The wastewater treatment plant that serves a large swath of the south metro area needs millions of dollars in upgrades to meet tightening state water quality standards, but the two cities responsible for paying are on vastly different financial footings.
Littleton and Englewood jointly own South Platte Water Renewal Partners, formerly known as the Littleton/Englewood Wastewater Treatment Plant. The sprawling sewage plant beside the South Platte River near Dartmouth Avenue serves 300,000 people over 108 square miles. Littleton and Englewood split up the job of collecting fees from users in 19 “connector districts,” including areas like Sheridan, Greenwood Village and Bow Mar, and stretching into Jefferson and Douglas counties. The connector districts all impose their own fees on top of the base rate to pay for maintenance of their own sewer lines.
The plant needs $58 million in upgrades over the next five years, partly to comply with state laws passed in recent years that will require a reduction in phosphorous and nitrogen flowing from the treatment facility into the river, plant director Pieter Van Ry told the two cities' councils during a joint meeting on July 25. The funds will also pay for a variety of other physical upgrades at the plant, such as to electrical systems, buildings, disinfection systems, and revamping a system to thicken solid waste.
Spending on physical upgrades to the plant has been climbing in recent years, budgets show, as the plant addresses deferred maintenance costs and works to meet a variety of stricter state and federal laws governing water quality.
By the end of this year, Littleton and Englewood will have paid off the $8 million cost of the plant's biogas project, Van Ry said, which will capture methane gas and sell it to Xcel Energy as part of a federal program. Current projections predict that the biogas project will pay for itself in four to seven years, at which point plant officials expect it will begin turning a profit. The equipment to capture methane, a greenhouse gas which the plant currently burns off, is expected to become functional in September.
While Littleton is sitting on more than $20 million in reserves that it plans to use to help foot the bill for the upcoming physical upgrades including the water-quality mandates, Englewood has no reserves in its sewer fund. Littleton will likely use up its reserves to pay for the upgrades, officials said. Both cities are undertaking rate studies to determine how to charge customers going forward, and while Littleton is anticipating sewer rate increases of 3% to 4% per year for the next five years to make up the difference not covered by its reserves, Englewood isn't yet sure what it will take to cover its share of the bill.
“Rates are going to have to go up, but by how much I have no idea,” Englewood Mayor Linda Olson said.
Take me to the river
The plant is tasked with complying with two mandates set by the Colorado Water Quality Control Division, which regulates wastewater treatment plants, Van Ry told the councils.
Regulations 85 and 31 both require reductions in the amounts of nitrogen and phosphorous that flow out of the plant and into the South Platte River, said Blair Corning, the plant's deputy director of environmental programs.
Regulation 85 requires the plant to cut its nitrogen discharge to 15 milligrams per liter (mg/l) or below by the year 2023, Corning said, while phosphorous discharge must be reduced to 1 mg/l or below by 2023.
Currently, the plant faces nitrogen limits that fluctuate depending on the flow in the river. The mg/l limit was in the low 40s toward the end of July, with the plant's discharge in the neighborhood of 20 mg/l. The plant currently has no limit on phosphorous discharge, with current discharges at roughly 3 mg/l.
Regulation 31 is even stricter than 85, requiring nitrogen to be cut to 2 mg/l or below, and phosphorous to 0.17 mg/l or below, by the year 2032, Corning said.
Regulation 31, however, has a built-in incentive program, which allows the plant to delay implementation by voluntarily stepping down discharge amounts in the meantime. If the plant hits a series of targets over the next several years, it can push back Regulation 31 compliance well into the 2040s.
Meeting the new standards will require a variety of new equipment and processes, Van Ry said, including injectors that will add chemicals to the treatment process to capture nitrogen and phosphorous.
Reducing phosphorous and nitrogen is important to prevent harmful algae blooms downstream, said Nicole Rowan, manager of the Clean Water Program for the Colorado Water Quality Control Division. Blooms can harm aquatic life by using up oxygen and can cause foul tastes and odors in drinking water for downstream cities.
The water-quality mandates have been in the works for years, Rowan said, and South Platte Water Renewal Partners has been an active and engaged participant in the public process to develop the regulations.
“This is something that nearly every wastewater facility in every state is working on right now,” Rowan said.
Paying for it
Littleton and Englewood split the cost of operating the sewage plant, with funds coming from sewer bills and "tap fees" which are charged on new sewer lines. The funds are drawn from the cities and the numerous connector districts, meaning residents of Littleton, with a population of roughly 47,000, and Englewood, with a population of roughly 35,000, actually represent the minority of rate payers. Both Littleton and Englewood have their own sewer budgets, which are enterprise funds, meaning they are funded solely by users and are exempt from revenue caps imposed on other funds by the Taxpayer's Bill of Rights.
Littleton and Englewood are each contractually obligated to pay half the cost of capital improvements at the plant.
Littleton managed to save up more than $20 million in reserves largely thanks to its tap fees, said City Manager Mark Relph.
“The financial status of our sewer fund is in great shape,” Relph said. “We've been anticipating this, and we're ready to meet the challenge.”
Littleton will likely use up most of its sewer reserves to pay for the capital projects, said Littleton finance director Tiffany Hooten, and its connector districts will likely see incremental sewer bill increases of 3% to 4% per year. The city may have to incur debt once the reserves are used up, she said.
“It really doesn't concern me,” Hooten said. “We're in the best position we could be to cash-fund these projects.”
Englewood, however, has no reserves, and has just half a million dollars in available funds in its 2019 sewer budget.
“I don't think we've kept up with the pace of costs,” Olson, the mayor, said. “We've been averse to raising fees on anything, and then we're stuck. It's not the way to do it when there are rising costs.”
Littleton's tap fees are far higher than Englewood's, starting at $5,000 and ranging up to more than $3 million, according to the city's website. Comparable tap fees in Englewood start at $1,200 and range up to $48,000. Englewood also hasn't had as much development as Littleton in recent years, Olson said.
What the capital projects mean for rate payers isn't yet known, Olson said, and for the time being, they'll have to wait for the outcome of Englewood's rate study, expected to be complete by summer 2020.
“Rates will be going up,” Olson said. “We've tried to raise rates incrementally in the past. I hope it's not a spike.”
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