CITY COUNCIL REGULAR MEETING AGENDA PACKET 9-1-26

Page 2 of 4 DISCUSSION Staff worked with Zone 7 to establish a draft term sheet based on the feasibility study to develop the draft agreement (Attachment 2), with key terms summarized below. Project Overview The project includes construction of new groundwater production wells at Tennis Park and Hansen Park, installation of raw groundwater pipelines connecting the wells to Zone 7's Hopyard Chloramination Facility, and improvements to the Hopyard Chloramination Facility to increase treatment capacity. Zone 7 would operate the new groundwater supply facilities as part of its overall water supply system and deliver the City’s GPQ through turnouts to the City distribution system. Improvements to the City’s distribution system required to convey the GPQ under future demand conditions are solely funded by the City, and are excluded from the proposed agreement with Zone 7. Design and Construction The agreement designates Zone 7 as the lead agency for project delivery. As lead agency, Zone 7 will be responsible for environmental review, permitting, procurement, design and construction, and consultant and contractor administration. The project will use a Progressive Design-Build (PDB) method, allowing the design team and contractor to collaborate during design development and establish a Guaranteed Maximum Price prior to construction. Although Zone 7 will administer the project, the agreement provides the City with meaningful participation throughout design and construction. The City will lead community outreach, review project deliverables, and provide input on design. Zone 7 retains final authority over technical and operational decisions affecting the groundwater system to guarantee delivery of 3,500 acre-feet per year GPQ to Pleasanton. Zone 7 shall seek the City's approval on design of project features affecting City-owned property, including facility aesthetics, location, and noise. The current estimated total capital cost for the project is $42.3 million in 2026 dollars. The agreement establishes proportional cost sharing based on each agency's reserved production capacity under average groundwater basin conditions. For the joint wells and raw groundwater pipelines, the City's share is 36 percent, with Zone 7 funding the remaining 64 percent. For improvements to the Hopyard Chloramination Facility, the City's share is 23 percent, with Zone 7 funding 77 percent. Each agency is responsible for its own self-performed costs. Zone 7 will invoice the City quarterly for its share of eligible consultants and contractor costs, with supporting documentation provided for each invoice. Key Agreement Provisions The agreement includes several provisions that protect the City's interests, including: • The City shall be entitled to a minimum annual Groundwater Supply from the Project of 3,500 acre-feet per year (AFY), produced and delivered at a maximum daily volume of 6.2 million gallons per day (MGD). • Either agency may discontinue participation in the project before construction begins during the design phase by providing written notice. If either agency exercises this Page 268 of 344