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setting the regional wastewater user rates, and what authority the council has in the review and approval of the implementation of the capital projects contained in the 2004 Facilities Plan. The MWMC establishes regional wastewater user rates on an annual basis. These rates are part of the annual regional wastewater program budget, which must be ratified by the governing bodies before they go into effect (see Section 13 of the proposed IGA). The governing bodies, therefore, have approval authority over the annual regional wastewater budget and associated user rates, with the exception of that portion of the user rates necessary to meet bond covenants and to achieve and maintain an un-enhanced credit rating of A for the commission' s bonds from at least one nationally recognized rating agency. The annual review and approval authority of the governing bodies extends to the capital improvement program as well, since the capital projects are listed in, and funded through, the annual regional wastewater budget. Any of the governing bodies may object to the capital projects list in an annual budget for the regional wastewater program, which would require written notification to the commission of the specific reason for the objection and a request for reconsideration. Under Section 13 of the IGA, if a governing body objects to the commission's decision after reconsideration, the governing body may refer the matter to the general membership of the Metropolitan Policy Committee (MPC) for mediation in accordance with any procedure adopted by MPC. Furthermore, the draft IGA calls for the MWMC to update the 2004 Facilities Plan on a five-year frequency, with these scheduled updates to be submitted to the governing bodies for review and approval at least 6 months in advance of the anticipated approval date and accompanied by an estimate of the effect the update may have on sewer user charges and system development charges. Finally, during the work session a question was asked whether SDCs will fund the new capacity necessary to serve growth in the service area. The 2004 Facilities Plan estimates a total of $144 million (in 2004 dollars) in capital improvement needs over the next 20 years. According to CH2M Hill, $57.8 million of this total is related to projects needed to serve projected growth in the service area during the planning period. The rates derived from the adopted SDC methodology were calculated to raise this amount of funding. For informational purposes, Attachment E includes a project list from the 2004 Facilities Plan which identifies the funding allocation for each project based upon the percentage of the project that is attributed to growth versus the percentage to be funded by existing users. The council is now scheduled to hold public hearings on the ordinance and resolution related to the amendments to the IGA and issuance of revenue bonds by MWMC, respectively. Final action on both the ordinance and the resolution is scheduled for May 23, 2005. Financial and/or Resource Considerations The regional wastewater program is supported by user fees, which are established annually by the MWMC and reviewed and ratified by the city councils of Eugene and Springfield, and the Lane County Board of Commissioners. Capital projects are also supported by revenue from systems development charges (SDCs). The proposed changes to the IGA do not directly affect these rates, but they improve and strengthen the agreement for the bond market and give the MWMC the ability to offer revenue bonds that will be competitive in the market. The most cost-effective financing for the regional wastewater projects is a combination of user fees, SDCs, and bond proceeds. Without the ability to obtain competitive bond rates, the commission would have to consider raising user rates in the next fiscal year, possibly by as much as 65%, to generate the necessary revenues. L:\CMO\2005 Council Agendas\M050509\S050509C.doc