Study/Work Session
September 21, 2026
Transcript
Castle Pines North Metropolitan District
7404 Yorkshire Drive, Castle Pines, CO 80108
Regular Board Meeting
September 21, 2026 5:30pm
I. Call Work Session to order
A. Roll call
A work session is held for discussion and information only, so no official Board action is taken and a quorum is not required
II. Finance Items
A. Review monthly claims for payments made from August 13, 2026 to September 16, 2026
CPNMD Board Work Session Claims Packet 09212026(PDF, opens in new tab)
III. Legal Items
A. Review: Hidden Pointe Mill Levy Agreement
Mill Levy Equivalent Payment Agreement 4908-8674-0431 v.2(PDF, opens in new tab)
IV. District Manager Items
A. Expenditure Request: Meter Radios
Meter Radio Expense Request(PDF, opens in new tab)
V. Adjourn
Board President Jason Blankaert:
Good evening, and welcome to the Castle Pines North Metropolitan District Board work session for September 21st, 2026. We will begin approximately 530pm, and we'll start with roll call.
Board Member Director James Mulvey:
Jim. Present. No conflict.
Board Member Director Tera Radloff:
Tera. Present. No conflict.
Board Member Director Jana Krell:
Jana. Present.
Jason:
Jason. Present. No conflicts. We're missing Leah tonight. We'll close item number one and move to number two, which is finance items with a review of monthly claims for payments made from August 13th, 2026 to September 16th, 2026.
Describer:
On screen.
TO: Board of Directors - Castle Pines North Metropolitan District
FROM: Eric Harris, Elevated Clarity (EC)
DATE: September 21, 2026
RE: Work Session Report - September 2026
Claims Submitted for Review
District Finance is submitting $3,090,455.49 in Payment Claims for review at the work session, consisting of $2,793,599.84 in checks and $296,855.65 in electronic payments.
All the invoices included in this month's Payment Claims Presently for Review were reviewed and evaluated for compliance with the Financial Controls Policy/Matrix.
Notable payment claims related to capital projects include the following:
-City of Castle Pines - Pay App #1 - Monarch Project: $577,590.64
-Myers & Sons Construction LLC - Pay App #11 - Filter Beds Rehabilitation Project: $206,901.00
-T Lowell Construction Inc - Pay App #6 - Lift Station Upgrades Project: $1.054.969.87
Financial Overview
A comprehensive financial report will be provided at the July Board Meeting, which will include an analysis of financial activity through July 31, 2026.
2027 Budget Process
District staff and consultants have begun preliminary work on the 2027 Proposed Budget. The process involves the following steps:
1. Review assumptions and prior-year actuals
District staff and consultants review the current year's actual and projected year-end revenues/expenditures, along with key assumptions (assessed valuation trends, growth, inflation, interest rates, tap fees, service demand) that will drive next year's numbers.
2. Project revenues
Estimate property tax revenue using the county assessor's preliminary assessed valuation and the district's mill levy, plus specific ownership tax, fees, charges, grants, and any TABOR-limited revenue sources, fund by fund.
3. Estimate expenditures and capital needs
Departments or service areas submit operating expenditure requests; layering in debt service, reserve requirements, and any capital improvement plan items for the coming year.
Financial Director Eric Harris:
Good evening. Board. On page two of your packet you have our work session report noting our claims on this is a $3,090,455.49. As mentioned, this comprises of claims submitted last month and electronic payments. A fairly large amount of claims on here, mainly related to all the construction projects that we have right now. We're currently in budget with the approved contract amendments that have been approved by this board right now.
So just want to make that point. Some high dollar items are noted on this report, which are, you know, with the city of Castle Pines for our cost share with them as well. Byers and Sons and T. Lowell Construction. So those are the larger ones. And then we of course have our electronic payments, which we have set up as our firm commitments and payroll and utilities and some of those other items as well.
One important item of note is we are working through the implementation for the expense management module. So we're going to layer that in with the financial controls policy. So I'm assuming Tera or someone else we will be routing those electronically. We'll have some. We'll take a five minute train at some point by the end of the year so that you can get notification and just click through those electronically as those go out the door.
