Water Demand Offset Fee Study
February 9, 2022
Attachment 2
Table of Contents
1. Background and Summary .................................................................................................................. 1
2. Water Demand Offset Fee Calculations ............................................................................................... 3
2.1. New Water Demand Created by Development ........................................................................... 3
2.2. Water Saving Estimates ............................................................................................................... 4
3. Program Implementation Cost Estimates ........................................................................................... 5
3.1. Direct Install Bathroom Conversion Program Costs ................................................................... 6
3.2. High Efficiency Residential Clothes Washer Rebate Enhancement Program Costs .................. 7
3.3. CII Turf Conversion Rebate Enhancement Program Costs ......................................................... 8
4. Water Demand Offset Fee Calculation .............................................................................................. 9
5. Recommended Water Demand Offset Fee ...................................................................................... 11
1. BACKGROUND AND SUMMARY
The City of Santa Rosa (City) first adopted a Water Shortage Contingency Plan (Shortage Plan) in 1992 and has updated the Shortage Plan at least every five years. The Shortage Plan considers the response to limited water supplies during various stages of water shortage. A water shortage may occur due to a variety of potential scenarios, such as drought, climate change, regulatory constraints, natural or human caused disasters, and catastrophic events which may occur at any time. The Shortage Plan is the City’s operating manual that allows the City Council, staff, and the public to identify and efficiently implement pre-determined steps to manage a water shortage. The City’s 2020 Shortage Plan was adopted by City Council on June 8, 2021. The City’s stages of water supply shortage as defined in the 2020 Shortage Plan are shown in Table 1.
Table 1 – City 2020 Water Shortage Contingency Plan Levels
The Shortage Plan includes a program of water use prohibitions and restrictions for each stage of water supply shortage. These prohibitions and restrictions in the 2020 Shortage Plan are summarized in Table 2.
During declared water shortage emergencies that require water allocations (water rationing), existing City water connections are assigned individual water allocations that require water conse rvation sufficient to ensure that water demand does not exceed the limited supply for the duration of the water shortage emergency. In the 2020 Shortage Plan, water allocations are required in Stages 5, 6, 7, and 8.
Table 2 – Water Supply Shortage – Water Use Prohibitions and Restrictions
Prohibitions and Restrictions (a) Stage When Effective
Water Waste Ordinance prohibitions All water conditions Prohibition on use of potable water for washing hard surfaces (e.g., sidewalks, driveways, patios) Stage 1
Hose end shut-off nozzles required Stage 1
Water served in restaurants on request only Stage 2
Hotel and lodging industry must incorporate signs/messages regarding washing of linens only upon request Stage 2
Prohibition on pressure w ashing with potable water unless a variance is obtained Stage 3 Landscape irrigation limited to hours of 8 p.m. to 6 a.m. Stage 3 Prohibition on filling and operating ornamental fountains Stage 4 Prohibition on filling new swimming pools and spas Stage 5 Recycled water must be used for construction dust control in some situations Stage 5 New construction must offset water demand by a ratio of one to one Stage 5 Prohibition on filling or topping of existing swimming pools and spas Stage 6 Prohibition on installing water using landscape in new construction Stage 6 New construction must offset water demand two to one (b) Stage 6 Prohibition on installing or replanting water using landscapes Stage 7 New construction must offset water demand three to one (b) Stage 7 Landscape irrigation is prohibited Stage 8
New construction must offset water demand four to one (b) Stage 8 (a) Prohibitions and restrictions from previous stage(s) remain in effect. (b) The City is preparing an Amended 2020 Water Shortage Contingency Plan with one offset requirement of 100 percent for Stages 5 through 8.
The Shortage Plan establishes that no water would be available to allocate to new demand created by development during water shortage emergencies that require water allocations (water rationing).
However, the City a cknowledges the severity of the housing shortage crisis and therefore the Shortage Plan allows development to continue during these water shortage stages so long as the new water demand created by new construction is offset.
