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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 a program providing low interest (1.0 %), 30-year loans through the Clean Water State Revolving Fund (CWSRF) to support the development of alternative water sources that will reduce the water demand from the State Water Project. To take advantage of this program, on September 2, 2014 City Council approved two resolutions indicating the City's intent to borrow an estimated $14,007,230 from the program to be used for the Pleasanton Recycled Water Project that includes bringing recycled water from the DSRSD waste water facility to the Ken Mercer Sports Park. The cost estimate used at that time was preliminary based on feasibility design concepts and as a result, there was an expectation that the cost of the project would change once project design progressed. The project is now at 100% design and the cost is now estimated at $19,875,720 which is $5,868,490 more than initial estimate. The cost difference is due to required design conditions and an anticipated increase of construction costs related primarily to market conditions. To address this issue, Section 2 of the "Reimbursement Resolution" (Attachment 1) has been amended to reflect that the principal loan amount is now $19,875,720 as compared to the $14,007,230 included in the original resolution. Other sections of the resolution remain unchanged. o In addition to the above, the state is requiring the City to amend the "Pledge and Revenue Resolution" (Attachment 2) which was also adopted on September 2, 2014, to more fully comply with program requirements. Essentially, the amendments simply clarify that as a condition of the loan, the City will pledge its water revenues in the Water Maintenance and Operating Fund as payment for any and all Clean Water Revolving Fund and/or Water Recycling Fund Program financing and that the City commits to collecting revenue to facilitate the repayment. The pledge is in the form of a lien in favor of the State Water Resources Control Board. It should also be noted that in addition to adopting the two resolutions above, program guidelines require the completion of California Environmental Quality Act documents and this process is currently underway. DISCUSSION As indicated when this matter was initially reviewed by the City Council in September 2014, staff 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 the loan for our long term recycling water needs. Page 2 of 3