So we're implementing those approval authorities within the software. So we have that in the future. And you'll be able to see a PDF of the invoice and everything after that's already been approved by Me and staff. So that's just continual enhancements of what we're doing with FE and XT, which is the accounting system. Very quickly. Before I ask if there's any questions, we are in the middle of budget season right now.
We had a staff review budget today. We got some revisions, and we're working through that right now. We are offering that forward to next month's work session. As a reminder, we have to submit a draft budget by October 15th, so please expect that. I think it's that Thursday that you'll receive that in your inbox that will be included in next month's work session packet as well.
We will work through that at that time. So it's everything from updated capital, all the numbers that I expected. So we're working through all that and we'll have a memo to accompany what changed year over year, if that makes sense. So that's an explanation of budget process. We will bring that back and potentially have we can have another, you know, session on that at the the next October board meeting, the November work session, so that we work towards approving that budget in the board meeting before Thanksgiving, which will be that Monday.
So that's our time.
Tera:
Remind me because you were in place we went through this with you last year?
Eric:
Correct. Correct. So we did last year because we had so many changes to the financial statements. We did have a preliminary draft available at this work session last year. We did not do that this year. So we're just bringing that straight forward to you in October.
So that's what we have right now. So pretty good conversations right now. Some updates everything from the distribution. Capital projects that we potentially discussed in the timing related to that. So that's one facet as well. Another item that we're working on with Nathan and Rene is conversations about changes to the rate structure, bringing the stakeholder group that has been delegated by this board.
So I think that's Jen and Jana. Expect to have a meeting sometime in the next couple of weeks. Related to that, everything regarding, you know, conservation, water budgets and things of that nature, more detailed conversations. So that's to be, it's forthcoming. With that talked about our process, upcoming schedule. Are there any questions? ....
Jason:
Not hearing anything. So thank you Eric for your presentation.
Eric:
Perfect. Thank you.
Jason:
We will go ahead and close that item to the finance items. And we'll move on to item three with Paul. Paul?
Describer:
On screen. MEMORANDUM
TO: Castle Pines North Metropolitan District
FROM: Seter, Vander Wall & Mielke, P.C.; Paul Polito, Esq.
DATE: September 25, 2026
RE: Legal Status Report for the September 28, 2026 Board Meeting
MATTERS IN PROGRESS
MATTER: WELL A-2 – LAYNE CHRISTENSEN COMPANY PROPOSAL AND
ADDENDUM
Status: Well A-2 experienced a further failure of its pumping equipment in August 2026, the latest in a series of seal shaft failures at that well since 2023. Layne Christensen Company, which installed the equipment, submitted a proposal dated August 25, 2026 to pull the well, complete a video survey of the well, and ship the motor, seal, and pump to the equipment manufacturer (Baker Hughes) for disassembly and inspection, for a lump sum price of $70,000, with Layne proposing to absorb one-
half of that amount. Layne has confirmed in writing that its warranty covers workmanship and material defects for one year following installation and does not cover failures caused by well conditions or operating conditions.
Counsel prepared an Addendum to the proposal that (i) provides for the District to select the third-party inspector, who will participate in the manufacturer’s
disassembly and testing rather than merely observe, with no destructive testing to be performed without the District’s consent; (ii) confirms that the removed
equipment remains the District’s property and will be returned to the District following the inspection, notwithstanding Layne’s standard terms and conditions;
(iii) memorializes the warranty framework described above and treats the equal division of the cost as an interim allocation subject to reallocation once the cause
of the failure is determined, with the equal division standing if no determination is reached; and (iv) preserves both parties’ rights with respect to prior work at the well. Layne’s legal department returned comments on September 15, 2026, and counsel provided a responsive redline on September 23, 2026. The parties are finalizing the Addendum so that the well can be pulled. Kennedy Jenks is evaluating the well and operating conditions in parallel with the manufacturer’s
inspection.
Legal Counsel Paul Polito, Esq.:
Hi everybody. And the legal status report is on page seven of the packet. I'm going to be discussing the Hidden Point Mill Levy Equivalent Payment agreement. But if there's any other questions at this point about the legal status report aside from that agreement, happy to answer that.
Describer:
On screen.