The City wishes to establish a Water Demand Offset (WDO) Fee to be paid by developers whose projects increase demand for water during declared water shortage emergencies that require water allocations for existing customers. The WDO Fees would fund existing or new City demand management efforts, water supply projects, and/or water conservation programs to offset the new water demands. The City would determine the most cost-effective and appropriate ways to use the WDO Fee revenue. Developers wishing to add new or increased water demand during declared water shortage emergencies that require water allocations would be required to pay WDO Fees to ensure a net zero impact on water demand.
The remainder of this report summarizes the proposed WDO Fees and the methodology that was employed to calculate the fees.
2. WATER DEMAND OFFSET FEE CALCULATIONS
City staff provided information on current water conservation measures, costs, and water savings, and staff and consultant jointly developed estimates for a standardized approach for determining the cost of measures that would provide lasting and measurable water savings benefits.
2.1. NEW WATER DEMAND CREATED BY DEVELOPMENT
The City charges developers a separate connection fee (sometimes referred to as the “demand fee”) as a requirement for connecting to the water system or for increasing demand at an existing connection. The connection fee is calculated based on the estimated peak month average daily water use created by each development project.
In contrast, the WDO Fee is based on the annual average daily water demand created by each development project. Table 3 summarizes the water use factors used for various types of development served by the City’s water utility. These water use factors were determined by examining the water usage from connections to the water system occurring from FY 2018 through FY 2021. The WDO Fees for residential development are calculated based on the average daily water usage estimates for each type of residential development identified. WDO Fees fo r commercial, industrial, and institutional development and irrigation connections are based on the estimated water usage of each development project.
Table 3 –Water Use Factors for Water Demand Offset Fees
2.2. WATER SAVING ESTIMATES
The City has direct experience, as well as reliable cost and water savings estimates, with a wide range of demand management efforts, water supply enhancement projects, and water conservation programs. For this WDO Fee study, the following three water savings programs were selected for analysis because they can be implemented relatively quickly and are anticipated to generate sufficient participation and therefore water savings:
(1) Direct install bathroom conversions con sisting of installation of ultra -high efficiency toilets and high efficiency faucet aerators, showerheads, and kitchen faucet aerators by qualified licensed plumbing contractors;
(2) Enhanced rebates for high efficiency residential clothes washer upgrades; and Type of Development
Average Daily Water
Usage (gal)
Thousand
Gallons per
Month
RESIDENTIAL (per housing unit) 1
Single Family Residential
Small Lot (6,000 sq. ft. and under) 156 4.7
Large/Medium Lot (over 6,000 sq. ft. to 1 acre) 221 6.6 Large Lot (over 1 acre) 401 12.0
Duplex and Triplex 131 3.9
Condos, Apartments and Mobile Homes
with separate irrigation 100 3.0
without separate irrigation 119 3.6
Eligible ADUs, SROs, Senior Housing, and Small,
High-Density Apartment Units 2 69 2.1
COMMERCIAL, INDUSTRIAL, INSTITUTIONAL, AND IRRIGATION
Based on Proposed Project 3 (na) (na)
1 Residential data based on average water usage over the past 4 years (FY2018 through FY2021)
2 Applies only to ADUs that are subject to Demand Fees. "SROs" are single Room Occupancy.
Small, High-Density apartments include all apartments 750 square feet and smaller. 3 Water demand for these customers is based on the estimated annual water demand for each proposed project.
(3) Enhanced rebates for ornamental turf conversions to low water using landscap ing at commercial, industrial, and institutional (CII) and multi-family residential landscapes irrigated via dedicated irrigation services 1.
For this reason, th is WDO Fee analysis is based on the estimated costs and water savings associated with those programs.
The focus of this study on direct install bathroom conversions, enhanced rebates for high efficiency residential clothes washers, and enhanced rebates for CII turf conversions does not imply that the City is limited in the future to those programs. The water utility could use WDO Fee revenue on any programs or measures that would achieve the needed water demand offsets.
The estimated daily water use factors for the three studied programs are summarized in Table 4.
