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FINANCIAL STATEMENT Funding for the project will be paid through an eight year loan from JP Morgan Chase and reimbursed by the Water Fund City staff have been working with the City's bank, JP Morgan Chase, to secure a loan JP Morgan Chase submitted a term sheet with a proposed interest rate of 2 00% for an 8-year loan which translates into annual payments of between $544,840 to $1,165,765 and total interest expense of $578,983 In addition, the City would have to pay legal expenses associated with preparing and reviewing the loan documents Staff will prepare a separate item to approve a loan with JP Morgan Chase for City Council consideration at a future City Council meeting BACKGROUND The base Pleasanton-DERWA agreement was executed November 2013 with Amendment #1 (maintaining the existing Val Vista Park connection) executed in September 2015 Section 5 3 of the base Pleasanton-DERWA agreement outlines the process and conditions for Pleasanton's recently completed DERWA expansion project, the Sixth Filter, as well as the process and conditions for future facilities expansion project(s) at the DERWA Recycled Water treatment plant When the base Pleasanton- DERWA agreement was executed, the DERWA plant design capacity (pre-sixth filter) was estimated to be 9 7 mgd, and the sixth filter was expected to expand that capacity by 1 9 mgd to a total of 11 6 mgd The presumption at that time was that additional treatment capacity could be created by future facilities expansion projects which would build more filters in a second, yet to be constructed, filter bank Unfortunately, although the design capacity of the sixth filter targeted a total plant design treatment capacity of 11 6 mgd, it was determined that the plant was only able to deliver 8 mgd due to the constantly high solids content of the plant influent coming from the DSRSD treatment plant, falling short of the design capacity by 3 6 mgd The underperformance of the DERWA plant, even with the sixth filter, brought into question the necessity of constructing more filters to meet future targeted RW demands as envisioned by the base Pleasanton-DERWA agreement, as well as bringing to light the fact that the average secondary influent being imported from DSRSD's secondary treatment plant into the DERWA RW plant had a much higher concentration of suspended solids than originally expected, which severely hampered filter performance To address the filter performance, DSRSD contracted with Carollo Engineers to design the expansion project In order to boost the existing filters' as well as future yet to be constructed filters' performance to or beyond their intended design capacities, a series of stakeholder design workshops including Pleasanton Utilities staff was held, and it was mutually agreed that the planned facility expansion should incorporate a ballasted flocculation process (proprietary name Actiflo) at the head of the plant, prior to the filtration treatment train The Actiflo is an industry proven process for removing high volumes of solids from the influent before directing it through the filtration process With the Actiflo's significantly reducing solids in the pre-filter influent, the treatment capacity performance of each of the existing six filters will increase from 1 4 mgd to a minimum design capacity of approximately 2 7 mgd per filter, providing for a total plant capacity of 16 2 mgd Combined with the other elements of the planned expansion, Pleasanton's share of the DERWA RW production volume will be increased to Page 2 of 4