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DUBLIN SAN RAMON SERVICE DISTRICT i REGIONAL CONNECTION FEES discussions with District and Pleasanton staff. Summarized in Appendix D is the projected number of new connections by year for each agency. Table 2 summarizes thc calculation for the residential connection fee. Lines 1 and 2 establish the plant investment made by the District to date. Line 1 represents the RCLD value of the assets as of June 30, 2008. To this amount, construction work in progress (Lines 2) is added to the asset total. However, in order to accurately reflect the District's net equity position, thc amount of outstanding principal debt must be subtracted from this total to avoid double counting of assets. This is carried out on Line 3. Finally, in recognition of the fact that the replacement fund balance will be used to finance improvements in the future, this is added into the total to arrive at the net equity investment on Linc 5. This total represents the existing system for which new users are "buying into." As such, the net equity amount is divided by the DUEs associated with the current treatment plant capacity to arrive at a unit cost of $1,820 /DUE under the proposed methodology. If the District were to implement a connection fee based solely on the buy -in methodology, then the charge would be $1,820 /DUE. However, to develop a fee that addresses the proposed expansion, the District asked Black Veatch to examine a combined buy -in /incremental approach. Thus, the next step in the calculation of the total fee involves determining the incremental cost of adding the expansion projects to reach 17.8 MGD. The District estimates that the total cost of the expansion to be about $87,767,740 (Line 6). To this amount, a carrying charge allowance (Line 7) is added. This allowance represents essentially interest during construction and is calculated at 5.5 percent interest for 3 years. As shown on Line 8, the total cost of the expansion is approximately $101,886,240. The DUEs associated with the expansion is simply the difference between the current DUEs and the expansion capacity or 20,444 DUEs. A listing of the District's proposed CIP program may be found in Appendix E. Also included as Appendix F is the Project Cost Allocation Policy, this policy outlines the District guidelines for determination of the appropriate funding for CIP projects. In arriving at the regional connection fee, under the proposed methodology, one can either use the weighted average of the buy -in component and the incremental cost or the sum of the two values. Using the weighted average of the two values is recommended when the difference between the values is large. The additive total is used in this analysis to represent the proposed regional connection fee and this approach is consistent with the one used in the derivation of the local connection fee. For the outstanding debt obligations (Bank Debt), the remaining debt service is divided by the incremental DUEs. East Bay Dischargers Authority (EBDA) treats and discharges the wastewater flows from LAVWMA as well as several other cast bay agencies. The cost of expanding the capacity of EBDA corresponding to the District and Pleasanton is shown in Line 16. Finally, the administrative costs associated with the CIP (Line 17) and credits for fees already collected (Line 18) and interest income (Line 19) are also proportioned out to the new users. The expansion costs related to increased flows from LAVWMA is paid by LAVWMA; only the share relating specifically to the District and Pleasanton flow is the amount included in this study. The total regional connection fee is then the sum of Lines 11, and 15 -19 as shown on Line 20. For administrative purposes, we recommend using a rounded value. Under the proposed methodology, the buy -in amount that can be transferred to the Replacement Fund is calculated on Line 21. BLACK VEATCH 9 MAY 2010