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J~~a~k~.,,~c 3 <br />November 10, 2008 *DRAFT* <br />Dear Sir or Madam, <br />This letter is an invitation for your participation in public hearing to discuss changing the rate <br />structure for the Efland Sewer System (System). Some of those receiving this notice are <br />current customers of the System. Others are receiving this notice because they may be served <br />by the expansion of the system, which is currently being permitted through the State. <br />When: November 24, 2008 at 7:30pm <br />Where: Battle Courtroom <br />East Margaret Lane <br />Hillsborough, NC <br />What: Public Hearing on a proposed increase in Efland Sewer System rates <br />The proposed rate schedule that will be presented to you at the public hearing will raise the <br />sewer rate this fiscal yeaz and for the next two fiscal years. The increase in the rate is <br />necessary for several reasons. <br />• The rate charged currently has not changed since the system started operatnig in <br />1987. <br />• The costs of operating the system have increased steadily since 1987. <br />• Current rates only pay for 25% of the cost of operating the system. <br />Most County or City operated utility systems are self-sufficient. The rates are set so that they <br />provide 100% of the cost of operating the system. Currently, Orange County lias to provide <br />75% of the budget for the System, since revenue from the current rate only provides 25% of <br />the System's costs. At the end of the proposed three-yeaz cycle of rate increases, the rate <br />should generate enough revenue to cover the costs of operating and maintaining the sewer <br />system. <br />As an example of the differences between the costs to run the system and the current rate, the <br />County pays the Town of Hillsborough about $140,000 per year to treat the wastewater from <br />the System. The County only collects about $63,000 per yeaz from the rates. So, the <br />treatment costs alone are more than double what is collected from our customers. In addition <br />to the treatment costs paid to the Town of Hillsborough, the County must pay about $60,000 <br />per yeaz for routine maintenance, utilities, billing and permit fees. <br />The System is required to have astate-issued operating permit. One of the conditions of that <br />permit is that we set aside money every year for large future projects that we lrnow are coming <br />up. This is called a Capital Improvement Plan. Over the next ten years, it is estimated that the <br />Efland Sewer System will need about $500,000 in major repairs and rehabilitation. This <br />