MILL LEVY EQUIVALENT PAYMENT AGREEMENT
This Mill Levy Equivalent Payment Agreement ("Agreement") is entered into between
Hidden Pointe Metropolitan District ("HPMD") and Castle Pines North Metropolitan District ("CPNMD"). HPMD and CPNMD are referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
A. HPMD and CPNMD, acting by and through its Water Activity Enterprise and its Wastewater Activity Enterprise, are parties to that certain Inclusion Agreement dated April 2, 2026, attached hereto as Exhibit A (the "Inclusion Agreement"), which provides for the inclusion of the HPMD Boundary within the CPNMD Boundary, subject to approval by the eligible electors within the HPMD Boundary at an election held in the manner described in §§ 32-1-401 et seg.. C.R.S. Capitalized terms used but not defined in this Agreement have the meanings given to them in the Inclusion Agreement.
Paul:
Okay. Or just get right into this. So on page 12 is the mill levy payment agreement. Just as a, as a little bit of background. So district is including Hidden Point metro district. The election is in November at which the Hidden Point electorate, will receive mail-in ballot and will vote on this. There is the wrinkle in that.
Well, under the agreement, the currently effective 25% surcharge that Hidden Point Residents pay on its water rates will cease. That's part of the inclusion. However, the district will not be able to collect a mill levy payment from the Hidden Point residents within that district next year. And this is a quirk in Colorado law. If you if you don't include the district by May 1st, you can't collect taxes for the following year.
So because the elections in November were well beyond the May 1st deadline. So this agreement is a way to close that gap to get the equivalent of what the district would get under those mill levy payments from the residents of Hidden Point. I've discussed this with the president, hidden point, he's very open to this and was happy to agree to it.
I'm presenting this to you now in a draft form, before I've sent a hidden point just to get any notes, comments, whatnot. I'll be sending it to them tomorrow. And we'll also be collecting, some specific ownership taxes as well. Thank you Eric for highlighting that. We wanted to well, I wanted to give him point flexibility and how to pay this so it's not tied to them collecting a mill levy from their residents.
It doesn't it doesn't force them to collect any mill levy above what they would be doing now. They can pay it from their bank account. They can pay it however they'd like to. So it gives them that flexibility. It really makes no difference to the district.
It's conditioned on monthly payments, but they can prepay all of it at one time. That's essentially what this agreement does. Does anybody have any questions about?
Eric:
If I can add just a few more things? We, we discussed the staff with CLA, which is the management company for Hidden Point Metro. These are pretty typical. Some of these kind of revenue conveyance things that happen between metro districts. IGA's.
These happen all the time. One item and they can implement that as well. We did have, if you go back to the details associated with the inclusion agreement, there's this, we referred to that this was forthcoming at some point in the future as far as the mechanism to true up any sort of loss of tax revenue associated with that.
So there's a there's a reference to it. This is just the completion of that agreement is out there.
Paul:
Yeah, yeah. Thank you. Yeah. I appreciate that.
Tera:
Two questions I am curious about the specific ownership tax on vehicles because I think that's remitted to the city.
Eric:
We get it as well as the district. So it's basically divvied up by the county treasurer and aggregate of a portion by tax base in Mill Levy assessed, if that makes sense.
So if there's not a mill levy, if we would have levied three and a half mills, we we would just be remitting the a portion of that would be received, if that makes sense. So it's just the combination at that point. So they would continue to levy it and then they'll just remit this the because it's based on the mills that are levy.
Tera:
So the county room to us.
Eric:
Correct with property taxes okay.
Tera:
I'm glad I got the lawyer and the accounting here together.
Eric:
So it's very interesting if you have different counties throughout Colorado, the type of dollar amount, that's what they did, if that makes sense.
Tera:
No, I just know that we buy a lot of vehicles.
Eric:
Yes, yes, yes.
Tera:
I've seen that before.
And then the only other thing I think was, it talks about and it makes sense for this agreement and maybe it's in the inclusion agreement, which talks a lot about the hidden point metro district boundaries, which will cease to exist if they are included. So is that any or does that because I know there was something about upon final payment, something happens and I didn't know if we needed expressly state that there will be no more hidden district boundaries.
Eric:
Well this doesn't. Oh, okay. The subsection really hidden point will continue to exist.
