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7 7 Capital investment – Water Supply Alternative/PFAS • Assumes the City Council will select and approve a water supply alternative project in September 2023, with the design phase completed in Summer 2024, and construction phase substantially completed by the end of 2025. The process will be longer by at least six months if the selected alternative involves constructing new wells • Includes purchasing 100% of water (3,500 AF) from Zone 7 in FY24 and FY25, then reduced to 1,750 AF for FY26 until the infrastructure improvements are fully in place • Cost for major project construction of water supply alternative will be included in the Phase 2 rate study but this Phase 1 rate study does include initial preparatory costs for the water supply alternative: o Water supply alternative project design costs assumed to be $2 million o Water supply alternative preconstruction costs (i.e., equipment prepurchase) assumed to be $4 million plus inflation o Additional capital funding of $2 million per year for two years plus inflation starting in FY24 for infrastructure improvements to help meet summer’s peak demands while wells are out of service and prior to water supply alternative project constructed • Borrowing of $6 million in FY24, with payback over 5 years • Funding for R&R (i.e., vehicles and equipment) set at $700,000 per year plus inflation starting in FY24 • Funding for existing Annual CIP 23183 Annual Water Distribution Improvements to remain at $1 million a year plus inflation • Addition of 2 Operator II positions ($442K) to manage water system and 1 Associate Engineer ($270) focused on water system improvement and expansion projects Capital investment – Future • Capital funding increasing to $4 million plus inflation per year starting in FY26. This value (and future values) is likely to be increased during Phase 2 rate study based on results of the Water System Management Plan currently underway.