1. Water Connection Fee Analysis Elk Grove Water District January 22, 2013

2. What we’ll cover today • Project Overview • What is a capacity fee? • What does the capacity fee cover? • Why the increase is needed? • How are connection fees calculated?

3. Project Overview Background • Water capacity fee was originally established in 2003 • 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

4. What the Capacity Fee Cover? • Cost to serve new development • Supply improvements • Distribution improvements • Information technology • Treatment improvements

5. Why the Adjustment is Needed? • Current fees do not: • Reflect updated system demands • Cover needs for expanded or additional facilities • Would prevent existing rate payers from incurring entire cost • Prevents reduced levels of service

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

7. Questions & Answers