September 1990
Virginia  User Charge Study

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Introduction
Purpose of the Survey
Part of the State’s ongoing responsibility is to
acquire financial and tedhnical information about
its communities. The information acquired from
this user charge survey allows the State to
monitor the ability of its communines to achieve
financial self-sufficiency for waste water treat-
ment operations. There is an especially strong
need for the State to look even more closely at
user charges since local municipalities will be
financing their future wastewater construction
without the assistance of federal grants. The
future success of wastewater pollution control in
the State will depend on the ability of local
cornmunmes to maintain financially self-suffi-
cient wastewater treatment operations.
Do’communines have healthy user charge
systems that pfovide adequate revenues to
support operations and debt repayment? To
answer this question and plan for the future.
State and local officials must know where
communities stahd in running self-sufficient
wastewater systems.
To obtain information on the financial solvency
of its communities, the State of Virginia under-
took a suz vey of user charges following the
procedures given in the United States Environ-
mental Protection Agency’s publication Looking
at User Charges. A State Survey and Report
(EPA 430/09-87-0008). The survey’s 11 ques-
uons, although deceptively simple, generate a
wealth of information on residential unit costs.
A copy of the survey form is provided in Appen-
dix t. The survey was mailed to statically
significant municipal wastewater systems during
November 1989. The response rate of 61% was
sufficiently large that confidence can be placed
in the results.
Responses on demographic and utility character-
istics were used to calculate ’unit costs and flows.
examine economic impact and ensure valid
comparisons between communities. Costs data
provided the basis for comparing user charge
systems and the, costs of operation, maintenance.
replacement and capitalization. Revenue ques-
tions allow the examination of whether the
systems were recovering enough money o
operate in the black
Not all respondents answered all the survey
questions, this resulted in different sample sizes
being used for the various analyses
Organization of Reoort
This report is divided into eight sections to
evaluate the financial self-sufficiency of munici-
pal wastewater treatment operations-
!. Covering the Costs of Operation
II Unit Costs by Treatment Level
III. Average Annual Total Residential Costs
and Sewer Service Charges per
Household
IV Equitability of Residential User Charges
‘V. Ability of Residential Sector to Cover
Residential Costs
V i. Planning for Equipment Replacement
VII Debt Burden Without Grant
Contribution
VIII. Summary Findings
A summary table ot each communucys responses
to the survey is presented in Appendix B
I. Covering the Costs of Operation
The most basic question is “Are sewer service
charges adequa e to cover the costs of operation
and to achieve clean water goals?” This analysis
shows the ratio of revenues to costs. For com-
munities where revenues are not adequate to
cover costs, i.e., the ratio is below 100%, the
communities should reassess their user charge
systems and other sources of revenues to ensure
proper funding.
In this analysis, 39% of the communities showed
revenues below their costs. These communities
had an average overall revenue shortfall of 36%

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MA I I A) OF KFLVE LES 10 COSTS
::
0
50% 50* - 74% 75% - 9 * ‘00* - I 23* ‘23%
P .4 1 . Si Sw ... I. C. . ,. 4 %)
DISTRIBUTION OF TOTAL REVENUES
TO TOTAL COSTS
TREATMENT NO. OF ABOVE BELOW
LEVEL COMMUN 100% 100%
PRIMARY 50%
SECONDARY 36 r
ADVANCED 50%
OVERALL
(\ote: In this report. the level of analysis is the
community. Some communities have more than
one treatment plant, and these different plants
may use different levels of treatment. In this
survey, two communities reported using both
primary and secondary treatment and three
communities reported using both secondary and
advanced treatment. For purposes of this report.
the former are analyzed with communities using
only secondary treatment and the latter with
communities using only advanced treatment.)
47
59
50%
61%
is
tOTAL COSTS
OM&R COSTS
TOTAL COSTS BY TREATMENT LEVEL
55
50+
20
0 —
‘I
d l
d l
d l
[ 1 Ji
11. Unit Costs by Treatment Level
OM&R COSTS BY TREATMENT LEVEL
Analysis of unit costs (cost of treatment per 1000
gallons) helps identify communities where costs
are usually high or low. Unit costs for individual
communities vary dramatically and the analysis
reflects this fact.
Communities with secondary treatment averaged
$2.64 per 1000 gallons, and advanced treatment
systems averaged S2.21 per 1000 gallons.
70 *
— f.U4
30 +
40
‘U
.— :0.
10
: 0! :rI
1 T T iL k r
SI UU 51 OIl 5 ’ 99 $/ UU 5/19 53 IJu 0+ ‘49 34 uI
0.1 sr. p . r 111114 1444S , I resiel
20
• $1 QU $1 00 $ 1 99 3 / D l i - $2 I I $3 UU $3 +‘# . $4 III
55
50
‘5
1-
21 )
10
• 1+ uU II 00- $1 #9 $Z UU - $e99 $3 uu $3 . 14 UU
4,1 1.,. 5Sf 1 .UUI ) bill ,.. II.si
-* . •_, ‘_._• ,:++.+. *e

