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infrastructure, and is used to ensure proper funding levels in the Water Enterprise Reserve Fund. • Capacity Expansion Surcharge: This charge covers the costs incurred by improvements resulting from the Vineyard Avenue Corridor Specific Plan to accommodate increased demand by residential users and is applied to Tier 4 which is 60 or more CcF a billing cycle. • Zone 7 Variable Cost: Covers the cost of service which includes the cost of water purchased from the City's wholesale water supplier, Zone 7 Water Agency, and covers a portion of Zone 7's fixed charges to the City. • Zone 7 Fixed Cost:This fixed charge is based on the size of your meter and covers a portion of Zone 7's fixed charges to the City. • Recycled Water Surcharge: Funds the City of Pleasanton's recycled water commercial irrigation program. Recycled water benefits all water users by freeing up potable water capacity for domestic water usage and is applied to the Single-Family Residential customers in Tier 4. Q: What will the revenue from the rate increase pay for? A: The rate increase aims to accomplish: • Funding for immediate/near-term essential system upgrades, i.e., pipe expansion projects and a temporary booster pump that are already moving forward and which became necessary when the City shut down the PFAS-contaminated wells and to purchase more water from the Zone 7 Water Agency, • Funding to plan for the water supply alternative project design work (approximately $21VI/year is budgeted for that work), • Funding for up to 3 additional staff to manage, plan, and implement solutions for the water system in addition to planning for current and future needs.The City operates many pumps and over 300 miles of pipes. To address the needs of this core service,the water program needs to increase staffing levels. • Funding to pay for the additional cost that is incurred by buying all of Pleasanton's water supply from Zone 7 for the next 2-3 years, and • Funding to replenish the Water Enterprise Fund Reserve which will put the City in a financial position to address the water supply project and the water master plan projects. The enterprise fund is headed towards insolvency, and waiting longer makes it even more complicated and expensive to finance PFAS-related projects and other system improvements. Q: What if we don't increase rates? A: If we do not increase rates, Pleasanton's water fund will be $25M in debt by 2026. The solid line on this image below is the Water Enterprise Fund reserve target (about $13M) to ensure we have funding to address emergencies and remain financially stable. Following the shutdown of Pleasanton's local groundwater wells, the City began purchasing 100%of our water from Zone 7 and is working to make infrastructure improvements (expanding pipes and installing a temporary pump) to get water into the system without using those wells. If rates aren't increased now, these costs will compound into a $25 million debt. Page 13