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Metropolitan Wastewater Management Commission Capital Improvement Program <br />Capital Program Funding and Financial Planning Methods and Policies <br />This annual budget document presents the FY 19-20 CIP Budget, the FY 19-20 AMCP Budget, <br />and 5-Year Capital Plan which includes the CIP and AMCP Capital Plan. The MWMC CIP <br />financial planning and funding methods are in accordance with the financial management <br />policies put forth in the MWMC Financial Management Plan. <br />Each of the two RWP capital programs relies on funding mechanisms to achieve RWP objectives <br />described above. The CIP is funded primarily through Capital Reserves, which may include <br />proceeds from revenue bond sales, financing through the State of Oregon Department of <br />Environmental Quality (DEQ) Clean Water State Revolving Fund loan program, system <br />development charges, and transfers from the Operating Fund to Capital Reserves. The AMCP is <br />primarily funded through wastewater user fees. <br />The RWP’s operating fund is maintained to pay for operations, administration, debt service, <br />equipment replacement contributions and capital contributions associated with the RWP. The <br />operating fund derives the majority of its revenue from regional wastewater user fees that are <br />collected by the City of Eugene and City of Springfield from their respective customers. In <br />accordance with the MWMC Financial Plan, funds remaining in excess of budgeted operational <br />expenditures can be transferred from the Operating Fund to the Capital Reserve fund. The <br />Capital Reserve accumulates revenue to help fund capital projects, including major <br />rehabilitation, to reduce the amount of borrowing necessary to finance capital projects. <br />The AMCP consists of three programs managed by the City of Eugene and funded through <br />regional wastewater user fees: The Equipment Replacement Program, which funds replacement <br />of equipment valued at or over $10,000 with a life expectancy greater than one year; The Major <br />Rehabilitation Program, which funds rehabilitation of the MWMC infrastructure such as roof <br />replacements, structure coatings, etc.; and the Major Capital Outlay Program for the initial <br />purchase of major equipment that will be placed on the equipment replacement list, or a one time <br />large capital expense.The MWMC assets are tracked throughout their lifecycle using asset <br />management tracking software. Based on this information, the three AMCP program annual <br />budgets are established and projected for the 5-Year Capital Plan. <br />For planning purposes, the MWMC must consider market changes that drive capital project <br />expenditures. Specifically, the MWMC capital plan reflects projected price changes over time <br />that affect the cost of materials and services. Accoridingly, the 2004 FP projections were based <br />on the 20-city average Engineering News RecordConstruction Cost Index (ENRCCI). Since <br />2004, local construction cost inflation accelerated even faster than the national average. City of <br />Springfield staff identified this trend and subsequently modified their inflationary projection <br />methodology accordingly. <br />The MWMC continues to monitor inflationary trends to inform our forecasting of capital <br />improvement costs. Accordingly, based on historical inflationary rate trends from 2006 through <br />2018, capital project budgets now reflect a 4% annual inflationary factor in the FY 19-20 Budget <br />and 5-year Capital Plan. <br />Page 38 FY 19-20 BUDGET AND CIP <br /> <br />- ¸ ΐΒǾ ΑΏΐΘǾ 7®±ª 3¤²²¨®­ ȟ )³¤¬ Β# <br /> <br />