HomeMy WebLinkAboutagenda.council.worksession.20091006MEMORANDUM
To:
FROM:
THRU:
THRU:
THRU:
DATE OF MEMO:
MEETING DATE:
RE:
Mayor and City Council
Jeff Rice
Phil Overeynder, Utilities Director
Steve Barwick, City Manger
John Worcester, City Attorney
October 19`, 2009
October 5~", 2009
Performance Contracting Energy Efficiency Improvements
REQUEST OF COUNCIL: Staff requests council approval to contract with McKinstry for
Performance Contracting of energy efficiency improvements to thirteen (13) City of Aspen
owned buildings and facilities. Under the Colorado Governor's Energy Office (GEO) technical
energy audit and performance contracting model the performance contract awazd is to
McICinstry.
PREVIOUS COUNCIL ACTION: July 8'" of 2008 council voted to approve a contract with
the energy services company McKinstry to perform technical energy audits in ten (10) city owned
buildings and facilities at a base cost of $0.10/squaze foot. Additional buildings were added to
McKinstry's scope for the audit and 14 buildings were audited, for a total audit cost of $38,000.
The Colorado GEO performance contracting model was made know to council at that time.
Performance contracting is using the savings in operating and maintenance costs generated from
improvements to offset the cost of implementing the improvements.
BACKGROUND: The City of Aspen owns and operates a number of buildings and facilities
varying in age and condition. With the exception of the Aspen Recreational Center (ARC) and
Red Brick Building none has undergone a technical energy audit to improve performance, reduce
energy use, reduce operating costs, and reduce cazbon emissions. McKinstry was challenged to
be innovative beyond traditional performance measures and integrate the city canary initiative,
utility, and staff goals to reduce energy consumption, lower our cazbon emissions, and act as
leaders in the climate change and energy economies. To date McKinstry has performed technical
energy audits in all tazgeted buildings and facilities and a detailed report has been compiled.
There were many potential areas of improvement and a preliminary list of measures was
Page 1 of 3
constructed from which the final work scope was selected with extensive staff input. With
McKinstry acting as our general contractor, RFP's for improvement project proposals were
released to the public and those proposals were received and compiled into a final work scope /
finance matrix to complete the report.
DISCUSSION: The Utilities Energy Efficiency division in cooperation with key city staff
desires to act on the proposed energy performance improvements identified in the technical
energy audits performed by McKinstry. The goal of this process will be to implement energy
upgrades to city facilities and buildings to reflect the City of Aspen's 2005 adoption of the
Canary Initiative and its commitment to reduce carbon emissions and address climate change.
The proposed improvements once implemented will have an annual net energy and operational
cost savings of $67,941 reducing the city cazbon emissions by 871,828 pounds per yeaz.
McKinstry will act as general contractor throughout the entire implementation process. They
have followed city procurement procedures releasing RFP's and obtaining work scope proposals.
The costs of the project aze $1,470,628 with $865,135 of city capital and an estimated utility
grant/rebate of $14,950........The calculated energy savings are guaranteed as is the proposal
dollaz amount per improvement project. The work performed under McKinstry's supervision
will be guazanteed by McKinstry and upon completion commissioning, monitoring, and
verification will be performed by and again guazanteed by Mckinstry. What this means is if we
have a problem with performance, energy reduction, or operation McKinstry will at no cost
repair the situation to guaranteed levels. Any reduction of savings realized beyond the
calculations presented will be to the benefit of the city and no further monies will be awarded
McKinstry.
The buildings and facilities that will receive improvements aze Aspen City Hall, Electric Switch
Station, Golf Facilities, Ice Gazden, Aspen Recreation Center, Parking Department, Pazks
Facilities, Rio Grande, Red Brick, Yellow Brick, Pazking Garage, Building and Plaza, Street
Facilities, Water Department Facilities, and. The improvement projects vary from building to
building and include lighting, controls, automation of systems, pumps, drive motors, waste heat
recovery, HVAC upgrades, retro commissioning, and new installation of necessary equipment
and structures. Upon completion of the project city buildings and facilities will use less energy
and operate more efficiently lengthening the life of the equipment, and in some cases increased
comfort for the building occupants.
If this proposal and subsequent performance contract with McKinstry is approved by Council, the
construction implementation phase will begin within two weeks of signing a contract. The
construction phase will be up to 180 days and the majority will be interior, low impact
construction.
FINANCIAL/BUDGET IMPACTS: The energy improvements identified have a bundled
simple payback of 10.5 yeazs. The $38,000 cost of the initial technical energy audits were
financed from the Utility Efficiency Budget. The total performance contracting proposal of
$1,470,728 is initially offset by $865,135 of contributed department capital budget. In addition,
Page 2 of 3
the City will receive utility grants/rebates estimated at $14,950. The remaining $590,642 will be
financed through atax-exempt municipal lease purchase agreement over a 10-12 year term at an
expected 4.5 - 5.0% interest rate.
ENVIRONMENTAL IMPACTS: The technical energy audit provided discovery into a wealth
of energy efficiency and operations improvements directly in correlation with the City of Aspen
2005 adoption of the Canary Initiative and our commitment to reduce carbon emissions and
green house gases (GHG) believed to attribute to climate change. The percent energy reduction
calculated for this project is 12% of current consumption in the buildings receiving upgrades.
That equates to 871,828 lbs of reduced cazbon emissions. A lazge benefit to having undergone
technical energy audits and to engage in the subsequent implementation of improvements will be
having "walked our talk" and continuing to establish the City of Aspen as a leader and leading
example in energy efficiency, carbon reduction, and renewable technologies.
RECOMMENDED ACTION: Staff recommends awazd of performance contracting contract to
McKinstry in the amount of $1,470,728 for the purpose of implementing the proposed energy
saving improvements to the recommended City of Aspen facilities and buildings.
ALTERNATIVES: The city can choose to implement the energy savings improvement
proposals under individual contracts managed by city staff. The implications of this aze
increased costs of individual construction elements with multiple general contractors, loss of
high level of quality control, loss of performance guazantees, loss of inclusive commissioning,
loss of monitoring and verification of improvements, increased staff involvement resulting in
lazge impacts to staff and available time. Staff does not recommend this option
PROPOSED MOTION:
I move that we move forwazd to finalizing the financing arrangement and energy performance
contract with McKinstry to implement the identified project.
