COST EFFECTIVENESS ANALYSIS
        Prepared by

Lombardo & Associates, Inc.
       90 Canal  St.
    Boston, MA  02114

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                                  TABLE OF CONTENTS

    1.  Cost Effectiveness Analysis:   Definition  and  Calculation  Procedure	1
   1.1.  Introduction	1
 1.1.1.  Innovative/Alternative Preference	.	2
   1.2.  Definitions	2
 1.2.1.  Capital  Costs			2
 1.2.2.  Operations and Maintenance Costs	2
 1.2.3.  Salvage  Value	2
 ^
   1.3.  Calculation Procedure for Cost Effectiveness  Analysis	3
 1.3.1.  Common Assumptions	3.
 1.3.2.. Capital  Costs..!	3
1.3.2a.  Cost of  Construction	3
1.3.2b.  Cost of  Land	3
1.3.2c.  Interest During Construction	3
1.3.2d.  Contingencies	5
1.3.2e.  Administrative, Legal, Financial and Engineering Design	5
1.3.2f.   Summation of Capital Costs Computation	5
 1.3.3.  Annual Operations and Maintenance	.	5
1.3.3a.   Incremental  (Growth - Retail) Annual 0 & M Costs	..6
1.3.3b.   Replacement of  Onsite  Systems		<	8
1.3.3c.   Energy Cost  Escalation	,....	 9
1.3.3d.   Other On-Site Operating  Costs	g
 1.3'.4.   Salvage Value	-	 9
1.3.4a.   Useful Life  and Failure  Rate of Mounds	11
1.3.4b.   Summation of Salvage Value for  Onsite  Systems	12
1.3.4c.   Land and Easements	13
     2.  Cost Effectiveness Analysis Methodology	,	13
    2.1.  Determination of  Areas of Analysis	13
    2.2.  Methodol ogy	13

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    2.3.  Growth ................. ..... ...................  ..............            15


      3.  Example Analysis.. ..............................................         15


    3.1.  Background Information ...... . ....................................... _   15.


  3.1.1.  Onsite  Systems [[[ -]5


  3.1.2.  Communal  Systems ............ . ..........................................  20


    3.2.  Problem Area 4 [[[    20


  3.2.1.  Onsite  Mounded Systems ............ . ................. . .................. 20


 3.J?.la.  Design Basis. . ................................. . ............ . _ ......... 20


 3.2.1b.  Capital Costs .................................................. . .......  20


 3.2.1c.  Annual 0 & M Costs ........................ .................... ........ ;  24


 3.2. Id.  Salvage Value [[[ c ...... 24


 3.2.1e.  Total  Present  Worth....... .................... ..........                 25



  3.2.2.  Communal  System ........... .                                               oir
                                      . ...... * .....  .............. , ............ . ... do
 3.2.2a.   Design Basis ...............
                                         ........... .... ..... ................... . . C.3


 3.2.2b.   Capital Costs ................. .
                                         "* .......................  ........ . ..... .:>

 3.2.2c.   Annual 0 & M Costs ..........................


 3.2.2d.   Salvage Value .......... . ............... ..... c ....... _ .......             2?


 3.2.3.   Comparison of System  by  Costs .................. .... .......               2g


   3.3.   Problem Area 14  (Downtown) ....... . ____ . ........ ., .............           2g


 3.3.1.   Design Basis ............. ............. . ............                      2g


 3.3.2.   Onsite  Solutions ........................ . ........... ..........          30


3.3.2a.   Capital Costs ____  ____ ...................... t ......... _
                                                                  ""*   C rB**. JU

3.3.2b.  Annual 0 & M Costs ................. ..............
                                                                  **************** <5-f

3.3.2c.  Salvage Value .........................................
                                                                ********** **** Ot

3.3.2d.  Total Present  Worth ........................ ;.... ......
                                                                   """* *a*ft J^

 3.3.3.  Communal  System for Downtown  Area ......
                                                                   ******'*****"* e w^

 3.3.4.  Comparison of  Onsite  vs. Communal ..........                              o7
                                                   **............ j/

 3.3.5.  Townwide Analysis .......... ...... . ........ c . ; .........                   -7



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  4.  User  Costs	41



4.1.  User  Costs  for Downtown  Residents	



4.2.  User  Costs  for System Being  Initially  Repaired	42



.4.3.  User  Costs  for Residents Not Receiving System Repairs		43


                                                                           44
      Questions		*	""


       EPA Cost-Effectiveness Analysis Guide!ines	45

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                             LIST OF FIGURES

1-1  Elements of Total Capital Cost	4
1-2  Annual Operation and Maintenance		   5
1-3  Fixed and Incremental Operations and Maintenance Costs	.7
1-4  Components of Salvage Value at End"of Design Period	14
2-1  Cost Effectiveness Procedures for Small Community Systems	15
3-1  Problem Area 4	26
3-2  Problem Area 14 Communal Solution	_>33

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                                      LIST OF TABLES
c
        1-1  Uniform Present Worth  Discount Factors Adjusted for Energy
             Cost Escalation	
                                                                          .10
3-1  Mounded Soil Absorption Bed for lO-Minutes per inch Perc:  Size
     Requirements and Associated Costs.!	17

3-2  Mounded Soil Absorption Bed for 20 Minutes per.inch Perc:  Size
     Requirements and Associated Costs	.....	....18

3-3  Mounded Soil Absorption Bed for 30 Minutes per inch Perc:  Size
     Requirements and Associated Costs.	19

3-4  Communal Solutions for' Problem Areas	21

3-5  Cost Basis for  Onsite Option	  31
          **

3-6  Costs of Collection System	34

3-7  Wastewater Treatment Facil ity:  Present Worth	35

3-8  Townwide Analysis:   Onsite/Small Communal	39

3-9  Townwide Analysis:   Onsite/Large Communal...	40

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                        COST EFFECTIVENESS ANALYSIS
1.   Cost Effectiveness  Analysis:  Definition and Calculation Procedure


    1.1   Introduction

            This  section will present the general  cost-effectiveness
         analysis  procedures appropriate to small communal  and onsite waste-
         water treatment systems design.  The cost components of the analysis-
         will first  be  defined and the general procedures for their determination
         will be outlined.  Three examples of the application of the analysis
         will be presented for the Woodrock Community.

             The  process of selection of an appropriate technical  option is
         influenced  by, three .general factors:

                  * the technical feasibility of the  option
                  * the presence of any over-riding,  non-monetary
                     objection to the option
                  * the cost effectiveness of the option

             In order  to be considered further, a particular option must be
         theoretically  capable of providing the desired degree of treatment to
         the waste stream of concern.  Technically feasible options must be
         examined  for their acceptability to the community  and incompatibility
         with local  environmental conditions.  Finally, those options which
         survive this preliminary sifting process are compared using the cost-
         effectiveness  analysis  (based upon the present worth method with an
         EPA specified  discount rate and 20 year planning period).   The appro-
         priate technical option would be the most cost effective of these pre-
         selected  alternatives.

             The  cost  effectiveness analysis determines the total  Present
         Worth of  all wastewater treatment alternatives for the community.
         The Present Worth consists of:

             -  Construction and Development Costs (Capital Costs)
             -  Present Worth of Operations and Maintenance Costs
             -  Salvage Value of Structures, Equipment, and Land

         This Present Worth must include all costs, both public and
         private.

         The general cost effectiveness formula can be  stated briefly as:


                 Capital Costs + Present Worth of Annual 0 & M Costs -
                 Present Worth of Salvage Value = Total Present Worth


         The determination of each of these components  will be discussed in
         greater  detail.  An example of the general cost effectiveness pro-
         cedure can  be  seen in the December 27, 1978 Federal Register.

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                                                                            2.-
     1.1.1   Innovative/ Alternative Preference.   Under present EPA regulations,
            the  Present  Worth of Innovative/Alternative options  may be  15%
            greater  than the most cost effective conventional option and
         -  still  be selected.  This preferential  procedure  is designed to
            encourage the investigation and application of new technologies.


1.2  Definitions

                                     , '
     1.2.1   Capital  Costs-   The capital costs of any technical option
            are  the  initial  costs of providing a structural /process
            framework for the waste treatment.   Capital costs include:

                *  costs of construction
                *  costs of land and easements
                *  contingencies
            _ *  engineering costs
                    administrative, legal and financial costs
                               interest during construction)
     1.2.2  Operations  and Maintenance Costs.  The annual  operation
            and maintenance costs are those costs associated with  providing
            an acceptable level of wastewater management with the  facilities pro-
            vided.   Annual operations and maintenance costs consist  of:

                 *   operator's salaries                                       f
                 *   routine replacement of equipment and equipment
                    parts (including septic system replacement)
                 *   energy and chemical costs
                 *   other requifred annual costs (management, water quality
                    monitoring, etc.;
                 *   deductions of revenues from energy recovery, crop
                    production and other valued outputs (such as irriga-
                    tion water)
                 *   incremental costs which depend on quantity of  flow
                    treated


     1.2.3  Salvage  Value.  Salvage value is the residual  worth of com-
            ponents  of  the waste treatment facility at the end of  the
            design period.  If a component has a useful life longer  than
            the design  period, then a salvage value (based on a fraction
            of the component's initial value) can be determined.   Such
            components  include:

                 -   1 and
                 -   wastewater conveyance structures
                 -   other structures (buildings, etc.)
                 -   equipment, for which the useful life of the equipment
                    is  longer than the planning period.

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                                                                               3.
1.3  Calculation Procedure For Cost Effectiveness Analysis

          The calculation procedure was stated briefly  in Section 1.1.
     In review the total Present Worth of an option is  found by:


                         Capital Costs

                      +  Present Worth of Annual Operations and Maintenance Costs

                      -  Present Worth of Salvage Value
                         Total Present Worth


          Determination of each category of costs will be examined in
     greater detail in the next sections.                              '


     1.3.1  Common Assumptions (1)  In order to, calculate the cost
            effectiveness of any particular alternative, the common
          _' factors must be defined.  These are:'

                  *  a 20 year planning period
                  *  land appreciation rate of 3% per year
                  *  energy cost escalations based on EPA 40 CFR Part 35 (2)
                  *  when this analysis was originally performed, the Water
                     Resources Council mandated interest rate was 7 1/8%.
                     It is noted that the present rate is 7 5/8%; however,
                     the 7 1/8% rate will be retained in this study.


