Niwot Sanitation District fees to rise

The Niwot Sanitation District Board of Directors hosted a public meeting at the Left Hand Grange in Niwot Dec. 14 to let customers know that fees will rise substantially in the new year to fund infrastructure improvements which have been in the planning stages for the past three years.

For many years, Niwot Sanitation District customers have grown accustomed to paying only a $71.00 bimonthly cost of service, without a mill levy for property taxes, which most special districts impose for capital construction projects. Although tap fees for new sewer taps range from $16,600 to $19,600 each, very few new taps are purchased as the Niwot area is largely built out.

The district is governed by a 5-member board of directors, who are elected by a vote of constituents. Those elections occur in May of odd-numbered years, with the next election scheduled for May 6, 2025.

President Jim Jones, and member-at-large Dick Piland and director Jan Swanson each reside in Overbrook, while President pro-Tempore Jennifer Uhland resides in Centrebridge, and Treasurer Randy Lutz lives in Majestic Heights. Directors are compensated at the rate of $100 per meeting, with meetings held on the second Friday of the month at 8 a.m. at the district offices located at 7395 N. 95th Street, Niwot, Colorado. Meetings are open to customers of the district.

Even though there is little likelihood that the district will have to expand its wastewater treatment plant to service new taps, the district facilities must comply with ever-changing federal regulations for wastewater discharge, and a change in flood-plain mapping has also affected the district facilities.

Jones put together a Wastewater Plant Improvement Project memo to the district's board of directors, which included summaries of board action and the history of the planned $27 million project.

Jones wrote, "Niwot Sanitation District is responsible for sewer collection and processing, Since Niwot is surrounded by open space, it is essentially built out (i.e. minimal tap fees will be collected in the future to pay for any plant improvements). Monthly fees fund the budget for collection system maintenance/repairs, operation of the plant and administration. The district receives no additional funding from property taxes like other communities do."

Dave Lewis of Direct Discharge Consulting, manager of the district, presented a resolution for a rate increase at the Dec. 8, 2023 board meeting to fund needed improvements, which was approved by the board. Lewis, who has 20 years of experience in the field of wastewater treatment, is the district's ORC (Operator in Responsible Charge).

The district board began discussing the potential rate increase at its June 13, 2023 regular meeting. At the August meeting, the board voted unanimously to increase rates by $35.00 per account per month, essentially doubling the fees. Later, based on new financial information, the board voted to increase the fees to $99.50 per month, or $199.00 bimonthly, an increase of 180% over the current rates.

One reason for the large rate increase is that the district needs to finance the project by issuing municipal bonds. The district has worked with Hilltop Securities on the bond issue, which recommended that the district's fees be increased to cover at least a 1.1 debt-service ratio. Jones explained that the board was concerned that fees to cover a 1.1 debt-service ratio might not be enough if costs are higher than anticipated.

As a result the board approved issuing a 30-year municipal bond to fund the improvements, with fees set to cover a 1.25 debt service ratio. The bonds are estimated to pay 5.1% when they are issued, which is 2% higher than the estimated rate before interest rates went up. The rate increase to customers is scheduled to take effect Jan. 1, 2024, with billing at the end of February and payment due in March.

In an interview after the meeting, Jones said, "We're going to meet with Hilltop on Thursday, and one of the things we want to explore is a tiered increase [in rates]. We know it's a shock to people. We know that some people live paycheck to paycheck, so we're also exploring monthly billing instead of bimonthly billing."

THE PROJECT

The project discussions began three years ago. The memo from Jones states, "Prior to 2020, district savings was thought to be adequate for upgrading the facility to meet new regulations for the plant discharge. Post-Covid construction costs have risen dramatically and continue to rise. We are using our current savings to procure equipment in 2023 to avoid a 20% price increase in 2024."

Jones said, "Before 2019, it cost $9 million to build a plant. Our reserves would have covered that." But with a drastic rise in construction costs, the savings don't come close to covering the current estimated cost of $27 million.

The board issued a Request for Proposals (RFP) for the study of the district's needs, and on June 20, 2022, the district selected JVA/Rice Lake West of Boulder to complete the study phase of the Wastewater Plant Improvement Project.

"We had a wrench thrown in our plans in September," Jones said. "We had done a study phase in 2022. We asked ourselves, 'Can we retrofit, or do we have to do something new?'" In the end the board concluded that "all the equipment and the infrastructure weren't going to be able to do it."

In addition, the floodplain map for Dry Creek recently changed, putting the district's headworks, which currently pumps raw sewage into the treatment pond for aeration, is now in the floodplain.

The board also explored financing issues. Board minutes reflect that a pre-qualification meeting was held with James Wheatley of the State Revolving Fund (SRF) on Feb. 28, 2023. Wheatley projected a rate increase of $46.18 per month, based on 2021 financial statements of the district. But minutes also state, "During a conference call with the SRF on Sept. 14, 2023, at their request, the board discovered that the SRF funds available in 2024 would only go to 'disadvantaged communities.' Board members began to explore other project funding options."

Jones explained that most of the SRF funding available, some 93%, would go to places in Colorado where there is a limited population, and few alternatives to pay for needed sewage treatment upgrades. That left little chance that the Niwot Sanitation District would qualify for the SRF funding.

The board minutes also reflect that on Nov. 10, 2023, emails were sent by the district to Representative Joe Neguse and Senators John Hickenlooper and Michael Bennet requesting their help with federal funding for the wastewater treatment project since the SRF funds would no longer be available. The minutes stated, "Did not hear any response from them."

The main reasons for updating the facility, according to the memo, are:

• Old equipment cannot be maintained any more.

• Upcoming 2026 permit for the discharge of processed sewage has higher standards that the older equipment cannot meet.

• New equipment will meet higher standards as well as be more efficient

• The current plant uses chlorine in the last step of processing wastewater, the new plant will replace that using UV light.

• An additional clarifier will be added to the new plant for redundancy.

Jones explained that the current system costs $8,000 per month in utility costs paid to Xcel Energy. "We will save money with the new system, which will use UV light instead of chlorine to treat the wastewater before it goes back into Dry Creek," he said. The current aeration pond north of Niwot High School will be eliminated with the new system.

The required public meeting to present the rate increase information to customers of the district was originally scheduled for Oct. 18, 2023, but was postponed to December due to the absence of two of the board members.

Although notice of the Dec. 14 meeting went out via postcard to district customers, the postcards did not arrive until a few days before the meeting, in the middle of the holiday season. As a result, many residents were unable to attend, and those who did expressed frustration at the lack of adequate notice of the contemplated rate increase. A crowd of approximately 50 people listened to the district's presentation by JVA's Andrew Spahn and his staff.

Jones wrote in an email to board members and staff after the meeting, "The one thing I learned from our meeting on Thursday is that we need to do a better job communicating with the district, even if we don't have everything figured out. I think we should be proactive in describing how we got where we are in the process and what will follow."

For more information on the project, go to the district's website at https://niwotsd.colorado.gov/.