ABSTRACT
This chapter presents several ways in which to calculate system development charges (SDCs) for water, wastewater, and storm water facilities. It suggests which approaches are appropriate under certain conditions, and which are not. The chapter explores market capacity method, prototypical system method, growth-related cost allocation method, recoupment value method, also known as the buy-in method, replacement cost method, marginal cost method and average cost method and system wide and growth-related cost-attribution method. The problem is that by charging SDCs in one community based on a prototypical system, the SDCs may exceed the actual costs of the community in installing a system, which would be inconsistent with rational nexus criteria. The SDCs would be too high and violate rational nexus principles because the capacity needed to accommodate new development is less than the capacity new development financed. As such, the recoupment approach will usually result in SDCs lower than the cost of accommodating new development.