CITY MANAGER COMMENTS:
ATTACHMENTS:
A. Matrix Project Breakdown Summary
Page 3 of 3
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MEMORANDUM
TO:
FROM:
THRU:
DATE OF MEMO:
MEETING DATE:
RE:
Mayor and City Council
April Barker, Stormwater Manager, Engineering
Scott Miller, Capital Asset Director
Trish Aragon, P.E., City Engineer
October 2, 2009
October 6, 2009 Work Session
Stormwater System Development Fee
REQUEST OF COUNCIL: Staff requests Council direction regazding potential changes to the
Stormwater System Development Fee and the impacts of those changes.
PREVIOUS COUNCIL ACTION: In May 2007, Council passed an ordinance (Attachment
B) that implemented a $2.88 fee to be chazged to each squaze foot of a site's entire impervious
azea, at the time of development or redevelopment exceeding 500 square feet of impervious area.
In a Work Session on June 1, 2009, Council directed staff to examine the equity of the fee as it
applies to development and redevelopment, particulazly how it applies to existing development at
the time of additions to or redevelopment of any portion of the site. Council also directed staff to
evaluate how changes to the amount and application of the fee would change revenues for the
Stormwater fund.
BACKGROUND: The needs of the Stormwater program were analyzed by staff, consultants,
and Citizens' Review Committee (CRC) in 2006, resulting in a Stormwater Utility Business Plan
and Supplement. This Plan was presented to Council and recommended program improvements
and capital improvement projects totaling $31 million. The group also reviewed and
recommended funding mechanisms to generate revenue for the improved Stormwater program.
In May 2007, Council approved a system development fee (Memo to Council and ordinance aze
Attachments A and B, respectively), estimated to generate $19 million over 15 years (or $1.27
million annually), to be assessed against development and redevelopment. In November 2007,
voters approved a mill levy (ballot language and resolution are Attachments C and D,
respectively) that would generate $12 million over 15 years (or $860,000 on average annually) to
be used for Stormwater improvements.
The Stormwater system development fee (SDF) is defined and codified in the City of Aspen
Land Use Code Chapter 25.18. A fee of $2.88 per squaze foot of total impervious area is
assessed against all properties that develop or redevelop more than 500 square feet of impervious
Page ] of 4
azea. The purpose of the fee was to provide funding necessary to constmct, maintain and
improve the City's stormwater facilities. The fee has been assessed to development and
redevelopment projects since November 2007. Revenues from the fee that have been collected
from November 2007 to July 2009 equal $947,243.23.
In the Council meeting in June, there was discussion of the equity in applying the fee to existing
and undisturbed impervious areas at the time of an addition to the property. For example, if an
existing 1000 sq ft home (footprint) added a 500 sq ft impervious driveway, the system
development fee assessed for the property would be $2.88 x 1500 sq ft = $4,320.00. The
question of concern was the appropriateness of applying the fee to the existing impervious area
(in the example above, the 1000 sq ft).
In the August 17, 2009 Council Work Session, staff presented the current financial situation of
the stormwater program. While the tax is generating the expected revenue of approximately
$800,000 annually, the fee, as is, is only estimated to generate $430,000 in 2009, approximately
66% short of the original annual total. This shortfall is attributed to the economic slowdown.
Assuming a conservative 4% increase in construction annually, this results in a revenue shortage
of $7 million over 15 years. To accommodate for the shortage in revenue, staff proposed a
reduced budget for flood control capital projects by $7 million. The top priorities of the CRC
were water quality projects - in maintaining those priorities staff proposed the cuts to flood
control projects and Council supported that direction.
DISCUSSION:
1. There is a perception that the SDF is inequitable because it applies retroactively to
existing impervious azea. To remedy this, the SDF could. be changed to only account for
new developed impervious areas. If the SDF is applied only to new developed
impervious area the estimated revenue generated would be $180,000 per yeaz, which is
42% of its current level and 14% of its expected level (2009 estimate of $430,000). This
amounts to lost revenue of about $250,000 from this year's budget.
2. The current stormwater program plan to fund capital improvements is lower than the
originally recommended program in the Stormwater Business Plan.
• The original SDF was supposed to generate $19 million over 15 years (or $1.27
million annually). The original dedicated property tax was supposed to generate
$12-13 million over 15 years (or $860,000 on average annually)
• The SDF at the current rate will generate $7.43 million over 15 years (or
$572,000 on average annually) and the tax will generate an estimated $13.8
million over 15 years or (1.06 million on average annually).
• The SDF is greatly impacted given the current economy. In 2008 it generated
approximately $560,000 and through July of 2009 it has generated only $260,000.
• The property tax at 0.65 mils has been voluntarily TABOR-limited reducing its
annual revenue by an estimated average of $240,000 below what could be legally
collected.
Page 2 of 4
As an interim measure, until new revenue sources aze identified, the following steps
could be taken -though it would keep the program at its current low level of capital
improvements to coincide with an amount of anticipated revenue.
• Change the SDF to new impervious azea only.
- At this rate of revenue, and to meet the goals of the stormwater program,
the stormwater capital plan would need to be extended from 15 years to
20 years.
- The amount of revenue generated by new impervious azea only would not
be enough to fund flood control projects (upgrades to storm sewer system
capacity) in the City. Therefore, development and redevelopment would
be required to control flooding on their own properties, detention. As an
option they could pay the City the amount it would cost to build detention
facilities, in-lieu-of detention fees.
Release the dedicated stormwater property tax from its voluntary TABOR
limitation as an offsetting measure.
- This would offset the change to the SDF, generate $240,000 per yeaz and
allow for approximately the same budget as presented on August 17,
completing the capital projects proposed in 15 years.
4. Because the interim solution keeps the program at its current low level of revenue, long-
term options should be considered to put the program on a stable, adequate and equitable
funding foundation. The goal is to require a representative portion of capital costs from
properties that contribute to the problems.
A report further explaining the current financial situation, the SDF, and suggestions for direction
is included as Attachment E.
FINANCIALBUDGET IMPACTS: If the SDF is modified to apply only to new impervious
area, the expected revenues would be $180,000. This would equate to a $250,000 drop from
20091evels and $1.09 million drop from the 2007 estimated annual average. This will result in
extending the time period in which capital projects associated with the stormwater program will
be implemented.
