System Development Charge (Impact Fees)

The System Development Charge is a contribution of capital towards existing or planned future back-up plant facilities necessary to meet the service needs of new customers. The charges are intended to provide funds to be used to finance all or part of capital improvements necessary to serve new customers.

Each of our engagements was to calculate the system development charge for new connections and the expansion of the water and sewer system.  Each study included the calculation of the Buy in Method, the Incremental Method and the Equivalent Residential Units Method. 

Since 1995, Pioneer Consulting has completed more than 20 system development charge studies.
Our work-plan for each community was as follows:

1. Develop Objectives – This step involved establishing the goals and objectives of the department. The objectives included funding major capital improvements, minimizing debt, equity recovery and maintaining the retained earnings and cash reserves to meet the capital needs of the system
2. Identify and Update Capital Improvements Schedule – The calculation of the SDC may or may not include future capital improvement costs. Many of our studies do include future capital projects.
3. Update the Fixed Assets -  This step includes updating of the fixed assets for the water and sewer system. We calculated the original cost, accumulated depreciation and the net book value for all fixed assets.
4. Calculate the System Development Charge -  This step includes calculating the SDC based upon the updated fixed assets. We calculated the SDC based on the “Buy In Method” , the “Incremental Method”
5. Prepare Reports – We prepared the reports outlining our calculations and recommendations.
6. Present Our Findings – We met with the governing officials to discuss our finds and recommendations.

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