June 16, 2025 — Water Resources Advisory Board Regular Meeting

Transcript

Captions from City of Boulder YouTube recording.

[0:00] Okay, I hope I'm I hope everybody can hear me okay tonight. I know I'm a little bit in an echoey room, but uh uh let me know if there's any problem hearing or understanding what I'm saying from where I am, but uh thanks for thanks everybody for joining tonight and uh we'll we'll call the meeting to order. Uh our first our first item is to look at the meetings at the minutes for the April meeting. Does anybody have any comments or any suggestions or changes on those minutes? Not hearing any. Um, I'll ask for a motion then to uh approve those minutes. Any second? Second. Okay. All in favor? I Okay, good. And I believe we may have a couple of uh

[1:01] comments tonight from the public. Joanna, if you would like to take over and handle that, we'll we'll cover that next. I'd be happy to. So, good evening. My name is Joanna Bloom and I'm serving as the technical host for this meeting. We'll start by sharing a few slides of the virtual meeting rules that we follow. These rules are in place to find a balance between transparency with community members and security that minimizes disruptions. We do need a full name associated with each person's participation in open or public comment and we cannot unmute you without it. If your full name is not currently displayed, um, go ahead and change it or you can always send me a text and I'm happy to change it for you and I'll give my number here in just a moment. There's no chat feature for this meeting, but if you do run into Zoom connectivity issues, um you're welcome to use the Q&A function. Um or you can again text me at 3038171742.

[2:03] Members of the public may be unable to control the audio audio or video features. Video is limited to city officials, employees, and invited speakers only. And I'll unmute you when you are recognized to speak. and call your name. Um, and then you'll see a three minute timer display once you begin your comments. Thanks so much for your participation. All right. So, if you are wanting to speak during open comment this evening, if you can find the raise hand function on your screen, typically that's on the bottom. Um, and you can virtually raise your hand. I'll go ahead and call you in the order that it was received. I do see Lynn Seagull followed by Eric Girtler. Lynn, I will go ahead um and ask hold up inclusiveness of a

[3:02] second. I'm trying to get rid of Chris Hedges on become a target because theelves have become so bankrupt. Can you go with the next person? I sure can. and then we'll come back to you. All right. Um, next we have Eric Girtler. And Eric, you should be able to unmute. Can you hear us? Okay. Uh, can you hear me? We sure can. Yes, we can hear you. Yeah. I I don't know how to turn my video on. I'm looking for a command. I don't see one. Um, anyway, I'll get started. Uh, I sent an email to the, uh, advisory board and, uh, and to Joe earlier today. Uh, I understand it was, uh, not 24 hours in advance. I'm wondering if anyone received that might have some idea about

[4:00] what I'm what I want to talk about today. We did we did receive that note, Eric, and I think um, several of us on the board are aware of that particular issue. So, if you'd like to make some comments, go ahead and then I think our director will be able to respond and maybe give you a little bit of the context about what's going on. Okay. Well, I live at uh 237 Pearl Street. I live I've lived in Boulder for 30 years and uh the farmer's ditch is basically my backyard. In April, uh with a little warning, uh I was told there would be maintenance on my backyard. uh and they came in and and basically dug up a large portion of the ditch and piled um made a huge mess and my next door neighbor got a bigger mess and when discussions with them I learned that what was going on was this is the beginning of a 30-year $3.5 million project to double the capacity of the

[5:01] farmer's ditch. Uh there was no notice. Um, we were given no preparation. I don't know why this is happening and uh I'm very disappointed. It feels to me like no one at the city of Boulder is uh looking out for the residents of Boulder. This is a big project that will affect many people uh disrupt traffic um potentially rebuilding streets. I don't know. I'm not an engineer. I um I've never gone to the city to work an issue like this. I'm just starting on this project. I've been traveling and now I'm trying to dig in. So, uh your guidance and your um your patience with me would be uh greatly appreciated. But I um I do want to dig in. I want to understand why this is happening. I want to be sure that someone is looking out for the interests of us citizens. And uh

[6:01] I got to tell you, having my backyard messed up like this in preparation for a stream flow that's um I think planned for 2050. Uh does not feel to me like anyone is trying to make this go well. Okay. Um, thank you for those comments. And, um, at the end of our, uh, public comment session here, Eric, um, our director, uh, of utilities, Joe Taduchi, will, I, I think, be able to, uh, respond to your questions and comments. Do you want to do that now, Joe, or would you like to wait until we're done with the other comment? We can we can wait. Um, and good evening everyone. I'm Joe Taduchi. I'm the director of the utilities department. Um, let's see if uh able to do her comments now. If she's

[7:01] still having trouble, I can speak to it now. Sounds good. Lynn Seagull is next. Lynn, I'm gonna go ahead and ask you to unmute and see if you're ready to provide. Thanks for hanging in with me, Joan. I was on my panel across the top with a little signs on it and I had to get off there rather than the zoom. I kept hitting the zoom thing. Anyway, yeah, I've heard Eric uh complain about this and that doesn't sound very good to me either. I'd like to hear Bark back and forth with him and Tatushi um and and hear what's going on here. I think there needs to be a lot more dialogue with the city of Boulder um boards and the public, which there's just not. It just feels like an echo chamber. Um, I know Joe's gonna address Eric's thing, but I've been talking to you about overuse of water for years and years and years and no one ever responds back. You know, there's the National

[8:02] Geographic little city there. You know, there's um um was uh what's the name of it? Weather vein. you know these these every I follow mostly planning board tab um landmarks board and all I see is every which way there's subsidies given there's $5 million giveaways at you know Juniper 1015 Juniper for you demolish the place they'll build a $10 million home there just because it's on the confluence zone well sorry the people bought the land on the confluence zone zone. Why is the city of Boulder essentially paying them off to uh to to demo their place? Because they can't move their their house into the into the make it larger, you know, into the confluence zone. Well, you know, why why

[9:00] should the city of Boulder give them a subsidy so that we have another affordable housing crisis to make up for this for another $10 million house? You know, this is just outrageous that then we have more and more people, more and more density, more and more people drinking water, more and more people showering. You know, my friend is probably the only person in all of Boulder that has a half bath. Seriously, that's all her house has is a half bath. And I hope she gets a huge tax benefit from that. She doesn't even have a shower. She's got a toilet in her bedroom. It's as if she's homeless with a house. You know, is this what the city wants for folks? You know, the more density, the more you know, these bedrooms, there's five bedrooms, there's six bedrooms, what's next? Seven bedrooms to an apartment in Boulder for the density.

[10:00] That's a lot of water use, right? You know, the the CU South Horrendous. Outrageous. Should never have been. No, Joe. No, Joe. Simple. Um, how about Sundance Event Center? 2500 people. That's a lot of water. We don't have it. I don't even see where my Oh, six seconds. Yeah, you're out of time. Thank you. Okay. Thank you. Thank you, Lance, for your comments. Thank you, Eric. And I think Joe can respond to some of Eric's questions for a few minutes. Yeah. Um, thank you both Eric and Lynn for the comments tonight. We're aware I'm aware of the maintenance work on Farmers Ditch and Eric I appreciate that when that happens um it can it can feel really impactful to property owners. Um that the city h does have a role with irrigation ditches in various

[11:02] ways. They're actually separate uh companies, separate entities from the city, which is not to suggest we don't have a connection to them, but um the way they function, they really have to operate in the interests of the of their shareholders. Now, the Farmers Ditch in particular, the city of Boulder Utilities is a majority shareholder and we have uh three three staff members who hold board positions including Emily McMurray who is in our utilities water resources department and she is the current um president of the board. I think in Eric's email he had mentioned Joanna Bloom was the president which she was at one time. um but has has has since moved moved off the board and we have other staff in there. And so in some cases we have a we have a direct interest with an

[12:01] irrigation ditch like that. We're on the board. Um we coordinate with the other board members and the maintenance staff for the work that is going to happen. In other instances, we pray we play um sort of a liaison role to the community and other departments in the city because we have the experience with ditches there. Um it is a tricky balance to strike in a modern city like Boulder to have these um irrigation ditches that have really powerful easement rights that go back to the formation of the city and they need to do their their maintenance work and it sometimes um can impact in negative ways private properties and and trees and sediment and removal like was done in the description that Eric have provided. So, uh, one thing I can do is I think in 2019 we prepared a memo for the board

