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METROPOLITAN WASTEWATER MANAGEMENT COMMISSION <br />NOTES TO FINANCIAL STATEMENTS <br />June 30, 2005 and 2004 <br />NOTE C -COMMITMENTS AND CONTINGENCIES <br />At 3une 30, 2005 MWMC was obligated by contracts for uncompleted construction projects for $1,598,545. At <br />June 30, 2004, the obligation on contracts for capital improvements projects was $1,294;776. <br />The Homebuilders Association (HBA) of Lane County has filed a petition for a writ of review in the Circuit Court <br />of Lane County, Oregon challenging the adoption of MWMC's System Development Charge (SDC) methodology <br />by the cities of Eugene and Springfield. The HBA are challenging the SDC methodology developed by MWMC to <br />charge new development for connecting to the wastewater system. The Lane County Circuit Court affirmed the <br />SDC methodology and dismissed all of the assignments of error put forth by the HBA. The HBA has appealed the <br />Circuit Court decision to the State Court of Appeals. Should MWMC lose in court and the methodology be deemed <br />unlawful, the court could order that all or a portion of the SDCs collected after July 1, 2004 be refunded. The total <br />amount of SDCs collected from July 1, 2004 through June 30, 2005 was $2,008,787.. MWMC has established a <br />contingency reserve in the budget to cover a potential court ordered SDC refund. <br />NOTE D -STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY <br />Budgetary information <br />MWMC follows these procedures in establishing the budgetary data reflected in the statements presented in required <br />supplementary information section. ~. <br />In the spring of each year, the Executive Officer submits a proposed budget to the Metropolitan Wastewater <br />Management Commission. The budget is prepared on the modified accrual basis of accounting. Estimated receipts <br />and expenditures are budgeted for by fund, department and category. Information on the past year's .actual receipts <br />and expenditures and the current-year amended budget are provided in the budget document. MWMC conducts a <br />public hearing for the purpose of obtaining citizen comments on the budget. MWMC then adopts the budget. All <br />three governmental bodies included in the intergovernmental agreement, the City of Springfield, the City of <br />Eugene, and Lane County ratify the budget as appropriate. MWMC then makes a fmal approval by resolution. <br />The MWMC may change the budget throughout the year by transferring appropriations between levels of control <br />and by adopting supplemental budgets. Any changes adopted by MWMC in this manner must also be adopted by <br />the City of Springfield, because the MWMC budget is included in the budget of the City of Springfield. <br />Management may transfer budget amounts between individual line items within the control level, but cannot make <br />changes between the legal levels of control. During the fiscal year ended June 30, 2005, the MWMC adopted <br />several transfer resolutions and supplemental budgets increasing revenue by $1,250,000 and increasing expenditures <br />by $311,000. <br />16 <br />