The difference between a seven percent increase and almost a 50 percent increase can sometimes be the difference between a water sprinkler and a flood. Just ask those associations facing the prospect of a new rate classification for single family residential common area irrigation accounts, as proposed by the Denver Water Board.

In response to an unanticipated increase greater than what was originally estimated during many associations' budget planning, the Rocky Mountain Chapter of the Community Associations Institute requested an opportunity to comment at the Board's February 14^th hearing. A copy of that request, outlining some of the concerns regarding the proposed tiered water rates, is displayed below.

At the hearing, industry called for the identification of "mixed use taps"–instances where one single family residence (or duplex) also serves some amount of common area and therefore has an unusually high water bill. The Board is considering how to identify the extent of these instances, and has asked that associations start keeping a list. Additionally, the Board learned that there may be more commercial irrigation taps out there than originally thought, and an audit of HOAs could shed light on their connections.

Also on the Board's discussion list: consideration of a new operating rule that would direct irrigation designers regarding how the taps for irrigation must be designed to ensure that separate irrigation taps are required for all common area irrigation or irrigated areas above a certain size.

This issue is not unique to water rates or to a single location of associations. It could happen with other utilities or providers in any locality or state. Unexpected fuel or energy increases could cause a similar concern, as could half a dozen other possible scenarios.

What makes it keenly challenging for any association is the fact that, especially when dealing with a necessity or something where there may not be room for much compromise, the best laid budget can suddenly be in trouble. Does an association raise assessments? Institute a special assessment? Dip into the reserves? Levy a fee increase?

Planning for the unexpected, and addressing the issue head on as the Rocky Mountain Chapter has, are two ways to handle similar concerns.

January 26, 2007

Denver Board of Water Commissioners
1600 W. 12th Ave.
Denver, CO 80204-3412

RE: Anticipated Tiered Water Rates for 2007 for Common Interest Communities

Dear Commissioners:

The Rocky Mountain Chapter of Community Associations Institute (RMC) represents the nearly 8,000 homeowner associations in the Front Range with the majority of those being in the greater metro area of Denver. These associations represent owners in single family homes with common area irrigation, condominiums, townhomes, patio homes, duplexes and other common interest communities. Their shared issue is the use of water for their common areas as well as the individual home with common use water. This includes the wide range of water taps of a single tap for domestic and irrigation use to the multi-tap systems in newer communities.

These Associations, like all businesses, started their planning and budgeting process in the late summer or early fall if they are on a calendar fiscal year. Boards and their management firms contacted utilities and vendors to discern any increases in services for 2007. Denver Water Department was contacted and Associations were told that there would be a 7% increase repeatedly. There was no qualifying statement or clarification of that amount to indicate changes in the tier structure or an increase in each of the rate structures. Boards presented their budgets to their owners, budgets were ratified and notices sent to owners of their fees in a timely manner to meet statutory requirements for Association budgets.

With the recent information from Denver Water that this is not a straight across the board increase, Boards have found themselves in a financial crisis. Water represents a substantive portion of the annual budget. With the recent blizzards and snow storms, funds are even more limited. These Associations clearly will not have the funds to pay for increases—in some instances as much as 50%. It is clear that the problem is in how Denver Water defines Associations, the definition of commercial vs. residential and no consideration of Associations with one tap serving all vs. multiple taps. In some Associations there is even the issue of some taps being commercial and some being residential.

The RMC would like to be placed on your agenda for the February 14, 2007 meeting to address these issues with the hope of resolving them to meet the needs of both parties.

Sincerely,
Justin Foy, President
Rocky Mountain Chapter, Community Associations Institute