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AVERAGE UNIT COSTS BY TREATMENT LEVEL
AVER AVER TOTALUNITCOSTS
NO. OF OM&R CAPITAL STD
COMMUN COSTS COST AVER MEDIAN DEV
4 ¶3.00 5:24 ¶42.6 S4.66 ¶2.04
47 ¶2.01 ¶0.63 ¶2 .64 ¶2.03 ¶2.16
10 ¶1.32 50.89 5221 ¶1.91 SI 77
61 ¶1.95 S0.73 52.68 ¶2.09 ¶2.14
III. Average Annual Total Residential Costs
and Sewer Service Charges per
Household
The average annual total residential treatment
costs and sewer service charges per household
serves as a basis for later analyses such as (1) the
percentage it represents of median household
income, and (2) whether costs are covering
actual costs. Here, the data has been arrayed to
show the disthbution by treatment levels. The
results of this survey showed a steady cost
increase as one goes from primary to secondary
to advanced treatment.
The secondary treatment residential costs were
concentrated in the $101 to $250 range, while
advanced treatment costs were in the $101 to
S150 and greater then $250 ranges. The user
charges for secondary were concentrated in the
S 101 to $250 range, while sewer charges for
advanced treatment were generally $151 or
greater.
AVERAGE RESIDENTIAL COST PER
HOUSEHOLD
tREATMENT
LEVEL
PR (MARY
SECONDARY
.DVA .NCED
OVERALL
I
25
° +
Is
150
- 1100 $101 - 1150 $151 - $250
£ .r.4. A• I C S,3S U , $s .IsId ($1
A\ERAGE ANNUAL CHARGE PER
HOUSEHOLD
T
30
AVERAGE ANNUAL CHARGE PER
HOUSEHOLD
Ij IJL•
$50 $50- $1.0 $101 - $150 $151 - $250 . $2S0
£ q ,.qu £... C .r3. pr l 3l0 (1)
U -‘ $* s I * S d I II —
AVERAGE RESIDENTIAL COST PER
HOUSEHOLD
45
15
— lu
25
20
10
S
DISTRIBUTION OF RESIDENTIAL COSTS AND
USER CHARGES
TREATM E .VT
LEVEL
PR (MARY
SECONDARY
ADV ANCED
OVERALL
\VE TOTAL
LN RESID
SAMPLE COST/IIH
4 5205.21
35 5210.99
5243.09
. VERAGE USER CHARGES
PER HOUSEHOLD
AVERAGE MEDIAN S1D DES
5593.45 S 58.00 5952 9
¶135.92 ¶130.00 S s
S17943 5194.00 S ‘ ,- 97
S109 $3 S137 10 S2
1
0
20
IS
I A
$50 $50 . $100 $101 $130 $151 1250 . $250
AVer,,. 0•s,$ssI,sl C1 f 1$)

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IV. Equitability of Residential User Charges
Are residential customers paying their fair share
of the costs? Or is one class of users subsidizing
another Analysis of data on the portion of the
flow, costs, and revenues attributable to residen-
tial users allows answers to these questions.
Based on the analysis, communities may restruc-
ture their user charge systems to distribute costs
more equitably.
This analysis shows that in many communities
residential users (58%) may be paying less than
their share of treatment costs. For communines
utilizing secondary treatment, about 57%of
communities charge residential customers less
than their estimated share of treatment costs: for
advanced treatment, this figure is 67%.

