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.%k loom <br /> a. Priority 1: Priority 1 projects are projects that are under construction, <br /> mandated by regulatory requirements, necessary to remedy failed processes that <br /> may lead to fines or public health issues,or to resolve significant safety issues <br /> subject to sanctions. Priority 1 projects are hereby deemed approved. City and <br /> District staff shall meet and endeavor to agree on scope of projects to accomplish <br /> compliance with the purpose(s)of Priority 1 projects. In case of dispute, City or <br /> District may require a Committee meeting be held within 30 days upon written <br /> notification by the District of the intended scope of Priority 1 projects. <br /> b. Priority 2: Priority 2 projects are projects that add increased treatment capacity <br /> to allow for the provision of service to future customers on an as needed schedule. <br /> Priority 2 projects may proceed,either upon agreement between the District and <br /> City staff or upon the identification by either party of a funding source sufficient to <br /> complete the project. In case of dispute, City or District may require a Committee <br /> meeting within 60 days of written notification by either party to consider a Priority 2 <br /> request. <br /> C. Priority 3: Priority 3 projects are projects that improve cost effectiveness, add <br /> alternative processes for increased flexibility, address deficiencies,or comprise <br /> "good neighbor" improvements. Priority 3 projects may be undertaken only upon <br /> agreement between the District and City. <br /> 3. Section 7 (e) of said Agreement(currently captioned "Minimum Increase in Regional <br /> Connection Fee") is hereby amended to read as follows: <br /> (e) Increase in Regional Connection Fee. (i) Adjustments to the Regional <br /> Connection Fee shall be based upon a cost of service study(to determine the estimated <br /> reasonable cost of providing the service for which the Regional Connection Fee is imposed, <br /> including supply or capacity contracts for rights or entitlements, real property interests, and <br /> entitlements and other rights of LAVWMA and/or District involving capital expense relating to <br /> their respective use of existing or new Regional Facilities), and District shall prepare such study <br /> at least once every four years. <br /> (ii)The District shall adjust the Regional Connection Fee each July 1 using the cost <br /> indicator established in the District action setting the Regional Connection Fees. <br /> 3 <br />