     1.3.2  Capital Costs.  These costs are a summation of the previously
            defined components in Section 1.2.1.  The means of estimating
            each cost will be discussed briefly.  Figure 1-1 presents the
            summation procedure in a graphical form.

     1.3.2a Cost of Construction.  These costs can be estimated from
            experience with similar facilities, industrial processes
            using similar technology, manufacturers' data, and EPA cost
            publications.  Cost estimates should be updated, where necessary,
            using the appropriate index (ENR, Wholesale Price Index, EPA indices).

     1.3.2b Cost of Land.  Land costs are variable, and should be estimated
            either from experience or from local sources (real  estate agencies,
            etc.).

     1.3.2c Interest During Construction (I)  When  capital  expenditures can  be
            expected to be fairly uniform during the construction period, interest
            during construciton may be calculated  as:


                 I = i (PCi); where

                     I = the interest accrued during the  construction period
                     P = construction period  in years
                     C = total  capital  expenditures
                     1 = discount rate (7-1/8%  per annum)

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                                                           t.     >

                                                           4.
                        FIGURE  1-1

            ELEMENTS OF TOTAL CAPITAL COST
      CONSTRUCTION
                             LAND
ITEMS
QUANTITY
PRICE
                                      V
                                   EASEMENTS
QUANTITY
UNIT PRICE
CONSTRUCTION
           CONTINGENCY
           ENGINEERING
           LEGAL/
             ADMINISTRATIVE
         TOTAL  CONSTRUCTION
                              TOTAL CAPITAL
                                                            c

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                                                                     '                   5.


                             If expenditures will not be uniform, or the construction
/                       period is longer than 4 years, interest during construction
V                       should be calculated on a year-by-year basis.  This is usually
                     .   included in the administrative/legal/financial portion of capital
                        cost determination.                                       -aHlt,ai


                 1.3.2d Contingencies.  Contingencies are usually calculated as a fixed
                        percentaa* of the total construction costs,  reflecting-the precision
                        and detail of the  construction cost  calculations.-  -Forthis analysis,
                        a value of 20% is -assumed^

                . 1.3.2e Administrative, Legal. Financial and Engineering Design.  The
                        administrative, legal and financial costs are determined for
                        each aspect of the project and are included  in the Total Capital
                        Costs.  Interest during construction is normally included in this
                        section.

                             Engineering design is based on estimations by the design firm
                        It is noted and emphasized that actual engineering and administra-
                        tive costs cannot be based on a percentage of construction costs.

                 1.3.2f Surnmat1on'_6f. Capital ;C6sts'-Computation.  In suranation, capital
                        costs are calculated as follows:.              . .
                        Component

                        Cost of Construction	   A
                        Contingencies	.-	!!"*6*2QA
                        Engineering Design	!!!!!!!!..!  ED
                        Financing,  Administrative  and Legal...*!!.*!*.'!  FI
                             Land and Easements	,	"   [_
                             Total  Capital  Expenditures	!*1.20A + ED +  FI -f L


                 1-3.3  Annual  Operations and Maintenance.  These costs  are a
                       summation of  the previously listed annual costs.  The present
                       worth of  the  annual 0 & M cost is found as shown  below:

                       Component                               Amount

                       0 &  M Costs		      B

                       Revenues	    r \

                       Total Annual 0 & M Costs	     B-C


                       Figure 1-2 presents this procedure graphically.

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Routine
 0 & M
                                  Figure 1-2

                      Annual Operation and Maintenance
                                                     6.
   Chemicals and
   Energy Costs
   (or recovery)
                               Annual  0 & M

Repair/Replacement
of Failing Systems
1

'
Present Worth
0 & M
          The Present Worth of annual 0 & M costs "is found by multiplying
          the sum by the Present Worth Uniform Series Factor.  A design
          period of 20 years and a discount of 7 1/8% are assumed.  Thus:
          Present Worth   =   10.49186
                      (B-C)
  1.3.3a Incremental (Growth -'Related) Annual 0 & M Costs.  There are annual
         costs which increase throughout the project primarily due to orowth
         within the community.

         The present worth of these increasing costs is found as shown:


              Component               Amount in Last Year of Planning Period

         Incremental 0 & M Costs	                    n

         Incremental Revenues	                 __(-)

                                                        D-E  (See Figure 1-3}


         To obtain the present worth,  the average incremental  annual  cost is
         multiplied by the gradient series factor:
                                                      c
                  (D-E)
                of years in-planning period)   X  PWF =  PW

                  D-E
                  20
X  (76.38969)  = 3.8195 X (D-E)  = PW
        The total annual  0  &  M present  worth  is the sum of the fixed  annual
        0 & M present worth and the  incremental annual 0 & M present  worth::.


        Total 0 & M Present Worth  =  (10.49186) X  (B-C) + (3.8195) X (D-E)
        Figure 1-3 presents a graphical representation of

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                                                                             8.
1.3.3b Replacement of Onsite Systems.  Septic systems which fail after the
       initial  construction period must be replaced as part of the ongoing     (
       maintenance program.  The total number of mounds emplaced during
       the  Planning Period includes those which replace conventional septic
       systems  (as they fail) and those which are repairs to the replacement
       mounds themselves.

            Failure Rate of'Present (conventional) Septic Systems

            The rate of failure of present septic systems is central to this
       determination, and should be determined statistically for the community
       in question.  In this case, a failure rate of 5% of the total number
       of initially unreplaced systems per year is assumed for demonstration
       purposes.   To simplify the calculation procedure,  the systems are assumed
       to fail  linearly over the 20 year Planning Period and, thus,  at the end
       of the Planning Period all present septic systems will have failed.  This
       can  be shown:


       Total Number of             Original Number
       Septic Systems Failures  =  of Septic Systems  x .05 x 20 years =

       Original Number of Septic Systems


            Failure Rate of Replacement'(mound) Systems  -

            All mounds, including those emplaced at the beginning of the PlanniiQ
       Period and  those which replace failing systems throughout the period, are
       themselves  subject to failure.  For the purpose of this analysis, a
       failure  rate of 1% of all mounds per year is assumed.   The number of failures
       of the originally built mounds can be determined by:
       Number  of      Total  Number of Originally
       Failures       Built  Mounds

       Total Number of Original  Mounds
                          x 20 Years x .01   =
           Thus,  at the end of the design period,  20% of  the  originally built
       mounds will  have failed and been replaced.

           The  failure of mounds which have been built to replace  conventional
       septic systems can be determined in a similar manner.   Hith  the  assumption
       made above  that the replacement of conventional systems is linear through-
       out the Planning Period, the average age of  one of  these replacement mounds
       is 10 years.   The number of failures can therefore  be calculated:
       Number of
       Mound Failures
   Original Number
=  of Septic Systems
x 10 Years x .01

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              Thus, It can be seen  that  10% of the repairs to failing septic
         systems are estimated to. fail during the Planning Period.

              In surmary, the total  number of mounds built can be  seen below:
         Problem Source
Failure Rate
 (annual)
         Initially Built
         Mounds
         Initially Conventional
         Septic Systems
     5%
         Mound Repairs  of
         Conventional Systems      1;
Number of Mounds Built During
      Planning Period
                         0.2 x Number of Initially
                         Built Mounds
      Number of Initially Conventional
      Septic Systems
                         0.1  X Number of Initially
                         Conventional  Septic  Systems
        Summary of Gnslte'O" &'M'Costs

              Since all  systems are assumed to fail linearly over the 20 year
         Planning Period the number of mounds replaced per year is equal to
         the total built divided by 20 years:



  Yearly Total  = [(0.2   X  Number of Initially  -f  (1.1  X Number of Initially)]/20 yrs
                             Built Mounds                    Conventional
                                                              Septic Systems


              This yearly total  is multiplied by the mound unit cost to provide
         the annual 0 &  M cost  for mound replacement:
  Mound Replacement Cost
    (Present Worth)
  Yearly Total  X   Unit  Cost   X   (PWF)
1.3.3c  Energy Cost Escalation

             Because of the rising cost of energy and the regional factors
        involved in energy supply, the Present Worth Factor for energy
        sources is variable.  Table 1-2 presents a summary of these Present
        Worth Factors for each Region and energy type.

1.3.3d  Other Onsite Operating'Costs

             The other annual  0 & M costs for the onsite option include  pump  repair
        and replacement (for mound  systems)  and preiodic septage removal for  all
        systems..


1.3.4   Salvage Value

             Salvage value is  determined  by:

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                                                                                           .
 Salvage Value              Initial Cost of          (% of Useful Life Remaining)      Discount
  (Present Worth)     =        Item             X    (          100%            )   jj  Factor

$                                     '
i                      The discount factor for the 7-1/8% interest rate and 20 year
                  planning period is 0.25245.  The useful .life of some capital items
                  are presented below (1):



                                 Item                  .        Useful Life

                     Land                                       Permanent
                     Easements                    "             Permanent
                     Wastewater Conveyance                      50 years
                       Structures
                     Tanks, Pump Chambers, Other                30-50 years
                       Structures
                     Process Equipment                      .,   15-20 years
                     Auxiliary Equipment                        10-15 years


         1.3.4a  Useful Life and Failure Rate of Mounds

                      Based on the excellent performance of properly desianed and
                 installed mounds in the last ten years, a useful life of~40 years
                 will be assumed for the purposes of this analysis.


