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Utilities

Posted on: September 27, 2020

Changes in Utilities Development Impact Fees Benefit City Growth

LCU DIF_TABLE

By Cassie McClure

At the Las Cruces City Council Work Session on Sept. 14, Council approved the reduction of the water development impact fees (DIF) and the increase of the wastewater DIF. While the allocation of who pays those fees will be further discussed by City Council, approving the payment of those fees allows the City of Las Cruces (City) to expand capacity in its utilities system to meet the expected growth for water and wastewater capacity as the city grows.

Implemented by City Council in 1995, DIF are a one-time assessment when new residential customers and commercial development connect water and wastewater service. Pursuant to the New Mexico Development Fee Act of 1993, Las Cruces Utilities has an obligation to reassess the DIF every five years.

The process for these rates changes came from consultant TischlerBise, of Maryland, who was contracted in February 2019 to review and provide an update to the City’s water and wastewater DIF. In its study, TischlerBise took into consideration water and wastewater usage, capital projects, the most recent water and wastewater rate reviews, growth projections, land use assumptions, and outstanding debt.

Currently, fees for commercial projects are paid by the builder or developer. For single-family residential homes, the DIF is divided by the developer, the end user of the property -  typically the homeowner, and the rate base, which is everyone who has a water or wastewater account. The residential allocation of payment was determined by City Council on June 30, 1995,through Resolution 95-368. For both water and wastewater, the developer pays 50 percent. For the homeowner, the portion for water is 28 percent and for wastewater it is 20 percent. For the rate base, it’s 22 percent for water and 30 percent for wastewater.

The draft Water and Wastewater DIF update was presented to the Capital Improvements Advisory Committee (CIAC) on October 2019. Then, on December 2019, the CIAC approved the update. In January 2020, the fee update was reviewed by the Las Cruces Utilities (LCU) Board of Commissioners during a Work Session.

Interim LCU Director Delilah Walsh said the fee finances new capacity for growth. “The charge to customers allows us to expand the system to the benefit of the entire city,” Walsh said. “Many times, the pump stations that might be in your neighborhood aren’t what supplies your neighborhood due to different water pressures zone. When we expand our system – with DIF – it allows us to build new pipes that allow for transport to other areas, we increase the strength of our system, especially if it allows Utilities to build support facilities and improve fire flow.”

She explained as well that it allows redundancy in the system. “If there is a break in a large main water line and we have a new subdivision, we can divert water from newer infrastructure to older areas of the City; it allows us to maintain service to a whole new set of customers who may have been without service otherwise,” Walsh said. 

Las Cruces Utilities can be reached at 575/528-3500 from 8 a.m. to 5 p.m. Monday through Friday. LCU provides services to approximately 100,000 Las Cruces residents and businesses.

PHOTO CAPTION: 

Here is a table of the current and proposed water and wastewater impact fees.

Note: This story was recently published in the Las Cruces Sun-News.

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