Item 2C: Adoption of Resolution Amending MWMC Regional Wastewater SDC Methodology

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