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SYSTEM DEVELOPMENT CHARGE METHODOLOGY <br /> <br />· Ratemaking principles employed to finance the capital improvements. Projected <br /> capital financing cost (i.e., interest expense) is added to the cost basis, based on the <br /> recommended project phasing and the need to borrow funds. <br /> <br />Methodology Element Three: Develop SDC Schedule <br />Unit costs for each capacity parameter are determined by dividing the adjusted cost basis by <br />the projected growth capacity requirements. The unit costs are then multiplied by the <br />estimated capacity requirements of different types of users, as determined from industry <br />reference data. Figure 4 illustrates this process. <br /> <br />FIGURE 4--SDC SCHEDULE DEVELOPMENT <br /> <br /> Capacity <br /> Unit Costs Requirement / SDC / Unit <br /> <br /> X ~ <br /> X -- <br /> X = <br /> <br />Using industry reference data for charging SDCs is consistent with the approach MWMC <br />has previously used to Charge SDCs. This type of approach uses flow and strength <br />assumptions that are consistent with the system capacity parameters described previously. <br />For example, average flow is defined as dry season maximum month flow. This capacity <br />measure is used in estimating user capacity requirements. The peak-to-average flow ratio <br />reflects the system planning assumptions. The flow and strength assumptions for various <br />land uses (development types) are presented in Appendix D. If information for a particular <br />development is not found in Appendix D, the SDC will be formulated using average data of <br />like or similar development as determined by the City Engineer. <br /> <br />Methodology Element Four: Calculate Revenue Offsets and Credits <br />To comply with Oregon SDC law, the SDC methodology must ensure that future system users <br />contribute no more than an "equitable share" of the capital costs of existing facilities: Before <br />real property is developed, it may have been subject to taxes that supported capital funding of <br />some of the Regional Wastewater System. After a development connects to the system, it will <br />pay rates and, possibly taxes as well, that may also support some level of capital funding. The <br /> <br />SEA31003271388(DG).DOC/041040034 <br /> <br /> <br />