[13:01] explaining irrigation ditches in detail and how they work and what our interest is, how the maintenance works like that. I can also share that in response to Eric's email. I didn't have a chance to do that today, but I think that would shed a lot of light on how they work. I do know in terms of the work that is being done on any of the ditches over time they fill up with sediment. Um trees and vegetation grows next to them because there's such a rich source of water there and the roots can can fill in the ditch and every so often ditch companies need to come through and remove that sediment and sometimes remove trees. And for sure that's impactful to private properties and in the role that we play in utilities. We've tried to influence the ditch company maintenance work to respect the rights that they have to do the work but also ask that they do it in

[14:01] a neighborly way. So, in general, that's kind of a a quick response in the moment to um the situation, and we can follow up directly with Eric um in the next day or two to have a discussion with him directly, but I do understand the impacts and some of that has to be that way, but we certainly want the notice to be there and encourage the ditch companies to do that in advance of the work. One uh last thing that I just thought of in terms of the capacity of the ditch. Um it's attributable to water rights in the state. And so there's a designated amount of water and flow capacity that the state has associated with the farmer ditch water rights which I believe are about 55 cubic feet per second. And over time as the ditch fills up with sediment and um is encroached on by trees and roots

[15:01] and things they lose the capacity. So it's not really in in my mind it's not really a project to expand the capacity to be something bigger than it's it's been. It's really restoring the capacity that's been there. That's important to our city utilities because we have water rights in that ditch that in a dry year in particular, we can have that water uh go to the Boulder Reservoir and and be treated. So, it's it's an important source to the city. Yes. So, I I hope that hope helps in in the moment and um we can follow up more in the coming days. I did just want to flag, Mr. Mr. Chairman, that there are a number of attendees and I did see another hand come up. So, I just wanted to check real quick with some of the attendees if anybody wanted to participate in open comment if that's all right. Um, so for those of you that are online, um, if you would like to virtually raise your hand to indicate that you would

[16:00] like to speak in open open comment, now is the time. Um, otherwise, I can pass it back over. All right. Uh I think we allow one comment per meeting. Yes. Yes. Okay. Um but we will follow up here shortly. Anyone else wanting to speak? All right. Thanks so much for the extra time. Just wanted to make sure we got everybody. I'll pass it back to you. Okay. Thank you, Joanna. And uh and thank you Eric and Lynn for your comments. Um and we'll try to respond to those in timely manner. Okay, I think we're on to the main uh topic on the agenda tonight, our main information item and a discussion from the staff about the capital improvement plan, five-year capital improvement plan. And uh so I'll turn it back over

[17:01] to you Joe to uh introduce who's going to kind of fill us in on the details tonight that we discussed a month ago. Great. Thank you for that. And so as mentioned in the main meeting um the agenda for tonight we've really cleared the whole agenda for just one topic which is what we normally do in June of every year and that is to look at our capital improvement program. Um each year the city goes through the budget process and it's really we're in year 2025 now. It's the next year that gets approved by council in the budget process. But because um utilities has such a big program in capital improvements, we look at a six-year CIP we call it. And um that's all context for the board and what your the recommended recommendation that we'll be asking for in July for the week. So um I will say for the we have two new

[18:01] board members this year and um the capital improvement program and rates and a recommendation to city council in July is probably the most important thing that the board does each year. And so each year in June, like I said, we like to take a deep dive, dedicate the whole meeting. Um, we have staff here to answer questions. We're really hoping to get your feedback and, uh, would would love to hear it tonight or before the July meeting. You could certainly follow up individually with me after if you have questions later. And then our hope would be to bring back um a revised CA CIP and uh rate proposal if necessary based on on your feedback uh and hopefully responsive to it. And so that's the program for tonight. And presenting tonight we have uh Chris

[19:00] Douglas who manages our utilities engineering work group, senior manager there. Um oversees the team that does all of the capital projects and then Steph Klingaman is our principal financial analyst. And um so Chris will be talking about the systems that we have the capital projects in highlighting some of the projects. It's not necessarily all of the 2026 ones that we'll be highlighting there. It's it's really the in the six-year program, some of the prominent ones that we'll put a spotlight on. And I think the way we have it set up, just like May, we'll break the presentation up into sections and let the board ask questions as we go so that you don't have to retain it all for the for the whole time. So I think with that I'll turn it over to you. Yes. Good evening board members again. I'm Chris Douglas's engineering manager. Joe really set things up. So

[20:01] maybe I'll I'll just dive into the next slide. Hey Chris. Um could I interrupt for just a minute? Um in in looking through all this material um ahead of time and particularly all the spreadsheets and so forth you have in the back. One thing that occurred to me that might be helpful tonight would be if you could um maybe emphasize or or spend a little bit more time on the projects which have the greatest impact, you know, in the next year or two as opposed to the ones that are kind of stretching out farther into the future. Um because I think, you know, we're going to have a limited amount of time to get into the details of all of these different projects. So maybe if you could kind of focus on the ones that are coming at us closer in the future, that would be helpful. Yeah, and absolutely. I'm glad you asked that because we do have really on on the setup here. So, I'll have a couple of talk about a couple of projects and it's a blend of projects that are a little bit longer in the capital improvement program, but then also there is a spot

[21:01] to pause and showing where those major projects that are actually in the 2026 budget. So, have that really for each of the utilities on this discussion point. So really as we look at it here in this overview is just a few slides to really kind of touch on what we talked about last month on the overview of the capital improvement programs and then we'll talk about the key projects and changes and at the end of each one of those utility discussions we'll have that pause to talk about 2026 projects and then Steph will um talk about financial matters and we'll wrap up certainly feel free to I I have some uh some pause sections worked into the presentation, but if anything comes up while I'm discussing, please feel free to to chime in. Okay, it sounds good. Thank you. Sure. And so really this first section and it's just really is three quick slides on kind of capital overview programs touching on each of the uh on the utilities. And really this

[22:00] is the kind of the foundational slide that we've talked about here where you know we have utilities infrastructure that's you know it's very complex system and it's several billion dollars worth of assets. Um we are trying to reinvest in those in in that critical and necessary assets. There is a backlog and a replacement needs are large. And then also as we go into here which is what we're talking about a lot tonight is funding strategies. So we are trying to avoid rate rate spikes while maintaining system reliability and we do uh we look at risk and cost and are trying to balance those things um within as individual projects. There's projects I'll talk about a little bit later that we've pushed back in this the capital improvement program or would actually move some forward. So, we do move things around a little bit as Joe has talked about over the years, this concept of if you think of a big music mixing board and you got the sliders. Uh, so we're we're doing that constantly

[23:01] within the capital improvement program. And this slide is really is some information on the water system and we uh use an asset inventory management system to help determine capital replacement priorities. So each of the assets or each of the pieces has a utility condition index score that is a combined to create an overall utility index score for the entire utility. So and what does a utility index score mean for the water utility? It's less about the UCI number but more about the trend in the numbers. So having that score of 100 is really a brand new system which really isn't practical just because the volume of assets that we have. But we also don't want a score that's zero either. So So a lower score means low lower score means it's it's getting closer to the end of its useful life. But does it mean that's the end the end

[24:01] of its useful life? No. And really what we're really trying to do is kind of represented by this graph is you you can see in the numbers that both in the treated water system and the source water system over the last couple years the UCI numbers are trending down. We expect that because when something gets old it it it reached more to its useful life. So we're trying to flatten the curve. Yeah. And really with that concept of flattening the curve is you look at projects like um the 63rd water treatment plant that we talked a we talked about last month or even the 63rd waterline project that we toured last month. By doing that rehabilitation we're bringing those individual UCI scores up which then flattens that trend. So it actually this is really an indicator of if we weren't doing anything the downward trend would be even worse. So that's really where we're trying to forstall that trend and what can we do to in the future um have that

