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As indicated in Figure 3, the allocation of project costs to growth is a function of the type of <br />project and a detailed capacity analysis that identifies growth’s share of: 1) planned capacity <br />expansion, and 2) total future load. <br />Costs by capacity parameter are allocated to growth as follows: <br />Capacity Projects: Growth’s share of capacity expansion (%) X project cost ($) <br />Performance Upgrades: Growth’s share of total future system capacity (%) X project cost ($) <br />Rehabilitation Projects: Allocation to growth = 0% <br />Where: <br />1.Growth’s share of capacity expansion = Projected growth capacity requirement (not met <br /> <br />by existing available capacity) divided by additional capacity to be added to the system <br />by planned improvements. <br />2.Growth’s share of total future system capacity = Projected growth capacity requirement <br /> <br />(total) divided by total future system capacity requirement. <br />Table 6 summarizes the growth allocation percentages by project type. The documentation <br />for these figures is provided in Appendix C. <br />TABLE 6 <br />Growth Allocation Percentages by Project Type <br />Project Type Average Flow Peak Flow BOD TSS <br />Capacity (growth’s share of capacity 100% 29.4% 100% 100% <br />expansion) <br />Performance (growths share of total 26.1% 10.8% 25.9% 26.1% <br />future system capacity) <br />Rehabilitation 0% 0% 0% 0% <br />Source: 2004 Facilities Plan <br />Step Four - Adjustments <br />The methodology includes the following adjustments to the reimbursement and <br />improvement fee cost bases: <br />? <br />. Existing (and if <br />Gifts or grants from federal or state government or private persons <br /> <br />applicable in the future, planned) asset costs are reduced by the percent of the asset that <br />is funded by grants. <br />? <br />. Projected <br />Ratemaking principles employed to finance the capital improvements <br /> <br />capital financing costs are added to the project costs if the project is funded through <br />debt proceeds. Future years’ interest expense is discounted to present value using a 5% <br />discount rate. <br />Page 16 OF 39 <br /> <br /> <br /> <br />