They will have if they pull their overlaying property tax statement. So you Hidden Point Metro and Castle Pines North Metro. There'll be a separate process for them to dissolve. Oh, so this is just including if that makes sense. So it's the same in the way that Lagae, the Lagae filing number one I believe they are in North Pines Vista metro and Castle Metropolitan District tax Bill.
So they actually have an additional 60 odd mills for their mill levy for that new development that's occurred. So same thing here. I don't think they're levy. It's to the discretion of the the board at hidden point whether or not they levy into levy. I think everyone's on the same page here. They're not going to levy the mill Levy.
So hopefully that they work towards dissolving something.
Tera:
So that absolutely makes sense. And thanks for reminding me about have to dissolve once you include the you have to correct. So yeah okay. Great.
James:
Mostly answer my question. Does the Metro have any other duties?
Paul:
I do think they have ... and parks.
Eric:
Okay. Yeah. So they would have to close that up. And then I think the intent is to dissolve based on the conversation I had with their president ...
It is their intent to eventually dissolve. I don't know if it will happen next to.
James:
Will that be transferred to the city property at that point?
Eric:
Or HOA.
District Manager Nathan Travis:
They've they've had that. Yeah. So the way that so they've got they do have there's like two larger stormwater ponds and stormwater infrastructure. They also have some internal trails as I understand it. Those are currently owned and operated by the HOA.
And then the metro district makes a payment to the HOA. So they'll be recovering those costs through probably some marginal increase their HOA dues. I don't know how far it went. At one point the HOA and Hidden Point Metro district were talking to the city about doing a similar transfer, where they'd give them some of the stormwater responsibility, and then maybe some of the trails. I have no idea what the status of that is, or if it went anywhere.
James:
If I didn't understand if we're going to with this before going to have any additional responsibilities in .......
Eric:
No, we currently own all the facilities in the district.
James:
So that was really, you know, the question that Tera asked was the same question I had. And then I just want to follow up with not sure what else we might have .....
Paul:
Any other questions on the agreement?
Like I said, I'll be sending it over to the representatives tomorrow, so hopefully I have an update on Monday, if not the next week.
Jason:
Thanks. All right. Thank you Paul. We will go ahead and close out. Item number three, the legal items, and we'll move on to item number for the district manager items.
Describer:
On screen. Memorandum
From: Nathan J. Travis
To: CPNMD Board of Directors
Date: September 21, 2026
Re: Expenditure Approval Request, Meter Radio Replacement
Vendor: Core & Main
Contract Amount: $140,940.00
Need and Purpose of Expenditure
The District has budgeted funding in 2026 for meter and meter-radio replacement. As part of that effort, I am requesting approval to purchase 783 Sensus M2 meter
radios from Core & Main at $180 each, for a total cost of $140,940.
This purchase is intended to serve both an immediate need and as the first phase of a larger meter replacement and Advanced Metering Infrastructure (AMI) program.
While the radio replacement is a budgeted expense for this year, the larger meter replacement program will be included in the 2027 budget.
Replacing the radios now allows us to begin upgrading our existing meter infrastructure while moving toward a system capable of providing more detailed and timely water-use information. Ultimately, this approach is intended to position the District to have customer water-usage portals available in 2028, allowing customers to monitor their own water consumption while improving the information available to District staff.
Alternative Means
The primary alternative would be to defer the radio replacements and complete the radio, meter, and AMI upgrades together as one larger project. Because funding for radio replacement is already included in the current-year budget, staff does not recommend delaying this portion of the work.
We also evaluated NEXT meters as an alternative to continuing with the Sensus platform. Based on the information and pricing reviewed by staff, a broader
conversion utilizing NEXT meters was projected to cost closer to $4 million. Given the significantly higher anticipated cost, staff determined that this was not the
preferred path forward.
Nathan:
So what I have for the board tonight is an expenditure request for water meter radios.
You guys will remember we had a representative from next meters come and visit the board several months back to give us a presentation. I still really, really enjoy that system. The biggest issue there is that the full implementation is somewhere between three and a half and $4 million. We were waiting to hear back from Korn Main, who is the vendor for census meters that we use on their total pricing.
We don't have that yet. So that the ultimate goal getting from where we are now to residents with fully realized portals that let them track their usage and give leak alerts, but we're looking at like a total cost of somewhere around 350 and $400,000. This request is just inclusive of $140,000 to purchase 783 meter radios.
