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3. DESCRIPTION OF THE SAC SYSTEM The Metropolitan Council Environmental Services(MCES) Sewer Availability Charge(SAC)is a charge to Customer Communities(Community) for the reserved capacity costs of the Metropolitan Disposal System(MDS). SAC has been levied since 1973 by MCES, and its predecessor agencies, for new Capacity Demand or increased volume use to the MDS. This method for allocating future costs is authorized by Minnesota Statutes section 473.517 subdivision 3. The regional SAC rate is periodically set by Metropolitan Council(Council)action(and is usually increased effective each January 1st). SAC is assessed based upon the estimated maximum potential daily wastewater flow,which is in turn based upon the usage of individual properties. Single family houses,townhouses, Condominiums,duplex units and most Apartments each equal one SAC per Dwelling Unit. For non- Residential Properties, one SAC unit is defined as 274 gallons of daily wastewater capacity. Commercial Properties are assessed SAC units based on estimated maximum potential daily wastewater proportionate to 274 gallons per day. Industrial Properties are assessed SAC units based on adding two components: i)Commercial criteria(see Appendix A), and ii)the maximum daily Industrial Wastewater for process flow. 3.1 History of the SAC Program While SAC has been levied by MCES since 1973, it was not part of the original rate structure of the regional sewer utility. MCES,then called the Metropolitan Sewer Service Board,was created in 1969 by Minnesota Statutes chapter 473C with mandates to provide service for the rapidly growing population in the Metropolitan Area and to clean up the area's rivers and lakes.At the time the law was passed, Communities in the Metropolitan Area struggling to keep up with rapid growth were operating about 35 treatment plants.Many treatment plants served limited local areas and they often caused serious water quality problems in the lakes and rivers which received their effluent. Heavy capital costs were inevitable as the Metropolitan Sewer Service Board needed to expand and improve treatment and collection capacity for the area to serve a population that grew 20 percent in the 1950s and 23 percent in the 1960s. The question facing the Metropolitan Sewer Service Board in the early days was how to pay for the share of capital projects reserved for future users. Then, as now,the"reserved"share represents excess capacity built into the current capital projects, so that treatment plants and interceptors provide capacity not only for today's population but for the population growth expected over the next 20 to 80 years. This reserved capacity does not include capacity for the amount of allowed Inflow and Infiltration(I/I)(allowed UI is considered used capacity). However, excess UI does take up reserved capacity that should be available for growth. The practice of building reserved capacity is based upon experience and economy. The physical Sites of sewer pipes and treatment plants seldom change, so major land acquisition occurs only once per Site. Further economies of scale in construction make it more cost effective to provide some reserved capacity in these facilities at the time the facility is first built,rather than to make small, frequent expansions in capacity. In 1971 and 1972, its first two years of operation,the Metropolitan Sewer Service Board allocated the cost of reserved capacity to individual Communities based on each unit's projected demand. However,many Communities,particularly those in the early stages of development, found it difficult, if not impossible,to pay lump-sum charges for reserved capacity. These developing Communities often had neither the population nor the tax base to finance the cost of capacity they would need in future years. It quickly became apparent that an alternative method of paying for Page8