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INDIAN RIVER COUNTY IMPACT FEE ANALYSIS 2.1.3 Combined Treatment and Transmission Unit Investment The combined treatment and transmission unit investment per mgd of system capacity ranges from$3.8 million to$4.1 million.These figures represent the total capital investment per mgd of capacity in the County's water system,exclusive of contributions in aid of [_. construction from developers,etc. The unit capital investment figure calculated above represents an estimate of the capital investment by the County per mgd of capacity to provide capacity for new customers.If a new connection to the water system were asked to pay an impact fee based on this unit cost, without adjustments,they would have paid their proportionate share of all the water sys- tem improvements constructed to serve them.However,after the user connects to the system,they will begin paying water rates that include a capacity charge or debt service element.This debt was issued in part to finance the construction of the expansion of the treatment facilities and transmission system.Thus,an adjustment must be made to the unit capital costs in the impact fee calculations to reflect these future debt service payments.In addition,because the treatment capacity was constructed during the last several years,and this treatment capacity will not be fully utilized for a number of years,the existing system customers have been paying,and will continue to pay,for the capital cost of these facilities for the new users until the facilities are fully utilized.An adjustment thus also needs to be built into the impact fee calculation to compensate the existing users for the costs they incur to carry this capacity for the new users until they connect. v 2.2 Debt Service Principal Credit To compensate for the future debt service costs that a new connection to the water system will pay through their rates,once they connect to the system,a credit for future principal payments is calculated.Future debt service principal payments were allocated between the water and wastewater system based on the distribution of the proceeds of these bonds.This analysis allocated 46.32 percent of the future debt service costs to the water system and the residual 53.68 percent to the wastewater system.The future principal payments were divided by the projected committed capacity(capacity committed to specific users)to derive an estimate of the principal payment per unit of capacity;the present value of these -� future payments were then used to derive the principal payment credit. Exhibit 2-3 shows the calculation of the principal payment credit. 2.3 Past Interest Payments Charge A charge is collected for interest expense incurred by existing customers to carry capacity ' for future users until they connect to the system.Cumulative interest expense incurred since 1993 is allocated between the water and wastewater systems in proportion to the allocation of the bond proceeds usage.The cumulative interest expense is divided by the committed system capacity to derive the unit charge per mgd of capacity in the system.Exhibit 2-4 shows the calculation of the past interest payment charge. l i OW12073.DDC 2d i