If the TABOR limit is released from the stonnwater property tax, an increase of $240,000 of the
2009 levels is expected, bringing the revenue generated from the tax back to 2007 expectations
of $860,000 annual average. This will result in balancing the funding decrease resulting from a
change in the SDF application.
ENVIRONMENTAL IMPACTS: If the stormwater program cannot fund capital projects
planned to upgrade the capacity of the stormwater system, development and redevelopment
projects will be required to detain stonnwater runoff on their sites, releasing it at a rate that the
current stormwater system can handle without flooding downstream properties. The typical
location for on-site detention in the downtown azea is underground and requires pumping which
uses significant amounts of energy.
Page 3 of 4
If the stormwater program cannot fund capital projects planned to improve the quality of runoff
discharged into the Roaring Fork River sediment loads from the City will be about 2,480 tons per
year. This is about 16.5 times the natural load of about 150 tons of sediment per yeaz. At this
rate the Roaring Fork River will likely remain categorized as "severely degraded" and will likely
continue to experience changes in river bed, river flow, and river temperature; decreases in
riparian habitat and species; and decreases in trout populations.
RECOMMENDED ACTION: Staff recommends that Council:
1. Change the SDF to apply to new impervious area only - a $250,000 annual reduction
to projected revenues.
2. Release the dedicated tax from its voluntary TABOR limitation as an offsetting
measure - a $240,000 addition to projected revenues.
3. Investigate replacement or supplementary forms of funding (i.e. in-lieu-of detention
fees) the capital program to shift a representative portion of the capital cost to
properties that contribute to the problems - to bring the revenues back up to $900,000
- $1,200,000 as originally planned.
If only Action #1 is chosen, the capital plan would have to be extended over 20 yeazs.
If Action #1 and #2 are chosen, the capital plan can be completed in 15 yeazs, as originally
planned.
Regazdless of Action #1 or #2, Action #3 is recommended to provide a stable funding source for
the stormwater program and release the burden of detention from development.
Attachments•
A -Memo to Council regazding establishment of stormwater system development fee.
B -Ordinance establishing stormwater system development fee.
C -Sample ballot language for property tax for stormwater.
D -Resolution supporting property tax ballot measure.
E - Stormwater System Development Fee Evaluation
CITY MANAGER COMMENTS:
Page 4 of 4
A+taa~
MEMORANDUM
TO; Mayor and Council
FROM : Trish Aragon, P.E., City Engineer
THRU: Steve Barwick, City Manager
Bentley Henderson, Assistant City Manager
Phil Overeynder, Director. of Public Works
Paul Menter, Finance Drector
DATE OF MEMO: May 14, 2007
MEETING DATE: May 21, 2007 Council Meeting
gE; Stonnwater Development Fees
SUMMARY: Staff is recommending proceeding with the adoption of an ordinance for the
implementation of the System Development Fee included in the 5tormwater Utility Business Plan for
sites that disturb. 500 squaze feet or greater. The fee is similar to the City of Aspen's existing water
system "tap" fee, in that it constitutes a capital facilities charge for the City's stormwater utility system:
Since it is a fee and not a tax, Council has the authority to approve its implementation by ordinance.
BACKGROUND: The System Development Fee had its first reading on May 14, 2007. (Refer to
Attachment 2) Since that time staff has modified the definition section of the ordinance for
development and redevelopment. The area of disturbance for development and redevelopment was
increased from 200 square feet to 500 squaze feet. (Refer to Attachment 1)
DISCUSSION: After the first reading of the System Development Fee, Staff internal discussions
reo ,vi;ng the definition section ofthe System Development Fee.
Because the City has never charged a system development fee for its stormwater system, the fee
proposed is to be charged against the total impervious area, and not just the increased impervious azea
resulting from the current development application. Staff recommended this approach because the
recommended capital program is designed to support both existing as well as increased impervious
areas and as noted above, no previous system development fees have been collected in the City for
stonnwater services.
Since the System Development Fee is calculated on the entire impervious area of the site not just the
change in impervious area staffwas concerned that the project size threshold for requiring the System
Development fee was too low and that small projects, with very little impact on the overall
development of the site would be required to pay the System Development Fee for the entire site. As a
result Staff is proposing in increase the threshold for development and redevelopment from 200 square
feet of disturbance to 500 square feet of disturbance.
FINANCIAL IMPLICATIONS:
Example fees are shown below:
Itn 'ous Area SF S tern Develo ment Fee
Sin a famil 2,500 $7,200
Commercial 10,000 $28,800
Laz a Commercial 90,000 $259 000
At an annual development/redevelopment rate of 4% of the City's impervious azea, this revenue
stream, with subsequent periodic adjustments for inflation, will be sufficient to pay for the
recommended storm system improvements over a IS year period.
Total estimated revenue collections over the noted I S yeaz planning period are $19 million.
ENVII20NMENTAL IMPLICATIONS: The fee will provide funding for construction of stormwater
facilities, which will improve the City's ability to manage storm runoff into the Roaring Fork River,
reducing sediment and pollutant runoff, and generally benefiting the ecology of the river, primarily
with in the City of Aspen, but also downstream from the City.
RECOMMENDATION: Staff is recommending proceeding with the adoption of an ordinance for the
implementation of the System Development Fee included in the Stormwater Utitity Business Plan.
ALTERNATIVES: Alternative funding options include: monthly service fee and combination
monthly service fees and property tax and are further described on pages 1-10 of Attachment A of
Attachment 2. The alternatives all assume voter approval of a new property tax or Council/voter
approval of the creation of a new stormwater utility operation. All the alternatives include a System
Development Fee. If a System Development Fee is not used to supplement the alternatives each
alternative would require higher fees or taxes in order to maintain the same level of planned
improvements.
CTFY MANAGER COMMENTS
Attachment 1- Stormwater Development Fee Ordinance
Attachment 2 -May 8, 2007 Staff Memo with Attachments
aH.~a~t a ;- -
ATTACHMENTI
ORDINANCE NO. ~
Series of 2007
AN ORDINANCE 8F THE CITY COUNCIL OF THE CITY OF ASPEN,
COLORADO, TO AMEND CHAPTER 25.18 OF TITLE 25 OF THE ASPEN
MUNICIPAL CODE FOR THE ADDITION OF A NEW STORMWATER SYSTEM
DEVELOPMENT FEE
WHEREAS, the City.'s Stormwater Management Plan identifies deficiencies in the
condition and capacity of its existing drainage system, and
WHEREAS, it is in the City's interest to protect its infrastructut~, the environment, and the
ecology of the Roaring Fork River from the effects of stormwater runoff, and
WHEREAS, a stormwater system development fee will generate an estimated $19 million
over fifteen years for use in improving the City's existing drainage system related to
development and redevelopment of property within the boundaries of the City of Aspen,
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
ASPEN, COLORADO, THAT
Section 1.
