Finance commission recommends $10 monthly PAS remediation fee to fund new Loveland water treatment project

The Finance Commission voted unanimously to recommend that the City Council consider a $10-per-billable-unit PAS (remediation and operation) fee on water utility bills beginning in June 2026 to help finance a proposed new water treatment plant.

Chris, a city staff presenter, told commissioners that AECOM’s basis-of-design (the 30% design) produced a wide cost range ($13.5 million–$22.5 million) and that the project team is currently centering estimates near $17 million. He said the city already received about $1.3 million in principal forgiveness that covered the design work and that the remaining construction funding gap is roughly $15.7 million, assuming the March 2028 contract/start requirement to meet the end-of-2029 completion timeline. "We have to start by March 2028," Chris said, describing the contractual timing and cash requirements.

Staff also presented modeled customer-fee options and operating-cost estimates. The basis-of-design includes an estimated average annual operation and maintenance cost of about $327,000; staff said current annual O&M spending is roughly $140,000–$150,000, implying an incremental operating cost near $180,000 driven largely by periodic replacement of granular activated carbon media.

The presentation outlined three funding scenarios: a best-case package that combines available grants (up to $4 million) and a $10 million 0% loan plus modest below-market borrowing; a mixed scenario with partial grant funding and below-market loans; and a worst-case scenario with no grant/0% loan availability that would require a roughly $15.75 million WSRLA (below-market) loan. Chris stressed uncertainty about future federal funds that underpin some state programs and said borrowing assumptions will shape fee recommendations.

Commissioners debated timing and messaging, prepayment and amortization mechanics, and rate-design questions (for example, how commercial customers are treated under a per-billable-unit model). Several members argued in favor of adopting a fee now to build reserves and ‘‘hedge’’ against the risk of losing grant or zero‑interest loan opportunities; others urged aggressive pursuit of grant funds first to reduce the long-term burden on ratepayers. After clarifying commercial-unit treatment and whether a sunset could be defined, the commission ultimately moved and approved a recommendation to council for a $10-per-unit monthly PAS remediation and operation fee.

The recommendation is advisory: the Finance Commission forwarded the fee proposal and supporting analysis to City Council for consideration and further action. The commission also directed staff to continue outreach and to return to council with additional details and any refinements to fee design and loan packaging.

The commission’s recommendation will be considered by city council; the vote at the commission was unanimous.