Water Committee Agenda and Packet 2011 03 04

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1. In instances where infrastructure has been built in advance of new development and has excess capacity available to be utilized by new development, the buy -in methodology is utilized. Under this methodology, new development repays the community for previous capacity investments via the capacity fee. 2. The incremental expansion methodology is used when a community plans to provide new development the same level -of- service (LOS) that is currently being provided to existing development in increments. Generally, utility infrastructure does not lend itself to this methodology given its nature of having to be in place prior to new development and capacity being constructed in large segments. 3. The plan -based methodology utilizes the City's capital improvement plan (CIP) and related master plans to determine new development's share of planned projects. Projects that do not add capacity, such as routine maintenance or replacement of existing facilities, are not included in the fees. Projects that add capacity are further evaluated as to the percentage of the project attributable to existing development versus new development. Only the portion of planned projects attributable to new development is included in the capacity fees. The majority of the proposed capacity fees utilize the plan -based methodology, with the buy -in methodology being used for recent improvements to the Wildcat Hill Wastewater Treatment Plant. A summary of the capacity fee components and methodologies is shown in the figure below: Figure 6 -2: Capacity Fee Components Water Capacity Fee Components: Resources Production Storage Distribution Reclaimed Water Planning and Study Efforts Wastewater Capacity Fee Components: Treatment Interceptors Collection Lines Planning and Study Efforts Sources: City of Flagstaff; TischlerBise. Calculation Methodology: Plan -based Plan -based Plan -based Plan -based Plan -based Plan -based Calculation Methodology: Buy -in and Plan -based Plan -based Plan -based Plan -based To better ensure the capacity fees are just and reasonable, a credit for capacity projects which have been funded with bonds backed by utility rates is deducted from the capacity fees. The inclusion of this credit in the capacity fee calculations is intended to avoid "double payment" situations whereby the payer of a capacity fee pays for the same capacity twice: once via the capacity fee and again via the utility rates. This calculation is discussed in greater detail in the wastewater capacity fee analysis.