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TOT RESIDENTIAL COSTS PER HH AS %
OF MHI
40 -
r
fl St. •t* IOOt-14fl 1502-200t •20flt
•..$taIliI tnt p.r tilt p. t f P 1* 11
•5n lp.r4Inl”tW tmo-.npii,.

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EQUIPMENT REPLACEMENT FUNDS
TOTAL NO OF COMMUNITIES 62
PERCENT OF COMMUNITIES WITH
EQUIPMENT REPLACEMENT FUNDS 55%
AVERAGE PERCENT VALUE
OF REPLACEMENT FUNDS 13%
MEDIAN VAUJE 10%
VII. Debt Burden Without Grant
Contribution
The effect of grant funding on capital costs was
examined by making adjustments to the debt
financing cost figure (as reported in the surveys)
to reflect ‘tota1” costs of capital without Federal
or Stale grant assistance This roughly deter-
mined theimpact of grant assistance on commu-
nity treatment costs.
This analysis showed that the average debt
financing costs for advanced treatment would
have increased from S.91 to $1.49 per 1000
gallons, while it would have increased from S.64
to $2.48 for secondary treatment. In this analy-
sis. grants reduced the average treatment costs
from $4 23 per 1000 gallons to $2.58 or 39%.

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VIII. Summary Findings
Some of the more interesting findings from this
survey were:
1. Thirty-nine (39%) percent of the communi-
ties are not collecting enough wastewater
revenues to meet their total expenses.
2. The average wastewater revenue shortfall for
the deficient communities was 36 percent of
their total treatment costs.
3. The unit wastewater treatment costs averaged
2.58 dollars per 1,000 gallons. Operation.
maintenance, and equipment replacement
averaged 1.95 dollars per 1,000 gallons.
4. The average residential treatment cost was
216 dollars per household per year while the
average residential user fee was 170 do lars
per household per year. -
5. The average sewer service charge was 0 7%
of the median household income (MFII),
however, the total residential treatment cost
was 1.1% of the MHI.
6. Fifty-eight (58%) percent of the residential
users appear to be paying less than their
appropriate share of the total costs.
7. Fifty-five (55%) percent of the communities
have equipment replacement funds with an
average value of 13% of operating funds.
8 Federal and State grants have reduced the
average total cost of wastewater treatment by
39% for secondary and adv nced treatment
systems.

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Appendix A
Model Survey Form

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4 ip
Dear (State Name) Community Official,
The budget problems you’ve faced in paying for community ser’nces will
probably increase in the future. This means your local residents and in ustry
must. pay more for wastewater treatment. Your challenge will be how to raise
money to meet your current and future wastewater treatment needs. The
information requested in the attached survey can help you meet this challenge.
STRIKING A BALANCE
As you know, every community needs to continuously examine its wastewater
costs and revenues to make certain they balance. The results of this survey
will help you decide if your current service charges are adequate for
operating, maintaining, and improving your wastewater treatment facilities.
HOW DO YOU COMPARE?
The information you and others provide will be analyzed to show how much
communities in the state pay for wastewater service. You’ll be able to
compare your community’s costs with others. If you return this survey to us,
we’ll send you-a copy of the survey analysis report.
DO YOU HAVE QUESTIONS?
Instructions are attached to help you answer the survey questions. To
answer some of the questions, you may need to involve various people in your
organization who know about the special aspects of.your wastewater system.
Even if you àr others don’t know the exact answers to all the questions,
please use your best estimates and return the survey to us by (date). Please
feel free to call (name of contact ) at ( telephone number) if you have any
questions. The survey should be returned to ( name of contact and address) .
Thank you or your help.
Sincerely,
( Name of Official )
Attachment
Al

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Comiiunity Name
Wastewater Service District (If your community
does not treat its wastewater) ______________________________
Contact Person(s)
Address
Phone No. __________________
1. How many households (not population) in your community rece’ive wastewater
treatment services? —
2. What is the current estimated median household income,in your- community?
$__________________
3. What is the current average flow treated at your facility?
____________ Gallons per day
4. What is your current estimated average wastewater flow per household per
day?
_____________ Gallons per day
5. What Is the level of treatment at your wastewater treatment facil I ty?
— primary — secondary — advanced
A 2

