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Preferred Alternative The resulting combination of the project cost (Capital, O&M plus system improvements unique to each option) and the relative benefit scores after applying the criteria developed, as outlined in Attachment 2, illustrate how the four options compare on a total cost/total benefits basis. The option that best meets the City's need for safe, reliable drinking water into the foreseeable future is Option 3 — two new groundwater wells — which provides the lowest cost option at nearly half the price of the baseline project while also being one of the highest benefit alternatives. Further discussion is provided in the executive summary of the Draft Final Report provided as Attachment 1. Two new groundwater wells outside of the influence of PFAS will achieve a high-quality, reliable, and cost-effective water supply option to replace the 3,500-acre feet of loss due to PFAS over the next 20 years. The baseline (Option 1) has a slightly higher level of benefits but is twice the cost. The reduced baseline (Option 2) is a marginally lower cost but provides substantially fewer benefits. Notably, any PFAS treatment option requires competency in treating water, a skill set the City does not currently possess. The Zone 7 purchase option (Option 4) is the costliest because the ongoing cost of the water purchases is about three times the unit cost of the capital required to develop two new wells to extract the City's groundwater quota. The Zone 7 cost of service accounts for all aspects of water management for the region (including addressing the regional PFAS issue), which goes beyond groundwater extraction costs alone. It should be noted that the recommendation of two new wells outside of the PFAS influence over treating the PFAS contamination does not deter the City from the efforts to ensure this vital water source for the City and region is protected for future generations and that proactively addressing the existing pollution continues to be a priority. Zone 7's PFAS management strategy of monitoring, blending, treating, managing, and diversifying is consistent with other agencies in the water industry. The City will continue to work on this issue, supporting Zone 7's role as the overseer of the groundwater basin. NEXT STEPS Concurrent with performing the supply alternatives analysis, Staff coordinated with Zone 7 on its groundwater modeling and capacity planning efforts. One of the first activities for implementing two new wells is receiving assistance from Zone 7 with siting and sizing the new City well capacity. Zone 7 is currently updating its groundwater model to assist in this effort, which is scheduled to be completed by October 2024. Zone 7 may also be advancing its own plans for adding well capacity in the Bernal subbasin. Constructive discussions about jointly proceeding in this regard have occurred at the staff level. During the period for the modeling effort, staff discussions may occur to develop the key terms for a joint project agreement. This way, at the end of the modeling effort, the City would be in a position to decide on proceeding with a City-only project of two new wells or pursuing a joint project with Zone 7. There is high confidence that the modeling will support placing new wells within the Bernal subbasin, substantially free of PFAS and isolated from contamination. However, Page 5 of 8