Chapter 25.18 of Title 25 of the Aspens Municipal Code is hereby amended to read as
follows:
Sec.25.18.010 Definitions.
For tho purposes of this Title certain words or phrases are defined as follows:
(a) Development. The proposed development creates at least 500 square feet of
new impervious area.
(b) Redevelopment. The proposed development disturbs at least 500 squaze feet of
the existing impervious area.
ro r
Sec. 25.18.020 Stormwater System Development Fee.
(a) A Stoanwater System Development Fee shall be assessed against all
properties at the time of development or redevelopment of the property. The fee shall be
assessed against the total impervious area of the development, not simply the increased .
impervious area, minus the amount of any stormwater system development fee actually
previously paid by the landowner or the predecessor of the landowner for connection to
the stormwater system. The System Development Fee shall be $2.88 per square foot of
total impervious area.
(b) The calculation for the credit to be given for property on which the structures
are substantially remodeled or rebuilt shall take into account the amount actually paid for
stormwater system development fees in the records as maintained by the city.
Section 2:
This Ordinance shall not effect any existing litigation and shall not operate as an abatement
of any action or proceeding now pending under or by virtue of the ordinances repealed or
amended as herein provided, and the same shall be construed and concluded under such
prior ordinances.
Section 3:
If any section, subsection, sentence, clause, phrase, or portion of this Ordinance is for any
reason held invalid or unconstitutional in a court of competent jtuisdiction, such portion
shall be deemed a separate, distinct and independent provision and shall not affect the
validity of the remaining portions thereof
Section 4: ~ the
A public hearing on the ordinance shall be held on the day of
City Council Chambers, Aspen City Hall, Aspen, Colorado.
SAMPLE BALLOT FOR COORDINATED ELECTION ~
~ PITKIN COUNTY, COLORADO ~
NOVEMBER 6, 2007
Vos Caudill, Clerk and Recorder
mtv. Colorado
TO VOTER: To vote for your choice, completely fill in the Oval to the LEFT of your
or wrongly mark this ballot, return it and request a replacement
VOTE LIKE THIS: •
_.. _....,..,, .~~oremrr or_~ CITY OF ASPEN
4 Year Term p
(Vote for One) a eople are listed numerically. A'yes' vote on any oanor isaue ~~
vole in favor of changing current law or existng
i
a vole
b
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c
Brad Zeigel a ssue
s
allo
vote on eny
ircumstances, end a'no
gainst changing current lewor existing circumstances."
~
~ Debbie Stone Bruell
School Board Director - District C Referendum 2A
4 Year Term
(Vote for One) SHALL CITY OF ASPEN SALES TAXES
~ Brucs Wampler BE INCREASED BY A NEW 0.15% SALES
TAX BECOMING EFFECTIVE UPON
~ Bill Lamont EXPIRATION OF THE CURRENT 0.25%
School Board Director - District D SALES TAX TO INCREASE REVENUES
4 Year Term BY AN ESTIMATED $870,989 FOR THE
(Vote for One) FIRST FISCAL YEAR (2010) AND SHALL
ANEW 2.1% CITY OF ASPEN USE TAX
~ Myles Rovig ON CONSTRUCTION AND BUILDING
MATERIALS BE APPROVED TO
WITH A BLUE OR
POSED AT A RATE OF UP
MILLS BE APPROVED TO ~
5E REVENUES BY UP TO
)ANNUALLY (FOR _
:TION IN CALENDAR YEAR ~
)RAN EXPANDED STORM
MANAGEMENT SYSTEM ~
ITY OF ASPEN TAXES 8E ~
iED BY UP TO 5800,000
LY (FOR COLLECTION IN _
AR YEAR 2008) AND BY SUCH
NALAMOUNTS RAISED _
LY THEREAFTER BY AN AD ~
M PROPERTY TAX MILL LEVY
JATARATEOFUPTO0.65 ~
]R THE PURPOSE OF PAYING
INCREASE REVENUES AN ESTIMATED AN
ST D MAINTENANCE OF, AN EXPANDED
ORM WATER MANAGEMENT SYSTEM, ~
~ $1,722,000 FOR THE FIRST FISCAL
YEAR (2008) AND FOR CITY TRANSIT W
AD HICH INCREASE SHALL BE IN
DITION TO THE AD VALOREM
~ SERVICES AND PEDESTRIAN pR OPERTY TAXES CURRENTLY LEVIED ~
~ AMENITIES AN
S D COLLECTED BY THE CITY; AND
HALL THE CITY BE AUTHORIZED TO
~
~ SHALL CITY OF ASPEN TAXES BE
INCREASED BY AN ESTIMATED $1,722,000 C
[f OLLECT, RETAIN AND EXPEND ALL OF
HE REVENUES OF SUCH TAXES AND
ND
~
_ FOR THE FIRST FISCAL YEAR (2008) AND BY
SUCH AMOUNTS AS MAY 8E GENERATED TH
E E EARNINGS THEREON] IN 2008 A
ACH SUBSEQUENT YEAR, _
~ ANNUALLY THEREAFTER BY A NEW 2.1% N
O OTWITHSTANDING THE LIMITATIONS
SECTION 20 OF THE
F ARTICLE X _
~ USE TAX ON CONSTRUCTION AND
BUILDING MATERIALS; PROVIDED THAT THE C ,
OLORADO CONSTITUTION (TABOR), _
~ FIRST ONE HUNDRED THOUSAND DOLLARS OR ANY OTHER
VISIED STATUTES
($100,000) OF EACH BUILDING PERMIT R
L ,
E
AW? ~
~ VALUATION SHALL BE EXEMPT FROM USE
TAX; AND SHALL CITY OF ASPEN TAXES BE ~ YES ~
~ INCREASED BY AN ESTIMATED $870,989
FOR THE FIRST FISCAL YEAR (2010) AND BY
~ NO
~
_ SUCH AMOUNTS AS MAY BE GENERATED ~
ANNUALLY THEREAFTER BY A NEW 0.15%
~ SALES TAX BECOMING EFFECTIVE UPON ~
~ EXPIRATION OF THE CURRENT 0.25%
~ SALES TAX; AND PROVIDED FURTHER,
THAT THE REVENUES DERIVED FROM ~
SUCH SALES AND USE TAXES SHALL BE ~
~ USED TO PAY THE COST OF OPERATION,
~
MAINTENANCE, CAPITAL REPLACEMENT,
~ AND IMPROVEMENTS OF CITY TRANSIT
~
SERVICE AND PEDESTRIAN AMENITIES;
~ PROVIDED, FURTHER, THAT THE FULL
AND
,
AMOUNT OF REVENUES DERIVED FROM
~ THE SALES AND USE TAXES MAY BE ~
~ RETAINED AND EXPENDED BY THE CITY
NOTWITHSTANDING ANY STATE REVENUE
~
~ OR EXPENDITURE LIMITATION, INCLUDING
THE LIMITATION CONTAINED IN ARTICLE X, ~
~ SECTION 20, OF THE COLORADO
CONSTITUTION?
