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DUBLIN SAN RAMON SERVICE DISTRICT REGIONAL CONNECTION FEES constitutional and decisional law related to fees imposed on new developments. AB 1600 enacted Government Code §66000- §66003 related to developer fees. In general, AB 1600 contains three requirements: Local agencies must follow a process set forth in the statutes and establish a nexus between a development project and the public improvement being financed with the fee. Local agencies must segregate the fee revenues from the General Fund to avoid commingling of funds. If a local agency has unspent or uncommitted developer fees for five years or more, then it must make annual findings describing the continuing need for that money, or it must refund the fees. Since its original passage in 1988, the California Legislature has added and modified various code sections to further clarify and expand the requirements related to developer fees. In particular, Government Code §66013 contains requirements specific to water and wastewater capacity charges. Specifically, §66013 states that "Notwithstanding any other provision of law, when a local agency imposes fees for water connections or sewer connections, or imposes capacity charges, those lees or charges shall not exceed the estimated reasonable cost of providing the service for which the fee or charge is imposed... The fundamental issue of this statutory requirement is that a maximum is set for capacity charges the estimated reasonable cost of providing the service. The statutory requirements pertaining to capacity charges in California continue to evolve. In 1998, the California Legislature passed Senate Bill (SB) 1760. SB 1760 amends and expands Government Code §66013 to subject capacity charges collected after January 1, 1999 to certain accounting, expenditure, and reporting requirements. Proposed Methodology The District has a number of revenue sources that it uses to support its on -going activities. Under the District's long -range financial plan, it is the District's policy to fund capital projects through a combination of connection fees, long term debt, and pay as you go monies. New capital projects are primarily funded through connection fees while replacement capital projects are funded through rates. As part of this study, the District requested Black Veatch to apply the buy -in methodology to its assets to derive a new connection fcc schedule. In addition, to maintain sonic level of consistency and enhance public acceptance, Black Veatch also paralleled to the extent possible, the approach used in the local collection system connection fee analysis. Consequently, the methodology proposed in the following section is a combination of incremental and buy -in approaches. In order to arrive at the appropriate facilities cost, Black Veatch reviewed the District's fixed asset listing. Starting with the original service date and original cost, the estimated reproduction cost for each in- service asset was calculated. Cost escalation factors used were obtained from Engineering News Record (ENR), and reflect local conditions in the San Francisco Bay Area. To arrive at RCLD, the reproduction cost was multiplied by the estimated remaining service life percentage. The net replacement cost is then, the RCLD plus any additional asset costs placed into service in FY 08/09. By using an ENR index, the connection fcc calculation may be updated yearly if desired to more accurately reflect current BLACK VEATCH 7 MAY 2010