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Caldwell agreement or unforeseen circumstances and related extra services as determined to be necessary by the City. This a new project and requires a Council appropriation of$363,755 from the Water Fund (420) fund balance in Fiscal Year 2022- 2023 to cover the costs. BACKGROUND On September 6, 2022, the City Council authorized staff to suspend the PFAS Treatment and Wells Rehabilitation Project and to further evaluate water supply alternatives for the portion of water supply currently sourced via the City's groundwater pumping quota (3,500 acre-feet/year). The need to consider water supply alternatives is driven by the following factors: o The PFAS Treatment Project cost estimate has increased approximately 30 percent due to the impact of recent inflation trends on the bidding market. • The City currently does not own or operate a water treatment plant and the PFAS treatment facility will require additional staff and have significant annual operational costs for treatment media procurement and disposal. These are substantial long- term costs to be directed at only 20 percent of the city's water supply. • A changing regulatory environment will continue to add uncertainty and potential liability to the City as it will be responsible for contaminant removal from the water it produces. o Acceptable contaminant levels are declining and may require continual changes in treatment techniques and technologies to meet requirements. Given the increasing costs of PFAS treatment, regulatory uncertainty, and long-term operational commitments, it is prudent for the City to consider other water supply alternatives before proceeding with the PFAS Treatment project. DISCUSSION The proposed project would evaluate alternatives for the portion of water supply currently sourced via the City's groundwater pumping quota (3,500 acre-feet/year). Two categories of water supply alternatives will be considered: Category 1 —Alternatives that continue to utilize City's groundwater quota such as new City wells located in areas without PFAS or Zone 7 pumping groundwater on City's behalf. Category 2 —Alternatives that do not continue to utilize City's groundwater quota such as purchasing 100 percent of the needed water from Zone 7 or water purchases outside of Zone 7. The above are conceptual alternatives. Brown and Caldwell would develop a full list and then work with the City to rank and compare each alternative. Page 2 of 3