~
~ YES ~
~
~ NO ~
t~~~~ii~~~~~~~ ~~~~~~
~~~~~~ ~ii~~~~~~~~~~
T
RESOLUTION #
(Series of 2006)
VIA
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ASPEN, COLORADO, IN
SUPPORT OF THE 2006 PITKIN COUNTY BALLOT ISSUE KNOWN AS °CITY
PROPERTY TAX FOR STORM WATER MANAGEMENT SYSTEM°, WHICH
AUTHORIZES TO LEVY A NEUV-0.65 MILL PROPERTY TAX FOR THE CITY'S
STORMWATER MANAGEMENT PROGRAM.
WHEREAS, the Roaring Fork River is severely degraded through the City with
increasing levels of sediment discharge and other pollutants. stormwater runoff has
been identified as the number one source of river pollution by the Roaring Fork
Conservancy; and
WHEREAS, it is in the City's interest to protect private property, pub-ic health
and safety, the City's infrastructure, the environment, and the ecology of the Roaring
Fork River from the effects of stormwater runoff; and
WHEREAS, the City of Aspen's stormwater Management Plan has ident~ed
ways to reduce the amount of storm water runoff going directly into the river from the
current 88°~ level to.37% preventing 1,426 tons of sediment from.reaching the river
each year; and
WHEREAS, reducing sediment will improve water quality, fish habitat, and river
health throughout Aspen and for miles downstream; and
WHEREAS, the cost of the stormwater Management plan is estimated to be $12
million over 15 year; and
WHEREAS, a new mill levy of 0,65 mill property tax wilt generate an estimated
$12 million over fifteen years for use in maintaining, improving, and :extending the City's
existing drainage system; and
WHEREAS, the new property tax is not a huge financial burden to the citizens of
Aspen. Atypical single family home in the West end will pay approximately $10 more
per month and an affordable housing unit will pay approximately $1 more per month in
property taxes; and
WHEREAS, the various projects identified in the stormwater Management Plan
will mitigate the adverse water quality impacts from the City on the Roaring Fork River;
and
NOW, THEREFORE, BE IT RESOLVED THAT THE ASPEN CITY COUNCIL supports
the ballot question known as °City Property Tax for Storm Water Management System°
that authorizes Coundl to levy a new 0.65 mill property tax to reduce the adverse water
quality impacts from the City on the Roaring Fork River and improve fish habitat and
~+~n
river health. The Aspen City Council urges the electors of the City of Aspen to support
said proposed referendum and to vote "Yes" on its passage.
Dated:
Michael C. Ireland, Mayor
1, Kathryn S. Koch, duly. appointed and acting City Clerk do certify that the foregoing is a
true and accurate copy of that resolution adopted by the City Council of the. City of ,
Aspen, Colorado, at a meeting held September25, 2008.
Kathryn S. Koch, City Clerk
A~Ff'~wh-r-~n~ E
amec~
City of Aspen
Stormwater System Development Fee
Evaluation
September 1St, 2009
i
TE~r_ Ciro ~~ t~sr~rv
C_.~....~ ~ .
~bi-~
City of Aspen, Colorado -
• Stormwater System Development Fee Evaluation
This report finds:
The current
stormwater program
is underfunded.
The current SDF is
perceived as
inequitable.
The current SDF can
be transformed to
charge only new
imperviousness in a
revenue neutral way
by increasing
dedicated tax
collections to the full
0.65 mils.
This is an interim
measure until the
program need is
refrned and other
viable funding
options have been
analyzed.
Introduction
This Report
This report addresses the following three questions:
1.
2.
3.
What is the current situation in terms of program budget and funding?
How much revenue does Aspen need to support stormwater?
Is the current System Development Fee structured in the most appropriate way
for Aspen?
Brief Summary of the Situation
In February, 2007 Aspen completed a detailed Stormwater Utility Business Plan.' It was
supplemented in April. 2 The plan contains detailed analysis of the City's stormwater
needs and issues, citizen input, an assessment of program costs and funding options.
The city responded by initiating atwo-pronged funding approach: a System
Development Fee (SDF) and a dedicated property tax.
As originally envisioned the combination of the two was to generate about $2.1 M
annually -this was seen at that time as the needs of the program. About $1.3M was
capital construction and $800,000 was in recurring expenses.
The System Development Fee
Adopted by ordinance in May 2007, the SDF charges $2.88 per square foot of total site
impervious area triggered by development and redevelopment exceeding 500 square
feet of impervious area. Originally, the system development fee was slated to generate
$19M over 15 years ($1.27M/yr in 2006 dollars). The actual 2009 projected revenue
from the fee is only $430,000, or 34% of the originally projected total. This shortfall is
primarily attributed to the economic slowdown, though estimates had to be made based
on incomplete data and significant unknowns.
The Dedicated Tax
In November 2007 voters approved a dedicated property tax of 0.65 mills independent of
TABOR. This funding is to support the rest of Aspen's stormwater program -the
recurring costs plus debt service. The tax was targeted to generate $860,000/yr on
average for the recurring program and debt service. The 2009 estimated revenue from
the property tax is $814,000 - on target.
Current Analysis
The structure of the System Development Fee, although recommended at the time of the
Business Plan development by citizens and political leadership alike, is in question.
There are two concerns.