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6. , bout how mucn of the money needed to construct your facility came from
state or federal- grants?
S_________________
7. How much does it cost to operate your facilities for a year? (operation,
maintenance, and equipment replacement costs -- DO NOT include the costs
of wastewater loans and bonds, or depreciation)
S_____________ Year of data
8. About how much money are you putting aside (as a percentage of operating
costs) each year for equipment replacement?
9. How much are you paying each year to cover wastewater loans or bonds?
(principal and interest costs only)
$____________ Year of data ______ -
10. How much money (revenue) are you currently collecting to pay for
wastewater collection, treatment and’ disposal, plus principal and interest
costs on wastewater debt?
S___________ Year of data
11. What is the current average annual sewer service charge per household?
S____________ Year of data
A3

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INSTRUCTIONS FOR COMPLETING SURVEY
These 1 instructions include information plus directions to help you comolete
some of the questions. If something does not fit your situation, answer as
best as you can and explain the problem or c’all the number shown in the cover
letter for mare help.
QUESTrONS 1-6
There are several possible sources of information to complete Questions 1-6.
Use the most current source that ‘corresponds best to’ your wastewater
facility’s service area. Sources for data include the census,, surveys
conducted by a regional planning agency, etc. In all cases, provide the best
information you have; give us your best estimate if actual numbers are not
available. —
1. Households. This should be the total number of households (residential
customers) serviced, not the number of people or population. (Residential
apartment buildings should be treated as equivalent dwelling units.)
2. Median Household Income. - This should be the most recent census value or
current estimate. Your local Bureau of CensUs, Data’ User Center, can
provide this information.
3. Current Average Flow Treated. This value represents flow from all
sources. Flow should be reported in gallons per day. If your flow is
calculated in cubic feet per day, multiply the flow by 7.481 to convert it
to gallons per day. -
‘4. Average Wastewater Flow Per Household Per Day. Calculate as follows:
gallons daily . number of residential daily flow per household
residential flow ‘ ‘customers (gallons per day)
Your figure for gallons daily residential .astewater flow might come from
your water supply department or your billing office. The wastewater: flow
figure should include an adjustment for infiltration/inflow.
QUESTIONS 7-11
Cost and revenue information you provide in Questions 7-11 should Include all
parts of the was.tewater system: collection (sewers, pumping stations), the
treatm!nt plant, and disposal (outfalls, sludge disposal).
7. Annual Costs. This number shoutd include annual ‘operating tosts,
‘maintenance costs,’ ‘replacement costs’ for wastewater collection and
treatment, and any charges from Regional systems. (It DOES NOT include
the costs of wastewater loans and bonds, or depreciation).
A4

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Ooerating costs include labor, materjals and supplies, utilities, and
overnead (sucn as office rent). -
Maintenance costs include preventive and corrective maintenance.
- Reolacement costs include costs to maintain but not to extend the useful
[ ife of the faciHties (like pumps and motors).
8. Equipment Replacement. This question is intended to determine what
percentage of the operating costs you i.ncluded in Question 7 are being put
aside to maintain but not extend the useful life of the facilities (like
pumps and motors).
9. Costs of Loans or Bonds. This number should include all principal and
interest payments you are making annually to pay for your wastewater
treatment facilities.
10,. Money (Revenues) Collected Annually. This should Include all the money
you collect for operat ng and financing all pa rts of the wastewater
facilities--collection, treatment, disposal and debt service. 00 NOT
Include grant monies.
11. Annual Sewer Service Charge Per Household. This should be an estimate of
the typical total annual sewer service bill for a residential customer.
One method of calculating this charge would be to use the wastewater
treatment rate established in your sewer use ordinance andthe av’erage
wastewater flow per household.
A5

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Appendix B
Formulas and Data