                      However, because:   1)  the somewhat complicated and sensitive
|                construction procedures required to properly install the systems
                 are often not followed  exactly; 2)  the waste disposal  systems are
                 often subject to misuse (overloading, lack of preventive maintenance,
                 etc.; and 3)  the general sensitivity of the system to external
                 environmental effects (accidents, floods, physical damage, etc.),
                 the actual useful life  is somewhat less than the assumed 40 year
                 period.  This difference in the design  useful life  and actual
                 useful life of mound systems is taken into account by assuming a
                 failure rate for the mounds.  This methodology was chosen because
                 it permits a more accurate estimation of salvage values than would
                 be made using an arbitrary reduction in the  assumed useful life.
                 Because of the somewhat unpredictable nature of the factors responsible
                 for mound problems, and  the fact that each mound is an individual unit,
                 the actual failures would tend to occur over an extended period  rather
                 than all  at once.  Shock loadings, misuse, or faulty construction would
                 tend to affect systems  on an individual  rather than mass basis.   There-
                 fore, it is felt that the assumption of a failure rate  provides  a
                 resonably  accurate simulation of mound survival  for the purposes of
                 this Cost Effectiveness Analysis.

                      The failure rate is  assumed  to be 1% of all  emplaced mound  systems
                 per year.   In order to  simplify analysis, it  will  be assumed  that these
                 mounds fail linearly over the 20 year Planning Period.   Thus,  there are
                 two "types" of mounds that need to be examined:   those  which  are
                 emplaced  at the beginning of the  Planning Period  and survive;  and
  }               those which replace failed systems,  either mounds  or conventional
                 (i.e., "future failures")  systems.

                 Salvage Value of Initially Emplaced  Mounds

                      For  those mounds emplaced  at  the beginning of the  Planning  Period,
                 the Salvage Value can be  determined  by:

-------
                                                                                 12.
Salvage
Value
Sal vage
Value
Initial
Value
Initial
 Value
                                               (% Useful Life Remaining)
                                               (        10S% - -
                                               [50% )
                                               [TW)
                                           0.5 X Initial
                                                  Value
         Theoretically,  at the end  of the  20 year Planning Period   the
         originally emplaced  mounds still..have 50% of their useful'  life
          cJilcl I III ily *


         Salvage Value of  Mounds Which .Replace Failed'Systems
         Sa.1 vage
          Value
 Initial
 Value
 (75%  )
 (100%)
         Useful  Life and Salvage Value of Septic Tanks

              As described above,  the useful  life of a concrete
                                 0.75 X Initial
                                         Value
                                                                                 C
        Salvage
         Value
Initial
 Value
' X
(60% )
(T5U%)
                                 0.6 X Initial
                                        Value
        This assumes that septic tanks will be emplaced only with those systems
        failing at the beginning of the Planning Period.~l4iacement systems
        will receive a mound only, with the assumption that KKfSlIng systems
        have properly sized and installed tanks.                      " bystems

1.3.4b  Summation of Salvage Value for Onsite Systems

             Based on the number of mounds emplaced during the Planninq Period
        as defined in Section 1.3.3b, a summation of the Salvage Value9
        Worth) for Onsite Systems is presented below:

-------
                                                                               13.
            Item

        Septic Tank


        Initial Mounds



        Replacement Mounds
       Number

Number of Initial
Problems

0.80 X Number of
Initial Problems
(1% failure rate)
  Procedure Summary

Number of Initial Systems X
Unit Cost X 0.6 X Discount Factor

Number of Initial Systems X 0.80
X Unit Cost X 0.5 X Discount
Factor
0.20 X Number of     Number of Replacement Mounds X
Initial Problems +   0.75 X Unit Cost X Discount
Number of Initially  Factor
Conventional  Septic =
Systems + 10* of Lniti.r.lly
Conventional  Septic
Systems
1.3.4c  Land & Easements
             Land is assumed to appreciate at a 3% rate over the planning
        period.  The resultant value (at the end of the 20 year planning
        period) is discounted to present worth using the discount factor.
        Easements are assumed to have their initial value at the end of
        the Planning Period.  The Present Worth easements is found by
        using the initial value and the discount factor.

             A summary o.f the Salvage Value determination procedure is
        presented on Figure 1-4.

    2.  Cost Effectiveness Analysis 'Methodology
   2.1       Determination of Areas of Analysis

             The analysis will be performed on three specific areas;
             Problem Area 4, Problems Area 14 (Town Center), and the
             Town as a whole.  Sufficient information will be provided
             so that analysis can be performed on the other problem
           .  areas, if desired.
   2.2  Methodology

        The methodology for analysis will  be performed as follows:

        1)  Define area into solution by

            a)  onsite and                                         .
            b)  communal (sewer)

      '  2)  Compute capital costs

            a)  repairing onsite systems (present problems, not solved  by  b)
            b) communal

-------
                                                          14.
                       FIGURE  1-4

              COMPONENTS OF SALVAGE  VALUF
                 AT  END QF  DESIGN! PF.R1PJ
                                                c
INSTALLED
NEW SYSTEMS
STILL IN USE
     V
             STRUCTURES
                   a
             COMPONENTS
                       EASEMENTS
NEW SYSTEMS
INSTALLED DUR-
ING  DESIGN
PERIOD STILL
IN USE
                             1
NEW SYSTEMS
THAT FAIL AND
ARE REPLACED
BY NEW SYS-
TEMS STILL
IN USE  .
            SUBTOTAL
                  v
          SALVAGE  VALUE
           (PRESENT WORTH)
                  SALVAGE VALUE
                  (PRESENT WORTH)
                                V
                     TOTAL SALVAGE  VALUE
                                      APPRECIAT
                                         VALUE
                       SALVAGE VALUE
                        (PRESENT WORTH)
                                                        w

-------
                                                                            75.
      3)  Compute annual 0 & M of initially-repaired systems

          a) onsite
          "b) communal

      4)  Compute annual repair costs of initially-repaired systems

      5)  Compute annual ) & M of present non-problem systems
                                            i 
      6)  Compute annual repair costs of present non-problem systems

      7)  Compute salvage value of all equipment having a useful  life
          greater than end of Planning Period

      8)  Compute management costs

      9)  Segregate  land costs as a  separate line  item

      10)  New  Construction:  compute costs  (capital, 0 & M and repair)
          of wastewater system for new construction.

          Figure 2-1  summarizes this entire, procedure,

  2.3 Growth

          .  The future growth of a community depends on many  factors.

            In  order  to simplify the  analysis for the examples in  the
      following sections, an assumption will be made for the growth rate
      of the Woodrock Community.  This assumption  assumes  an annual
      growth of 50 homes/year.  It is also  assumed that this new  con-
      struction does not occur in any of  the previously defined prob-
      lem areas, but is scattered throughout the undeveloped portions
      of the community.                        .

   3. Example  Analysis

  3-.1 Background  Information

3.1.1 Onsite Systems

            The unit  construction  costs for  mounded leachfields  are
      presented in Tables 3-1  through  3-3.   It should  be noted  that
      the costs presented in  these Tables are  for  demonstration purposes
      only, and will not  accurately  reflect costs  in all parts  of the
      country.  It should also be noted that the particular design code
       used for Woodrock results  in a relatively larger mound size than
       would" result from using other (e.g.  Wisconsin)  recommended  designs.
       Table 2-1 in the Problem Area  Description delineated the  number and
  "_''._  bedroom size of failing systems for1 all  the problem areas.   Annual
       operation and maintenance costs will  be  calculated with 5% per year
       present leachfield failure  rate..  The failure rate  for all  replacement
       (mound)  will  be assumed to  be 1% per  year.   Present  failing systems will
       receive a new septic  tank,  pump-chamber  system, .and  mound.   Future
       failing systems will  receive only a new  mound.   The  procedures  necessary
       to perform the Cost Effectiveness  Analysis  are  presented in three examples
       below.

-------
                                                              16.
                          FIGURE   2-1

            COST EFFECTIVENESS  PROCEDURES ' FOR
                  SMALL  COMMUNITY  SYSTEMS
 .CAPITAL COSTS:
COMPLETELY ON-SITE
     SOLUTION
   (+)
  ANNUAL OSMt
 FUTURE FAILURES
 Replacement Costs
        \/
  SALVAGE VALUE:
    ALL SYSTEMS
     REPLACED
                      PROBLEM DEFINITION
                       TECHNICAL OPTION
                          SPECIFICATION
                      COST EFFECTIVENESS
                           ANALYSIS
    CAPITAL COSTS:
    MIXED ON-SITE/
  COMMUNAL SOLUTION
    ANNUAL OaM:
   FUTURE FAILURES/
EQUIPMENT REPLACEMENT
      OPERATION
     SALVAGE VALUE:
 ALL SYSTEMS REPLACED
    a STRUCTURES
                              LEAST
                          PRESENT WORTH
                         PROCESS SELECTION
  CAPITAL COSTS:
     COMMUNAL
     SOLUTION
  ANNUAL 08M:
EQUIPMENT REPLACE
 MENT &  OPERATION
  SALVAGE VALUE:
    STRUCTURES
                                                               
-------
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-------
                                                                               20.
  3.1.2  Communal Systems

              The cos.ts associated with Communal solution for the various
         Problem Areas are presented on Table 3-4.  The communal solution
         involves the collection of septic tank effluent by a small  diameter
         gravity sewer and transferal to a communal  leachfield (mound).  All
         present problem systems are hooked up to the sewer, as well as  those
         presently non-failing systems which are along the sewer route.

   3.2  PROBLEM AREA 4

              Problem Area 4 was described  in  section 2.2.4  of Case  Study.
         The  cost effectiveness  analyses  for the onsite  mounded option and
         communal  (sewer)  option are  examined  below.

'3.2.1   Onsite  Mounded Systems

3.2.la  Design  Basis

              Problem Area 4 contains  a total  of 34 septic systems,  13 of which
         ar.e  presently failing.   In the onsite option, a  septic tank, pump
         chamber and  controls, and mound will  be provided for  each problem
         system  during initial construction.   Replacement of systems which fail
         during  the Planning Period were addressed in detail in the  Annual
         0 &  M Costs  determination.   It is  assumed that mounds  initially
         emplaced  fail  linearly  over  the- 20 year period  (1%  of Total Number
         Constructed/year),  while initial non-problem systems  fail linearly
         at a higher  rate  (5% of Total Initial  Non-Problems/year).   Replacement
         systems receive only a  mound, rather  than septic tank/pump chamber/
         mound.  There are 21 initial  non-problem systems in Problem Area 4.

