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Deciding on the type and amount of capital charges to impose

Another area that is entirely within the discretion of the authority is the type and amount of capital charges you plan to impose on new connections to your system. While the power to impose such fees was already established in the Municipal Authorities Act, descriptions and definitions of the charges an authority could make were provided later in Pennsylvania Act 203 of 1990.

The ability to impose these charges provides a formidable means of distributing costs evenly among all those who benefit from the project. Each of the charges is designed to recover specific types of costs incurred by the authority when constructing the system. Often the design of these systems must take into consideration the individual needs of those who will be using the system. Consequently, each of the permitted charges place a different burden on different types of users.

The following is a summary of these charges along with the basis of the charge, some calculation considerations, and an explanation of how they may affect different classes of users.

1. Connection Fees
The connection fee is designed to recover the costs of the facilities between the mains in the street and the property line. This appears pretty straight forward; however, some caution is advised. The Act permits a recovery of the actual costs incurred or the average actual costs for similar installations. This, of course, presumes that a record keeping system exists to document these costs. Such records are particularly important to authorities when these facilities are installed by authority personnel. It is even more important when a portion of the authority's normal overheads are to be billed as part of this charge. The bookkeeping system should be reviewed to ensure that the billed charges can be substantiated.

2. Customer Facilities Charges
The customer facilities fee recovers the cost to install facilities between the structure's plumbing and the authority's lateral or curb stop. For the most part, it should not create any special problems since most authorities require the property owner to provide these facilities.

3. Tapping Fees
The tapping fee is comprised of a series of component parts: the capacity part, the distribution/collection part, the special purpose part, and the reimbursement part. The first two parts (capacity and distribution/collection) relate to the authority's overall system, while the second two parts (special purpose and reimbursement) will generally relate only to specific facilities or particular areas.

The capacity part recovers the cost of capacity facilities, water and wastewater treatment plants, pumping and lift stations, major transmission mains and interceptors, and other similar facilities. The distribution/collection part recovers the cost of collection mains and related facilities, but care should be taken not to include the cost of water service lines or sewer laterals in this fee since these costs are to be collected as a connection fee. Also, if property owners were assessed a portion of the cost of these mains when they were constructed, the amount of those assessments must be subtracted from the cost of the facilities before calculating this part of the tapping fee. The value of facilities constructed by developers and dedicated to the authority may not be included when computing the fee, and some or all of the tapping fee must be waived if the authority requires a developer to construct and dedicate the necessary service facilities.

4. Other Charges
It should be noted that the act only allows for the imposition of charges enumerated by the act. This is important because authorities commonly bill other charges when an application for service is received. For example, an administrative processing fee, inspection fee or other similar charges are each established to reimburse the authority for certain costs that it will incur. It may be necessary to include the cost of these services into one of the enumerated charges in order to conform with the act and guarantee that the costs supporting the fees are properly documented.

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