CITY COUNCIL REGUALR MEETING AGENDA PACKET

Page 2 of 4 Water customers in Pleasanton fund the costs associated with purchasing water from the Zone 7 Water Agency (Zone 7), which includes water purchased from groundwater wells, treatment, transportation through pipes and pump stations, and compliance with federal and state water quality standards. In November 2023, the City Council approved a 30% increase in water rates for 2024 and a 12% increase for 2025. At that time, it was noted that biannually (every two years), a new water rate study would be conducted to assess and propose water rates for periods beyond December 2025, reflecting current costs and allowing for future adjustments to account for increases in Zone 7 water costs and other operational and capital improvement expenses based on the Water System Management Plan (WSMP). The City’s sewer infrastructure comprises more than 270 miles of sewer pipelines and 10 sewage pump stations. The current sewer rate, adjusted based on the Consumer Price Index (CPI), applies to local sewer rates and charges until June 30, 2026, as specified in the Master Fee Schedule (Resolution No. 92-100). The City is currently updating the Sewer System Management Plan (SMMP), with completion expected in 2025. This plan will outline future major maintenance projects, and a consultant will be selected to review the SMMP recommendations and conduct the sewer rate analysis and evaluation. DISCUSSION The City received three statements of qualifications (SOQs) in response to the RFQ which was announced via the City's website and Bidnet Direct. The intended scope of work included three phases. The first phase establishes a framework by which the rate and connection fee studies will be conducted while performing community outreach. This second phase includes the financial analysis of the water, recycled water, and sewer systems including a cost of service analysis and determining the rate design/structure. The third phase includes assisting City staff with the rate and connection fee adoption process. Details are provided in Exhibit A of Attachment 1. The three firms that submitted SOQs were: • The Shpigler Group • Raftelis Financial Consultants, Inc. • Water Resources Economics, LLC Staff rated all three firms and interviewed two of the firms. Based on the evaluation criteria in the RFQ, review of the SOQs, and evaluation of the presentations and responses to questions in the interviews, staff determined the most qualified and well-suited firm for the project is Water Resources Economics, LLC. The firm's president, Sanjay Gaur, will be the project director. He and several of his key staff have previously worked with the City and so have experience with Pleasanton's water rate structure. In addition to meeting all the technical criteria and having lower hourly rates (as compared to the other firm that was interviewed), Mr. Gaur and his team presented a thoughtful, methodical approach the review panel believed would be the best for Pleasanton including attendance at four Water Advisory Group meetings and two City Council meetings. Staff and the consultant have prepared a working timeline to provide sufficient time for community engagement, City Council review and to meet the timing prescribed by the Proposition 218 process regarding notification to ratepayers. Page 29 of 46