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THE CITY OF 1 8 III III o o � CITY COUNCIL AGENDA REPORT pLEASANTON© September 7, 2021 Finance Operations Services Department R TITLE: APPROVE PFAS TREATMENT AND WELLS REHABILITATION PROJECT FUNDING PLAN SUMMARY Per- and polyfluoroalkyl substances (PFAS) are unregulated contaminants of emerging concern in drinking water due to their health impacts and tendency to accumulate in groundwater. The California Division of Drinking Water (DDW) has provided a tentative schedule to begin regulating PFAS by establishing maximum contaminant levels (MCLS) for certain substances by early 2024. Through ongoing testing, the City has confirmed the presence of PFAS in its Wells 5, 6, and 8 groundwater supply facilities. On June 15, 2021, City Council received a presentation on and approved proceeding with final design of the PFAS Treatment and Wells Rehabilitation Project (Project). The goal of the Project is to implement PFAS treatment and rehabilitate the well facilities to extend their useful life as safe, reliable, and locally controlled sources ofwater. City Council also directed staff to prepare a plan to fund the design and construction of the Project (Funding Plan) and present it at a future City Council meeting. This report responds to that request. The proposed Funding Plan identifies a funding framework and strategy that maximizes funding sources with the least impact to ratepayers. RECOMMENDATION Approve the proposed Funding Plan and strategy as outlined under the summary of Staff Recommendations at the end of this report. FINANCIAL STATEMENT The proposed Funding Plan identifies $42.7 million in Water Operating Fund, Water Connection fees, and debt financing to cover the remaining estimated cost of the Project. The expected impact on the City's water rates is up to an $11.60 increase to bi- monthly water bills.