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<br />Step Three - Project Valuation <br /> <br />Calculation of the improvement fee begins with a review of MWMC's adopted 20-Year Project <br />List to determine the value of future projects. Future projects are valued based on the inflation <br />adjusted original cost estmate approach. Under this approach. the original estimated cost of <br />future projects is adjusted by the Engineering News-Record national 20-cijy average <br />Construction Cost Index from the time of the original estmate to estimate current values. The <br />inflation adiusted original cost estimate approach recognizes inflation since the original <br />estimate. <br /> <br />Step ~ Four - Project Cost Allocation <br />The project cost allocation methodology, for use in determining the improvement fee cost <br />basis, is a four-step allocation process consisting of the following steps: <br /> <br />I-I. Allocate project costs to facility process components (e.g., primary treatment, secondary <br />treatment). <br />1-2. Allocate costs by components to system capacity parameters (e.g., average flow, peak <br />flow). <br /> <br />1-3. Allocate project costs to type (capacity improvement, performance upgrade, or <br />rehabilitation). <br /> <br />1-4. Allocate costs to user type (existing customers or projected growth). <br />The project cost allocation methodology provides an equitable basis for determining the <br />projects or portions of projects that are related to growth capacity needs and are, thereby, <br />included in the improvement fee portion of the SDC calculation. The methodology is not <br />tied to a specific list of projects intended to be funded by SDCs (20-year project list), but is <br />intended to provide a consistent framework for allocation of future projects to growth. <br /> <br />Each step of the methodology is described below. The general allocation process is also <br />presented graphically in Figure 3. <br /> <br />fIGURE 3-PROJECT COST ALLCOA TION <br />