09.03 - Exhibit 2 - WSN WAC-SAC Study

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City of Pequot Lakes WAC & SAC Assistance July 19, 2012, 8:30 a.m. Committee Meeting Pequot Lakes City Hall We have not included this entire document herein, but have included from it Appendix A: SAC Criteria for Commercial Properties which gives the SAC amount for various non- residential types of establishments. Changing the Appendix A for "local situations ", or adjusting ERCs / SAC / WAC, especially for larger developments (i.e. maybe a sliding scale; e.g. 90% of the calculated ERC when the calculated ERC is over 10, 80% of the calculated ERC when the calculated ERC is over 20, etc.) is a City -by -City decision. Please NOTE that this draft language, if acceptable, should definitely be reviewed by the City Attorney so that it can be properly formatted and included in these two Ordinances. Comments? WAC and SAC amounts Cities use many financial methods to determine the actual dollar amount for each WAC unit and each SAC unit. Our proposal to the City to assist them on this task was based on keeping this methodology as simple as possible. This should aid in repeating it for future periodic re- calculations. Should the City desire a more refined method — and many more variables can be considered - a financial consultant should be hired. Before getting to the proposed method of calculating the WAC and SAC, attached is a graphic simplification of the City's wastewater system. A similar one can be prepared for the City's water system. The graphic depicts the components of a system - each of which has initial costs, operation and maintenance (O &M) costs, and eventual future replacement costs. Every City pays for these costs via different charges (some with others not shown) as well as different splits between such charges. If SAC and WAC were not implemented from the beginning of a system, a city needs to decide if they are going to spread the costs out based on the whole system capacity and hook -ups (as if WAC and SAC fees were being collected from the beginning), or just spread the costs out based on remaining system capacity and hook -ups. SAC Calculations An important variable is the capital cost of the wastewater system that the SAC is being applied to. Wastewater capital costs can include lift stations, stabilization ponds, pond structures, blowers and aeration system, spray irrigation / disposal, land, engineering, administrative, Page 2 of 4 M013031-City of P.quot ialeM30B0048 -WAC & SAC Assi =m\0130B00 5.000 -WAC & SAC Ass6mm\Coms,ondeeal20UM 19- Comminee meedog handoocdoc