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Discussion Paper March 12, 1998 4 Page 4 6 The existing Agreements of Sale and Purchase between OWASA and the Town of Carrboro, the Town of Chapel Hill, and the University of North Carolina established that OWASA should in general follow a policy where, to the extent possible, fees are "based on cost of service" methodology. In the specific case of water and sewer line extensions, this policy was made explicit by the statement "...the ultimate cost of any such extension will be borne by those primarily benefiting from such extension." The agreements also authorize either Town to construct extensions to the water and sewer systems, and dedicate the improvements to OWASA. The Towns and Orange County have statutory authority to pay for water and sewer system improvements and to recover such costs through several methods, including assessing the benefited parties. The OWASA Board of Directors has stated a willingness to seek the input of the parties and to work together to reach a construction of the terms of the original Agreements of Sale and Purchase in light of contemporary circumstances and needs. OWASA has the authority to make special assessments against benefiting properties for all or part of the costs of constructing, reconstructing, extending or otherwise building or improving water and sewer systems (G.S. 153A -185). From 1977 to 1993, OWASA extended water service to one project area and sewer service to five project areas. All of the project costs were assessed to the benefited parties. There were no subsidies from OWASA; however, several of the projects received State grant funds which reduced assessments to the benefited parties. jbr t.VomicelamiproWocs4eports\w pol_1 O.sam