3.2.1b   Capital  Costs

         Construction Costs:
                                                 C
        Item

 Septic Tank
 Pump Chambers & Controls
 7-Bedroom Mounds  (10 min/in)

 TOTAL CONSTRUCTION COSTS
Number   Unit Costs   Total Cost    Present Worth
  13
  13
  13
1,833
  975
6,184.80
$ 23,829
  12,675
  80,402.40

$116,906.40
        Development Costs:



          Contingency
          Engineering Design
          Financial, Legal,
            Administration

                 Subtotal

          Easements

             TOTAL CAPITAL COSTS
         Total  Cost

       $  23,381.30
          23,381.30

           9.352.00

       $  56,114.60

           1,300.00

       $ 174,321.00
                    Present Worth
                                        a.
                            >-
                     $ 174,321.00

-------
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-------
                                                                                        24.
           3.2.1c  Annual  0  & M Costs

                      , The  annual  0 & M costs will  be calculated  for  a 5%  failure
                   rate for  septic  systems.   No new  growth  is assumed.  The estimation
                   of the  number of mound replacements was outlined in Section  1.3.3b.
                   For the initially constructed systems, the number of failures can be
                   estimated by:
                        Initially
                   13   Installed
                        Systems
          X 0.01/year =,0..13 systems/year
                   For the initial nonproblem systems, the number of failures can be
                   estimated by:

                       Initial
                   21  Nonproblem  X 0.05/yr =  1.05 systems/year
                       Systems.

                   Septage pumping is assumed to take place every 3 years for all
                   systems as a cost of $75  per  pump-out.  The annual cost for pumpinq
                   is, thus, $25.
      ITEM
 Initially Built Hounds

 Initially Conventional
    Septic Systems

Mound Repairs

Septage Pumping

Pump Maintenance

Total
NUMBER
  0.13/yr.
                                         "UNIT PRICE
$6,185
                                ANNUAL COST
$  804
                                                                                PRESENT WORTH
                                                                C
1.05/yr.
0.105/yr.
34
13
$6,185
$6,185
$ 25
$ 42.50
$6,494
$ 650
$ 850
$ 618
                                                           $9,416
                                                      $98,791
          3.2.Id  Salvage Valve
                      The procedures for salvage  value determination were outlined
                  in Section 1.3.4.  The value  for each component is calculated below:

                  Septic Tanks                                       .                   " .

                      Number x  (% of Useful  Life  Remaining)   x  Unit Cost  =  Salvage Value
                                          100%
                      13 x  (0.60) x $1833 =    $14,300
                                                               Ci

-------
                                                                                 25
                Initially  Constructed Mounds
                Number x (%  Useful  Life Remaining)    X Unit Cost  = Salvage Value
                                 100%
                (0.80 x 13)  x (0.50) x $6185 =    $32,160
                Other Mounds
                (21 + 0.2  x  13)  x (.75) x $6185 =   $109,475
                Pump Chambers
                13 x (0.6)  x  $975 =  $7605

               A summation of the salvage values is presented below;
          Item                       ._,    ,
          	        .       .        Salvage Value.           Present Worth
        Septic Tanks                   *  14
        Pump Chambers                      7
        Initial  Mounds                    ^'IKn
        Replaced Mounds                  109^475
                                      $163,540
 3.2.1e  Total Present Wnrf-h
                   Capital
                   O&M
                  Total Present  Worth             $231  826
 3.2.2  Communal System
3.2.2a  Design Basis
                                                                             -
3.2.2b  Capital  Costs
       .Construction Costs  from Table 3-4
        Total  Construction  ......... ....      $175 310
        Contingencies ..................... !.'.'$ 35,*260
        Engineering Design. ...... ............  $ 35,260
        Financial/Legal Administration......   $14100
        |:and  r ......  -------- - ......... ......  $ 34^000
        Easements......... ......... . ...... ...  $  2,00
                Total  Canital Costs           $296.930

-------
                                                   26.
    PROBLEM AREA 4
    201 WASTEWATER MANAGEMENT
    STUDY
    Figure   3-1
o
                       23O
      0 Problem Septic Syste
      4"*PVC Gravity Sewer
     	4" PVC Force Main
        Manhole
       Pump Station
      O Dosing Siphon
      j  j Leach Reid
                                                    c
                   O  TOO'
                   scale
30O

-------
;          3.2.2c  Annual  Operations and Maintenance                  '
                       The operations and maintenance costs include septage pumping,
                  collection pipe and dosing system maintenance, communal  system
                  failure (1% per year, as with onsite mounds), and septic system
{                 failure (5% per year).
                  Collection Pipe
                  Quanti ty           Basis           Cost
                   2940 LF          $0.10/LF         $294

                  Septage Pumping                                           .
                  Quantity              Basis              Cost
                  34 Houses          $25/year/house        $850
                  Dosing  System Repair - Pump Maintenance
                  Quanti ty              Basis         .     Cost
                    J"                        "              nv JJ.JJ
                    1 Pump             $363/Pump           $363
                  Communal Leachfield Repair
                  Quantity              Basis                    Cost
                      1          1% of Total  Cost (excluding      $1763
                                        land)
                  Onsite  Replacement
                  Quantity              Basis              Cost
                  0.7 year           $6185/mound          $4330
                  The summary of annual  0 &  M costs is presented below:  .
                  Annual  Operations and Maintenance
                            Item                                  Amount    Present Worth
                  Septage Pumping                                 $850
                  Collection Pipe                                   294
                  Dosing  System                                     363
                  1% Communal  Leachfield Failure Repair           1,763
                  5% Onsite Failure Repair (.7/yr)                 4,330
                       TOTAL 0 & M (5% Failure)                   7,600        $79,738
          3.2.2d  Salvage Value
                      The salvage value of  the  communal  system is determined in a
                  manner  similar to that followed for  the onsite system.

-------
Septic Tank
Number     X
   13      X
(% Useful  Life Remaining)    X Unit Cost
         100%
                            X    1833
                                                        =  Salvage  Valu
                                                           -
                                                                       i
                           0.60
 Collection System
 Quantity X (% Useful  Life Remaining)  X Unit Cost = Salvage  Value
                      100%
 2940 LF X (0.60)  x $20.00 = $35,280
 Cleanouts.
 6 x (0.60 x-$1200}= $4320  -
 Communal  System
 Mound  (excluding  land)
 1 x  (0.5)  x  $69,477  = $34,739

 Dosing System
             
-------
       Easements

       The value of easements is assumed to be unchanged throughout
       the Planning Period

           20    x  1  x $100  =  $2000


       The salvage values for the communal system are summed up below.

       Item                      .      Amount       Present Worth

       Septic Tanks                    $14,300
       Collection System                35,280
       Cleanouts                         4,320
       Communal
         Mound                          34,739
         Dosing                          4,800
         Land             ,              61,408
       Onsite Mounds                    64,943
         (5% Failure)
       Easements                         2,000

             TOTAL                    $221,790        $55,991


       Total  Present Worth

       5% Failure RAte

         Capital	$ 296,930
         0 & M (PW)	    79,738
         Salvage	   (55,991)

                                     $ 320,677


3.2.3  Comparison of System by Cost

       Onsite System (PW)                   Communal System (PW)

          $231,826                               $320,677


       The onsite solution is obviously the more cost effective
       for.Problem Area 4.

  3.3  Problem Area 14 (Downtown)

3.3.1  Design Basis

            There are presently  36  problem systems  in the downtown area of
       the case study community.   In the onsite  option, 29 will  be  repaired
       onsite, while the remaining  7 must be served by a communal system
       because of a lack of  space onsite.  The communal  system also  includes
       6 presently non-failing systems which must connect to the sewer because
       of its proximity.   The remaining 328 systems in the downtown  region

-------
                                                                             .30.
        will be repaired onsite as they fail  (5% of total/year).   In  the
        communal option, all 370 septic tanks in the downtown region  are
        connected to a collection system.and  piped to an aerated  lagoon/aqua-
        culture treatment facility.

 3.3.2  Onsite Solutions

             Table 3-5 presents background cost estimate for onsite systems
        within the Woodrock town center.
        Table 3-5 Cost Basis for Onsite Option

        1)  Septic Tank/Conventional  Soil  Absorption System,  based
            on a 3-bedroom home, percolation rate of 20 min/inch:    $2900

        2)  Septic Tank/Mounded Soil  Absorption System, based
            on a 3-bedroom home, 4 foot mound, and percolation  
            rate of 10 min/inch:                                    $7325

        3) "Septic Tank/Mounded Soil  Absorption System, off-site    $9150
             While most of the problems in the town center can  be  solved
        onsites there are several which require the establishment  of a
        communal leaching area in the town center.
3.3.2a  CAPITAL COST
          ONSITE SYSTEMS: . (from Table 3-6)
             by Method #1:
             by Method #2:
             by Method #3:
15@  $2900 each = $43,500
 80  $7325 each = $58,600
 6@  $9150 each = $54,900
             SUBTOTAL (ONSITE)
                 $157,000
         $157,000
        COMMUNAL LEACHING SYSTEMS:

          Collection System Component

             Septic Tanks
             Septic Tank Hook-up
             Collection Pipe  1410 LF
             Cleanouts
             Pump Station
            13 @ $800/ea
            13 @ $450/ea
               @ $20/LF
           10 @ $1200/ea
            1 @ $15,000
             SUBTOTAL (COMMUNAL COLLECTION)
$10,400
$ 5,840
$28,200
$12,000
$15.000

$81,440

-------
                                                                               31
        Leachf1 eld Component
Land Clearing
Excavation
Gravel
Pea Stone
Fill Material
Trench Pipe
Distribution Boxes         
  Pipe                50 LF,
Grading & Shaping  11,750ft'
                              .62 Ac
                           144.4 yd,
                            77.8 yd"5
                            11.1 yd
                            1740
                            1200
yd-
LF
@ $2QOO/Ac = $1,240

-------
                                                                                 32.
 3.3.2c  Salvage Value
              The salvage value of the onsite option is determined in
             5am man"ep a? fr the  Orls1te and communal options described
         for Problem Area 4 above.  A summation of the values is
         presented below:
                               c
         Item

         Onsite Systems (Present Problems)

         Communal  System
           Septic  Tanks

         Collection  Pipe
           Cleanouts
           Pump  Station
           Leachfield-

         Future  Onsite  Systems  (5% Failure )
           i*                   i *.  ,        4

         Easements

              Total Salvage
  Amount

 $ 78,500
   6,240

  16,920
   7,200
   9,000
   8,675

  91,750

  36.000

$254,285
3.3.2d  Total Present Worth

        5% Per Year Failure of Present Non-Problem Systems

             Capital		$  406,885
             Annual 0 & M (PW)	;  1,421,650  
             Salvage (PW)	    (64,195)

                 Total  Present Worth   $1.764,340
Present Value
  $64,195
                              C
3.3.3  Communal  System for Downtown Area

        The communal  system for downtown Woodrock  involves  the  collection
        of septic  tank effluent and treatment by an-aerated lagoon/aquaculture system
        The piping layout is presented in Figure 3-2, and the costs
        associated with collection and treatment are  summarized  in
        Tables 3-7 and 3-8.

