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400 Jones Ferry Road <br />Carrboro, NC 27510-2001 <br />Equal Opportunity Employer <br />Printed on Recycled Paper <br />Voice (919) 968-4421 <br />www.owasa.org <br />December 18, 2017 <br />Mayor Pam Hemminger <br />Town of Chapel Hill <br />405 Martin Luther King Jr. <br />Boulevard <br />Chapel Hill, NC 27514 <br />Mayor Lydia Lavelle <br />Town of Carrboro <br />301 West Main Street <br />Carrboro, NC 27510 <br />Chair Mark Dorosin <br />Orange County Board of <br />Commissioners <br />Post Office Box 8181 <br />Hillsborough, NC 27278 <br />Subject: OWASA System Development Fees <br />Dear Mayor Hemminger, Mayor Lavelle, and Chair Dorosin, <br />In our continuing effort to provide affordable and high-value services to our current and future <br />customers and in response to a new law passed by the North Carolina General Assembly (NC <br />House Bill 436/Session Law 2017-138), OWASA is recalculating the upfront costs for new <br />connections to our water and sewer system. In general, the purpose of these fees is to recover the <br />cost of capacity needed to serve new customers. Although in the past we have referred to them as <br />service availability fees, the new law refers to them as system development fees. <br />The legislation provides us with a choice on which cost-of-service methodology we use to <br />recalculate our system development fees. The choice lies in whether or not to incorporate <br />projected costs of system expansion into the fee. In a system with few expansion-related <br />expenses on the horizon, such as ours, we propose to not include these projected costs and to set <br />the fee to only reimburse OWASA for past expenditures made to provide capacity for demand. <br />Due to discounts required by the legislation, either method would reduce connection fees; the <br />method we are proposing will reduce them more. <br />The extent of the reduction will depend on the property type and size of either home or meter, as <br />briefly summarized below. <br />Residential Customers, Individually-Metered: System development fees for new <br />connections for residential properties are based on anticipated water use using heated <br />square-footage of the home as a proxy for water use. Depending on the house size, <br />system development fees will be reduced by 25-36% under the proposed fees. For <br />example, under current rates, a new 1,300 square foot home would be charged $3,862 to <br />connect to the water and sewer system. Under the revised rates, the same new connection <br />would be charged $2,472. <br />In addition to what is required by law, it is proposed that we add a new “low-tier” for <br />system development fees to further reduce connection costs for very small homes. <br />Currently, <1,300 square feet is the smallest tier and lowest fee for this property type. <br />Attachment <br /> ORANGE WATER AND SEWER AUTHORITY <br />A public, non-profit agency providing water, sewer and reclaimed water services <br />to the Carrboro-Chapel Hill community. <br />8