Erie council adopts water-allocation policy, shortens permit windows and stays in Northern supply project amid debate over costs

The Erie Town Council on May 26 adopted a new water-allocation policy and related code and fee changes intended to stretch limited municipal water while staff pursues additional supplies. Council also voted to remain a participant in the Northern Integrated Supply Project (NISP) interim agreement after hours of questions about cost and risk.

Planning and Development Director Sarah Narmela told the council the town currently has roughly 749 unallocated acre‑feet and proposed allocating 125 acre‑feet for the remainder of 2026. She said staff recommended distributing that allocation annually across contingency (10%), public projects (10%), economic development (15%) and residential development (65%) and noted no affordable‑housing allocation this year because no project is at a ready stage.

Narmela and Utilities Director Todd Fessenden laid out two emergency code changes to implement the policy immediately: amending Title 8 to remove the municipal preference for fee‑in‑lieu so developers may bring their own water, and amending Title 9 to shorten the timeline for building‑permit applications and initial active construction from 180 days to 90 days. Narmela said the fee‑in‑lieu payment will reserve a water allocation at application or at permit issuance, with refunds possible under a set form and a 5% administrative holdback; staff said those changes would be effective May 27, 2026.

Finance Director Sarah Hancock said the town had already budgeted for flattened building‑permit revenue and that the fee adjustment is intended to align the water dedication charge with the town’s current water acquisition costs. Utilities staff said the town spent about $7.2 million this year purchasing Colorado Big Thompson (CBT) shares to shore up supply, and that other potential supplies (Boulder Creek raw water, additional CBT, or treatment upgrades) are being evaluated.

The policy and code changes drew sustained council questions about budgetary trade‑offs, developer impacts and whether allowing developers to bring their own water would require more treatment capacity. Narmela and Fessenden said developers could bring water that the town can treat at the Lynn Morgan plant; water quality or treatment limits would determine feasibility for specific sources.

The water discussion led directly into a separate but related agenda item about the Northern Integrated Supply Project. Brad Wind, general manager at Northern Water, and town staff described NISP as a long‑running regional project that has recently shrunk (staff said participation and projected yield dropped from earlier plans and are now roughly 19,500 acre‑feet of firm annual yield). Staff and the water council warned that reduced participation raises per‑participant costs: recent capital estimates were given at about $85,000–$95,000 per acre‑foot before financing, with financing expected to increase lifetime costs.

Councilors pressed staff on how NISP debt service could affect current ratepayers. Finance Director Hancock said the town’s modeling shows that, under the payment schedule provided by Northern and the current participation level modeled at 4,500 shares, the water fund could be sustained for a limited forecast horizon but that the numbers are uncertain and will be refined in the 2026–27 budget and a rate refresh. Staff noted Erie has already invested roughly $29.1 million in NISP to date.

Council discussion highlighted that the next interim payment cycle could be materially larger: staff circulated a draft 2027 budget for the project of about $28 million across participants, and at the interim allocation on the table Erie’s modeled share was approximately 23%, which staff estimated would equate to about $6.44 million at that illustrative level.

After extended debate, the council took a roll‑call vote on the interim agreement. Council member Mortilero and Mayor Moore voted no; Council members Hoback, Mayor Pro Tem Bell, Pesa Morelli and Bear voted yes. The motion carried, keeping Erie in the NISP interim agreement for the near term.

What this means going forward: the council approved emergency ordinances and resolutions to implement the new allocation policy and fee schedule effective May 27 and kept Erie’s NISP participation in place while staff and Northern refine design, cost and financing details. Staff will continue modeling impacts on rates and will return to council as clearer figures emerge through the budget and consultant rate study.

Council members and staff stressed the decision reflected a trade‑off between securing diversified future supply and the risk that escalating project costs could increase debt service and, ultimately, water rates. Staff repeatedly said they will present updated debt service scenarios and rate modeling as soon as Northern provides more definitive cost and payment information.