-------
                                                                                  33.
Figure  3-2
Problem Area  14
Communal  Solution
                                     Problem Septic System
                                        PVC Gravity Sewer
                                        PVC Force Main
                                     Kanhole
                                     Pump Station
                                     Dosing Siphon
                                     Leach Field

-------
                                                                       34.
 Table 3-6 Costs of Collection System
 Capital  Costs
Item
4" Collection Pipe
6" Collection Pipe
8" Collection Pipe
Cl eanouts
Septic Tanks
Pump Station
Street Connection
River Crossings
Escavation
Basis
10,530 LF @ $16/LF
280 LF @ $18/LF
9,620 LF @ $20/LF
no - @ 1200
370 @ 800
1 @ 42,000
370 @ 450
5  @ 16,500
2270yd3 @ 35/ydJ
Cost
$168,480
5,040
192,400
132,000
296,000
42,000
166,500
82,500
79,450
     Total  Construction Cost
                             $1,164,370
 Contingencies	$232,875
 Engineering  &  Design	  $232,875
 Financial/Legal/Administrative...  $  93,150

     Total Capital  Costs         $1,723,270
                                         $1.723.270.
Annual  Operations  & Maintenance
 Collection  System
 Septage  Pumping
Salvage  Value

Collection  System
Cleanout
Septic Tanks
Pump Station
River Crossings

  Total  Salvage  Value
20,430 LF @ $0.06/LF
   370    @ $25
        Value

      $219,550
        79,200
       177,600
        25,200
     	49,500
      $551,050
 $1,225
  9,250

$10,475
                                         Present worth
                                                                 $109,900
                 Present Worth
                  $139,115
Total  Present Worth  of Collection Systems
 Capital Costs
 Annual 0  & M  (PW)
'Salvage Value
     $1,723,270
        109,900
       (139,115)
  Total  Present Worth
     $1,694,055

-------
                     TABLE 3-7

                WASTEWATER TREATMENT FACILITY

                     PRESENT WORTH
                                                                        35,
 CAPITAL COST:
          Site Preparation
          Equalization Tank
          Acquaculture Treatment'
           (aerated  lagoon)
 $  6,800
   19,900
  443,250
          Operations Building/Laboratory
          Exterior Piping
          Electrical, HVAC
          Effluent Disposal

            Total Construction Cost

          Contingencies
          Engineering, Design, etc.
          Legal, Administrative, etc.
          Operator Training
          Land

            Total Development Cost

                  TOTAL CAPITAL COST

ANNUAL OPERATIONS AND MAINTENANCE:

          Labor
          Electricity
          Equipment Replacement
          Laboratory Analysis
          Resource Recovery
                  TOTAL 0 & M COST
Salvage Value
          Equalization Tank
          Aquaculture Treatment
          Operations Building
          Exterior Piping
          Effluent Disposal
          Land
   35,000
   15,000
   20,000
   62,500

$ 602,450

$ 120,450
   90,400
   30,100
   20,000
   80.000

$ 341,000
$  15,000
    1,300
      500
    1,000
-   2.250

$  15,550
               $ 943.450

               Present Worth
$ 163.150

Present Worth
$  11,940
  221,625
   21,000
    9,000
   31,250
  144,490

$ 439,305     $ 110,900

-------
Table 3-7 cont.
Total Present Worth of Wastewater Treatment Facility
                                                                              36.
Capital Costs
Present Worth of Annual O&M
Salvage Value (Present Worth)

        Total Present Worth
$  943,450
   163,150
  (110,900)

$  995,700
                                                                            0

-------
                                                                             37,
3.3.4  Comparison of Onsite vs. Communal Systems for Downtown Woodrock

       Onsite Systems (5% Failure/yr)

       Present Worth	$1,764,345

       Communal System

       Collection	$1,694,055
                                       , \
       Treatment Plant		';	$  995,700

                   Total Present Worth                 $2,689,755

       The onsite option is more cost effective than the communal option.

3.3.5  Townwide Analysis

       A townwide analysis' can be made by summarizing  the cost effectiveness
       analysis for problem areas 1-15 (Problem Area 15 is the dispersed
       problems).  A 1% failure rate of  onsite systems was assumed for the
       outlying regions, and a 5% failure rate in the  downtown section.
       Downtown corcmunal and. onsite solutions are examined for their
       impact on the overall cost, of the program.  All outlying problem
       areas are solved by onsite solutions.

            Included in the townwide assessment are:

            *  a septage treatment facility  ($742,900  capital costs;
               $25,500/yr 0 & M costs)

            *  management option, including  a computer and groundwater
               monitoring ($25,000 capital costs; $13s600/yr 0 & M costs)

            *  an assumption of 50 new septic systems  added per year in
               non-problem areas.

       The assumption that no new growth occurs in presently defined Problem
       Areas has been made because each  of the Problem Areas is essentially
       a completely built-up housing development, with little room for further
       growth.

3.3.5a Repair of New Systems

       The determination of the repair of new (growth-related) systems is
       similar to that for present systems.  With an incremental, annual
       increase of 50 systems per year and an assumed  failure rate of 1%/year,
       there would be 115.5 failures in  the  20 year design period.  If these
       were assumed to fail in a linear  fashion (a simplification) then the
       annual cost for repairs can be shown  by:

-------
                                                                                       38.
Total Number of Failures/Planning Period   X   Unit Cost
                                                                        Annual  Cost
     115.5 failures/20 years   X   $9253
                                                         $53,435/year
                 The Present Worth of this annual cost is $530,632
          3.3.5b Salvage Value of New"Systems

                 Based on the assumed growth and failure rates, a total of 115 5
                 systems will be estimated to fail  in the design period   If these
                 are assumed to fail linearly over  the 20 year peHod then the
                 salvage value can be calculated as-
Number of Replacements
                   t"

        115.5
% Useful'Life'Remaining
         100%          '

      (0.75)
                                                 )    X Uni
  Unit Cost   *   Salvage Value

X  $9,253     =   $801,541

              =   $202,350
                (Present Worth)
                 For the present case,  the system cost is  assumed to  be  $9,253
                 (4 Bedroom Mo.und with  30  minute/inch  perc rate - from Table  3-3)
                                                                                        C
       Inlire
                                                                              for the

-------
                                                                                                                         39.
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                                                                                                      40.
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-------
                                                                                   41,
       4.  User Costs                                                                

                The determination of user costs in a situation where different
           users  receive  different types of services requires that the community
           make a number  of decisions relative to the allocation of those costs.
           For the purposes of  this example it is assumed  that 370 structures will
           be  serviced  by the central collection treatment system; 589 will  receive
           onsite repairs and 3144 will continue to use  their existing onsite systems
           but will become part of the overall management  district and will  make
           avail  of the septage treatment faciVities.  The costs used in this_example
           are summarized below:
            I.   Capital  Costs

                A.  Downtown Collection System

                    Total Capital  Costs
                    85% Federal Grant
                    10% State Grant
$1,723,270
 1,464,780
   172,330
                    Total Local Share            -   $   86,160

                    Debit Retirement (20 yrs 9 11%)* $   10,820/yr
                B.  Wastewater Treatment Facility

                    Total Capital Costs
                    85% Federal Grant
                    10% State Grant


                    To.tal Local Share

                    Debit Retirement (20 yrs @ 11%)* $
-
Si
11%)*
$
$
$
943
801
94
47
5
,450
,930
,350
,170
,920/yr
                 C.   Septage  Treatment  Facility

                     Total  Capital  Costs
                     85% Federal  Grant
                     10% State Grant
 $  742,900
    631,470
     74,290
                     Total  Local  Share               $   37,140

                     Debit Retirement (20 yrs  @ 11%)* $    4,660/yr
                 D.  Onsite System Repairs

                     Total Capital Costs
                     85% Federal Grant
                     10% State Grant
                     Total Local Share
 $7,353,450
  6,250,430
    735,350
 $  367,670
                     Debit Retirement (20 yrs 
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                                                                                  42'.'
     II.  Operation and Maintenance Costs

          A.  Downtown Collection System
              (excluding septage pumping)

          B.  Wastewater Treatment Facility

          C.  Septage Treatment Facility

          D.  Management Costs (onsite systems)
   S  1,225/yr


   $15,550/yr

.'.  $32,000/yr

   $37,200/yr
C
    III. ' Septaqe Pumping/Hauling Costs

          $75/household every three years  =
              $2S/household/yr

                         ft.       '
4.1.  User Costs for Downtown Residents

           The'-resi dents of the downtown district will be assessed the total
      cost of the collection and wastewater treatment systems and a  proportionate
      share of the septage treatment and management costs.  Since the downtown area
      will be served by a small diameter gravity sewer, each structure will be using
      a septic tank which will have to be pumped.  A summary of the user cost
      calculation follows:
           Collection system Capital Costs
           Wastewater Treatment Capital Costs
           Septage Treatment Capital Costs
           (370 x 4660/4103)
           Collection 0 & M
           Wastewater Treatment 0  & M
           Septage Treatment 0 & M
           (370 x 32,000/4103)
           Mangement Costs (370 x  37,200/4103)
   $10,820
     5,920

      .420
     1,225
   15,550

     2,890
     3,350
                                                                                     C
                                             Total     $40,175
            User Costs
                 Collection/Treatment  40,175/370   =   $109/yr
                 Septage Pumping                    -     25/yr

                                  Total  User Cost,   =   $134/yr


 4.2  User Costs For System Being Initially Repaired

           Residents who'will  be having their systems repaired will  be.assessed .for
      the costs of those repairs plus a proportionate snare  or the ouier racilities
      they will use, these are summarized below.                                     

