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Connection Fee Methodology <br />Buy-in Method <br />•Used for agencies with additional capacity in existing system <br />•New customers “buy in” to system that existing customers built <br />Incremental Cost Method <br />•Used for agencies that need to expand the system to serve new customers <br />•New customers pay for capital projects built to serve them <br />Hybrid Method <br />•Used for agencies that has existing capacity but requires additional capacity <br />•New customers pay a portion to buy in to existing system ad a portion to build new capacity <br />WRE recommends the Buy-in Method for the City, since there is additional capacity in the sewer <br />system to serve new customers <br />21 <br />Sewer Buy-in Fee Methodology <br />•Determine value of existing sewer system – assets based on Replacement <br />Cost Less Depreciation (RCLD) and cash balances <br />•Define units of service related to existing customers in Equivalent <br />Dwelling Units (EDUs) <br />•Revenues from buy-in fee can be used in the Sewer Enterprise Fund to <br />benefit existing customers / offset future rates <br />22 <br />21 <br />22 <br />Page 376 of 617