Equitably Allocating the Cost of Providing Sanitary Services to an Adjoining Municipality

The City of Oakdale, Minnesota was asked to accept wastewater flows from a proposed new development in the adjacent City of Lake Elmo, Minnesota. The proposed new development would require the extension of wastewater infrastructure at a considerable cost to the City of Lake Elmo to provide a connection to its system. The City of Oakdale had infrastructure nearby that would only require the upgrading of a single lift station to accept these new flows. However, the challenge was to develop a system for equitably allocating Oakdale's costs for accepting these flows. The cost allocation needed to include all direct and indirect cost the City of Oakdale incurs in operating its wastewater system and also a return to the City for both the risks it bears in the operation and financing of the wastewater system and the investments it has made in the system. The distribution of costs needed to include administration, operation and maintenance of lift stations, and operation and maintenance of the collection system. The challenge in developing the allocation was that the Lake Elmo flows would only use a portion of the collection system and two of their fifteen lift stations. In addition, the cost allocation needed to be a system that could be updated annually and one that the City of Lake Elmo would agree was equitable as well. This session will provide a detailed discussion of the cost allocation methods developed for each functional cost component of the wastewater system and the logic behind the allocation. The final cost allocation model will be presented and discussed. The speakers will highlight the benefits of the process developed and its equity that made it acceptable to both cities. Key learning objective: Discuss and demonstrate a process to equitably allocate the cost of accepting wastewater flows from a neighboring community as it flows through portions of your collection system to some of your lift stations until it reaches the regional interceptor to be conveyed to the treatment plant.