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1. Ratio of Revenues to Costs
= Total Revenue (10) / [ OM&R Costs 7) ± Debt Financing Costs i 9-)I
2. Total Unit Costs per 1000 Gallons
= [ OM&R Costs (7) + Debt Financing Costs (9) * 1000
Current Average Flow i3) 365
3. OM&R Cost per 1000 Gallons Processed -
= (OM&R Costs (7) / [ Current Average Flow (3) 365]) 1000
4. Average Annual Charge per Household
= Current Average Annual Sewer Service Charge (11)
5. Average Residential Cost per Household
= Residenbal Flow Proportion * EOM&R Costs (7) + Debt Financing Costs (9)1
Nuniber of Households (1)
Where Residential Flow Proportion
= Flow / Household (4) Number of Households (1J
Current Average Flow (3)
6. Ratio of Revenues to Costs: Residential
= [ Number of Households (1) * Average Annual Sewer Charge (11)1
Cost of Treating Residential Flow
Where Cost of Treating Residential Flow
= [ OM&R Costs (7) + Debt Financing Costs (9)] Residential Flow Proportion
7. Total Residential Cost per Household as a Percent of MHI
= Average Residential Cost per Househoid / Average v [ H1 (2)
8. Sewer Service Charge as a Percent of MHI -
= Current Average Annual Sewer Service Charge (11)! Average MHI (2)
9. Equipment Replacement Funding
= Equipment Replacement as a Percent of OM&R (8)
10. Annual Debt Financing Cost Adjustment
= Total Grant Dollars (6) * Capital Cdst Recovery Factor
Where the Capital Cost Recovery Factor is assumed to be 0.102, representing the equivalent
annual cost of borrowing the grant funding over 20 years at 8 percent interest per year.
Note that in compu’urig these measures, any system which was missing one or more parts of the
data was excluded from the calculation. thus, sample sizes vary from measure to measure.

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SUMMARY CHAR [ OF USER COSTS SURVEY INFORMATION
Community Average Level’ of Treatment Operation Debi Financing Total Cost Average Annual blat Res Cobt boldI F1e rdeniiul
Number Flow (GPO) Costs Costs per Year $11000 Gal Service Charge per Household Cost us ol Ml II
- per Household
1 1.460.000 secondary $250000 $58.pOO $0 58 $25 00 $128 33 073%
2 41.000.000 advanced $13,814,000 $1,851,300 $105 $13000 $11872 032%
3 250.000 secondary $135,000 $0 $148 $1300 $24281 229%
4 280.000 secondary $65,745 $36,000 $100 $14300 $10901 044%.
5 161.150 secondary $178,215 $54,000 $395 $17800 $14842 052%
6 1.100.000 secondary $426,901 $172,806 . $1 49 $21780 $136 30 0 37%
7 2.860.000 secondary $506,400 $298,887 $0 77 $139 20 $63 35 0 26%
8 11 .000 secondary $18,000 $0 $4 48 $200 00 $229 09 2 29%
9 613,000 secondary $63,000 $96,000 $071 $1100 $7937 051”/o
10 263.000 secondary $220,000 $43,300 $2 74 $330 00 276 31 I 59%.
Ii 125,000 secondary $75,808 $13,750 $196 $8400 $10317 062%
12 60.300 secondary $73,282 $38,990 , $510 $10057 $21385 143%
13 20.600 secondary $15,000 $10800
14 92.468 secondary $210,383 $108,000 $943 $9944 -
15 22.000 secondary $13,000 $0 $162 $19200 $11404 039%
16 17,000.000 advanced $5,430,071 $5,426,600 $1 75 $21948 $14369
17 1.300,000 advanced $460,566 $521,550 $207 $14189 $22664 . 227°k
18 28.000’ secondary $33,038 $17400
19 35.000 secondary $58,655 $45,552 $8 16 $24 12 $27423
20 14.800.000 secondary $3,227,658 $607,002 $071 $91 00 $214 02 1 55%
21 130.000 secondary $40,000 $23,856 $135 $19200 $14736 Ô94%
22 1,100,000 secondary $410,000 $210,000 $154 - $16500 $10568 052%
23 800.000 secondary $126,889 $0 $043 $13000 $8849 034%
24 190.000 secondary $125,000 $45,000 $245 $25332 $16374 1 13%
25 130.000.000 prImary, secondary $40,304,000 $10,373,000 $1 07 ‘ $7800 $9356 032%
26 30.000 secondary $80,000 $10,126 $8 23 $30000
27 322,425 secondary $156,244 $60,527 $184 , $12649 $17749 047%
28 33.000.000 secondary $5,713,000 $0 $0 47 $108 00 $34 62 0 tS%
29 35,000 secondary $38,000 - $11850
30 65.000 secondary $40.000 $14,964 $232 $12000
31 200.000 secondary $340,000 $64,000 $5 53 $135 00 $404 00 I 26%
32 15.000 secondary $0 $12000
33 1.885.000 secondary, advanced $1,151,370 $361,979 $220 $15200 $32515 090%
34 69,000 secondary $39,000 $16800
35 34,000,000 advanced $12,300,000 $19600
36 12,000.000 secondary $1,900,000 $1,600,000 $080 $16500 $13125 053%
37 8.000.000 secondary $1,886,000 $0 $065 $5760 $47 15 022%
38 100.000 secondary $48,690 $65,458 $313 $21600 $20547 107%
39 24.000 Primary $22,510 $9,814 $369 $2.24280 $14950