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                                                                              43.
     Onsite  System  Repair  Capital  Costs          $46,170
     Septage Treatment  Capital  Costs
     (589  x  4660/4103)                               670
     Septage Treatment  0 & M'
     (589  x  32,000/4103)                           4,590
     Management Costs                        ..      ,. 
     (589x37,200/4103)                           5,340
                                  Total         '   $56,770

      User Costs

           Treatment   56,770/589     =  $96/yr
           Septage Pumping                25/yr
                   Total User Cost    =  $121/yr


4.3.  User Costs For Residents Not Receiving System Repairs

           For this example it is assumed that this group will pay for its
      share"of all cost associated with utilizing the septage- facilities.

      A.  Summary Follows:

          Septage Treatment Capital Costs
          (3144 x 4660/4103)                      =  $ 3,570
          Septage Treatment 0 & M
          (3144 x 32,000/4103)                    -   24,520
          Management Costs
          (3144 X 37,200/4103)                    =   28,510
                                   Total             $56,600

           User  Costs

                Treatment        56,600/3144     =   $18/yr"
                Septage Pumping                      25/yr
                           -   Total  User Cost   =   $43/yr

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                                                                                 44.
    Questions
1.  Is the most cost effective solution always the mdit favorable  from a
    community's standpoint?  Why or Why not?
2.  A number of assumptions are made in conducting a cost effectiveness analysis,
    of the following which are mandated by EPA regulations and which  are  left
    to the discretion of the engineer:
         -  length of planning period
         -  discount rate
         -  rate of failure of onsite systems
         -  cost of repairing onsite treatment systems
         -  useful  life of capital items
 .  Discuss, in general terms the implications of varying these  assumptions
    as they relate to the selection of a particular alternative.
3.  Different present worth factors are used for land costs  and  energy costs
    under existing EPA regulations.  What is the basic  assumption  behind
    these differences?            '                                           .
                                                                                  c

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EPA  COST-EFFECTIVENESS  ANALYSIS GUIDELINES
               ArreroiX A

  cosr-orrcnvrnrEss AMM.*SZS cnineuira

  I.  Purpose,  These  guidelines represent
Agency policies and procedures for  deter-
mining the most cost-effectlve waste treat-
ment  management  system;  or component
part.                "
  2.  Authority. These  guidelines are pro-
vided  under sections 212X2XC) and 217 of
the Clean Water Act.
  3.  Applicability. These guidelines, except
as otherwise noted, apply to J1 facilities
planning under  step  1  grant assistance
awarded  after  September 30,  1978. The
guidelines also apply to* State or locally fi-
nanced facilities  planning on which  subse-
quent step 2 or step 3  Federal grant assist-
ance Is based.  , ,
  4.  Definition*. Terms used in these guide-
lines are defined, as follows:
  B. Waste treatment management system-
Used  synonymously with  "complete waste
'treatment system" as defined In 535.905 of
this subpart.
  b. Coat-effectiveness analysis. An analysis
performed to determine which waste treat-
ment  management system or  component
part will result  In  the minimum total re-
sources costs  over  time  to meet Federal.
State, or. local requirements.
  c. Planning period. The  period over which.
 a. waste  treatment management system Is
 evaluated for cost-effectiveness. The plan-
 ning period begins with the system's initial
 operation.
  d. Useful life. The  estimated period of
-time during which  a treatment works or 
 component  of ft waste treatment manage-
 ment system will be operated.
  e. Disc.ggresratian. The process or result of
 breaking down a sum total of population or
 economic activity for a Stale or other Juris-
 diction ae.. designated 208 area or SMSA>
 into smaller areas or Jurisdictions.
   S. Identification,  selection, and screening
 of alternatives, a. Identification of alterna-
 tives. All feasible' alternative waste manage-
 ment systems shall be initially identified.
 These alternatives should Include systems
 discharging to receiving waters, land appli-
 cation systems,  on-site and other non-cen-
 tralized systems. Including revenue generat-
 ing applications, and systems employing the
 reuse of wastewater and  recycyling  of pol-
 lutants. In Identifying alternatives,  the ap-
 plicant shall  consider the possibility of no
 action  and  staged  development  of  the

   b. Screening of alternatives. The Identi-
 fied  alternatives  shall  be systematically
 screened  to  determine  those capable of
 meeting the  applicable Federal. State and
 local criteria.
   c. Selection of alternatives. The Identified
 alternatives shall be-Initially analyzed to de-
 termine which systems have  cost-effective
potential and which should be fully evaluat-
ed according to the cost-effectiveness analy-
sis procedures established In the guidelines.
  d.  Extent of effort. The extent of effort
and  the level  of sophistication used In the
cost-effectiveness analysis should reflect the
project's size and importance. Where proc-
esses or techniques are claimed to be Inno-
vative  technology on the basis of the cost
reduction criterion contained tn paragraph
8eU) of appendix E to this subpart. a suffi-
ciently detailed cost analysis shall be Includ-
ed to substantiate the claim, to the satisfac-
tion of the Regional Administrator.   > 
  6. Cost-effectiveness analysis procedures.
  SL.  Method of analysis. The resources costs
shall be determined by evaluating opportu-
nity costs.  For resources that can be ex-
pressed tn monetary terms, the analysis will
use  the Interest (discount) rate established
In paragraph 6e. Monetary costs shall be
calculated in terms of present worth values
or equivalent annual values over the plan-
nins period defined In section 6b. The anal-
ysis, shall descriptively  present  nonmone-
tary factors (e.g., social and environmental)
In order to determine their significance and
Impact. Nonmonetary factors include prima-
ry and .secondary environmental effects, im-
plementation capability, operabillty. per-
formance  reliability  and  flexibility.  Al-
though such factors  as use and recovery of
energy and scarce resources and recycling of
nutrients are to be Included In the monetary
eost analysis, the non-monetary  evaluation
shall also Include them. The most cost-effec-
tive alternative shall be the waste treatment
management  system which the analysts de-
termines to have the lowest present worth
or equivalent annual value unless nonmone-
t&ry costs are overriding. The most' cost-ef-
 fective alternative must also meet the mini-
mum  requirements  of  applicable  effluent
 limitations,   groundwater  protection,  or
 other  applicable  standards  established
 under the Act.
   b. Planning period. The planning period
 for  Uie cost-effectiveness analysis shall be
 20 years.
   c. Elements of monetary costs. The mone-
 tary costs to be considered shall Include the
 total  value of the resources  which are at-
 tributable to the waste treatment manage-
 ment system or to one of Its component
 parts. To det rralne these values, all monies
 necessary for capital construction costs and
 operation and maintenance costs shall be
 Identified.   '                -    
   (1>  Capital construction costs used tn a
 cost-effective analysis shall Include all con-
 tractors'  costs  of   construction  including
 overhead and profit, costs of land,  reloca-
 tion, and right-of-way and easement acquisi-
 tion: costs of design engineering, field explo-
 ration and engineering  services during con-
 struction: costs  of administrative and legal
 services Including costs of bond sales; star-
, tup costs such as operator training: and in-
 terest during construction. Capital construc-
 tion  costs shall also Include contingency
 allowances consistent  with  the  cost esti-
 mate's level of precision and detail.
   (2) The cost-effectiveness  analysis shall
 Include  annual  costs  for  operation and
 maintanance (Including routine replacement
 of  equipment and equipment parts). These
 costs shall be adequate to ensure effective
  and dependable operation during the sys-
  tem's planning period. Annual costs shall be
  divided between fixed annual costs and costs
  which would depend on the annual quantity
  of  waste water  collected   and  treated.
Annual revenues  generated, by  the waste
treatment  management  system  through
energy recovery, crop production, of other
outputs shall be deducted from the annual
costs for  operation and maintenance- In ac-
cordance  with guidance Issued by the Ad-
ministrator.
  d. Prices. The applicant shall calculate the
various components of costs, on the basis, of
market prices prevailing at the tlwe of the
cost-effectiveness   analysis.  The  analysis
shall not allow for Inflation  al  wages and
prices, except those lor land, as described in
paragraph ShCU and for natural gas. This
stipulation Is based on the Implied assump-
tion that prices, other than the exceptions.
for resources involved In treatment works
construction  and  operation, will tend to
change  over time by approximately the
same  percentage!  Changes tn the  general
level of prices will not affect the results of
the cost-effectiveness analysis. Natural gas
prices shall be escalated at a compound rate
of 4  percent  annually  over the planning
period, unless the  Regional  Administrator
determines that the grantee has Justified
use of a  greater or lesser percentage  based
 upon  regional differentials between histori-
 cal natural gas price escalation and con-
 struction cost escalation.  Land prices shall
 be appreciated as provided  tn paragraph
 6h.
   (2) Where expenditures win not be unl-
' form, or when the construction period will
 be greater than 4 years. Interest during con-
 stcuction shall b calculated on a year-by-
 year basis.
    g. Useful life. UJ The treatment works'
 useful life for a cost-effectiveness analysis
 shall be as follows:
. Landpermanent..
 Waste water  conveyance  structures (In-
     cludes collection systems, outfall pipes.
     Interceptors,    force  mains, ~ tunnels.
     etc.)50 years.
 Other structures (Includes  plant building.
     concrete process tankage, basins. lift sta-
     tions structures, etc.)30-50 years.
 Process equipment15-20 years.
 Auxiliary equipment10-15 years.
    (2) Other useful life periods will be accept-
  able when sufficient Justification  can be
  provided. Where a system or a component Is
  for Interim, service, the anticipated useful
  life shall be reduced to the period for Inter-
  im service.
    n.  Satvaye value. (1} Land purchased for
  treatment works. Including  land used  as
  part of the treatment process or for ulti-
  mate disposal of  residues, may b assumed
                                FEDERAL iECISTER, YOU 43, HO. 18&WEDNESDAY, SEPTEMBER 27,  W3

