms of so far, what we're thinking.

I think the intent was to apply adjustments uniformly across the rates for each tier.

Um, what we had some initial discussion about is are the are the tiers set appropriately.

So when we originally adjusted the tiers, I think back in 2020, you know, we had historically had rate tiers, but the thresholds didn't really seem to tie to anything.

And so what we attempted to do is try to set that tier one rate to be kind of a lifeline rate to protect vulnerable users and really try to make sure we were ensuring access to essential indoor water.

And then we kind of went up from there with tier two, kind of reflecting some outdoor use, and then as we got into the upper tiers, um, you know, people that have an interest in using a lot of water, we can make that available, but it it is a premium in terms of our infrastructure needs, and so that comes at a higher rate.

So I think the question is is the 3,000 the right number if because if we're seeing you know efficient users staying below that, there's potentially an opportunity to move those things around so that we protect we protect that lowest rate and recover revenue from the other tiers that again have a higher outdoor use has a huge demand on infrastructure because we're only we have to have the infrastructure and pay for it 12 months a year, but it's it's only getting fully utilized three days in the summer.

So it you know it I think it's equitable to charge a premium for that super high-end outdoor use, but it's just sort of figuring out is there is there juice for the squeeze left in that because we did dig into it um I think pretty significantly in 2020, 2021.

And you said earlier in the presentation that we are not seeing a ton of behavior change.

No, yeah, we we did not.

Like we we looked at the numbers, and I I had kind of thought with with the level of increases we did and and tighten those things up, we would have seen more of a migration from the upper tiers.

There was some adjustment, possible adjustment, maybe some of the commercial tiers, but is it worth the amount to make that change in the confusion and understanding of doing that for not a lot of benefit, but that's just one thing we need to shore up.

Yeah, I mean, one thing that is interesting is we are seeing an apparent trend in people reacting more to when it rains, which is good.

We seem to have got people's attention smart on that.

Um, and it's kind of making it a challenge for the the treatment plant because they have to keep like stomping on the gas and then hitting the brakes.

You know, we we make a bunch of water and then it it rains and everyone shuts off their sprinkler systems, and we have to adjust, but it it does seem like more so in past years we're seeing a distinct drop in in daily demand when it rains.

So that's a that's a good thing.

Um but that's not based on our rates, that's based on I mean it heightened awareness anyway.

Maybe it is, right?

Yeah, I mean, the other consideration is that you know bills are a month in arrears.

Um, and so you know, people don't necessarily know how much they used until the end of the month where we're yeah, we're working on some things related to that to try to get people better access to their meter data in real time.

Um we're kind of a little bit of a challenge in that we have a meter vendor that's different than our billing vendor, but trying to pair those things together to get people access to the big picture.

So at least initially it like it was not uh a mass exodus or big change in behavior in the upper tiers.

Yeah.

Well, I mean to me, since we don't we haven't seen a lot of behavior change from it, to me, that says our tiers are not um progressive enough in terms of progressive tiers, right?

So and I mean I'm you're the expert, so but it seems to be an indicator that we could increase the top tiers a little more than we increased the bottom tier.

Um to me, yeah, it's it still seems fair.

So I mean I don't know if that's what you're asking us today of like do you do we approve of the philosophy moving forward or what?

But to me that would make sense, especially considering you know we've we've had increases year over year, we're gonna continue to have increases, so we do need to continue to be investing and protecting in the folks that can least afford increases.

Um, and so I think at every chance we have, like we need to ask the question of should we be increasing uniform across the whole system, you know, based on a system that we think works, or do we need to nudge the system a little bit more?

And that gets us to where we need to be.

Um so another thing we're trying to figure out how to finesse within that is um I would say a decent number of our most vulnerable customers are probably in multifamily or mobile home parks.

Right.

And so they're not getting an individual bill.

Right.

And they're not directly getting impacted by the rate tier structure.

So it's a it will a little more finesse to try to figure out how to protect that usage because we can't just go, well, geez, it's it's one mobile home, it should be able to do 3,000.

So let's make sure that's protected.

Because it in some ways they have the advantage that they they kind of get pooled minutes.

So there's a better chance of staying within the lower tiers because they're getting the allocation times the number of units.

Um but we're just it's something we want to be careful about that we don't sort of have unintended consequences if we go, oh well, let's let's change the tiers for a two-inch meter, and then we find out that that has a an unintended consequence on certain multifamily yeah.

The other thing I I've been talking for a while, so I'll I'll let the mic go.

But the last thing I'll say, I I think I say this every time we talk about water, that as the costs increase, increase, increase, the internal um right, like investment in reduction and efficiency, just the the return on investment of that just goes keeps going up, right?

And so um, and I know you've done a lot of work with efficiency and reduction with the sustainability team and others, right?

And I think we've done a good job there, but to me it just like continues to show that like I don't know if we need to think more about that or like have a longer term strategy around reductions, but um you know, I think of like energy performance contracting for energy, right?

Like you make an investment here, and then basically within the project it pays for itself.

I don't know if people do that with water, but as the cost increases, it seems like you can make the math work, where we somehow invest in like a larger project to like that because of the size of the utility, we can we can you know use our economies of scale and get a really good price for helping the community overall the system become more efficient.

It's an upfront investment, but over five, ten, fifteen, twenty years, it easily pays for itself because we reduce the burden on the system.

So I don't know again, um you guys are the experts, but I'm curious if anyone's done anything like that or if that's something we've thought about um, or I'm sure there's things I'm not thinking about that don't make it make sense.

Just to some great degree, we've tried to get more aggressive in that space.

So that the rate increases definitely have gotten people's attention.

Yeah.

Um they haven't necessarily tipped the ROI for everybody, but like for example, we've had a number of HOAs get serious about looking at their water use.

We've been able to connect them with some local funding as well as some grants through Northern Water.

Yeah.

Um, you know, it sort of remains to be seen if what that does in terms of reducing their usage and their their bill.

Um but it it's it's been a good conversation starter, but kind of to your point, it it hasn't necessarily hit that tipping point where people can see that oh, if I go and spend this much money, my savings over the life of that infrastructure will be.

I mean, because it's dis it's distributed cost, right?

Like it's somebody a few hundred dollars a month for somebody, right?

And so it doesn't it doesn't make sense for them to spend the time to think about it too hard, quite frankly, right?

But for us, because we're looking at the whole system, we can, right?

And so for them the payback is gonna be they're not gonna see the payback because it's gonna be reduced future rate increases, right?

Yeah, no, that's the tricky part, right?

Because if we if we if we do that, if we get people to reduce usage and we can reduce some of these major capital improvements, they're not gonna they won't they won't know that they're getting the savings, but it we won't have those feature increases to pay for that capacity because we won't have needed it.

Right.

Um so it doesn't make any sense for them to do it, really.

It's not rational for them to make in a lot of ways because they don't even know it's a it's an unknown in the future of is it gonna be 8% or 12%?

They don't know and they're not they're not thinking in that way, right?

Especially for uh you know, three, four hundred, five hundred dollar a month expense, they're not gonna be thinking that way.

So how do we how do we like yeah, how do I don't know yeah, how do how do we make the decision for them sort of in a lot of ways, or not not make the decision for them?

That's the wrong way to say it, but um incentivize it in such a way where we're we're um we're taking on the investment burden.

Um also I don't know.

I think I lost my it's a it is a tricky business model.

And we'd be happy to happy to discuss in great detail sometime if you're interested because it is there's a we should yeah, there's a there's a timing thing that is tricky to overcome.

Yeah, yeah.

Well, thank you.

That's the last question I had.

Um, and um, you know, I think these things are tough, and so I just I appreciate it like the numbers and the challenges, but also like the critical importance of delivering clean water.

Um is just I mean, it's it's unbelievably important, so I appreciate the work.

Okay.

Any other questions?

I don't have a question, but I have a comment.

I like your idea of having um real time information because as it is, like I had a valve broken last year, so I'm just now seeing what it works with my my working valves because I was playing around with it, but I don't see the result of how much water I use until now.

You know, so it makes it kind of difficult to make those adjustments that I could have made four weeks ago.

Okay, comments?

Um thank you.

I just have to literally just got off in 10 hour exploration into all things all water from Northern Water, and that was one of the last things that we were left with ag is so important in this state, and um even the I guess it was the CEO was saying that's super important.

This is a very valuable question to say do we push more more water to municipal populations and take it from agriculture?

And the cons conservation of water is that is what we can do.

And um the transfer of water, they're doing a great deal of work in order to streamline and make more efficient the process of getting the water.

And I think I saw the water that's coming here uh at Windy Gav.

It'll be here in a couple of years.

Uh it looks really good.

So I think this is something that we should keep in mind is that the more we look at our usage on on this end, the more it will benefit the whole watershed where we are uh in that we don't have to continue using more and have that question of like how much are we reducing agriculture in order to feed our population versus wasting it or not using it efficiently?

So thanks.

All right.

Next steps.

One more slide for you tonight.

So again, this is first step of May uh September 19th.

We will be that's on Friday, so even though the code says September 20th, we'll get you a day early.

Um delivery ahead of the budget book to council that has all these details in there.

We'll be looking forward um with what we have proposed tonight, September 30th.

We'll be bringing our CIP tour uh TV on the details for that, but I'll be getting more information there.

And then our um first and second readings of the budget are slightly different than they have been in the past.

That's because the first meeting or week um is a observed holiday, so just note that um that we are meeting for first reading October 14th, and then we will be doing what is typically your workshop, but um a regular business meeting on October 28th to accommodate for those holidays.

So again, at that first reading, you have your um budget appropriation.

We will also be doing the introduction for the downtown development authority.

Unlike Lura, council does actually have to make formal action in the past, it was just kind of a here's our recommendation, and then you would come back if there was anything over a certain threshold.

So you'll be hearing from our executive director of the Dowtown Development Authority on October 28th.

We will have um the second reading for it, but um a lot of the fees, the pay plan, and our adoption of the general improvement districts.

So as always, please don't hesitate to reach out.

We don't want um you know silence between August and October if you have any concerns or thoughts or process of what's being proposed.

So thank you, uh Mayor Pretem for leading it tonight.

Uh, we are happy to answer any other questions, but we hope we were able to get them out in the different chunks.

Great.

Thank you.

Moving on to our last um item of the evening is new ideas.

Does anybody have any new ideas to be ready to the group?

I have one.

Um okay, I'll share my idea.

Um, I was just wondering if um council was interested.

I know that it is an election year, and we have traditionally had um two, sometimes three um candidate forums in the past.

Um generally we do have the youth advisory, and then we have the League of Women Voters.

I know in the past they've also done a forum over at Josephine Commons as well.

I think the 2017-2019 elections as well.

Um, so there's just a question.

Um, as you know, I'm the liaison to the chamber of commerce, and the chamber is thinking about hosting a candidate forum, and just was wondering if um there's an appetite for council to see if we could utilize city staff to televise that potentially and utilize on the library or council chamber somebody's that's set up for um recording or televising, whatever production of the um forum.

So just wanted to get anybody's ideas, thoughts on that.

So we have two are those two going this year, right?

So this would be a third one.

I don't understand what I mean.

I think two is more than what you normally do.

So um three seems like a lot.

Why can't they collaborate on one of the others with like the League of Women Voter one?

It was just in the past we've done Josephine Commons has done one.

So that's why this question just came up because members of the chamber just wanted to remember that happening, and so I'm just asking the question.

If there's not an appetite, we go forward with the two that we have.

Certainly, um, they can certainly do it independently, just as Josephine Commons did, I believe.

Um I don't know if it knows done coordinated through the city.

I don't remember if it was televised or not.

I know I because everybody in those two elections and G JD and I talked about it, and we remember doing the forums, but we don't remember if they were televised or not.

So it just happened to be at that time for the seniors.

I am open to it and happy to attend.

My only concern is that the packet that went out to candidates did mention two, it did not mention a third.

Okay.

Uh I'm open to a third simply for the reason that we do have a revitalized chamber and the DDA is having is has a lot of questions about economics and considering the fishbowl that we went went to, and my limited experience with the forums was that there questions were more global than hyper local.

And uh I'm just curious if the chamber is focused on economic uh questions.

So it would give a different look to that forum if it's this it's if it's basically the same structure as the youth uh advisory board and I I think it has to deal with small business issues.

I I would I think it might be timely to have that third one.

I know it's a lot, and but I think the questions there's a lot of questions that people might have that could be answered by the candidates.

And I'm wondering, is there a cost involved to the city to host it here?

I don't know.

I mean, other than staff cost.

So any of anybody else thoughts?

I would say we should be we should be fair, you know, and I think uh equitable to the different groups.

So if one group um, you know, an external group wants to use the space um to do that.

Um I would think we would want to try to be consistent um in our support of different external groups that want to do that.

So that's a yes, I'm supportive of this.

Okay, yeah.

I love the idea.

Um just one quick thing, because I know the city has expanded our economic development and the amount of chambers we actually work with.

Uh so the Latino chamber also serves us as being Boulder County.

So uh I guess this is not necessarily a question for you, but you're the liaison, so I'm gonna ask you anyways.

You think it'd be open to actually working with the other chamber as well.

I'm sure they would be.

I I'll add the meeting later on with the um later on this week for the executive director regarding something else I can certainly ask and expand it to maybe potentially the DDA as well.

I think you thought that up.

Expand to the DDA meeting and being able to involve be involved and have questions if that's something you would suggest it.

I think it might be or if they may be interested in other DA.

If you want to check.