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SUMMARY CHART OF USER COSTS SURVEY INF0RMArI0N
Couiinuiii I y Average
Niliiber How (GPD)
Level ol It eatinunt
Operation Debt Frnancing
Costs Costs per Year
ToiiI Rus Cost Fold I tJ 5ltloiIlkIt
er I lousel ioltl Cosi as ‘ /., ul Mt II
Total
Cost
Average Annual
$/IOQO Gal
Service Charge
per Household
40
4 1
185.000
140,000
- se.ondary
primary, secondary
$159,000
$53,700
$0
$125,000
$235
$3 50
$22500
$177 50
$22346
$174 17
I
0 73%
42
93,300
advanced -
$203,317
$0
$597
$3000
$32949
146%
43
110.000
secondary
$77,558
$43,512
$302
. - $15432
,
$26262
44
45
14.000,000
250,000
secondary, advanced
secondary
$5,900,000
$549,709
$19,060,000
$0
$488
$6 02
$25680
$3000
$59547
$427 79
I 2/u/a
I 90%
46
47
800,000
27,186.247
primary
advanced
- $350,000
$5,537,384
- $0
$437,690
$1 20
$060
$96 00
$4754
-$84 44
$9670
0 5t%
040%
48
700.000
secondary
$189,695
$0
$074
$12599
$15808
263¼
49
85,000
secondary
$80,500
-
$23,400
$335
. $17 00
$27057
2 16%
50
- 53,000
se ondary -
$89,623
$0
$463
$12000
$50730
405%
51
18.800
secondary -
$17,000
-
$16800
52
75.000
secondary
$60,000
$0
$219
$18000
- $30000
214%
53
150.000
secondary
$45,000
$33,000
$142
$15000
$9360
066%
54
120,000
primary, secondary
$75,650
$35,000
$253
$19078
I 91%
55
663
secondary
$20,000
$0
$36000
$1,508 30
189%
56
70.000
secondary
$62,419
$6,963
$272
$502
$212 II
‘
I 00%
57
40.000
primary
$50,000
$45,000
$651
$2000
$26363
I 32¼
58
54,000
primary
$95,000
$15,888
$563
$1500
$32329
209%
59
200.000
secondary
$,70,000
- $84,756
-
$2 12
$34 49
$233 68
60
61
600.000
127,785
second ry
secondary -
$119,162
- $94,561
$Q
.$0
$054
$203
$1600
- $8400
$6786
$141 34
038%
060%
62
- 82.000
secondary -
$91,616
$93,114 -
$617
$19800
$22528
093%
63
.240,000
secondary
$100,000
$0
$1 14
$2920
$12917
006%
64
940,000
secondary
$404,880
$741,595
$334
$27500
$24393
0 79%
65
31,000,000
advanced
$763,933
$956,750
$015
$27000
$1887
007%
66
- 450,000
secondary
$207,107
$60,000 -
$163
$12000
$17807
082%.
67
4.810,000
- advanced
$1,250,000
$3,000,000
$242
$19400
$33305
107%
68
270.500
advanced
$60,000
$33600
69
- 791,418
secondary
$129,411
$49,846
$062
$151 44
$1518
009%
AVERAGE
MEDIAN ,
$268
$209
$16988
$13710
$21557
$17583
110%
080%

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