Economy & Economic Development  March 20, 2015

Surging water prices dry up Fort Collins homebuilding

FORT COLLINS — Escalating water prices are stalling several housing developments in northeast Fort Collins, an area the city would like to see include more housing to support a growing workforce.

Waterfield, Fox Grove, East Ridge and several other proposed housing projects in the area are facing water fees so high that they are jeopardizing the future of hundreds of homes, three developers say.

Although these projects are within city limits, developers must buy water through the East Larimer County Water District, or ELCO, which along with the Fort Collins-Loveland Water District, the West Fort Collins Water District and the city’s utilities department, provides water to separate parts of the city.

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Mike Scheid, general manager of ELCO, said the district always has required developers to “bring their own water” into the district’s system, as is the case for other districts that operate within the city’s limits. But that was at a time when development wasn’t as prevalent and outside water prices were much lower.

Waterfield and East Ridge are near Timberline Road and East Vine Drive, and Fox Grove is south of East Mulberry Street and east of Interstate 25, areas within ELCO that have been annexed into the city.

ELCO was formed by the state in 1962 to serve unincorporated Larimer County north and east of Fort Collins and to provide water for agricultural purposes, but over time the city has annexed some of those unincorporated areas.

Rich Shannon, a consultant with Pinnacle Consulting Group in Loveland and Greenwood Village, said the water issue is a public-policy dilemma that threatens future development in northeast Fort Collins.

“This area has the best potential for a mix of housing with a variety of price points,” he said.

Ted Shepard, a planner with the city of Fort Collins, said building homes in the northeastern part of the city would allow people who work in the city to live in the city, avoiding commutes from nearby bedroom communities such as Timnath, Wellington and Severance, where more, lower-cost housing is being developed. From the “big-picture perspective,” Shepard said, “there is concern with a growing in-commuting workforce.”

Curly Risheill, owner of Risheill Homes LLC in Castle Rock and a partner in the Waterfield project with Jim Dullea of Parker Land Investments LLC, said bringing water into ELCO’s system is cost-prohibitive.

“We’ve talked with a supplier, but they quoted exorbitant water fees. … We are frustrated. This project has been platted and approved by the city. We’ve done everything they’ve asked, but now this is holding us up.”

Rischell said tap fees, which include raw water fees that cover the infrastructure needed to treat and transport water, and a plant investment fee, come to about $24,000 per home. Waterfield consists of 175 single-family homes and up to 200 apartment units. Scheid said ELCO’s one-time charge for tap fees for a typical apartment unit would be approximately $12,000 — $9,000 for the raw water fees and $3,000 for the plant investment fee.

Developers building homes within the Fort Collins-Loveland Water District are charged $23,000 per acre foot for raw water and a $7,000 tap fee per single-family home, according to Mike DiTullio, the district’s manager. Fort Collins Utilities, on the other hand, charges a cash-in-lieu fee of approximately $6,500 per acre foot per home. Tap fees through the city’s utilities can range from $2,000 for a 4,000-square-foot lot to $7,700 for a one-half acre lot.

Carol Webb, the city of Fort Collins’ water resources and treatment operations manager, said the raw-water requirement for a single-family home varies based on the lot size.

“Using a small lot size of 4,000 square feet, a minimal amount of water might be about 0.56 acre-feet. The city’s water utility accepts both water rights and cash-in-lieu of water rights to meet the raw water requirement. Currently, the cash-in-lieu rate is $6,500 per acre foot.”

Building homes in an area served by the city is financially attractive compared with building in areas served by other water districts because municipal water fees are lower, making building moderate-income housing easier.

“We want to build homes that are affordable, in the $260,000 to $300,000 range. But with these water fees, it doesn’t make financial sense for us to build. I can’t find a builder who can produce a home at those price points if we have to pay high water fees,” Risheill said. “The tap fees don’t concern us; we know developers are expected to buy those.”

Gary Hoover, owner of Windsor-based homebuilder Hartford Companies, has received approval for East Ridge’s 384 single-family lots and tracts reserved for future development including 200 to 240 multifamily units on 147 acres.

Developer Les Kaplan’s Fox Grove would include 105 single-family detached homes on the 36-acre site. At the current water prices, Kaplan said, he can’t move forward with the project and suspects other developers that are trying to build in areas that are not serviced by the city are in the same boat.

“There are at least 1,000 lots that are stuck in the mud,” Kaplan said. “Something needs to done about this. It’s a good example of how discombobulated Fort Collins’ growth-management area plan is.”

The city of Fort Collins has extra water, but won’t sell it to developers who are building within ELCO’s boundaries, Scheid said.

Webb said this has become a big issue as growth continues and water prices increase.

“We (the city) do collaborate with the water districts that serve portions of the city, but we have legal restrictions on what we can do with water that is designated for our own service area,” Webb said. “We have talked about the issue, but not the resolution for it. It’s an evolving conversation.”

FORT COLLINS — Escalating water prices are stalling several housing developments in northeast Fort Collins, an area the city would like to see include more housing to support a growing workforce.

Waterfield, Fox Grove, East Ridge and several other proposed housing projects in the area are facing water fees so high that they are jeopardizing the future of hundreds of homes, three developers say.

Although these projects are within city limits, developers must buy water through the East Larimer County Water District, or ELCO, which along with the Fort Collins-Loveland Water District, the West Fort Collins Water…

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