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2. Analysis 2. ANALYSIS The first step in calculating the water and sewer impact fees was to determine the cost basis for each major system function (i.e., transmission or collection and treatment and disposal). The second step was to determine each system's capacities. 2.1 COST BASIS The net system value calculated in the determination of the impact fees includes: ■ The existing system assets are analyzed to determine the replacement cost new less depreciation (RCNLD) of IRCDUS' existing major water and sewer system components. • Assets that do not provide backbone or capacity related infrastructure such as general and administrative assets and minor vehicles and equipment are excluded from the cost basis. ■ Any contributed assets and/or assets not funded by the County (i.e., funded by grants, developers) are also excluded from the cost basis. The Utility's net system value for the water and sewer systems included in the calculation of impact fees is summarized in Schedules 3 and 4 of the Appendix, respectively. 2.1.1 Existing Fixed Assets The accounting records for IRCDUS' existing and in-service assets serve as the basis to determine the water and sewer system's respective values. Stantec evaluated IRCDUS' fixed asset listing and associated accounting records of assets which included an asset number and description, location description, purchase date or year in service, useful life, and net book value of each asset, as of October 1, 2023. Stantec allocated each fixed asset by its corresponding system and functional cost components. Water assets were functionalized by the categories of treatment and transmission/distribution, whereas sewer assets were functionalized by the categories of treatment/disposal and transmission/collection. To determine the current value for the water and sewer systems, Stantec escalated the cost of each asset utilizing the Engineering News Record (ENR) Construction Cost Index to calculate the current replacement cost based upon the year IRCDUS placed the asset in service and adjust for remaining years of depreciation. In this way, Stantec identified the value of the water and sewer systems stated in terms of replacement cost new less depreciation (RCNLD) for each asset and each system's respective functional components. Schedule 1 in the Appendix summarizes IRCDUS' fixed assets in service, calculated RCNLD, and applicable functional allocations for the calculation of the water and sewer impact fees using the buy - in approach. 0 114