HomeMy WebLinkAbout10/17/2000, 3 - MODIFICATIONS TO THE WATER USE OFFSET PROGRAM (RETROFIT FOR NEW DEVELOPMENT) council. Myo�o - 3 .:(,\G_ .
j , acenba uEpom -N
C I T Y OF SAN LU IS O B I S P O
FROM: John Moss, Utilities Director
VationPrepared By: Ron Munds, Utilities CoCoordinato(3�
SUBJECT: Modifications to the Water Use Offset Program (retrofit for new
development)
CAO RECOMMENDATION
Adopt a resolution increasing the retrofit credit towards water impact fees from the current $150
per toilet to $300.00 per toilet for flush valve and handicapped type toilets.
DISCUSSION
Background
The replacement of older toilets, which use from 3 '/1 to 6 gallons of water per flush to ultra-low
flush toilets (ULFT), which use 1.6 gallons of water per flush, has been the cornerstone of the
water conservation program. When developing the City's water management strategies, a
decision was made that retrofitting would continue until essentially all the toilets in the
community were replaced with ULFT's. This policy is part of the Water Element of the General
Plan. Currently, the City has three programs to accomplish the toilet replacement goals. They
are:
• Retrofit Rebate Program
• Retrofit Upon Sale Program
• Water Use Offset Program (retrofit to build)
The Water Use Offset Program accounts for about 65%of retrofit activity taking place to date.
Staff estimates that there are approximately 39,000 toilets in the City of San Luis Obispo. As of
September 1, 2000, about 26,600 toilets have been retrofitted leaving around 12,400 toilets left
for replacement. The toilet count estimate is based on information provided by the Community
Development Department and a California Urban Water Conservation Council (CUWCC) study
which provides a methodology of estimating the number of commercial toilets in a community.
Because of the strong economy and subsequent new development from both infill projects and
newly annexed areas, it has become increasingly difficult to keep pace with the demand for the
required retrofits. This can be attributed to several factors:
• The types and number of projects currently in the planning process (i.e. large residential
and commercial projects).
• Limited number of plumbing contractors participating in the program.
• The difficulty in finding the remaining retrofits.
3-1
Council Agenda Report—Water Use Offset Program Modifications
Page 2
These factors will be discussed in more detail in the following.section. In order to achieve the
City's goal to essentially retrofit all the toilets in the community and to facilitate the current
growth taking place in a timely manner, changes to the existing Water Use Offset Program are
being recommended and will be discussed in the following sections of this report.
Water Use Offset Program Description
The purposes of the Water Use Offset Program are to ensure that new development does not
impact the City's ability to serve existing water customers and to assist in staying at or below the
water planning figure of 145 gallons per person per day (gppd). Though any water saving
plumbing fixture can qualify as a retrofit, typically, toilet replacement has been the most cost
effective means to achieve the required water savings for new development projects. The current
policy requires developer s to retrofit facilities served by the City which will reduce long-term
water usage equal to twice the water allocation required for the new project. It is also current
policy that this requirement be met prior to the issuance of a building permit.
Commonly, a developer will hire a plumbing contractor to locate and perform the retrofits for a
project. A $150.00 credit per bathroom replaced is given towards the water impact fee. This
figure was arrived at by taking a sample of receipts received as verification for the Retrofit
Rebate Program and then averaging the cost for the installation of the toilet, showerhead and
faucet aerator to arrive at the $150.00 credit. This was done in an effort to provide equity to the
developers so they would not have to pay the cost of retrofitting, which in essence is creating a
water supply beyond the needs of their project, on top of paying full water impact fees. At the
beginning of the program (around 1989) it was relatively easy to find willing participants. In
fact, the program was operating relatively smoothly until last year. With the strong economy,
there has been an increase in building activity which has resulted in a demand for over 200.acre
feet of retrofit water with more projects coming in every day. Many of the developments are
large residential and commercial projects. Since the current policy is to have the retrofit
requirement completed prior to the issuance of the building permit, it has been difficult to
achieve the required retrofit given the current conditions, causing minor delays and/or financial
hardships on the developers.
Though any plumbing contractor can perform the retrofit work, currently there are only two
contractors that are actively pursuing this type of work. Even though there are an estimated
12,400 toilets available to retrofit, the contractors have indicated that it is becoming increasingly
difficult to find willing participants for the program. Additionally, there are a number of flush
valve type toilets (commonly found in public restrooms, schools, etc.) and handicap toilets that
are more expensive to purchase than a tank type toilet and do not yield enough water savings to
be economically feasible for the contractors to replace.
Water Use Offset Program Modifications
Recommendation- Increase the credit towards the water impact fee for flush valve and
handicap toilets.
