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RESOLUTION NO. 16 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PLEASANTON WITH RECOMMENDATIONS RELATED TO ZONE 7'S POPOSED FIXED RATE METHODOLOGY, DROUGHT SURCHARGE AND RESERVE POLICIES WHEREAS, Zone 7 supplies most of the City of Pleasanton's water; and WHEREAS, Zone 7's rates are set by the Zone 7 Board of Directors and passed through to Pleasanton's customers on the City of Pleasanton's water invoices; and WHEREAS, the continuing drought and related water conservation is adversely affecting Zone 7's ability to cover its fixed operating expenses which, in turn, caused Zone 7 to deplete their operating reserves ; and WHEREAS, to provide revenue stability, Zone 7 is proposing to recover 35% of their expenses through fixed rates and 65% through variable rates; and WHEREAS, Zone 7 is also proposing to charge a Drought Surcharge of $0.62 per ccf in 2017 and $0.49 per ccf in 2018 to replenish their reserves; and WHEREAS, Zone 7 is also proposing a policy that establishes operating reserve levels equal to approximately 50% of operating expenses; and WHEREAS, the City Council reviewed Zone 7's proposal and expressed support for Zone 7's fixed rate methodology, the proposed reserve policy, and the 2017 Drought Surcharge; and WHEREAS, the Pleasanton City Council recommends that Zone 7 adopt the Drought Surcharge of $0.62 per ccf for one year and return next year with a proposed Drought Surcharge for 2018 after reviewing actual FY 2016/17 revenues and expenses; and WHEREAS, the Pleasanton City Council recommends that Zone 7 make a demonstrated effort to reduce fixed expenses. NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF PLEASANTON DOES RESOLVE, DECLARE, DETERMINE, AND ORDER THE FOLLOWING: SECTION 1. The City Council supports Zone 7's proposed fixed rate methodology, the proposed reserve policy and the proposed 2017 Drought Surcharge of $0.62 per ccf. SECTION 2. The City Council recommends that Zone 7 return next year with a proposed Drought Surcharge for 2018 after reviewing actual FY 2016/17 revenues and expenses. SECTION 3. The City Council recommends that Zone 7 make a demonstrated effort to reduce fixed expenses. PASSED, APPROVED, AND ADOPTED by the City Council of the City of Pleasanton at a regular meeting held on October 4, 2016.