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RESPONSE TO WRITTEN TESTIMONY AT EUGENE CITY COUNCIL PUBLIC HEARING ON THE MWMC WASTEWATER FACILITIES PLAN AND SDC METHODOLOGY capacity assessments that CH2M HILL has recently conducted for other wastewater utilities in Oregon. Page 9 - General Issue Raised - Why is growth required to pick up 100% of the I/I bill for the dry season flow? They are not. Existing users' dry season maximum month flow includes estimated dry season I/I. Therefore, existing users are allocated capacity costs that include their associated dry season I/I. The difference is that existing users' dry season maximum month capacity needs are assumed to be met through existing capacity, whereas new users will require new facilities to meet a portion of their needs. Furthermore, existing customers are paying for the costs to reduce I/! through the local wastewater portion of rates charged by Eugene and Springfield. These investments are not included in the SDC calculations. Future facilities are sized consistent with the assumption that these investments will be made and I/I reductions will occur accordingly. Additional discussion of this issue is found on page 7 of the Response to April 2, 2004, Questions from the Eugene Chamber of Commerce, which has been distributed to the Eugene City Council. Page 10 - General Issue Raised - Growth is being double-charged for average flow capacity - through allocation of average flow costs and again through allocation of peak flow costs that include average flow as a component of overall peak flow contribution. This assertion is incorrect. As required by State law, the SDC improvement fee methodology is "calculated to obtain the cost of capital improvements for the projected need for available system capacity for future users." To recognize the multiple functions of the system and increase the equity of the charges, multiple capacity measures are employed in the determination of existing and future system capacity needs, and ultimately cost responsibility. Therefore, one of the first steps in the improvement fee development process is to break out the improvement costs into the relevant capacity parameters and then to allocate the costs to growth based on their projected capacity needs. The first point to understand is that the total costs are split up among the capacity parameters, such that the total costs by parameter equal the total costs of the projected improvements. Take, for example, a $1 million project that is allocated 50 percent to average flow and 50 percent of peak flow. Assume further that this project is 100 percent capacity related (as opposed to performance). The allocated costs are thus $500,000 average flow and $500,000 peak flow. In this case, growth's share of the $500,000 related to average flow is determined in proportion to their share of required average flow capacity expansion -100 percent based on the SDC Methodology. For the peak flow portion, growth is again allocated the costs in proportion to its share of required capacity expansion, which in this case is 29 percent (30 mgd/102 mgd). Yes, the 30 mgd of peak flow includes base flow, plus I/I, but this is not a double charge, as the peak flow portion of the project costs has yet to be allocated. The allocation to system parameters results in the project being divided into two discrete elements. In one case, the costs are allocated in proportion to average flow alone, and in the other case, costs are allocated in proportion to base flow plug peak season I/I. This is not a double-charge, it is a means of allocating costs to growth in proportion to capacity needs that is consistent with state law. C:\DOCUMENTS AND SETTINGS\CEEXELRLOCAL SETTINGS\TEMPORARY INTERNET FILES\OLK3B~AIS HBALETTERSFROMCH2 FINAL DRAFT 061804.DOC 2