[25:01] trend go back up. That's a that's a difficult cost balance that we're really trying to look at. Kristen, can I ask for that quickly? So I like how you explained that and and said another way. If it was a brand new city and everything we had both treatment plants brand new, all of our pipelines, the score would be 100. It's not possible with all the assets for that to be the case. So just like a car, they're depreciating all the time. And so we're trying to manage the collection of them and bringing the ones with the lowest score back up and then the collecting comes up. And quick question because I think showing this chart they're depreciating faster than we are replacing or putting money in. And is that because they're going to other systems that are not the treated and source water systems? It's it's a combination okay of that and it's also if you look at the approximately $3

[26:01] billion assets that we've got that is trying to balance versus rate rates and we'll talk about recommended rate increases we would be somewhere in that 15 to 20 million that we need to be putting into as into rehabilitating assets whereas we've been trending gained at about $10 million a year. So, we're looking at trying to increase that number, but also balancing that with reasonable rate increases. So, we we've been given a really good system by the, you know, the previous folks that uh built everything and now we're in that cycle of it's time to start replacing things. So, this is a continual cycle that we're really dealing with. So we're we're trying to find that right balance and it's investing our money wisely as we look at risk and getting those things where we feel we have a high risk

[27:00] spending 10 million and you'd like to go up to 15 to 20 that that is one of those as we're looking into something that's that's coming in future years is looking at a longer term capital improvement program as we've got so this is not uh something that is uh uncommon in the industry And I would say even Boulder is being more realistic and risk than a lot of other cities reinvesting into our system, right? But we're still behind. Chris, can you remind us as well? So when we talk about the rate increases, there are three different funds, correct? And so only what goes into the water fund is what's going to help with the treated water and source water. Correct. So yeah, the we have a water fund, a water fund, which is source and treated water, a wastewater fund, and a storm and flood fund. or utility and they are all I'll call them quasi municipal independent companies even though we're nested underneath the city but the the funds that come into each

[28:00] one of those entities is spent on those individuals. Yeah. And is there a a number that either caused you worry or causes you to sleep well at night? That's that's a number that we've been having a lot of internal debate. What's the right number? Yeah. you know, it's not zero and it's not 100, but it's not it's not in that realm of this is a letter grade aspect. So, we would like to see it um start to trend out and flatten, which is what we've got, but you know, I have turned around and said this is the number that we're shooting for. We're still trying this is a relatively relatively new grading system that we're still trying to to work through what that best number is. I noticed somewhere in the report, Chris, that there was a comment made that the city was worried that a lot of the particularly on the drinking water side, that the the uh infrastructure was

[29:01] aging rapidly and that we needed to make, you know, substantial investment in that area in particular. But yet it seems that the uh you know rate increase in that part of the program is about the same as it has been over you know the average of the last several years. Um, are you guys are you guys concerned that that that rate may need to be higher in the future or that we're we're kind of not keeping up with ourselves there or we're going to have to increase those percentage gains in the future so that we don't let that number your UCI sort of number get too low? I might take that one, Steve. And I think one of the conversations that I'm having with Chris and the and the managers of each of the capital improvement programs for each of the utilities is really establishing a long-term plan where we where we get all of the assets that need attention on the

[30:00] table. We've done a version of that in the water uh in the water fund storm flood. Well, I I'm thinking of the AIM program and water, but then we did um an updated comprehensive plan a few years ago in storm and flood and we really in simple terms got a collection of all the projects in our backlog and we looked at how can we get these done in several decades of time and what would the rate increases look like. I want to replicate that for wastewater and and water. And so for the moment, between the staff resources we have, what we think is reasonable to manage the projects and maintain what we've got, Steve, I think the rate increases that we're proposing right now seem reasonable, but I'm hoping as we do that longer term look in the in the next few years, we'll be able to better answer

[31:00] that question. And as soon as the team finished the comprehensive flood and storm water plan, that was my question to them. It's like, okay, we've got 35 projects listed here to build this out. Can we do this in a reasonable amount of time with reasonable rates or not? And when we looked at it, the answer was between some bonding here and there and spacing them out, we think we can. And so I I think we just need to look at that a little more. um comprehensively and have those discussions with the board in the next few years and and thank you for that primary job as if you wait two slides talk about that. Is there a UCA for the flood waters? Well, flood water is a little bit different. So we're we're we're looking at it a little bit different from the flood perspective because the flood the storm and flood utility is it's still we're still having to build infrastructure to

[32:00] meet the our storm water and flood goals. So it's a little bit and it's also it's also a little bit harder sometimes to track some of those things in the storm and flood utility because it's just a little bit different than the way you look at it. and and this slide is really trying to talk about um the wastewater system and we don't have right now this asset inventory and UCI scores in the wastewater system right now but we're working on it. So that's really where we're looking in the next couple of years on pulling that together. But we're doing a lot of pre-work where we're improving our data quality for the sewer model and correlating asset information in our GIS system and then also doing a deeper dive in the in those assets at our water resources recovery facility out at um 75th and and and looking on that end. But one of the things that really comes in here is even

[33:01] without the scores, this graphic really shows you what we're doing. This is the sanitary sewer lining program that we've been uh really from some direction from city council in 2015. We're looking at a a big relining program and completion by 2035. Big thing to to show on this trend is you look on the the left figure is the original date that those that infrastructure was installed. So you look again in particularly in downtown Boulder there's a lot of red following that red yellow green motif. Red is old. And so so or or that's that follows that red light concept that we talked about. Whereas then you look at the slide on the right and you can see how we've gone from so much red to a lot of green. That's what we have lined since 2015. So it really has brought the effective age of the pipe really up. And so we've got

[34:02] more detail as we dig into it. But it's even though we don't have the official AIM UCI scores, we're still doing a whole lot of work that is helping us to get there. And the UCI work just help us define it a little bit better. I I don't want to I don't want to keep taking us down rabbit holes, but in the history of of RAB and rate discussions when we were like the sewer backups that happened in the 2013 flood when we were looking at that and I was in a different role at the time that the team had a 100redyear plan to realign the system and I think combination of council and board feedback with what people were experiencing saying with sewer backups in their homes. They said, "What would it take to do to do that work in 20 years?" And so we came back, it was either 2014 or 2015

[35:01] with a 30% rate increase that was requested of us by council and the board and we're doing that work and we're we're generally on track to get to turn all that stuff green in 20 years instead of a 100. That's what it takes sometimes. Then in the storm flood utility really what this is the that long-term plan that Joe had talked about from the 2022 uh comprehensive storm and flood plan. So the figure on the left identifies the 30 individual flood reaches that need to have flood improvements. And then the figure on the right is we've taken those 30 reaches and combined them into 14 projects which you can kind of see lump together and the goal was to have the projects be approximately $15 million a piece and we're doing one project every 3 years. So that's where Joe talked

[36:03] about that 30 year how do we get there to complete all of the the flood assets? That's what this plan is. And actually, we're starting because we've got some other projects in the current six-year capital improvement plan, but the first project, that first grouping in in 2M Canyon Creek, we're going to be beginning design work in 2030. So, it's a little bit further out on the out here, but we're setting ourselves up to start that process. What standard is the flood management being built to? Uh what our goal is is flood protection is as at 100 years 100 and is that historic or is that possible and that that's looking at because we a lot in a lot of areas we don't have that level we're looking at that historic level but that's also we're also looking at each individual reach on a case by case basis because some of those reaches and one we'll talk a little bit uh later tonight in Gregory Canyon Creek is in a highly populated

[37:02] area very dense can't get to that 100redyear storm with the available room that we have to use the project. So there's the goal of the 100redyear but then we're also having to look at it on case by case basis and we've been asking lots of questions. This was my first formal pause for questions. So uh you know I think it's great to do this conversation. I I really appreciate your questions as they go. I will I will move on and now now I'm going to talk about some of the key projects um by each utility in the capital improvement plan. So we're going to start with the uh the water utility. I'm sorry. Hi. I just had a I just had a a couple of very general I think overarching questions. Um, I wondered if

[38:00] there was a standard escalation for all capital construction costs that is assumed for the projects. Uh, you know, an annual escalation. It looks like it's 4%, but I just wanted to um acknowledge I guess that these costs are we're we're not just assuming constant. And then secondly, um contingency. how much uh contingency is assumed in some of these construction costs as we move into, you know, I I agree with Steve's focus on the next couple of years, but just thinking out into the future if we've assumed greater amounts of contingency for the projects that we don't have as much detailed design and cost estimates on. Yes. Yes. So certainly on the escalation is we are assuming a 4% cost escalation on these projects and it's that's something that in the last few years particularly post

