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Capacity Charge FAQs

What is a Capacity Charge? 

A Capacity Charge, also called a Connection Fee or Participation Fee, is paid to the District for the privilege of connecting to the District’s sewer facilities. The District's facilities include local collection systems, trunk lines, treatment plants, and capacity. The Capacity Charge consists of two components: a Local Capacity Charge and a Regional Capacity Charge.

How is the Local Capacity Charge Different from the Regional Capacity Charge? 

The Local Capacity Charge funds required enlargements and expansion of the sewer collection system. The Regional Capacity Charge is collected by the District and paid to the City of Roseville, which oversees the operations and financing of the two regional treatment plants by the South Placer Wastewater Authority (SPWA). The Regional Charge funds the SPWA debt service; maintains a Rate Stabilization Fund; and provides monies for additional expansions, modifications, or improvements to the Regional Wastewater Facilities.

How are Capacity Charges Determined? 

California Government Code §66013 requires that capacity fees be based on the "reasonable cost" to accommodate additional demand from new development or the expansion of existing development.  Fees must comply with Propositions 26 and 218.  

How are the District’s Capacity Charges Determined? 

The basis for the Monthly Service Charge and the Capacity Charge is the Equivalent Dwelling Unit (EDU).  An EDU is used to determine design and fee requirements based on the typical average flow and strength of wastewater generated from a single-family residential (SFR) home. Charges for wastewater generated from non-residential, commercial, or industrial uses are calculated using factors found in Chapter 2.03.03 of the Sewer Code. All residential units including multi-family units are assessed at the rate of 1 EDU per unit.

The District’s Local Capacity Charge is a capacity fee calculated based on an incremental-cost approach whereby new customers pay for the incremental investment necessary for system expansion. The District has a detailed listing of capital improvements needed to serve new developments identified within its System Evaluation and Capacity Assurance Plan (SECAP). The SECAP identifies the upsizing of existing sewer trunk lines and new sewer trunk lines to convey flow from future developments within the service area to the regional treatment plants. Under this approach, the cost of these growth-related future facilities is allocated to the new developments they serve.

What are the District’s Current Capacity Charges? 

The current Capacity Charge is $14,767 per EDU.  This charge is comprised of a $4,915 Local Capacity Charge and a $9,852 Regional Capacity Charge. The Capacity Charge is reviewed regularly to ensure that the District collects the appropriate revenue to pay for necessary system expansions and enlargements due to development. The Capacity Charbe is adjusted annually to keep up with construction costs.

The District does not collect a Capacity Charge for Accessory Dwelling Units (ADU) as defined in the District Sewer Code, Chapter 2.03.05 and California Government Code Section 65852.2. Dwelling units that do not meet the ADU definition in the Sewer Code and are created for individual home ownership are required to pay a Capacity Charge.

Are there Other Funding Sources to Offset Capacity Charges for Specific Uses? 

The District has limited sources of revenue which include monthly service charges, fees to recover for services rendered, and property tax revenues.  Due to external requests, the District has examined using a portion of its property tax revenues to reduce the Local Capacity Charge for proposed low-income housing units. State and local government may expend public funds to achieve goals such as facilitating affordable housing solutions, so long as the expenditure is rationally related to a legitimate government interest, does not constitute a gift of public funds, and complies with Propositions 218 and 26.

There have been proposals to expend public funds to assist in the development of affordable housing supply, even if it incidentally benefits a private developer. However, it cannot constitute a gift of public funds and must be a legitimate expenditure. The issue faced by the District is the availability of discretionary funds. The District’s financial resources are exclusively dedicated to the enterprise of providing sewer collection and treatment to ratepayers within its service area. Property taxes collected for the District are deposited into the Operating Fund to supplement revenues and offset the Monthly Service Charge. The current rate structure subjects these charges to Proposition 218. Shifting already dedicated funds to enable a subsidy would run afoul of Proposition 218’s prohibition of rates and charges exceeding the reasonable cost of providing service and be considered an impermissible tax without voter approval as required by Proposition 26. The District would need to submit a special tax for voter approval to use property tax revenues for this purpose.

Why are the District’s Capacity Charges Higher than Other Local Agencies? 

Fee structures and the factors influencing them can vary significantly due to infrastructure requirements, financial situations, and local regulations. In California, municipalities, such as Cities and Counties have the authority to establish their own regulations and guidelines for development projects, including sewer infrastructure. Therefore, the process and requirements can differ depending on the local jurisdiction. Independent sewer districts are financially self-sufficient entities that operate independently from local municipal governments. They rely on their own revenue sources, including capacity charges, to fund their costs. Municipal governments have access to a broader range of revenue streams which can be used as subsidies.

In addition, jurisdictional agencies with authority over land use can mandate development to make improvements through Development Agreements. Development Agreements are a tool to facilitate the construction of infrastructure, including sewer facilities. When it comes to sewer facilities, municipalities typically require developers to provide adequate sewage infrastructure to accommodate the increased capacity resulting from their development. A benefit of this is that cities and counties do not have to impose a separate development impact fee, or Sewer Capacity Charge, to pay for sewer trunk facilities. City and County governments have the ability to include the District in a development agreement for a proposed development project so that sewer infrastructure can be provided to the District to offset the Local Capacity Charge.

Has the District Considered Varying Rates for Residential Uses? 

The South Placer Wastewater Authority partners (the City of Roseville, Placer County, and the District) are in the process of conducting an EDU analysis of the various residential sewer uses and their impacts on the sewer system to establish a nexus for the usage of various residential housing types. The study will review alternate assessment methods such as square footage of the unit, fixture unit analysis, and the number of persons per household (PPH). Rate structures must establish a nexus between the use and the charge imposed, comply with existing bond covenants, be administratively feasible, and be properly noticed and heard before the public.


Item 7.1 Board Report Sewer Participation Charge Analysis.pdfItem 7.1 Presentation Local Participation Fee 2024-0104.pdf
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