Memorandum
REPORT TO:
Community Development Board
FROM:
Shawn Kohtz, Director of Utilities
SUBJECT:
Special Presentation - Cash In Lieu of Water Rights Fee Update
MEETING DATE:
October 19, 2026
AGENDA ITEM TYPE:
Citizen Advisory Board/Commission
RECOMMENDATION:
Special Presentation - Cash In Lieu of Water Rights Fee Update
STRATEGIC PLAN:
BACKGROUND:
Resolution 4095, passed March 17, 2008, establishes the City’s currently effective cash in lieu of water rights (CILWR) fee rate at $6,000/acre-foot. New developments must satisfy the City’s water adequacy code, set forth at BMC 38.410.110, prior to final development approval. Compliance through payment of CILWR to offset a development’s municipal water use has been the primary compliance method chosen by the vast majority of development applicants because the alternative method of obtaining new municipal water rights under state law is highly complex, takes multiple years to complete, and has no guaranteed outcome. The water adequacy code provides authority for the City Commission to establish the CILWR fee by resolution.
Technical and economic analyses supporting an updated CILWR fee have been performed and summarized in the attached CILWR fee update study. The report recommends increasing the fee to the $13,050/acre-foot midpoint of the $11,600 - $14,500 range derived by the 3-pronged valuation methodology explained in the report. This work was completed by WestWater Research as a specialty subconsultant to the City’s on-call water rights consultant HydroSolutions. WestWater Research is an industry leading water economics firm specializing in water rights valuations, water markets, and transactional support throughout the western U.S.
City staff brings this CILWR fee update to the CDB as a special presentation because of the role CDB holds in the development review process. No action is requested or required of the CDB. Stated connections between the CILWR fee and Community Plan Goals follow:
- Goal R-2: Pursue community decisions in a manner that supports resilience. Essential to community resilience is its water supply. The CILWR provides funding for municipal water rights thus supporting community resilience.
- Goal N-3: Promote a diverse supply of quality housing units. CILWR provides funding to obtain new municipal water rights, which will supply water to diverse and quality future housing developments.
- Goal DCD-1.13. Pursue acquisition and development of diverse water sources and resources. CILWR provides funding to obtain new municipal water rights from different sources such as groundwater. Water source diversity promotes community resiliency as the City’s current municipal water rights are entirely surface water dependent.
UNRESOLVED ISSUES:
None.
ALTERNATIVES:
N/A.
FISCAL EFFECTS:
The recommended fee midpoint of $13,050/acre-foot is over double the current fee rate of $6,000/acre-foot. If so resolved by the City Commission at the recommended midpoint, the City will receive revenue at a level commensurate with securing new municipal water rights within the current market environment, as well as revenues for changing existing water rights to a municipal purpose. For a newly constructed single-family residence, the updated CILWR fee midpoint imparts a cost of $3,050 onto the purchase price of a home; for a new multi-family residential unit, a $1,620 fee results.