Sec. 26.1.

 (a) In addition to the other powers provided in this act, the agency may establish and impose a charge referred to as a facility capacity fee, and which that is in the nature of a connection fee, for the right to make a new retail connection to the water distribution system of any retail water distributor within the agency that obtains all, or any portion, of its water supplies from the agency. The necessity for the fee, and the amounts thereof, shall be determined, established, imposed, collected, and used in the manner provided in this section.

(b) If the board of directors determines that its existing water importation, transportation, and delivery facilities and other related works, property, and improvements are not adequate for the purpose of receiving, importing, transporting, and delivering additional needed quantities of water available from the State Water Resources Development System or from other sources, the board of directors may adopt and carry out a plan for any of the following purposes:

(1) To obtain additional facilities, works, property, improvements, and supplies of water.

(2) To increase or enlarge, as may be appropriate, its existing capacity and facilities for obtaining, importing, transporting, and delivering additional quantity of water to retail water distributors within the agency which are in need of additional water supplies.

(3) To finance or reimburse the agency for advancing the cost of acquiring facilities, works, property, improvements, and supplies of water and to allocate that cost among lands within water service areas of the agency which, by reason of new development or new construction thereon, will need new water service and will be benefited by making the additional supplies of agency water available for purchase by the retail water distributors that will supply those lands with water.

(c) (1) Prior to adopting any plans pursuant to subdivision (b), the board of directors shall hold at least one public hearing, at which oral or written presentations may be made, as part of a regularly scheduled meeting to establish water service areas within the agency.

(2) Notwithstanding any other notice requirements of this act, notice of the time and place of the hearing and meeting, including a general explanation of the matters to be considered, and a statement that the data required by this subdivision is available, shall be mailed at least 14 days prior to the hearing to any interested party who files a written request with the agency for mailed notice of the hearing on those plans and on allocation of the costs thereof. Any written request for that mailed notice shall be valid only for one year from the date on which it is filed with the agency unless a renewal request is filed. Renewal requests for the mailed notices shall be filed on or before April 1st of each year. The board of directors may establish a reasonable annual charge for sending the notices based on the agency’s estimated cost of providing the service.

(3) At least 10 days prior to the hearing, the agency shall make available to the public data indicating the cost, or estimated cost, to acquire, construct, and provide the water importation, transportation, and delivery facilities and other works, property, and improvements necessary to obtain and provide the additional water to those retail water distributors who will serve water to the lands on which the new developments and new construction will be located, and the proposed method and basis for allocating the costs as among those lands.

(d) (1) Following the public hearing or hearings, the board of directors shall make both of the following determinations:

(A) The extent of the need for the additional property and supplies of water to be supplied by the agency.

(B) Whether existing facilities and other works and improvements of the agency are adequate to import, receive, transport, and deliver those additional quantities of water.

(2) If the board of directors determines that there is a need or that the agency’s existing facilities, works, property, and improvements are inadequate to serve that water, or both, the board of directors shall adopt the plan or plans specified in subdivision (b).

(e) In making its determinations as to how to allocate the costs of the plan or plans within water service areas of the agency, the board of directors shall determine the amount of the facility capacity fee to be imposed for and upon each new connection to the delivery facilities of the retail water distributors that will supply those lands with imported or local water. The facility capacity fee shall be fixed and determined pursuant to a method and basis whereby the fee is as nearly as reasonably practicable an amount proportionate to the benefit to the land, including consideration of the volume of water to be delivered to the new retail connection.

(f) The board of directors may contract with the counties, or cities on or after January 1, 1992, in which the agency is located for the collection of the facility capacity fee along with building permit fees or other fees related to the improvement of property, or may contract for collection of the facility capacity fee by the retail water distributor.

(g) The proceeds of the facility capacity fee imposed and collected pursuant to this section shall be used exclusively by the board of directors for the annual capital budget of the agency, as described in Section 29.1, for purposes authorized by this section as specified in the plans adopted pursuant to subdivisions (b), (d), and (e).

(h) Any action taken by the board of directors pursuant to this section shall be taken only by resolution.

(i) Any judicial action or proceeding to attack, review, set aside, void, or annul any resolution imposing a facility capacity charge of the agency, or a resolution modifying or amending an existing charge imposed by the agency, shall be commenced within 120 days of the effective date of the resolution. Any action or proceeding shall be brought pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure.