The City of Lafayette is facing the twin threat of climate change and water demand, and residents are literally — and suddenly — paying for it.
As of July 1, Lafayette residents have begun the journey towards paying almost 60% more for their water by 2025 than they were at the beginning of 2023. With a 9% mid-year increase this summer potentially followed by 21% increases for each of the next two years, the average household’s bill won’t double, but it might come close.
According to a presentation by city staff to Lafayette City Council, each percent increase on residents’ water bills accounts for another $100,000 in revenue. So in a couple years, the City of Lafayette could be taking in almost $6 million a year more than it was in 2022. And it needs it, the city says.
Capital projects costing the city more than $100 million are on the docket for the next few years, city officials told Boulder Reporting Lab — projects designed to ensure residents have enough water in an uncertain future.
“One of the key drivers behind all [these projects] is climate change,” Lafayette’s utilities director, Jeff Arthur, said in an interview. “All the projections for our region indicate warmer temperatures and more erratic precipitation.”
The abrupt rate hikes highlight the tension confronting many Front Range communities as they try to balance an unpredictable water supply with increasing demand. Younger cities are especially vulnerable, as they don’t have as many senior water rights as older cities. Lafayette has some older water rights, but maybe not enough. And for the water it has access to, it doesn’t have enough space to put it.
Many projects the city is paying for — or soon will be — involve water storage, so Lafayette will be able to hold water from wet years to get through the dry ones. This year was a prime example of this problem, Arthur explained.
“It has been very wet, and we don’t have a place to put the water rights that we have,” he said. “They’re going down the river and won’t be available for next year.”
And though city staff say these projects make water rate increases necessary, the unusually high bumps are enough to raise alarm. For a mobile homeowner, city staff estimate costs would rise roughly $75 a month by 2028, according to a city presentation. For a single-family residence in Old Town, it would jump almost $100 a month. And for the owner of a house with a large lawn, costs could increase upwards of $225 a month. The fees will apply to both residential users as well as commercial.
“These proposed hikes will have a tremendous negative impact on the residents of Lafayette,” said Amanda Donovan in a comment submitted for a June 6 council meeting.
She, along with others, voiced bewilderment at how the City of Lafayette ended up in this predicament. Couldn’t they see it coming? What about budgeting for future costs?
Enterprise fund runs out of money
Lafayette’s city water utility is an “enterprise fund” – meaning it’s paid for by rates and fees rather than taxes. The city has explained that fund is facing a shortfall. This shortfall was identified by an outside consultant. Hired by Lafayette in 2021, Raftellis Financial Consultants “confirmed significant gaps between projected revenues and expenditures,” a city memo says, citing necessary projects on the horizon.
The memo also states rate increases are “needed to maintain the solvency” in the fund, and the fund will require “significant revenue increases over the next several years.” The 9% increase that went into effect July 1 will generate $400,000 in revenue this year, a fraction of what the city needs.
“It is not fair to place the burden on individuals and families for making up the water enterprise fund deficit,” Donovan said in her comment, “which I understand was mainly due to [actions of] past councilmembers and past city employees’ incentives for developers.”
This claim of unfairness was echoed by many others at the June 6 council meeting, who voiced displeasure at having to pay for the mistakes of past governments. The mistake, in the view of residents who spoke out, was allowing new development without proper investment in water infrastructure. Lafayette’s population grew almost 25% between 2010 and 2020. Boulder, by comparison, grew less than 12% in the same time period.
In one resident’s words, Lafayette “desired growth so badly that it all but gave away its water to developers.”
When new developments are built, cities have the opportunity to charge “plant investment fees” to new customers connecting to their water systems. These fees can help finance infrastructure improvements or expansions needed to accommodate more water users. And while these fees have to be reasonable — water utilities can’t charge new customers absurd fees just to give existing customers a rate break — if they’re too low, existing customers will have to pick up the slack.
Arthur said there was “definitely a period” when Lafayette’s water costs were much higher than the fees it was collecting from developers.
“It’s not as simple as cause and effect,” Arthur said. “But it’s a true statement that if [Lafayette] had historically charged [new developers] the maximum it could, there would be more money in the bank. And that money could be used to pay for some of these projects.”
In 2021, Lafayette “almost quadrupled” what it required new developers to pay into the city’s water system. They also changed requirements to prioritize developers bringing their own water rights to Lafayette. One of the more common rights brought by new developers, Arthur said, is shares from the Colorado-Big Thompson project: water from the Colorado River.
But to balance the books for the enterprise fund, it was too little, too late.
Increases will fund reservoirs to store water and projects to treat water
Colorado operates undera water rights system of prior appropriation. Meaning, the earlier you started using water, the better off you are.
As Arthur explained, this means younger municipalities are scrambling to secure enough water for their residents — often from the taxed Colorado River, and often at great expense. Erie, for example, currently gets all of its water from the Colorado River. But even cities like Lafayette that enjoy more senior rights and a variety of sources both east and west of the Continental Divide are facing increasing populations.
To address this, Lafayette is a partner in the Gross Dam expansion in Boulder County, as well as the Windy Gap Firming Project — an effort to hold more Colorado River water for Front Range communities in a massive new reservoir called Chimney Hollow in Larimer County. The city’s also looking to expand its own Goose Haven reservoir complex located on Highway 287 and Isabelle Road.
But the biggest project Lafayette will be funding in the coming years is the Northern Integrated Supply Project. A collaboration between 15 different municipalities and water districts, the project is pulling water from the Cache la Poudre River into two new reservoirs, one near Greeley and another near Fort Collins, that will be pumped to municipalities from Loveland to Fredrick. Erie is the largest investor in NISP.
For Lafayette, “annual debt service for NISP alone is projected to be approximately $5 million per year compared to current total billed revenue in the water fund of about $10 million per year,” the city memo states.
In addition to addressing storage capacity and water rights concerns, the city is looking to increase its treatment capacity. As it currently stands, Lafayette only has one water treatment plant.
“It is not ideal to have a single facility,” Arthur said. “It provides very little flexibility when things break or issues occur. If something goes down, we do not have a whole lot of time to address it.”
The city does have piping that connects it to Louisville’s and Erie’s water systems, but neither is something Lafayette could rely on for a significant amount of time, as neither is set up to meet the city’s full needs. And Arthur said that while some water treatment plants can have one segment taken offline while another is fixed, that isn’t the case for Lafayette, mainly because it needs the whole facility to provide adequate water for residents.
“[The plant] functions near capacity at peak periods,” Arthur said.
As Lafayette is working to increase its water resources and its water treatment capabilities, there’s the awkward fact that most of the water used by residents, at least in the summer, is not for drinking or cooking or any other essential need. Most of Lafayette’s summer water is consumed by lawns.
“We only treat about 2 million gallons a day of water in the winter,” Arthur said. “And when people fire up their irrigation systems in the summer, we get up to about 10 million gallons a day.”
Arthur added that with a warming climate, people are firing up those irrigation systems earlier in the year and leaving them on later — using more water as water becomes more precious.
“If we need to continue to expand our capabilities to serve large amounts of outdoor use, there’s a cost to that,” Arthur said.