Commissioners’ Briefing on Front Foot Benefit and House Connection Rates November 2015

Front Foot Benefit (FFB) 2

Background 3 WSSC constructs major transmission and collection lines as part of the Capital Improvements Program and pays for them with System Development Charges or bonds Developers build most of the smaller water and sewer mains serving local and residential communities By law, WSSC can only build the smaller lines for single lot applicants or for health hazard applicants WSSC didn’t complete construction on any of these extensions in 2015 Subsequent to the passage of legislation transferring substantially all subdivision-sized line construction responsibility from WSSC to developers, front foot footage declined significantly.

Background (cont.) 4 Applications for projects submitted prior to the effective date of the legislation could still be constructed by WSSC if the applicant so desired. To recover the cost of constructing the smaller water and sewer lines, the State of Maryland has authorized WSSC to levy a front foot benefit charge to those properties benefiting from the construction

Historical Front Foot Benefit Rates 5 Constructed FFB FootageApproved FFB Rates Calculated FFB Rates WSSC Subsidy Assessment YearWaterSewerWaterSewer WaterSewer ,172 89,879 $ 2.96 $ 5.28 $ 2.96 $ 5.28 $ ,162 23, ,301, ,895 7, ,410, ,230 6, ,718, , , ,431 8, ,075, , , (1) , ,924, (1) Amortization period changed from 23 to 20 years. $4.80 is the 20-year equivalent of a $ year assessment. $7.18 is the 20-year equivalent of a $ year assessment.

Front Foot Benefit Rates 6 Rates are effective January 1 and are applied to all properties abutted in the prior year Once set, rates cannot be increased Rates are based on actual costs of construction Rates are established on a per foot basis The front foot benefit charge is uniform for each class of property

Proposed 2016 FFB Rates 7 Establish maximum Front Foot Benefit rates per foot of $4.80 for water and $7.18 for sewer to be paid annually over a period of 20 years

Housing Connections (HC) 8

Background 9 Rates are effective January 1 and are applied to all connection applications filed in that year and any deferred payment option connections completed during that year The deferred payment option is effective for owner-occupied single family dwelling units Rates are by size and type of connection and are estimates of the future cost of construction The basis for the rates is historical cost, adjusted by factors that have a potential impact on future costs (inflation, revised regulations, etc.)

Improved and Unimproved Rates 10 Separate rates are charged for two types of house connections:  Improved connections are made to existing water and sewer lines installed in a street, road, alley or right-of-way which has been paved or otherwise improved  All other connections are unimproved (consequently, an extension must also be built)

Proposed 2016 HC Charges (Residential Small Size) 11 UNIMPROVED AND IMPROVED RESIDENTIAL SMALL SIZE CURRENT PROPOSED CURRENT PROPOSED UNIMPROVED UNIMPROVED IMPROVED IMPROVED RATES 2015 CHARGES 2016 CHARGES 2015 CHARGES 2016 CHARGES Water (inside and outside meters): 1”$ 2,250 $ 2,250 $ 7,250 $ 7,250 1 ½” 2,250 2,250 7,250 7,250 2” 3,250 3,250 7,750 7,750 Sewer: 1 ¼” & 1 ½” pressure sewer 3,500 3,500 10,750 11,500 4” & 6” 3,500 3,500 10,750 11,500 Deferral option connection, residential only, where allowed: Water (inside and outside meters): 1” $ 2,350 $ 2,350 $ 7,625 $ 7,625 1 ½” 2,350 2,350 7,625 7,625 2” 3,400 3,400 8,150 8,150 Sewer: 1 ¼” & 1 ½” pressure sewer 3,675 3,675 11,300 12,075 4” & 6” 3,675 3,675 11,300 12,075 Change in the Sewer Improved rates.

Proposed 2016 HC Charges (Other Rates) 12 CURRENT PROPOSED 2015 CHARGES 2016 CHARGES NON-RESIDENTIAL SMALL AND LARGE SIZE Water (inside and outside meters) Estimated Cost Estimated Cost Sewer Estimated Cost Estimated Cost RIGHTS OF WAY (connection built by plumber) Water: 1” $ 375 $ ½” ” residential ” non-residential and ½ of the unimproved large connection rate Sewer: 1 ¼” & 1 ½” pressure sewer ” & 6” ” & larger Estimated Cost Estimated Cost No changes from current rates.