Table 4 –Water Use Factors for Water Demand Offset Fees 1
3. PROGRAM IMPLEMENTATION COST ESTIMATES
The cost of implementing WDO programs is more than the material and installation cost of devices such as ultra-high efficiency toilets. WDO programs also require program development, program coordination, public outreach, and administration. The following subsections provide a comprehensive analysis of direct and indirect costs associated with each program. The “fully loaded”
1 Turf conversions at CII and multi-family sites have been shown to save nearly three times as much water per square foot converted compared to single family residential sites in the City’s service area.
Daily Use
(per person) 2
Number of
people 3
Current Fixture
Flow
Replacement
Fixture Flow
Water
Savings (gpd)
Ultra-high Efficiency Toilet 5 uses/day 2.7 1.6 gal/use 0.8 gal/use 10.8 Bathroom Faucet Aerator 8.1 min/day 2.7 2.2 gal/min 1.0 gal/min 26.2 Kitchen Faucet Aerator 4 4.05 min/day 2.7 2.5 gal/min 1.5 gal/min 10.9 Showerheads 5.3 min/day 2.7 2.5 gal/min 1.5 gal/min 14.3 Residential Clothes Washer 5 0.4 2.7 23 gal/use 13 gal/use 10.8 CII Turf conversion (1,000 sq. ft.) n/a n/a n/a n/a 0.8 6 1 Small discrepancies in sums of values shown in tables are due to rounding. 2 Source: Handbook of Water Use and Conservation, Amy Vickers, 2001 5 Source: http://toolbox.calwep.org/wiki/Clothes_washers_(residential)#WASHER_LIFE 6 Average water savings determined to be 31 gals per year per square foot at CII sites based on EKI study (included in 2020 UWMP).
4 Assumes only 50% of minutes per day (half of potential water savings) because about half of households in Santa Rosa have been found to have standard kitchen faucets that can be retrofitted with City provided aerators.
3 US Census Bureau, QuickFacts, Population Estimates, Persons per Household, 2015-2019
cost per unit (e.g., dollars per toilet) was calculated by dividing annual program cost by the number of units estimated to be installed per year.
3.1. DIRECT INSTALL BATHROOM CONVERSION PROGRAM COSTS
A bathroom conversion program does not currently exist at the City; therefore, the creation of the program would require new additional internal labor for the marketing and outreach effort, contract development, and program implementation and tracking. The City’s total annual internal labor costs for the bathroom conversion p rogram is summarized in Table 5. It is assumed that the City would convert approximately 1,000 locations per year, which comes out to $89 in City labor costs per bathroom conversion.
Table 5 –Annual Internal Labor Costs for Direct Install Bathroom Conversion Program 1
Position Title
Total Program
Annual Hours
Fully Loaded
Hourly Rates 2
Approx.
Cost
WUE Coordinator 140 $95.76 13,400$
WUE Technician 3 $56.26 200$
WUE Representative 277.5 $84.33 23,400$
WUE Intern 250 $16.25 4,100$
Senior Administrative Assistant (Temp) 100 $66.31 6,600$ Deputy Director of Water Resources 6 $128.44 800$
Director of Santa Rosa Water 0.5 $152.77 100$
Administrative Secretary 251.5 $58.65 14,800$
Administrative Analyst 1.5 $80.96 100$
Paralegal 1.5 $73.16 100$
Human Resources Technician (Risk Management) 1.5 $63.15 100$ Assistant City Attorney 1.5 $137.27 200$
Purchasing Agent 5 $100.68 500$
Marketing and Outreach Coordinator 100 $87.73 8,800$
Community Outreach Specialist 100 $59.36 5,900$
Graphic Design Support 3 N/A N/A 10,000$
Annual Totals: 1240 89,100$
1 Small discrepancies in sums of values shown in tables are due to rounding. 2 Source: City of Santa Rosa Calculated Billable Rates Summary By Job Code, October 2020 3 Graphic design support costs based on previous contracts for drought outreach.