So these would replace existing radios that we have. They're all older technology going back like pre 2010. With all of these in place, we'd be able to go ahead and take that next step which is fixed base fully AMR. So we'd be able to read all of the meters remotely. And then the subsequent step following that would be to replace the remaining like 800 or so meters we have that don't match with the smart technology.
We need all of the meters replaced to get the full use of the customer portal. We can start that like the AMR process and to get some level of customer portal in place with just the remaining of the radios replaced. So unlike next meters where it's the meter and the radio is all in one unit census has a separate meter and radio project products are going to upgrade the meters first.
Total request for that is 140 $140,940. And that was budgeted for this year.
Jason:
What was the budget?
Nathan:
Budget amount was 160 something. 5160.
Eric:
So it's a little it's a little convoluted because there's three different components in our capital program, if I may, before we get into this. So there's the meter replacements. There's the meteor meter radio equipment.
Then there's the fixed base meter reading system. Between all of that, we had $1.24 million in our capital plan over the next 3 to 4 years. So it's a .... 1.24 million.
Jason:
And you think it's going to be closer to 3 or 4 million?
Nathan:
Yeah. Half at most. Okay.
Jana:
And I don't remember I said meeting before, but I don't remember a presentation from a meter per say.
I remember discussing the meters. But do you guys remember that?
Nathan:
Yeah. His name was Eric.
Jason:
He didn't have a lot of information.
Nathan:
Yeah, yeah, it was kind of a it was more of a sales pitch.
JanaL
Probably. And we're not talking about the guy that wanted to do the locks in the car key card.
Eric:
This was like in March. I want to say. What was that final amount you said?
James
I remember getting ...
Nathan:
The final amount for like the project on this one. Including this upper end, half a million, probably closer to 350.
Jana:
So you like this product?
Nathan:
It's the one we currently have. Oh yeah. So this this is continuing with the current vendor that we've used historically, updating our remaining remaining meters and then using their product to go live.
The for three and a half to 4 million was a wholesale vendor change. So we would have to change every meter in the district.
Jana:
I don't know if I totally follow, but Eric, you're saying some people need new meters, some people need new meter radios. Correct. And what was the third one?
Eric:
Fixed base meter reading system.
Jana:
So what is that third one.
Nathan:
So yeah. So right now we have a vehicle that drives around. We load up upload around download route. The fixed base system is permanently installed antennas at various locations around the district. We're looking between 3 or 4 of them that are always online. And so then those pull those pull meters four times a day. So that's what gets us that like running read.
And then we can also like automatically pull a meter. So it's it's less staff time gives us instant access to reading meters. Finals become a lot more simple when people call in for selling their homes.
Tera:
Right now somebody has to drive,
Nathan:
Has to physically drive around to get the meters reads every month. And then we only have that one data point.
We don't get the daily usage to track.
Eric:
So we get budget savings.
Jason:
To upgrade our current system. It's going to be $1.2 million. This is just the first step.
Nathan:
No to upgrade our full system. We'll get to that like under $500,000. The 1.2 is projected based on like the first step of the next meter system that I'm not recommending we continue with.
Eric:
So yeah, budget savings is what we're saying.
Tera:
Overall is it three or is it one?
Nathan:
Overall. Yeah. Overall it'll be we're still waiting on the final survey to tell us yeah this year this year, next year and 2028 overall it'll be like between 350 and 450.
Jana:
.... into the next amount that's written into this. About 333 to 31.
Yeah. So can you explain what this 3 to 3 is for?
Nathan:
Right. And so this number, this is the one that'll change a little bit. But so the 140 covers just the radio replacements. The remainder covers the rest of the physical meters that need to get changed out. And the implementation of the fixed base reading system and do that also.
That number also includes ten years of service on that product or on the fixed base stations.
James:
What does that include, like software updates,
Nathan:
Software updates, equipment replacements, maintenance, repair.
James:
Okay, a leased system, or we buy that equipment.
Nathan:
We're buying it. Yeah, okay.
Eric:
For the telecom. Right.
Nathan:
This one is it's not this one's not cellular. We'll have a couple cellular.
But yeah. So it's..
Jana:
Are you coming back to the 3D three is 2026. So like the three 2027 it will be. Yeah okay.
