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• • Attachement A <br /> maximizing capital expenditures, while at the same time, minimizing rates. <br /> This is accomplished through a variety of techniques and funding sources. <br /> Table 1-2, provides a summary of the general approach or methodology that <br /> will be used to analyze the capital expenditures. <br /> Table 1-2 <br /> Overview of the General Methodology For Reviewing <br /> the Financing of Capital Project Expenditures <br /> + Total Capital Projects- <br /> ✓ Renewal and Replacement Capital Projects ; <br /> ✓ Legally Mandated Capital Projects <br /> ✓ System Growth and Expansion Capital Projects <br /> — Outside Funding Sources- <br /> ✓ Capital Reserves <br /> ✓ Low-Interest Loans (State and/or Federal) <br /> ✓ Customer Capital Contributions <br /> ✓ Connection Charges (System Development Charges) <br /> ✓ Borrowed Funds/Lon�Term Debt(e.g. Revenue Bond) <br /> = Capital Projects Financed With Rate Revenues (Deprec. Exp.) <br /> The basic framework shown above is developed on a year-by-year basis for <br /> each of the projected years included in the revenue requirement analysis. In <br /> summary form, the general approach is to list all capital projects in each <br /> year, and then determine the various outside funding sources for the projects. <br /> These outside funding sources may be low-interest loans, customer capital <br /> n ri i n T <br /> co t but o s, etc. he balance of projects unfunded by these means, must be <br /> financed from a combination of long term debt and rates. It is the balancing <br /> of the use of long term debt to the impact upon rates which is critical to the <br /> analysis. <br /> EES has identified three types of capital projects which the City may incur. <br /> These include renewal and replacement capital projects, legally mandated <br /> projects, and finally, system growth or expansion related capital projects. <br /> Renewal and replacement capital projects are those related to the <br /> refurbishment of the existing facilities and plant in service. Renewal and <br /> replacement capital projects should ideally be paid for via rate revenues. <br /> However, to minimize rates they are often financed from a combination of <br /> rates and long term debt. In contrast to the above, legally mandated capital <br /> projects are those which are required to meet certain legislation or <br /> health/safety requirements (e.g. Safe Drinking Water Act). Legally <br /> mandated projects are often financed through a combination of low-interest <br /> loans and market rate long term debt (e.g. revenue bonds). In the last few <br /> years, it has been these types of capital projects that have significantly <br /> impacted the water rates of utilities across the United States. Finally, <br /> Scope of Services 1-4 <br />