CITY COUNCIL REGULAR MEETTIMG AGENDA PACKET 7-7-26

Page 1 of 3 Item #4 CITY COUNCIL AGENDA REPORT July 7, 2026 Public Works - Utilities Division TITLE: AUTHORIZE THE CITY MANAGER TO EXECUTE AN AGREEMENT WITH ZONE 7 WATER AGENCY FOR MUNICIPAL AND INDUSTRIAL WATER SUPPLY SUMMARY The City’s primary water supply source is treated water purchased from the Zone 7 Water Agency (Zone 7). In early 2023, Zone 7 began a renewal process with the City and the other water retailers – California Water Service, City of Livermore, and Dublin San Ramon Services District (DSRSD) – to extend water supply service through December 31, 2055. The proposed agreement preserves the key principles of prior agreements while updating the language and provisions to reflect current laws and regulations, improve formatting, and incorporate revisions where appropriate. Key provisions of the proposed agreement are summarized in the Discussion section of this report. The proposed agreement is substantially similar to the agreements being considered by the other retailers and was approved by the Zone 7 Board of Directors on May 19, 2026. Each retailer is presenting its respective agreement to its governing body for review and approval during June and July 2026. RECOMMENDATION Authorize the City Manager to execute an agreement with Zone 7 for municipal and industrial water supply. BACKGROUND The City has two water supply sources: 1. Treated water purchased from Zone 7, also referred to as municipal and industrial water supply; and 2. The City’s groundwater production quota (GPQ) of 3,500 acre-feet per year (AFY). Historically, treated water purchases from Zone 7 have represented approximately 70 to 80 percent of the City’s total water supply. However, in November 2022, the City removed all its groundwater wells from service due to the detection of PFAS. Since that time, the City’s water supply has been provided exclusively through treated water purchases from Zone 7. The City is currently implementing the Groundwater Supply Project to restore use of its GPQ, with completion tentatively estimated for the end of 2029. The City’s first agreement with Zone 7 for treated water supply was approved on January 22, 1968, for a 30-year term. Around that time, Zone 7 also executed similar treated water supply agreements with other water retailers, including California Water Service, City of Livermore, Page 50 of 214