James:
Just in round numbers I saw 783. And then you said like 800. How many total meters in the district.
Nathan:
4041 I know it's not a round number but yeah. So 4041 total meters. So we have 4040. Yes. We have 4000 total meters that exist.
Of those 800 have radios that we need to replace roughly 800 kind of that same number, about 800 of them also have meters that we need to replace. The other ones are all new meters, new radios. And then the fixed based system is the final layer on top of them.
Tera:
And then how does all that translate to me being able to look at my meter?
Will I have an app.
Nathan:
Yeah. So the their, their general recommendation is that you get the fixed base system in place and run it for approximately a year just to make sure you've got any bugs, make sure you've got the proper coverage, and then that system reads your meter four times a day. And then there's an we have a lot of options at that point.
So there's a bunch of different software packages. We packages we can look at for that user interface that'll look at those readings and kind of like talk to our billing system. The one that Sensus has is honestly kind of junky and no one really likes it. So there's a couple other ones that they recommend. But so the 2027 or 2028 step would be to implement that interface.
And that's our fourth package, which is not included in this ..... And so then, you know, we associate those meter readings with your account that gets tied to our billing system. We can even tie that into our GIS so that we can check this stuff out in the field. But then yeah, as a resident, you could look in and you'd see how much water you used up to four times a day.
So you can see it, a 24 hour view, and then it'll start to track all kinds of things like depending on the software package out of it will generate. Yeah, we can generate user alerts.
Tera:
Instead of catching it in your monthly. Yeah.
Jana:
Is any of this cost passed on to the user at all?
Nathan:
I mean, ultimately all of it is in
Jana:
I mean like actual line item of ...
Nathan:
No it'll be in rates and fees.
It was being inclusive of the bill.
Jana:
Do you foresee this driving I mean it's kick the can down the road and next year you're free to just what we're going to continue to have the.
Nathan:
Yeah I mean we'll have continual rate adjustments year over year.
Jana:
I mean that's inevitable. I guess I'm just trying to think how will this impact that the next time we do a rate analysis.
Nathan:
Compared to our like capital outlays and expenditures?
It's relatively small. So it shouldn't have to larger than overall at the day.
Eric:
We do know that Nathan has conveyed or we've talked about known meter issues throughout the district that are to this will resolve. Okay.
Tera:
Sounds like a good investment. Yes. Sorry.
Nathan:
That is all I had.
Jason:
Any other questions?
James:
What’s the latest and greatest water line break?
Nathan:
Oh which one was the last one?
Rene:
The one by my house?
Nathan:
The one across the street from your house?
Rene:
Yeah. Wembley place.
Jana:
Did you do it? Yeah.
James:
There's was like some pictures.
Nathan:
Oh, no. What did you. Yeah. Rene sent the one at the inside. Yeah. We have a little scope cam.....
Yeah, yeah, that's a pretty common pipe condition that we're finding through that entire area. Over the next couple of weeks, we're going to be digging holes to kind of do some spot checks on pipe. We just got a, Rene and I were just calibrating it earlier today, but we just got a little device that tells us wall thickness for ductile iron pipe.
So we're going to pop some holes and take that. That'll be kind of like the at least for this like upcoming condition assessment report. That'll be kind of the fast the first piece or the last piece. We need a place to get that. This will have this will have some budget impact. Overall we're looking at what that ultimately pipe replacement program looks like with the frequency of breaks that we're having.
Jason:
That's all over here.
Nathan:
Yeah, yeah. So we're looking at recommending a kind of just one large project beginning with on rather than.
Tera:
The original neighborhood.
Eric:
We were talking about earlier.
Nathan:
It's about pre 1994, 1994 and before about 90% of it that needs to be replaced.
James:
At this point people probably I mean, I don't know, but I can imagine they're gettin frustrated about.
Nathan:
Yeah. Yeah. We're starting to get some and it's we've had some pop up on next door, a few phone calls.
It's more mixed than I would expect. So there's a lot of like the initial post, a couple of men pull back, you'll see an initial post that's like, hey, there's this terrible street repair. Like, why are there so many? And then it's pretty mixed, kind of following that with half people being like, yeah, they're doing a great job, much better than they have.
