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approximately 4 2 mgd, without the construction of additional filters as envisioned by the original Pleasanton-DERWA base agreement The other elements, in addition to the Actiflo, of the planned expansion include several pump additions and upgrades, and ultraviolet disinfection enhancements DOSCUSSION The main purple pipe project has been completed, and as a result, there are approximately 135 irrigation customers who are in varying stages of permitting their connection to the RW system over the next year Pleasanton's current share of DERWA RW, as a result of the recently completed Sixth Filter Project, is 1 9 mgd, however Pleasanton's RW maximum day demand forecast is approximately 4 2 mgd, after the connection of all the remaining RW irrigation customers from all of the Purple Pipe Project phases Recycled Water Demand Estimates by Project Phase Purple Pipe Project Phase Average Day Maximum Day Demand (mgd) Demand (mgd) 1 A 1 237 3 093 1B 0 066 0 164 Newly Identified Customers 0 009 0 024 Gibraltar Loop Extension 0 055 0 138 Valley Extension 0 4 0 8 Callippe Preserve Golf Course 0 70 1 26 TOTAL 1.768 4.219 In order to be able to meet all of our forecasted RW demands for all of our new RW irrigation customers, it is necessary that the City of Pleasanton participates in the DERWA treatment plant facilities expansion project Financing Options Staff explored the option of making the DERWA payment through incremental payments based on the City's increased demand for recycled water In that scenario, the City would make six$1 18 million payments over 3 5 years or approximately$1 8 million a fiscal year for four years Those payments reduces the amount of Water funds available to fund other Water capital project priorities Securing a loan to pay the City's DERWA obligation ensures the Water Fund will have approximately $1 million more annually to fund other priority capital projects over the next four years Finance staff and the City's Financial Advisor, PFM, have been working with the City's bank, JP Morgan Chase, to get a quote on an eight year$7 1 million loan to pay the City's obligation to DERWA JP Morgan Chase proposed a blended interest rate of 2 0% on that loan A review of current market rates indicates that an 8-year AA rated Municipal Bond would yield an interest rate of approximately 2 17% Thus, staff and PFM have concluded the 2% interest rate is a favorable rate for the City Further, interest rates have increased since October of 2016 by almost 100 basis points and are expected to continue to increase Thus, soliciting quotes from other banks exposes the City to the risk of paying Page 3 of 4