Sustainable Water Assurance Fee
The Sustainable Water Assurance Fee pays off debt issued to finance ECCV’s Northern Project, which provides ECCV customers with renewable water. The debt comes in the form of bond issuances. The District has issued, and recently refunded (similar to refinancing a mortgage), several series of bonds since 2004. Prior to January 2018, the fee was known as the Northern Project Construction Fund Fee.
Just like a mortgage allows a homeowner to take ownership of a home and reside in it while the principal and interest are paid off over time, the same goes for bond financing. The bonds are the mortgage – money borrowed by ECCV which must be paid back with interest over time.
The Northern Project – which includes the Northern Water Treatment Plant – has been operating for several years but ECCV must continue to make regular payments on the debt. The Sustainable Water Assurance Fee generates the revenue that's used to make these payments.
No, the Sustainable Water Assurance Fee is the new name for what was previously the Northern Project Construction Fund Fee. The fee amount remains the same: $25 per month for residential customers.
Sustainable Water Assurance describes the community benefit of a water supply that can continually meet demand without depleting over time. Securing, and delivering this type of water supply to customers has been an important focus for ECCV and the name change reflects that continued focus.
Since the Northern Water Treatment Plant went into operation in 2012, customers have also inquired as to why there was still a fee needed to support a “Northern Project Construction Fund.” As noted above, while the fee continues to pay back debt issued to finance that construction, the name change reflects the on-going nature of the project to deliver, and enhance, the District’s use of a sustainable water supply.
Changing the name of the fee doesn’t provide ECCV with any new abilities in terms of changing the fee amount, how it’s assessed, or what it supports.
A sustainable water supply is one that can continually meet demand without being depleted. Think of it in terms of deposits and withdrawals. With a sustainable supply, water is being deposited frequently enough to offset what’s being withdrawn (or used). In this case, renewable water from the South Platte River is increasingly being used to meet customer demand. Historically, the river will refill each year with water from snowmelt and precipitation, which creates a sustainable supply.
Prior to the Northern Project, ECCV relied almost entirely on well water pumped from aquifers. Aquifers don’t refill quickly, if at all. That creates a situation where barely any water is being deposited, but is being consistently withdrawn.
While the maturity date for each debt issuance is known, more financing may be required. The system provides water and sanitary sewer services to roughly 60,000 people. Like all infrastructure, the ECCV system needs continued investment to support development and maintenance, regardless of growth in the District.
Bond financing will continue to be an important financial tool for the District to assure a sustainable water supply. The ECCV Board of Directors and staff continue to evaluate options, but there is a possibility the fee could remain in some form or another for the foreseeable future.
Renewable water from the Northern Project currently makes up about 40% of the District’s overall water supply. The long-term plan is to increase this to more than 80% to help guarantee water demand in the community can be met well into the future. Increasing production capacity at the Northern Water Treatment Plant involves expansion of the current treatment facilities.
The ECCV Board of Directors and District staff frequently review revenue from taxes, rates, and fees and compare that revenue with known and anticipated costs.
Additionally, the District works to maintain a cash reserve. The reserve is like a savings account: it can be a source of emergency funds, or used to help cover anticipated costs and then be gradually replenished. Like a savings account, drawing down the reserve too much leaves the District vulnerable if an expensive, unforeseen problem were to arise, and can also lead to less favorable rates if financing is needed. Both of those things, insufficient reserve funds or higher interest rates, could result in sudden and substantial fee increases for customers.
The ECCV Board of Directors has always worked to avoid these situations through sound financial management. Utilizing reserve funds in combination with revenue from water rates and fees allows the District to maintain an adequate reserve while also reducing the amount rates or fees are increased to cover the costs of necessary projects.
On a related note, in 2014, ECCV sold its Western Waterline for $34 million to the South Metro Water Supply Authority, while still retaining the ability to use the line to transport water to the District from ECCV’s Western Wellfield in the Highlands Ranch area. The revenue from this sale will help offset the cost of expanding the Northern Water Treatment Plant. This is an example of the District’s past investment in infrastructure providing a financial benefit in addressing future needs.
Securing a sustainable, renewable water supply benefits all ECCV customers regardless of growth. It enables the District to provide water from sources that can be naturally replenished.
However, when a new home is constructed in the District, the buyer pays a tap fee as part of the purchase of the home. Currently, an ECCV water tap fee is $27,250 per tap. This fee is in place to ensure that new development pays its own way to access ECCV’s water and sanitary sewer systems.
Developers and builders in the District must pay these tap fees in advance, and that cost is then included in the price of the new home. The revenue from tap fees is used to purchase and secure water rights, much of which are utilized through the Northern Project.
ECCV is a special district, and is therefore a quasi-governmental entity that is not-for-profit. The District doesn’t have shareholders, and there aren’t any incentives or mandates for increasing revenue each year. Rate and fee increases are determined based on costs. Sometimes those greater costs are a result of projects to improve the water and sewer systems – like expanding the Northern Water Treatment Plant – and sometimes are a result of price increases for goods and services necessary for the day-to-day operation of the District.
The fee supports the development of the infrastructure needed to deliver a renewable water source to your home. Water usage is billed at different rates depending on how much water is used in a month.
Consider that water itself is relatively inexpensive compared to the infrastructure needed to deliver it to your home. For example, renewable water from the Northern Project must be diverted from the South Platte River and into shallow aquifers, pumped into the ECCV Northern Water Treatment Plant where it’s processed, and is then sent, gradually uphill, through the 31-mile northern waterline to the District.
We recognize the Sustainable Water Assurance Fee can represent a notable percentage of an overall monthly bill, and can be disconcerting for customers. However, it is also what provides our community with a sustainable water supply and a system to reliably deliver it. You can find more information on why ECCV pursued the Northern Project and the benefits it provides in The Northern Project FAQs.