You have to break things to fix things. Then the other half we're like, oh, there forever, idiots. So, they're they're very they're kind of mixed. But I think we're gonna I mean, with the break frequency that we've got over there, we got some issues. I think we'll probably scale back, especially once we have like a replacement program in, kind of defined and planned.
I think we'll probably scale back maintenance in those areas to, to kind of like reduce these types of breaks, knowing that would like to replace it in a year or two anyway.
Tera:
And when you say budget impact, do you mean 2026?
Nathan:
And beyond? Yeah. So we'd look we'd like to do the design and well, not 2026. So we'd like to design 2027 if it's one project and aim for bidding construction 2028, it's probably about a 12 month plus ish construction project.
My like very, very back of the napkin wag is somewhere around like $10 million. So I want to also look at potential financing options to spread that one out.
Eric:
So that's the so please expect that and think about that over the next couple of weeks as we kind of approach budget season because we're in, the first part of that is a budget allowance potentially in 2027, like Nathan mentioned, but we're going to be looking at what makes sense from feasibility standpoint, what a potential market rate is, what's the debt service associated with this as well?
It may not be. If that timeline plays out, it might not be until 2028 that we wouldn't have to seek a date backed covenant for financing, similar to what we have with the Chase loan. We may have to potentially look at refunding and reissuing some component of that just because of how the document, how was structured back in 2017, I believe it was this year.
Or we just pay it off and just the person got involved as well. We have no debt authorization currently from a property tax standpoint. So if we were to finance it without going to the voters or having a ballot question would be a rate of it, that makes sense.
Tera:
Well, I mean, that's the oldest part of the system.
It can't handle it.
Eric:
In my due to the just by the sheer cost of it. I would recommend if this is something that does need to happen, that would be the way to go.
Jana:
What is a rate?
Eric:
Rate covenant is essentially enterprise debt that's backed by your, utility bills. Yeah. That's it, not property taxes. And so essentially it's not a property tax.
It's it's called just a pledge by your rates. So this district in this instance would be required to raise rates sufficiently enough to pay for that loan. It's slightly more expensive debt than property tax. Not not too much. I can't quantify the basis points, but, it's pretty affordable way to finance enterprising movements.
Tera:
I think the issue in the past hasn't been nobody wants to see rates go up or whatever.
But I think issue of the past is that there hasn't any transparency. And whatever we do, we certainly have a, you know, a great communications to everything. Okay. It's really about.
Nathan:
Yeah. And a heavy heavy cost offset for this one. So one of the things that I guess I was probably like if I sat down and thought about it, I would have realized.
But really seeing it on paper is like when we plotted all of our breaks that we've had over the last 15 years, with the exception of like minor curb stop repairs or in the case of like some expensive curb stop repairs, with the exception of like some minor repairs, minor valve repairs, every large water line break we have had has either been on one of the transmission mains that we just finished replacing, or it's been in like these three neighborhoods, like every single one.
And so there's a real reasonable expectation that once we get this replaced, that we could see those break frequencies drop down to like one or fewer per year.
James:
What are the cost of the water mains breaks this year?
Nathan:
I'd have to go back and pull it together,
James:
5 or 6.
Eric:
And that'd be roughly what we'd be looking at in debt service.
James:
So I just I just think maybe now is a good time to start building that. We're having that conversation.
Nathan:
Yeah, exactly. So yeah.
Rene:
That would be part of the condition assessment right?
James:
Yeah. Yeah. And previously you talked about breaking into .......
Nathan:
But yeah, the more we look at it.
James:
Yeah frequency of the breaks, I think it makes sense to me if we can afford to do it all at once, I think that’s smarter.
Nathan:
I do.
And one of the other things kind of the two year pushback. So if we pull back maintenance there to try and reduce the, like, physical wear on the system, see if we can have fewer breaks, is really make sure that we're moving away from the kind of like modus operandi of using Kennedy Jenks as like our default design engineer, especially for a distribution system or design is big.
I want to make sure that I want to take it out and actually, yeah, bid it for engineering firms and then Kennedy Jenks Service Design Review, and of course, you know, they'd be welcome to bid the project as well. So we'd have to. One thing that'll be helpful having Rene on board is we can do a heavier lift on the actually, like, proposal review and then select from there, but have Kennedy Jenks manage the project, design it with another firm.