This study assumes that each typical bathroom conversion would replace one toilet, one showerhead, two bathroom faucet aerators 2, and one kitchen faucet aerator with high efficiency fixtures3. The plumber's direct material cost per toilet is approximately $225 for a 2 -piece ADA compliant unit with f lange replacement and angle stop and riser. The City’s direct material cost for providing two bathroom aerators, one kitchen faucet aerators, and one showerhead is approximately $9. The service charge paid by the City to plumbers for each conversion would be $450.
Table 6 provides the total cost per bathroom conversion for the direct install program.
Table 6 –Total Cost per Bathroom Conversion
3.2. HIGH EFFICIENCY RESIDENTIAL CLOTHES WASHER REBATE ENHANCEMENT PROGRAM COSTS
This study assumes that the clothes washer rebate value at the time of implementation would be increased by $100. For example, currently t he City has a high efficiency residential clothes washer rebate program that provides a rebate of $50 per washer, bringing the total rebate to $150 per clothes washer if this WDO rebate enhancement program were implemented today.
As a consequence of enhancing the clothes washer rebate value, it is estimated that the City’s existing program management efforts will increase by 25 percent for the additional marketing and outreach, customer service, and administration and tracking required for the enhanced rebate program. The City’s annual internal labor costs for the washer rebate program is sum marized in Table 7. The City issues approximately 200 rebates per year, which comes out to about $198.50 in internal labor cost per clothes washer for each rebate. Therefore, the additional 25 percent labor cost attributable to the enhanced rebate program is approximately $50.
2 The water savings for two-sink bathrooms are assumed to be the same as one -sink bathrooms, provided both aerators are replaced.
3 This study assumes that about half of households have standard kitchen faucets that can be retrofitted with City provided aerators.
$450 = Plumber service charge
$225 = Direct cost per toilet
$9 = Fixtures provided by City
$89 = Internal labor cost per conversion
$773 = Total cost per bathroom converted
Table 7 –Annual Internal Labor Costs for High Efficiency Residential Clothes Washer Rebate Enhancement Program 1
Table 8 provides the total cost per residential clothes washer for the enhanced rebate program.
Table 8 –Total Cost per High Efficiency Residential Clothes Washer for Enhanced Rebate
3.3. CII TURF CONVERSION REBATE ENHANCEMENT PROGRAM COSTS This study assumes that the CII turf conversion rebate value at the time of implementation would be increased by $1.00 per square foot. For example, currently the City has a CII turf conversion rebate program that provides a rebate of $1.50 per square foot, bringing the total rebate to $2.50 per square foot if this WDO rebate enhancement program were implemented today.
As a consequence of enhancing the turf conversion rebate value, it is assumed that the City’s existing program management efforts will increase by 25 percent for additional marketing and outreach, customer service, inspections, and program administration and tracking . The City’s annual internal labor costs for the turf rebate program is sum marized in Table 9. The City issues rebates for approximately 200,000 square feet per year, which c omes out to about $0.45 in additional internal labor costs per square foot for the enhanced rebate program. Therefore, the additional 25 percent labor cost attributable to the enhanced rebate program is approximately $0.11.
Position Title
Total Program
Annual Hours
Fully Loaded
Hourly Rates 2
Approx.
Cost
WUE Coordinator 80 $95.76 7,700$
WUE Technician 50 $56.26 2,800$
WUE Intern 40 $16.25 700$
Senior Administrative Assistant (Temp) 40 $66.31 2,700$ Deputy Director of Water Resources 10 $128.44 1,300$
Marketing and Outreach Coordinator 100 $87.73 8,800$
Community Outreach Specialist 100 $59.36 5,900$
Graphic Design Support 3 N/A 10,000$
Revenue Operations Supervisor 3.4 $86.01 300$
Annual Totals: 423 40,200$
1 Small discrepancies in sums of values shown in tables are due to rounding. 2 Source: City of Santa Rosa Calculated Billable Rates Summary By Job Code, October 2020 3 Graphic design support costs based on previous contracts for drought outreach. $100 = Rebate enhancement
$50 = Internal labor cost per enhanced rebate
$150 = Total cost per enhanced rebate
Table 9 –Annual Internal Labor Costs for CII Turf Conversion Rebate Enhancement Program 1
Table 10 provides the total cost per square foot of CII turf converted for the enhanced rebate program.
