2022 Capacity Charge Study
September 20, 2022
Capacity Charges
• Capacity charges are the one-time fees charged to new development for capacity in the sewer collection and treatment system. • The current charges were calculated in 2018
Legal Standard
• Section 66013 of the Government Code states that capital facility fees shall not exceed the estimated reasonable cost of providing the service for which the charges are imposed.
2 Common Capacity Charge Approaches
Past Investments in
Capacity
Future Investments
in Capacity
Buy-In Approach Incremental Cost Approach
Value of Plant in Service
Existing Capacity
(equivalent meters)
= Fee Cost of Proposed Growth Projects
Planned New Capacity
= Fee
3 Recommended Methodology
4 • This Study recommends using the Incremental approach to calculate the Capacity Charges.
• The remaining available capacity in the system is very limited and it is reasonable that District decide to keep this small amount of extra capacity as a safety “cushion” against future peak loads.
• The Amended 2015 Master Plan has identified significant expansion-related projects that will need to be built to accommodate growth. The cost of this new capacity is representative of the current cost of capacity in the system Capacity Charge Components
5 Local Collection Capacity Charge - For the costs of upsizing local pipes, benefits specific areas
Trunk Capacity Charge – For the cost of upsizing the trunk serving the PARWQCP, benefits all customers
Treatment Plan Capacity Charge – For the cost of purchasing more capacity at the PARWQCP, benefits all customers
Local Collection Unit Costs
6 Estimated cost of Local Collection System expansion 1: $22,156,000 Projected interest expense 2: $21,082,388
Proposed additional Local Collection System capacity 3: 1,080,000 Cost recovery percent for fee calculation 4: 70%
Local Collection Unit cost ($/gpd): $28.02
1 Source: Amended 2015 Sewer Master Plan (total cost less Trunk cost) 2 Assumes 5 percent interest and 30 year repayment period 3 Source: Amended 2015 Sewer Master Plan
4 District policy based on estimated rehabilitation value of replacing existing pipeline Trunk Unit Costs
7 Estimated cost of Trunk expansion 1: $13,000,000
Projected interest expense 2: $12,370,060
Proposed additional Trunk System capacity 3: 1,080,000
Cost recovery percent for fee calculation 4: 100%
Trunk Unit cost ($/gpd): $23.49
1 Source: Amended 2015 Sewer Master Plan and email from District staff (Akin Okupe, July 1, 2022) 2 Assumes 5 percent interest and 30 year repayment period 3 Source: Amended 2015 Sewer Master Plan
4 The Trunk expansion consists of adding a second trunk, which is entirely to serve growth.
Treatment Plant Unit Costs
8 Cost of Capacity Rights in the PARWQCP: $5,000,000
Interest Expense: $4,758,000
Cost recovery percent for fee calculation 2: 100%
Cost Allocation Flow BOD SS Total
Cost Allocation (%): 34.0% 33.0% 33.0% 100%
Cost Allocation ($): $3,317,720 $3,220,140 $3,220,140 $9,758,000 Wastewater Strength at PARWQCP
1 : 250 225
mg/L mg/L
EPASD Buildout Capacity at PARWQCP: 1,000,000 761,518 685,367 gpd lbs/year lbs/year
Unit Cost: $3.318 $4.229 $4.698
per gpd per lb per lb
1 Source: 2018 Capacity Charge Study and based on historical influent wastewater strength at the wastewater treatment plant.
2 The purchase of additional capacity at the treatment plant is entirely to serve new growth.
Proposed Capacity Charge (per EDU)
9 Flow BOD SS
Equivalent Dwelling Unit (EDU) Loadings 1
240 200 200
gpd mg/l mg/l
0.4006 0.4006
lbs/day lbs/day
Cost Recovery Components
Trunk Expansion: $23.49 - -
Local Collection System Expansion: $28.02 - -
PARWQCP Buy-In Cost: $3.318 $4.229 $4.698
Subtotal: $54.83 $4.229 $4.698
per gpd per lb per lb
Capacity Charge per EDU
Trunk Cost Recovery: $5,637.79 - -
Local Collection Cost Recovery: $6,725.97
Treatment Plant Cost Recovery: $796.25 $618.69 $687.43
Total Cost Recovery: $13,160.02 $618.69 $687.43
Percent of Total: 89.4% 5.0% 5.6%
Trunk Capacity Charge (per EDU): $5,637
Local Collection Capacity Charge (per EDU): $6,725
TreatmentPlant Capacity Charge (per EDU): $2,102
Total Capacity Charge (per EDU): $14,464
1 Based on 2018 Capacity Charge study, which used current engineering design estimates and SWRCB standards
Capacity Charges for Other Accounts
10 Accessory Dwelling Units (ADUs) - For those ADUs that are eligible to be charged a Capacity Charge (subject to state-level laws), the fee will be $964 per plumbing fixture
Non-Residential – Non-residential accounts are assigned an EDU value based on the following formula:
Number of EDUs = 0.894 x Flow / 240 gpd + 0.05 x BOD / 200 mg/l + 0.056 x SS / 200 mg/l gpd = gallons per day
BOD = biochemical oxygen demand
SS = suspended solids
mg/l = milligrams per liter (measure of concentration)
Survey of Regional Capacity Charges
for single family homes
11 $0
$5,000
$10,000
$15,000
$20,000
Special Circumstances
12 • There exist some proposed development projects that meet both of the following criteria:
ü The development would require a pipeline expansion project that far exceeds the Capacity Charge revenue that the new development would be charged. ü The Local Collection pipeline expansion project serves an area where additional development is uncertain
Developer Financing Policy
13 • In such situations, it its recommended that the District adopt a policy whereby such developments would be required to pay for 50% of the required local collection pipeline expansion project (with the other half being paid by ratepayers in order to acknowledge the benefit of rehabilitating the existing pipe).
• The above costs would be paid in-lieu of the Local Collection Capacity Charge. The developer would still be required to pay for the Trunk Capacity Charge and the Treatment Capacity Charge.
• If and when future development does occur “upstream” of the pipeline project, the developer would receive the Local Collection Capacity Charges paid by the new developers.
Discussion
14