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Page 12 of 15 <br />• Buy-In Method: The Buy-In Method establishes a connection based on the value of <br />the system’s existing capital assets and is typically most appropriate when a system’s <br />current capacity is sufficient to serve both short-term and long-term projected demands. <br />The rationale underlying the Buy-In Method is that new customers should pay to buy <br />into existing system capacity funded by past and current users. <br />• Incremental Cost Method: The Incremental Cost Method establishes connection fees <br />based on the cost of planned capital expenditures required to expand system capacity <br />and is typically most appropriate when a system’s current capacity is already fully <br />utilized by existing users. The rationale underlying the Incremental Cost Method is that <br />new users should fund planned capital projects that are necessary to accommodate <br />growth. <br />• Hybrid Method: The Hybrid Method establishes connection fees based on a <br />combination of the Buy-In Method and the Incremental Cost Method. The Hybrid <br />Method is typically most appropriate when some existing capacity is available to new <br />users, but capacity expansion is still necessary to accommodate long-term demands. <br /> <br />Staff recommends the Buy-In for the City’s sewer connection fees, as the existing sewer <br />system has remaining capacity to serve new customers. The Buy-In fee calculates the value <br />of the existing sewer system and its remaining capacity based on the audited value of fixed <br />assets provided by staff as of June 30, 2025 (end of FY 2025) and projected cash balances as <br />of June 30, 2026 (end of FY 2026). Once the value of the existing system is calculated, the <br />total system value is divided by the existing demand on the system, measured in EDUs <br />(Equivalent Dwelling Unit). One EDU represents the average annual wastewater flow for one <br />single-family account, and EDUs were calculated based on account and wastewater flow <br />information provided by staff. <br /> <br /> <br />Proposed Sewer Connection Fees <br />A sewer connection fee survey was conducted to compare Pleasanton’s proposed connection <br />fee for single-family customers with those of peer agencies in the Tri-Valley area. Sewer <br />connection fees include both a local collection component and a regional treatment <br />component. The regional treatment component, which currently accounts for about 97% of <br />Pleasanton’s combined connection fee, is set by DSRSD and is outside the City’s control. <br />With the fee update, Pleasanton combined connection fees are expected to remain below <br />Dublin and within the range of peer agencies in the Tri-Valley area. The comparison is shown <br />in Figure 6 below. <br /> <br /> <br /> <br /> <br /> <br />Page 349 of 617