Workers installed a new gas line two years ago at the site of a planned natural gas project at Fontmore Road and Panorama Drive. Courtesy Colorado Springs Utilities
When city auditors took a look at Colorado Springs Utilities’ cost-sharing of infrastructure upgrades, they couldn’t conclude whether the developer or Utilities, or both, funded the upgrades and at what cost.
They also discovered loosy-goosy rules and recommended Utilities tighten up its policies and better document who pays what when lines are upgraded in tandem with infill development.
Infill development refers to redevelopment of existing areas within the city, or development of vacant land surrounded by other development property within the city. The city has pushed for more infill development in recent years to enable the city to deliver services more efficiently, as opposed to developments unfolding on the city’s periphery, which tends to drive up delivery of those services. Infill development is on full display in the Downtown area where auto repair shops and vacant land have given way to multi-story apartment buildings.
The City Auditor’s Office looked at the Utilities Reliability Program
projects chosen for funding in 2021.
“We conclude improvements are needed to ensure URP decisions align with Utilities Rules and Regulations,” auditors noted in an August report. “URP documentation of objectives, guidelines, and decisions should also be strengthened to ensure clarity and transparency.”
Utilities acknowledged shortcomings in documentation of program criteria and rules for how much developers pay and how much Utilities ratepayers pay.
Utilities spokesperson Steve Berry called the findings unsurprising and not out of the ordinary.
“The approach with system connections and predictive reliability is ever evolving as technology and materials improve, analytics become more sophisticated, customer expectations change and as leadership direction changes at both a staff and elected level,” he said via email.
The URP
Created in 2020, the URP was intended to identify opportunities to prioritize and fund Utilities’ infrastructure projects that meet certain criteria, auditors said.
Here’s how Utilities describes the program: “[URP] is a multi-year program that proactively and holistically identifies, assesses, and prioritizes existing utility infrastructure, across all Springs Utilities’ services, for economy of scale construction opportunities which address potential barriers to future city growth.”
But while Utilities spent $6.5 million on URP and $13.2 million was to be spent this year, “objectives, qualifying criteria, policies, and processes had not been finalized, documented, or consistently applied,” auditors found.
Auditors further noted that without definite goals and procedures, “program success cannot be measured.” Thus, funding might not be justified, they said.
Besides key information being missing that would illustrate the need for a project, documentation used by Utilities failed to identify how each project complied with Utilities Rules and Regulations and Line Extension and Service Standards, the audit report said.
In addition, the URR and LESS don’t mention urban renewal, infill or Utilities-driven revitalization projects such as those evaluated for URP funding.
Because developer contributions vary for each utility service, auditors noted there was potential for confusion.
“It was not possible to validate costs assigned in URP projects were in accordance with the URR and LESS guidance,” the audit report said. “Therefore, this audit could not ensure fair application of URR charges for redevelopment or infill type URP related projects.”
The audit didn’t mention any specific development sites.
Rules and Regulations
City Auditor Jacqueline Rowland notes that with new construction, utility line extension costs generally are not the responsibility of Springs Utilities.
“When Utilities is performing a URP project, they may be extending lines and updating infrastructure around an infill development area, for example,” she said via email. “Cost sharing and cost recovery responsibilities between the developers and Utilities in URP projects was not clear for us to ensure policies were followed. Rules and Regulations did not clearly address URP-type projects for cost responsibilities.”
Citing the undergrounding of electric lines as an example, Rowland says, “In an infill development project, the developer would be required to pay to underground the electric lines. The URP is one element of the Utilities plan to update aging infrastructure. When a project is designated as a URP infill project, Utilities would update and bring related infrastructure to current code and standards.
“So in this example, the work is a URP project and a development project,” she added. “We were not clear in this example, who should pay the undergrounding of electric lines. Our recommendation asked for clarity in policies or regulations on cost responsibilities for URP projects that involve development.”
Berry, with Utilities, said in an email, “The audit report shows that Utilities acknowledged the recommendations to do a better job of documenting what is done and at what cost to which party and will adopt/update programs for doing so by end of year.”
He also notes that the Utilities Policy Advisory Committee recently was assigned to delve into cost sharing/recovery. That study is due for completion in mid-2023, which could play a role in further refining Utilities’ procedures in late 2023 or early 2024, he said.