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771 1 I 1 issuing debt. As shown in Table 27, the July 1998 escalated cost of the City's wastewater treatment and disposal system is $40,761,967. This cost is divided by the current capacity of 46,325 equivalent single - family dwelling units to yield a cost of $968 or $5.90 /gpd inclusive of contingencies at ten percent. It is estimated that a connection fee of $968 for fiscal years 1997/98 and 1998/99 would yield adequate revenue for future system expansion. Value -of- Service Method. The value -of- service method is probably the most frequently employed method of developing connection fees for wastewater utilities. Under this method, connection fees are based on the practices of other communities, tempered by the ability of new users to pay. Note that the value -of- service method yields a range of fees which appear reasonable rather than a specific fee. Theoretically, the maximum connection fee that could be assessed a new user is equal to the value of service associated with the new connection. An obvious measure of value of service can be obtained from cost comparisons between municipal treatment and private systems. The less obvious but more important value considerations are a function of increased property values associated with greater land use density potentials afforded by municipal treatment. The actual value of service can, therefore, amount to thousands of dollars. This consultant does not know of any wastewater utility that has established connection fees based solely on the value of service. On the other hand, very few wastewater utilities have connection fees -based entirely on cost of service. In fact, most wastewater utilities base connection fees at a point somewhere in between these two extremes- -the selection of which is most fre- quently based on the practices of other wastewater utilities. Accordingly, a survey of the connection fees of 35 other Bay Area wastewater utilities and a summary of the connection fees of 605 California wastewater utilities are presented in Table 28. As shown in Table 28, for the current fiscal year 1996/97, connection fees ranged from $100 the City of Los Altos to $7,200 for the City of Palo Alto; the average connection fee was $2,660 for thirty -five northern California communities shown in Table 28. The average connection fee for 755 California communities was $2,087 for fiscal year 1996/97 and from nothing to $13,184. These connection fees are escalated in Table 28 for anticipated inflation of 3 percent annually fiscal year 1998/99 for comparison with alternative connection fees developed for the City of San Leandro. As shown in Table 28, the average Bay Area connection fee increases to $2,810 and the average California connection fee increases to $2,200. The connection fee proposed for fiscal years 1997/98 and 1998/99 for the City of San Leandro is only $950 which is substantially less than the connection fees assessed by most other California municipal wastewater utilities. 82