Table 10 –Total Cost per Square Foot of CII Turf Conversion for Enhanced Rebate
4. WATER DEMAND OFFSET FEE CALCULATION
The WDO Fee amount was calculated based on the average cost associated with the three programs previously discussed. Table 11 summarizes the daily water savings expected from each approach as well as the cost per unit in order to calculate the cost per daily gallon of water saved.
Table 11 – Cost per Gallon Offset by Program
Position Title
Total Program
Annual Hours
Fully Loaded
Hourly Rates 2
Approx.
Cost
WUE Coordinator 90 $95.76 8,600$
WUE Technician 675 $56.26 38,000$
WUE Intern 850 $16.25 13,800$
Deputy Director of Water Resources 10 $128.44 1,300$
Marketing and Outreach Coordinator 100 $87.73 8,800$
Community Outreach Specialist 100 $59.36 5,900$
Graphic Design Support 3 N/A N/A 10,000$
Senior Administrative Assistant (Temp) 50 $66.31 3,300$ Annual Totals: 1875 89,700$
1 Small discrepancies in sums of values shown in tables are due to rounding. 2 Source: City of Santa Rosa Calculated Billable Rates Summary By Job Code, October 2020 3 Graphic design support costs based on previous contracts for drought outreach. $1.00 = Rebate enhancement
$0.11 = Internal labor cost per square foot rebated
$1.11 = Total cost per square foot rebated
Program
Daily Water
Savings (gal) Cost per Unit
Cost Per Daily
Gallon Saved
Bathroom Conversion Install (per home) 62.3 $773.00 $12.41 CII Turf Conversion (per sq. ft.) 0.08 $1.11 $13.07
High Efficiency Clothers Washer (per unit) 10.80 $150.00 $13.89
WDO Fees were calculated based on the cost of entirely offsetting the anticipated future use of water by new development through the implementation of the three programs previously described. For example, the analysis determined the number of toilet replacements it would take to offset the new water demands created by a new single-family home.
Table 12 summarizes the number of units that would need to be installed to offset the new water demand associated with each new type of development.
Table 12 – Number of Retrofits Required to Offset Demand per New Connection
Table 13 shows the required cost to offset different types of development with the various program approaches. Water use estimates for new development from Table 3 were used in the fee calculations. The average cost of the three programs (bathroom conversions , turf rebates, and washer rebates) was weighted based on the relative amount of water that is being saved by each program in a typical year.
Type of Development
Bathroom
Conversions
CII Turf
Conversions
(1,000 sq. ft.)
Washer
Retrofit
Thousand
Gallons per
Month
RESIDENTIAL (per housing unit) 1
Single Family Residential
Small Lot (6,000 sq. ft. and under) 2.5 1,837 14.4 4.7
Large/Medium Lot (over 6,000 sq. ft. to 1 acre) 3.5 2,602 20.5 6.6 Large Lot (over 1 acre) 6.4 4,721 37.1 12.0
Duplex and Triplex 2.1 1,542 12.1 3.9
Condos, Apartments and Mobile Homes
with separate irrigation 1.6 1,177 9.3 3.0
without separate irrigation 1.9 1,401 11.0 3.6
Eligible ADUs, SROs, Senior Housing, and Small,
High-Density Apartment Units 2 1.1 812 6.4 2.1
COMMERCIAL, INDUSTRIAL, INSTITUTIONAL, AND IRRIGATION
Per Thousand Gallons per Month 3 0.5 388.5 3.1 1.0
1 Residential data based on average water usage over the past 4 years (FY2018 through FY2021) 2 Applies only to ADUs that are subject to Demand Fees. "SROs" are single Room Occupancy.
Small, High-Density apartments include all apartments 750 square feet and smaller. 3 Water demand for these customers is based on the estimated annual water demand for each proposed project.
Table 13 –Calculation of Water Demand Offset Fee based on Weighted Average of Offset Costs
5. RECOMMENDED WATER DEMAND OFFSET FEE
It is recommended that the City establish the WDO Fee based on the costs and water savings associated with the average cost of known and successful programs, as presented herein.
The fee schedule presented in
Table 14 shows proposed fee amounts for any water shortage emergency that requires water allocations (rationing). If the City revises the shortage stage structure and/or the percentage offset required for one or more shortage levels, the WDO Fees shown in Table 14 should be prorated to determine the resulting fees.
Demand Offset Fee 1
Type of Development
Offset Cost
for Bathroom
Conversion
Offset Cost with
CII Turf Rebate
Offset Cost
with Washer
Rebate
Weighted
Average
Offset Costs
RESIDENTIAL (per housing unit)
Single Family Residential
Small Lot (6,000 sq. ft. and under) $1,936 $2,039 $2,167 $1,964 Large/Medium Lot (over 6,000 sq. ft. to 1 acre) $2,743 $2,888 $3,069 $2,782 Large Lot (over 1 acre) $4,976 $5,241 $5,569 $5,047
Duplex and Triplex $1,626 $1,712 $1,819 $1,649
Condos, Apartments and Mobile Homes
with separate irrigation $1,241 $1,307 $1,389 $1,259
without separate irrigation $1,477 $1,555 $1,653 $1,498 Eligible ADUs, SROs, Senior Housing, and Small,
High-Density Apartment Units 2 $856 $902 $958 $868
COMMERCIAL, INDUSTRIAL, INSTITUTIONAL AND IRRIGATION
Per Thousand Gallons per Month 3 $410 $431 $458 $415
1 WDO fee is assessed per housing unit for residential and per TGAL for CII accounts 2 Applies only to ADUs that are subject to Demand Fees. "SROs" are single Room Occupancy.
Small, High-Density apartments include all apartments 750 square feet and smaller. 3 Water demand for these customers is based on the estimated annual water demand for each proposed project.
Table 14 – Proposed Schedule of Water Demand Offset Fees
To account for inflation, it is recommended that the City adjust the WDO Fees on an annual basis at the beginning of the calendar year (January 1) starting in 2023, using the Engineering News Record’s 20-Cities CCI (20 -cities CCI). The 20 -cities CCI is a broadly accepted construction cost index that attempts to reflect the monthly changes in general construction and labor costs. Adjusting WDO Fees annually using this index helps the City maintain fees commensurate with inflationary cost changes between periodic comprehensive updates. The WDO Fees presented herein have been indexed to a 20-cities CCI value of 12,464 (August 2021).
It is also recommended that the City update WDO Fee calculations whenever feasible when updating the Water Shortage Plan, which is scheduled to occur every five years. Water usage behavior, program costs, and water savings can all evolve over time and such periodic updates will help ensure that the fee will continue to effectively offset the new water demand created by development.
Type of Development WDO Fee 1
RESIDENTIAL (per housing unit)
Single Family Residential
Small Lot (6,000 sq. ft. and under) $1,964
Large/Medium Lot (over 6,000 sq. ft. to 1 acre) $2,782
Large Lot (over 1 acre) $5,047
Duplex and Triplex $1,649
Condos, Apartments and Mobile Homes
with separate irrigation $1,259
without separate irrigation $1,498
Eligible ADUs, SROs, Senior Housing, and Small, High-Density Apartment Units 2 $868
COMMERCIAL, INDUSTRIAL, INSTITUTIONAL, AND IRRIGATION 1 Per Thousand Gallons per Month 3 $415
3 Applies only to ADUs that are subject to Demand Fees. "SROs" are single Room Occupancy. Small, High-Density apartments include all apartments 750 square feet and smaller.
3 Water demand for these customers is based on the estimated annual water demand for each proposed project.
1 WDO fee is assessed per housing unit for residential and per TGAL for CII accounts