JOINT POWERS FINANCING AUTHORITY AGENDA PACKET 9-15-26

Page 4 of 6 as a credit strength. The rating also benefits from Pleasanton's exceptionally strong economic and demographic characteristics and the City's disciplined financial management policies. Notwithstanding the strength of the rating, the City's liquidity position is below the median for 'AA'-rated water utilities nationally. According to S&P's most recent medians data, 'AA'-rated systems carry approximately 649 days' cash on hand, while the City ended Fiscal Year 2024/25 with approximately 200 days' cash on hand and $20.9 million in unrestricted cash reserves. This difference was a key factor in S&P's September 2025 revision of the outlook from Positive to Stable, reflecting the City's cash position relative to higher-rated peers. S&P noted that the rating could be raised in the longer term should the City surpass reserve projections and achieve a liquidity position more commensurate with higher-rated peers. Repayment Term At the August 11, 2026, meeting, the Council directed staff to evaluate a shorter repayment schedule than 30 years to save interest costs. Staff conducted additional analysis, including 20-, 25-, and 30-year repayment terms, and concluded that a 25-year repayment term would reduce interest costs while reflecting the need for annual debt service to be balanced against three competing priorities: • Preserving sufficient annual cash flow to fund ongoing capital projects • Maintaining strong days' cash on hand • Retaining capacity for planned future debt issuances As shown in Table 1 below, the total debt service payment for a 25-year repayment term is $24.65 million, $2.84 million lower than the $27.49 million for a 30-year repayment term. Table 1. Repayment Term Comparison The Authority is obligated to pay the debt service on the Bonds using amounts received from the City as installment payments payable by the City under the Installment Sale Agreement. The City is obligated to pay the installment payments from the “Net Revenues” of the City’s water system. Net Revenues are defined in the legal documents to mean the gross revenues received by the City from the water system, less operations and maintenance costs of the system. The use of Net Revenues to pay the installment payments will be on parity with the City’s obligation to make payments with respect to the State Revolving Fund (SRF) Agreement executed in 2015 and 2024 Water Revenue Bonds. The maximum amount authorized to be borrowed would be $16.5 million, including an amount necessary to cover issuance costs. The attached resolution authorizes the sale of the Bonds at a public sale and approves the form of the Preliminary Official Statement and other documents. Further, the Resolution authorizes the City Manager and the Finance Director to take any and all actions necessary to consummate the issuance of the Bonds. Page 6 of 205