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Mr. Smith said that it is certainly an option in the future. However, Callippe is located far from existing recycled water sources and the only feasible way to service the site would be to build a scalping plant closer to this portion of town. Councilmember Pentin referred to Section 4.2.3 of the DERWA agreement and asked why the contracted water volume sunsets in 2020. Mr. Smith said that provision is only effective if Pleasanton doesn't ever buy any additional capacity. Essentially, DERWA agreed to guarantee the city 500 acre feet while it expanded its own system capacity. If the city has not done so by then, DERWA would not be obliged to reserve that amount for the city's use. Vice-Mayor Cook-Kallio asked about revenue sources for and the current balance of the Recycled Water Fund. Mr. Smith stated the current balance is approximately $1.2 million. Revenues, which equal $400,000 to $500,000 annually, come from a surcharge on tier 3 and 4 use. Councilmember Narum asked why, if the city is simply selling the water to itself, staff is requesting $40,000 for the purchase of recycled water from Livermore. Mr. Smith explained that city accounts are treated the same as any residential or commercial account. The city will purchase the recycled water at the negotiated price and sell it to the Parks Department at 90% of the current potable water rate. The city's original $40,000 investment plus profits would be repaid to the Recycled Water Fund. Mayor Thorne opened the item for public comment. Bert Michalczyk, General Manager of DSRSD, urged the Council to support the proposed agreements. He said that recycled water benefits the entire Tri-Valley, increases the reliability of the overall water supply and reduces the amount of water discharge into San Francisco Bay. He thanked Mr. Smith for his vision and patience in drafting these agreements. He also extended the thanks of DSRSD Board President Dawn Benson who was unable to attend. Mayor Thorne closed public comment. Each member of the Council shared their support for the long overdue program and thanked staff for their hard work in preparing such a comprehensive plan. MOTION: It was m/s by Brown/Pentin to approve the Recycled Water Feasibility Study; authorize staff to commence a CEQA and NEPA environmental review process; approve the Fifth Supplemental Agreement for Wastewater Disposal Services with DSRSD and the Agreement with DERWA to provide recycled water treatment and delivery services; waive full reading and adopt Resolution No. 13-643 authorizing submittal of application for grant and loan funding opportunities for the design, planning and construction of a recycled water system; and authorized an increase of $40,000 in the Water Operating Fund (Fund 305) for the purchase and resale of recycled water from the City of Livermore and DSRSD/DERWA. Motion passed by the following vote: Ayes: Councilmembers Brown, Cook-Kallio, Narum, Pentin, Mayor Thorne Noes: None Absent: None City Council Minutes Page 5 of 13 November 5, 2013