Filling a vacant seat on its governing board was just one of the points of business conducted by the Upper Thompson Sanitation District (UTSD) when it met Tuesday. Discussing potential rate changes for the coming year consumed the full board’s attention for the majority of the meeting.
Michael Morton, who previously sat on the board, rejoined the board of directors when he was sworn in to replace Jack Reed who resigned in July.
After Morton was sworn in, the board went into executive session to consult with the District’s attorney about a matter related to a court proceeding. Prior to beginning the executive session, board chair Chris Eshelman commented that the UTSD was not involved in litigation.
After adjourning the executive session and returning to the public meeting, the board heard a presentation recommending a rate hike and rate restructuring from Steve Ravel, a professional engineer and project manager with Merrick and Company, an engineering, architecture, surveying and geospatial firm in Greenwood Village retained by UTSD in preparation for the construction of the proposed new $80 million water reclamation facility.
Ravel provided an overview and recommendations for rate increases for metered customers, a system development fee, and a basic service fee.
No action was taken on the recommendations. Instead, the directors may choose to take
action at the September meeting.
The directors may take action to approve the changes at the September meeting.
No public comment was voiced in opposition during the meeting.
Metered customers
Currently there are 120 customers who pay a total metered fee. They are charged an access fee of $11 per connection per month, or $132 per year and a metered rate of $15.35 per 1,000 gallons.
According to the UTSD Rules and Regulations the access fee is the “minimum fixed base charge applied to metered customers to capture the additional District costs for collection and processing meter data and billing. The access fee is billed at a cost ($) per private service lateral tap per month.”
Because the combined access fee and the metered rate may be less than the minimum single family equivalent (SFE)—the average hydraulic and chemical characteristics of the discharge of a single-family home in the District’s service area—approximately two dozen customers, or 22% of all metered customers, are currently paying less than the SFE which is $865 per year.
Ravel recommended that what is currently called the “access fee” be changed to “data collection fee” and that a new “access minimum base rate” be charged per quarter per metered account.
This change would increase the annual fee for approximately 26 UTSD customers. “What we’re proposing is all customers would get billed a base rate on a quarterly basis in 2024 rates of $216.25,” said Ravel. If the District adopts a rate increase for 2025, this base rate would increase according to the rate increase.
According to the metered rate proposal, customers would be allocated up to 14,052 gallons per quarter for $216.25. Customers who discharge more than that would then pay the rate the District established per 1,000 gallons, said Ravel.
Ravel stressed that the proposal was a methodology change and not a rate change, however if a subsequent rate increase were to be approved by the board, these figures would increase.
Board member Sue Doylen commented that one of the driving reasons for the proposed changes relates to equity among all customers whether they live in their homes year-round or seasonally. “They participate in this organization, and it doesn’t matter whether they’re here or not. We’re here. 24/7, 365, every day, every hour, the lines and the staff, and everything. It’s about fairness,” said Doylen.
System Development Fee (SDF)
A system development fee—commonly known as a tap fee—is a one-time fee collected to pay for growth related to the capital expansion costs of wastewater collection, conveyance, and treatment facilities. The fee varies with the number of SFEs and allows the payer to connect to a District line.
The SDF has two components, an asset share, and the cost of treatment capacity. The fee is reviewed periodically by the District and subject to change. Prior to January 2017, the SDF was referred to as the Plant Investment Fee.
Ravel explained that the SDF is for a new customer, such as someone building a home, a hotel, or a restaurant, who has not been connected. “They’re buying into the District and essentially getting the advantage of having a collection system and a treatment plan that’s in operation that has the ability for them to connect that all your other customers have been paying for, either through capital expenses or operational maintenance expenses, for years.”
In February 2020, the SDF was $10,202 per SFE. If that fee were updated using the July 2024 Engineering News Record Construction Cost Index (ENR CCI) that would be $12,140 per SFE, or for accounting purposes, rounded to $12,200. Ravel suggested the board consider a rate of $18,100 for 2025 based on the rising cost of construction.
Based on the calculations in a spreadsheet presented by Ravel, it would cost the UTSD $180,949,900 in today’s dollars to replace all existing water mains, the three lift stations, and the treatment facility.
Eshelman commented that although the increase is a big jump, “I think it’s still almost conservative considering some of the costs and what’s plugged in with the plan.”
“I have worked on the affordability housing side of the world for a long time. This is a hard pill, but to ensure that the system maintains its financial integrity over time, it’s something that we have to do,” said Doylen.
Ravel told the board it is not accurate to compare the tap fees of communities to each other because each community is driven to set fees based on different factors as some communities want to encourage growth and development and might set a fee lower as an incentive to builders, and others communities might set tap fees higher as a way to restrict development.
Basic Service Fee
Ravel also proposed to the board that it consider raising the basic service fee to all customers beginning in 2025 a minimum of 8.5%. While the UTSD increased non-metered residential customer service rates 8.5% for 2024, it did not approve a recommendation made in 2023 by Willdan Financial Services in its Wastewater Rate Study, a financial planning model, to implement a metered rate access fee or base fee.
The board members discussed the possibility of raising the rate between the recommended minimum and as much as 10.5%, which would allow the District to pay off loans for the new water reclamation facility faster which would result in incurring less interest costs and a savings of millions of dollars.
Several members said they would like to see a compromise between 8.5% and 10.5%.
The board will take up the matter at its September 17 meeting at 4 p.m. at the District’s Office, 2196 Mall Rd. If the members of the board decide at that time not to act on a rate increase for 2025, they may need to wait until the November or December meeting to allow for the necessary amount of time required to notice the public about the meeting.
Public comment on the proposed rate increases can be made in person or online during the board meeting. Customers with questions about how the changes and rate increase would affect them are encouraged to contact the UTSD to discuss their individual bill, 970-586-4544.