1. Improvement fees shall be spent only on capacity increasing Capital Improvements, including expenditures relating to repayment of debt for the improvements. An increase in system capacity may be established if a Capital Improvement increases the level of performance or service provided by existing facilities or provides new facilities. The portion of the improvements funded by Improvement Fees must be related to the need for increased capacity to provide service for future users.

2. A Capital Improvement being funded wholly or in part from revenues derived from the Improvement Fee shall be included in the plan adopted by the city pursuant to Section 12.07.070.

3. Notwithstanding subsections 12.07.050(B)(1) and (2), SDC revenues may be expended on the costs of complying with the provisions of subsections 12.07.050(B)(1), including the costs of developing SDC methodologies and providing an annual accounting of SDC expenditures.