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6/02/2025 Existing Conditions Report Castlewood County Service Area (CCSA) 12 charges). The calculation of charges does not include a contingency for emergencies. No County policies regarding CSA reserves or fund balances were identified. Water M&O Service Charges Service charges based on annual costs provide funding for water maintenance and operations. Total service charges increased significantly in recent years, primarily due to water operations and maintenance as noted above in the section Non-recurring Water M&O Expenditures. Water M&O rates were $1,089 per meter/connection for nine years through FY24,33 increasing to $2,958 in FY25 or nearly triple the prior year. The following year, FY26, charges are projected to increase to $3,940 if the proposed supplemental charge for prior year fund balance deficits (see below) applies to a full year of FY26. The supplement is proceeding through the notice and hearing process.34 A number of factors contributed to water O&M costs exceeding revenues, a need for higher rates, and reductions in fund balances that triggered a County loan and supplemental assessment. Cost factors included: 1. Unforeseen leaks and pump failures during fiscal years FY2022-23 and FY2023-24, demanding immediate attention.35 2. Water system configuration and operation information missing , or system improperly configured, contributing to higher emergency repair costs.36 3. Multiple changes in O&M contract providers at increasing contract costs and additional charges.37 4. Water overage charges for usage exceeding CCSA’s allocated 90MG annually due to excess use,38 leakage, and possible impacts during water tank repair and testing.39 Prior years’ rates did not anticipate or incorporate these costs, and did not provide reserves for contingencies and emergencies; consequently, ACWPA added a supplemental charge beginning in FY2025-26 to repay the County loan40 for an accumulated fund balance deficit to that point. 33 Annual Report, Fiscal Year 2023-2024, Table 2. 34 FY26 Annual Report, 5/6/2025, recommending rates for FY2025-26. 35 Castlewood CSA R-1967-1 Engineer’s Report for Proposed Supplemental Service Charge, April 22, 2025, pg. 5-6. 36 Review of Five Years of Water Maintenance Invoices, CPOA Water Committee 3/20/2025. 37 Castlewood CSA R-1967-1 Engineer’s Report for Proposed Supplemental Service Charge, April 22, 2025, pg. 5-6. 38 CCSA subsequently implemented charges for excess use by residents [date]. 39 Review of Five Years of Water Maintenance Invoices, CPOA Water Committee 3/20/2025. 40 See ACPWA memorandum to BOS with attached resolution R -2024-484, Oct. 2, 2024.