3-2
Council Agenda Report—Water Use Offset Program Modifications
Page 3
Flush valve and handicap toilets cost significantly more than the standard tank type toilets. The
$150.00 credit was based on the installation of a tank type toilet in single family residences.
Since flush valve and handicap toilets are found in the commercial and institutional sectors, the
water credit per toilet is based on the type of business and the expected water use of the toilet.
An example would be a flush valve toilet in a restaurant would be used more often than one in a
small office. Though the cost of replacement would be the same in both businesses, the water
credit would be quite a bit less in the office retrofit. A majority of the remaining commercial and
institutional retrofits fall into the lower water credit category, and therefore are not cost effective
for plumbing contractors and their clients to replace at the $150.00 credit. By raising the credit
amount to better reflect the replacement cost(replacement costs range from $300 to $375
according to local plumbing contractors), the flush valve and handicap toilets will be exchanged
at a higher rate than is currently occurring and move the City forward in accomplishing its
retrofit goals.
Advantages-By increasing the credit towards water impact fees, there will be a greater
participation rate in the commercial and institutional sectors that may not otherwise be achieved.
through any of the City's program's. Additionally, it will temporarily help alleviate the backlog
of retrofits for projects currently in planning and building process.
Disadvantages-This action would finther reduce the amount of water impact fee revenue
currently being collected.
Recommendation: Increase the credit towards the water impact fee for flush valve and handicap
toilets from $150.00 to $300.00 to better reflect the true cost of the retrofit and increase the
replacement of these types of toilets.
Alternative 1- Allow developers to post a bond or provide a monetary guarantee to ensure
the retrofitting is completed in a timely manner after the building permit is
granted.
Because of the backlog for retrofit credits, developers have been inquiring if it was possible to
pay a fee or post a bond in order to obtain their building permit if the retrofit condition is not met
at the time they are ready to proceed with construction. As previously stated, the current policy
is that the retrofit requirement be completed prior to the issuance of the building permit. The
purpose of this policy is to ensure that the City's water management goals are achieved.
Additionally, this policy simplifies the administration of this very complicated program. To date
there have only been minor delays caused by the current policy. As there are fewer retrofit
opportunities available, staff can foresee problems arising in the near future from this policy.
Advantages- This alternative would alleviate the timing problem associated with the issuance of
the building permit if the retrofit requirement is not complete at the time construction is ready to
proceed. Additionally, if the bond or other monetary guarantee is significant enough in terms of
cost, the developers should have adequate motivation to complete the retrofitting.
3-3
Council Agenda Report—Water Use Offset Program Modifications
Page 4
Disadvantage- If a developer decides not to do the retrofitting and forfeit the bond or guarantee,
the City would not only lose the water savings but would then have to administer the funds
generated from this activity to accomplish the desired retrofit. While this alternative may
provide a reasonable and feasible means of dealing with the backlog or retrofits, staff believes it
is premature to provide this option at this time. As development proceeds, and if the staff
recommendation is approved by Council, staff will reevaluate the need for this alternative in the
future and if needed,return to Council with a revised recommendation at that time.
Alternative 2- Change the retrofit ratio from the current 2:1 to a 1:1.
Since the inception of the Water Use Offset Program, developer's have been required to retrofit
facilities served by the City which will reduce long-term water usage equal to twice the water
allocation required for the new project. Reasons for this requirement are to ensure that new
development does not impact the City's ability to serve existing customers and to achieve the
city-wide retrofit goal in an expeditious manner.
Advantage- By decreasing the retrofit requirement for new development, it will temporarily help
alleviate the backlog of retrofits for projects currently in the planning and building process.
Disadvantages- Changing the retrofit requirement at this point in time would not be fair to
developers that have previously participated in the program. Additionally, by changing the
program to the 1:1 ratio, completion of the city-wide retrofit goal would take longer to achieve.
Because of these factors, staff does not recommend this alternative.
Alternative 3- Levy a water efficiency surcharge on water customers who have not
retrofitted.
To encourage water customers to participate in the Water Use Offset Program, a water efficiency
surcharge could be established and levied on water customers who have not retrofitted their home
or business. The charge would be eliminated when a customer provides documentation that they
have retrofitted.
Advantages-This approach would likely persuade most water customers to come forward and
participate in the program and achieve the City's goal to essentially retrofit the entire community.
Disadvantages-It would be difficult to accurately merge the retrofit database with utility billing
database. This could lead to errors in assessing the surcharge. Additionally, from the customers
perspective, this could be perceived as a draconian or heavy handed measure. This could be an
alternative to be considered in the future, but because of the technical and perception issues, staff
does not recommend this alternative at this time.
