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BACKGROUND Dublin San Ramon Services District (DSRSD) and the City entered into the Agreement for Wastewater Disposal Services (WDS Agreement) in October, 1992. The WDS Agreement provides for the contractual relationship between DSRSD and the City as it pertains to sewer services provided by DSRSD to the City's sewer customers. The City and DSRSD then entered into the First Supplemental Agreement to the Agreement for Wastewater Disposal Services ("First Supplement") on September 2, 1997. The purpose of the agreement was to define various aspects regarding participation in and execution of the Clean Water Revival project including funding. After construction of the facilities for CWR in 1999, the project was mothballed due to public opposition to the reverse osmosis process. Following the cancellation of the project, the City of Pleasanton and DSRSD never fully resolved the funding responsibilities for the unused CWR facilities. Unrelated to the funding for the CWR, the City and the District have entered into several subsequent amended agreements to help further their respective recycled water systems and programs. The last of these amendments, Fifth Amendment, occurred in 2013. DISCUSSION On October 14, 2009, in an attempt to settle the unresolved CWR funding issue, City Manager Nelson Fialho and General Manager Bert Michalczyk agreed to a procedure for staff to conduct an audit of the Clean Water Revival Project. The purpose of the audit was to determine the total cost of the CWR Project and the portion of the cost attributable to connection fees from City's sewerage service area. The audit was undertaken by Daniel Smith and Dora Lozano of Pleasanton and Dave Requa and Gemma Lathi of DSRSD. Staff was assisted by Chris Davenport of The Covello Group, the construction manager for the Clean Water Revival project. The audit was completed in October 2010. At the October 2010, DSRSD/Pleasanton Liaison Committee meeting the Committee agreed to accept the audit and directed staff to use the information in the audit to negotiate a settlement. Based on the CWR audit and the successful negotiations between Pleasanton and DSRSD, the proposed Sixth Supplemental Agreement resolves any and all outstanding issues and claims between the parties related to DSRSD's Clean Water Revival Project. The Agreement states that DSRSD shall transfer $2,311,713 from the Regional Expansion Fund to its Water Expansion Fund representing the value of the wastewater disposal capacity that the Parties' respective Recycled Water Programs have in the past and will in the future provide to the Wastewater Expansion Fund. The amount was determined in accordance with the calculation presented in Exhibits A and B of the Agreement. It was determined that the City will receive $1,124,098 and DSRSD will retain $1,187,615 in its Water Expansion Fund. Page 2 of 3