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THE CITY OF 1 101: I`"" CITY COUNCIL AGENDA REPORT —)LE ASANTONe December 20, 2016 Operations Services Department TITLE: AUTHORIZATION OF NOTICE TO PROCEED FOR DERWA FACILITIES EXPANSION PROJECT, ALLOCATION OF FUNDS AND PAYMENT AGREEMENT BETWEEN DERWA AND THE CITY OF PLEASANTON, AND ADOPTION OF A RESOLUTION OF INTENT TO REIMBURSE CERTAIN EXPENDITURES OF THE DERWA EXPANSION PROJECT FROM PROCEEDS OF INDEBTEDNESS SUMMARY The City's primary source of recycled water(RW) being delivered to and through the new Pleasanton Purple Pipe Project is produced by DERWA (Dublin San Ramon Services District (DSRSD) — East Bay Municipal Utility District (EBMUD) - Recycled Water Agency) The maximum net volume of recycled water that the existing DERWA plant (located next to DSRSD's Pleasanton treatment plant) configuration (with sixth filter) can produce is approximately 8 mgd (million gallons per day), which is distributed to RW customers within the service areas of Pleasanton, DSRSD and EBMUD Pleasanton's share of DERWA RW as a result of the recently completed Sixth Filter Project is currently 1 9 mgd, however Pleasanton's RW demand forecast after connection of all the current customers adjacent to the newly constructed purple pipe projects is approximately 3 4 mgd maximum day demand, and with the additional connections made possible by the Valley Avenue purple pipe extension, total maximum day demands of approximately 4 2 mgd can be expected In order to be able to meet all of our forecasted RW demands, the City must participate in the DERWA facilities expansion project per Section 5 3(e) of the base"Agreement to Provide Recycled Water Treatment and Delivery of Services by and between DERWA and the City of Pleasanton" (Pleasanton-DERWA agreement) This expansion phase is estimated to cost $18 2 million, and construction is estimated to begin in January 2017 Pleasanton's share of the project is estimated to be $6,750,000 and includes construction and capacity buy-in costs, as outlined in the Notice to Proceed (Attachment 1) RECOMMENDATION It is recommended that the City Council authorize the City Manager to execute the Notice to Proceed for the DERWA Phase 2 Recycled Water Treatment Plan Expansion Project and authorize advancing up to $7 1 million for the project that will be reimbursed by a bank loan to be secured at a future date It is also recommended that the City Council adopt the attached resolution declaring its official intent to reimburse certain expenditures of the DERWA expansion project from proceeds of the loan indebtedness