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DUBLIN SAN RAMON SERVICE DISTRICT REGIONAL CONNECTION FEES Introduction General Background Established in 1953, Dublin San Ramon Service District (District) provides municipal services to communities in Contra Costa and Alameda Counties. Services include water, recycled water, and wastewater. With the first wastewater treatment plant in 1961, the District emerged as a regional wastewater treatment provider in the area. Throughout the years the District has expanded to meet the wastewater needs of a growing community. To date, the District owns and operates a 17 million gallon per day (MGD) treatment facility and a collection system of approximately 186 miles of mains. As a regional wastewater provider, the District provides services to roughly 132,000 people in the Cities of Dublin, San Ramon and Pleasanton. Customers include residential, commercial, institutional and industrial. The District operates as a self- supporting entity. As such, the District's rates and connection fees (system development charges) are developed to provide sufficient levels of revenue to meet all operation and maintenance expenses, debt service requirements, routine annual extensions and replacements, capital improvements, and other specific bond ordinance requirements. Connection fees are developed by allocating capital projects costs to new and existing customers accordingly. It is recognized that there is currently a contract in place with the City of Pleasanton that dictates when and how revenues are to be recovered. Purpose The purpose of this report is to present the findings of Black Veatch's (Black Veatch) connection fee analysis for the District's Regional Wastewater Expansion Fund. Specifically, this report establishes a methodology for the development of connection fees that assists in getting new users to pay their fair share of the costs. The proposed connection fees recognize customer costs of service, contractual agreements, and local policy considerations. This study is limited to the regional wastewater system and Black Veatch has not reviewed any activities associated with water, recycled water and local sewer collection operations. Scope The outcome of a detailed study of the connection fees for the District's regional wastewater expansion fund are presented herein. For purposes of this report, the study period has been defined as the fiscal years beginning July 1, 2010 and ending June 30, 2020. Unless otherwise noted, references in this report to a specific year are for the District's fiscal year ending June 30. The methodology used in calculating the system development charges is premised on the fact that new customers or developers pay for required system capacity, to the extent that service charges do not support the investment for the required capacity. The study considered the total capital investment value less depreciation, less any outstanding utility debt in excess of available debt service reserves and unused BLACK VEATCH 1 MAY 2010