The first is that the SDF may appear to be inequitable in that it charges parcels for their
total impervious area rather than only the additional amount in the redevelopment, and is
applied at the onset of construction of additional impervious area. This retroactive
approach is unusual and is not strictly in accord with Colorado legislation (though the
legislation may not apply to home rule cities).
In addition there is an ongoing shortfall in capital project funding from the SDF currently
recognized by both the community and political leadership.3
~ City of Aspen, Stormwater Utility Business Plan, AMEC Earth & Environmental, Inc., February, 2007
2 City of Aspen, Supplemental Report, Stormwater Utility Business Plan, AMEC Earth & Environmental, Inc., April, 2007
s Aspen Post Independent, 19 August, 2009, Aspen Daily News, 19 August, 2009.
Page 1 of 9
City of Aspen, Colorado
Stormwater System Development Fee Evaluation
This report provides a brief analysis and suggestions only -directions for further
investigation. An appropriate due diligence process and thorough analysis and of the
Stormwater program and the adequacy/acceptability of funding structure changes would
be warranted prior to adjustment of the current tax and charges or activation of any
additional funding sources. Though an interim step may be warranted.
1. Current Stormwater Budget and Funding
What is the current situation in terms of budget and funding?
Program Budget
The Stormwater special revenue fund (Fund 160) works to prevent reduce and mitigate
the impacts of development on the Roaring Fork River. The fund provides funding to
address stormwater runoff issues through land use planning, hydrologic and hydraulic
engineering, construction of stormwater management areas (such as wetlands),
inspections, creation and enforcement of regulations, sediment removal, water quality
monitoring and educational and outreach programs.
The 2009 budget total for the fund is about $1.2M as shown in Table 1. This budget
number may be insufficient to meet growing stormwater program needs for capital
construction, permit compliance, and system maintenance and restoration.
Conversations with local staff indicate that a more appropriate number may be in the
$1.7-2.1M range annually.
The 2009 stormwater program budget indicates the following categories of expenditure
and as shown in Figure 1: a
Table 1.2009 Budget
Payroll $364, 910
Maintenance $ 28,250
Professional Services $ 82,830
Materials & Supplies $ 44,140
Overhead $ 63,060
Tax Collection Fees $ 16,280
Capital $604,000
Total $1,203,470
om~r
Capital i23;
509'0
~~~ °ayroll
30?0
i
t`~
G~:cl'hcaJ f`'~ddEOaAU
53'e 33'0
Figure 1.2009 Expenditures
City of Aspen 2009 Operating and Capital Budget
Page 2 of 9
City of Aspen, Colorado
stormwater System Development Fee Evaluation
The forecasted budget for the stormwater fund (Special Revenue Fund 160) is shown in
Table 2 for a five year period. Lines 2 and 3 reflect the two funding sources each
growing between 3 and 4% annually. Debt service (funded from the tax and fee) grows
in year 2014 based on a matching $3.2M in bond revenue/construction cost for the Rio
Grande design project let in 2013 but not included in this Table.
Table 2. Five-Year Projection 2010-2014
2010 2011 2012 2013 2014
1 Beginning Balance
2 stormwater Property Tax X1,625,000 $
5857,000 2,039,000
5883,000 $i,8G5,000 5
$912,000 2 216,000 $
5946,000 2,124,000
5981,000
System Development Fee
3
$447,000
$465,000
5484,000
5503,000
S523,000
4 Interest Income 545,004 $57,000 552,000 562,000 559,000
Current Revenue:
5 Subtotal $1,350,000 $1,406,000 $1,448,000 $ 1,511,000 $ 1,708,000
,
6 TotalAvailabfe Funds $2,975,000 $3,444,000 $3,313,000 $ 3,726,000 $ 3,832,000
7 Operating Expense 5637,000 SG55,000 5673,000 $692,000 5712,000
g Capital Expenditures 5290,000 5915,000 5405,000 $890,000 $740,000
g Debt Service X9,000 59,000 520,000 520,000 5281,000
10 Subtotal, Current Expenditures: $936,000 $1,579,000 $1,098,000 $ 1,602,000 $ 1,733,000
11 Chan e in fund Balance $414,000 - 174 000 $350,000 -$91,000 -$26,000
12 Endiing Fund Balance $2,039,000 $1,865,000 52,216,000 $2,124,000 $2,098,000
Funding
In 2005 the City of Aspen undertook a study of stormwater management needs and
funding options. Funding alternatives were identified and discussed by an advisory
committee, which made recommendations to the administration and City Council. A
detailed stormwater Business Plan report and supplement were developed, as
previously stated.
In November, 2007 Aspen's voters approved a special ad-valorem property tax mill levy
'
Aspen currently employs s
of up to 0.65 mills for the specific purpose of increasing revenues to fund the City
two funding sources for stormwater management system, and by such amounts raised annually thereafter by an
stormwater. a system ad-valorem property tax mill levy imposed at a rate of up to 0.65 mills independent of
development charge and
a dedicated property tax
TABOR limitation.
The stated purpose of the tax is to fund "the costs of capital improvements to, and
"
The
operation and maintenance of, an expanded storm water management system.
ballot measure enabled the City to collect, retain and expend all of the revenues of such
taxes and earning thereon in 2008 and each subsequent year notwithstanding the
limitations of the TABOR or any other law.5 The current property tax levy is estimated to
generate $814,000 in 2009.6 This revenue stream is anticipated to grow by 3-4%
annually.
In addition to the property tax, cone-time stormwater development fee was instituted by
the City Council in 2007. The stormwater development fee was set at $2.88 per square
foot of impervious area on properties being developed or redeveloped with 500 or more
additional square feet of impervious coverage. The stormwater development fee is
e November 6, 2007 stormwater property tax ballot measure approved by City of Aspen voters.
e City of Aspen 2009 Operating and Capital Budget
Page 3 of 9
City of Aspen, Colorado
Stormwater System Development Fee Evaluation
The current Stormwater
program is limited by the
inability of the funding
methods to generate
su~cient revenue to
meet the program needs
identifred in a past
Business Plan.
applicable to the entire impervious area of properties being redeveloped if they add 500
or more square feet of impervious coverage.
Development fee receipts in 2008 (for an 18-month period following adoption of the fee)
were forecast to be $1,000,000 in 2008 and estimated at $600,000 in 2009 because of
the slowing pace of development.' However, only $700K was collected in 2008 and
recent estimates put the 2009 revenues at about $430,000, requiring a significantly
reduced capital construction program ($12M over 15-years instead of the original $19M).