Here is Jana, has got plenty of spare time. She's going to throw a number on it.
Jana:
I was actually going to volunteer to do it. And I'm not joking. (laughter) ....No because I did it for Aurora for many years for the water line replacement program. It's so easy. It's so easy. It's like 2D plants. You just draw a line. ... So I think you guys won't have any trouble finding somebody cheap, for that.
Tera:
Yeah. So we have a standard objective and likely story.
Eric:
Just a couple of things to look at over the next probably 4 to 8 years. Everything related to renewable water storage tank project this project as well, because we're really trying to line up the cash flows and make sure that this all works in accordance with our reserve planning. So there's a lot of moving parts with that.
James:
Perfect. I mean, that's kind of stuff we were talking about a year ago, which is, you know, when we look forward, one of the big hitters.
Jason:
Slightly off topic, I haven't been hearing a lot of complaints about rusty water anymore. Have those died down?
Nathan:
We have with the with the exception of actually a line break fairly recently and we got one one discolored water call in the last line break.
But prior to that, the last documented call I could find was a week and a half after the 2024 boil advisory.
Jason:
Congratulations on the filter.
Jana:
I know I completely agree it was such a big hot item when we started it. Now it's.
Nathan:
Oh, we also think we have a plan to avoid cutting over cutting open the floor of the treatment plan for the drainage problem over there too.
So we're working through that right now too. Involves sump pumps and creative engineering. (Laughter)
Jana:
For the pipes around you. (Laughter)
Jason:
Down the road. Creative engineering.
Tera:
Before we ever redid the water plant that was creative engineering.
Eric:
Please report back to us before any decisions are made.
Rene:
I heard it was mostly coming from the...
Tera:
It was a Home Depot bucket...
Jason:
I think Jim said all of that.(Laughter)
All Speaking:
Yeah. And that first trip there was like, oh...
Jana:
You leave it in place.
Tera:
You saw the whole orange Home Depot bucket thing.
Jana:
Yeah, I hate .......
James:
I couldn't imagine if you were working there. It just smells.
Nathan:
So that's one thing we'll have to look at with that distribution. I have a move and replace guy. But also man that's expensive.
Jana:
I know, but I hate it. So do I.
Open a road.
Nathan:
Well we own it forever is the problem is a forever liability like so we'll have to. So distribution system piping, The best way to do it is to remove and replace. So you go through lay all the new piping, get the new system in place, and then go back through and rip out all of the old piping.
It is very much more expensive than just laying next to it. But the the problem with those abandoned facilities is one like nobody your records never really follow them, as well as they should. And you like you own that pipe forever. So if that pipe ever gets collapsed, then, you know, starts taking up a bunch of sediment and starts creating sinkholes, like, there's there's reasons to pull it out, but it is like a, like doubles your project costs.
Jana:
And then what? Also, the reason I even brought it up is because I hate it. It's like leaving trash in the ground. Yeah, but I get that it costs more money, I get that. But then when you get into older parts of town, there's so many abandoned things you can't even work around to put new anymore because you're saying, well, I get this much clean dirt left because of 30 years, 60 years of abandoned pipe.
So I hate it. It just makes. And also, just like Nathan said, a lot of times we don't get marked and then you'll hit one and you think.
Nathan:
Well, you can't mark them, right? Because like, you're... Because their abandoned. You abandon all that great assets because you don't want to cause operational confusion so.
Tera:
It’s like all that space junk up there.
Jana:
No space junk bothers me too. .....Where it just feels like kicking the can to the next...
All speak:
.(Laughter)......
James:
We have to have you and your kids over facility.
Jana:
It's just like face queen.
Tera:
Why do that?
Nathan:
I want to go.
Jana:
It's the right thing.
James:
We'll have you in.
Nathan:
I will show up with. I will pretend to be whatever grade school I need to be and to go hang out with you at Lockheed.
Tera:
You don't have to pretend not do you? (Laughter)
Nathan:
Walk around with the sucker in the (Laughter)
Eric:
Little white propeller hat.(Laughter)
Rene:
Do you need a background check?
Jason:
All right. Close out this section.
Tera:
Yes you do.
Jason:
All right. We will go ahead and close item for the district manager items. And we'll move to item five which is adjourned the meeting. Thank you everyone. Thanks.
.