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BACKGROUND The City of Pleasanton contracts with the Dublin San Ramon Services District (DSRSD) for wastewater treatment and disposal services. This contractual relationship has existed since the late 1970's when the City's Wastewater Treatment Plant was decommissioned. The current agreements between the City and DSRSD (dated 1992 and thereafter) provide for DSRSD to set regional sewer connection fees for the expansion of the treatment plant located on Johnson Drive in Pleasanton and the Livermore Amador Valley Water Management Agency's (LAVWMA) pumping and pipeline facilities that export treated wastewater to the San Francisco Bay. The City and the District each operate their own local collection systems that transport wastewater to the District's Regional plant for treatment prior to eventual discharge to the San Francisco Bay. While the local rates differ between the City and the District customers, by contract the regional treatment, disposal and connection rates /fees must be the same. By contract, once any adjustments to the regional sewer connection fees are adopted by the DSRSD Board, the City must adopt these charges within sixty days. In 2009, DSRSD hired the consulting firm of Black Veatch to review if any changes were needed in the regional connection fees that are collected from new development to pay for the cost of expanding either the DSRSD regional wastewater treatment plant or the LAVWMA disposal facilities (2010 Study). The results of the 2010 Study were adopted by the DSRSD Board on June 15, 2010 with the changes in the sewer connection fees to be effective within DSRSD and the City on August 1, 2010. Changes to the Regional Connection Fees The study prior to the 2010 Study was performed during the 2006 -2008 time period and adopted to be effective July 1, 2008 (2008 Study). As a result of the 2008 Study the regional connection fee was established July 1, 2008 and then increased by the ENR escalator on July 1, 2009 and decreased by the ENR escalator on July 1, 2010 to its current level of $13,393 per single family equivalent demand. The results of the 2010 Study were that the connection fee should be increased from $13,393 to $13,840. The regional connection fee includes the cost of both the prior expansion of the DSRSD's wastewater treatment plant located in Pleasanton (known as the Phase IV Expansion) and LAVWMA "s Export Pipeline Expansion Project. The two projects required the issuance of approximately $186 million in bonds; currently $146 million is outstanding with an annual debt service payment of approximately $9.0 million payable from regional connection fees. On June 15, 2010, the DSRSD Board also adopted an ENR escalator to be applied annually to the portion of the fee representing the DSRSD Regional component ($8,210). The remainder of the fee ($5,630) is collected to fund the payment of the annual debt service on the outstanding bonds on the LAVWMA pipeline and will not be escalated annually. The table on the following page presents the regional sewer connection fees approved on June 15, 2010 by the DSRSD Board for implementation on August 1, 2010: Page 2 of 3