Revenues for 2009 are shown in Figure 2.
Devefoprnent Fees
a2~;
Figure 2.2009 Revenues
2. Stormwater Program Needs
Starrn:vater
sES~
How much revenue does Aspen need to support Stormwater?
Past Projections
The Supplement to the Business Plan developed in 2007 estimated both operating and
capital construction needs.
The capital planning and construction program was divided into three areas (2006
dollars) as shown in Table 3.
While some of the estimates are based on significant preliminary engineering others are
broader. Notably, the master planning costs are designed to shed light on the actual
need and to investigate how to integrate flood control and water quality enhancements
into all projects, as appropriate.
This total was to be a 15 year program or $1,280,000 annually.
Table 3. 15 Year Capital Projection
' City of Aspen 2009 Operating and Capital Budget
Program Component ~ Estimated Total
Flood Control Management I $9,600,000
Water Quality Management ~ $8,923,000
Page 4 of 9
City of Aspen, Colorado
Stormwater System Development Fee Evaluation
A projection of
stormwater program
needs completed in
2007 estimated that the
capital consfrucfion
program need was
$1.28M annually.
The recurring costs of the program (2006 dollars) were similarly estimated as shown in
Table 4.
Table 4. Recurring Program Cost Projections
The same 2007 analysis
projecfed a recurring
need ofabouf $860,000
annually.
Program Component Estimated Total
Routine Maintenance $455,300
Remedial Repair &
Replacement $183,000
Plans Review, Inspection &
Enforcement $136,500
Water Quality Monitoring,
Studies and Education $60,000
General Administration $25,000
TOTALS $859,800
These numbers reflect the best information in 2006. No significant changes to estimates
have occurred since that time.
The recurring cost numbers will show an increase as new construction builds high
maintenance water quality treatment devices. This was estimated to be about $350,000
at about ten years out. This is not included in the analysis at this time.
Upper and Lower Bounds
Because all of these are in 2006 dollars we must increase them by 12.6% reflecting four
years of compounded 3% cost increase to make them comparable to the existing budget
numbers which are in 2010 dollars and might be considered to represent a lower
boundary to the program -though adjustments can be made to the existing program as
well.
We then have an envelope of stormwater program cost as indicated by the existing
budget (lower limit) and the projected need (upper limit in 2010 dollars). The lower limit
capital costs are an average of the current budget projection through 2022 in today's
dollars.
Table 5. Stormwater Program Cost Range
Lower Bound Upper Bound
(Business Plan
(2009 budget) Su lement
Recurring Costs $596,000 $990,000
Page 5 of 9
City of Aspen, Colorado
stormwater System Development Fee Evaluation
Includes debt service.
This tells us that at a minimum our program revenue (less interest income) must be in
the $1.2M range and at a maximum in the $2.4M range.
An estimate of unmet
needs probabty ranges Detailed reanalysis of the true costs and projections is beyond the scope of this study.
from $500,000 to We recommend a revisit of both the recurring costs and the capital program. The
$700,000. masterplanning should be done in any case to define real capital needs in light of the
current water quality realities.
Current revenue is $1.3M. Based on Table 5 there may be a maximum funding shortfall
of about $1.1 M for the upper bound program. In reality the number is probably in the
$500,000 to $700,000 range as the economy increases and fees pickup and as a tighter
program need estimate is developed.
Program Pacing and Adjustment
Another way of bridging the gap is by looking at the current stormwater program to
determine if there are areas where suitable pacing of the capital program could reduce
costs in the short term.
The capital program in planning has been cut from a 15-year $19M program to a $12M
program. With no adjustment and current projections using a modified SDF and
unrestricted dedicated property tax funding the program can last until 2016 before the
fund balance goes to zero. By delaying capital projects by an average of six months the
current revenue stream could sustain the stormwater program throughout the planning
period.
3. System Development Fee Assessment
Is the current System Development Fee structured
in the most appropriate way for Aspen?
Key Issues with the Fee
The key issue seems to be the provision that the fee be calculated based on the entire
impervious coverage of the properties subject to redevelopment or added development if
the additional impervious area exceeds 500 square feet, which can result in a very high
charge if the property has substantial pre-existing impervious area.
The current SDF has
two significant issues: For example, a property with about 7,000 square feet of impervious area wishin to add
an inequity perception g
and insufficient revenue a fifty foot (50') by ten foot (10') driveway is subject to a one-time stormwater
capacity to meet needs. development fee of about $21,600.
Basis for an SDF
A system development charge is one variation on standard capital recovery charges.
Capital recovery charges are an equalization device, intended to attain reasonable
equity in the apportionment of infrastructure costs over the life cycle of capital assets
A capital recovery component is usually derivative element of a more comprehensive
Page 6 of 9
., City of Aspen, Colorado
Stormwater System Development Fee Evaluation
rate methodology (such as is used for water, wastewater or stormwater user fees), and
is applied to recover or meet capital costs associated with providing or maintaining
adequate service capacity over time.
The capital recovery charge may reflect prior investment in systems that were designed
and built with excess service capacity in anticipation of growth or planned improvements
that must be funded, which means that the existing value of installed assets and the
estimated value of future improvements must at least be reasonably estimated.
There are a variety of ways of calculating capital recovery charges though all tend to be
either prospective or retrospective (explained below), including: growth-related cost
allocation method; marginal-incremental cost approach; system buy-in methodology;
value of service methodology; and variants that incorporate two or more of the above.
City Councils generally have substantial latitude in structuring service fee rates
(including capital recovery components) to meet the needs and practices of their
as the charges resulting from the rate structure is fair and
nities as lon
d
l
g
commu
ua
indivi
reasonable. In the case of a capital recovery charge the rate must be related to the
capital costs of service caused by the new development.
