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Item 2: Resolution Amending MWMC Regional Wastewater SDC Methodology
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Item 2: Resolution Amending MWMC Regional Wastewater SDC Methodology
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6/9/2010 12:22:51 PM
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11/13/2009 11:02:22 AM
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City Council
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Agenda Item Summary
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11/16/2009
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unit of growth by capacity measure. The study period is defined as a 20-year period, <br />consistent with facility planning requirements. The Department of Environmental Quality <br />(DEQ) stipulates that entities that own and operate wastewater facilities assume a 20-year <br />planning horizon when developing facility plans (see DEQ Guidance for Development of <br />Wastewater Facilities Plans, 2000). <br />To determine the capacity required by growth, the capacity required by existing users is <br />subtracted from the capacity projected in the facility plan to be required at the end of the <br />planning period. For peak flow estimates, existing users’ current capacity requirements are <br />adjusted for anticipated I/I reductions (see Guidelines for the Preparation of Facilities Plans <br />and Environmental Reports for Community Wastewater Projects, 1999). <br />Methodology Element Two: Develop Cost Basis <br />The cost basis represents the total costs that the SDCs are intended to recover. The following <br />methodological issues were addressed in developing the reimbursement and improvement <br />fee cost bases: <br />? <br />—The method for valuing existing <br />Existing System Valuation (Reimbursement Fee) <br /> <br />facilities with capacity to serve growth. <br />? <br />—The method for allocating existing <br />Existing System Allocation (Reimbursement Fee) <br /> <br />system facility value to growth. <br />? <br /> The method for valuing future projects. <br />Project Cost Valuation (Improvement Fee) <br /> <br />? <br />—The method for allocating future projects <br />Project Cost Allocation (Improvement Fee) <br /> <br />to growth. <br />? <br />—Deductions or additions to the cost basis to recognize past or future <br />Adjustments <br /> <br />capital funding methods. <br />Each issue is discussed below. <br />Step One - Existing System Valuation <br />Calculation of the reimbursement fee begins with a review of MWMC’s fixed asset records <br />to determine the value of the existing system. The system is valued based on the inflation <br />adjusted original cost approach. Under this approach, the original cost of existing system <br />assets is adjusted by the Engineering News-Record national 20-city average Construction Cost <br />Index from the time of construction to estimate current values. The inflation adjusted cost <br />approach recognizes appreciation in the system since assets were constructed and assumes <br />that the wastewater system is maintained in perpetuity. <br />Page 10 OF 39 <br /> <br /> <br /> <br />
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