8M Consent 2011 0906 - Laserfiche WebLink

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Connection Fee Recommendations u u I J J J n 0 I It is recommended that the City maintain the current single - family residential connection fee of $950 for fiscal years 1997/98 and 1998/99. Based on the marginal cost - pricing analysis at reproduction cost new discussed previously, it is estimated that an average connection fee of $968 inclusive of contingencies at ten percent per equivalent single - family dwelling unit will derive costs of system expansion over fiscal years 1997/98 and 1998/99. No further consideration should be given to the system buy -in connection fee of $456 because it will not recover the incremental costs of future system expansion. It is further recommended that the City consider implementing a connection fee based on value of service considerations. The City's current connection fee is based on the current cost of duplicating the existing facilities. However, this cost is likely to approximate the average costs of several expansions with each expansion costing more or less than this average cost. Because the City has not needed to expand its wastewater management facilities, detailed engineering studies have not been conducted for the next expansion phase and thus exact costs of any such expansion are not known. If connection fee revenues are not adequate for the next expansion phase, some form of debt would need to be issued, such as another General Fund loan. If the City desires to fund expansions on a pay -as- you -go basis without any debt, then the City should consider implementing a higher connection fee based on the value of service provided. As previously discussed, this method until recently has probably the most frequently employed method of developing connection fees for wastewater utilities. With today's ever - increasing costs of system expansion, these additional revenues provide a safeguard to existing system users in that it is less likely that they will be burdened with costs of expansion caused by area growth. Because of legislation (AB 1600), however, the City should identify likely expansion projects and tie any higher fee to those projects before considering implementing a fee higher than previously recommended. Based on the practices of other California wastewater utilities, a City connection fee of $2,200 appears reasonable. Note that though a connection fee of $2,200 approximates the average of 755 California communities, high growth communities with current expansion projects usually have connection fees of over $3,000. Because these higher connection fees are usually based on current known expansion costs as compared to historical costs, current replacement costs, or connection fees of other communities, these higher connection fees are more likely to be representative of new expansion costs. A City connection fee of $2,200 ought to be quite reasonable for the service provided 84