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THE CITY OF I -'a CITY COUNCIL AGENDA REPORT pL£ASANTON. September 6, 2016 Operations Services Department TITLE: AUTHORIZATION OF NOTICE TO PROCEED FOR DERWA FACILITIES EXPANSION PROJECT AND ALLOCATION OF FUNDS SUMMARY The City's primary source of recycled water(RW) being delivered to and through the new Pleasanton Purple Pipe Project is produced by DERWA (DSRSD - Eastbay Municipal Utility District(EBMUD)- Recycled Water Agency). The maximum net volume of recycled water that the existing DERWA plant (located next to DSRSD's Pleasanton treatment plant) configuration can produce is approximately 8 mgd (million gallons per day), which is distributed to RW customers within the service areas of Pleasanton, DSRSD and EBMUD. Pleasanton's share of DERWA RW as a result of the recently completed Sixth Filter Project is currently 1.9 mgd average day flow; however Pleasanton's RW demand forecast is approximately 3.4 mgd average day flow, with occasional peak flows of approximately 4.2 mgd when all of the current Purple Pipe Project's projected customer connections are completed. In order to be able to meet all of our forecasted RW demands, the City must participate in the phase currently being planned for the DERWA facilities expansion project per Section 5.3(e) of the base "Agreement to Provide Recycled Water Treatment and Delivery of Services by and between DERWA and the City of Pleasanton" (Pleasanton-DERWA agreement). This expansion phase is estimated to cost $19.5 million (fully loaded estimate), with Pleasanton's share estimated to be $5,216,000 payable in three equal installments of $1,739,000 each, the first of which is payable at time of execution of Notice to Proceed (NTP) and subsequent payments due in FY17/18 and FY18/19. RECOMMENDATION It is recommended that the City Council authorize the City Manager to execute the Notice to Proceed for Pleasanton's share of the planned DERWA Phase 2 Recycled Water Treatment Plant Expansion Project and authorize $1,739,000 for the first project payment. FINANCIAL STATEMENT Funding for the first payment of $1,739,000 for the project is available in the Water Expansion Fund, with a current fund balance of $3,630,035.