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4. Appropriate $500,000 from the Water Enterprise Fund Balance to the Water Replacement Capital Improvement Program to fund the anticipated Fiscal Year 2023/24 costs for this project. FINANCIAL STATEMENT This is a new project and requires City Council appropriation of $500,000 from the Water Fund (420) balance in Fiscal Year 2023/24 to cover the anticipated planning and development costs. A new water rate study will need to be conducted to determine the rate impacts of this project's design, construction, and maintenance costs. BACKGROUND On September 6, 2022, the City Council authorized Staff to suspend the PFAS Treatment and Wells Rehabilitation Project and to evaluate further water supply alternatives for the portion of water supply currently sourced via the City's groundwater pumping quota (3,500-acre feet/year). Concurrently, the City Council formed a Water Supply Alternatives Ad Hoc Subcommittee (Brown, Narum/Nibert). On October 18, 2022, the City Council established a new capital improvement project called the Water Supply Alternatives Study, allocating $363,755 from the Water Enterprise Fund balance to fund a professional services agreement with BC in the amount of$263,755 to perform the technical scope of services, and $100,000 for as- needed legal services associated with the project. The study's objective is to evaluate alternatives relative to the PFAS Treatment and Wells Rehabilitation Project and recommend a preferred path forward (i.e., either continuation of the project or an alternative water supply to produce 3,500-acre feet/year). On February 21, 2023, the City Council was provided an update on the progress of the study, which noted that the initial gathering and data review had been completed. A comprehensive list of alternatives was presented, including some provided by Zone 7, to be discussed and narrowed with input from the Ad Hoc Subcommittee. On May 16, 2023, the Council was provided an update on the progress of the study. At that time, the remaining work to be completed included evaluating alternatives and recommending the path forward. On September 19, 2023, the Council was provided an update on the progress of the study along with the preliminary results indicating two new wells as the selected water supply alternative. DISCUSSION To date, in collaboration with City Staff and the Ad Hoc Subcommittee, BC has collected and reviewed data and information from the City and Zone 7 Water Agency, developed a comprehensive list of water supply alternatives, confirmed a set of evaluation criteria, and performed initial screening of alternatives. Page 2 of 8