HDR Engineering 3/24/2017 - Laserfiche WebLink

Task 3: Technical Analysis — Connection Charges This task is related to the calculation of the connection charges for water, sewer, and surface water utilities. The City currently has a methodology in place which was the basis for calculating the current connection charges. In general,the methodology considers the existing asset values of each utility, along with any future capacity expansion projects.The value of the capacity is divided by the total number of equivalent capacity units to derive the cost per equivalent unit.While this is a simplistic description of the overall methodology, it does reflect the general approach that will be used. Provided below in more detail are some of the specific aspects of each analysis which will be considered in this task. ✓ Water Utility-The water connection charge will consider the plant components of filtration, transmission, and distribution. The methodology develops a cost per equivalent unit for each of these plant components by taking into account the gross existing plant in service, less any contributions in aid of construction (CIAC). That net plant in service is then adjusted for any cumulative interest on plant in service, less any outstanding debt service (principal). Finally, any cash balances available are included within the valuation of the assets to establish the existing buy-in component. To that valuation, any future plant in service,which is expansion (capacity) related, is included. This provides the total valuation of the plant in service which may be considered for the calculation of the connection charge.The connection charge may include only a buy-in component, or it may include the buy-in and future/expansion component. Given the valuation of plant, the value is then divided by the number of equivalent units to establish a connection charge stated on a per equivalent residential unit (ERU). This provides the cost basis for one (1)water ERU for filtration,transmission, and distribution plant components ✓ Sewer Utility-The sewer connection charge will be developed in a manner similar to the water connection charge methodology described above. However, in this particular case,the City's prior sewer connection charge methodology will be modified to reflect only sewer related assets. The City's current sewer connection charge includes the valuation of both sewer and surface water assets within the connection charge. In other words, the City does not currently have a surface water connection charge and the value of the surface water assets are presently included within the sewer capacity charge analysis. A key objective of this study is to create separate and distinct sewer and surface water connection charges. In the case of the sewer connection charge, the plant components are segregated between treatment and collection assets.The result of this portion of the analysis will be a sewer connection charge per equivalent residential unit(ERU). V Surface Water Utility—As noted above,the existing costs of surface water are included within the current sewer connection charge. This study will segregate out the surface water assets and establish a separate and distinct surface water connection charge. In discussions with the City, it is HDR's understanding that the surface water assets are clearly delineated within the City's asset records and the establishment of the valuation of the surface water assets should not be difficult or require significant estimates or assumptions. The methodology to be used for the surface water connection charge is similar to the water and sewer methodology discussed above. The main difference is that"capacity" or"equivalent units" will be measured defined as impervious surface units. The current and ongoing impervious surface rate structure study will be used to establish the impervious surface units to be used within this study. HDR, at this time, does not believe that any distinction will be made related to the plant Page A-2