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ATTACHMENT 2 R RAFTELIS November 29, 2021 Ms. Tina Olson Director of Finance City of Pleasanton P.O. Box 520 Pleasanton, CA 94566 Subject: Proposal for Water and Sewer Connection Fee and Drought Rate Study(Amendment) Dear Ms. Olson: Raftelis Financial Consultants, Inc. (Raftelis) is pleased to submit this letter proposal for the opportunity to assist the City of Pleasanton (City) with a Water and Sewer Connection Fee and Drought Rate Study (as an amendment to the existing contract we have with the City for a Water, Recycled Water, and Sewer Rate Study). Water Resources Economics will be a subconsultant to Raftelis for this engagement. The following sections outline the tasks that Raftelis believes will be involved in completing a study that accomplishes the City's goals and objectives. SCOPE OF SERVICES The tasks shown below define the technical approach for the scope of services. It should be noted that while these tasks are listed consecutively, some tasks will overlap and may be conducted concurrently. Task 1—Water and Sewer Connection Fees The water and sewer connection fee analysis will include an assessment of projected new development, including net growth development and a determination of the amount of excess capacity in existing water and sewer facilities, and/or a percentage assessment of the need for new planned facilities attributable to new development. We will also rely on the City to provide a list of its existing inventory of updated water and sewer facility assets in order to conduct these calculations. To calculate connection fees, Raftelis will first determine the most appropriate method to utilize. The various approaches have largely evolved on the basis of changing public policy, legal requirements, and the unique and special circumstances of each agency. The buy-in method, incremental cost method, and the hybrid approach are three widely accepted and appropriate approaches for connection fees(also called capacity fees, development impact fees, etc.). » Buy-in method: assumes that new customers are entitled to service at the same price as existing customers. However, existing customers have already developed and financed the facilities that will service new customers. Under this approach, new customers pay only the amount equal to the net investment already made by existing users. » Incremental cost method: assumes that new users utilize surplus capacity from existing system that must be replaced or requires new capacity to be added to the system. Under this approach, new customers pay for additional capacity requirements, irrespective of past investments made by existing customers. » Hybrid method: incorporates elements of both of the buy-in and incremental cost methods. 445 S.Figueroa Street,Suite 1925 Los Angeles,CA 90071 www.raftelis.com