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<br />Metropolitan Wastewater Management Commission
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<br />Reserves
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<br />CAPITAL RESERVES
<br />
<br />The MWMC Capital Budget includes five reserves: the Equipment Replacement Reserve, SDC
<br />Reserves (Reimbursement, Improvement, and Contingency), and the Capital Reserve. These
<br />reserves accumulate revenue to help fund capital projects including equipment replacement and
<br />major rehabilitation. They are funded by annual contributions from user rates, system
<br />development charges, bond proceeds, and the SRF Loan. Each reserve is explained in detail
<br />below.
<br />
<br />EQUIPMENT REPLACEMENT RESERVE
<br />
<br />The Equipment Replacement Reserve accumulates replacement funding for three types of
<br />equipment: 1) major/stationary equipment items costing less than $200,000 with useful lives of
<br />20 years or less; 2) fleet vehicles maintained by the Eugene Wastewater Division; and 3)
<br />computers that serve the Eugene Wastewater Division. Contributions to the Equipment
<br />Replacement Reserve in the FY 06-07 budget total $603,077. Additional budget detail is
<br />provided below.
<br />
<br /> ADOPTED AMENDED PROPOSED
<br /> BUDGET BUDGET BUDGET
<br />EQUIPMENT REPLACEMENT RESERVE FY 05-06 FY 05-06 FY 06-07
<br />Beginning Balance 6,658,667 6,533,627 5,842,835
<br />Annual Equipment Contribution 162,012 162,012 365,199
<br />Annual Vehhicle Contribution 158,532 158,532 209,549
<br />Annual Computer Contribution 25,512 25,512 28,329
<br />Interest 205,000 205,000 269,679
<br />Fund Equip Repl in Projects 0 0 (1,512,000)
<br />Equipment Purchases (580,133) (1,241,848) (310,335)
<br />Reserve 6,629,590 5,842,835 4,893,256
<br />
<br />SYSTEM DEVELOPMENT CHARGE RESERVES
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<br />SDCs are required as part of the MWMC IGA. They are connection fees charged to new users to
<br />recover costs associated with construction of plant capacity, and are limited to funding Capital
<br />Programs. The purpose of the SDC Reserve is to collect and account for SDC revenues
<br />separately from other revenue sources, in accordance with statutory requirements. Since 1997,
<br />the Commission has maintained an SDC structure that is a combination of "Reimbursement" and
<br />"Improvement" fee components. Estimated SDC revenues for FY 06-07 total $1,868,800.
<br />Budgeted FY 06-07 Capital costs to be paid with SDCs are $6,895,000. The projected beginning
<br />SDC Reserve balance on July 1,2006 is $7,891,357. During FY 04-05 several law suits were
<br />filed challenging increases in SDCs. Taking into account the uncertainties that arise with these
<br />challenges, MWMC created an SDC Contingency Reserve to hedge potential loss of part or all of
<br />the SDC revenue collected from FY 04-05 through FY 05-06. The SDC Litigation Reserve is
<br />continued in FY 06-07. Additional budget detail is provided on the following page.
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<br />Page 39 PROPOSED FY 06-07 BUDGET AND CIP
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