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                                                                                                                      46.
to h*v a, salvare value at the end of Che
pUnnlnt period a  least equal to Its previu1-
tas market value a  the time of the analysts.
la csleuUtlne the salvage value of land, the
land value shall  be appreciated at & com-
pound, no* of 3 perc nt annually over the
planning  period, unles the  Regional Ad-
ralnU*wr determines that the grantee has
Jollified the use of & ertater or lesser per-
centace  based upon hUuncal differences
between local land cost escalation and con-
structioa cost escalation. Thi land cost esc*.
latioa rat* may b updated periodically la
ewdanc* *lth Asency guidelines. Risht-
of.vay .eatemenw  shall  be considered to
have a s*lv*se value not greater thin the
prevaUUat market value at  the time of the
analysis.
  <2) Structures wfl] b assumed to have .
salvage value Jf there Is a use for them *t
the tnd of the planninz period. la this case.
salvage value  shall  be estimated  uslne
straitht line depreciation during the useful
Jlfc of the treatment works.
  <3> The method used IB paragraph 6h<2J
nay b* used to estimate salvage value.at the
nd of the planning period  for phased addi-
 tions  ot process  equipment and auxiliary
 equipment.          ,-
  <4> When the anticipated useful life of a
 facility Is less thin 20 years (for analysis of
 Interim  facilities),  salvage value can be
 claimed for  equipment IT it can be clewly
 demonstrated that  a specific  market or
 reose opportunity will exist.
  TT/i*nof(tfe and.  altemailve  teasleicater
 treatment ?rocJ end techniq'Jts.
   . Bet tnnlnt October 1.  1978,  the capital
 eosti'of  publicly  owned treatment works
 irhleh use processes and techniques meeting
 the criteria of appendix E to this subpart
 and which have only a, water pollution con-
 troj function, may be eligible if the present
 worth cost  of trie treatment works is not
 more than 115 percent of the present worth
 cost of the most cost-effective pollution con-
 trol system, exclusive of collection sewers
 and interceptors comanoa to the two sys-
 tems  blnt  compared, by  US percent.
 except for the following situation.
   b. Where  innovative or  alternative unit
 processes would serve In lieu of conventional
 unit processes in a conventional waste water
 treatment plant, and the present worth
 costs of the nonconventional unit processes
 a  less tV""! 50 percent of the present
 worth casts of the treatment plant, multiply
 the present worth costs of the replaced con-
 ventional processes by 115 percent, and add
 Xhtf cost of nonreplaeed unit processes.
   c. The eligibility of multipurpose projects
 *-hlch combine a. water -pollution  control
  function with another function, and wftich
 \ue processes and techniques meeting the
  criteria of appendix E to this subpart. shall
  be determined in accordance with guidance
  fcuued by the Administrator.
1   "d. The above provisions exclude Individual
  systems under f 35.918, The regional Admin-.
  istrator may allow a grantee to apply the 15-
  percent preference authorized  by this sec-
  tion, to  facility plans prepared under step 1
  grant assistance awarded  before October 1..
  1978.
    ft.   CaJ- For non-SMSA facility planning areas
not Included in designated  areawid* 208
areas, the State may disaggregate popula-
tion  projections  for  non-SJSA  counties
among facility planning areas an The estimation of existing and  future
  ADBP.  exclusive of  flow reduction from
  combined residential, coevaerdal and Insti-
  tutional sources. shaU b* baaed Upon one of
  the following methods:
    (a) Preferred Tntths*!. ExiKiss ADBP Is es-
  t!r=at*d  ba*td upcct. a  fully documented
  analysis of water us records eji}usicd for
  cons-ursption aad losses or on  records of
  wastewater flows for extended dry periods
  less  estimated  dry  weather  bxfatratSon.
  Future flows for the treataeat.works. />. .-n
  should b estimated, by 
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                                                                                                                             47.
c
                                       0.1 to 0.2
                                       O.S to O.S
tsttos per  capita flows based on  existing
jewered resident population and multiply-
ing this figure by the future projected popu-
lation to be served. Seasonal population can
be  converted to equivalent full time resi-
dents using the following multipliers:

Day-uu visitor   .      	'
Seuooai Ttoltor	
The preferred method shall be used wherev-
er water supply records or wastewater How
data exist. Allowances for future increases
of per capita flow over time will not be ap-
proved.                                 ,
  (b) Optional  meOiod. Where water supply
and wastewater now data are lacking, exist-
lag and future ADBF shall be estimated by
multiplying a  gallon per  capita  per   day
(gpcd) allowance not exceeding those In the
following table, except as noted below, by
the estimated  total of  the existing   and
future  resident populations  to be served.
The tabulated ADBF  allowances, based
upon several studies of municipal water  use.
include estimates for commercial and insti-
tutional  sources  as well  as  residential
sources. The Regional Administrator  may
approve   exceptions  to  the  tabulated
 allowances where large  Cmora than 25  per-
 cent of total estimated  ADBF) commercial
 and Institutional flows are documented.
                  Description
                                 Gallon* per
                                  capita pr
                cities and towns with pro-
       jected  total  10-year  population* of
       SJOOorta ------
      Other cttlo and towns        ....... 
        c. Flow reduction. The cost-effectiveness
      analysis for each facility planning area shall
      include an evaluation of the costs, cost sav-
      ings. and effects of now reduction measures
      unless the existing AJDBP from the area Is
      less than 70 gpcd. or the current population
      of  the  applicant  municipality  is  under
      10.000. or  the  Regional  Administrator
      exempts the area for having an effective ex-
      isting  flow reduction program. Flow reduc-
      tion measures include public education, pric-
      ing and regulatory approaches or a combi-
      nation of  these. In preparing- the  facilities
      plan and Included  cost effectiveness analy-
      sis. the grantee shall, as a minimum:
        (1) Estimate  the flow reductions Imple-
      mentable and cost  effective when the treat-
      ment works become operational and after 10
      and 20 years of operation. The measures to
      be evaluated shall  Include a public Informa-
      tion  program;  pricing and regulatory ap-
      proaches;  Installation of water meters, and
      retrofit of toilet dams and low-flow shower-
      heads for existing homes and other habita-
      tions: and specific changes In local  ordin-
       ances. building  codes or plumbing  codes re-
       quiring Installations of water saving devices
       such as water meters;  water conserving toi-
       lets. showerheads. lavatory faucets, and ap-
       pliances in new homes, motels, hotels. Insti-
       tutions. and other establishments.
         (2)  Estimate  the costs of the  proposed
       How reduction measures over the 20-year
       planning period. Including costs of public In-
       formation, administration, retrofit  of exist-
       ing buildings and the Incremental costs. If
       any. of Installing  water conserving devices
      ' in new homes and  establishments.
         <3>  Estimate  the energy reductions: total
       cost  savings   for  wastewater  treatment,
       water supply and energy use; and the net
cost savings (total savings minus total costs)
attributable to the proposed flow reduction
measures over the planning period. The esti-
mated  cost  sayings  shall  reflect  reduced
sizes of  proposed  wastewater  treatment
works plus reduced costs, of  future water
supply facility expansions.
  (4) Develop and provide for Implementing
 recommended flow  reduction  program.
This shall include * public Information pro-
gram highlighting effective flow reduction
measures, their costs,  and the savings of
water and costs for a typical household and
for the community. In addition, the 'recom-
 mended program shall comprise those flow
 reduction measures which are cost effective.
 supported by the public and within the Im-
 plementation authority of the grantee or
 another entity willing to cooperate with the
 grantee.
   (5) Take Into account In the design of the
 treatment works the flow reduction estimat-
 ed for the recommended program.
   d. Industrial  flows. U) The treatment
 works' total design  now capacity may In-
 clude allowances for industrial flows. The
 allowances may Include capacity needed for
 Industrial flows which the existing treat-
 ment  works  presently serves.   However.
 these flows shall be carefully reviewed and
 means of reducing them shall be considered.
 Letters of Intent to the grantee are required
 to  document  capacity needs  for existing
 flows from significant Industrial users and
 for future flows from all Industries Intend-
 ing to Increase their flows or relocate In the
  area. 'Requirements  for  letters  of Intent
  from significant Industrial dischargers are
  set forth In 3 35.925-11(0.
   (2) While many uncertainties accompany
'  forecasting future Industrial, flows, there Is
  still a need to allow for some unplanned
  future Industrial growth. Thus, the cost-ef-'
  fective (grant  eligible) design capacity and
  flow of the treatment works may Include (In
  addition to the existing Industrial flows and
  future Industrial  flows documented by let-
  ters of Intent) a nominal flow allowance for
  future nonidentlflable Industries or for un-
  planned  Industrial  expansions,   provided
  that 203 plans, land use plans and toning
  provide for such Industrial growth. This ad-
  ditional allowance for future unplanned In-
  dustrial flow shall not exceed S percent (or
  10 percent for towns with less than 10.000
  population) of the total design flow of the
  treatment works exclusive of the allowance
  or 25 percent of the total Industrial  flow
  (existing plus documented future), which-
  ever Is greater.
    e. Staging of treatment plants, (1) The ca-
  pacity of treatment plants (I.e., new plants.
  upgraded plants, or expanded plants) to be
  funded under the construction- grants pro-
  gram shall not exceed that necessary for
  wastewater flows projected during an Initial
  staging period determined by one of the fol-
  lowing methods:
      First method. The grantee  shall ana-
  lyze at least three alternative staging  peri-
  ods (10 years. 15 years, and 20  years). He
  shall select the least costly (I.e..  total pres-
  ent worth or average annual cost) staging
  period.
     (b) Second  method. The staging period
  shall not exceed the period which Is appro-
  priate according to the following table.
                                                                                              STAGING PERIODS ro TMATXTST PIAHTS
                                                                                                Flow growth factors A municipality may stage the construc-
tion of  a treatment  plant  for a shorter
period than the maximum  allowed under
this policy. A shorter staging period might
be  based upon  environmental factors (sec-
ondary Impacts; compliance with other envi-
ronmental laws under } 35.925-14. energy
conservation, water  supply), an  objective
concerning planned  modular construction.
the utilization  of  temporary treatment
plants, or attainment of consistency with lo-
cally adopted plans  Including comprehen-
sive and capital Improvement plans.. Howev-
er, the staging period In no case may be less
than  10  years, because of associated cost
penalties and the time necessary to plan..
apply for and receive funding, and construct
later stages.
  (3) The facilities plan shall present the
design parameters for the proposed treat
ment  plant. Whenever the proposed treat-
ment  plant  components' size or capacity
would exceed the minimum reliability  re-
quirements suggested In  the E?A  technical
bulletin. "Design  Criteria for Mechanlcsl.
 Electric, and Fluid System and Component
 Reliability." a complete Justification, includ-
 ing supporting data, shall be provided to the
 Regional Administrator for his approval.
   f. Staginy of interceptors. Since the loca-
 tion and  length of  interceptors will Influ-
 ence growth, interceptor routes and staging
 of construction shall be planned  carefully.
 They shall be consistent with approved  20
 plans, growth management plans and other
 environmental laws under  53S.S25->14 and
 shall  also  be consistent with  Executive
 orders for flood plains and wetlands.
   U> Interceptors may be allowable for con-
 struction grant funding If they eliminate ex-
 isting point source discharges and  accommo-
 date  flows  from  existing habitations  that
 violate  an enforceable requirement  of  the
  Act. Unless necessary to meet those objec-
  tives. Interceptors should not be extended
  into environmentally sensitive arexs. prime
  agricultural  lands and  other  undeveloped
  areas (density less than one household per 2
  acres).  Where extension of an Interceptor
  through such areas would  be nscessary to
  Interconnect two  or more communities., the
  grantee shall reassess the need for the Inter-
  ceptor  by further consideration of alterna-
  tive  wastewater  treatment  systems^ If- the
  reassessment demonstrates a need for the
  Interceptor, the  grantee shall  evaluate the
  Interceptor's primary and  secondary  envi-
  ronmental  Impacts, and provide  for appro-
  priate mitigating measures such  as rerout-
  ing the pipe to minimize adverse  Impacts or
  restricting  future connections to the pipe.
  Appropriate and effective grant, conditions
  (e.g.. restricting sewer hookups)  should be
  used where necessary to protect  environ-
  mentally sensitive areas  or prime  agricultur-
  al lands from new development. N?DES
  permits  shall Include  the conditions to
  Insure  Implementation   of the  mitigating
                                               REGISTER, VOL 43. HO. 1S&WEBNESDAY, SEPTEMBER 27, 1978

