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deliver sufficient water supply during peak demand periods. Depletion of the reserves is <br /> unsustainable for the operation of the enterprise fund. This situation is problematic <br /> because it creates operational risk when reserve funds are not available to do <br /> necessary repairs or larger necessary projects and from a policy perspective because it <br /> does not meet the City's approved reserve target of 35 percent. This reserve deficit for <br /> both the water and recycled water funds is depicted in Figure 1 below. <br /> Figure 1 <br /> Fund Balances - Total Funds <br /> $20 <br /> o $15 <br /> 510 - <br /> $5 $3.9 <br /> ($5? FY 2024 ,..m_ FY 2026 <br /> ($10) <br /> ($15) -$10.0 <br /> ($20) _ <br /> ($25) <br /> ($30) -S25-1 <br /> -w, Ending Balances Reserie Target <br /> Water Quality Regulations/PFAS <br /> In 2019, the City was made aware of contaminants of emerging concern called per- and <br /> polyfluoroalkyl substances, collectively known as PFAS, and as a result of testing <br /> results took the City's Well 8 out of service (it remains so currently). Removing Well 8 <br /> from service reduced the water system's capacity and redundancy to deliver water but <br /> the system was able to operate with Wells 5 and 6 with continued conservation. <br /> In late 2022, the State Water Resources Control Board Division of Drinking Water <br /> (DDW) issued a General Order, requiring the City to perform testing in all groundwater <br /> wells beginning the first quarter of 2023. Based on testing results and lower water <br /> demand during winter months, the City took Wells 5 and 6 offline in November 2022. <br /> Since then, the City has been purchasing 100 percent of its water supply through Zone <br /> 7. In September, the City will complete an evaluation of water supply alternatives and <br /> select a preferred project that will treat or replace the 3,500 AF of water produced by the <br /> City's groundwater wells. <br /> Of note, the presence of PFAS is not isolated to Pleasanton, the Tri-Valley region, or <br /> California. A recently released study by the US Geological Survey shows that 45 <br /> percent of the drinking water provided from private wells and public supplies across the <br /> 50 states and US territories shows evidence of PFAS contaminants. <br /> Page 3 of 17 <br />