[39:01] pandemic and we've seen significantly higher increases on that end but it having that across all of the utilities at least accounting for that cost increase. And then um Amy, you brought up the question on contingency and I don't know if you remember from last month we had that final figure that um but depending on how much we know about a project in that level of a class 5 estimate. A lot of times we're in that plus 100% minus 50% on a project when we're very early in the stage. So, and then as you get closer to knowing more about the project, that contingency funnel decreases. And so, we are looking at from a classified level really anything that is probably greater than three years out in that capital improvement program because there's just so many things that you don't know about a project. And as it gets closer into

[40:00] um the kind of final design and design work in say one year or next year out, we're in that potentially class one, class two just depending on where we are in the design process. So you're assuming like 20% on the more immediate construction costs. It's somewhere in that range. And I would say generally speaking, that's that's based on what we know of T. And and I will admit and it's also one of those things that and we're still struggling because the construction market is changing. So we do work with staff when things you know we things are coming in and we're having to adjust on the on funding vehicles and that's a lot of times where staff and I and um the project managers uh spend a lot of time and having a lot of I wouldn't call them difficult conversations but u really pointed conversations to work through advanced projects we have to adapt on the fly we

[41:00] do and there will be a couple examples of u projects that have come up where we have adapted on the fly. See, so this one uh this this project here on the source water system is we have a couple of um source water pipelines. And so really following that red and green motif. This is the Barker Gravity pipeline. And the green, the the big bold green is pipes that we have lined since 2016 since excuse me 2017. And we then you can kind of see in the light red there are the sections that we need to complete. We've got about 14,000 ft of pipeline and siphons and to to replace and we're spending approximately $5 million a year. So, this is one of those areas where you'll see 20 funding in 2026, but then it's even going out to 2029 when we think we're completing the project. And the really the the the big thing

[42:02] about this particular project with it being one of our our water sources is we're doing this construction in the winter where we can have we don't need as much water from the source water side and where we can line it and then get it back on for the summer command season. And then the other series of of projects in the uh source water system is it's really based on some updates from the state engineers office in 2020. uh they readjusted the way they look at dam safety related to the hydraologic hazard of a dam, the seismic design requirements and the hydraologic modeling or the the water draining into the dam. And so we've shifted the prioritization over the last few years uh to to be looking at that in our high hazard dams. And one of the um projects

[43:00] that we completed in this is on Barker Dam which is just outside the town of Netherland on Boulder Creek. And uh we did a uh dam stability project and looked at the hydraologic and seismic loading and then the city went through an evaluation process with some dam safety experts and now we're recommending looking at a more advanced uh monitoring program instead of actually going forward and doing what could be a significant capital improvement project. So that's the type of thing that we're looking at in the in the for related giving enough leeway I mean advanced warning monitor taking action. Correct. Correct. And so and that's really it's and certainly it's a partnership with ourselves and state engineers office on where and how we're looking at things. So now shift over to the treated water system and really start with the the

[44:01] water treatment plants. And so we have an ongoing corrosion control disinfection uh project at the Passo water treatment plant. And one of the things that came out of that uh is we were looking at what our requirements are for the the disinfection tank at the potass treatment plant. And there was one of the factors was significantly more expensive than we anticipated. So we were doing a re-evaluation project on what our goals are on that and we've shifted that to uh 2029 instead of what we were thinking would be early brief years in CIP. And then also one of the other project that we're looking at is our chemical disinfection systems at both the Passo and Boulder Reservoir treatment plants. And we're looking in 2026 beginning design work where it's we're replacing aging tank and and storage infrastructure to uh to bolster that up

[45:02] as well. And then moving on to transmission piping. And so the board may remember in in blue that we toured the 63rd um street pipeline last month. And that project is is moving forward and we're looking at completion in 226 just about here this summer. The section north of J Road. Well, we'll be opening that back up and then we'll be working on the section there in blue south of J Road. And then also looking at a a bidding next year of the Colar Tank to Broadway pipeline there in the in the orange with future years in the outear CIP in in the pink. And so again, Noler to Broadway, I believe, is is one of those ones where there will be some uh funding required in 2026. Be asking for of recommendations from the board.

[46:00] Then in the outer years of the CIP, I'll just touch base on the U tank uh our tank replacement program. We've got a lot several tanks that are in the uh early 1900s era that need to be replaced. So, we're looking at projects related to other things like at the treatment plants or some of the other pipeline projects because these tank projects are going through long-term outages. So, bolstering up or making those other areas system more reliable so that we can take these tanks offline uh which could be for several summers. And then Steve, this is the slide for you here. Here, here's the slide of the major programs in the water CIP for 2026. These are projects that are over about $500,000 in funding that will be either it's a new project or we're infusing funding in 2026. And so, it's a

[47:02] combination of individual projects and programs. And maybe it's now is the right time to pause and see if there are any questions. If I can add to what you just said, the way it works out when you bring the CIP every year, it may be that what's designated in in the next budget year, 2026 in this example. It could just be an investigation or a design or something like that. That's not a big dollar number. or it could be something like the meter replacement that um we're we're using capital funds but they're not necessarily major major projects. I think on that list probably the um Parker Costler pen stock repair has has potential to become a big one soon and then some of those dam stability projects I think are more in the studies realm but have the potential to become

[48:02] big projects later. Chris, could you go back through three slides and where you talked about the Barter Dam um stability project and how did you refer to it? Um how that works? I don't I don't think we've heard much about that. Can you give us two minutes of what that project actually sort of consists of? Sure. Um, as we've looked through with the state engineer and they're changing requirements and really some of the specifics on the Bucker Dam is there are anchors in the dam itself that basically uh giant rods that drilled through the dam and into the rod foundation. So, and how that was installed in the 80s, it's difficult to understand what the condition of those anchors are. So, we're looking at, but then they also put some test anchors just outside the dam

[49:01] to so that you can go and do and pull those test anchors out and see what the condition of the metal is. That gives us an indication on on what we're going to do. Um also one of the things that the uh that the experts recommended for us is some hydraologic or hydraulic monitoring within the dam or some basically drilling some small holes in the dam to where we can understand the water level. So how does the fluctuation in water level impact the stability? Because we know we're in that thinking the dam is full, it's pushing against the dam. Well, is there water seeping through the dam or is there not? Which then leads to um stability. So, this this goes you could go into the much bigger aspect of we could have a in that realm of an estimate hundred million range of a job to to really work

[50:00] on the stability on the dam. But really the experts are saying no, let's take a pause, double double check what you've got before you go out and do that big capital project. So that's the type of thing that we're getting. It's that recommendation of okay, let's monitor the water going through the dam or around the dam and does that lead us to having to do something versus just automatically going to doing a very large capital project. Does that help, Steve? Yeah. Okay. Thanks. And you said these are new part of some new science was just in terms of monitoring. It's part of this the monitoring is there. Yeah. And and that's not really the new science really. The new part is like for instance the state engineer has looked at on the seismic stability. They're always changing how you calculate that. So they've said oh we know more data we have more data now. Maybe the the chance

[51:00] of having an earthquake is different. Yeah, it is. I'm trying to remember on the I think it's maybe it's a frequency but not necessarily a magnitude. So that's so they're saying okay let's take that new data. Well, how does the DM react to that? And then and really on that end is and what's our factor of safety? And so we're it gets into that point of are your factor of safety is still safe and you still have that factor of safety but it's maybe a little bit lower than current standards. So what can we do to get us up to current standards? It's a many of our systems are subject to regulatory changes more broadly. That's what we're talking about here. the this the regulatory standards have changed and typically when that happens you're you have a certain amount of time to come up to that standard if it's higher so that some of our wastewater projects

[52:02] are at the wastewater plant are driven by different regulations but there's a lot is transportation coordination here just across Unbelievable. Well, and and what transportation coordination is what we've realized. So, you know, one of the things we've got is where's the value of a project? And if transportation is repaving or installing a new bridge, does it make sense for us to come in and do a waterline project in conjunction with that? So, for instance, um one of the ones is right off of 55th is Central Avenue and transportation is going to be replacing that bridge. Well, as we looked at it, they're going to do the water line in their bridge construction footprint, but it's actually makes more sense for us to do the water line from there all the way out to 55th. So, instead of having a concept of the, oh, well, we want to do that project, we