-------
  measures when new permits are Issued to
  the affected  treatment facilities In those
  nasea where the measures are required to
  protect the treatment facilities against, over-
  loading.
    (25 laUrctptor pip* sizes  (diameters for
  cylindrical pipes) allowable for construction
  (Taut funding shall be based on a staging
  period of 20 years. A larger pipe sfce corre-
  sponding to * longer stating period not to
  esceed 40 years 0*7 be allowed If the grant-
  ee can demonstrate, wherever water quality
  management plans or other plans developed
  for compliance with laws under J33.325-H
  hate been approfed. that the larger pipe
  vould be consistent with projected land use
  patterns !n such plans and that the larger
  pipe would reduce overall (primary plus sec-
  ondary) enTironmenUI impacts. These envi-
  ronmental Impacts include:
    <) Primary impacts.  (J) Short-term dis-
  ruption of traffic, business and, other dally
  activities,
    (ii) Destruction of  flora and fauna, noise.
  erosion, and, sedimentation.
      Secondary impacts. (!) Pressure, to
  rerone or otherwise facilitate  unplanned de-
  velopment. '
     and 202Ca> of
                the Act shall be equivalent to the estimated
                construction costs of the most cost-effective
                treatment worts. For the eligibility determi-
                nation, the costs of .construction of  the
                actual treatment works and  the most cost-
                effective treatment works must be estimat-
                ed on a  consistent  basts. Up-to-date cost
                curves published by SPA'* Office of Water
                Program Operations or other cost estimat-
                ing guidance shall be used to determine the
                cost  ratios  between cost-effective project
               components and those of the  actuil" project.
               These cost ratios shall  b.multiplied by the
               step  2 cost and step  3 contract  costs of
               actual components to determine the eligible
               step 2 and step 3 costs.
                 c. The actual treatment works to b buflt
               shall  be  assessed.- It must be determined
               that the actual treatment works" meets the
               requirements of  the  National Environmen-
               tal Policy  Act  and all applicable laws, regu-
               lations, and guidance, as  required  of  all
              , treatment works by H 35.925- aad 35.925-
               14. Particular  attention should be  given to
               assessing the project's  potential secondary
               environmental effects aad to  ensuring that
               air quality standards will not be violated.
               The actual treatment works' discharge must
               not cause violations of water  quality stand-
               ards.    ;
                d. The Regional Administrator shall ap-
               prove  the plans, specifications, and esti-
               mates  for the actual treatment works under
               section 203(a) of the Act, even though E?A
               will be funding  only a portion of its de-
               signed capacity.
                e. The- grantee shall satisfactorily assure
               the Agency that the funds for the construc-
               tion costs  due to the  addtional  capacity
               beyond the cost-effective treatment works-
               capacity as determined by EPA (Le, the In-
               eligible portion of the treatment works), as
               weU as the local share of the  grant eligible
               portion of the coustruction  costs  will be-
               available.
                f- The grantee  shall execute appropriate
               grant conditions or releases providing that
              the Federal Government is  protected from
              any further claim by the grantee, the State.
              or any other party for any  of the costs of
              construction due to the addiUonsJ capacity.
                g. Industrial cost recovery shall be based
              upon the portion  of the Federal grant allo-
              cable to the treatment of industrial wastes.
                h. The grantee  must Implement a  user
              charge-system  which  applies to the entire
              service area, of the grantee, including any
              area served by the additional, capacity.        /
                                                                                                 C
?HORAt  REGISTER
                                                         HO.  IW WH3N5SDAT, SSTEk
                                                           27,  J978

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Work Session:  Cost Effectiveness Analysis

     The cost effectiveness analysis presented for problem area 4 (pages  20-
29 of Cost Effectiveness Analysis Module) illustrates the methodology of
making the very basic decision of onsite versus a communal (or cluster)
system.  Under the assumptions used for the analysis the onsite systems
were shown to be more cost effective.  However it may be necessary to
question some.of the underlying assumptions.  For purposes of conducting       .
the necessary analysis, the group will be in smaller groups.

Work Tasks:                                                        -

Problem Area Group:  This group will act as a coordinating body for the
work session assimilating the results.of the other work groups.  The other
work groups will be addressing specific issues relative to cost effectiveness
of onsite versus communal systems.  This group will be responsible for
combining the results of the other groups' work and assessing its overall
Implications as it relates to the selection of onsite versus cluster systems.

This group will also be responsible for identifying other issues which may
impact this decision (i.e. onsite vs. communal) and assessing their im-
plications.                                            .

Initial Failure Rate Group:  A review of the problem area description
provided in the Case Study (p.21) shows that all of the homes in the area
were built around the same time and have relatively the same soil conditions.
An argument might be made that the survey has in fact underestimated the
number of systems that are now failing.  Assess the implications of this
possibility.  Using the analysis-presented on pages 20 and 24 of the cost effective-
ness module conduct a similar analysis for 15, 20 and 25 failures.  Assume that
development costs will remain at about 48% of construction costs.  What
appears to be the cut-off, point at which the number of existing failures
would tend to sway the selection towards a community system.  (Refer to
the Comparison of Systems on page 29).

Future Failure Rate Group:  Using a similar argument as that presented for the
Initial Failure Rate Group one might argue that the 5% failure rate is too low.
Using the analysis presented on p.24 conduct an analysis using a 10% and  20%
failure rate.  Since at a 10% failure rate all systems will fail by year 10
use a present worth factor of 6.98  (uniform series, 10 years @ 7 1/8%) for
the present worth of initially conventional systems; similarly for 20%, a
present worth factor of 4.09 should be used.  Discuss how this effects the
overall results by refering to the comparison of systems on p. 29.

Mound Design Group:  As a contrary argument, one can argue that the mound design
for the Woodrock system is very conservative.  A mound design based on the
EPA Design Manual for Onsite Systems for a 7-bedroom house and lO.min/in
percolation rate has yielded the following results  (these are comparable to
the quantities presented in Table 3-1 of the Cost  Effectiveness Module-
p. 17):
                                                       3
               Excavation for Trenches          24.5 YD3
             - Gravel for Trenches              24.5 YD    .
               Peastone for Trenches                3
               Fill Material                   190   YD
               Distribution Pipe               292   LF
               Backflow Preventer                1   EA

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                Header Pipe
                Grading and Supervision
                Layout and Supervision
  55    LF,
2730    FT"
 292    LF
                                                                                    ,f
Using this new design and the costs .in Table 3-1 calculate the costs
of such a mound.  Using this cost show the effects of this mound cost
on the cost effectiveness analysis presented on pages 20 and 24 of the
Cost Effectiveness Module.     .            
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