Water Connection Fee Analysis Elk Grove Water District Finance Committee January 30, 2013

Elk Grove Water District – Connection Fee Study | 2 Project Overview Existing Fee Structure Review What is a capacity fee? What does the capacity fee cover? Why the increase is needed? How are connection fees calculated? What we’ll cover today

Elk Grove Water District – Connection Fee Study | 3 Project Overview Background Water capacity fee was originally established in 2003 Water meter fee was established in 2006 Fees have been updated periodically, but have not been comprehensively updated to reflect additional capital needs Purpose To identify appropriate fee levels to recuperate new development’s share of planned water facilities

Elk Grove Water District – Connection Fee Study | 4 Meter and Installation Charges –Recovers cost of new meter and installation Capacity Charges –Applicable to Service Area 1 –Based on cost of CIP in 2003 –Total CIP cost allocated to existing and new equivalent dwelling units (EDU) –Cost per EDU converted into fee schedule based on meter size Existing Fee Methodology

Elk Grove Water District – Connection Fee Study | 5 Existing Fee Schedule Meter SizeEDU Meter Charge Capacity ChargeTotal 1”1.0$580$3,895$4, /2” ,9599,825 2”4.01,10215,58016,682 3”9.02,64535,05537,700 4”16.04,47062,32066,790 6”36.08,452140,220148,672

Elk Grove Water District – Connection Fee Study | 6 Cost to serve new development Supply improvements Distribution improvements Information technology Treatment improvements What the Capacity Charge Cover?

Elk Grove Water District – Connection Fee Study | 7 Current fees do not: –Reflect updated system demands –Cover needs for expanded or additional facilities Would prevent existing rate payers from incurring the cost Prevents reduced levels of service Why the Adjustment is Needed?

Elk Grove Water District – Connection Fee Study | 8 To equitably and fairly allocate costs, one of two methodologies are used: 1.Plan-Based Methodology – Allocates future costs related to the District’s Capital Improvement Plan (CIP) via a growth and existing needs basis 2.Buy-In Methodology - used when existing components have excess capacity available How is the Capacity Fee calculated?

Elk Grove Water District – Connection Fee Study | 9 Questions & Answers