[53:00] don't have funds allocated for it, we're we're kind of creating a program there to where we we have that flexibility to back and forth with other departments. So that's that's really that you see that transportation one and it's something we've done for a long time in the store and flood utility but haven't done it as much the other utilities. It's just the allowing us to frankly it makes it easier to get to a yes instead of having to say oh well we have to put on some other project. Can you talk a little bit about the Alia Dam is is a reservoir we have that's up in the watershed and it is uh we're doing a major up upgrade to that dam based on uh some safety concerns that were brought up by the state engineer. So that's really it's a project that's been going on for a while and it was to infuse a little more funds to get that

[54:00] project accomplished. Then for the um the Barker gravity pipeline and so that should finish in 2026. That's so you'll see that that's where we're thinking that project's going to be finished in 2029. And that's the one from the figure where we're spending about $5 million a year. We've broken that out into winter by size. I'm just curious in terms of risk of anything failure and cosmos vote for any of these. Well, I mean you I'll just say go on stay on the bark gravity pipeline that was installed in 1909. [Music] So, it's pretty amazing that it's been around and we've come up with a really ingenious process to be able to do this in small chunks. So, you you'll look at all of these on uh that that risk and stability. I I I talk with within staff

[55:01] within utilities engineering as we go into UCI numbers and those sorts of things. Those those are helping us to make decisions on what we kind of call second page projects. They're important, but it's the gee, how do we pick and choose? But we really are working in in a realm right now with a lot of peace projects where it's there's no path of there is not a uh path of you know what am I saying or there's path of least resistance path of least resistance or path of no regret with each project to where even if we're shifting things around we're still getting a lot of value for it. Sure. When I started with the organization back in 2005, none of the work that occurred in the market for gravity, it's it kind of functions like a buried irrigation ditch.

[56:00] But our I say it did have a failure at one point and the risk of failure was higher when before we started all of this work, but with as much as we've accomplished now, it's way way lower. This used to be one of things in our system that I was concerned most about and it's less and less so every year. Now shifting our shifting modes to the wastewater system. So, I've got a couple of projects here on the wastewater system. And this is a um a pipeline project, which is the lower Goose Creek project there in red, which actually that project ends just right outside here at the MSC and where we're sitting now, and runs up Old Pearl. It should get almost to the Foothills Parkway. And this was actually a project that we did the first phase and created it in 2021, but we had some funding limitations. So, we paused on that project. uh because we

[57:02] went after other projects um that had a higher priority and one of them was the main sewer interceptor project which has just come online this year and we also had the the the baseline road uh sewer interceptor. So we're pivoting back to this project. So that's an example of how we might shift some projects around. We would have loved to have done it back in 2021 if we had the funding but didn't. So it was a trade-off we had to make. So we're going to come back on this one. This is a combination of um increasing the diameter which then allows us to increase the capacity of that line as well as we're seeing um some decreased instacity. And then pivoting to the uh the word for the water resources recovery facility. Showing two projects here on the screen in red is it's replacing the uh the buildings uh heating, ventilation and air conditioning systems are old and

[58:01] need to be replaced. And it also includes a looped pipeline around the facilities which we use for hot water loop to to heat the uh to heat the systems. This is actually an example of a project where we saw some significant cost escalation from when we were originally doing the cost estimating several years ago. We were thinking it was going to be about a $600 price. So, it's coming in at 11. And so, that's that significant cost increase. So, there is some additional funding that we're asking for in 2026, but it's also a project that we have delayed for several years. We went after other projects for DP and the regulator toward the end on the phosphorus upgrade projects which is just about to come online this year. And then the the other projects that we're looking here in the CIP was doing some construction in 2026 on the primary clarifiers which are the two circles in yellow.

[59:01] And those were the the touchbased projects that I wanted. And again, we've got this list of projects in that $500,000 or greater range that we're asking RAD to take a look at for 2026. And I'll pause and stop for if there are questions on any of that. So, you mentioned that a few years ago you had to pause the sewer replacement and so there's this like um constant tradeoff like challenge you face. Correct. Maybe could you tell us what would which of these projects and also would be those that you might consider pause and shuffle and for instance another one of those ones where we were trying to take advantage of things is not necessarily but I'll say talking with Chris Olsen who's here who's my lead on uh in the room who's my lead on the uh the wastewater program and

[60:00] Oligman the the lead operator birth. They don't want to pause on anything. But so if you want me to tell you what what what my priority project is, I would I will say I will fight to try to keep it. But we have we have a very good and realistic dialogue when those numbers come in for in this this HVAC project. There was another project that we we're looking at to to move forward. It was related to the public service power shutdown that happened last last year last year and we had put some funds because there was some questions. Do we need backup power at the work and so we had money assigned in 2025 for that project? Well, we knew it was an important enough job that we had to allocate funds. Well, then there was are there almost or have completed agreements with Excel and the public utilities commission to where Excel is going to be doing some different things to give us more reliable power in and in

[61:01] in a shutdown. So, we were able to take those funds and earmarked and and move them over towards the H the HVAC project. So that's that's again that push pull on the I trust me the list is actually longer than this and and and we would like to keep doing on that end but I I I'm really proud of really everybody on the team on when it does come to this from finance or utilities leadership or even the engineering or the operations team. There's there's a great dialogue on that and we're all trying to be realistic. NEAC has been delayed since 2021 already. That I think we originally had funds in 2023. Um Chris Olsson. I managed the the wastewater engineering. Yeah. I think um I think we originally

[62:01] had some money allocated in 2023 to replace a a failing segment of the hot water loop. Um and it's probably been on the plant stats study for a long time before that. So maybe it's a naive question but just remember how there's so how you make the tradeoffs. So all the you have all these different things obviously everything's important you have a system if anything fails kind of essentially almost everything fails but is there is there is there an informal process is there a formula because I wonder even if there's a way you know I watch this as an analyst you think about is there a way you could even program you know all my considerations of you know something to kind of tell me what you know cost and risk and everything else. It's a it's a great question. From my vantage point, if you look at the funding of the different departments across the city, utilities budget is the highest by far. If you see it on a bar chart compared to the other 20 departments and so I feel like in my role, we owe

[63:03] the public a certain level of sophistication in the way that we're going about assessing this. And I'm proud of the way the team does it. uh the condition in index work and and just assessing like asset management the condition what's the highest risk what's the highest consequence of failure staff availability like it really is if you think of a recording studio in a mixing board that's the best analogy I can always think of and we're constantly changing that balance and re-evaluating and it's it's a bit of a dynamic situation as Chris was describing how we adapt to changeable circumstances. It really depends if a cost comes back on a project 25% more, but we're ready to do it and and we've got to find those funds that we look at the other projects that are candidates. How ready are they?

[64:01] Which one could we maybe move out a year? and and so there's there's also an element of judgment that just comes into it. And I I think we do that um in a in a very reasoned way and how we go about it both art and science. And the last utility I'm going to touch base on is several projects in the excuse me in the storm and flood utility. So this first one um is the South Boulder Creek uh phase flood mitigation project and from a flood perspective it's pretty straightforward project. It cons it consists of an earthn dam which is kind of that dark red uh area, a a concrete spillway or flood wall that really runs along US 36

[65:01] and then an outlet works in that bright yellow that goes under 36 and connects back to South Boulder Creek. And that project has been going on for a long time. Projected cost is about $66 million. We're actually working on uh the bid documents and permitting and we're looking actually go out to bid on that project in the next few weeks. Then the next one is the Gregory Canyon project and Gregory Canyon Creek project and and Joel this is that where we talked about what storm level are we designing for. This is uh running from the confluence of Boulder Creek basically up through the hill area to Pennsylvania Avenue and it's in the middle of backyards and so as very steep highly developed drainageway we can the we're designing for for a 25ear storm 25

