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Page 1 of 4 <br />Item #9 <br /> CITY COUNCIL AGENDA REPORT <br /> <br />September 1, 2026 <br />Public Works - Utilities Division <br /> <br />TITLE: AUTHORIZE THE CITY MANAGER TO NEGOTIATE AND EXECUTE AN <br />AGREEMENT WITH ZONE 7 WATER AGENCY FOR THE DESIGN, <br />CONSTRUCTION, AND OPERATION OF A REGIONAL GROUNDWATER <br />DEVELOPMENT PROJECT - PHASE II AND PHASE III <br /> <br />SUMMARY <br />The proposed agreement establishes the framework for the City and Zone 7 Water Agency <br />(Zone 7) to jointly design, construct, and operate new groundwater facilities in the Bernal <br />Subbasin. The project will restore Pleasanton's use of its 3,500 acre-feet per year groundwater <br />production quota (GPQ) following the loss of the City's existing groundwater wells due to PFAS <br />(per- and polyfluoroalkyl substances) contamination. Authorizing the agreement allows both <br />agencies to advance project delivery toward the target operational date of December 2029. <br /> <br />BACKGROUND <br />Historically, approximately 20 to 25 percent of Pleasanton’s water was provided by local <br />groundwater wells. However, in 2022, the City took these wells offline after detecting PFAS. In <br />2024, the City Council approved an agreement with Zone 7 to evaluate the feasibility of a Joint <br />Groundwater Wells Project. The feasibility study (Phase I) was completed in 2025 and <br />identified Pleasanton Tennis and Community Park and Hansen Park as feasible locations for <br />new groundwater wells. On April 21, 2026, the City Council directed staff to proceed with a <br />joint project with Zone 7, and draft an agreement for Phase II (Design and Construction), and <br />Phase III (Operations) of the new facilities. <br /> <br />The current estimate is in line with the project allowance included in the Water Rate Study of <br />$27 million in 2024 dollars, or approximately $29 million in 2026 dollars. The City’s cost share <br />for the project, including improvements to the City’s water distribution system required by the <br />project and solely funded by the City, is provided in the table below. <br /> <br />Table 1. Capital Cost Estimate1 – City Share <br />Feasibility Studies2 $1.5 million <br />Regional Groundwater Development with Zone 73 $15.2 million <br />City Water Distribution Improvements4 $12.3 million <br />Total $29.0 million <br />1. Cost estimate is in January 2026 dollars. <br />2. City received a $1 million grant from the State Water Board to help fund the feasibility studies. <br />3. Capital cost estimate is the City’s cost share per the City and Zone 7 agreement. <br />4. Capital cost estimate is the sole responsibility of the City. <br />Page 267 of 344