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BACKGROUND In November 2013, City Council adopted The City of Pleasanton Recycled Water Feasibility Study, and directed staff to pursue both the environmental documentation and funding necessary to continue advancing Pleasanton's Recycled Water Program, as outlined in the aforementioned feasibility study. In response to California's current record breaking drought, in March 2014 the SWRCB approved 1.0 %, 30 -year term loans through the Clean Water State Revolving Fund (CWSRF) in an increased effort to support the development of alternative water sources that will reduce the water demand off of the State Water Project. This interest rate will terminate once $800 million of funding has been obligated to projects with an estimated recycled water delivery to customers by January 17, 2017. The final items necessary for the City to ensure successful submission for CWSRF funding include the following items: • Completion of California Environmental Quality Act documents — currently underway • Adopted Pledged Revenue and Fund Resolution — this document fulfills the federal law requirement that CWSRF applicants establish a dedicated source of revenue for repayment. This financing agreement identifies the pledged revenue and fund that will be used for repayment. • Adopted Reimbursement Resolution - this document establishes the City's legal intention to finance the construction of the City's Recycled Water Project with moneys provided by the State of California, and sets the expected maximum principal amount of the loan to $14,007,230. DISCUSSION Recycled water is considered by the Department of Water Resources California Water Plan 2013 (draft) as one of the key long -term, resource management strategies in mitigating California's future water supply shortfalls. The State's Recycled Water Policy declares "independence from relying on the vagaries of annual precipitation and move towards sustainable management of surface waters and groundwater, together with enhanced water conservation, water reuse [water recycling], and the use of stone water" As a reflection of the above policy, the state has implemented programs that provide long -term low interest rate funding to agencies to expand the use of recycled water. Staff has analyzed the potential for various funding sources and has determined that the combination of availability, low interest rate and term of payback, represents the best option for funding long term recycling water needs. Assuming the City repays the loan over the thirty year loan term, interest charges would be approximately $45,000. As indicated, the focus of the repayment resolution (Attachment 1) is to memorialize that the City will repay the loan. The pledge resolution (Attachment 2) commits the City to collecting the revenues require to repay the loan and established a lien in favor of the State Water Resources Control Board on the City's Water M &O Fund to assure loan Page 2 of 3