[66:00] and historic 25 that that is that historic 25ear storm whereas right now we've got somewhere in the range of about a fiveyear cap fiveyear strong capability. Okay. So, we're talking about significant improvement even with the limited space on the project that we have. I think what you're you're getting to Joel is is a valid question like historic um looking back and using the historic occurrences on floods and using that as the basis of design. We now know that that will that will tend to under underestimate what what a true 100red-year flood is. And so in our comprehensive storm and flood plan that gets to climate change and and we have some language in there and we're trying to retrofit an old city to modern flood plane regulations. So this Gregory Creek one where you have

[67:01] houses on both sides there's only so much room and to try and buy all those houses like it would just put it out of reach. So there's there's a practical balance in this utility of what's practical and feas feasible and I think the team did a really really good job of capturing that in the comprehensive plan striving for the highest that we can get building in climate change considerations when we can. There are elements of that in the South Boulder Creek project because we've got room to do it there. But even there could go up to 500 right. No, I mean and the point is you're you're increasing the capacity to so at least you will be able to handle bigger events and I assume too that there are then contingencies of what happens whether the flood is you get a one you get the 50 year event 100 events you get whatever you have to do warning or well that then it becomes emergency

[68:02] response or or hopefully proactively emergency preparation and people do know the situation And uh everyone still has to be ready regardless of what level we're designing to 25. Yes. Yeah. All right. Thanks. Thank you. And then the last project in the storm and flood utility that I'd like to touch on is the upper Goose Creek. And this is actually a combination of a a flood project and a storm water project. So storm water we thinking that smaller either two or fiveyear storm depending on if we're in residential or commercial. So that's where the photo shows that's actually North Boulder Park at about 9inth Street. And so that's a a storm in 20 2023. And so we have a lot of backup and and localized flooding in that storm event. So this is this project is to help with storm sewer in

[69:02] that smaller size in the upper part of the base. But when you generate flows in the basin, we're trying not to uh harm anybody downstream. So there's we have to have somewhere for that water to go. So the flood component is on the left is in the lower part of this drainage basin. We need to increase capacity down there to be able to handle that additional storm flood flow. So this this project is actually um we've brought the consulting engineer and we're starting the design and then we're looking at starting the construction 2028. I mean is that the flooding near that part? How much damage does that cause? It's inconveniences park. Well I I I think it's not just the park. There's another photo that we have that

[70:00] we sometimes use in these presentations and it's it's not that big of a thunderstorm that can create flooding on Broadway and cars are up to their wheel wells or up to their hoods in water. That's happened multiple times the last I don't know five six years and and it just the capacity of the combined pipe storm water system and the flood drainages are not there and it it really needs attention. Now, I will close things out before we hand it over to Steph to talk about financial matters with again that $500,000 in 2026 uh projects funding. And you'll see in here um you know things like and you saw in some of the other sites where it says a program that's that's something where we're infusing it with money. what do we actually that's more

[71:01] along the lines of okay we know we need to keep doing something year after year whereas Gregory Canyon Creek is for that one project flood acquisition program is an example of we fund it every year we buy a property every month and the intent is having enough funds to buy buy a property we'd like to say every year the property values are going up the older too. So that money does not stretch as far as this either. So any other questions about storm flood utility oh actually I I'm sorry Steph I forgot about this slide. This this is just a list of projects on where we talked about that transportation fund. This is

[72:00] interdep departmental projects that we're we're in and utilities engineering may not be the lead on but we're either helping with funding because it has a utilities component to a project or we may be even advisors to other teams and for instance I'll just one project I'll I'll hit on is Primos Park where that's a much needed park in North Boulder but it has a stream running through through that park so there's a flood compound year in that with parks and Rex is taking the lead, but then we're helping advisory on the flood component and then also contributing funding uh to that project as well for for that flood pump flood portion of the project. some of those other city projects that are huge priorities in their own right might pull one of our projects forward in the priorities because it needs to be done and that would in that storm flood Primos Park is one of those reaches that

[73:01] needs a storm flood project but we might not want to do it for 10 years say but because of the other need on the other departments we're we're accelerating that project. And now I'll hand it over to Steph. Thanks, Chris. Sele budget analyst. Thanks for joining us tonight. Um, so today I'll be covering some key financial topics related to our three utilities. Um, and the goals to help provide a clear picture for how we manage our financial resources, plan for future needs, and ensure the long-term financial health of the entire department. So, I think a couple of these slides are a little refreshed from last time, but um just wanted to go through our core utility funding sources. So, our main sources of funding are primarily through user fees and municipal bonds um and occasionally supplemented by state and federal assistance programs. User fees

[74:02] provide our most stable source of revenue and municipal bonding allows to finance large projects upfront that we then pay over time. um grants and low interest loans from our state and federal programs can reduce project cost. However, these funds are competitive and they often require projects to meet specific criteria. Um there's also a limitation of how much money we can receive in grant funding as an enterprise fund. So talk a little bit about that on the next slide. So um either of these are the main source of funding for our department. Uh but some of these secondary revenues help us associate fiscally. Um the first one I've had listed here are the plant investment fees. Uh we also refer to those as PEFs. And um these are the onetime fees from development used to fund system expansion. Uh we also sell bio gas and hydro power which help diversify income and support some of our sustainability goals. Um, we also have

[75:02] other revenue sources that might include water sales, some supplemental service charges like or install fees or late payments. Um, we also receive interest earned. Um, and you'll see that interest earned money tick up um, usually right after we sell a bond and then that will slowly decrease over time. Um, all of the supplemental fees and revenues um, help round up the budget beyond our normal user fees. And in order to remain an enterprise undertabber, uh, no more than 10% of our revenue can come from government sources like grants. And we meet this requirement with the vast majority of our revenue being generated from our user reviews. So these are the proposed ratings. Um for 2026 um we are recommending or proposing an 8% increase in the water rate, a 6% increase in our wastewater rates and a 5% increase in our storm water and flood rates. Um this aligns

[76:01] with what we presented last year for 2027 and 2028. We are proposing 8% increases in our water and wastewater funds and a 7% increase in our storm water and flood funds. Um, I'll just mention quickly, uh, if you look back from last year, we did recommend a 6% increase for 2027. Um, but due to some, you know, growing capital deeds, uh, we are recommending or sorry, proposing an 8% increase for 27 wast. Yeah. So last year, and there's actually a slide that covers increases, but I can quickly just mention um last year we had um an identical rate recommendation for 25 that's shown for 2026. Um we typically had about 5% rate increases for the wastewater fund. For water, it ranges between six and eight. And then for the storm water and flood fund, there was a period of time from 21 to 24 that we had

[77:00] about 12% rate increases in in anticipation of the storm water bond um for the self project. Uh are there any other questions here? Really quickly, could you remind us are these rate increases um just capital spending increases or these also controlling for inflation and other good question. Yeah. And I think um I looked at what the CPI just like general water and sewer CPI increase was just for the entire nation. It was about 5% May 2024 and May of 2025. So I just tariffs are imposed. I mean there's a lot of equipment. Could that have a noticeable effect on this that's might go up% more? Yeah. Yeah. Those are still unknowns. Um um so the next three or four slides just wanted to show some uh bill impacts. Uh

[78:00] the first one that we have here is the uh average single family residential bill. Um we're assuming an average consumption use of around 7,500 gallons. Um but you can see that with the 8% recommendation, we're going from $137.84 to $1472. That's about a $98 increase. I think that's a little less than 7% for all for utilities. This is an old I can tell that stop sharing my apologies. I will say while we're switching things, that last slide that Steph showed, you know, with the $9 increase, a trap that we can all fall into is to just say,

[79:00] well, it's it's only $7 a month, that doesn't seem that bad. So, when you start accumulating that year after year after year, that people's bills get higher and higher. And we're trying to be mindful of that. But also one thing I say to our team members and we're having these conversations internally is like we do need to be mindful about affordability, right? But at the same time the infrastructure doesn't care. It's either going to keep working or it isn't. And are there programs to help lower people? We do we do definitely um have bill assistance. I will say that is something that RAB has really supported us and has emphasized as uh an item that we need to focus on and make available to our community because the majority of people in Boulder probably can pay and can afford it, but we need to make sure that we don't leave

[80:01] those who can't behind. And so really working on that program, it's in our uh it's in our work plan to keep building on that for the next few years. So ask a question. Um does the city like forecast how much in the rates they're anticipating not collecting from those equity programs? Is that factored into like the budgets and things? Does that make sense? In a way, it is. I mean, by our charter, we we can't the utility itself, we can't give away free water or free services or we jeopardize our enterprise status. And so, in in various ways, we track the what we're collecting. We track the aging bills that haven't been paid. And then through our utility billing team

[81:00] and our customer service, when someone's struggling to pay their bill or falling behind, we can offer them a payment plan or see what the situation might be to keep them in service, but also um capture those payments over time. So, I don't know if that answered your question. We're not directly tracking it the way you asked, but through the various systems we have, we kind of get all that information one way or another. But that like difference in revenue between like including those support programs versus not is like factored into the rate projections. Yes. I think later in the presentation here, Steph will show um she'll walk through one of the fund financials for one of the utilities and it's really just all the revenue and all the expenses by line item and you can

[82:02] see how we how we track that. We may or may not have that. We're getting there. Question. No, it's good. I'll bring you up on it. You know what? I saw it loading. Yeah, my computer didn't sync. So, I I'm sorry about that. It's true. Part of my role here is to fill this happen and to fill in the gaps when they did. So, it's great that you're asking those questions. Yes. So, thank you, Joe. So, you're going to talk about the bonds. Um, I I have a slide that just shows the uh historical rate increases u and then sort of the bonds that are posted on there. Um, but do you have a specific question on the bonds? I was just curious about the uh the um South Ber Creek.

[83:00] Yeah. Do you want to Yeah, I I can speak to that. Um we've been building up the um from year to year the funds for that and getting ready to bond. As you know, there's there's pretty publicly been a legal challenge to our bond situation. Can't really get into the details of that. The judge did just do a ruling on it um within the last few weeks here and ruled in the city's favor. But it's a really good example. Um, we're planning to pay for that project with bonds and finance it over time and that allows us to keep reasonable smooth rate increases. As we were thinking about, well, is there another way we could pay for that? What if we just did it with rate increases? And I asked Steph, what would that look like? And it would require like two years of roughly 70 or 80% rate increases which we has

[84:02] actually been done. Um we had a when Steph gets to that historical rate increase slide after the 2013 flood council did pass a 75% rate increase in the storm water and flood fund. Anytime you do a rate increase though, the base cost of services goes up and stays at that new level. The benefit of a bond is you can meter that out over time. If we did that type of a major rate increase for any project and in the circumstances of South Boulder Creek, we might want we would want that to come back down after we generated the funds. that bonding is such an important component of what we do in utilities and not just for the city of Boulder but for every utility across the country and um

[85:04] it would be extremely concerning to not be able to do that. You're on track working through our difficulties. Thank you. Um, so yeah, went through the single family residential rate increase about uh $9.18 per month. Um, looking at a duplex um that is just slightly higher. It's about $12.35 um across all three funds. And then wanted to look at a couple of commercial uh properties as well. So this just summarizes the impact for a large apartment complex with a 4-in water meter. Um that's a pretty significant monthly increase. Um, but it also trends in terms of the percent increase of about 6.7%. How many how many permits? I I was thinking that that question might get asked. Um, I don't know the unit number, but I can get back to you. It's quite large. It's about six million

[86:00] gallons of consumption a year. So, it's a lot of million. Yeah. Correct. Yeah. And then the last one here is a restaurant with a one one and a half inch meter. um that monthly increase is about $461.50. So this is the uh those historical rate increase slides. This is just the water initially. Um and you can see that you know in the last uh I think 10 years or so we bonded about four times in the water fund. um those those bonds tend to be between 30 and $35 million and those rates of as I mentioned earlier tended to be between six and 8% annual rate increases per year. Um the next bond payoff is scheduled for 2036. And then in the wastewater fund, we've bonded a little bit more frequently. Um and they have tended to be smaller amounts with the exception of our bond last year which was around $61 million.

[87:01] Um and a large um a large portion of that bond helped to pay for the MS project. Um but here we've we've tended to have rate increases of about 5% which is just kind of keeping up with inflation. Um so you know starting next year we are proposing some higher rate increases for this fund. Um our next bond matures in 2026 for the wastewater fund. And then finally Beth storm water and flood fund as promised. Yeah, there it is. Yeah. Yep. Uh, so 75% increase in 2015. Oh, sorry, Steve. No, I just I was just exclaiming at the dramatic nature of the the curtain. That was about the lining of pipes. Actually, the pipe lining is in the wastewater fund. is if you can see that spike there in 2015 is that 30%

[88:02] increase. That's where you talked about that that lining fund whereas the 75% increase was really a post 2013 floods. Okay. Yeah. Yeah. And I also mentioned this, but we had those really high rate increases between 2021 and 2024 to um help strengthen our financial position ahead of this self-holder bonding. And so going forward, we anticipate some more moderate rate increasing somewhere in the 5 to 7% range. I just wanted to speak to our reserves and how they provide a strong financial foundation to support the utility through some unexpected challenges should we face any. Um we have our operating reserves which support day-to-day expenses and um our operating reserves are currently set at 25% of operating expense. Sorry. Yeah. 25% of operating expenses. Um the water resiliency reserve is a fairly new

[89:01] reserve. I think um implemented in the last five years or so and it's currently set at 10% of customer revenue that's generated in the water fund. We tend to contribute to it in higher revenue years or when we have a surplus. Um if it's a drier year, for example, we might experience a surplus of revenues. Um and the intent is to avoid sudden rate increases when when conditions change. And then finally, our capital reserves um provide funding for any sort of emergency response. Um I will just note and if you review the attachments um to the memo, we are gradually increasing the capital reserve funds for our wastewater and storm water programs over time. Um so this is an example of the fund of financial again that's provided in attachments. Um this is actually schedule three and I know it's kind of small on the screen but um if you want to refer to to attachment schedule 3 um

[90:00] feel free to. So just walking through a basic fund financial. It's a pretty simple math equation. Um but you start with your beginning fund balance which is essentially the ending fund balance from the prior year. you add in your annual revenues and subtract your annual expenses and this gives you a fund balance before reserves. Um we'll then subtract reserves uh the reserves that I just spoke to. We subtract the allocation of reserves um which were set aside to manage financial risk and the result is the ending fund balance which we aim to keep positive. Um, in our wastewater fund, um, the ending balance is expected to decline from about $51 million at the end of 24 to about $550,000. Um, is primarily due to the planned completion of several major capital projects. Um, this decline is expected and not a concern since we're still able to meet our capital needs and reserve targets. Um, and then we will slowly

[91:00] build that up over time um, in anticipation of future bonding. Uh last thing on the fund financial is that it brings together all of our financial assumptions to show a full picture of the utility's projected financial health. It also highlights our ongoing reinvestment in essential infrastructure which is something that Chris uh pointed out when we were discussing the condition index earlier in the water fund. Um so all those things are are key to maintaining you know our strong service levels. And then I just have a couple of slides. Um, I thought it might be helpful to walk through a few key financial metrics that are typically used to evaluate utilities's health. Um, so this first one, which is probably familiar, is our days cash on hand, which shows how many days a utility can cover its operating expenses using its available cash reserves. Um, the target does vary by utility, but the typical range is between 90 and 150 days. And you can see from this chart that we're generally

[92:00] staying within those target ranges. Um although some funds do fluctuate because of our land capital spending. And then last slide here um is the debt service coverage ratio or the DSCDR you might be referred to as um and it's a way to measure how well the utility can pay back debt. Um a higher DSCR just means that the utility is in a stronger financial position to pay back its debt. And we tend to um target a 2.0 O times which is indicative of a strong rating from S&P but the city's minimum requirement is about 1.25 times and again you can say what what are the numbers mean what one or two what is that so it's it's just another way of um describing how well we can cover our debt payments. So the calculation is is also really simple. It's it's revenues subtract out your operating expenses and then you divide that by the total debt payments. So yeah, so using that equation like in

[93:01] 2025 example, um looking at the wastewater fund, we can pay back our debt two times. And that's it for me. Are there any questions on finances? One one quick question, Stephanie. What what's the time frame on issuing one of these bonds? How early do you have to start work on that? and prior to actually receiving the funds. And is that all done inhouse with you and your staff or do you use outside bankers or consultants or how does that process work sort of dayto-day? That's a good question. So, I' I'd say that it takes about six months um under a normal process. And we do use um outside legal counsel and outside um financial consultants to help prepare us for um any sort of bond sale, our financial consultants really guide us through the process of meeting with a rating agency.

