Connection Fee Program

In 1981, a Sanitation Districts-wide Connection Fee Program was implemented to provide funds for future capital expenditures needed to accommodate additional wastewater contributions in the Sanitation Districts' sewerage system. This program requires all new users of the sewerage system, as well as existing users who expand their wastewater discharge, to pay a connection fee to the Sanitation Districts based upon the quantity and the strength of the wastewater discharge. This connection fee applies to residential, commercial and industrial dischargers. For new facilities, the connection fee is to be paid prior to the time the facility is actually connected to the sewer or, in the case of expanding existing facilities, at the time of expansion of the wastewater discharge. A new wastewater discharger may incur a connection fee for an existing facility if the baseline capacity is not sufficient for the new discharge. Industrial users who expand their wastewater discharge, such that the capacity is 25 percent greater than the baseline capacity, will be required to pay a connection fee for the increased discharge thereby establishing a new baseline capacity.

For users obtaining wastewater discharge permits at industrial sites within the Sanitation Districts' service area, baseline capacity may have been established by the previous industrial user. Baseline capacity generally remains with the site regardless of change of ownership. The only exception occurs when a relocation credit is granted under Section 3.08 of the Connection Fee Ordinances so as to allow a portion of the baseline capacity to be relocated to another site within the service area.

Connection fee rates for industrial users are determined using the following formula:

Connection Fee = R [ (X*Flow/260) + (Y*COD/1.22) + (Z*SS/0.59) ]

Where: R = Connection fee rate in dollars for a single capacity unit.

Flow = Average wastewater flow rate in gallons per day (gpd).

COD = Chemical oxygen demand (COD) expressed in pounds per day, to be determined by multiplying the COD concentration in mg/L by the flow in gpd and by the conversion factor 0.00000834.

SS = Suspended solids (SS) expressed in pounds per day, to be determined by multiplying the SS concentration in mg/L by the flow in gpd and the conversion factor 0.00000834.

The R, X, Y, and Z factors used in the connection fee formula are derived annually for each of the active Sanitation Districts. These factors vary according to Sanitation District and to the specific circumstances which may apply to individual dischargers. The R factor has the widest variability and in 2011, ranges from $1,400 to $6,190. The exact factors which pertain to a site can be obtained by contacting the Sanitation Districts or by accessing our Rates by District webpage; however, charge determinations for most Sanitation Districts can be approximated using R = $4,400, X = 0.66, Y = 0.13, and Z = 0.21. In order to calculate the actual connection fee, it is necessary to know the specific Sanitation District in which a facility is located and the correct R, X, Y, and Z factors as well as the facility's baseline capacity, if any.

For users applying for a new industrial wastewater discharge permit, any connection fee obligation will be determined after the application has been submitted. If a connection fee is required, an invoice will be forwarded to the official designated as the company's contact on the permit application form. The connection fee payment is due within 45 days from the date of the billing. The permit will not be issued until the connection fee payment has cleared (i.e., up to 10 working days for personal or company checks).

For existing dischargers who intend to significantly modify or expand their facilities, an application for a permit revision must be submitted and approved before any of the proposed changes are actually made. A connection fee determination will be made on the basis of the increase in sewer capacity above the permitted capacity baseline. If it is determined through a permit review process that the existing discharge has exceeded the permitted capacity by more than 25 percent, an invoice will be submitted and issuance of the revised permit will not occur until the connection fee payment has cleared. The connection fee payment is due within 45 days from the date of the billing. Late payments are subject to penalty and interest.

For connection fees triggered by an annual surcharge filing or audit, a preliminary notification letter is first sent to the discharger which addresses the circumstances of the pending charges. The letter establishes a short comment period which allows the discharger time to present additional information or set up a conference with Sanitation Districts' staff to answer questions. The notification letter also advises the discharger of the option to demonstrate a reduction in discharge rather than paying a connection fee, if the discharger believes that modifications to operational procedures or implementation of conservation measures will reduce the discharge to within 25 percent of the existing baseline. Following the comment period, the charges are formalized and an invoice is submitted requiring payment within 45 days. If payment or a complete Election to Demonstrate (which includes a properly executed agreement and the required collateral) is not received by this deadline, an immediate ten (10) percent penalty is imposed and the election to demonstrate option is forfeited. A second invoice which will include the penalty fee is then sent to the discharger. If payment is not received by the stated deadline, additional interest at the rate of one and one-half (1.5) percent per month is assessed on the total delinquent connection fee, including the initial ten (10) percent penalty, until the payment is made.

An industrial user may satisfy the connection fee obligation through extended payments for a period not to exceed six (6) years. Requests for an extended payment plan must be made within the 45 days of the notice of charges and accompanied by a minimum ten (10) percent payment. Interest will accrue on the unpaid balance at a rate based on the prime interest rate in effect at the beginning of the then-current fiscal year. Payment schedules of three years or less are based on the prime interest rate plus one (1) percent. Payment schedules greater than three years are based on the prime interest rate plus three (3) percent.

If a company elects to demonstrate a discharge reduction, notification must be submitted in writing and accompanied by appropriate security such as a surety bond, letter of credit, or certificate of deposit. The amount of the security submitted will be based on the current connection fee multiplied by a growth factor (which accounts for rate changes during the demonstration period) then reduced by 50 percent. A company also has the option of making a non-refundable deposit for a portion of the billed connection fee.

The demonstration period is typically the next full fiscal year which occurs after an election to demonstrate is made. However, the discharger may be allowed to start the demonstration earlier in the fiscal year in which the election is made. The demonstration is to be evaluated on discharge data for the designated 12-month period. Following this period, if the data show that the demonstration was successful (i.e., the capacity units are within 25 percent of the established baseline), the security is returned to the discharger. If the demonstration is unsuccessful, the discharger has the option of electing to make supplemental demonstrations, provided: (1) sufficient security accompanies a timely request, and (2) a non-refundable payment of five percent of the connection fee charge is made. Connection fee charges are based on the rate in effect at the time of billing.

For questions regarding the Connection Fee Program, please refer to the Sanitation Districts' Connection Fee Ordinance or contact the Surcharge Processing Group at (562) 908-4288, extension 2600.