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police department and sees less use of force in reports which is the goal. She noted police officers have made it clear the use of force is a last resort and their preference is to work through situations without it. Item 18 was continued to the next meeting of the City Council. Mayor Brown recessed the meeting at 10:05 p.m. and reconvened at 10:12 p.m. 17. Approve Funding Plan for Per -and Polyfluoroalkyl (PFAS) Treatment and Wells Rehabilitation Project Finance Director Tina Olson reported on June 15th, staff presented to City Council the PFAS and Wells Rehabilitation Project where it was agreed staff should proceed with a detailed design and return to City Council with a funding plan. She reported the design and California Environmental Quality Act (CEQA) documents will run through the Fiscal Year 2022/23 and advised the first procurement and construction contract will be awarded in fall 2022 with the project completed in the winter of 2025. Director Olson advised the main strategy is to minimize the impact to the water rates, minimize the use of debt because the debt service will have to be put back into the rates, and ensure funding is available when the project needs it. She presented the funding framework by Fiscal Year and reported the $3.3 million in Water Operations funds is the fully -funded CEQA and design the City Council already approved. She explained Connection Fees and Financing, Settlement Proceeds, and Grants are interchangeable for a total of $31.4 million. Director Olson reported $3.3 million from the Water Operating Fund has already been allocated and $6 million will be allocated in FY 2023/24 and FY 2024/25. She reported $2 million will be allocated each year in the next Capital Improvement Plan (CIP). Staff is proposing the PFAS project be the highest priority with the Water Operating Funds in the CIP process. She reported Connection Fees are the Development Impact Fees for water and sewer systems. An Impact Connection Fee Study has not been conducted since the 1980s for either the water or sewer fees and noted Consumer Price Index (CPI) is also not attached to the fees. The goal is to conduct a Fee Study once the Master Plan is completed which is expected to be in place by the end of FY 2022/23. There is $4 million available in the Water Connection Fee Fund that can be allocated to the project and is proposing a total of $5.3 million be allocated. She noted it is quite likely the remaining $1.3 million will not be available through the end of the project and will need an interfund loan. There is a possibility of receiving Bureau of Reclamation Smart Water Program grant funds of $1.5 million since the project is an eligible cost. The State has money for water projects and PFAS/Well Projects may be eligible. Townsend and Associates will conduct research and write the grants as funding becomes eligible for these projects. The real issue is timing and the bond principal will be reduced by the amount of the grant funds received, and if the grant funds are received after the project starts, bond proceeds will be used to pay debt service and adjusting the water rates accordingly at the time. Director Olson reported hiring PFM which is the City's Financial Advisor to look at all the financing options including different Federal and State programs and Revenue Bonds. She reported the preferred option is the State Revolving Fund Loan Program (SRF) which has an interest rate of 1.8% and would be $7.7 million less in total debt service than issuing Revenue Bonds. The drawback is that it will require additional environmental review including looking at all the alternatives like Zone 7. She noted the state agency would have to review and approve all the conclusions from the study and is concerned it could delay the project's start. The State City Council Minutes Page 12 of 16 September 7, 2021