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3.0 Legal Considerations in Establishing CFs for the City 3.1 Introduction An important consideration in establishing connection fees is any legal requirements at the state or local level. The legal requirements often establish the methodology around which the connection fees must be calculated or how the funds must be used. Given that, it is important for the City to understand these legal requirements and develop and adopt their connection fees in compliance with those legal requirements. This section of the report provides an overview of the legal requirements for establishing connection fees, or capacity charges under California law. A discussion of the applicability of Proposition 218, as it relates to connection fees, is also provided. The discussion within this section of the report is intended to be a summary of our understanding of the relevant California law as it relates to establishing connection fees. It in no way constitutes a legal interpretation of California law by HDR. 3.2 Requirements Under California Law In establishing connection fees, an important requirement is that they be developed and implemented in conformance with local laws. In particular, many states have established specific laws regarding the establishment, calculation and implementation of connection fees. The main objective of most state laws is to assure that these fees are established in such a manner that they are fair, equitable and cost - based. In other cases, state legislation may have been needed to provide the legislative powers to the utility to establish the fees. "The laws for the enactment of capacity charges or connection fees in California are found in California Government Code sections 66013, 66016, and 66022 within the 'Mitigation Fee Act.'" The laws for the enactment of connection fees in California are codified in California Government Code sections 66013, 66016, and 66022, which are interspersed within the 'Mitigation Fee Act.' The Mitigation Fee Act is comprehensive legislation dealing mainly with development impact fees, although the above sections set forth the various requirements for imposition of connection fees in California: calculation of the fees, noticing, accounting and reporting requirements, and processes for judicial review. A summary of the relevant statutes required in the calculation of connection fees is as follows: "66013 (a) Notwithstanding any other provision of law, when a local agency imposes fees for water connections or sewer connections, or imposes capacity charges, those fees or charges shall not exceed the estimated reasonable cost of providing the service for which the fee or charge is imposed, unless a question regarding the amount of the fee or charge imposed in excess of the estimated reasonable cost of providing the services or Legal Considerations in Establishing CFs for the City 8 City of Pleasanton - Recycled Water Connection Fees