3-4
Council Agenda Report—Water Use Offset Program Modifications
Page 5
Alternative 4- Pass an ordinance that requires all businesses and residences to be
retrofitted.
A mandatory retrofit ordinance could be adopted which would give water customers a certain
period of time (i.e. 1 year, 2 year, etc.) to provide verification that their property has been
retrofitted. After the grace period, the City could end all the incentive programs and levy some
sort of penalty on properties which are not in compliance.
Advantages-This approach, like Alternative 3, would persuade water customers to come forward
and participate in the program and achieve the City's goal to essentially retrofit the entire
community.
Disadvantages- Similar to Alternative 3, it would be difficult to accurately merge the retrofit
database with utility billing. This could lead to errors in assessing a penalty. Additionally, from
the customers perspective, this could be perceived a draconian or heavy handed measure. This
could be an alternative to be considered in the future but because of the technical and perception
issues, staff does not recommend this alternative at this time.
Alternative 5- Retain the Current Water Use Offset Program
Council could decide the current program and water impact fee credit is adequate and retain the
current policies and procedures.
Advantages- Retrofitting would continue to occur and the City, over time, would essentially be
retrofitted.
Disadvantages-Retaining the current program would not address the cost issues previously
identified in this report and the backlog of retrofitting. Additionally, many of the remaining flush
valve and handicap toilets may not be replaced under the current system. Because of these
factors, staff does not recommend this alternative.
Alternative 6- Terminate the Water Use Offset Program.
Council could determine that the remaining higher gallonage toilets will be retrofitted over time
through the Retrofit Upon Sale Program and/or the Retrofit Rebate Program and that the Water
Use Offset Program should be terminated.
Advantages-The Water Fund would receive the full water impact fees instead of the partial fees
currently being collected and it would significantly reduce the amount of staff time currently spent
administering the program. This time could then be redirected towards other water conservation
program areas.
Disadvantages-Terminating the program does not accomplish the goal of essentially retrofitting
the entire community which will put into question the integrity of our water management policies.
3-5
Council Agenda Report—Water Use Offset Program Modifications
Page 6
Because retrofitting is such an important component of the City's overall water management
strategy, staff does not recommend this alternative.
CONCURRENCES
The Finance and Community Development Departments concur with the recommendation made
in the report.
FISCAL IMPACT
Based on estimates provided by the retrofit plumbing contractors, there could be as many as
2,000 flush valve and handicap toilets remaining to be retrofitted. At the additional credit, the
potential net impact to the Water Fund based on this estimate could be a revenue loss of
$300,000 in impact fees over the next 2 to 3 years. Divided by 2 years, the annual impact to
revenues is less than 1.7%. The annual Water Fund analysis currently accounts for a reduction in
water impact fee collection revenue due to the retrofit credit and other factors such as tract maps
which were vested prior to establishment of water impact fees, so this additional minor reduction
will not impact the Water Fund analysis to any significant degree. The financial impact is
especially minor when considering the cost to obtain additional water supplies.
Attachments
Resolution
ATTACHMENT 1
xESOLUTION NO. (2000 Ser,.,.
A RESOLUTION OF THE COUNCIL OF THE CITY OF
SAN LUIS OBISPO REVISING THE METHODOLOGY FOR SETTING
WATER IMPACT FEE RETROFIT CREDITS
WHEREAS, the City Council has determined that new development must continue to
retrofit at a 2 to 1 ratio until the City is essentially retrofitted; and
WHEREAS, the intent of the water impact fee retrofit credit is to provide an equitable
reduction of the water impact fee in recognition of the costs involved in retrofitting existing
facilities.
BE IT RESOLVED by the Council of the City of San Luis Obispo as follows:
SECTION 1. Set a variable water impact fee credit for the cost of retrofitting, when it is
mandatory as a condition of development based on the number retrofitted bathrooms required to
meet water offsets, at $150 per bathroom when replacing a tank type toilet and $300 per toilet
when replacing a flush valve or handicap type toilet not to exceed the actual water impact fee.
SECTION 2. Authorize the Utilities Director to establish an equitable retrofit credit in
cases where retrofit offsets are achieved through methods other than bathroom retrofits.
SECTION 3. Rescind Resolution No. 8389.
Upon motion of , seconded by
and on the following roll call vote:
AYES:
NOES:
ABSENT:
the foregoing resolution was adopted this day of , 2000.
Mayor Allen Settle
ATTEST:
Lee Price, City Clerk
APPROVED AS TO FORM:
ffr� Jgjym. C' Attorney 3-6