The current SDf is The purpose of the existing System Development Fee was to fund the CIP portions of
based on an assumption
of4% of the impervious the Aspen program of $19.2M over 15 years, or $1,279,533/year. The current
us area of the City was estimated to be 11,100,000 sq ft based on sampling and
i
i
area being replaced mperv
o
extrapolation. It was then assumed that parcels containing an average of four percent of
annually. this impervious area would develop/redevelop per year based on historic rates of 3% to
5% per year. Then: $1,279,5331(4% x 11,100,000 sq ft) _ $2.88/sq ft
An analysis of the fees that have been paid shows the following approximate statistics:
• total fees = $809,590 in 19 months
• average fee = $23,812
median fee = $19,116
total impervious area - 281,108 sq ft
average impervious area - 8,209 sq ft
median impervious area - 6,638 sq ft
• total new impervious area -120,745 sq ft (42% of the total)
• average new impervious area - 3,698 sq ft
median new impervious area -1,729 sq ft
Other SDF Options
Fee Reconfiguration Analysis
If the fees generated on total imperviousness are $430,000 per year, then the fees
The SDF could be
converted to a new generated on just the new areas would be about 42% of that or $181,000 (a difference in
would be the lost revenue annually if this simple change
Thi
000
development fee but s
).
the range of $250,
would generate only were made.
42% of the current fee.
Incidentally, there is also an easy way this lost revenue can be made up. The current
dedicated property tax is voluntarily TABOR limited in its application. An assessment of
the increases in revenue if this voluntary restriction was taken away and the full 0.65 mil
rate was levied shows that the increases would offset the decreases in revenue from the
' change in SDF application to only new impervious areas.
The average difference is a decrease in revenue of $12,000 annually. That is,
application of the full 0.65 mills without TABOR limitation is estimated to make up for
about $240,000 of the $250,000 annual decrease in revenue from applying the SDF to
Page 7 of 9
City of Aspen, Colorado
stormwater System Development Fee Evaluation
only increases in impervious areas.
Table 6 illustrates this cash flow for a five year period (Table 2 revised with lower SDF
This difference could be revenues and no TABOR restriction}. There is very little difference in the Line 5 Current
voluntary~TABORy lifting Revenue from year to year. It should be noted that this is a temporary solution in
restrictions on the that the capital expenditures are still lower than previously identified as the need.
dedicated property tax
collection. Table 6. Table 2 with Reduced SDF and no TABOR Restriction
Adjusting the current
SDF and relaxing
TA80R restrictions
would solve the
immediate problem of
the perceived inequity
the fee. But this is a
temporary solution ano
does not increase the
total program capacity.
2010 2011 2012 2013 2014
1 Be innin Balance $1,625,000 $2,053,000 $1,874,000 2 139 000 $1,938,000
2 stormwater Property Tax $1,131,000 $1,147,000 $1,107,000 $1,130,000 $1,205,000
3 System Development Fee $188,000 $195,000 $203,000 $211,000 $220,000
d Interest Income $45,000 $57,000 $52,000 $60,000 $54,000
5 S~.abtotal, G2,rrentRevenue; $1,364,000 $1,400,000 $1,363,000 $1,401,000 $1,623,000
G TotafAvailafilaFunds $2,989,000 $3,453,000 $3,237,000 $3,540,000 $ 3,561,000
7 erat~ Ex ease $637,000 $655,000 $673,000 $692,000 $712,000
8 C italEx erndrtu-es: $290,000 $915,000 $405,000 $890,000 $740,000
9 IJebt Servre $9,~0 $9;000 $20,000 $20,000 $281,000
10 52.ahtr~tal, G2,rrentEx errdit~es: $936,000 $1,579,000 $1,098,000 $1,602,000 $ 1,733,000
'11 Chan e in fund Balance $428 000 -$179,000 265,000 -$201,000 -$110,000
12 Endin Fund Balance $2,0.53,000 $1,874,000 $2,139,~]~~1 X1,938,000 $1,827,000
In-lieu of Construction Fees
An in-lieu of fee allows new development to shift its responsibility for stormwater impact
accommodation to the City in exchange for a fee related to the cost the individual
developer might have incurred had they done the impact reduction themselves. This
allows an alternative consideration of the size of the fee -matching it to the cost the
developer himself might incur if they had to construct significant detention.
Requirements for on-site stormwater quantity and quality treatment and control when
property development occurs have become awidely-adopted regulatory practice in the
past thirty years. Aspen itself has just completed a stormwater design manual with new
requirements.
The objective of on-site controls is to mitigate the hydrologic and water quality changes
that occur when natural land surfaces are replaced with impervious coverages such as
Changing the SDF to an pavement and rooftops. In simple terms, storing (detaining) stormwater on a site and
in lieu fee is an option
but would require more releasing at a lower peak rate over an extended time period allows a downstream
study and data drainage system to be of smaller size to attain a given storm return interval service level,
preparation. and thus less costly. Treating stormwater to remove harmful pollutants on site provides
pollutant removal closer to the source, allowing the city to install smaller treatment
systems and reduces the burden of acquiring large tracts of land for stormwater
treatment near the river.
Controlling runoff to optimize infrastructure investment often requires the installation of
regional systems to reduce peak runoff flows, even when on-site detention is required.
Because the scale of regional facilities is often more efficient than a multitude of on-site
systems, and because regional public systems are more reliably maintained than private
Page 8 of 9
City of Aspen, Colorado
Stormwater System Development Fee Evaluation
on-site systems, some communities have instituted fees in lieu of requiring construction
of on-site systems on each development project.
In some cases the in-lieu fees are optional at the developer's discretion. In others, they
are mandatory. In-lieu fees are structured to apportion the cost of regional facilities
equitably among all properties that would develop in the future and impose service
demands on the facility. However, this approach does nothing to mitigate the runoff from
the installed base of previously developed properties, properties that are not
redeveloping, that are typically present in urban areas.
A potential problem arises, however, with the timing of fee collection and actual
construction of the regional facility. The developer shifts his or her responsibility and
concomitant risk to the City in return for the fee. Thus, the regional facility must often be
built years before enough fees have been collected to pay for it. This means that the
cost of building the regional facility often must be front-ended by the local jurisdiction. In-
lieu of construction fees paid later is essentially a recovery of the financial participation
of the subject properties that were developed later.
The existence of a fee in lieu of mandatory on-site detention may also require that
periodic stormwater service fees and/or capital recovery fees be adjusted to ensure that
developers are not double-dipped by multiple fees over time.
Unlike SDFs the in lieu of fee can be related to the cost the developer would have
incurred for placing structures on their site rather than the simple incremental cost of
capital construction to accommodate increased flows. This is especially true where the
fee is voluntary. With the high cost of land in Aspen such a shifting of responsibility
downstream and on to more efficient treatment may be seen as preferable to on-site
treatment.
Page 9 of 9