[94:01] And then when we do actually go to sell the bonds and then our legal counsel helps prepare official statements. um they help us prepare ordinances that we then present to council um that sort of thing. Yeah. And I will say from my perspective since I've been in this role, I've really learned how big a body of work that is for our team and Steph works with the central finance team as well and there's a lot that goes into it. Um, so it's a it's something we have to build into our work plan to expect the staff time to support it. We don't get much money from state federal sources, right? It's small. That's public. We don't um we did receive a pretty significant grant um for the phosphorus project. It was about $1.5 million um loan forgiveness or grant um which was which is pretty

[95:02] amazing. Um yeah, I do think one of the things we feel a sense of obligation to though is thinking about affordability for our community members. So, we're constantly looking at the outside funding opportunities and when it it's also a big body of work to pursue those and you can just you can go after everything and spend a lot of time. So, you have to be really targeted and thoughtful about it. But over the years, we usually have something in the mix most of the time that's getting outside of the funding. read that the state reserving fund or some of the EPA funds might be cut back. I don't know what's happening. It's a really volatile time right now. I mean, some of our other departments are are rely more heavily on those things and uh are understandably nervous. I think going back to a a question that came up with the board here tonight

[96:01] earlier paraphrased I I think like how can the community have assurance that we're going about this in a methodical and and logical and sophisticated way. One of the things that gives me that assurance is when we go through the bonding process and we have the outside bonding rating agencies look at our operations. It's essentially an independent audit and we've had water and wastewater bonds in the last few years and for the storm water and flood bond associated with South Bulberry Creek um we were given a AAA rating which is the highest that you can get. That's I think in the past in utilities in Boulder we've had double A and there there are still good ratings that are lower than that. But yeah, but that's for me that's a that's sort of a independent validation that I think the

[97:00] board and the and the community and staff can feel good about that we get that. You have any sense of how many public water utilities would fall in that same category, Joe? Is that is that pretty unusual for public utilities of our size or is that sort of standard? I don't know that it's standard, but Steph or Amy might might have perspective on that. I I don't know off the top of my head, Steve. Um I do know that it it does vary by utility. Um Amy, I don't know if you were going to say something. I think I saw you towards I I am off mute. Um, a lot of larger m u municipal utilities do have very strong ratings, credit ratings um and issue a lot of debt. Um, they're recognized as having really reliable revenues and being low risk. generally the industry

[98:00] is seen as being low risk and so um it's it's not it's not unusual for utilities to have high credit ratings but um Boulder does have a very high credit rating and has been and that that's definitely to your advantage. I would say that um to Jo Joel's point, the the Biden infrastructure investment and jobs act dedicated a lot of money to the water um water sector through the SRF, the state revolving fund programs and there's one basically one more year where that supplemental funding will be made available and so uh and the expectation is that the Trump administration is going to be through the bill that's being uh going through Congress right now um cutting EPA

[99:00] funding pretty significantly for water. Um unless things change dramatically. I mean, the EPA budget that came out a couple weeks ago has like 90% cuts to this SRF program and the WIFIA program. So, um, if Boulder is interested in tapping into some more of that principal forgiveness and lower interest rates for the state SRF program, now is really the time to consider that. I'd say maybe you've already been having conversations with them, but that's my understanding. We have been considering that for certain things looking at it. So we have staff here to ask additional questions. It felt like the board was asking them as we went and I I actually

[100:00] appreciated the conversational nature of it. Um I like that when it happens. I think an earlier question really early in the presentation of like are we keeping up with the infrastructure and the condition assessments should we be doing more aggressive rates I personally would say for this year recommending what we're proposing here I think you've probably seen the news in the paper about the financial pressures the city is experiencing across other funds different than ours, but that tends to be experienced in our community members who are trying to pay their bills as well. So, between some of the long-term forecasting that we have in mind in the utilities and that situation, I think just kind of staying where we're at and maybe looking at at uh

[101:02] getting more aggressive in the future would be how I'm feeling about it. But there is Any other questions for Stephanie? Sorry, I was questions for Steph. Yeah, more from the board. I just want to help. We saw a chart companies ago water use rates they drop somewhat they're still dropping or terms. Yeah, you know water water efficiency per capita. I think I think it has been leveling out since 2002 has dropped significantly. I think one of the things on the upcoming agenda, we'll be talking to the board in July about water supply and water supply policy. I think as climate

[102:00] change goes forward and what I'm seeing from our team, we're going to need one of the levers we're going to need is water conservation probably more heavily in the future. So, we're going to need it to go down. We have any other questions for Chris or for Stephanie? Okay. Well, thank you for the presentation, Chris, Stephanie, and all the people that helped to prepare that. I think that was a good summary and um if we don't have any other questions on that, let's move on. Does anybody on the board have any matters to raise this evening? If not, do we have any matters from staff, Joe? Yeah, I I have one. And before we uh

[103:01] completely depart from the CIP, really appreciate the board's input and questions tonight. I I really like the conversation. and how I'm feeling at this point. Um, unless you'll individually reach out to us with concerns between now and July, feeling like putting this together and coming back with what we're proposing is is where we're at as a staff team and sensing a level of comfort from the board. I think that's what we would do any other feedback. I mean, I guess I guess your your comment there at the end, Joe, about feeling like we might have to start to increase those rates a little bit more in the future is one that we should kind of keep on the Yes. on the agenda going forward. And, you know, kind of check in with you guys at least at least once a year on that topic and make sure that

[104:00] that even though they might it might be politically difficult or unpopular that to ensure that we're looking at rates that are going to get us to the point where we need to be. And I guess I'm a little bit I'm a little bit concerned to hear you say that because it, you know, it makes us wonder if if maybe these increases need to be higher at the moment. It's it's a fair point and I I do think just naturally in the in the upcoming years we'll be able to have that check in you and have a clearer picture of what we would want to recommend that way. Okay. Um, under matters, I just have I just have one thing. Uh, I just wanted to mention to the board, I believe it's at its June 26th meeting, city council will be considering a, uh, water agreement with CU for their north campus.

[105:00] And um it's it's really kind of development related which is not in in RAB's purview but CU is one of the big users and what essentially what the agreement does is brings that part of their campus. Say they have a lot of housing there now um between I believe 17th Street and Folsam just on the pretty much adjacent to the Boulder Creek path. they'll have housing there. And so this agreement will bring that part of their campus and their system in line with the way we have them set up on their accounts with other things. Um matters relating to the university can generate interest. So community members may come to to you as board members and have questions about that. I always try to make those things. It's it's an administrative thing for us and development related. So if you had

[106:02] questions or concerns about that, we could um we could certainly pass that on to council, but there's really no action required of the board. Okay. Anything else, Joe? I don't have anything else under matters and uh I think if I can open it quickly here I can talk about the upcoming agenda. Um and just from memory, I believe in um July we will have we'll have a public hearing and be asking the board for a recommendation to council on the CIP and rates. And then um also having an information item on water supply planning and policy. Uh, I forget what the date of the July Rab meeting is, but we'll also be having a check-in with city council subsequent

[107:00] to your the discussion we have with you. 21st 21st. Um, and then in uh August, we don't have have a meeting scheduled, right? And just in the nick of time, I opened up the upcoming agenda. And then um in September, we would have another action item on the graywater policy. There's a state regulation that requires every municipality to to act on that essentially. Um and then I believe we have an information item on another check-in on water wise, landscaping, and code update. We had a member of our planning team here back in April, I believe, that briefed the board on that. So, it'll be an update on that in advance of uh council action. So, that's

[108:01] what we have on upcoming schedule. Okay. Any other items that we need to discuss? I think that takes care of it for staff tonight. Appreciate the conversations with the board. Okay. Well, thank you again Chris and Stephanie and everyone for the presentation tonight. I think it was a good good concise summary and uh appreciate all the work that you guys always do for these meetings to condense all this stuff down into a you know concise and understandable version for the board. So, thank you again for that. And I think with that we're ready for a motion to adjourn. So in a second. Second. All in favor? Hi. Okay. Thanks everybody. Thanks.