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BOOK ih PAGE 56 During During the early stages of contract negotiation between Indian River County and Hartman Associates, Inc. for the initial rate studies, the capital recovery mechanism known as the "Line Extension Fee" was not discussed. This somewhat obscure charge was not studied in detail and most recently the application of line extension charges has been under scrutiny. On November 4, 1999, the Utility Advisory Committee heard discussion from the Utility staff and the County Attorney, (see attached Utility Advisory Committee minutes), regarding the Line Extension Fee. The Utility Advisory Committee members, after hearing concerns expressed by the Department regarding the ambiguity of the line extension charges, voted to encourage the Department to negotiate a Task Authorization with Hartman and Associates, the County's Rate Consultant and Task Authorization No. 1 is attached for Board consideration. ANALYSIS Task Authorization No. 1 will include an historical review of the County's application of this charge and review how other utilities provide for distribution/collection system cost -recovery beyond that historically provided by impact fees. The Scope of Services include five meetings with the County and its staff one of which took place on July 28, 1999. In addition, the Utilities staff with the assistance of the County Attorney has already performed an extensive bit of historical research, and enclosed is a comprehensive sampling including the Resolutions 93-148, Resolution 95-16, and Resolution 97-21. These are made available at this time for the Board's familiarization. Revenue generated from line extension charges is in the range of $250,000 a year and is an integral part of the overall revenue stream which was incorporated into the Rate Revenue Model finalized on June 22, 1999. The line extension fee was never codified but was adopted through various resolutions, lacking specific guidelines and evolving over the years without specific definition and application. Difference of opinions regarding interpretation and the historical ambiguity of this charge leads the staff members of the Utility to believe that a study is in order including a series of public meetings to ensure that this charge is fully disclosed and gets the scrutiny required. RECOMMENDATION The Department of Utility Services asks the Board of County Commissioners approve Task Authorization No. 1 with Hartman and Associates in the amount of $9,950.00 to perform a comprehensive analysis of the County's line extension charges, and recommend changes, assist in a public hearing and ordinance revision, and perform other activities as illustrated in the Task Authorization, in concert with the Utility Advisory Committee. DRH/b Attachments December 7, 1999 112