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

2. What we’ll cover today • 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?

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

4. Existing Fee Methodology • 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

5. Existing Fee Schedule

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

7. 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 the cost • Prevents reduced levels of service

8. 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 

9. Questions & Answers