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reserve policy to reorganize their reserves and primarily fund the replenishment of those <br /> reserves through budget surpluses and not by raising rates. <br /> Debt Financing <br /> The two rate scenarios include a placeholder of $3M for Water Supply Reliability <br /> Projects. Some examples of Water Supply Reliability Projects are the California <br /> WaterFix, Bay Area Regional Desalination Project, Potable Reuse, Los Vaqueros <br /> Expansion, and water transfers. These projects are proposed to be funding on a pay-as- <br /> you-go basis. Zone 7 is currently funding its Asset Management Program at $12 <br /> million/year level, and assumes no new debt service in the future. The Zone 7 Board <br /> should reconsider debt financing of at least a portion of the Asset Management Program <br /> in order to smooth out costs over time, provide intergenerational equity and reduce <br /> impacts on the wholesale water rates. Staff recommends that Zone 7 rely on issuing <br /> bonds for the major capital projects with payback periods to reflect the useful life of the <br /> respective facility to ensure future users pay their fair share of the cost. <br /> DISCUSSION <br /> City staff values its relationship with the Zone 7 Board and Agency staff, and supports <br /> its approach to maintain a balance between controlling costs and increasing water rates <br /> reflecting both Zone 7's economic realities and the region's overall financial conditions. <br /> Zone 7's General Manager, Valerie Pryor will be speaking tonight about Zone 7's <br /> budget, water rates and water supply and Pleasanton staff will provide information on <br /> the rate impacts to its customers. <br /> Submitted by: Fiscal review Approved y: <br /> Kathleen Yurchak Tina Olson Nelson Fialho <br /> Director of Operations and Director of Finance City Manager <br /> Water Utilities <br /> Attachments: <br /> 1. Resolution <br /> 2. Zone 7 Rate Overview <br /> 3. Zone 7 Staff Report <br /> Page 5 of 5 <br />